Zoetic International PLC Sale of Colorado Oil and Gas Interests (7424X)
September 02 2020 - 1:04AM
UK Regulatory
TIDMZOE
RNS Number : 7424X
Zoetic International PLC
02 September 2020
Prior to publication, the information contained within this
announcement was deemed by the Company to constitute inside
information for the purposes of Article 7 under the Market Abuse
Regulation (EU) No. 596/2014 ("MAR"). With the publication of this
announcement, this information is now considered to be in the
public domain.
2 September 2020
Zoetic International plc
("Zoetic" or the "Company" or the "Group")
Sale of Colorado Oil and Gas Interests
Trading Update
Zoetic International plc (LSE: ZOE), the London-listed
vertically integrated CBD company, is pleased to announce that it
has agreed to sell its remaining interest in its oil and gas assets
located in Colorado, USA (the "Disposal"), as well as continued
progress with its core CBD business.
Highlights
-- Disposal of the Company's "East Denver" oil and gas assets agreed
-- Bank loan of US $276,574 from ANB Bank is now paid in full
and the Company now has no borrowings
-- Total estimated annual savings of US$1 million from closing natural resources office
-- Second international distributor of CBD products in final stages of contract
-- Substantial reallocation of resources to the fast-developing
CBD business following exit from the major part of the Company's
oil and gas business
Sale of Colorado Oil and Gas Interests
The Disposal consists of assets referred to previously as the
"East Denver" interests. The assets subject to the sale include a
7.5 per cent working interest in two leases, eight producing wells,
associated surface equipment and a connecting gas pipeline (the
"East Denver Assets"), held by the Company's wholly owned Colorado
subsidiary, Highlands Natural Resources Corporation. The purchaser
is True Oil LLC, the operator of the East Denver Assets ("True
Oil").
The consideration for the sale of the East Denver Assets is
US$376,000, however the Group had a loan secured on the East Denver
Assets of US$276,574 from ANB Bank (subject to final non-material
adjustment). After paying ANB Bank, settling historic amounts due
to True Oil as the operator of the East Denver Assets and the
reassignment and repayment of existing bonding arrangements on the
East Denver Assets, the final proceeds due to the Company are
expected to be less than US$20,000. Completion of the sale is
subject to certain procedural matters and a further announcement
will be made when completion occurs.
Exit from the Oil and Gas Business
The sale of the East Denver assets, in combination with the sale
of the Kansas assets announced on 27 May 2020, and the wind down of
the Montana holdings signals the Group's exit from the oil and gas
business. This will provide a clean break from the Group's most
substantial liabilities and operating costs. With the completion of
these sales, the Group will have materially exited the natural
resources sector and will be well positioned to continue the growth
of its CBD business as an agile and innovative market leader
through the reallocation of Group resources.
Whilst the proceeds of these sales will not be substantial,
these transactions have enabled the Group to make considerable
reductions to ongoing expenditures and eliminate external
borrowings. The ongoing cost base of the Group's natural resources
operations had developed on the basis of a larger business than was
ever achieved. While certain significant costs had already been
eliminated during the financial year to 31 March 2020, this
financial year will see a much greater reduction in costs,
currently anticipated to exceed US$1 million.
This includes both the closure of the Highlands Natural
Resources Corporation office in Denver, Colorado (where the lease
was negotiated and terminated, saving over 95% of liabilities over
the term of the lease) and the termination of employment of the
highest paid employees in the Group and consultancy contracts for a
number of personnel who were engaged in the running of the legacy
natural resources activities. The Board is confident that it has
crystallised substantial savings during the current financial year
and limited the Group's exposure to the heightened volatility of
the natural resources market whilst renewing its focus on the
continuing success of its CBD business.
Trading Update
The Company is pleased to announce it is in final negotiations
of an international distribution contract. This will be the second
contract negotiated for international distribution by the executive
team. Further details will be announced when contract is executed.
The continued demand by quality distributers for the Company's
Chill products reinforces the Boards decision to push the product
offerings into the global market. There will be inevitable hurdles
to overcome in the everchanging regulatory world of CBD, but the
Board believes the Company is well positioned to be first movers in
emerging CBD markets.
Trevor Taylor, Co-CEO of Zoetic, commented, "We are pleased to
have agreed the sale of our East Denver Assets, which marks the
culmination of over a year's effort in transitioning from the
Company's origins in the US oil and gas business towards our fast
developing CBD business. Making a strategic exit from the Company's
legacy operations has refocused our efforts, leaving us with the
bandwidth and resources to maximize the potential of our CBD
activities."
Antonio Russo, Co-CEO of Zoetic, commented, "We are very pleased
with the direction our international go to market plan is headed.
The strategic partnerships that are coming together give the
Company a lot of momentum as the rest of the world starts to use
CBD. They will now see what we have witnessed in Colorado for many
years."
**ENDS**
Enquiries
Zoetic International plc c/o IFC Advisory
Trevor Taylor, Co-CEO
Allenby Capital Limited (Financial Adviser and Broker) +44 (0)
20 3328 5656
Nick Harriss
Nick Naylor
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe
Graham Herring
Florence Chandler
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