Manitok Energy Inc. Announces Amended Terms For The Lease Issuance And Drilling Commitment Agreement
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MANITOK ENERGY INC. ANNOUNCES AMENDED TERMS FOR THE LEASE ISSUANCE AND DRILLING COMMITMENT AGREEMENT
May 24, 2017, Calgary, Alberta – Manitok Energy Inc. (the "Corporation" or "Manitok") (TSX-V: MEI) is pleased to announce amended terms of its Lease Issuance and Drilling Commitment Agreement (the "Agreement") with an Alberta based royalty company (the "Company"). Summary of the key terms of the revised Agreement are as follows:
In the amended Agreement, Manitok has agreed to:
- the early surrender of approximately 148,000 acres of undeveloped leased lands located mostly in the northern end of the Entice block in Manitok's Beiseker and Strathmore areas and the payment of cash consideration of approximately $1,998,520, with $350,000 having been paid immediately on the execution of Agreement and the remainder to be paid by Manitok following the completion of its previously announced plan of arrangement with Craft Oil Ltd. which is anticipated to be closed on or about June 6, 2017 (the "Arrangement");
- assign its existing gross overriding royalty ("GORR") on Section 28-41-07 W5M at Willesden Green, Alberta, grant a 4% GORR on its working interests on developed and undeveloped lands at Willesden Green, Alberta and grant a 4% GORR on its working interest on undeveloped lands at Stolberg, Alberta, and related tax pools; and
- convey its proprietary interest in various 2D and 3D seismic data sets and related tax pools while obtaining a concurrent 15 year seismic data licence to such 2D and 3D seismic data.
In the amended Agreement, the Company has agreed to:
- adjust the remaining drilling and completion expenditure commitment from $56.0 million to $24.0 million, with $8 million required by December 31, 2017 and the remainder by August 31, 2018;
- conditional upon closing of the Arrangement, extend the primary term on 1,554 hectares (3,885 acres) of undeveloped land at Wayne, Alberta that were previously due to expire on June 15, 2017; the renewed primary term will extend these leases for an additional three (3) years; and
- adjust the Agreement terms to provide Manitok with the option to extend the primary term associated with all undeveloped leased lands within the Agreement (expiring on April 30, 2018) for an additional thirty-two (32) months to December 31, 2020 at $600/hectare with no capital commitment in the future, versus the previous $400/hectare plus future capital commitment.
The land under the Agreement held by Manitok has become its core area of operation. The Corporation has taken the production in the Entice area from zero to a peak of approximately 3,200 boe/d in December 2016, during the early development phase of its operations. Currently Manitok has identified a development drilling inventory of approximately 56 Lithic Glauconitic oil horizontal locations and approximately 46 Basal Quartz oil horizontal locations on the Carseland and Wayne area lands continued to be held under the Agreement in this area. The amended terms of the Agreement will enable the Corporation to continue to develop this prolific core area in a financially stable manner.
Manitok is a public oil and gas exploration and development company focused on Lithic Glauconitic light oil in southeast Alberta and Cardium light oil in west central Alberta. The Corporation utilizes its expertise, combined with the latest recovery techniques, to develop the remaining oil and liquids-rich natural gas pools in its core areas of the Western Canadian Sedimentary Basin.
For further information on Manitok contact:
Manitok Energy Inc.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. Per boe amounts have been calculated using a conversion ratio of six thousand cubic feet (6 mcf) of natural gas to one barrel (1 bbl) of crude oil. The boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Forward-looking Information Cautionary Statement
This press release contains forward-looking statements. More particularly, this press release contains statements concerning the timing and completion of the Arrangement, management estimated development drilling inventory and the potential outcome of the amended terms of the Agreement to Manitok's future operations.
The forward-looking statements in this press release are based on certain key expectations and assumptions made by Manitok, including expectations and assumptions concerning the prevailing market conditions, the intentions of its lenders, commodity prices, and the availability of capital.
Although Manitok believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Manitok can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with adverse market conditions, the inability of Manitok to complete the Arrangement at all or on the terms announced, not obtaining the required court, shareholder and regulatory approvals for the Arrangement, a lender not approving the amendment to a credit facility and the risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserves estimates; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), uncertainty as to the availability of labour and services, commodity price and exchange rate fluctuations, unexpected adverse weather conditions, general business, economic, competitive, political and social uncertainties, capital market conditions and market prices for securities and changes to existing laws and regulations. More information about certain of these risks are set out in the documents filed from time to time with the Canadian securities regulatory authorities, available on Manitok's SEDAR profiles at www.sedar.com.
Forward-looking statements are based on estimates and opinions of management of Manitok at the time the statements are presented. Manitok may, as considered necessary in the circumstances, update or revise such forward-looking statements, whether as a result of new information, future events or otherwise, but Manitok undertake no obligation to update or revise any forward-looking statements, except as required by applicable securities laws.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.