Calgary, Alberta – November 7, 2022 – Chronos Resources Ltd. (“Chronos”) and Samoth Oilfield Inc. (“Samoth”) (TSXV: SCD) are pleased to announce that they have entered into a definitive agreement dated November 7, 2022 (the “Agreement”) providing for a business combination transaction (the “Transaction”).
Pursuant to the Transaction:
(i) Chronos will complete an equity private placement (the “Financing”) for maximum aggregate gross proceeds of $65.0 million;
(ii) Chronos and Samoth will complete a business combination which will result in the reconstitution of the management team and board of directors of Samoth with the current management team (the “New Management Team”) and board of directors (the “New Board”) of Chronos. The New Management Team will be led by Dave Burton as President and Chief Executive Officer, Lindsay Goos as Chief Financial Officer, Jamie Conboy as Vice President, Exploration, Kyle Boon as Vice President, Operations and Jeff Rideout as Vice President, Land.
The New Board will be comprised of Dave Burton, Kevin Olson, Ian Atkinson, Ali Horvath, Bruce Beynon, Don Cowie, and Kel Johnston. Sanjib (Sony) Gill, a partner in the Calgary office of the national law firm Stikeman Elliott LLP, will act as Corporate Secretary. In addition, Neil Roszell will serve as a Special Advisor to the New Board;
(iii) the resulting issuer created from the combination of Samoth and Chronos (the “Resulting Issuer”) will be renamed “Lycos Energy Inc.” (the “Name Change”) and is expected to trade on the TSX Venture Exchange (the “TSXV”) under the new stock symbol “LCX” as a Tier 1 oil and gas issuer;
(iv) each issued and outstanding common share in the capital of Chronos (each, a “Chronos Share”) will be acquired by Samoth in exchange for twenty (20) common shares in the capital of Samoth (“Samoth Shares”) at a deemed price of C$0.035 per Samoth Share (the “Acquisition”), with the final number of Samoth Shares to be issued being determined based on the size of the Financing; and
(v) Samoth will complete a consolidation of the Samoth Shares on the basis of one (1) postconsolidation Samoth Share (each, a “Resulting Issuer Share”) for every eight (8) preconsolidation Samoth Shares (the “Consolidation”), representing an exchange ratio, on a postConsolidation basis, of two and a half (2.5) Resulting Issuer Shares at a deemed price of C$0.28 per Resulting Issuer Shares for every Chronos Share.
The Transaction is expected to be completed on or about December 12, 2022, subject to the completion of the Financing and customary closing conditions, including approval by the TSXV.
Chronos Overview
Chronos is an oil-focused, exploration, development and production company based in Calgary, Alberta, operating high-quality, heavy-oil, development assets in the Gull Lake area of southwest Saskatchewan and heavy-oil assets in the Lloydminster area of Saskatchewan and Alberta (collectively, the “Assets”).
Pre-Transaction Corporate Highlights
Successful Leadership Team
- Extensive experience drilling and completing multi-stage horizontal wells in unconventional resource plays
- Management team has previously led drilling programs in the Sparky, Shaunavon and Viking
- Experienced board of directors ensures highest standards of corporate governance and capital stewardship
Compelling Emerging Development Asset
- Development inventory of 100+ risked locations
- Wells are low-cost vs. deeper plays in basin, reducing event risk and increasing economics of program
- Optimized drilling and completion techniques are leading to improved initial rates and lower costs
Strong Financial Position
- Low decline production base provides stable free cash flow with limited maintenance capital or
liability management - Strong balance sheet with no debt and forecast 2022E Q4 Annualized EBITDA of >$11.7 million
- Positive working capital of $2.2 million
- 2022 capital program of $6.7 million fully funded with cash flow
- 2023 capital program to be expanded to include increased drilling, new facilities and acquisition capital
Low Decline Production Base
- Heavy oil production of 1,050 boe/d (99% oil) in SW Saskatchewan and Lloydminster
- Lloydminster – Mannville stacked sands and channels – Colony, Mclaren, Waseca, Sparky, GP, Rex, Lloyd and Cummings, 99% operated with average working interest of 98%
- SW Saskatchewan – Cantuar, Success, Roseray and Upper Shaunavon formations
- Stable production with low decline rate (<10%)
- Decline from Q1 to Q2 2022 was 0% with no drilling
- Enhanced by a waterflood program and continuous field optimization
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/143232/
