CALGARY, Alberta--(BUSINESS WIRE)--Horizon Petroleum Ltd. (the “Company” or “Horizon”) (TSXV: HPL) is pleased to announce that it has entered into a Letter of Intent (“LOI”) with a private European entity (the “Farmee”) for a farm-in on the Lachowice conventional natural gas field in the Bielsko-Biala concession in southern Poland (the “Bielsko-Biala Concession”), which Horizon is in the process of acquiring, as previously disclosed in Horizon’s press releases dated September 19, 2017 and June 13, 2018.
Under the terms of the LOI, the Farmee has agreed to fund 100% of the capital expenditures required to bring the Lachowice field to first production, with Horizon continuing as operator. In return, the Farmee will receive 50% of the equity in Horizon’s subsidiary that will hold the Bielsko-Biala Concession. After satisfying the capital commitment (the “Farm-in Obligation”) and earning its 50% of the equity, future expenditures and profits on the Bielsko-Biala Concession will be shared equally. The Farm-in Obligation includes funding all costs related to drill, complete and test the first well as well as the surface production equipment required to produce the well. In aggregate, the Farm-in Obligation is expected to total approximately US$8 million (approximately C$10.5 million). The first well is expected to spud late in the first quarter of 2019, with initial production estimated at 3 MMCFD (facilities constrained) expected to begin in the fourth quarter of 2019. The LOI is non-binding and is subject to a number of conditions, including formal documentation of a Joint Operating and Shareholder Agreement, confirmation of the Farmee’s financial capacity, the closing of Horizon’s acquisition of the Bielsko-Biala Concession and required regulatory approvals. The Farm-in Obligation provides Horizon with an accretive plan to finance the capital expenditures to reach first production.
The LOI relates only to the Bielsko-Biala Concession, which forms a portion of Horizon’s acquisition of five concessions in Poland (the “Acquisition”). The details of the Acquisition are contained in Horizon’s previously issued press releases dated September 19, 2017 and June 13, 2018. The Acquisition is expected to close in the third quarter of this year. The remaining four concessions will be owned 100% by Horizon after closing of the Acquisition.
Readers are cautioned that the Company does not yet own the Bielsko-Biala Concession to which the LOI relates, and that the completion of the Acquisition is subject to such uncertainties and assumptions which have previously been disclosed by the Company.
Private Placement Update
On June 13, 2018, Horizon announced its intention to raise up to C$5 million through a private placement of up to 100,000,000 common shares of Horizon at a price of $0.05 per share (the “Private Placement”). Net proceeds of the Private Placement are anticipated to be used to close the Acquisition, prepare the Polish assets for development and for general corporate purposes. Horizon entered into an engagement agreement with Gneiss Energy Limited, a London, United Kingdom based energy-focused advisory practice, for the purposes of raising new equity in Europe. In addition, Horizon is raising funds from Canadian and certain European investors on a non-brokered private placement basis. Horizon expects to close the Private Placement in one or more tranches in the third quarter of 2018.
About Horizon Petroleum Ltd.
Calgary-based Horizon is focused on the appraisal and development of conventional oil & natural gas resources, onshore Europe. The Management and Board of Horizon consist of oil & natural gas professionals with significant international experience.
Note Regarding Forward Looking Statements.
This press release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to the Company’s plans and other aspects of our anticipated future operations, management focus, strategies, production results, industry conditions and business opportunities. In addition, and without limiting the generality of the foregoing, this press release contains forward-looking information regarding the completion of the farm-in pursuant to the LOI, the anticipated terms and size of the Farm-in Obligation, the anticipated potential of the Acquisition, the closing and timing of closing of the Acquisition, the closing and timing of closing of the Private Placement, the use of proceeds from the Private Placement, capital program and allocation thereof, future production including the anticipated timing and production of the Bielsko-Biala Concession, development and drilling plans, potential growth, as well as the source of funding the Company’s capital spending. Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future.
The forward-looking information is based on certain key expectations and assumptions made by Horizon’s management, including expectations and assumptions previously disclosed by Horizon, and in addition with respect to prevailing commodity prices and differentials, exchange rates, interest rates, applicable royalty rates and tax laws; future production rates and estimates of operating costs; performance of future wells; reserve and resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; the ability to efficiently integrate assets and employees acquired through acquisitions, including the Acquisition, the ability to market natural gas successfully and Horizon’s ability to access capital. Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Horizon can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. Horizon’s actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on future operations and such information may not be appropriate for other purposes.
Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and we disclaim any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
Neither 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.