REG - ADM Energy PLC - Investment, Financing and Debt Restructuring

Adm EnergyAnnouncement

26/06/2024 14:00

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RNS Number : 0096U  ADM Energy PLC  26 June 2024

 

 

26 June 2024

 

 

ADM Energy PLC

("ADM" or the "Company")

 

US Oil and Gas Investment

Financing and Debt Conversion

 

 

ADM Energy PLC (AIM: ADME; BER and FSE: P4JC), a natural resource investing
company, is pleased to announce the investment in Vega Oil and Gas, LLC
("Vega"), a Texas Limited Liability Company with assets in Moore County,
Texas, by ADM Energy (USA), Inc., a wholly owned subsidiary of the Company
("ADM USA").  The Company further announces that ADM USA has entered into a
financing agreement for US$600,000 with OFX Holdings, LLC, ("OFXH") a
substantial shareholder of the Company; and ADM Energy PLC entered into debt
conversion agreements, totalling £532,752.

Highlights:

·    New investment by way of an acquisition of 100% of the membership
interest (equity) of Vega with an interest in three wells in Moore County,
Texas with an average Net Revenue Interest of approximately 80%.  The
transaction is being funded by a US$150,000 capital commitment by ADM USA, a
US$100,000 borrowing facility from a private, third-party US lender and the
issuance of 20 million, 5-year warrants in the Company with an exercise price
of 1.0 pence.

·    Financing agreement with OFXH, a substantial shareholder of the
Company, providing for up to US$600,000 in financing to ADM USA of which
US$225,000 has already been received pursuant to a loan with an interest rate
of 12.0% per annum (the "Initial Advance").

·    The use of proceeds of the Initial Advance are as follows:

o  US$80,000 advanced from ADM USA to the Company; and

o  US$145,000 to fund investments and capital contributions by ADM USA in
Vega or other assets.

·    Debt-for-Equity conversion agreements for a total of £532,752 with
OFXH, Ventura Energy Advisors, LLC ("Ventura") and Catalyse Capital Ltd
("Catalyse") resulting in an aggregate corporate debt reduction of £532,752.

Vega Oil and Gas Investment

The Company is pleased to announce the investment by way of an acquisition of
100% of the equity interest of Vega with the associated economic interest in
certain wells (the "Vega Wells") as highlighted in Table 1.0 below with an
effective date of 1 June 2024:

 

 

                             Sneed 3 & 4 Consolidated      T G Thompson 73-2
 Lease Number                06372                         09503
 Location                    Moore County, Texas           Moore County, Texas
 Number of wells             2                             1
 Working Intetrest           100.000%                      100.000%
 Net Revenue Interest        76.352337%                    84.8750%
 Over-Ride ROYALTY Interest  1.08333%                      -

Table 1.0. Details and economic interests of the Vega wells.

 

The Vega Wells, in aggregate, produced an average of 26 barrels of oil per day
(net to the interest of Vega) in January, February and March 2024 but are
temporarily shut-in awaiting completion of a new tank battery.  The Company
plans to invest in the construction of a new tank battery, work-over the Vega
wells and restore production in the near term.

ADM USA Financing Agreement

To finance cash requirements associated with the Vega transaction and other
purposes, ADM USA has entered into a financing agreement with OFXH, a
substantial shareholder of the Company, which provides for up to US$600,000 in
financing (the "Total Financing") to be made available to ADM USA and of which
the Initial Advance of $225,000 has already been received.

Estimated use of the Total Fundraising, of which up to a total of US$200,000
will be made available to the Company from ADM USA, is as follows:

·    Approximately US$400,000 will be used to fund investments and capital
requirements of ADM USA (including the US$150,000 associated with the Vega
transaction), comprising;

o  Approximately US$200,000 may be used to finance further investments and as
growth capital to expand the ADM USA's investment, announced 8 April 2024, in
JKT Reclamation, LLC ("JKT").  Such investment may include the expansion of
the existing facility at Wilson, Oklahoma or to fund certain costs and
investments necessary to acquire, equip or initiate operations at a second
reclamation facility currently being planned in the State of Texas.

·    Approximately US$200,000 to finance investments that may include
additional investment in Efficient Oilfield Solutions, LLC ("EOS").

The use of proceeds of the Initial Advance are as follows:

o  US$80,000 to be made available to the Company from ADM USA; and

o  US$145,000 to fund investments and capital contributions by ADM USA
including an initial US$60,000 advance to Vega.

Debt-for-Equity Conversions

Furthermore, debt-for-equity conversion agreements ("Debt-for-Equity") have
been reached with OFX Holdings, LLC; Ventura Energy Advisors, LLC; and,
Catalyse Capital, Ltd. for the conversion of a total of £532,752 in debt and
accrued and unpaid interest into ordinary shares in the Company at a price of
1.0p per share as follows.

·    OFXH has agreed to convert all remaining debt due by ADM to OXFH to
the total of £270,752 for 27,075,200 ordinary shares;

·    Ventura has agreed to convert £162,000 of outstanding debt and
accrued interested into 16,200,000 ordinary shares and;

·    Catalyse has agreed to convert £100,000 in outstanding debt and
accrued interest into 10,000,000 ordinary shares.  In addition, Catalyse has
been issued with 10,000,000 ordinary shares at 1.0p per share comprising
5,000,000 ordinary shares associated with the restructuring of its existing
debt obligations and an additional 5,000,000 ordinary shares associated with
further restructuring and advisory services to the Company. The outstanding
debt owed to Catalyse has been restructured to be paid by 30 September 2024.
As a result of the above debt conversions and liability terminations,
aggregate corporate debt has been reduced by a total of £532,752 and resulted
in the issue of 53,275,200 ordinary shares ("Conversion Shares") in the
Company at a price of 1.0p per share and fees totalling £100,000 due to
Catalyse have been settled by the issue of an additional 10,000,000 shares
("Fee Shares").

Related Party Transactions

The debt reduction and issuance of the Conversion Shares to both OFXH and
Ventura (a company controlled by Randall Connally) and the financing agreement
with OFXH are related party transactions pursuant to the AIM rules. With the
exception of Claudio Coltellini and Stefan Olivier, the directors of the
Company consider, having consulted with its nominated adviser, Cairn Financial
Advisers LLP, that the terms of the debt reduction and the issue of Conversion
Shares to OFXH and Ventura are fair and reasonable insofar as its shareholders
are concerned.

Admission Details and Share Capital following the Financing and
Debt-for-Equity Conversions

Application has been made for the Conversion Shares and the Fee Shares,
totalling 63,275,200 ("Deal Shares") to be admitted to trading on AIM. It is
expected that Admission of the Deal Shares will become effective and that
dealings will commence at 8.00 a.m. on or around 27 June 2024.

Following Admission of the Conversion Shares and the Fee Shares, the Company's
enlarged issued share capital will comprise 627,863,811 Ordinary Shares of 1.0
pence each with voting rights in the Company. This figure may be used by
shareholders in the Company as the denominator for the calculations by which
they will determine if they are required to notify their interest in, or a
change in the interest in, the share capital of the Company under the FCA's
Disclosure and Transparency Rules.

Adjusted for the issuance of these new shares, on Admission, OFXH will hold a
total of 123,744,367 ordinary shares representing 19.7% of the enlarged share
capital of the Company.

Warrants in issue

Following the above issue of Warrants the total number of Warrants in issue is
134,373,626 equating to 17.6% of the Company's enlarged share capital assuming
full exercise of all warrants.

 

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via Regulatory Information Service , this inside information is
now considered to be in the public domain.

 

Commenting on the equity financing and debt conversion Stefan Olivier, CEO,
stated: "The additional equity financing and debt conversion announced today
by OFXH and other key stakeholders strengthens ADM's balance sheet further as
we continue to prioritise near-term cashflow generative projects and
investments."

 

 

Enquiries:

 

 ADM Energy plc                                       +44 7495 779520
 Stefan Olivier, Chief Executive Officer
 www.admenergyplc.com (http://www.admenergyplc.com/)

 Cairn Financial Advisers LLP                         +44 20 7213 0880
 (Nominated Adviser)
 Jo Turner, James Caithie

 ODDO BHF Corporates & Markets AG                      +49 69 920540
 (Designated Sponsor)
 Michael B. Thiriot

 Gracechurch Group                                    +44 20 4582 3500
 (Financial PR)
 Harry Chathli, Alexis Gore, Henry Gamble

 

About ADM Energy PLC

ADM Energy PLC (AIM: ADME; BER and FSE: P4JC) is a natural resources investing
company with investments including a 30.6% economic interest in JKT
Reclamation, LLC; a 46.8% economic interest in OFX Technologies, LLC
(www.ofxtechnologies.com (http://www.ofxtechnologies.com) ); and a 9.2% profit
interest in the Aje Field, part of OML 113, which covers an area of 835km²
offshore Nigeria. Aje has multiple oil, gas, and gas condensate reservoirs in
the Turonian, Cenomanian and Albian sandstones with five wells drilled to
date.

 

About JKT Reclamation LLC

JKT Reclamation is the owner of a 20-acre facility in Wilson, Oklahoma with
fixed assets including a workshop and office structure, ten 410-barrel storage
tanks and other related separation and material handling equipment. In
addition to the property, plant and equipment, other assets include two
proprietary chemical formulae with additional potential commercial
applications. JKT management believe its proprietary chemicals give JKT two
key competitive advantages over other similar facilities because:

·    JKT's chemical-based process does not require use of a centrifuge,
which are expensive to operate and maintain, the operating costs required to
process and recover saleable oil are lower than they would be if a centrifuge
were employed in JKT's process; and,

·    JKT owns its chemical formulae, JKT does not have to purchase
similar, commercially available chemicals, resulting in substantial cost
savings to JKT.

JKT management believe the combination of these two advantages allows JKT to
achieve substantially higher operating profit margins than similar facilities
and that, long term, JKT can use this cost advantage to increase its market
share in its service area.

 

Forward Looking Statements

Certain statements in this announcement are, or may be deemed to be,
forward-looking statements. Forward looking statements are identified by their
use of terms and phrases such as "believe", "could", "should", "envisage'',
"estimate", "intend", "may", "plan", "potentially", "expect", "will" or the
negative of those, variations or comparable expressions, including references
to assumptions. These forward-looking statements are not based on historical
facts but rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations, performance,
future capital and other expenditures (including the amount, nature and
sources of funding thereof), competitive advantages, business prospects and
opportunities. Such forward-looking statements reflect the Directors' current
beliefs and assumptions and are based on information currently available to
the Directors.

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