REG - TomCo Energy PLC - Acquisition of an initial 10% interest in TSHII

TomCo EnergyAnnouncement

16/11/2021 07:05

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RNS Number : 4621S  TomCo Energy PLC  16 November 2021

16 November 2021

TOMCO ENERGY PLC

("TomCo" or the "Company")

 

Acquisition of an initial 10% interest in TSHII and Loan Agreement

TomCo Energy plc (AIM: TOM), the US operating oil development group focused on
using innovative technology to unlock unconventional hydrocarbon resources, is
pleased to provide a further update with respect to the Company's 100% owned
subsidiary, Greenfield Energy LLC's ("Greenfield"), potential acquisition of
up to 100% of the ownership and membership rights and interests in Tar Sands
Holdings II LLC ("TSHII") (the "Membership Interests"), as announced on 9 June
2021 (the "Agreement").

The Company is pleased to announce that Greenfield has now exercised its
option to acquire an initial 10% of the Membership Interests for a total cash
consideration of US$2 million, of which an amount of US$500,000 was satisfied
by crediting the deposits paid previously.  Accordingly, Greenfield now
retains an exclusive option, at its sole discretion, to acquire the remaining
90% of the Membership Interests for additional cash consideration up to 31
December 2022, as detailed in the Company's announcement of 9 June 2021.

Alongside the acquisition of the initial 10% of the Membership Interests, a
newly incorporated subsidiary of Greenfield has been granted a lease over
approximately 320 acres of the 760 acre site owned by TSHII (the "Lease
Area"), for a nominal consideration and annual rental of US$320, together with
a 12% of net sales royalty per barrel of conventional oil, gas or sulphur
produced and removed from the Lease Area.

The lease provides Greenfield's subsidiary with the exclusive right to
explore, drill, and mine for, and extract, store, and remove oil, gas,
hydrocarbons, and other associated substances on and from the Lease Area,
together, inter alia, with the right to erect, construct and use such plant
and equipment and infrastructure as required.  The lease is for an initial
term of 10 years and will continue thereafter for so long as any oil, gas or
other hydrocarbons are being produced from the Lease Area or drilling
operations are being prosecuted or as the parties may agree.

Loan Agreement

The US$1.5 million balance of the consideration paid to secure the acquisition
of the initial 10% of the Membership Interests has been financed by way of an
unsecured US$1.5 million loan from Valkor Oil & Gas LLC ("Valkor") to
Greenfield (the "Loan").

The Loan is repayable by Greenfield through a number of potential options, or
combination of such options, at its sole election, such combination adding up
to the US$1.5 million principal amount of the Loan, plus any applicable
interest or fees incurred.  The repayment options include granting a share of
potential net production revenues to initially offset the principal amount and
for a period of five years thereafter from any oil well(s) planned to be
drilled on the Lease Area, but for which the requisite further funding and
permits have not yet been secured; and/or straight repayment of the principal
amount plus interest and fees amounting to 15% of the principal amount of the
loan, payable on the maturity date.  In any event, a minimum of US$1.5
million must be repaid on or before 30 May 2022. To the extent that any part
of the principal amount has not been paid by the scheduled maturity date
(which may be extended by mutual agreement of the parties) then interest of 2%
per month shall be applied to such unpaid amount from time to time until it
has been repaid in full.

Greenfield is engaged in ongoing discussions regarding funding options to
potentially achieve the ultimate acquisition of 100% of the Membership
Interests, together with the drilling of a number of production oil wells and
the planned first 5,000 barrels of oil per day production plant, whilst
progressing other preparatory work.  However, there can be no certainty that
Greenfield can secure the requisite funding or the permitting required.

Further announcements will be made as and when appropriate.

Related Party Transaction

As a former JV partner, Valkor is considered to be a related party of the
Company (as defined in the AIM Rules for Companies) and, accordingly, the Loan
constitutes a related party transaction pursuant to AIM Rule 13. The TomCo
directors, having consulted with Strand Hanson Limited, the Company's
Nominated Adviser, consider that the terms of the Loan are fair and reasonable
insofar as the Company's shareholders are concerned.

Commenting, John Potter, CEO of TomCo, said: "We are delighted to have
completed this purchase of an initial 10% stake in TSHII.  The acquisition
provides Greenfield with a base from which to accelerate its plans to pursue
both the drilling of certain near term oil production wells and thereafter the
acquisition of the balancing 90% of the Membership Interests and its first
commercial scale plant, subject to funding.  We expect the permitting process
for the production wells to be completed in Q1 2022, following the drilling of
three exploration wells intended to occur in December 2021.

"Greenfield is currently focused on commercial negotiations with third parties
in order to seek to secure the funding for its future plans, together with
progressing the required permitting and other preparatory work.  We look
forward to providing further updates in due course."

 

Enquiries:

 

TomCo Energy plc

Malcolm Groat (Chairman) / John Potter (CEO)
  +44 (0)20 3823 3635

Strand Hanson Limited (Nominated Adviser)

James Harris / Matthew Chandler
                  +44 (0)20 7409 3494

Novum Securities Limited (Broker)

Jon Belliss / Colin Rowbury
                          +44 (0)20 7399 9402

IFC Advisory Limited (Financial PR)

Tim Metcalfe / Florence Chandler
                  +44 (0)20 3934 6630

For further information, please visit www.tomcoenergy.com
(http://www.tomcoenergy.com/) .

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018.

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