/NOT FOR DISTRIBUTION TO
Additional information on the Transaction will be provided in a subsequent news release upon execution of the definitive agreement for the Transaction.
- Acquisition of all outstanding shares of SUB. SUB owns the 100 % working interest of the Project A oilfield under a Production Sharing Agreement which is currently producing and selling heavy oil in
Europe . - SUB has executed Heads of Agreements to acquire three additional onshore PSAs in the same country. All three of the additional PSAs have historically produced oil and natural gas and Horizon believes there are significant undeveloped natural gas resources also associated with the additional PSA's.
- This acquisition greatly enhances Horizon's strategy to establish Horizon as a European oil and gas production company with assets in
Poland andEurope that have significant potential to increase oil and gas production over the next few years. - Combined Management and Board with extensive international experience and expertise including Co-founders of Canacol Energy the second largest natural gas producer in
Colombia .
Our strategy is to evaluate, acquire and develop previously discovered gas and oil resources in the proven natural gas and oil basins located onshore
The current energy crisis in
We think it is important to build a diversified portfolio of assets with reserve and production potential that can build the company's asset value and cashflows which will generate high rates of return for our shareholders. We are actively screening, evaluating and pursuing business development opportunities to add reserves and production potential in
The proposed transaction fits this strategy bringing significant oil production, reserves and resources with large gas development upside potential.
The Transaction is an arm's length transaction and when completed, is intended to be a "reverse takeover" for the purposes of the requirements of the
The Horizon shares to be issued to the shareholders of the Vendor in the Transaction will be issued pursuant to exemptions from the prospectus requirements of applicable securities legislation, and may be subject to escrow conditions as required by the TSX-V.
The parties have agreed to use their best efforts to complete the Transaction documents by late February, 2023. Both Horizon and the Vendor intend to hold shareholders' meetings in Q1, 2023 to approve the Transaction. Trading in the common shares of the Company is currently halted and will remain halted until further notice in accordance with the policies of the TSX-V.
Upon completion of the Transaction, the Company will have its head office located in
The Company plans to change its name to
The obligations of Horizon and the Vendor to consummate the Transaction shall be subject to, among other things: (i) the receipt of all necessary regulatory, Horizon Shareholder approval and TSX-V approval, including, without limiting the generality of the foregoing, the approval of the Transaction in accordance with the TSX-V policies; (ii) the receipt of all necessary shareholder and board of director approvals; (iii) the confirmation of the representations and warranties of each party to the LOI; (iv) the absence of any material adverse effect on the financial and operational condition or the assets of each of the parties and SUB (v) the delivery of standard completion documentation; and (vi) other conditions precedent customary for a transaction such as the Transaction. The conditions listed above are for the benefit of, and may be waived by, Horizon and the Vendor as it relates to the obligations of the other party to perform or obtain the same.
SUB is a limited liability company incorporated in
SUB holds the Project A production sharing agreement ("PSA") with a state company ("
SUB is the operator of the Project A onshore oil field with a 100% working interest and operates the field through its wholly-owned operating subsidiary SUB A.
In 2018, the
Upon the finalization and signing of the PSAs for the New Fields, SUB will hold 100% interest in four onshore oil fields in
Current gross production in the Project A field totals approximately 280 bopd of heavy oil. The fields are formed by large thrust anticlines involving highly-fractured and karstified carbonate reservoirs of Late Cretaceous to Eocene age. The producing assets in this region typically deliver medium to heavy oil and natural gas.
SUB is in the process of obtaining a report prepared in compliance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities on the reserve and resource estimates in respect of the Project A oilfield. The report is currently being undertaken by RPS Group PLC., an independent qualified resource evaluator.
The following table summarizes selected financial information for SUB as at
Income Statement Data | 12 Months Ended | 12 Months Ended | |||
Total Revenues | 3,426 | 2,013 | |||
Operating Cash flow | (3,303) | (5,595) | |||
Operating Expenses | (2,777) | (2,875) | |||
Net (Loss) and | (3,944)
| (6,498) |
Balance Sheet Data | As at | As at | |||
Current Assets | 5,406 | 4,705 | |||
Net Tangible Assets | 31,743 | 28,373 | |||
Total Assets | 54,333 | 51,627 | |||
Total Liabilities | (22,590) | (23,254) | |||
Shareholders' Equity/ | 31,743 | 28,373 |
The Vendor currently holds approximately 51% of the shares of SUB. By closing, the Vendor expects to complete a share exchange with the remaining shareholders of SUB whereby it will hold a minimum 90 % plus one Share up to 100% of the shares of SUB. The purchase price for SUB shares will be satisfied by the issuance of approximately 240,000,000 common shares of Horizon to the Vendor at a deemed price of
Horizon currently has 109,857,176 common shares outstanding. Further, Horizon has 43,333 stock options outstanding with an exercise price of
In connection with the Transaction, Horizon will lend to SUB
Furthermore, an arm's length company ("Finco") will lend SUB, a total of
- Tranche A, expected to be finalized during the week of
January 16, 2023 , Finco will lend SUBUS$320,000 . The terms of the Note are such that SUB will have 365 days to repay the Note, and will be charged a rate of interest of 7% per Annum, due on maturity. - Tranche B will occur upon execution of the necessary definitive documentation to effect the Transaction. Finco will lend SUB
US$2,500,000 on the same terms as the first tranche. Half of Finco's legal costs for set up of the loan will be deducted from the first tranche.
The Vendor will act as guarantor for the Notes. Additionally, after the Notes are issued, Finco and Horizon may exercise its option per the Notes to convert into 10.5% of SUB common shares for the
In order to finance the transaction costs and interim expenses, Horizon intends to complete a non-brokered private placement (the "Offering") of up to 11,250,000 units ("Units") in the capital of Horizon at a price of
In connection with the Offering, certain insiders are expected to purchase Units in the Offering. Each of the insiders is a related party of Horizon, and as a result, the Offering will be a related party transaction for purposes of Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions ("MI 61-101").
The Company intends to rely on exemptions from the formal valuation and minority approval requirements of sections 5.5(a) and 5.7(1)(a) of MI 61-101 in respect of such insider participation, based on a determination that fair market value of the participation in the Offering by insiders will not exceed 25% of the market capitalization of Horizon, as determined in accordance with MI 61-101.
In connection with the Offering, Horizon may pay finder's fees of up to 7% cash and up to 7% convertible securities, or a combination of both, as permitted by the policies of the TSX-V.
The proposed use of proceeds of the Offering loan to SUB of
Horizon and the Vendor have agreed that Horizon will use its best efforts to complete a financing of up to
The Transaction Placement is expected to be a brokered private placement but no investment dealer has been retained to date and pricing of the Transaction Placement is not determinable at this time. Horizon expects to pay industry standard fees and commissions in connection with the Transaction Placement.
The pro forma company will have an oil and gas reserve base with significant upside potential in the development of contingent resources and exploration of prospective resources. These will provide an extensive drilling inventory to increase reserves, company value, add production and increase cashflow from the assets:
The reserve and resources of the Lachowice natural gas development project were described in Horizon's press release dated
With respect to SUB's reserves and resources, a NI 51-101 reserve and resources report for the Project A oilfield will be prepared and we will update shareholders by press release when it is completed.
Horizon will issue the Vendor approximately, 240,000,000 common shares and 30,000,000 preferred shares
Not including the Transaction Placement, following completion of the Transaction, Horizon expects to have a total of approximately 361,107,176 common shares issued, 30,000,000 preferred shares issued, 65,690,000 common shares reserved for issuance under warrants, and up to 10% common shares reserved for issuance under share based compensation arrangements. Of the issued shares, approximately 60% will be held by the existing Vendor shareholders, and approximately 40% will be held by Horizon shareholders.
Those shares of the Company to be issued to the Vendor shareholders who become principals of the Company will be subject to TSX-V escrow requirements.
Sponsorship of the transaction is required by the TSX-V unless exempt in accordance with TSX-V policies. The Company is currently reviewing the requirements for sponsorship and may apply for an exemption from such requirements. There is no assurance that Horizon will ultimately obtain an exemption from sponsorship.
Subject to any necessary shareholder and regulatory approvals, the board of directors and officers of the Company upon the completion of the Transaction will be as follows:
Dr.
Dr.
Tan Shern Liang, Director
The executives and employees of SUB will hold positions with the proforma company. They add a great deal of experience and expertise to Horizon's current Board and executive team. In addition, a nominee of the Vendor, to be determined, will be added to the board of directors.
The background of each of the aforementioned persons is as follows:
Dr.
Dr.
Tan Shern Liang, of
All information provided in this news release related to the Vendor and SUB has been provided by management of the Vendor and SUB and has not been independently verified by management of Horizon.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Horizon should be considered highly speculative.
The
Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in the Company's filings with the Canadian securities regulators, which filings are available at www.sedar.com.
All information in this press release relating to SUB has been provided by SUB and is the sole responsibility of SUB.
This news release contains "forward-looking information" within the meaning of applicable securities laws relating to the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction, and the proposed directors and officers of the Resulting Issuer. The information about SUB contained in the press release has not been independently verified by SUB. Although Horizon believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because Horizon can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Transaction, the appointment of the proposed directors and officers of the Resulting Issuer and associated transactions, that the ultimate terms of the Transaction, the appointment of the proposed directors and officers of the Resulting Issuer and associated transactions will differ from those that currently are contemplated, and that the Transaction, the appointment of the proposed directors and officers of the Resulting Issuer and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The terms and conditions of the Transaction may change based on Horizon's due diligence and the receipt of tax, corporate and securities law advice for both Horizon and SUB. The statements in this press release are made as of the date of this press release. Horizon undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of Horizon, SUB their securities, or their respective financial or operating results (as applicable).
The TSX-V has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Neither the TSX-V nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.
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