Razor Energy Corp. (ticker: RZE) announced that it has completed the acquisition of certain non-operated working interest positions to consolidate its existing Kaybob Triassic Units 1 and 2 from an arm’s length company for a cash consideration of $4.9 million.
The Kaybob assets are characterized by low decline, light oil focused production with abundant infrastructure that directly enhance Razor’s existing asset portfolio. The acquisition has been funded with Razor’s existing cash reserves.
Increased working interest position
- Kaybob Triassic Unit #1 WI increased from 52.95% to 93.48%
- Kaybob Triassic Unit #2 WI increased from 73.25% to 100.00%
On a pro forma basis including this acquisition, using field production estimates, the company expects Jan. 2018 production to exceed 4,900 BOEPD, of which 85% is light oil and NGLs.
The acquisition has an effective date of Nov. 1, 2017.
Asset summary
| Total purchase price(1) | $4.9 million |
| Current production (November 2017) | 260 boe/d |
| Annual decline rate | 15% |
| Run rate cash flow(2) | $1.9 million |
Acquisition metrics
| Current production (November 2017) | $18,850 per boe/d |
| Run rate cash flow(2) | 2.54x |
| (1) | Subject to normal adjustments for a transaction of this nature and adjustments related to the exercise of ROFRs. |
| (2) | Run rate cash flow does not have any standard meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities. Refer to “Non-IFRS measures”.Run rate cash flow is based on annualized current production of 260 boe/d multiplied by the operating netback for the Kaybob Assets of $20.62/boe. |
Haywood Securities Inc., Canaccord Genuity Corp. and Eight Capital acted as strategic advisors to Razor in respect of the acquisition.
Increased term loan facility
Razor has secured an increase of $15 million in its existing non-revolving term loan facility from Alberta Investment Management Corporation (AIMCo), on behalf of certain of AIMCo’s clients, for an amended principal amount of $45 million.
The terms of the amended term loan facility are materially unchanged from the term loan facility established in Jan. 2017. Principal continues to be due in Jan. 2021 with an interest rate of 10%, payable semi-annually. As consideration for the amended term loan facility, 255,600 common shares of Razor have been issued to AIMCo.
The proceeds of the increased term loan facility will be used by Razor to fund its development program and for general corporate purposes.
After the issuance of the Razor shares to AIMCo and the shares purchased to date under the previously announced normal course issuer bid, Razor currently has 15,767,534 shares issued and outstanding.
EnerCom Dallas conference presenter details
Razor Energy will be presenting at the EnerCom Dallas investment conference, Feb. 21-22 at the Tower Club in downtown Dallas. Institutional investors, portfolio managers, financial analysts, CIOs and other investment community professionals who invest in the energy space should register now.
