Whitebark Energy Limited (WBE) through its wholly owned subsidiary Salt Bush Energy Limited (SBE) has terminated the Definitive Agreement to acquire the residual 40% interest in the Wizard Lake Oilfield
As a result of not completing the Agreement there will be no material changes to WBE cashflow from the field due to ongoing arrangements under the Farm-In and Joint Operating Agreements for as long as it takes the wells to pay out.
SBE remains operator of the Wizard Lake Oilfield and will still retain a first right of refusal over the balance of interests in the Wizard Lake Oilfield.
As announced on 18 December 2019, the acquisition of the Wizard Lake assets would proceed in stages. Stage 1 was completed on 23 December 2019 with SBE moving to 60% ownership1. WBE/SBE has the right to acquire the remaining 40% interest in Wizard Lake for C$2.8m and C$2m in WBE shares (Stage 2 and Stage 3).
Under the Agreement, Closing of Stage 2 was subject to the company arranging appropriate financing with a target date of 31 March 2019. Due to the rapid decline in global economic conditions, particularly the recent decline in oil prices, this financing has not been achieved and nor would it be prudent to proceed given present market conditions.
Accordingly, SBE has served notice to terminate the Definitive Agreement after Stage 1 and will remain with a 60% interest and Operatorship of the field. Due to ongoing payback arrangements associated with the 2019 Farmin Agreement and Wizard Lake Joint Operating Agreement (JOA), SBE will continue to receive 85 – 100% of field income until all pro rata past costs are recovered. Under existing agreements, SBE has a first right of refusal on any sale of the 40% interest it does not own.
Whitebark Energy Managing Director, David Messina said: “The market has changed materially over the last two months and while our focus remains on Wizard Lake, it is clearly not the time to undertake this transaction.”
Source: Company Press Release