Pulse Oil to Raise C$30 Million via Private Placement
Calgary-based Pulse Oil Corp., along with its wholly-owned subsidiary Pulse Oil Operating Corp. (OpCo), has commenced a private placement of units to raise up to C$30.9 million. The proceeds of the placement will be used by the company primarily for meeting operational and developmental expenditures on its Bigoray operations in Alberta, where it drilled two successful oil wells last year.
In June 2019, Pulse Oil had announced the completion of a 3-phase enhanced oil recovery (EOR) study for the Nisku D&E pinnacle reefs in the Bigoray area. The study indicated a peak production rate from the area of 5,000 barrels per day (bbls/d) of oil.
In addition to funding the core Bigoray area operations, the proceeds of the placement will be used for meeting general working expenses and for the repayment of outstanding debts.
The company explained that each placement unit will comprise one preferred share of OpCo and 25 common shares of Pulse Oil, and will be priced at CA$25.75 per unit.
Pulse Oil said that the holders of preferred shares will be entitled to receive a dividend payment equal to 100% of the free cash flow of OpCo on a pro-rata basis until these shares realize an internal rate of return equal to 25%. Thereafter, the holders will be entitled to a dividend payment equal to 50% of the free cash flow of OpCo, until the IRR is equal to 100%, and a dividend payment equal to 25% of free cash flow of OpCo. In addition, OpCo also has the option to redeem all or any part of the outstanding preferred shares at a cost of $25.00 per share, subject to certain conditions.
“Bigoray is our main priority at Pulse and being able to access funding will speak to the quality of the project at Bigoray. We feel the potential upside in Bigoray would be exciting for all shareholders that have stuck by us over these difficult times and of course for the new shareholders that invest in us now to get the Bigoray project up and running,” said Garth Johnson, the company’s CEO.
Raymond James is acting as sole agent and bookrunner for the placement, while INFOR Financial is acting as financial advisor to the company. The placement will be conducted on a commercial efforts basis, and will include the issuance of up to 1,200,000 units.
The completion of the placement is subject to the receipt of all necessary regulatory approvals, and is scheduled to close in June.