ROK Resources Acquires Assets in SE Saskatchewan
TSX-V listed ROK Resources Inc. has entered into two separate agreements with undisclosed sellers to acquire various operated and non-operated interests in producing, non-producing, and undeveloped oil and natural gas assets in south-eastern Saskatchewan.
Under the terms of a Production Sharing Agreement (PSA), ROK Resources will acquire certain operated interests in producing oil and gas assets in south-eastern Saskatchewan, plus certain non-operated interests in producing and non-producing oil and gas assets in another part of south-eastern Saskatchewan, in exchange for a combined consideration of approximately C$2.93 million. This is comprised of an initial cash consideration of C$2.5 million, and the issuance of 2,250,000 Class B common shares of ROK Resources at a deemed price of C$0.19 per share (based on the closing share price on March 12th, 2021, one trading day prior to the transaction announcement), amounting to C$427,500. In addition, ROK Resources will also grant the seller an overriding royalty specific to the non-operated interests.
The assets acquired include 2,500 gross acres of operated interests in producing oil and natural gas assets located in close proximity to ROK Resources’ existing land base, interest in a multi-well facility, and two central oil batteries. The properties target the Midale and Frobisher formations and include potential for additional growth. During January 2021, production from the properties averaged approximately 67 barrels of oil equivalent per day (boe/d), of which approximately 91% is oil.
Under the terms of a farm-in agreement, ROK Resources will acquire the rights to earn interest in certain undeveloped oil and natural gas assets located in south-east Saskatchewan, in exchange for certain carry funding obligations including participation in drilling, completion, and equipping of two earning wells, paying 70% of the costs to earn a 35% working interest in the earning wells, plus a 35% working interest in 2,900 gross acres of prospective land. Prior to December 31st, 2021, ROK Resources has the option to purchase up to a 50% interest in the undeveloped assets, which would include two producing oil and natural gas wells.
The assets acquired under this agreement include the rights to earn a 35% working interest in the earning wells, plus a 35% working interest in 2,900 gross acres of prospective land located in South-eastern Saskatchewan.
“The foundation has been established with the addition of a complementary set of acquisitions and a farm-in, providing ROK additional cashflow and a runway to grow reserves and future cashflow as oil prices continue to trend upwards. Ownership in two multi-well facilities underlines ROK’s future cost-effective development, utilizing existing processing capacity, water disposal and pipeline infrastructure. ROK will continue to focus on strategic acquisitions, securing long-term financial partners, and continuing to create shareholder value,” commented Cam Taylor, Chairman & CEO of ROK Resources.
To fund the operations and development of the acquired assets, ROK Resources launched a private placement of its units to raise gross proceeds of up to C$2.2 million.
Calgary-based ROK Resources (formerly Petrodorado Energy Ltd.) is engaged in the exploration and development of oil and natural gas properties in Saskatchewan. Previously, the company was engaged in exploration and production activities in Colombia.
The transactions are subject to customary closing conditions, including completion of a financing transaction to provide funding to purchase the assets, and the receipt of any necessary regulatory approvals. The PSA is expected to close on or about April 30th, 2021, with an effective date of April 1st, 2021.