FUNDED AND READY TO COMMENCE DRILLING PROGRAM IN TEXAS PANHANDLE
Molori Energy Inc.'s (MOL.V) Texas-based operating partner, Ponderosa Energy LLC, has secured a reserve-based loan facility from a Texan bank. The proceeds of the RBL, together with cash on hand and current cash flows, will initially be applied towards the accelerated development of its well re-completion program. The initial facility size is USD $5,000,000 with a term of three (3) years. Outstanding funds used for development will accrue interest at a rate of Prime Rate + 25 basis points (0.25%) with a floor of four percent (4.00%). The RBL is a crucial milestone for operational growth and will provide additional liquidity for well re-completions, acquisitions, new drilling and working capital.
In addition, Ponderosa has applied for permits to drill three drill-ready targets, the first of which it anticipates completing and testing by mid-August. The wells will be drilled in conjunction with Molori's and Ponderosa's plans to test the Red Cave formation at approximately 2500 feet, and are anticipated to cost approximately USD $250,000-$300,000 per well.
Earlier this year, Ponderosa commissioned a large-scale engineering and geophysical study including rasterization of 200+ well logs, which was underwritten by Ponderosa's technical team and provides an in-depth assessment of Ponderosa's and Molori's Red Cave acreage in Moore, Potter and Hutchinson counties. The report identifies a number of initial well locations and is expected to provide Ponderosa and Molori with a strategic advantage as they pursue additional acreage.
Commented Joel Dumaresq, CEO of Molori, "As a result of our recently-completed financing as well as today's announcement of the RBL, Molori is well-positioned to begin the next phase of the Company's development. Consistent with what we've promised our investors and shareholders, we will soon begin drilling into the Red Cave formation, and look forward to providing the capital markets with regular updates on our progress."
In the event of success with these initial wells, Ponderosa and Molori has available an additional 400 or more potential well locations.
The Company also announces that it has applied to the TSX Venture Exchange to amend the exercise price of a total of 3,500,180 outstanding non-transferable common share purchase warrants (the "Warrants").
The Warrants were issued pursuant to a non-brokered private placement of 7,000,360 units at a price of $0.30 per unit, which closed on May 15, 2017. Each unit consisted of one common share and one-half of one Warrant, with each Warrant entitling the holder thereof to purchase an additional common share of the Company until May 15, 2019, at an exercise price of $0.50. Pursuant to the proposed amendment, the Warrants would be amended by reducing the exercise price of the Warrants from $0.50 to $0.35. All other terms and conditions of the Warrants are proposed to remain unchanged.
The proposed amendment to the Warrants is subject to acceptance by the TSX Venture Exchange.
Molori Energy Inc. is an oil and gas production company with current operations in the Texas Panhandle West Field. The Company owns a 25 percent working interest in certain leases located in the bifurcated Texas panhandle, operated by Texas-based independent oil and gas producer Ponderosa Energy, LLC ("Ponderosa"), This giant field was discovered in 1910 and expanded three years later to create one of the largest gas fields in the US The experienced management team at Molori is aggressively acquiring select properties which provide immediate cash flow and development opportunities, now and in the years ahead. Molori is seizing the opportunity, in the current oil & gas environment, to assemble oil and gas production now in the years ahead.