(TheNewswire)
Vancouver, British Columbia – March 3 , 2024 – G2 Energy Corp. (CSE:GTOO, FWB:UD9) ( the " Company " or " G2 ") and its wholly-owned subsidiary G2 Energy TX1 Inc.(“ G2 TX1 ”) are pleased to announce entry intoan amending agreement for secured convertible debenture withCloudbreak Discovery PLC (“ Cloudbreak ”) dated March 1, 2024 (the“ AmendingAgreement ”), whereby the parties agreed toamend the terms of the secured convertible debenture among theCompany, G2 TX1 and Cloudbreak dated May 31, 2022 (the “ Debenture ”).Additionally, the Company and G2 TX1 have entered into a loanagreement with Clarmond Wealth Limited (“ Clarmond ”) datedFebruary 29, 2024 (the “ LoanAgreement ”).
Debenture andAmending Agreement
Under the Debenture, Cloudbreak advanced G2 Energy TX1USD$2,000,000 (the “ Principal Amount ”), and Cloudbreak had theoption to convert only the accrued and unpaid interest on theDebenture, but not the Principal Amount. For more information on theDebenture, please see the Company’s news release dated June 1,2022.
Pursuant to the Amending Agreement, the p arties have agreed to amend the Debenture as follows:
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The maturity date of the Debenture will be extendedfrom May 31, 2024, to May 31, 2025, and Cloudbreak in its solediscretion will have the option to further extend the maturity date byone calendar year to May 31, 2026.
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The Principal Amount, together with all accrued andunpaid interest and all other monies owing under the Debenture, shallbe convertible, at the sole discretion of Cloudbreak, into units ofthe Company (each, a Unit ”) at a price per Unit which shall bethe minimum price permitted by the Canadian Securities Exchange (the“ CSE ”), with each Unit entitling the holder thereof to onecommon share in the capital of the Company (each, a “ Common Share ”),and one share purchase warrant of the Company(each, a “ Warrant ”), with each Warrant entitling theholder thereof to acquire one Common Share (each, a “ Warrant Share ”) ata price of CAD$0.07 per Warrant Share or the minimum price permittedby the CSE if the CAD$0.07 is not permitted, until 5:00 p.m.(Vancouver time) on the date of expiration of the Warrant, which istwo years following the date of the issuance of the Warrant.
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The Debenture shall not be convertible by Cloudbreakand the Company shall not give effect to any such purportedconversion, to the extent (but only to the extent) that: (i)Cloudbreak, together with any Person acting jointly or in concert withCloudbreak, as determined in accordance with National Instrument62-104 – Take Over Bids andIssuer Bids , would in the aggregate beneficiallyown, or exercise control or direction over, in excess of 19.99% of thetotal issued and outstanding Common Shares, immediately after givingeffect to such conversion (the Maximum Percentage Limitation ”). No priorinability to convert the Debenture pursuant to this paragraph shallhave any effect on the applicability of the provisions of thisparagraph with respect to any subsequent determination ofconvertibility. For the purposes of this paragraph, beneficialownership and all determinations and calculations (including, withoutlimitation, with respect to calculations of percentage ownership)shall be determined in accordance with National Instrument 55-104 - Insider ReportingRequirements and Exemptions
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In the event there is an event of default and 61 dayshave lapsed since a notice of such event, the Debenture shall bedeemed fully convertible by Cloudbreak without any restrictionsimposed by the Maximum Percentage Limitation and the Company shallgive effect to any such conversion requested by Cloudbreak.
Cloudbreak presently holds a registered 3.25% GrossOverriding Royalty, net of the occupation tax for oil produced inTexas (the “ SEVTaxes ”), on all minerals including oil and gasproduced and sold from the Masten Property located in the PermianBasin in Levelland, Texas (the “ Property ”).Pursuant to the Amending Agreement, G2 TX1 shall also pay toCloudbreak an additional amount in cash equal to 0.75% of 8/8overriding royalty, less the SEV Taxes, on all minerals including oiland gas produced and sold from the Property.
In connection with, and as partial consideration forthe amendments, the parties have agreed that:
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Cloudbreak will convert USD$60,000 of interest underthe Debenture into 2,000,000 Units at a price of CAD$0.03 per Unit,with each Unit entitling the holder thereof to one Common Share andone Warrant, with each Warrant entitling the holder to acquire oneWarrant Share at a price of CAD$0.05 per Warrant Share for up to twoyears from the date of conversion;
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the Company will pay USD$10,000 of the interestoutstanding on the Debenture immediately upon receipt of any fundsfrom any debt of equity financing, to satisfy a portion of theoutstanding accrued and unpaid interest outstanding on the Debenture;and
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the Company will reconstitute its board of directorsfrom six to five members, and appoint two nominees of Cloudbreak asdirectors of the Company.
Loan Agreementwith Clarmond
The Company and G2 TX1 entered into the Loan Agreementwith Clarmond, whereby Clarmond has agreed to advance a loan (the “ Loan ”) in the principal amount ofUSD$250,000.00 (the “ Loan Principal Amount ”) to G2 TX1 on theterms and conditions set out in the Loan Agreement. The Company willact as the guarantor of the Loan. The funds will be used for enhancingand increasing oil and gas production on the Property as well as forgeneral working capital.
The Loan has an 18-month term with an option for anadditional six month extension at the discretion of Clarmond from thedate the funds are advanced (the “ Advance Date ”), andbears interest at a rate of 10% per annum which interest shall bepayable in cash (prepaid every three months in advance); and 12% paidin units (the “ Loan Units ”) at aprice of CAD$0.05 per Loan Unit for a total of 1,215,000 Loan Units (prepaid in full) , witheach Loan Unit entitling the holder thereof to one Common Share andone Warrant, with each Warrant entitling the holder to acquire oneWarrant Share at a price of CAD$0.07 per Warrant Share until 5:00 p.m.(Vancouver time) on the date of expiration of the Warrant, which istwo years following the date of the issuance of the Warrant.
As consideration for the Loan, G2 TX1, and the Companyas guarantor, has agreed to pay Clarmond a fee of USD$12,500.00,USD$6,250.00 of which will become due and payable on the Advance Date,and $6,250 of which shall become due and payable on first business dayof the sixth month from the Advance Date.
Commencing on the fourth month from the Advance Date,on the third Business Day of each calendar month, G2 TX1, will payClarmond the cash equivalent of a 13% working interest on the Propertyfor the previous month, which amount will be applied to reduce theLoan Principal Amount then outstanding.
As a bonus payment, the Company will pay Clarmonda n amount in cash calculated to equal of 1% of8/8 overriding royalty, less the SEV Taxes, on all minerals including oil and gas producedand sold from the Property.
Slawek Smulewicz commented: “The combination of the loan and the restructuring of theconvertible debenture with Cloudbreak, will provide the Company withincreased financial flexibility and allows G2 to focus on increasingits production on the Masten Unit while at the same time building asolid and consistent production profile. G2 continues to build onthese relationships in order to further advance its business opportunities with partners.Amid evolving market conditions, the Company is in a better positionto continue working on its corporate objectives for fiscal year 2024and into 2025.”
On Behalf of the Board,
“ SlawekSmulewicz ”
Slawek Smulewicz
CEO
For further information, please contact:
O: +1 6047655684
E: slawek@g2.energy
W: WWW.G2.ENERGY
About G2 EnergyCorp.
G2 is a junior oil and gas producer listed on the CSEexchange. It's primary focus is to acquire and develop additionaloverlooked, low risk, high return opportunities in the oil and gassector. G2's strategy is to obtain a portfolio of risk-managedproduction and development opportunities onshore, U.S.A. In May 2022,G2 acquired the Masten Unit in the Permian Basin, Texas. The MastenUnit is the Company's first producing asset. G2 is targeting top tierprojects with operating netbacks and infrastructure facilities whichwill fast track overall oil and gas production growth.
The Canadian Securities Exchange hasneither approved nor disapproved the information containedherein.
Forward Looking StatementsCaution
Statements in this press releaseregarding the Company which are not historical facts are“forward-looking statements” that involve risks and uncertainties.Such information can generally be identified by the use offorwarding-looking wording such as “may”, “expect”,“estimate”, “anticipate”, “intend”, “believe” and“continue” or the negative thereof or similar variations. Sinceforward-looking statements address future events and conditions, bytheir very nature, they involve inherent risks and uncertainties. TheCompany provides forward-looking statements for the purpose ofconveying information about current expectations and plans relating tothe future, including expectations regarding the Company's ability tomeet its outstanding obligations, and readers are cautioned that suchstatements may not be appropriate for other purposes. By its nature,this information is subject to inherent risks and uncertainties thatmay be general or specific and which give rise to the possibility thatexpectations, forecasts, predictions, projections or conclusions maynot prove to be accurate, that assumptions may not be correct and thatobjectives, strategic goals and priorities may not be achieved. Theserisks and uncertainties include but are not limited to thoseidentified and reported in the Company’s public filings under theCompany’s SEDAR+ profile at www.sedarplus.ca. The Company's abilityto meet its outstanding obligations could differ materially from thosecurrently anticipated due to factors such as: the performance offacilities and pipelines, commodity prices, price volatility, pricedifferentials and the actual prices received for the Company’sproducts, royalty regimes and exchange rates, the availability ofcapital, labour and services, the creditworthiness of industrypartners, G2’s ability to acquire additional assets, unexpected increases in operating costs,and risks associated with potential future lawsuits and regulatoryactions made against the Company including but not limited to beingfound in default of the Company's obligations to Cloudbreak orClarmond. Although the Company has attempted to identify importantfactors that could cause actual actions, events or results to differmaterially from those described in forward-looking information, theremay be other factors that cause actions, events or results not to beas anticipated, estimated or intended. There can be no assurance thatsuch information will prove to be accurate as actual results andfuture events could differ materially.
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