(TheNewswire)
Vancouver, B.C. - TheNewswire- June 1, 2022 - G2 Technologies Corp. (name change to G2 EnergyCorp. is pending) (CSE:GTOO ) , ( OTCQB:GTGEF ) , ( FWB:1NZ.F) (the “ Company ” or “ G2 ”) is pleased toannounce that it has closed the acquisition, through its wholly-ownedTexas subsidiary G2 Energy TX1, Inc. (" G2 TX1 "), of theMasten Unit (an oil and gas producing field) (“ Masten ”) located inthe Permian Basin in Levelland, Texas. The purchase and sale agreementdated December 21, 2021 and amended May 20, 2022 between the sellersof Masten (the " Sellers ") and G2 TX1 was first announcedby news release dated December 24, 2021. The Masten acquisition willconstitute a Change of Business (" COB ") pursuantto the policies of the Canadian Securities Exchange (the" CSE ").
Masten ProjectOverview
Willrich Energy Advisors (an independent thirdparty Petroleum Engineering and Geology firm,qualified reserves evaluator) prepared a Reserve Report on Masten,dated effective January 1, 2022 (the " Report ") inaccordance to National Instrument 51-101 Standards of Disclosure for Oil and GasActivities . The Report is available for reviewunder the Company's profile on SEDAR www.sedar.com. The technicalinformation and data in this news release have been extracted from theReport.
This appraisal in the Report evaluates G2’s ProvedDeveloped Producing (PDP) and Probable Undeveloped (PrUD) reserves.
The table below summarizes G2’s net oil and gasreserves and cash flows generated using the requested price deck.Results shown below are presented for your information and should notbe construed as our estimate of fair market value. As of January 1,2022, G2’s net total proved and probable reserves have beenestimated to be as follows:
Net | Reserves | ||||
as of Light and Medium Oil | 01/012022 Natural Gas | Future Net | Present Worth of FNI Discounted @ | Present Worth of FNI Discounted @ | |
Reserve Category | (Bbl) | (Mcf) | Income, $ | 10%/Annum, $ | 15%/Annum, $ |
Forecast Price Proved Producing | 435,090 | 566,430 | 14,301,500 | 6,495,580 | 4,884,370 |
Total Proved | 435,090 | 566,430 | 14,301,500 | 6,495,580 | 4,884,370 |
Probable Undeveloped | 283,240 | 344,740 | 5,933,180 | 3,042,590 | 2,123,970 |
Total Probable | 283,240 | 344,740 | 5,933,180 | 3,042,590 | 2,123,970 |
Total Proved + Probable | 718,330 | 911,170 | 20,234,680 | 9,538,170 | 7,008,340 |
There is at least 90% probability that the quantitiesactually recovered will equal or exceed the estimated proved reservesand at least 50% probability that the quantities actually recoveredwill equal or exceed the sum of the estimated proved plus probablereserves.
Future net income (FNI) is after deducting estimatedoperating and future development costs, severance and ad valoremtaxes, but before Federal income taxes. Total net Proved and ProbableReserves are defined as those natural gas and hydrocarbon liquidReserves to G2’s interests after deducting all shrinkage, royalties,overriding royalties, and reversionary interests owned by outsideparties that become effective upon payout of specified monetarybalances. All Reserves estimates have been prepared using standardengineering practices generally accepted by thepetroleum industry and conform to those classifications defined in theCanadian Oil and Gas Evaluation Handbook (“ COGEH ”). Allhydrocarbon liquid Reserves are expressed in United States barrels(“ Bbl ”) of 42 gallons. Natural gas Reserves are expressed inthousand standard cubic feet (“ Mcf ”) at the contractual pressure andtemperature bases. All monies are expressed in United Statesdollars.
Jim Tague, Consultant of The Performance AnalyticsGroup offered the following:
“ This is anexciting opportunity for G2 to establish operations in a low cost,established field with substantial upside. Results from recenthorizontal drilling by adjacent operators have proven thattechnologies designed to exploit the deeper Permian shale work well inthis field’s shallower San Andres formation, but at a far lowerexpense and a higher return on investment. With this acquisition, G2is now positioned to grow current production and exploit this emergingand profitable San Andres horizontal play - both of which can lead tosignificant gains in shareholder value. ”
Slawek Smulewicz, President & CEO commented:
“ Theacquisition of the Masten Unit is a significant event for G2 as oilremains trading at multi year highs and inventories are at multi yearlows, demand is back to Pre COVID level and there is constrainedsupply growth in the coming years. The G2 Energy team anticipates 2022to be a milestone year for the company. Its first oil and gas assetacquired from the proceeds of this financing is currently producing 80BOPD and is primed for growth. The team at G2 Energy is ready toexecute and unlock the economic potential in the Masten Unit and begin working on the nexttransaction immediately. ”
Terms of Purchaseof Masten
USD$4,000,000 was the total upfront cash acquisitioncost (the " PurchasePrice ") for Masten, of which USD$400,000was paid in cash by G2 and at total USD$3,600,000 was financed througha secure loan from the Sellers and a secured convertible debenturefrom an arm's length party (see below for details).
Within 90 days after the closing date, G2 is alsoobligated to issue to the Sellers USD$300,000 worth of G2’s commonshares at a price of the greater of: (i) USD$0.25 (CAD$0.32) percommon share, and (ii) the closing market price of G2's common shareson the CSE on the trading day prior to the date of issuance of theshares, subject to regulatory approval, if required.
G2 also agreed to issue to the Sellers performanceshares equal to USD$400,000 (the “ Performance Shares ”) at a price per share equal to the average closing marketprice of G2's common shares on the CSE for the three (3) trading daysprior to the date of issuance of the Performance Shares, subject toregulatory approval, if required. The Performance Shares are issuablewithin 90 days of the achievement of either of two triggering events(a “ TriggeringEvent ”) described below, provided that aTriggering Event occurs between the closing date of the acquisitionand the second (2nd) anniversary of the closing date (the" EarnoutPeriod "):
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(i) G2 obtains an average increaseof 50% or more in daily oil production of Masten, compared to theaverage daily oil production for a period of 30 consecutive days priorto the closing cate, over a period of three (3) consecutive monthsduring the Earnout Period; or
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(ii) an average price USD$80.00per barrel as quoted for West Texas Intermediate per the New YorkMercantile Exchange over a period of 120 consecutive days during theEarnout Period.
Sellers' SecuredPromissory Note
The Sellers financed a portion of the Purchase Pricefor the acquisition of the Masten with a secured loan by promissorynote (the " Note ") in the principal amount ofUS$1,600,000 with the following terms:
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Primary security by deed of trust over all of theproperty and assets of G2 TX1, including the oil and gasleases;
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Assignment of production from Masten, includingproceeds of the sale of products;
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Three (3) year maturity;
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10% interest per annum;
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Principal and interest to be paid in 35 equal monthlyinstallments of USD$51,627 and the balance in the 36 th month;
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G2 TX1 has the right to prepay the Note, subject to aminimum total interest payment of USD$160,000;
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2.25% overriding royalty on production fromMasten.
In connection with the acquisition of Masten, G2 hasagreed to issue 5,000,000 common shares to an arm's length finder andshare purchase warrants entitling the finder to purchase 3,000,000Common Shares at price of $0.30 per Common Share for two years fromthe date of issuance.
All common shares of G2 issued to the Sellers and thefinder are subject to a hold period of four months and one day fromthe date of issuance of the shares.
CloudbreakDiscovery PLC – Secured Convertible Debenture
Cloudbreak Discovery PLC (“ Cloudbreak ”)financed a portion of the Purchase Price for the Masten acquisitionwith a US$2,000,000 secured convertible debenture (the" Debenture ") having the following terms:
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Secondary security over all of the property and assetsof G2 TX1 ranked in second position behind the Sellers' Note andsecurity;
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Pledge of 100% of the issued common shares of G2 TX1,which are held by another subsidiary of G2;
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Guarantee by the Company of all of G2 TX1's obligationsunder the Debenture;
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Two (2) year maturity;
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12% interest per annum payable quarterly;
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Accrued interest is convertible to common shares of G2at Cloudbreak's option. The conversion price will be based on theclosing price of G2's shares on the last trading day of the applicablecalendar quarter end, subject to regulatory approval, ifrequired;
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G2 TX1 may prepay the Debenture in whole or in part andonly after the date that is 12 months after the closing date,including an interest premium payment equal to 18 months' interest onthe principal amount less the amount of interest received byCloudbreak before the date of prepayment;
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G2 issued 6,500,000 share purchase warrants toCloudbreak with an exercise price of C$0.30 per share exercisable fortwo (2) years from the closing date, with G2having the right to accelerate the expiry date of the warrants if theclosing price of the common shares on the CSE trades above $0.60 for aperiod of 10 consecutive trading days;
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3.25% overriding royalty on production fromMasten;
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Cloudbreak has the right for two (2) years to providedebt financing for future acquisitions of properties by G2 or G2 TX1within an area of interest and area of influence set out in theDebenture, and if Cloudbreak waives or fails to timely respond tonotice from the Issuer, Cloudbreak will be entitled to a 1% overridingroyalty on all oil and gas and other substances produced and sold fromthe applicable area of interest property.
The Sellers, Cloudbreak, the Company and G2 TX1 enteredinto an intercreditor agreement providing that until the Sellers' Notehas been repaid in full, Cloudbreak's liens and security interests inany asset of G2 TX1 is subordinate to the Sellers' liens and securityinterests. In addition, any event of default under the Note and theSeller's deed of trust will constitute an event of default under theDebenture.
Change ofBusiness
The acquisition of Masten qualifies as a Change ofBusiness or COB as defined by CSE Policy 8. TheCompany's common shares will remain halted until the documentationrequired under the CSE Policy 8 have been accepted by the CSE andposted on the CSE website, including a Listing Statement.
On Behalf of the Board,
“ SlawekSmulewicz ”
Slawek Smulewicz
President & CEO
O: +1 778 7754985
E: slawek@g2.energy
W : WWW.G2.ENERGY
About G2Technologies Corp.
G2 Technologies Corp. is a Canadian Securities Exchangelisted company focused on acquiring and developing overlooked,low-risk, high return opportunities in the oil and gas sector. G2 isseeking to acquire a portfolio of risk-managed production anddevelopment opportunities onshore, U.S.A. In the near term, G2 ispursuing production acquisition opportunities with top-tier operatingnetbacks and infrastructure facilities to fast-track future productiongrowth.
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 as the completion of the proposed acquisition. Such informationcan generally be identified by the use of forwarding-looking wordingsuch as “may”, “expect”, “estimate”, “anticipate”,“intend”, “believe” and “continue” or the negative thereofor similar variations. Since forward-looking statements address futureevents and conditions, by their very nature, they involve inherentrisks and uncertainties such as the risk that ; . The Company providesforward-looking statements for the purpose of conveying informationabout current expectations and plans relating to the future,including expectations forthe effects of the proposed change of business of G2 to oil andgas, and readers arecautioned that such statements may not be appropriate for otherpurposes. By its nature, this information is subject to inherent risksand uncertainties that may be general or specific and which give riseto the possibility that expectations, forecasts, predictions,projections or conclusions may not prove to be accurate, thatassumptions may not be correct and that objectives, strategic goalsand priorities may not be achieved. These risks and uncertaintiesinclude but are not limited those identified and reported in theCompany’s public filings under the Company’s SEDAR profile atwww.sedar.com. Statementsrelating to “reserves” are also deemed to be forward-lookingstatements, as they involve the implied assessment, based on certainestimates and assumptions, that the reserves described exist in thequantities predicted or estimated and that the reserves can beprofitably produced in the future. Actual results could differ materiallyfrom those currently anticipated due to factors such as: the performance of existing wells, theavailability and performance of facilities and pipelines, thegeological characteristics of G2's properties, prevailing weather andbreak-up conditions, commodity prices, price volatility, pricedifferentials and the actual prices received for the Company’sproducts, royalty regimes and exchange rates, the application ofregulatory and licensing requirements, the availability of capital,labour and services, the creditworthiness of industry partners andG2’s ability to acquire additional assets. Although the Company has attempted toidentify important factors that could cause actual actions, events orresults to differ materially from those described in forward-lookinginformation, there may be other factors that cause actions, events orresults not to be as anticipated, estimated or intended. There can beno assurance that such information will prove to be accurate as actualresults and future events could differ materially.
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