Hemi­sphere ar­ranges $35-mil­lion (U.S.) loan fa­cil­ity

Stockwatch Daily - - ENERGY - Mr. Don Sim­mons re­ports

HEMI­SPHERE EN­ERGY Corp. has en­tered into a new and sig­nif­i­cantly in­creased credit fa­cil­ity with Ci­bolo En­ergy Part­ners LP (and cer­tain of its af­fil­i­ates), a Hous­ton­based firm fo­cused on en­ergy in­vest­ment op­por­tu­ni­ties. The new credit fa­cil­ity is a strate­gic and trans­for­ma­tional trans­ac­tion for Hemi­sphere that will al­low the com­pany to ac­cel­er­ate the devel­op­ment of its South­ern Al­berta Atlee Buf­falo wa­ter flood oil as­sets. Con­se­quently, the com­pany has re­paid and ter­mi­nated its ex­ist­ing credit fa­cil­ity with its Cana­dian bank.

New credit fa­cil­ity Hemi­sphere has en­tered into a first-lien se­nior se­cured credit agree­ment with Ci­bolo pro­vid­ing for a mul­tidraw, non-re­volv­ing term loan fa­cil­ity of a max­i­mum to­tal prin­ci­pal amount of up to $35.0-mil­lion (U.S.), with an ini­tial com­mit­ment amount of $15.0-mil­lion (U.S.) . This rep­re­sents an ap­prox­i­mate 50-per-cent in­crease in cur­rently avail­able credit to Hemi­sphere as com­pared with its for­mer credit fa­cil­ity. Hemi­sphere has made an ini­tial draw of $10.0-mil­lion (U.S.) of the ini­tial $15.0-mil­lion (U.S.) com­mit­ment un­der the new credit fa­cil­ity. Ad­di­tional com­mit­ments are sub­ject to fur­ther ap­proval by Ci­bolo. The in­ter­est rate for the new credit fa­cil­ity is the three-month U.S.-dol­lar Lon­don in­ter­bank of­fered rate (LIBOR) with a LIBOR floor of 1 per cent, plus 7.50 per cent payable quar­terly, for a five-year term with a ma­tu­rity date of Sept. 15, 2022.

The new credit fa­cil­ity has been used to fully re­pay the out­stand­ing in­debt­ed­ness un­der the for­mer credit fa­cil­ity and will also be used to greatly ex­pand the com­pany’s devel­op­ment in the Atlee Buf­falo area. Hemi­sphere’s board of direc­tors and Ci­bolo have ap­proved a devel­op­ment plan un­der which Hemi­sphere in­tends to make cap­i­tal ex­pen­di­tures of up to $7.6-mil­lion in the rest of 2017. These ex­pen­di­tures in­clude plans to drill seven ad­di­tional wells in Atlee Buf­falo, ex­pand its F pool fa­cil­ity, and con­struct a

new wa­ter sep­a­ra­tion and rein­jec­tion fa­cil­ity in the G pool. This will al­low the com­pany to drill in an area of unattributed re­serves in the F pool, op­ti­mize and in­crease pro­duc­tion ca­pa­bil­ity in the G pool, ex­pand its field­wide reser­voir sim­u­la­tion, and set up for an ag­gres­sive 2018 drilling pro­gram.


In con­junc­tion with the new credit fa­cil­ity, the com­pany has is­sued 13.75 mil­lion war­rants to Ci­bolo. Each war­rant en­ti­tles Ci­bolo to pur­chase one com­mon share of Hemi­sphere at an ex­er­cise price of 28 cents prior to Sept. 15, 2022. This ex­er­cise price rep­re­sents a 40-per-cent pre­mium to the 30-day vol­ume-weighted av­er­age price of Hemi­sphere’s com­mon shares at mar­ket close on Sept. 14, 2017.

Prior to the pro­vi­sion of the new credit fa­cil­ity, Ci­bolo did not own any se­cu­ri­ties of the com­pany. As­sum­ing the ex­er­cise of all of the war­rants is­sued in con­junc­tion with the new credit fa­cil­ity, Ci­bolo would own ap­prox­i­mately 15 per cent of the out­stand­ing com­mon shares of the com­pany.

We seek Safe Har­bor.

Karen Bax­ter con­densed this news re­lease (karenb@stock­watch.com).

Frank Stephen Borow­icz, Bruce Gre­gor McIn­tyre, Charles Noel O’Sul­li­van, Don Sim­mons, Gregg Kings­ley Ver­non, Richard Ma­clen­nan Wy­man

(HME) Shares: 89,793,302

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