Canadian Overseas Petroleum Limited and its affiliates, an international oil and gas exploration, production and development company with production and development operations focused in Converse and Natrona Counties, Wyoming, USA, announces (the "Announcement") (i) US$2.5 million of committed common share financing and certain amendments to the outstanding Bonds (as defined below) of the Company, as described herein (collectively, the "Financing") (ii) the execution of a Forbearance Agreement with its senior lender and (iii) the appointment of a Chief Restructuring Officer.

Other terms of the Financing include:

• Completion of the Financing is expected by January 15, 2024 and is intended to be used for working capital purposes.
• 1,312,232,633 common shares (the "New Shares") are to be purchased at a price (the "Subscription Price") of GBP 0.0015 by Anavio Capital Partners LLP or an entity or entities associated by it (the "Purchaser").
• The Company will grant the Purchaser warrants equal to at least 100% of the number of New Shares, with each warrant entitling the holder to purchase a Common Share at the Subscription Price, expiring 26 August 2028.
• The conversion price of the Bonds will be amended to the Subscription Price per conversion share. The maturity date of the 2027 Bonds (as defined herein) will be extended to 26 January 2028, and the maturity date of the 2028 Bonds (as defined herein) will be extended to 26 January 2029.
• The commencement date for any exercise by the Company of its parity call option under each of the Bonds will be extended to 1 January 2025.
• The exercise price of the existing warrants will be amended to the Subscription Price, and the expiration date will be extended to 26 August 2028.
• The Company will appoint one additional independent non-executive director to be nominated by the Purchaser by no later than 31 March 2024.

Senior lender support

In concert with the Financing, COPL and its affiliates entered into a Forbearance Agreement with its existing Senior Credit Facility Lender and appointed Peter Kravitz of Province Fiduciary Services as Chief Restructuring Officer.

Under the terms of the Forbearance Agreement, subject to certain conditions precedent and continued compliance with the Forbearance Agreement, the senior lender agrees not to enforce certain rights, remedy, powers and privileges available to it as a result existing defaults under the terms of the senior loan facility before February 29, 2024.

Among other things, the Forbearance Agreement requires the Company to deliver a cash flow generative business plan which shall include a sales process for the Company's assets. There can be no guarantee that such a process will result in a sale or that even if a sale was completed, will result in net proceeds to the Company.

Operations

The Company has stopped natural gas and NGL purchases. Oil production for the 4th quarter, up to December 28, 2023 averaged 1,083 bbl/d (gross). 

DTR

As at the date of this announcement, the Company has a total of 1,038,771,819 common shares issued and outstanding. There are no common shares held in treasury and therefore the total number of voting rights in the Company is 1,038,771,819. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

MI 61-101

The Company has also determined that the Financing is a "related party transaction" pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101") and is exempt from the formal valuation and minority approval requirements applicable to related party transactions defined under MI 61-101 pursuant to the financial hardship exemption under sections 5.5(g) and 5.7(1)(e) of MI 61-101.

The Company relies on the above exemptions on the basis that (i) as described in the Company's announcement of 20 December 2023, the Company is in serious financial difficulty because, without the Financing, it does not have sufficient working capital for its present requirements, (ii) the Financing is designed to improve the financial position of the Company, (iii) the transaction is not subject to court approval or court order, (iv) the Board of Directors of the Company and all independent directors, each of the foregoing acting in good faith, have determined that (i) and (ii) above apply and that the terms of the Financing are reasonable in the circumstances to the Company, and (v) as at the date hereof, there is no other requirement to hold a meeting to obtain the approval of the shareholders of the Company for the Financing.

KeyFacts Energy Industry Directory: Canadian Overseas Petroleum