JES.P Jesmond Capital Ltd

/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/

CALGARY, AB , Jan. 17, 2023 /CNW/ - Jesmond Capital Ltd. (TSXV: JES.P) ("Jesmond") is pleased to announce that it has entered into a binding definitive agreement (the "Agreement") with Quattro Energy Limited ("Quattro") and Quattro's shareholders (the "Quattro Shareholders", and together with Jesmond and Quattro, the "Parties") dated effective January 16, 2023, pursuant to which the Parties will complete a transaction that will result in Jesmond acquiring Quattro (the "Transaction"), with the combined entity (the "Resulting Issuer") continuing the business of Quattro.

Jesmond is a "capital pool company" as defined in the policies of the TSX Venture Exchange (the "Exchange") and intends the Transaction to constitute its Qualifying Transaction (as such term is defined in the policies of the Exchange). 

Quattro (www.quattroenergy.co.uk) is a privately held company that was incorporated in England and Wales on April 20, 2021 by founders Neill Carson and Jens Pace, both of whom have a proven track record of building oil and gas companies and extensive capital market experience.  The objective of Quattro has been to build a portfolio of international oil and gas producing assets.  To that end, Quattro has entered into an Assets Purchase Agreement with United Oil & Gas plc ("United") dated January 16, 2023, to acquire from United (the "License Acquisition"), the Seaward Production Licence No. P2519 (the "P2519 Licence").  Details of the License Acquisition are set forth below, and the License Acquisition is to close concurrently with the Transaction.

The P2519 Licence includes Blocks 15/18e and 15/19c and covers an area of c. 225 km² in the Outer Moray Firth Basin, a highly prospective area with development potential of the United Kingdom Central North Sea, close to existing producing infrastructure.  The P2519 Licence contains the existing Maria Oil Discovery in the Forties Sandstone, drilled by Shell/Esso in 1976, and also two Jurassic Oil discoveries, Brochel and Maol. Maol was drilled by Shell in 1987.

A National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities compliant report is currently being prepared in respect of the P2519 Licence, and details of that report and any further information regarding the P2519 Licence will be disclosed in a subsequent news release.

Pursuant to the closing of the Transaction, and regulatory approval, Quattro will become the Licence Operator with a 100% working interest in the P2519 Licence. Quattro's strategy is to grow and add value through its operating capability and commercial network, with an initial focus on additional opportunities in the North Sea.

As at October 31, 2022 (unaudited, as provided by Quattro), Quattro had assets of £48,013 (CAD$78,559) and liabilities of £10,363 (CAD$16,956). As at January 11, 2023, Quattro had estimated working capital of £56,983 (CAD$93,236) (unaudited, as provided by Quattro). For the year ended 2021 (unaudited, as provided by Quattro), Quattro had no revenue and administrative expenses and loss for the year of £105,435 (CAD$172,513).

Terms of the Transaction

Pursuant to the terms of the Agreement, Jesmond will acquire all of the issued and outstanding shares of Quattro, in exchange for 22,357,669 common shares of the Resulting Issuer at closing of the Transaction.  This share exchange was based on a valuation of Jesmond of CAD$2,150,000 (equivalent to approximately CAD$0.228 per common share of Jesmond, which value includes all issued and outstanding Jesmond Common Shares (defined below) but does not include any convertible securities of Jesmond outstanding) and a valuation of Quattro of CAD$5,092,000.  Pursuant to the Transaction, the shareholders of Quattro will become shareholders of the Resulting Issuer and the Transaction will result in a Reverse Takeover (as such term is defined in the policies of the Exchange) of Jesmond.

It is proposed that prior to the completion of the Transaction, one of the Parties will complete an arm's length private placement financing of securities (which may include subscription receipts, convertible debentures or long term warrants) (the "Concurrent Financing") for aggregate gross proceeds of not less than CAD$5,500,000 at a subscription price or conversion price which is the equivalent of not less than CAD$0.25 per common share.  The securities issued pursuant to such Concurrent Financing would either be exchanged for or converted into common shares of the Resulting Issuer.  

Completion of the Transaction is subject to a number of conditions, including:

1.  
   1. completion of the Concurrent Financing;
   2. completion of the License Acquisition;
   3. the Parties preparing the requisite disclosure document in accordance with the rules of the Exchange, which disclosure document will outline the terms of the Transaction;
   4. the Parties receiving all requisite regulatory approval, including the approval of the Exchange, the approval of the North Sea Transitional Authority (for the transfer of the P2519 Licence) and any third-party approvals and authorizations;
   5. each of Jesmond and Quattro obtaining the requisite shareholder approvals for the Transaction;
   6. the Parties obtaining requisite board approvals for the Transaction;
   7. all of the parties required by the Exchange entering into an escrow agreement upon the terms and conditions imposed pursuant to the policies of the Exchange; and
   8. the Resulting Issuer meeting the applicable Initial Listing Requirements of the Exchange as an Oil and Gas Issuer (pursuant to Policy 2.1 – Initial Listing Requirements of the Exchange), including, without limitation, the public float requirements.

Jesmond expects that upon completion of the Transaction, the Resulting Issuer will be an exploration stage oil and gas company with no producing properties and, consequently, no current operating income, cash flow or revenues.

Pursuant to the terms of the License Acquisition, Quattro will acquire the P2519 Licence, in exchange for cash consideration of £2,450,000 (CAD$4,008,690) payable at closing of the Licence Acquisition (the "Completion Payment").  It is contemplated that the funds from the Concurrent Financing will be used to make the Completion Payment.

There are additional bonus cash payments that may become payable to United after completion of the Licence Acquisition, as follows:

1.  
   1. Uplift Payment – a cash payment amount of £1 million (CAD$1,636,200) payable within 10 business days after the earlier of (A) the date on which consent is given by the given by the North Sea Transition Authority to the Field Development Plan submitted in respect of block 15/18e under the P2519 Licence, which is expected to be submitted by July 31, 2023, and (B) there is a sale of more than 49% of Quattro for an aggregate cash payment of £3,000,000 or more within one (1) year from the closing of the Licence Acquisition;
   2. Bonus Payment 1 – a cash payment amount of £1 million (CAD$1,636,200) payable within 90 days after the date on which 3 million barrels of oil are produced from the Maria Discovery;
   3. Bonus Payment 2 – a cash payment amount of £750,000 (CAD$1,227,150) payable within 90 days after the date on which 4 million barrels of oil are produced from the Maria Discovery; and
   4. Bonus Payment 3 – a cash payment amount of £500,000 (CAD$818,100) payable within 90 days after the date on which 5 million barrels of oil are produced from the Maria Discovery.

Completion of the License Acquisition is subject to a number of conditions, including the following material conditions:

1.  
   1. receipt of written approval of the North Sea Transition Authority to the License Acquisition; and
   2. payment of the Completion Payment.

The longstop date for completion of the License Acquisition is April 16, 2023, subject to certain circumstances where completion can be extended for an additional 20 business days. 

The Jesmond Common Shares are presently halted, and it is expected they will remain halted until the Transaction is completed and approved by the Exchange.

Sponsorship of the Transaction is required by the Exchange unless an exemption or waiver from sponsorship requirement is available. Jesmond is currently reviewing the requirements for and expects to apply for an exemption from the sponsorship requirements pursuant to the policies of the Exchange. Jesmond intends to include any additional information regarding sponsorship in a subsequent news release.

The proposed Transaction will not constitute a "Non-Arm's Length Qualifying Transaction" (as such terms is defined by the Exchange), as a result of which, it is not expected that Jesmond will be required to obtain shareholder approval for the Transaction. 

Prior to the completion of the Transaction, Jesmond will call a meeting of its shareholders for the purpose of approving, among other matters:

1.  
   1. a name change for Jesmond, as acceptable to the applicable regulatory authorities, effective upon closing of the Transaction; and
   2. reconstitution of Jesmond's board of directors, as applicable.

Board of Directors and Management

Upon completion of the Transaction, the proposed directors and officers of the Resulting Issuer are as follows: 

Neill Carson, United Kingdom - Executive Chairman, Director - Neill has 41 years of management and international experience in the oil & gas industry. In early 2004, Mr Carson co-founded Ithaca Energy Inc. ("Ithaca") where he served as its President and a Director from April 2004 and acted as Chief Operating Officer until late 2007. While at Ithaca, Neill was responsible for asset acquisitions, all aspects of operations and safety, general corporate strategy, and the drilling of four successful oil wells. Across his 4 years with Ithaca, the portfolio grew to 39 MMboe of 2P reserves and was on plan to deliver 8,000 boepd of production. Ithaca was sold in 2017 with an enterprise value of approximately 1.6 billion dollars.

Neill co-founded Iona Energy Inc. ("Iona") in late 2007 where he served as Chief Executive Officer until his departure in mid-2014 to form i3 Energy. Responsible for all aspects of corporate strategy and portfolio development, he grew Iona to 40 MMboe of 2P reserves and saw peak production of 6,700 boe/day.

In 2014, Neill co-founded i3 Energy ("i3"). i3 currently produces in excess of 24,000 boepd from a strong reserve base of 2P reserves of over 150 MMBOE. Neill served as CEO of i3 until 2018 and continues to serve as a Non-Executive Director on the Board of Directors of i3 which is listed on The Alternative Investment Market (Aim) of the LSE and the Toronto Stock Exchange.

Jens Pace, United Kingdom - Chief Executive Officer, Director - Jens is an experienced leader in the oil & gas industry with a career spanning four decades. Jens is currently interim CEO of PetroNor E&P, an Africa focused company with 5,000 bbl/d of production. PetroNor is listed on the Oslo Stock Exchange.  Jens was appointed to this role as he previously held a non-exec board position with PetroNor E&P since 2019 following the merger the previous year with African Petroleum Corporation where he had been CEO since 2015. While at African Petroleum Corporation, Jens led funding initiatives, negotiation of transactions, and drilling operations to deliver high impact deep-water exploration in West Africa.

Prior to joining African Petroleum Corporation in 2012, Jens spent 30 years with BP, and its heritage company Amoco, in a broad range of upstream positions and leadership roles, initially in the UKCS, followed by West Africa, Russa, and culminating in North Africa where he was VP Exploration. Jens holds a BSc in Geology and Oceanography from the University of Wales and an MSc in Geophysics from Imperial College, London, UK.

Mark Semple, United Kingdom - Chief Financial Officer - Mark is an experienced finance and commercial executive with substantial accounting, commercial operations, planning and risk management experience.  Prior to joining Quattro, Mark was Chief Commercial Officer of Sand Hill Petroleum since 2017, a Warburg Pincus PE start-up, with Oil and Gas operations in Central and Eastern Europe.

Prior to Sand Hill, Mark spent 25 years with BP, in a broad range of upstream, corporate and leadership roles, across UK, USA and Russia; culminating as CFO for North Africa region and Head of Commercial Operations across North Africa, Middle East and Caspian regions.

Charles Joseland, United Kingdom - Non-Executive Director - Charles has 32 years experience with PwC including 20 years experience as an audit partner, as part of its Energy, Utilities & Mining Group. Charles has been responsible for providing services to many international resources groups including those with operations in North & South America, FSU, Europe and Africa. He has acted as reporting accountant for various companies quoted on both the LSE Main Market and Aim. Charles is a Non-Executive Director on the Board of Aim listed Kodal Minerals Plc In addition to being a director of Quattro, it is anticipated that Charles will chair the Audit Committee.

Chelsea Hayes, United Kingdom - Non-Executive Director - Chelsea is currently an director and the Director of Business Development, for North Peak Resources Ltd. and has been working as a marketing and communications advisor for over 25 years. Chelsea was a Founding Director of the financial PR consultancy, Pelham Public Relations, in November 2004, growing it to a 40-strong, £6m business and advising technology, media, mining and energy companies, before merging with Bell Pottinger and then leaving the business. Since then she has been involved in founding and growing several other businesses in the UK.

Stuart Olley, Alberta, Canada - Non-Executive Director - Stuart is a Senior Partner at Gowling WLG (Canada) LLP. He is past leader of Gowling's Natural Resources Group and an Executive Committee member for several regional initiatives, including Latin America and Cuba. Stuart has extensive legal experience in the natural resources sector, bringing in-depth knowledge from executing international financing and merger transactions in this sector for over 30 years.

Ian Smale, United Kingdom - Non-Executive Director - Ian spent 30 years at BP, starting as a geologist in the Exploration and Production business before moving to more commercial roles in Air BP and Downstream in the late 1980s. As Global Head of BP's Mergers and Acquisitions team Ian oversaw a multi-billion-dollar divestment campaign post the Amoco and Castrol mergers, including BP's Forties Field to Apache and BP Chemicals to Ineos, as well as the acquisitions of Veba's Oil and gas business in Germany and TNK in Russia.  Ian returned to the Upsteam Exploration Business as Business Unit Leader for North Africa in 2005 where he managed BP's interests in Algeria and Libya. Ian was Head of Strategy and Policy reporting directly to the CEO and the Board.

He is a proven public company executive director with Hydrodec, an AIM-listed oil recycling Company as well as an experienced Non-Executive Director firstly with the UK Government owned National Nuclear Laboratory and subsequently for Nexen UK following the acquisition of Canada's Nexen Petroleum by CNOOC, a Chinese State Oil and Gas Company.

Other Insiders of the Resulting Issuer

Assuming the Company completes the Concurrent Financing, and assuming that financing totals the CAD$5,500,000 minimum, then it is expected that each of Neill Carson and Jens Pace will hold more than 10% of the outstanding common shares of the Resulting Issuer.

As of the date hereof, Jesmond's authorized share capital consists of an unlimited number of common shares ("Jesmond Common Shares"), of which 9,440,100 Jesmond Common Shares are issued and outstanding. As well there are 944,000 options and 350,000 broker options outstanding, each exercisable to acquire one Jesmond Common Share at an exercise price of CAD$0.10 per share.

As of the date hereof, Quattro has 22,357,669 ordinary shares issued and outstanding. Quattro has no shares issued or reserved for issuance pursuant to a share option plan, nor any shares reserved for issuance pursuant to warrants, convertible debentures or any other incentive plan.

Jesmond expects to change the name of the company in connection with the completion of the Transaction to reflect the Resulting Issuer and its business going forward. Any such name change is subject to applicable Exchange and other regulatory approvals, and shareholder approval, as applicable.

It is proposed that a finder's fee of 100,000 common shares of the Reporting Issuer be payable to Gage Jull, who introduced Jesmond and Quattro.  Payment of the finder's fee is subject to the approval of the Exchange and completion of the Transaction.

Jesmond will issue additional news releases related to the Concurrent Financing terms, sponsorship and other material information as it becomes available.

All information in this press release relating to Quattro and the P2519 Licence has been provided by Quattro and is the sole responsibility of Quattro.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the structure, terms, conditions and proposed timing for completion of the Transaction, the Licence Acquisition and the Concurrent Financing; the ability of Jesmond and Quattro to complete the Transaction and the Concurrent Financing; the ability of the Quattro to complete the Licence Acquisition, the anticipated ownership percentages in connection with the Transaction; the resumption in trading of the Jesmond Common Shares; the Resulting Issuer's future business operations and results; the receipt of all necessary shareholder, Exchange, securities regulatory authority and other third party consents and approvals; and the receipt by Jesmond of an exemption from the sponsorship requirements of the Exchange. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors, which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive shareholder or regulatory approvals; and the results of continued development, marketing and sales. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Jesmond disclaims any intention or obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise, except as required by law.

SOURCE Jesmond Capital Ltd.