Woodrose Corporation Announces Acquisition of Viking Energy (SC-6
Cadlao) Limited
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec 11, 2013) -
Woodrose Corporation (TSX-VENTURE:WRS.H) ("Woodrose" or the
"Company") is pleased to announce that it has entered into a
binding letter agreement with Viking Energy Cadlao Holding (VECH)
Limited ("VECH") and Viking Energy (SC-6 Cadlao) Limited ("VEP")
dated effective December 9, 2013 (the "Letter Agreement") to
acquire 100% of the outstanding shares of VEP (the "Transaction").
VEP owns a 50% shareholding in Cadlao Development Company Limited
("CADCO") that holds an 80% operated participating interest in the
Service Contract 6 (Cadlao) offshore Republic of the Philippines
(the "Service Contract"). The Service Contract governs an offshore
petroleum exploitation area that contains the Cadlao oilfield, an
anticlinal structure which was discovered (off of vintage 2D
seismic) by Amoco in 1977 and produced c.11 million barrels of very
light crude oil (47° API, 0.520% of sulphur) from 1981 until 1991
before being suspended. CADCO plans to redevelop the Cadlao
oilfield based off of a new 3D seismic interpretation.
The Transaction will constitute a "reverse-takeover" of Woodrose
in accordance with the policies of the TSX Venture Exchange (the
"TSXV") and the reactivation of Woodrose, which is currently an
NEX-listed issuer.
Overview
The Transaction is the first step in Woodrose's new strategy to
become a leading independent oil producer focused on the
development and the exploitation of highly cash generative proven
shallow waters offshore oilfields in South-East Asia using
cost-effective development concepts and offshore production and
storage facilities. Woodrose will also seek to establish itself as
a preferred partner for national oil companies and local operators
to un-lock and monetize undeveloped offshore oilfields throughout
South-East Asia.
Woodrose seeks to accumulate a portfolio of operated interests
in offshore oilfields with the objective to reach a net oil
production of 20,000 barrels per day and proven and probable ("2P")
reserves of 50 million barrels in the next 3 to 5 years. As a
result of the Transaction, Woodrose intends to become the largest
oil producer in the Philippines once production from the Cadlao
oilfield is resumed.
Woodrose will work closely with the Thome Group of Companies
(www.thome.com.sg) and its affiliated company Offshore Production
Solutions to secure cost-effective offshore production and storage
solutions (facilities together with operations and maintenance
services) for the exploitation of the Service Contract and other
future projects.
Summary of Transaction
Under the terms of the Letter Agreement, Woodrose has agreed to
acquire all of the issued and outstanding shares of VEP (the "VEP
Shares") in exchange for Woodrose common shares ("Woodrose
Shares"). Upon completion of the VEP Financing and the
Consolidation (as defined below), it is anticipated that Woodrose
will issue, on the closing of the Transaction (the "Closing"),
73,500,000 Woodrose Shares at a price of CDN$0.50 per Woodrose
Share to shareholders of VEP immediately prior to Closing.
Woodrose has agreed that, prior to Closing, it will consolidate
all of the issued and outstanding 8,196,374 Woodrose Shares into
3,800,000 Woodrose Shares (the "Consolidation"). Also, as referred
to above, prior to Closing, VEP will complete an equity financing
for a minimum of US$20,000,000 (the "VEP Financing"). VEP may, at
its option, increase the financing by up to CDN$12,000,000. In the
event the VEP Financing is so increased, the number of Woodrose
Shares to be issued to the VEP shareholders will increase to up to
97,500,000. In addition, prior to completion of the Transaction,
the Company has agreed to complete a private placement financing
(the "Woodrose Financing") prior to Closing to raise a minimum of
CDN$5,800,000 and a maximum of CDN$12,000,000 through the issuance
of subscription receipts ("Subscription Receipts") at a price of
CDN$0.50 per Subscription Receipt. Each Subscription Receipt will
be automatically convertible into one post-Consolidation Woodrose
Share upon Closing. The proceeds of the Woodrose Financing will be
used for working capital and payment of costs and expenses relating
to the Transaction. All securities issued pursuant to the Woodrose
Financing will be subject to a statutory four-month hold period
from their date of issuance.
Concurrent with the Transaction, it is also proposed that the
Company will continue from Alberta (Canada) into the British Virgin
Islands (the "Continuation"). Shareholders of the Company will vote
on the Continuation and the Transaction at a special shareholders
meeting anticipated to be held in March 2014.
Upon completion of the Transaction, it is anticipated that the
Company will be classified as a Tier 2 Oil and Gas Issuer on the
TSXV.
Proposed Management Team
As part of the Transaction, a new board of directors gathering
experienced oil and gas executives and entrepreneurs will be
appointed. Upon closing of the Transaction, the following directors
and senior officers are anticipated to be appointed in replacement
of Woodrose's current board and management:
Roderick Fraser (Chairman of the Board)
Mr Fraser is a production engineer with over 30 years of
experience in the oil and gas sector initially through industry
roles with Amoco (production engineer), Esso (field superintendent)
and Fuel Resources (VP Operations and Board member). Mr Fraser
moved to oil and gas investment banking in 1992. Mr Fraser held
various senior positions with JP Morgan Chase (Managing Director,
Head of Oil & Gas Latin America), WestLB (Managing Director,
Head of Oil & Gas Americas) and Standard Bank (Managing
Director, Global Head of Oil & Gas). Mr Fraser is currently an
independent consultant acting as strategic advisor for large
financial institutions (investment banks and private equity / hedge
funds). Mr Fraser also serves as non-executive director of
Fortaleza Energy Inc.
Conrad Clauson (President and Chief Executive
Officer)
Mr Clauson is an entrepreneur with 20 years of experience in
investment banking, shipping and oil & gas in Asia. Mr Clauson
held senior positions with Merrill Lynch (Head of Norway) and
Donaldson, Lufkin & Jenrette (Head of Scandinavia). Mr Clauson
has extensive experience in business development and deal
structuring together with long-standing relationships with national
oil companies, private local operators and local authorities in
South-East Asia.
Ali Al-Qabandi (Non-Executive Director)
Mr Al-Qabandi is a Chartered Public Accountant with 35 years of
experience in the oil and gas industry. Mr Al-Qabandi held numerous
senior positions with Kuwait Oil Company ("KOC") including
Executive Assistant Managing Director of Planning and Finance,
Director of Kuwait National Petroleum Company and Kuwait Gulf Oil.
Mr Al-Qabandi is a co-founder of Gulf Keystone Petroleum Ltd
(listed on AIM with a market capitalisation of US$2.5 billion) and
served as Chief Financial Officer (2001-2007) and Business
Development Director (2007-2013).
Gabriel Simonian (Non-Executive Director)
Mr Simonian is a geologist (PhD) with over 35 years of
experience in the oil and gas business worldwide. Mr Simonian was
previously a Director of the geophysical consulting company Scott
Pickford undertaking asset evaluations for oil and gas companies.
Mr Simonian is co-founder of Simco Petroleum, a geo-technical
advisory boutique advising oil and gas companies in asset
acquisitions / divesture transactions and providing business
development and licence management services. Mr Simonian also
established a number of private and listed oil and gas companies
including Scotsddale Petroleum (sold to PA Resources AB) and Crown
Energy AB.
Alexander Trotter (Non-Executive Director)
Mr Trotter has over 20 years of experience in asset / fund
management. Mr Trotter was initially trained as a lawyer and
practiced with multinational law firm Linklaters LLP. Mr Trotter
held various portfolio management positions with GAM and UBS. Mr
Trotter is currently portfolio manager of Fulcrum Asset
Management's Africa Funds including upstream oil and gas
allocations. Mr Trotter also serves as non-executive director of
several private companies and trustee of philanthropic foundations
including the Tony Elumelu Foundation.
Neil Herbert (Non-Executive Director)
Mr Herbert is a Chartered Public Accountant with over 15 years
of experience in the natural resources exploration and exploitation
sector. From 2005 until 2007, Mr Herbert served as Finance Director
of UraMin Inc., a uranium mining company listed on AIM and TSX
which was acquired by Areva in 2007 for US$2.5 billion. Mr Herbert
was previously Executive Chairman of Polo Resources Limited, a
natural resources investment company with holdings in mining and
oil & gas companies / projects worldwide. Mr Herbert is
currently the Executive Chairman of UrAmerica, uranium exploration
and exploitation company focusing on mining projects in Latin
America.
Edouard Etienvre (Director and Chief Financial
Officer)
Mr Etienvre was previously oil and gas equity research associate
with Société Générale and reserve-based lending banker with Bank of
Scotland plc. Mr Etienvre has extensive corporate finance, business
development, commercial and deal execution experience in the oil
and gas / offshore sector.
Ian Ripley (Chief Operating Officer)
Mr Ripley is a chemical and structural engineer with over 30
years of experience in managing offshore oil and gas field
developments / redevelopments worldwide with Woodside Petroleum
(North Rankin and Goodwyn projects in Australia), Occidental
Petroleum, Apache Energy (Stag and Devil Creek projects in
Australia), Hyundai Heavy Industries (West Seno project in
Indonesia), Daewoo Oil Company (Shwe project in Myanmar) and
Talisman (Thang Long project in Vietnam). Mr Ripley has a
successful track-record in delivering offshore oil and gas field
developments / redevelopments on schedule and within budget using
cost-effective development concepts and proven technologies. Mr
Ripley also has long-standing relationships with operators,
contractors and authorities throughout Asia.
In addition, upon closing of the Transaction, Woodrose will be
entitled to appoint two additional non-executive directors of the
Company.
Roderick Fraser, the proposed Chairman of the Board, commented:
"I am very pleased to join the board of directors of Woodrose
Corporation upon closing of the acquisition of Viking Energy (SC-6
Cadlao) Limited. The redevelopment of the Cadlao oilfield is a low
risk / high reward project that will be a stepping stone for
Woodrose Corporation to implement its new strategy and establish
itself as a leading low-cost offshore oil producer in South-East
Asia."
Description of VEP and Service Contract
Each of VEP, VECH and CADCO are companies existing pursuant to
the laws of the British Virgin Islands. VECH is currently the sole
shareholder of VEP which, in turn, holds a 50% shareholding in
CADCO. VEP's 50% shareholding of CADCO is subject to the terms and
conditions of a shareholders' agreement.
CADCO holds an 80% participating interest in the offshore
petroleum exploitation area located off the west coast of the
Republic of the Philippines and governed by the terms of the
Service Contract (the "Service Contract Area"). CADCO is the
operator of the Service Contract Area and the remaining 20%
participating interest is held by VenturOil Philippines, Inc. a
private Philippines oil and gas company. The Service Contract Area
contains the Cadlao oilfield which was discovered by the Cadlao-1
well drilled in 1977 by Amoco Philippines Petroleum Company
("Amoco").
The Cadlao oilfield is an anticline structure (reservoir depth
1,950 meters) located in shallow waters (18-90 meters) with
oil-in-place volumes estimated at 40 million barrels. It was
initially developed by Amoco in 1981 based on 2D seismic data with
two subsea wells located in a water depth of 90 meters and tied to
a floating production storage off-loading vessel ("FPSO"). The
Cadlao oilfield produced c.11 million barrels of very light crude
oil (47° API, 0.520% of sulphur) from 1981 until 1991 when
production was suspended at 900 barrels per day.
The redevelopment of the Cadlao oilfield is anticipated to
consist of drilling four new deviated wells in two phases whereby
two new wells will be drilled and completed prior to first oil
("Phase 1") and if necessary to extract recoverable oil, two
additional new wells are planned to be drilled 3-9 months after
first oil ("Phase 2") (the expenditures related to these wells are
anticipated to be self-funded out of cash flow from Phase 1).
The Phase 1 and Phase 2 wells will be drilled from the seamount
located within the Service Contract Area using an independent leg
jack-up rig (water depth of 18 meters). The new wells will have
dry-tree completions and will be tied to a jack-up production
platform hosting a suitable processing unit and connected to a CALM
buoy moored storage tanker using a subsea pipeline. The offshore
production and storage facilities (jack-up production platform,
storage tanker and CALM buoy) will be chartered from Offshore
Production Solutions (Cadlao) Limited on a time charter basis under
a charter agreement with a firm period of 3 years. First oil from
the Cadlao oilfield is currently anticipated in Q4 2014 at 12,500
barrels per day.
The Company will engage Gaffney, Cline and Associates to issue a
technical report on the Service Contract Area reflecting the
progress made by CADCO on the Cadlao oilfield redevelopment over
the last 15 months and compliant with NI 51-101 standards and which
will be filed under the Company's profile at www.sedar.com.
Significant Conditions to Completion
Closing of the Transaction ("Closing") is subject to conditions
precedent, which include but are not limited to the following:
- Completion of formal due diligence by Woodrose on the business,
the assets and the financial condition of VEP
- Execution of the definitive agreement between the Company,
VECH, VEP and VEP's shareholders
- Completion of a technical report on the Cadlao oilfield
prepared in compliance with NI 51-101
- Delivery of audited financial statements of VEP and completion
of pro-forma financial statements for Woodrose
- Sufficient funding in place on Closing to fund VEP's
obligations towards the anticipated Phase 1 work program
- No material adverse change having occurred in the business, the
assets or liabilities of VEP and Woodrose
- Completion of the minimum VEP Financing
- Completion of the minimum Woodrose Financing
- Approval of the Transaction and the Continuation by the
Woodrose shareholders
- Receipt of all necessary regulatory approvals including from
TSXV
The Transaction and the Continuation is recommended by the board
of directors of Woodrose. To date, shareholders of Woodrose holding
approximately 67% of the Woodrose Shares have entered into
agreements wherein they have agreed to vote in favour of the
Transaction and the Continuation.
Escrow Requirements
The new Woodrose Shares to be issued by the Company to
shareholders of VEP who will be "Principals" (as defined in the
policies of the TSXV) will be subject to certain escrow conditions
as prescribed by the TSXV. In addition, the Company, VECH and VEP
will procure that the following parties enter into voluntary escrow
agreements:
- Woodrose's largest shareholders as of the date of the Letter
Agreement; and
- The shareholders of VECH as of the date of the Letter
Agreement;
These voluntary escrow arrangements will have an 18-month
release schedule with 10% of the shares in Woodrose held by these
parties to be released on Closing, 15% being released 6 months
after Closing; 15% being released 12 months following Closing; and
all the remaining shares placed in escrow to be released 18 months
after Closing. All securities issued pursuant to the Transaction
may be subject to additional resale restrictions required by the
TSX-V.
Summary of the Work Program
The gross costs associated with the proposed Phase 1 of the
Cadlao oilfield have been budgeted at US$62.5 million. CADCO's net
share of the costs associated with Phase 1 of the Cadlao oilfield
redevelopment (80% of the gross amount) will be funded entirely by
loans from VEP which will be financed by a combination of equity
injection from the Company and debt finance.
The gross costs associated with the proposed Phase 2 of the
Cadlao oilfield have been budgeted at US$40.0 million. It is
anticipated that 100% of CADCO's net share of the costs associated
with Phase 2 of the Cadlao oilfield redevelopment (80% of the gross
amount) will be funded out of cash flows from Phase 1.
Sponsorship
Wolverton Securities Ltd. ("Wolverton") has agreed, subject to
completion of a satisfactory due diligence review, to act as the
sponsor of the Company with respect to the Transaction. Wolverton
will be engaged by Company on arm's length terms.
Wolverton will receive a sponsorship fee and reimbursement of
expenses. An agreement to sponsor should not be construed as any
assurance with respect to the merits of the Transaction or the
likelihood of completion.
ON BEHALF OF WOODROSE CORPORATION
Darren Devine
President, CEO and Director
NEITHER THE TSX-VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE
TSX-VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
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
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 to be prepared in connection with
the Transaction, any information with respect to the Transaction
may not be accurate or complete and should not be relied on.
Trading in securities of the Company should be considered highly
speculative.
Cautionary Note Regarding Forward-Looking Statements
Information set forth in this news release may involve
forward-looking statements under applicable securities laws.
Forward-looking statements are statements that relate to future,
not past, events. In this context, forward-looking statements often
address expected future business and financial performance, and
often contain words such as "anticipate", "believe", "plan",
"estimate", "expect", and "intend", statements that an action or
event "may", "might", "could", "should", or "will" be taken or
occur, or other similar expressions. All statements, other than
statements of historical fact, included herein including, without
limitation; statements about the terms and completion of the
Transaction are forward-looking statements. By their nature,
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements, or other future events, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following
risks: failure to satisfy all conditions precedent to the
Transaction, including shareholder approval, approval of the TSX
Venture Exchange and completion of the necessary financings,
continuation and the additional risks identified the management
discussion and analysis section of Woodrose Corporation's interim
and most recent annual financial statement or other reports and
filings with the TSX Venture Exchange and applicable Canadian
securities regulators. Forward-looking statements are made based on
management's beliefs, estimates and opinions on the date that
statements are made and the respective companies undertakes no
obligation to update forward-looking statements if these beliefs,
estimates and opinions or other circumstances should change, except
as required by applicable securities laws. Investors are cautioned
against attributing undue certainty to forward-looking
statements.
Woodrose CorporationDarren Devine+1 604-638-8067Suite 800 / 789
West Pender StreetVancouver / British ColumbiaV6C 1H2 / Canada