Mineral Hill Industries Enters Into a LOI to Acquire Additional Oil Producing Properties in Oklahoma and Integrates an Experienced Operating Team /THE SECURITIES BEING OFFERED HAVE NOT BEEN, NOR WILL BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
Mineral Hill Industries Enters Into a LOI to Acquire Additional Oil
Producing Properties in Oklahoma and Integrates an Experienced
Operating Team
/THE SECURITIES BEING OFFERED HAVE NOT BEEN, NOR WILL BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE OFFERED OR SOLD IN
THE UNITED STATES
OR TO U.S. PERSONS WITHOUT REGISTRATION OR APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENT OF SUCH ACT. THIS RELEASE DOES NOT CONSTITUTE AN OFFER FOR SALE OF
SUCH SECURITIES IN
THE UNITED STATES
OF AMERICA./
Toronto
: TSX-V: MHI
Frankfurt
: N8Z1/WKN: AODLHP
OTC Market (US): MHIFF
VANCOUVER
,
Jan. 14, 2019
/CNW/ - Further to the Company's announcement dated
May 28, 2018
, Mineral Hill Industries Ltd. ("MHI") or the
"Company"), wishes to announce that it has signed a Letter of Intent ("LOI") to acquire additional oil producing assets in
Oklahoma
from a privately held
Oil & Gas Company (the "Target"). The Target's team has acquired and operated its assets over the last 15 years developing a daily production capacity
of 120- 150 bblspd.
The completion of this transaction will contribute to the Company's strategic vision not only to geographically increase the footprint of its previous
acquisition located in close proximity of
Oklahoma's
"STACK play" in the
Anadarko
Basin, one of the best unconventional oil plays in the US, but will also
fulfill Mineral Hill's objective to integrate a dedicated professional in-depth management team with over
60 years of combined operational and administrative experience within the Oil & Gas industry.
Two geological "Reserve Reports" were commissioned by the Target in
July 2018
and were compiled by two independent petroleum consulting firms;
both well established in
Texas
for over 40 years. As both "Reserve Reports" were not prepared in accordance with the Canadian OIL & Gas Evaluation
("COGE") Handbook, the LOI terms require that the data and value provided by Target's two reserve reports will be confirmed by a NI51-101 performed
by MHI's independent "Qualified Person" (the "NI51-101 Report").
The initial development of the assets was funded via bank financing which required the assets to be pledged as collateral. In 2018, the Target's bank
merged with a banking group that does not finance Oil & Gas projects. Subsequent to receiving notice from the secured lender, Target filed for protection
under the U.S. Chapter 11.
The LOI lays further out the conditions and terms that will be the basis for the subsequent "Definitive Agreement", determination of final consideration to
be given for the assets and will serve as a basis to negotiate the final settlement to satisfy the secured lender and outstanding trade obligations for the
Chapter 11 release.
Under the terms of the LOI, MHI will first complete the private placement announced on July16, 2018 by selling a minimum amount of 3.0 million
securities units at
Cdn$0.20
per securities unit ("Unit") for total proceeds of up to
Cdn$600,000
("PP#1"), whereby each Unit will consist of one common
share of the
Company and one transferable common share purchase warrant ("Warrant") exercisable within a period of one (1) year from the date of issue, at an
exercise price of
Cdn$0.30
per Warrant Share. Subsequently MHI will commission a NI51-101 performed by MHI's independent "Qualified Person" (the
"NI51-101 Report") to confirm the data and value provided by Target's two independent petroleum consultants. MHI will seek firm funding commitments
for PP#2 in the amount between
US$6.5 million
to
US$8.5 million
through either corporate micro-bonds or a combination of bank financing and additional
equity issuance to satisfy the final settlement of the Bank debt and Target's outstanding trade debt obligations.
The final consideration to Target's shareholders will be satisfied through the issuance of the number of MHI Shares equal to (a) the NI 51-101 valuation
discounted by the assumed liabilities portion, divided by (b) the deemed MHI share price of
Cdn$1.10
(the "Consideration-Share-Price"), subject to a
possible adjustment of the Consideration-Share-Price, whereby the total MHI shares issued are to represent not less than 40% and not more than 50%
of the fully diluted post-closing capital stock of MHI. MHI and Target agreed to adjust the Consideration-Share-Price so that the total MHI shares to be
issued for Targets Assets are to represent not less than 40% and not more than 50% of the fully diluted post- closing capital stock of MHI.
The effective date of the Transaction will be the fifth (5th) banking day after the Approval of the TSXV and after approval by the Regulatory Authorities in
respect to the Chapter 11.
The Parties to the LOI recognize that the MHI shares issued as consideration for Target's assets may be escrowed at the request by the TSXV and may
be subject to restrictions on resale relating to hold periods, insider trading and control persons, and that the Escrow Shares shall be deposited in escrow
and released subject to certain conditions as set forth in the Escrow Agreement.
The Company seeks Safe Harbor
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.
SOURCE
Mineral Hill Industries Ltd.
View original content:
http://www.newswire.ca/en/releases/archive/January2019/14/c2179.html
%SEDAR: 00005822E
For further information:
Dieter Peter, President & CEO Phone: (604) 617-6794
CO: Mineral Hill Industries Ltd.
CNW 15:58e 14-JAN-19