Mayan Energy Ltd (AIM: MYN), the AIM listed oil and gas company, is pleased to provide an update on its investment in Deloro Energy LLC (“Deloro”) which is invested in the Asphalt Ridge heavy oil sands project (‘the project’) in Utah, USA, which has an 87 Million Stock Tank Barrels (“STB”) contingent resource in place and is being developed by TSX listed Petroteq Energy Inc (‘Petroteq’) (TSXVE: PQE OTC: PQEFF).
Following evaluation of the project financing options and both parties existing commitments, it has been agreed to alter the structure and terms of Deloro’s US$10m funding agreement with Petroteq to ensure the timely advancement of the Project. This translates into a small dilution to Mayan’s equity interest in Deloro. Post restructuring Mayan’s equity holding in Deloro will be 17.3% (previously 17.6%).
The Deloro investment in Asphalt Ridge has now been structured directly into the TSX and OTC listed entity, Petroteq Energy Inc. via the issue of listed equity and unlisted warrants. The first tranche funding of US$3.6m has been closed by Deloro in return for the issue of 6 million shares in Petroteq where a 4 month lockup applies, and 6 million warrants over Petroteq stock, exercisable at US$0.91 for 3 years which is subject to TSX approval. To complete the first tranche under the revised transaction Deloro has raised a further US$1.1m funds from existing Deloro unit holders to ensure it completes the first phase of funding under the re-negotiated agreement. Mayan elected not to participate in the funding. Mayan’s equity interest in Deloro following this capital raise is 17.3% (previously 17.6%).
Additionally, Deloro has the right until 13 June 2018 to invest a further US$2.4m in return for the issue of 4 million shares in Petroteq and 4 million warrants over Petroteq stock, exercisable at US$0.91 for 3 years.
With the current strong oil price Deloro and Mayan see significant upside potential in the shares of Petroteq as they move through commissioning of the Asphalt Ridge plant. Production remains on target for 1,000 + bpd with ramp up commencing during May and June 2018. We note that Align research has recently valued Petroteq at US$3.98 per share.
Mayan CEO Eddie Gonzalez commented, “We are supportive of the new structure and believe our investment in Petroteq and their Asphalt Ridge via Deloro will continue to add value to the Company. With the current strong oil price we see significant upside potential in the shares of Petroteq as they move through commissioning of the plant and expansion of the proposed operations following successful proving of the technology. We are conscious of the Company’s capital structure especially as we do not feel the current progress on the ground is being truly reflected in the share price. We remain focussed on building our portfolio of producing assets in Texas and Oklahoma where we are making strong progress with bringing new wells on stream and building production.”
You can find the full Petroteq announcement on:
