Northern Petroleum, the AIM quoted oil company focusing on production led growth, announces that it has agreed to divest interests in its assets, as detailed below, to High Power Petroleum LLC, for a consideration of US$2.5 million in cash and the application of US$0.25 million of well stimulation services by Blue Spark Energy Inc., an affiliate of H2P based in Calgary.
The Company also announces a proposed direct subscription, subject to shareholder approval, to raise gross proceeds of up to £5.1 million at a price of 3.5 pence per subscription share through a first tranche subscription of 124,047,017 new ordinary shares and a second tranche subscription of up to 20,600,000 new ordinary shares, both at the Issue Price. The Issue Price represents a premium of 12.0 per cent. to the middle market closing price per ordinary share of 3.125 pence on 29 November 2016, being the last business day prior to this announcement.
A proposed open offer for up to 21,500,000 new ordinary shares with nominal value of 1 pence each in the capital of the Company at the Issue Price, raising up to an additional £0.8 million, will be made to existing qualifying shareholders. Total funds realised from the Consideration, the Subscription and Open Offer will total up to US$9.7 million (approximately £7.8 million).
The Subscription and Open Offer
AMI and board appointment
H2P is a wholly-owned oil and gas exploration and production subsidiary of I-Pulse Inc., a technology company which develops and commercialises high pulse power solutions with multi-sector and cross-industry applications, particularly for the natural resources sector. H2P is investing in a broad portfolio of upstream oil and gas assets, leveraging the I-Pulse group's unique proprietary technologies in well stimulation, production optimisation and electro-magnetic exploration surveying applications, to create an enhanced economic return.
Keith Bush, Chief Executive Officer, commented:
"The introduction of H2P as a strategic investor at both the asset level and as a corporate shareholder marks a step-change for the Company. The investment across the Company's asset portfolio validates the strategy we have pursued with production led growth in Canada and the Italian exploration and appraisal portfolio providing the possibility of very large returns in the medium to long term. Not only does H2P bring strong financial support, they provide rigorous technical review and innovative technology to help enhance our asset value.
"Continued support from our other key shareholders, Cavendish and City Financial, combined with H2P gives the Company a strong financial base from which to grow production in Canada and develop the Italian portfolio. Asset acquisition opportunities are still coming on to the market in Canada, and through the AMI we can now pursue these with a well financed and capable partner, to help accelerate growth in Canada and build a material production business.
"With the business now strengthened it is important that the Company's existing private shareholders can invest alongside our new shareholder through the open offer and benefit from the value that will result from this new partnership."
Scott Aitken, Chief Executive Officer of H2P, commented:
"We are very pleased to be partnering with Northern Petroleum across their asset base. Their strategy of building production and cashflow in Canada while maturing exploration and appraisal opportunities in Italy is closely aligned with how we are building our exploration and production operations. We believe H2P can add technical expertise along with the potential enhancements of our pulse technology, initially starting with well stimulations in Canada."