IEC holds exploration and production permits in Bulgaria, Georgia and Ukraine. Scion’s initial focus is to appraise and develop excellent gas development opportunities with significant exploration upside on IEC’s Gradishte and Kilifarevo exploration permits in Bulgaria. IEC also holds 3 licenses in the Ukraine, which are on standby due to current security issues in that country.
Horizon Petroleum Ltd. is pleased to announce that it has entered into an arrangement agreement with privately-held, Calgary-based Iskander Energy Corporation, pursuant to which Horizon will, subject to certain conditions, acquire all of the issued and outstanding common shares of IEC in exchange for 55,373,072 pre-consolidated shares of Horizon at a deemed value of $0.05 per share by way of a plan of arrangement under the Business Corporations Act. Prior to completion of the Transaction, Horizon will complete a non-brokered private placement of an aggregate of not less than $1.2 million and up to $2 million at a price of $0.05 per pre-consolidated share. Concurrent with the completion of the Transaction and as a step of the Plan of Arrangement, it is expected that the Company will, subject to shareholder and regulatory approval, amalgamate with IEC, change its name to Scion Energy Corp. and that each currently outstanding Horizon share and IEC share will be exchanged for shares of the new amalgamated company, effectively consolidating the common shares of Horizon on a 6:1 basis. Completion of the Transaction is subject to customary closing conditions, including approval of the TSX Venture Exchange and court approval.
Approval
The Transaction will require the approval of, among others, the holders of at least 66 2/3% of the Horizon Shares present in person or represented by proxy at a special meeting of Horizon shareholders (the “Horizon Meeting”) to be called to consider the Transaction. The Transaction is also subject to obtaining the approval of the holders of at least 66 2/3% of the IEC Shares at a special meeting of IEC shareholders to be called to consider the Transaction. Further information regarding the Transaction will be contained in a joint information circular that Horizon and IEC will prepare, file and mail in due course to their respective shareholders in connection with the Horizon Meeting and the IEC Meeting. It is expected that the Horizon Meeting and the IEC Meeting will take place in June, with closing of the Transaction expected to occur shortly thereafter. Complete details of the Transaction are set out in the Arrangement Agreement, which will be filed by Horizon on SEDAR.
Recommendation of the Boards of Directors
The board of directors of Horizon has unanimously approved the Transaction and unanimously determined that the Transaction is in the best interests of Horizon. The directors and officers, and certain key shareholders of Horizon, representing in aggregate approximately 28.3% of the issued and outstanding Horizon Shares (on a non-diluted basis) have agreed to vote their Horizon Shares in favour of the Transaction at the Horizon Meeting.
The board of directors of IEC has unanimously approved the Transaction and unanimously determined that the Transaction is in the best interests of IEC. The directors and officers of IEC, representing in aggregate approximately 38% of the issued and outstanding Iskander Shares (on a non-diluted basis) have agreed to vote their IEC Shares in favour of the Transaction at the IEC Meeting. Additionally, certain directors, management and shareholders owning IEC Shares equal to or greater than 5% of the issued and outstanding IEC Shares, representing in aggregate 68% of the IEC Shares, have agreed to a hold period on their shares, whereby 50% of their shares will be restricted from trading for a period of 4 months from the closing of the Transaction, and the remaining 50% of their shares will be restricted from trading for a period of 8 months from the closing of the Transaction.
Under the terms of the Arrangement Agreement, each of Horizon and IEC shall not solicit or initiate any inquiries or discussions regarding any other business combination, subject to the fiduciary duty of the Horizon or IEC board of directors, respectively, in the event that an unsolicited superior proposal is received by either Horizon or IEC.
Corporate Strategy
Scion will focus on oil and gas development and production opportunities in the Black Sea Region and Africa to provide near term reserve, production and cash flow growth.
IEC holds exploration and production permits in Bulgaria, Georgia and Ukraine. Scion’s initial focus is to appraise and develop excellent gas development opportunities with significant exploration upside on IEC’s Gradishte and Kilifarevo exploration permits in Bulgaria. IEC also holds 3 licenses in the Ukraine, which are on standby due to current security issues in that country.
In Georgia, IEC’s production comes from its 90%-owned Satskhenisi PSA Permit. The wells within Satskhenisi are relatively shallow (700 – 2,300m) and the oil is light (38 deg API) and sweet, and sells at the plant gate for a price of Brent minus US$12 per barrel (to account for marketing and transportation). IEC has identified a number of light oil and gas development opportunities which it is in the process of evaluating.
In Bulgaria, IEC holds a 50% interest in the (net) 943 km2 (approx. 233,000 acres) Gradishte block and the (net) 10 km2 (approx. 2,500 acres) Kilifarevo block, with the opportunity to access and exploit conventional play types. Both permits have wells that have historically tested in excess of 1mmscf/d of natural gas. The Gradishte Permit is contiguous and on trend with multiple oil and gas/condensate producing fields immediately to the northwest. The Government of Bulgaria granted a standstill agreement to IEC, effective June 2013 and expiring June 2016 and likely until the current fracking moratorium is lifted, thereby deferring IEC’s work commitments. IEC intends to negotiate a new production-focused work plan to exploit previous gas discoveries through conventional means (i.e. without fracking). There is extensive pipeline infrastructure that runs east-west through the Gradishte block as well as a local industrial market located within the Permit boundary. Gas prices in Bulgaria are currently approximately $5.5/mcf. IEC’s estimates of resources are preliminary in nature and require successful modern production tests and state-approved development plans to become classified as reserves.
Upon completion of the Transaction, the Company plans to focus on development of the existing asset base of IEC, as well as pursue acquisition and development of other high quality assets in the region with existing or near-term production potential. The Company also plans on advancing its potential farmin opportunity in Cameroon, West Africa, as previously reported by Horizon on November 9, 2015 and December 23, 2015.
Source: Marketwired
