Edge Resources Inc.

Edge Resources Inc.

July 28, 2015 08:45 ET

Edge Resources Inc. Announces New Major Capital Partner and Completion of Equity Financing

CALGARY, ALBERTA--(Marketwired - July 28, 2015) - Edge Resources Inc. (TSX VENTURE:EDE)(AIM:EDG) ("Edge" or the "Company") is pleased to announce that it has closed a private placement for gross proceeds of CDN$500,000 with a new, strategic investor group (the "Investor Group").

The private placement subscription was completed by the Investor Group at a price of $0.08 per share, representing a 10.5% premium to the previous 10 day end-of-day volume weighted average price ("EOD VWAP"). A finder's fee equivalent to 5% of the gross proceeds was paid in cash. The net proceeds will be used to support the Company's ongoing acquisition strategy.

The funding is a planned first step by this Investor Group who has indicated an intention to become a significant new, long-term capital partner through the funding of several potential acquisitions in the coming months.

After several months of due diligence, the Investor Group selected Edge and its management team to become a platform through which to make significant investments into the Canadian oil and gas industry. The price paid demonstrates the Investor Group's macro and long-term commitment to strengthening Edge's balance sheet and supporting Edge's acquisition strategy in partnership with Edge's other significant shareholders and lenders. Edge's two largest shareholders, one of which is also a significant lender to the Company, are supportive of the Investor Group and its intentions to assist in funding the Company's major growth initiatives.

Growth Strategy

As stated in previous releases, Edge is intent on achieving shareholder value creation through the pursuit of aggressive and focused growth. Management believes this may best be achieved through the merger and acquisition opportunities that are available in a volatile market such as the oil and gas industry is experiencing today.

The Company believes that high quality drilling locations currently in inventory are best left in inventory and opportunities to acquire additional production, land and drilling locations are best acquired in market conditions such as today's.

The cornerstone of Edge's corporate acquisition and consolidation strategy is a major focus on medium and heavy oil acquisition targets, both corporate and asset based. In management's opinion, the consolidation of medium and heavy oil assets offer the most value-enhancing growth opportunity in the Company's history. Medium and heavy oil assets offer:

  1. The same - or better - full cycle ROI's compared to light oil assets for experienced operators

  2. A less competitive consolidation arena; thus, lower entry costs, leading to better economic returns

  3. A broad distribution of assets amongst smaller players, making consolidation and efficient way to release economic value trapped in over-administrated, operationally inefficient entities

  4. An area of consistently demonstrated expertise for the Edge management team with industry-leading low operational costs and efficiencies

Edge expects the availability of high-return projects to increase in the future, facilitated by (i) lack of sustaining cash flow amongst junior E&P companies resulting in a lack of drilling and; therefore, intensified production declines and (ii) less patient lenders for E&P companies that lack strong capital partners and/or sustaining cash flow.

Brad Nichol, Edge's President and CEO commented, "Being able to raise new capital in this very challenging market is an accomplishment that few have been able to demonstrate. We have consistently proven it to be one of our core strengths and it is an absolutely critical competitive advantage in our industry; and one that is currently enjoyed by few. To have a new capital partner commit now, as we embark on an aggressive growth strategy through consolidation of medium and heavy oil assets, signifies a major kick-start to Edge becoming one of Canada's high-growth E&P companies. I am especially excited that the Investor Group, combined with the support of our current lenders and major shareholders, should allow us to expand our existing production and growth profile as acquisition prices approach historical lows. We aim to become one of the largest E&P companies focused on medium and heavy oil, for the sole benefit of our existing and new shareholders, and today's news is a significant step in that direction.

Additional information may also be available at www.edgeres.com or www.sedar.com.

About Edge Resources Inc.

Edge Resources is focused on developing a balanced portfolio of oil and natural gas assets from properties in Alberta and Saskatchewan, Canada. Management has consistently focused on:

  1. Shallow, vertical, conventional programs with reduced capital, operational and geological risks

  2. Very high or 100% working interests and fully operated assets

  3. Pools and horizons with exceptionally high reserves in place

The management team's very high drilling success rate is based on the safe, efficient deployment of capital and a proven ability to efficiently execute in shallow formations, which gives Edge Resources a sustainable, low-cost, competitive advantage.

The term "boe" may be misleading, particularly if used in isolation. A boe conversion ratio for natural gas of 6 Mcf: 1 boe has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

The term "bopd" means "barrels of oil per day." The term "boepd" means "barrels of oil equivalent per day."

Unaudited Financial Information

Certain financial and operating information included in this press release for the year ended March 31, 2015, such as capital expenditures, production, F&D costs and FD&A costs are based on unaudited financial results, and are subject to the same limitations as discussed under "Forward-Looking Information". These estimated amounts may change upon the completion of audited financial statements for the year- ended March 31, 2015 and changes could be material.

Forward-Looking Statements

This news release includes certain information, with management's assessment of Edge's future plans and operations, and contains forward-looking statements which may include some or all of the following: (i) anticipated production rates; (ii) expected results of capital programs; (iii) expected timelines for production optimization; (iv) net debt levels; (v) anticipated operating costs; and (vi) expected capital projects and associated spending; which are provided to allow investors to better understand the Company's business. By their nature, forward-looking statements are subject to numerous risks and uncertainties; some of which are beyond Edge's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, changes in environmental tax and royalty legislation, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources, and other risks and uncertainties described under the heading 'Risk Factors' and elsewhere in the Company's Management Discussion and Analysis and other documents filed with Canadian provincial securities authorities and are available to the public at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The principal assumptions Edge has made includes security of land interests; drilling cost stability; finance and debt markets continuing to be receptive to financing the Company, the ability of the Company to monetize non-core assets and industry standard rates of geologic and operational success. Actual results could differ materially from those expressed in, or implied by, these forward-looking statements. Edge disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. For more information on the Company, Investors should review the Company's registered filings which are available at www.sedar.com.

This news release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Trading in the securities of Edge Resources Inc. should be considered highly speculative. 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.

Contact Information

  • Edge Resources Inc.
    Brad Nichol
    President & CEO
    +1 (403) 767 9905

    Edge Resources Inc.
    Ward Kondas
    +1 (778) 918-8384

    Sanlam Securities UK Limited (Joint Broker and NOMAD)
    Simon Clements / James Thomas / Max Bascombe
    +44 (0)20 7628 2200

    SP Angel Corporate Finance LLP (Joint Broker)
    John MacKay / Richard Hail / Stuart Gledhill
    +44 (0)20 3463 2260