Pulse Oil Corp.
TSX VENTURE : PUL.H

February 17, 2017 08:30 ET

Pulse Oil Corp. Provides an Update on Its Qualifying Transaction

KELOWNA, BRITISH COLUMBIA--(Marketwired - Feb. 17, 2017) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS

Pulse Oil Corp. ("Pulse" or the "Corporation") (TSX VENTURE:PUL.H) announces the TSX Venture Exchange (the "Exchange") has conditionally approved Pulse's proposed Qualifying Transaction as previously described in news releases dated October 13, 2016, October 18, 2016 and November 30, 2016. Pulse previously executed a definitive asset purchase agreement with Hydrate Resources Corp. ("Hydrate") on November 8, 2016 and the purchase price is payable as to $3,763,429 by issuance of 25,089,530 common shares of Pulse.

In addition, Hydrate conducted a private placement to raise an additional $425,000 by the issuance of 2,833,334 Subscription Receipts at a price of $0.15 per Subscription Receipt entitling the holder of the Subscription Receipt to automatically receive, without payment of additional consideration, one common share of Hydrate upon the Exchange giving conditional acceptance to the acquisition by Pulse of the issued and outstanding shares of Hydrate. The private placement of Subscription Receipts closed on December 22, 2016 and as a result, at closing of the Qualifying Transaction, Pulse will issue to the holders of securities of Hydrate a total of 27,781,197 Pulse Shares, inclusive of the $425,000 private placement that closed on December 22, 2016. The Proposed Acquisition is intended to constitute the Qualifying Transaction of Pulse in accordance with Policy 2.4 of the Exchange, subject to Exchange approval.

Pulse's filing statement dated as of February 15, 2017 (the "Filing Statement"), as approved by the Exchange, has been filed on SEDAR and may be viewed at www.sedar.com. The Filing Statement describes Pulse's proposed Qualifying Transaction, as required by Exchange Policy 2.4. Pulse anticipates completing the Qualifying Transaction on or before February 24, 2017.

On closing of the Qualifying Transaction, Pulse is expected to commence trading on the Exchange as a Tier 2 Oil and Gas issuer under the trading symbol "PUL", at which time Pulse will no longer be considered a capital pool company.

Reserve and Financial Disclosure

Bigoray Asset Description and Reserves Disclosure. All BOE's stated below are gross volume.

1. As evaluated by McDaniel & Associates Consultants Limited, an independent qualified reserves evaluator ("QRE") as defined in NI 51-101, as at October 1, 2016 and based on HRC owning a 50% interest in the Bigoray area currently owned by Crimson:
a) 458,800 BOE of Proved Reserves with an estimated net present value before tax ("BT") and discounted at 15% of $2,938,300 and; an estimated net present value discounted at 10% of $3,982,000.
b) 689,800 BOE of Proved and Probable Reserves with an estimated net present value BT and discounted at 10% of $5,702,100.
Company Proved and Probable Reserves and Value by
Reserve Category
Proved Reserve Category Oil (1) MMCF NGL Total BOE PV15% BT PV10%BT
PDP 0 90.4 3,600 18,700 $ 6,800 $ 300
PDNP 272,000 740.9 44,600 440,100 $ 2,931,500 $ 3,981,800
PUD 0 0 0 0 $ 0 $ 0
Total Proved 272,000 831.3 48,300 458,800 $ 2,938,300 $ 3,982,100
Probable Reserve Oil (2) MMCF NGL Total BOE PV15% BT PV10%BT
Category
PDP 0 42.7 1,700 8,800 $ 17,600 $ 19,500
PDNP 62,900 180.8 10,500 103,500 $ 608,500 $ 945,100
PUD 97,200 97.2 5,300 118,700 $ 531,500 $ 755,400
Total Probable 160,100 320.7 17,500 231,100 $ 1,157,700 $ 1,720,000
Proved & Probable Oil (3) MMCF NGL Total BOE PV15% BT PV10%BT
Reserve Category
PDP 0 133.1 5,300 27,500 $ 24,400 $ 19,800
PDNP 334,900 921.7 55,100 543,600 $ 3,540,000 $ 4,926,900
PUD 97,200 97.2 5,300 118,700 $ 531,500 $ 755,400
Total Proved & Probable 432,100 1,152.0 65,800 689,800 $ 4,095,900 $ 5,702,100
(1) Proved Reserves of 458,800 BOE consist of 272,000 barrels of oil made up of 259,000 barrels of light and medium oil and 13,000 barrels of heavy oil. Additionally proved reserves consist of 138,500 BOE of conventional natural gas and 48,300 barrels of NGLs as classified in the Canadian Oil And Gas Evaluation Handbook ("COGEH").
(2) Probable Reserves of 231,100 BOE consist of 160,100 barrels of oil made up of 61,000 barrels of light and medium oil and 99,100 barrels of heavy oil. Additionally proved reserves consist of 53,500 BOE of conventional natural gas and 17,500 barrels of NGLs as classified in the Canadian Oil And Gas Evaluation Handbook ("COGEH").
(3) Proved and Probable Reserves of 689,800 BOE consist of 432,100 barrels of oil made up of 320,000 barrels of light and medium oil and 112,100 barrels of heavy oil. Additionally proved reserves consist of 191,900 BOE of conventional natural gas and 65,800 barrels of NGLs as classified in the Canadian Oil And Gas Evaluation Handbook ("COGEH").

Note: A BOE conversion ratio of 6 Mcf:1 bbl has been used in the calculation of barrels of oil equivalent or BOEs, and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The use of the term BOE may be misleading, particularly if used in isolation. Reserves estimates as disclosed herein have been prepared by McDaniel & Associates Consultants Ltd. in accordance with standards contained in the Canadian Oil and Gas Evaluation (COGE) Handbook, and reserves definitions used in the preparation of these estimates are as set out by the Canadian Securities Administrators in National Instrument 51-101 with reference to the COGE Handbook. All reserve evaluations of set forth in the press release are based on McDaniel & Associates Consultants Ltd pricing assumptions as at October 1, 2016. It should not be assumed that the reserve values estimated by the McDaniel & Associates Consultants Ltd report represents the fair market value of the reserves set forth in such report. There is no assurance that the future price and cost assumptions used in the McDaniel & Associates Consultants Ltd report will prove accurate and variances could be material. The recovery and reserve estimates of oil, natural gas and NGL provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual oil, natural gas and NGL reserves may be greater than or less than the estimates provided herein. After October 1, 2030, the pricing assumptions used in the McDaniel & Associates Consultants Ltd Report escalate at an annual rate of 2%.

  1. Ownership of all lands, petroleum and natural gas rights, wells, facilities and pipelines necessary for production and sales, including batteries, pipelines.

  2. Interests in two Devonian aged, Nisku pools that provide HRC a growth opportunity through implementation of an enhanced oil recovery program conducted successfully in similar pools in close proximity to the Assets.

  3. Large 2D and 3D seismic data sets covering prospective formations contained within the Assets including Nisku, Pekisko, Cardium and Mannville formations.

Proposed Finder's fee

Mr. David Sidoo assisted Pulse in securing the Agreement between Pulse and Hydrate. Pursuant to an agreement between Pulse and Mr. Sidoo, Pulse has agreed to pay Mr. Sidoo a finder's fee, and, subject to the approval of TSX-V, the finder's fee will consist of $69,000 in cash and 666,667 common shares of Pulse at a deemed issue price of $0.15 per common share, subject to a four month hold period and cash upon closing of the Agreement, in full satisfaction of the finders' fee agreement.

Other Information

Completion of the Qualifying Transaction is subject to a number of conditions including but not limited to Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement that was prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

About the Corporation

Pulse is incorporated under the provisions of the Business Corporations Act (Alberta) and has a registered office in Kelowna, British Columbia. It is a "capital pool company" under the policies of Exchange. As such it intends for the Proposed Acquisition to constitute the "Qualifying Transaction" of the Corporation as such term is defined in the policies of the Exchange.

Neither the TSX Venture Exchange, Inc. nor its Regulation Service Provider (as that term is defined under the policies of the TSX Venture Exchange) has in any way passed upon the merits of the Proposed Acquisition and associated transactions and has neither approved nor disapproved of the contents of this press release.

Cautionary Statements:

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the proposal to complete the Proposed Acquisition and associated transactions, including statements regarding the terms and conditions of the Proposed Acquisition and associated transactions. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Proposed Acquisition and associated transactions, that the ultimate terms of the Proposed Acquisition and associated transactions will differ from those that currently are contemplated, and that the Proposed Acquisition and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation, RSR, the Properties or their respective financial or operating results or (as applicable), their securities. Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas 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.

This press release does not constitute and the subject matter hereof is not, an offer for sale or a solicitation of an offer to buy, in the United States or to any "U.S Person" (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "1933 Act")) of any equity or other securities of the Corporation. The securities of the Corporation have not been registered under the 1933 Act and may not be offered or sold in the United States (or to a U.S. Person) absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act.

Contact Information

  • Pulse Oil Corp.
    Greg Downey
    Chief Financial Officer
    (250) 979-7022