Source Rock Royalties Ltd.

Source Rock Royalties Ltd.

August 10, 2015 08:00 ET

Source Rock Royalties Ltd. Closes Brokered and Non-Brokered Private Placements & Completes Viking Light Oil Royalty Acquisition From Toro Oil & Gas Ltd.


Source Rock Royalties Ltd. ("Source Rock") announces that it has completed an initial closing of its brokered private placement with AltaCorp Capital Inc. for gross proceeds of $3,327,100. In addition, Source Rock has closed a concurrent non-brokered private placement for gross proceeds of $1,702,500 (collectively, the "Private Placements"), for cumulative gross proceeds of $5,029,600. Pursuant to the Private Placements, Source Rock issued 5,588,444 common shares at a price of $0.90 per share. Following completion of the Private Placements Source Rock has 20,845,625 common shares outstanding.

Source Rock also announces that it has closed the acquisition of the previously announced 19.5-year Viking light oil production volume royalty (the "PVR") from Toro Oil & Gas Ltd. ("Toro") (TSX VENTURE:TOO) for a purchase price of $12.0 million. The PVR is effective July 1, 2015 and applies to Toro's Hamilton Lake lands (including both unit and non-unit), Consort lands and Esther lands (the "Lands"). The PVR entitles Source Rock to escalating Viking light oil royalty production, without being subject to any associated royalties or cost deductions, starting at 50 bbl/d for the remainder of 2015, increasing to 95 bbl/d by 2021 and after 2022 declining by 20% of the prior year's volumes annually. The PVR is a first priority right to Viking light oil barrels produced from the Lands.

In conjunction with acquiring the PVR, Source Rock has been issued 350,000 common shares of Toro.

About Source Rock Royalties

Source Rock is a Calgary-based private dividend-paying corporation founded in early 2013 that is exclusively focused on acquiring and managing royalties on oil and gas properties and mineral title interests in the Western Canadian Sedimentary Basin. In addition to acquiring existing royalties, Source Rock strives to creatively manufacture royalty interests on high-quality oil and natural gas assets that are owned and operated by experienced management teams with the technical and fiscal capability to successfully develop the assets. Source Rock owns varying gross overriding royalties on approximately 16,000 acres of land in the Viking light oil fairway in west-central Saskatchewan. As a royalty interest owner Source Rock receives top-line revenue from oil and natural gas production that occurs on its royalty lands. Source Rock does not incur any of the costs associated with activity on its royalty lands, including drilling, completing and equipping wells, maintenance and optimization of wells, enhanced recovery initiatives, abandoning of wells or reclamation of the land.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction, including, but not limited to, the United States. The common shares of Source Rock referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Forward-Looking Statements

Certain statements contained in this news release are forward-looking statements. All statements other than statements of historical fact may be forward- looking statements. Forward-looking statements relate to future events or performance and include statements which contain words such as "anticipate", "could", "should", "expect", "estimate", "seek", "may", "intend", "plan", "likely", "will", "believe" and similar expressions (including the negatives thereof). The forward-looking statements contained herein are provided to allow readers to better understand our business and prospects. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such statements. Source Rock believes that the expectations reflected in the forward-looking statements contained herein are reasonable but no assurance can be given that these expectations will prove to be correct and, as a result, such statements should not be unduly relied upon. The forward- looking statements contained herein speak only as of the date hereof, and Source Rock assumes no obligation to revise or update these statements whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities laws.

All forward-looking statements are based on certain assumptions and analyses made by Source Rock in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The assumptions and other factors upon which the forward-looking statements contained herein are based, include, but are not limited to, the following: the general stability of the economic and political environment in which Source Rock intends to operate; the impact of increasing competition; drilling results, field production rates and decline rates; the ability of the operator of the projects in which it has an interest to operate the project in a safe, efficient and effective manner and to successfully market the production therefrom; the ability of Source Rock to expand oil and natural gas reserves through acquisition; future oil and natural gas prices; future currency exchange and interest rates; and the ability of Source Rock to obtain qualified staff in a timely and cost efficient manner.

Actual results, performance or achievements could differ materially from those expressed in, or implied by, the forward-looking statements contained herein as a result of known and unknown risks, including, but not limited to, the following: volatility in market prices for oil and natural gas; operating risks inherent in oil and natural gas operations; general economic conditions; competition for, among other things, capital, acquisitions of reserves, and personnel; equipment and labour shortages and inflationary costs; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the effect of weather conditions on operations and facilities; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; and stock market volatility. As a result, no assurance can be given that any of the events anticipated by the forward-looking statements contained herein will transpire or occur, or if any of them do so, what benefits will be derived therefrom. The foregoing list of risks is not exhaustive.

The forward-looking statements contained herein are expressly qualified by this cautionary statement.

Not An Offer to Purchase Securities

This news release is for information purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of Source Rock Royalties Ltd. in any jurisdiction.

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