Prairie Provident Resources Announces Strategic Asset Sales

CALGARY, Alberta, Oct. 30, 2023 (GLOBE NEWSWIRE) -- Prairie Provident Resources Inc. (“Prairie Provident” or the “Company”) is pleased to announce that it has entered into a definitive agreement with a private oil and gas company to sell the Company's Evi cash-generating unit located in northern Alberta for a base purchase price of $27.0 million payable in cash, subject to effective date adjustments based on an effective date of August 1, 2023 (the “Evi Sale“). Upon completion of the Evi Sale, the purchaser will become responsible for all future abandonment and reclamation obligations (ARO) pertaining to the Evi assets, with AER deemed liabilities of approximately $48.1 million gross ($43.5 million net).

In a separate transaction, the Company has entered into a definitive agreement with another private oil and gas company to sell certain non-core assets located in the Provost area of central Alberta for a base purchase price of $1.8 million payable in cash, subject to effective date adjustments based on an effective date of July 1, 2023, and potential future payments of up to $720,000 in aggregate based on the price of oil and production from the Provost assets during the 24-month period following closing (the “Provost Sale”).

Both transactions are currently expected to close on or before January 31, 2024 and are subject to regulatory approval, customary closing conditions and purchase price adjustments.

Completion of the Evi Sale and the Provost Sale will build upon the recapitalization initiated in May 2023 by streamlining the Company’s asset portfolio through the disposition of undercapitalized legacy assets, in turn allowing Prairie Provident to focus on higher return development opportunities in Central and Southern Alberta.

Proceeds of the completed transactions will allow the Company to achieve a material reduction in debt and associated interest expense. Additionally, a portion of the proceeds will be directed to a development program designed to increase production, cash flow and reserves value from Prairie Provident’s core areas located in Central and Southern Alberta, including Princess, Provost and Michichi.

Evi Sale

The properties included in the Evi Sale comprise the Company’s entire asset base in the Northern Alberta region.

The Company is selling the Evi assets for a base purchase price of $27.0 million payable in cash, subject to effective date adjustments based on an effective date of August 1, 2023. In addition, the purchaser will upon completion become responsible for all future ARO pertaining to the Evi assets, which carry AER deemed liabilities of approximately $48.1 million gross ($43.5 million net).