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Journey Energy Inc. Announces Equity Financing and Term Debt Extension


CALGARYSept. 30, 2019 /CNW/ – Journey Energy Inc. (JOY – TSX) (“Journey” or the “Company“) today announced two significant financial transactions improving its balance sheet and liquidity.

Non-brokered private placement
Journey has entered into a non-brokered, private placement for $7.3 million of flow through common shares (within the meaning in the Income Tax Act (Canada) (the “Flow-Through Shares“).  2.8 million Flow-Through Shares were issued at a price of $2.60 per share, representing a premium of 13.5% to the five day, volume weighted average price of Journey’s shares preceding today. The proceeds from the issuance of the Flow-Through Shares will be used to incur eligible Canadian Development Expenses (“CDE“) prior to March 31, 2020.  Journey is planning to use the funds for development activity in its Matziwin and Skiff core areas, which will be conducted between October 1, 2019 and March 31, 2020.   Journey has had significant success in these two areas where they have been delineating portions of the reservoirs which are essentially undrained.  Initially, Journey plans to drill 4 wells (3.6 net) in Matziwin prior to year-end, followed by a development program in Skiff in the first quarter of 2020. The 2019 drilling activity is already included in Journey’s current guidance.

Term Debt Extension
Journey announces that it has renegotiated its two outstanding tranches of promissory notes that were previously issued to the Alberta Investment Management Corporation, on behalf of certain of its clients, (“AIMCo“).  Both sets of promissory notes were repaid and a new, second-lien, term debt financing was entered into with AIMCo and will be comprised of two tranches of $22 million each.  The first tranche will mature on September 30, 2022 and bear interest at 7.65% per annum.  The second tranche was extended three years past its original expiry and will now mature on October 31, 2023.  This tranche will bear interest at 11.5% per annum.  As part of the new term debt issuance, AIMCo received 1,137,331 warrants to purchase common shares of Journey at an exercise price of $3.15 per share.  The warrants will expire on September 30, 2022.  The warrant terms further provide that, subject to certain exceptions on a change of control, AIMCo shall only be permitted to exercise a percentage of the warrants determined such that, at no time shall AIMCo be deemed to have beneficial ownership of greater than 19.99% of the outstanding common shares.

In addition, today AIMCo increased its equity stake in Journey by 2,790,700 common shares through a private purchase with third parties. AIMCo now holds 7,740,700 common shares of Journey, representing approximately 18.4% of the basic outstanding shares, after incorporating the Flow-Through Share private placement.

Journey president Alex Verge commented that, “Journey is extremely fortunate to have the continuing support of a business partner like AIMCo, who, as both an equity partner, and a 2nd lien debt holder, has helped Journey continue to advance its business over the past three years. With no near-term debt maturities to be concerned with, Journey is now able to continue building upon the excellent drilling results we have achieved in Matziwin and Skiff since early 2018, and deliver enhanced value to our shareholders.”

About AIMCo

AIMCo is one of Canada’s largest and most diversified institutional investment managers with more than $115 billion of assets under management. AIMCo was established on January 1, 2008 with a mandate to provide superior long-term investment results for its clients.  AIMCo operates at arms-length from the Government of Alberta and invests globally on behalf of 31 pension, endowment and government funds in the Province of Alberta. For more information on AIMCo please visit www.AIMCo.alberta.ca.

About the Company

Journey is a Canadian exploration and production company focused on oil-weighted operations in western Canada.  Journey’s strategy is to grow its production base by drilling on its existing core lands, implementing waterflood projects, and by executing on accretive acquisitions.  Journey seeks to optimize its legacy oil pools on existing lands through the application of best practices in horizontal drilling and, where feasible, with water floods. Journey is also in the early phases of advancing development of an unconventional shale resource play in the oil window of the Duvernay, in the western shale basin of our central core area.

FORWARD LOOKING STATEMENTS AND OTHER ADVISORIESInformation in this press release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, which involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Journey, including, without limitation, those listed under “Risk Factors” and “Forward Looking Statements” in the Annual Information Form filed on www.SEDAR.com on March 26, 2019. Forward-looking information may relate to Journey’s future outlook and anticipated events or results and may include statements regarding the business strategy and plans and objectives. Particularly, forward-looking information in this press release includes, but is not limited to, information concerning Journey’s drilling and other operational plans, production rates, and long-term objectives. Journey cautions investors in Journey’s securities about important factors that could cause Journey’s actual results to differ materially from those projected in any forward-looking statements included in this press release. Information in this press release about Journey’s financial position is based on assumptions about future events, including economic conditions and courses of action, based on management’s assessment of the relevant information currently available. Readers are cautioned that information regarding Journey’s financial outlook should not be used for purposes other than those disclosed herein. Forward-looking information contained in this press release is based on current estimates, expectations and projections, which Journey believes to be reasonable as of the current date. No assurance can be given that the expectations set out herein will prove to be correct and accordingly, you should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time except as required by applicable securities law.

Readers are cautioned that the above list of risks and factors are not intended to be exhaustive. Additional information on these and other factors that could affect operating and financial results are, or will be, included in reports filed with the applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

No securities regulatory authority has either approved or disapproved of the contents of this press release.

SOURCE Journey Energy Inc.



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