Pulse Oil announces a private placement offering of preferred and common qquity to fund bigoray enhanced oil recovery project

CALGARY – Pulse Oil Corp. (TSX-V:PUL) (the “Company” or “Pulse“) is pleased to announce that it intends to complete a brokered private placement (the “Private Placement“), whereby the Company and a wholly owned subsidiary of the Company, Pulse Oil Operating Corp (“OpCo“) will issue an aggregate number of units (the “Private Placement Units“) comprised of securities issued by the Company and OpCo for gross proceeds of up to $30,900,000.  Each Private Placement Unit will be priced at $25.75 and will consist of one (1) preferred share (a “Preferred Share“) in the capital of OpCo, and twenty-five (25) common shares (“Common Shares“) in the capital of the Company.  The Private Placement will be conducted on a commercial efforts basis for the issuance of up to: (i) 1,200,000 Preferred Shares of OpCo, at a price of $25.00 per Preferred Share; and (ii) 30,000,000 Common Shares, at a price of $0.03 per Common Share.

Holders of the Preferred Shares will, among others terms, be entitled to receive a dividend payment equal to 100% of the free cash flow of OpCo, calculated in accordance with the rights and restrictions attaching to the Preferred Shares, on a pro-rata basis, until the Preferred Shares have realized an internal rate of return (“IRR“) equal to 25%.  Thereafter, holders of Preferred Shares will be entitled to a dividend payment equal to 50% of the free cash flow of OpCo, until the Preferred Shares have realized an IRR equal to 100%, and a dividend payment equal to 25% of free cash flow of OpCo.  OpCo may (but is under no obligation to), commencing on the date that is five (5) years and one day from the date of issuance, and on every one (1)-year anniversary thereafter, redeem all or any part (on a pro-rata basis by shareholder) of the then outstanding Preferred Shares at a cost of $25.00 per Preferred Share.   The Preferred Shares will be non-voting shares of OpCo, provided that the holders of Preferred Shares will be entitled to certain customary consent rights with respect to certain fundamental matters with respect to OpCo and its business pursuant to the terms of a shareholder agreement to be entered into among OpCo, Pulse and the holders of Preferred Shares at closing of the Private Placement.

The Private Placement will be conducted by Raymond James Ltd. (the “Agent“), as sole agent and sole bookrunner. INFOR Financial Inc. is acting as exclusive financial advisor to the Company.

Drew Cadenhead, Pulse President and COO commented, “This funding will allow us to accelerate our Enhanced Oil Recovery (“EOR“) project at Bigoray at a time when our largest expense associated with the project, the NGL injection solvent, is at historically low prices. With peak EOR sweet light crude oil production rates forecasted 12-18 months after initiation of solvent injection, we believe it makes sense to advance the project in the current low oil price environment.  Accelerating the program now improves the economic forecasts of the project with the goal of creating value for all of our shareholders.”

Pulse CEO, Garth Johnson commented, “Gaining access to a new investor base in these challenging times where raising capital is extremely difficult would allow Pulse to expedite our EOR project. Bigoray is our main priority at Pulse and being able to access funding will speak to the quality of the project at Bigoray. We feel the potential upside in Bigoray would be exciting for all shareholders that have stuck by us over these difficult times and of course for the new shareholders that invest in us now to get the Bigoray project up and running.”

The net proceeds received by OpCo in the Private Placement attributable to the Preferred Shares are intended to be used by OpCo for:

1. 1. capital and operational expenditures at its 100% owned Bigoray oil and gas operations in Alberta;
   2. up to $500,000 per annum of general working capital in respect of Pulse that can be paid to Pulse via intercompany loan or management fee; and
   3. the repayment of certain third party debt of Pulse/OpCo related to the Bigoray oil and gas operations.

In order to ensure proceeds received by OpCo pursuant to the Private Placement will be utilised solely for the development of the Bigoray assets and for other allowable costs and expenses (as described above), OpCo will distribute all of the oil and natural gas assets of OpCo, including all petroleum & natural gas rights, miscellaneous interests and tangibles associated therewith, other than the Bigoray assets currently owned by OpCo, to a newly formed subsidiary of Pulse.

A full summary of all terms associated with the Preferred Shares will be available on www.sedar.com upon the closing of the Private Placement.

The net proceeds, estimated to be up to $828,000, received by the Company in the Private Placement attributable to the Common Shares are expected to be used to fund  the following expenses:

The proceeds will not be used to pay any related parties of Pulse.

The Private Placement is being made pursuant to the “accredited investor” prospectus exemption under NI 45-106 and other applicable exemptions pursuant to local securities laws.

The Common Shares issued pursuant to the Private Placement will be subject to a hold period under applicable securities laws, which in Canada expire four months and one day from the date of issue.  In addition to the foregoing, without prior written approval of TSX Venture Exchange (“TSXV“) and compliance with all applicable securities legislation, the Common Shares may not be sold, transferred, hypothecated or otherwise traded on or through the facilities of TSX or otherwise in Canada or to or for the benefit of a Canadian resident until the date that is 4 months and a day from the date of issuance of the Common Shares.

The Private Placement is scheduled to close in June, and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals including the approval of the listing of the Common Shares on the TSXV.

About Pulse Oil Corp.

Pulse is a debt-free, Canadian company incorporated under the Business Corporations Act (Alberta) that is focused on a 100% Working Interest Enhanced Oil Project Located in West Central Alberta, Canada. The project includes two established Nisku pinnacle reef reservoirs that have been producing sweet light crude oil for over 40 years. The Company plans to institute a proven recovery methodology (NGL solvent injection) to further enhance the ultimate oil recovery from these two proven pools. With under 10 million barrels of oil recovered to date, and representing just 35% recovery factor from the pools, Pulse is moving forward to execute the EOR project and unlock significant value for shareholders.

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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 neither approved nor disapproved of the contents of this press release.