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Halo Exploration announces significant Montney results, debt financing, Q4 development program, and remarks from Premier of Alberta


CALGARY, ALBERTA – September 21, 2020 / Halo Exploration Ltd. (the “Company” or “Halo”) is pleased to announce test results from its HALO HZ MCKINLEY 5-21-65-22 (“5-21”) upper Montney well, as well as confirmation of tranche 2 funding of the Company’s $10.7 million term loan, and the Company’s preliminary plans for its Q4 development program.

Highlights

  • Montney Well Results: 5-21 has been on production since July 29th, 2020 and has averaged 640 Boe/d (500 Bbls/d) through its first 51 days of production. The last 48 hours of that period have averaged 949 Boe/d (725 Bbls/d).(1)(2)
  • Term Debt Tranche 2 Funding Commitment: Confirmation of accelerated tranche 2 funding by Proof Capital Inc. to provide an additional CAD $7.7 million of term debt.
  • Q4 Development Program: Confirmed funding to support a 2 well development plan in Q4 2020.
  • Updated Estimated Productive Capacity: the 5-21 well, plus volumes behind pipe, bring Halo’s current productive capacity to greater than 1,800 Boe/d (>1,000 Bbls/d).

“The 5-21 upper Montney test result firmly establishes the commercial nature and running room of Halo’s oil weighted asset base. Horizontal drilling and fracture stimulation of more conventional Montney reservoirs (with higher porosity & permeability than typical unconventional reservoirs) has placed Halo on a development path to meaningful free cash flow. The highly economic nature of the Company’s inventory combined with an active risk management program will allow Halo to navigate this unprecedented time of low prices and market volatility, as will support by Proof Capital through its election to fund tranche 2 of its term loan on an accelerated basis. We wish to thank our shareholders, stakeholders and lenders for their support through 2020, as well as Premier Kenney for his encouragement as we build towards Alberta’s economic recovery.” said Geoff Cain, President and CEO of Halo Exploration.

Alberta Premier Jason Kenney commented: “Alberta has always relied on innovators and entrepreneurs who work to make ideas into reality. Halo Exploration is a testament to that Alberta spirit. The last five years have been among the most challenging that our resource sector has faced. But, because of the hard work and determination of Halo and their leadership team, including their President and CEO, Geoff Cain, they are demonstrating that Alberta’s energy industry will continue to create jobs and opportunities for years to come. It’s companies like Halo that are leading the way in Alberta’s Economic Recovery. This is a great day for Halo, a great day for our resource industry and a great day for Alberta.”

HALO HZ MCKINLEY 5-21-65-22 Initial Results

Halo has now drilled, completed, tested and tied-in its 100/05-21-65-22W5/02 upper Montney well located in the McKinley strike area near Fox Creek, AB. The 5-21 well is co-located with the HALO MCKINLEY 3-22-65-22 upper Montney vertical well and the HALO HZ MCKINLEY 13-16-65-22 lower Montney horizontal well on the Halo McKinley Multi-well Battery (3-22 surface).

The 5-21 Montney oil well was opened to flow post fracture simulation on July 26th following a 3-day flow test. The well was tied-in to the Halo McKinley Multi-well Battery and has now been on continuous production for 51 days. To September 17, 2020, the well flowed at a restricted rate that averaged 1,044 Bbls/d of total fluid and 640 Boe/d (78% of 40˚ API oil) with a 52% water cut. In the last 48 hours the well averaged 949 Boe/d (76% of 40˚ API oil) with a 38% water cut. To date, Halo has recovered 65% of the load fluid used during fracture stimulation.(1)(2)

Total drill and completion costs for the 5-21 well were CAD $4.4 million. Halo expects future drill and completion costs to average CAD $4.0 million.

$10.7 Million Debt Financing

Halo closed the first tranche ($3.0 million) of the CAD $10.7 million Term Loan on June 12th, 2020. As of September 15th, Proof Capital Inc. (“Proof”) confirmed its intention to deliver the remaining CAD $7.7 million of principal ahead of schedule (“Tranche 2“). Tranche 2 funding was originally scheduled to follow the 60-day production milestone. Tranche 2 is expected to close on or before October 15th, 2020. Proof Capital Inc. (“Proof”) acted as agent and financial advisor to Halo with respect to the Term Loan (www.proofcapital.ca).

$3.4 Million Equity Financing

On June 12th, 2020, Halo closed a concurrent equity financing for proceeds of CAD $3.4 million. The financing was completed by way of a private placement of units comprised of one Common Share and 0.66 of a Common Share purchase warrant (“Warrant”). Each Warrant shall expire on the earlier of (i) the Corporation achieving sixty (60) days of production of the 5-21-65-22W5 well (expected to be October 15th, 2020) or (ii) March 31, 2021. If exercised, total potential proceeds from outstanding Warrants would be up to an incremental CAD $3.4 million.

Estimated Monthly Sales Volume & Productive Capacity

In addition to production from the 5-21 well, Halo estimates an incremental 1,193 Boe/d (538 Bbls/d) of Montney productive capacity as illustrated in the table below:

UWI

Description

Prod. day average rate/total test average

100/05-21-065-22W5/02

Upper Montney HZ

640 Boe/d, 500 Bbls/d(1)(2)

100/03-22-065-22W5/00

Upper Montney Vertical

77 Boe/d, 50 Bbls/d

100/13-16-065-22W5/00

Lower Montney HZ

122 Boe/d, 81 Bbls/d

100/12-01-065-22W5/00

Upper Montney HZ

994 Boe/d, 407 Bbls/d

Q4 Development & Montney Inventory

Prior to the drilling of the 5-21 well, McDaniel & Associates, the Company’s independent reserves evaluator, had granted Halo 32 booked locations in addition to 350 contingent/prospective locations in the Montney.(3) The initial 5-21 results have further validated the Company’s Montney inventory. Fourth quarter capital spending requirements for Halo’s two well development program will be met by cash flow from operations, the Company’s $10.7 million term loan, and $3.4 million of potential warrant proceeds.

In addition to the Company’s 61.25 net sections of Montney acreage, Halo has another 37 net sections of contiguous prospective acreage in the Duvernay.

About Halo

Halo Exploration Ltd. is a private oil and gas exploration & production company focused on the Montney oil window in the Greater Kaybob, McKinley and Ante Creek strike areas near Fox Creek, Alberta. For more information please visit our website at www.haloexp.com or contact:



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