TomCo Energy plc (LON:TOM), the US operating oil development group focused on using innovative technology to unlock unconventional hydrocarbon resources, has announced an update with respect to the Company’s wholly owned subsidiary, Greenfield Energy LLC (“Greenfield”). As previously announced, TomCo, via Greenfield, currently owns a 10% Membership Interest in Tar Sands Holdings II LLC (“TSHII”) together with an exclusive option, at its sole discretion, to acquire the remaining 90% of the Membership Interests for certain additional cash consideration in the period up to 31 December 2022.
Loan Agreement
On 16 November 2021, the Company announced that the acquisition of the initial 10% of the Membership Interests in TSHII had been financed by way of an unsecured US$1.5 million loan from Valkor Oil & Gas LLC to Greenfield. The Loan was scheduled to be repaid on or before 30 May 2022, however the terms of the loan have now been varied in order to extend the repayment date to on or before 30 June 2022.
As a former JV partner, Valkor is considered to be a related party of the Company (as defined in the AIM Rules for Companies) and, accordingly, the variation of the Loan’s terms is deemed to constitute a related party transaction pursuant to AIM Rule 13. The TomCo directors, having consulted with Strand Hanson Limited, the Company’s Nominated Adviser, consider that the variation of the Loan’s terms is fair and reasonable insofar as the Company’s shareholders are concerned.
TSHII Drilling Update
Further to the Company’s announcements of 10 February and 10 March 2022, the Company is pleased to report that the drilling of the three exploration wells on the TSHII site has been completed.
Initial results from the drilling met with the Company’s expectations. The results of this drill programme are currently being assessed and confirmed by Netherland, Sewell & Associates, Inc.. NSAI will then provide an update to its initial TSHII reserves report, as announced by the Company on 13 January 2022, in the coming months.
Additionally, Greenfield is currently progressing the requisite permitting for the planned production well programme on the TSHII site following recent changes to the relevant permit legislation. The Company currently anticipates that the necessary permits will be secured in time for drilling of the wells to commence in Q3 2022, assuming the requisite funding has been secured, with initial production then expected in Q4 2022. The number of wells to be permitted has been increased from five to seven.
Commenting, John Potter, CEO of TomCo, said: “We continue to make good progress with our plans for the TSHII site and are pleased with the positive results we have already seen from the three exploration wells. We are also advancing the previously announced due diligence exercise being undertaken by a potential financing party currently interested in backing our plans for Greenfield, together with other matters in relation to the TSHII site.
“The Company’s Board has recently undertaken a site visit to Utah and met with the Valkor team and our sand off-take partner. Whilst in Salt Lake City the Board also met with the Company’s local professional advisers and were able to view some of the cores recovered from the exploration wells, which are being stored at the Utah Geological Society’s core store. We look forward to providing further updates in due course.”
