TomCo Energy plc (LON:TOM), the US operating oil development group focused on using innovative technology to unlock unconventional hydrocarbon resources, has announced its unaudited interim results for the six-month period ended 31 March 2023.
Chairman’s Statement
Operational
The Company’s primary focus remains on its wholly owned subsidiary, Greenfield Energy LLC, and its plans to pursue the construction of two oil sands separation plants, capable of processing at least 6,000 tonnes per day of oil sands at a suitable site held by Tar Sands Holdings II LLC (“TSHII”) in Utah, USA, as well as potentially exploiting other opportunities available to it.
Post the reporting period end, the Company has continued to seek to secure the requisite funding package for Greenfield’s development, with the primary scenario involving the potential disposal of a majority stake in Greenfield to a partner in return for, inter alia, certain upfront cash consideration, a continuing equity participation for TomCo in Greenfield without the requirement for further capital contributions from the Company, and the provision of a sizeable funding package to Greenfield. While taking longer than hoped, discussions remain ongoing and, based on conversations to date, the Board remains optimistic that suitable funding arrangements can be successfully concluded during the remainder of 2023 despite the current challenging global macroeconomic environment. Following recent agreement with the vendor of TSHII, the deadline for Greenfield to potentially exercise its option over the remaining 90% ownership and membership rights and interests (the “Membership Interests”) in TSHII has recently been extended to 31 December 2023.
Permitting for the planned in-situ oil recovery/production wells at TSHII is ongoing. Labour shortages at the relevant US permitting authority along with a general increase in the number of permit applications being made has resulted in significant delays. It is currently hoped that the Company’s first production well permit will be secured in Q3 2023.
Funding activities
Since the Company’s financial year end on 30 September 2022, the previously announced unsecured Convertible Loan facility of £750,000 principal amount, drawn down in two equal tranches in September and October 2022, was converted in full together with accrued interest thereon into a total of 232,140,577 new ordinary shares at an average price of approximately 0.34 pence per share. A total of 105,000,000 two year warrants exercisable at a price of 0.75 pence per share were issued to the Convertible Loan subscribers and the Company’s broker in connection with the facility and remain outstanding. The proceeds from the facility were utilised, inter alia, to repay a proportion of the outstanding unsecured loan previously advanced to Greenfield by Valkor Oil & Gas LLC (the “Valkor Loan”). The principal amount outstanding in respect of the Valkor Loan is currently approximately £0.47 million which is repayable on completion of a suitable funding transaction for Greenfield.
On 30 November 2022, the Company raised gross proceeds of £0.925 million via the placing of 264,285,714 new ordinary shares at a price of 0.35 pence per share. 15,857,143 two year warrants exercisable at a price of 0.35 pence per share were issued to the Company’s broker in connection with the placing and remain outstanding. An initial £250,000 tranche of an additional committed Convertible Loan facility of up to £1m was drawn down in April 2023 (of which £225,000 principal amount has since been converted to date), however, the remainder of such facility was subsequently cancelled and materially replaced by way of a £500,000 gross placing and subscription in June 2023 at a price of 0.08 pence per share. This funding was secured in order to, inter alia, further progress Greenfield’s short-term plans and preparations in relation to the TSHII site.
The net proceeds are also being utilised to cover the Company’s expenses in relation to an ongoing exercise seeking to secure potential funding of up to US$200 million for Greenfield. Whilst there can be no certainty that such funding negotiations and proposed arrangements will be satisfactorily concluded, nor as to the precise terms of any such funding package, such non-equity financing, if secured, would enable Greenfield to acquire the remaining 90% of the Membership Interests in TSHII and cover the currently estimated construction costs of an initial 6,000 tonnes per day oil sands separation plant and the requisite associated supporting infrastructure to enable the future mining of oil bearing sands at the TSHII site.
Summary
Our continued focus is on progressing our plans for Greenfield and unlocking the significant potential that we see in the TSHII site and planned extraction methodology.
Greenfield is engaged in ongoing discussions regarding possible funding options to potentially achieve the ultimate acquisition of 100% of the TSHII Membership Interests, as well as the proposed drilling of several oil production wells and the future construction of the planned initial 6,000 tonnes per day separation plant, whilst progressing other preparatory work. Whilst there can be no certainty that the Company and Greenfield can secure the requisite funding and further well permitting required, I am optimistic, based on discussions with potential funders to date, that the requisite funding package to implement our plans can be secured during the remainder of 2023 and thank all of our stakeholders for their continued patience and support.
These continue to be very exciting times for TomCo Energy as we look to realise Greenfield’s significant long- term potential.
