Calgary, Alberta--(Newsfile Corp. - November 18, 2021) - New Stratus Energy Inc. (TSXV: NSE) ("New Stratus" or the "Corporation") is pleased to announce the approvals by the Ministry of Energy and Non-Renewable Natural Resources of Ecuador and the Ecuadorian Antitrust Authority (Superintendencia de Control del Poder de Mercado) for the transfer of the shares ("Shares") of Repsol Ecuador S.A. to New Stratus (the "Transaction"). The Corporation has been formally notified of such approvals.
Upon completion of the Transaction, the Corporation will hold an indirect 35% operated working interest in service contracts (the "Service Contracts") for Blocks 16 and 67 in Ecuador (the "Blocks") and Repsol Ecuador S.A. will remain the operator of the Blocks. Gross production in October 2021 on the Blocks was 15,617 barrels of oil per day (5,466 net to the sellers).
New Stratus, through Repsol Ecuador S.A. as operator, intends to invest approximately US$200 million in 2022 and 2023 to drill development wells on the Blocks following the completion of the Transaction and the completion of negotiations with the Government of Ecuador to extend rights to the Blocks through a production sharing contract. In keeping with its minimum carbon footprint policy, New Stratus will drill these wells from existing, environmentally licensed, well pads. This capital expenditure program will be financed primarily by cash flow and a debt facility being finalized with the Corporation's financial partners.
The transfer of the Shares does not imply any change in the legal entity of Repsol Ecuador S.A., other than the beneficial ownership of the Shares. Furthermore, the Transaction will not alter or affect any of the labour rights of the employees of Repsol Ecuador S.A. who will continue with no change to their rights. New Stratus is committed to maintaining stability for all employees of Repsol Ecuador S.A. in accordance with the contractual commitments it will assume once the Transaction is completed.
Additionally, New Stratus is committed to continue supporting the communities in the area of influence of the Blocks and will continue complying with all the commitments that Repsol Ecuador S.A. has made to the neighboring communities, as established by Ecuadorian law and in agreement with the Waorani Nation of Ecuador.
Finally, New Stratus will continue to rigorously adhere to and comply with all environmental regulations and commitments related to the operation of the Blocks.
New Stratus will provide more details on the Transaction at closing, which is expected in December 2021. The closing of the Transaction remains subject to customary TSX Venture Exchange approvals (the "TSXV Approvals") and satisfaction of customary closing conditions.
Certain information set forth in this news release constitutes "forward-looking statements", and "forward-looking information" under applicable securities legislation (collectively, "forward-looking statements"). All statements other than statements of historical fact are forward-looking statements. Forward-looking statements may be identified by the use of conditional or future tenses or by the use of such words such as "will", "expects", "intends", "may", "should", "estimates", "anticipates", "believes", "projects", "plans", and similar expressions, including variations thereof and negative forms. Forward-looking statements in this press release include expectations about the completion of the Transaction, the final terms thereof, and the timing thereof, management's expectations with respect to the Transaction and plans with respect to drilling and operations on the Blocks, receipt of the TSXV Approvals and satisfaction of other closing conditions, expectations regarding capital investment in the Blocks, the extension of the term of the Blocks, entering into a production sharing contract with the Government of Ecuador in respect of the Blocks, expectations regarding the cash flow from the Blocks, and expectations regarding the ability to obtain a debt facility, and are based on the Corporation's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Forward-looking statements are not guarantees of future performance and undue reliance should not be placed on them.
In respect of the forward-looking statements contained herein, the Corporation has provided them in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of the Corporation to receive, in a timely manner, the TSXV Approvals, the ability of the Corporation to satisfy, in a timely manner, the conditions to the closing of the Transaction, the ability of the Corporation to negotiate extension to the term of the Blocks and enter into production sharing contracts with the Government of Ecuador, the expected cash flows from the Blocks, and the ability of the Corporation to obtain a debt facility on satisfactory terms, some or all of which may prove to be incorrect. Accordingly, readers should not place undue reliance on the forward-looking statements contained herein.
Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: risks and uncertainties relating to the completion of the Transaction as described herein; the ability to successfully integrate operations and realize the anticipated benefits of the Transaction; incorrect assessments of the value of the Transaction; changes in commodity prices and currency exchange rates; currency and interest rate fluctuations; the ability to secure adequate debt financing; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. New Stratus undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws.
New Stratus has included the above summary of assumptions and risks related to forward-looking statements provided in this news release in order to provide readers with a more complete perspective on the Transaction and such information may not be appropriate for other purposes. Actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits may be derived therefrom.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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