Toro Oil & Gas announces non-dilutive financing
On May 26, 2015, Toro Oil & Gas Ltd. (Toro) announced that it entered into a binding letter agreement with Source Rock Royalties Ltd. (Source Rock) for a non-dilutive financing, which inclusive of a C$4 million acquisition fund, total C$16 million.
In exchange for C$12 million in cash proceeds, Toro commits to provide Source Rock with Viking light oil production volumes as a royalty (a "PVR"). The C$12 million PVR is allocated into two separate components: an C$8 million binding PVR in return for Toro providing royalty barrels starting at 33 bbls/d of light oil from Toro's Viking production base and escalating to 63 bbls/d by 2021; and a further C$4 million PVR conditional upon Source Rock closing an external financing of at least C$10 million, in return for Toro to provide royalty barrels starting at 17 bbls/d and escalating to 32 bbls/d by 2021.
Toro will issue 350,000 common shares to Source Rock at a deemed price equal to the ten day volume weighted average share price on the TSX Venture Exchange prior to the execution of the agreement. Together with its existing sources of liquidity, Toro intends to use the proceeds to increase and accelerate its 2015 drilling program within the Viking light-oil fairway.
Additionally, Source Rock will establish an acquisition fund of C$4 million, accessible at Toro's option, for the purpose of strategic acquisitions by Toro within the Viking light oil fairway. Source Rock will be granted a gross over-riding royalty to be determined on the production and lands acquired by the acquisition fund.
The parties anticipate that closing will occur on or before June 30, 2015.
Toro is a junior oil and gas energy company focused on acquiring, developing and exploiting large oil in place pools within the Alberta-Saskatchewan Viking light oil fairway.
Source Rock is a Calgary-based private corporation exclusively focused on acquiring and managing royalties on oil and gas properties and mineral title interests in the Western Canadian Sedimentary Basin.
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