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Crown Capital Provides Strategic Financing for Marquee Energy

May 31, 2017, 07:09 AM
Filed Under: Energy
Related: Energy

Marquee Energy Ltd. announced key steps that have been taken to increase growth, value and liquidity. The company has entered into a term loan with Crown Capital Fund IV, LP, an investment fund managed by Crown Capital Partners Inc. and has closed a new credit facility with a major Canadian bank. This will allow the Company to expand its capital program for the second half of 2017.

Marquee has entered into an agreement with Crown Capital for a $30 million subordinated term loan. The Term Loan bears an interest rate of 10% per annum over a term of five years and is second lien secured. In conjunction with the Term Loan, Marquee has granted Crown Capital 37,500,000 warrants or approximately 8.6% of the outstanding shares. Each Warrant entitles Crown to purchase one common share of Marquee at an exercise price of $0.11 any time prior to May 30, 2021. The exercise price of the Warrants represents a 46% premium to the 20-day volume-weighted average trading price of Marquee common shares at market close on May 29, 2017. If fully exercised, the warrants would represent approximately 8% of the fully diluted common shares outstanding.

Proceeds from the Term Loan will fully repay the previous syndicated loan, provide long term funding and liquidity certainty for the Company and support an expanded drilling program of high netback and high rate of return horizontal light oil wells at Michichi.

Marquee's Credit Facility is a $12 million revolving, operating demand facility with a major Canadian bank, with the next interim review scheduled for October 31, 2017 and replaces the company's previous syndicated credit facility of $25 million. Following the closing of the financing, Marquee will have a positive cash balance of approximately $7.5 million and be undrawn on its Credit Facility.

"Marquee is pleased to have a new strategic partner in Crown Capital who is supportive of unlocking the value of our Michichi asset in eastern Alberta", said Richard Thompson, president and CEO of Marquee.

The Credit Facility and Term Loan significantly improve Marquee's liquidity and allow for acceleration of the large scale light oil development opportunity at Michichi. The enhanced liquidity will support an accelerated drilling program following up on the success of the first quarter drilling program.

Marquee owns and operates oil and gas facilities and extensive gas gathering system infrastructure at Michichi and has identified over 290 development drilling locations which include 88 undrilled locations booked in Marquee's 2016 year end reserve report. These locations have been identified utilizing extensive horizontal and vertical well control in combination with Marquee's large 2D and 3D seismic coverage at Michichi

The Board of Directors of Marquee has approved a capital budget of approximately $15 million for the second half of 2017. The budgeting is based on an oil price of US$50WTI/barrel and a natural gas price of $2.75/GJ AECO. The capital program is expected to increase cashflow, production and reserves while leaving the Company undrawn on its Credit Facility at year-end.

Marquee is planning to drill six light oil horizontal Banff wells in the second half of 2017, and expects a year end corporate exit rate of 3,000 boe/d - 3,300 boe/d (25-37% production growth exit to exit). The production growth in 2017 is expected to increase the Company's oil and liquids weighting and reduce corporate unit operating costs generating an expected improvement of field netbacks by more than 40%.

The second half 2017 drilling program is anticipated to commence mid-June to early July, and expects to incorporate mono-bore drilling with increased frack stages to improve productivity and reserves recoveries while maintaining similar well costs as recent drilling. The capital spending also includes legacy horizontal well optimization, operating capital, normal course abandonment and reclamations costs as well as seismic and land acquisition expenditures.

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