Pipestone Energy Corp. announces the conversion of its convertible preferred shares

CALGARY, Alta., Oct. 11, 2022 (GLOBE NEWSWIRE) — (PIPE – TSX) Pipestone Energy Corp. (“Pipestone” or the “Company”) is pleased to announce the voluntary early conversion of all outstanding convertible preferred shares (“CP Shares”) of the Company by their holders. This early conversion confirms once again the continued support given to Pipestone by its main shareholders, Riverstone Pipestone LP, GMT Capital Corp. and GMT Exploration Company LLC.

On September 17, 2020, Pipestone issued $70 million worth of CP stock, the proceeds of which were used to resume its development program amid the sharp drop in commodity prices due to the COVID-19 pandemic in first half of 2020. This financing provided the company with the capital needed to continue to effectively grow its asset from ~13,700 boe/d in Q3 2020 to ~30,800 boe/d in Q2 2022.

The CP shares had a conversion price of $0.85 per share, as well as a 6.5% dividend right, payable in arrears. Holders of CP shares had the right to convert their CP shares at any time. After the second anniversary of issuance, if the common shares (“Ordinary actions”) of the Company were trading at more than $1.70 per share for 20 days over a 30-day trading period and that Pipestone had an effective shelf prospectus covering resales of the underlying common shares, all CP shares then outstanding would automatically be converted into common shares at the conversion price.

Pursuant to the terms of the CP Shares, for a period of two years from the date of issue, accrued and unpaid dividends (“PIK Provisions”) have been added to the CP stock liquidation preference. After two years, at the option of the Company, dividends may be declared and paid in cash, including accruals of PIK, if the CP Shares are not voluntarily converted by their holders. These two factors combined led to the early conversion of CP shares by their holders.

On September 30, 2022, the date of the conversion notices, the shares of CP had a liquidation preference, including PIK accrued liabilities, of $79,850,406.82 and were converted into a total of 93,941,655 shares ordinary shares on October 5, 2022. No dividends were declared or paid on CP shares while they were outstanding. Pro forma, Pipestone now has 279,442,517 common shares outstanding.

In view of the mandatory early conversion of CP shares in the event the holders thereof do not voluntarily convert their CP shares, Pipestone has filed a shelf prospectus which is effective September 30, 2022. Although the shelf prospectus provides the Company with future flexibility with respect to the issuance of various securities, it currently has no plans to raise capital. At current commodity prices, Pipestone expects to continue to generate strong free cash flow.

Pipestone Energy Corp.

Pipestone is an oil and gas exploration and production company focused on developing its extensive base of contiguous, condensate-rich Montney assets in the Pipestone area near Grande Prairie. Pipestone plans to increase production to 32 Mboe/d (midpoint) in 2022 and to approximately 55 Mboe/d by the 2025 exit, while generating significant free cash flow and deleveraging the business. Pipestone is committed to creating long-term value for its shareholders while maintaining the highest possible environmental and operational standards, while being an active member and contributor of the communities in which it operates. Pipestone has certified all of its production from its Montney asset under the Equitable Origin EO100MT Standard for responsible energy development. Pipestone shares trade under the symbol PIPE on the TSX. For more information, visit www.pipestonecorp.com.

Pipestone Energy Contacts:

Advisory settlementForward-looking statements

In order to provide Pipestone shareholders and potential investors with information about Pipestone, this press release contains certain information and statements (“forward-looking statements”) that constitute forward-looking information within the meaning of applicable Canadian securities laws. Forward-looking statements relate to future results or events, are based on internal plans, intentions, expectations and beliefs, and are subject to risks and uncertainties that may cause actual results or events to differ materially from those are indicated or suggested. All statements other than statements of current or historical fact are forward-looking statements. Forward-looking statements are generally, but not always, identified by words such as “anticipate”, “estimate”, “expect”, “intend”, “expect”, “continue”, “propose”. , “may”, “will”, “should”, “believe”, “plan”, “target”, “goal”, “project”, “potential” and similar or other expressions indicating or suggesting future results or events.

Forward-looking statements are not promises of future results. There can be no assurance that the results or events indicated or implied by any forward-looking statements, or any plans, intentions, expectations or beliefs contained in them or upon which they are based, are correct or will actually occur or materialize (or that they do, what benefits Pipestone can derive from it).

In particular, this press release contains forward-looking statements relating to the Company’s expectation to continue to generate significant free cash flow at current commodity prices.

With respect to the forward-looking statements contained in this press release, Pipestone has evaluated important factors and made assumptions regarding, among other things: future commodity prices and exchange rates, including the consistency of future oil , natural gas liquids (“NGL”) and natural gas prices with current commodity price forecasts; the ability to contract additional natural gas processing capacity, commencing in 2023, on terms acceptable to Pipestone or not at all; the economic impacts of the COVID-19 pandemic; Pipestone’s continued ability to obtain qualified personnel and equipment on a timely and cost-effective basis; the predictability of future results based on past and current experience; the predictability and consistency of the legislative and regulatory regime governing royalties, taxes, environmental matters and oil and gas operations, both provincially and federally; Pipestone’s ability to successfully market its oil, NGL and natural gas production; the timing and success of drilling and completion activities (and the extent to which the results thereof meet expectations); Pipestone’s future production levels and the amount of future capital investments, and their consistency with Pipestone’s current development plans and budget; future capital expenditure requirements and the adequacy thereof to achieve Pipestone’s objectives; the successful application of drilling and completions technology and processes; the applicability of new technologies to the recovery and production of Pipestone’s reserves and other resources, and their ability to improve capital and operating efficiencies in the future; the ability to recover Pipestone’s reserves and other resources; Pipestone’s ability to economically produce oil and gas from its properties and the timing and cost to do so; the performance of new and existing wells; future cash flows from production; future sources of funding for Pipestone’s capital program and its ability to obtain external funding as needed and on acceptable terms; future debt levels; geological and engineering estimates regarding Pipestone’s reserves and other resources; the accuracy of geological and geophysical data and their interpretation; the geography of the areas in which Pipestone conducts exploration and development activities; the timely receipt of required regulatory approvals; the access, economic, regulatory and physical limitations to which Pipestone may be subject from time to time; and the impact of competition in the industry.

The forward-looking statements contained herein reflect management’s current beliefs, but the estimates and assumptions on which they are based may prove to be incorrect. Although Pipestone believes that its underlying assessments and assumptions are reasonable based on currently available information, undue reliance should not be placed on forward-looking statements, which are inherently uncertain, depend on the accuracy of such assessments and assumptions and are subject to known factors and unknown risks, uncertainties and other factors, both general and specific, many of which are beyond Pipestone’s control, which may cause actual results or events to differ materially from those indicated or suggested in the forward-looking statements. These risks and uncertainties include, but are not limited to, volatility in market prices and demand for oil, NGLs and natural gas and related hedging activities; general economic, business and industrial conditions; the difference between Pipestone’s actual capital costs, operating costs and economic returns from those expected; the ability to find, develop or acquire additional reserves and the availability of capital or financing to do so on satisfactory terms; and the availability of sufficient natural gas processing capacity; and risks associated with the exploration, development and production of oil and natural gas reserves and resources. Additional risks, uncertainties and other factors are discussed in the MD&A dated March 9, 2022 and Pipestone’s Annual Information Form dated March 9, 2022, copies of which are available electronically on Pipestone’s SEDAR profile at ‘address www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof, and Pipestone undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. , except as required by applicable securities. laws. All forward-looking statements contained herein are expressly qualified by this notice.

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