News Release – TheNewswire – Vancouver, British Columbia – December 13, 2022 – Samurai Capital Corp. (TSXV:SSS.P) (“Samurai” or the “Company“) is pleased to announce that it has entered into a letter of intent (“LOI“) dated December 7, 2022, to enter into a business combination (the “Transaction“) with Home Run Oil & Gas Inc. (“Home Run“). It is expected that upon completion of the Transaction, the combined entity (the “Resulting Issuer“) will meet the listing requirements for a Tier 2 Oil & Gas issuer under the policies of the TSX Venture Exchange (the “TSXV“). The Transaction is intended to constitute the “Qualifying Transaction” of Samurai, as such a term is defined in Policy 2.4 – “Capital Pool Companies” of the TSXV.
The Transaction is not a “Non-Arm’s Length Qualifying Transaction” pursuant to the policies of the TSXV and, as such, the Company is not required to obtain shareholder approval for the Transaction.
General Information on Home Run
Home Run was incorporated under the Business Corporations Act (Alberta) on August 5, 2021. Home Run’s head office is located at Suite 610, 1414 8th Street SW, Calgary AB, T2R 1J6. Home Run is a private junior oil and gas exploration and development company currently active in west central Alberta, specifically in the Ante Creek N. Area. Home Run currently owns a 100% working interest in 29.5 sections of lands, leases and licenses (18,880 acres/7,552 hectares) in the Ante Creek N. Area, Ante Creek Area, Simonette Area and the Kaybob S. Area of West Central Alberta. Home Run will, subject to the completion of the Transaction, continue to be active in the west central Alberta Area and expects to drill the first well, on a proven reserve location at Ante Creek N., before the end of the second quarter 2023.
Pursuant to a National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities compliant report dated effective September 30, 2022 by an independent qualified reserves evaluator (the “Reserves Report”), Home Run’s future net revenue (before income taxes, discounted at 10%), using forecast prices and costs, attributable to total proved reserves is $13.46M, to proved plus probable reserves is $22.10M and to proved plus probable plus possible is $24.23M, with respect to the Ante Creek N. Area only (6,080 acres/2,432 has.). The estimated future net revenues are presented before deducting future estimated site restoration costs, and are reduced for estimated future abandonment costs and future capital costs associated with non-producing, undeveloped and probable additional reserves. Estimated values disclosed do not necessarily represent fair market value.
Home Run currently has 24,837,500 common shares (“Home Run Common Shares“) issued and outstanding and no other securities are issued and outstanding.
Home Run is lead by Jeffrey Standen, a Petroleum Landman with over 45 years of related industry experience. Mr. Standen has been a founder, held senior executive management and director positions with numerous private and public oil and gas energy companies. Some of the companies that Mr. Standen has helped build were Renaissance Energy, Canadian Leader Energy, Centurion Energy International, Extreme Energy, Charger Energy and Vital Energy.
Capitalization of Samurai
Samurai currently has 4,400,000 common shares (“Samurai Common Shares”) issued and outstanding and securities exercisable or exchangeable into 640,000 Samurai Common Shares, being: (i) 440,000 incentive stock options exercisable at a price of $0.10 per Samurai Common Share; and (ii) 200,000 agent’s compensation options exercisable at $0.10 per Samurai Common Share.
Terms of the Transaction
The Transaction is expected to be completed by way of a three-cornered amalgamation, share purchase, share exchange or alternate transaction to be determined with input from the legal and tax advisors to each of Samurai and Home Run, which will result in Home Run (or an Alberta incorporated parent entity) becoming a wholly-owned subsidiary of Samurai.
Upon the satisfaction or waiver of the conditions set out in the definitive transaction agreement to be entered into by Samurai and Home Run (the “Definitive Agreement“), the following, among other things, will be completed in connection with the Transaction:
a) Samurai will issue 47,000,000 Samurai Shares to the former holders of Home Run Common Shares (which will result in the Home Run shareholders receiving approximately 1.8923 common shares of the Resulting Issuer in exchange for their Home Run Common Shares) (the “Purchase Price“);
b) Samurai will complete a private placement of 4,000,000 Samurai Shares at $0.05 per share for gross proceeds of at least $200,000 (“Private Placement”), which will be used for transaction costs;
c) Samurai will complete a private placement offering of secured non-convertible debentures for gross proceeds (including Home Run Debt, described below), of not less than $1,750,000 (the “Debenture Financing”). Each debenture will bear interest at 12% per annum and will be secured against all of Samurai’s present and after-acquired personal property. The debentures will be due in 24 months from the date of issuance and will be redeemable by Samurai after a period of 12 months. The debentures are non-convertible, however, each debenture holder will receive a bonus of 15% of the value in Samurai Shares, at a deemed price of $0.10 per share and a pro-rata share of 2,625,000 Samurai Share purchase warrants entitling the holder to purchase an additional Samurai Share at a price of $0.25 for a period of 2 years. The proceeds of the Debenture Financing will be used for the drilling, logging and casing of Home Run’s first well and working capital;
d) Samurai shall assume $250,000 of Home Run promissory notes outstanding (“Home Run Debt’) to be settled via participation in the Debenture Financing;
e) The management and board of directors of the Resulting Issuer will be comprised of three nominees from Home Run and one nominee from Samurai. The management and board of directors will be announced in further press releases; and
f) Samurai will change its name to such name as determined by Home Run in its sole discretion, in compliance with applicable law and as may be acceptable to the TSXV.
The Transaction is not a Non-Arm’s Length Transaction under the policies of the TSXV. A Finder’s Fee, payable by the issuance of 2,675,000 common shares of the Resulting Issuer (plus GST to be paid in cash), will be paid to an Arm’s Length Finder upon successful completion of the Transaction.
If and when a Definitive Agreement is execution, a more comprehensive news release will be issued by Samurai disclosing details of the Transaction, including financial information respecting Home Run and details of insiders and proposed directors and officers of the Resulting Issuer.
Conditions of the Transaction
Completion of the Transaction is subject to the satisfaction of customary closing conditions, including: (i) the satisfactory completion of due diligence by each of Samurai and Home Run; (ii) receipt of all required approvals and consents relating to the Transaction, including without limitation, any required approvals of the shareholders of Samurai and Home Run, required approval of the TSXV and other approvals under applicable corporate or securities laws; (iii) completion of the Private Placement; (iv) the completion of the Debenture Financing; and (iv) the TSXV’s approval for listing the shares of the Resulting Issuer.
Sponsorship of Transaction
Sponsorship of a qualifying transaction of a Capital Pool Company is required by the TSXV unless exempt in accordance with the policies of the TSXV. Samurai intends to apply for such an exemption.
Trading Halt
Trading in the securities of Samurai will be halted until the completion of the Transaction.
Additional Information
If and when a Definitive Agreement is executed, Samurai will issue a subsequent press release in accordance with the policies of the TSXV containing details of the Definitive Agreement and additional terms of the Transaction, including information relating to sponsorship, summary financial information in respect of Home Run, and to the extent not contained in this press release, additional information with respect to the Private Placement, Debenture Financing, history of Home Run and the proposed directors, officers, and insiders of the Resulting Issuer upon completion of the Transaction.
For further information please contact:
Samurai Capital Corp.
Anthony Zelen, CEO
Phone: (778) 388-5258
Home Run Oil & Gas Inc.
Jeff Standen, CEO
Phone: (403) 615-5827
All information in this press release relating to Home Run has been provided by Home Run and is the sole responsibility of Home Run.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in the United States. The securities described herein have not been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities law and may not be offered or sold in the “United States”, as such term is defined in Regulation S promulgated under the U.S. Securities Act, unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration requirements is available.
Cautionary Note
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a Capital Pool Company should be considered highly speculative.
The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.
Forward-Looking Statements
This news release contains “forward-looking information” within the meaning of applicable securities laws relating to Home Run’s expected drilling and development plans, the proposal to complete the Transaction and associated transactions, including statements regarding the terms and conditions of the Transaction, the Purchase Price, the name change of the Company, the Private Placement, the Debenture Financing, the use of proceeds of the Private Placement, the use of proceeds of the Debenture Financing, and the proposed directors and officers of the Resulting Issuer. The information about Home Run contained in the press release has not been independently verified by Samurai. Although Samurai believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because Samurai can give no assurance that they will prove to be correct. Readers are cautioned to not place undue reliance on forward-looking information. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Transaction, the name change of the Company, the Private Placement, the Debenture Financing, the appointment of the proposed directors and officers of the Resulting Issuer and associated transactions, that the ultimate terms of the Transaction, the Private Placement, the Debenture Financing, the appointment of the proposed directors and officers of the Resulting Issuer and associated transactions will differ from those that currently are contemplated, and that the Transaction, the name change of the Company, the Private Placement, the Debenture Financing, the appointment of the proposed directors and officers of the Resulting Issuer and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The terms and conditions of the Transaction may change based on Samurai’s due diligence (which is going to be limited as Samurai intends largely to rely on the due diligence of other parties of the Transaction to contain its costs, among other things) and the receipt of tax, corporate and securities law advice for both Samurai and Home Run. The statements in this press release are made as of the date of this press release. Samurai undertakes no obligation to comment on analyses, expectations or statements made by third-parties in respect of Samurai, Home Run, their securities, or their respective financial or operating results (as applicable). There can be no assurance that the Transaction will be completed or, if completed, will be successful.
OIL & GAS ADVISORIES
All reserve references in this press release are to gross reserves as at the effective date of the applicable evaluation. Gross reserves are Home Run’s total working interest reserves before the deduction of any royalties and including any royalty interests of Home Run. The recovery and reserve estimates of Home Run’s crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein. All estimates of reserves and future net revenue contained herein were derived from the Reserve Report, in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 Standards for Disclosure for Oil and Gas Activities. It should not be assumed that the present worth of estimated future cash flow presented herein represents the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserve estimates of Home Run’s crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein.
“reserves” are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on (a) analysis of drilling, geological, geophysical, and engineering data; (b) the use of established technology; and (c) specified economic conditions, which are generally accepted as being reasonable and shall be disclosed. Reserves are classified according to the degree of certainty associated with the estimates being “proved reserves”, “probable reserves” and “possible reserves”.
In this press release “proved reserves” means those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.
In this press release “proved plus probable reserves” means probable reserves being additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.
In this press release “proved plus probable plus possible reserves” means possible reserves being those additional reserves that are less certain to be recovered than probable reserves.
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