Canadian Overseas Petroleum, an international oil and gas exploration and development company, today announces that: 

• The Company has signed a Term Sheet for a US$65 million Senior Credit Facility (“Credit Facility” or “Facility”) with a US based Global Investment Firm (the “Lender”) to finance the closing of its acquisition of Atomic Oil and Gas LLC (“Atomic”) and its related entities announced on December 16, 2020. The facility has a term of four years and is subject to typical lending conditions through its term.
• The Facility has a base size of $45 million, with an additional, or “accordion”, $20 million to fund future development at the sole discretion of the lender.
• The terms of the Facility are market competitive.

Closing of the Credit Facility, which is not yet legally binding, is expected on or about the week of February 15, 2021 and is subject to typical closing conditions, which include entering into a formal Lending Agreement. At closing, draw down of the Credit Facility would allow the Company to complete the acquisition of Atomic and its related entities.

Arthur Millholland, President and CEO, commented: 
"We look forward to the completion of the Atomic acquisition which will be materially value enhancing to COPL, providing an immediate and growing revenue stream from day one. Crude oil prices have increased significantly since we entered into the transaction thus enhancing the overall value of the proposition. Working with our new colleagues we plan to accelerate the production profile from the Atomic assets. This represents a step change in the strategic growth opportunities open to COPL and we look to the future with renewed confidence.”

Ryan Gaffney, CFO, added: 
“Securing this credit facility term sheet is a key milestone as it means we will be fully funded and enables us to complete the Atomic acquisition. The quality of the assets we are acquiring has allowed the Company to attract the debt necessary to complete under better terms than other proposals.”

Highlights of the transaction to COPL 

• The low crude oil price, which initially enabled COPL to entertain the transaction, has increased significantly which enhances the overall value;
• The acquisition has a high NPV asset at a price well below traditional metrics: Proved(P1) value of $101.7mm (net of royalties); Proved + Probable(P2) value of $185.8mm (net of royalties);
• The acquisition presents a high ROI > 50%; $2.18/bbl acquisition cost on P2 reserves vs a value of $7.52/bbl at NPV10%. (net of royalties);
• COPL receives material leverage via the transaction, due to enhanced scale and funding
• The new enlarged team will capitalise on the Company’s existing technical resources combined with operational expertise.

About Atomic

Atomic is a closely-held private oil and gas company incorporated under the laws of the State of Colorado. Atomic’s assets are located in Powder River Basin in the State of Wyoming, USA where it holds operated interests in 52,258 acres (gross) of contiguous leasehold. There are two oil production Units within the lease block: the Barron Flats Shannon Miscible Flood Unit (57.7% WI) and the Cole Creek Unit (66.7%), as well as one unitized exploration area - the Barron Flats Federal Unit (deep). Atomic has two affiliates: The Southwestern Production Corp, the operating entity; and PipeCo, a midstream company holding the pipeline and facility assets.