Trio Petroleum, a California-based oil and gas company, has entered into a non-binding Letter of Intent (“LOI”) for the acquisition of a 100% working interest in certain petroleum and natural gas properties held by Novacor Exploration, which are located in the prolific Lloydminster, Saskatchewan heavy oil region. In the event that Trio completes the Acquisition, it believes that it could strategically position itself to expand its operations into one of North America’s most promising heavy oil basins, with upside potential for long term production and reserve growth. Since the Novacor assets are in the heavy oil area, they offer economical development and low operational costs. Market accessibility combined with a favorable regulatory process makes this area very attractive for continued and future development within these lands.

The Novacor assets are located at the South-West quarter of Section 19, Township 47, Range 26W3M and the North East Section 3, Township 48, Range 24W3M, both in the Lloydminster, Saskatchewan area. There are currently seven producing wells located on the two properties. Production from the wells in Section 19 is subject to Freehold Royalties of 13.5% and a GORR of 2%, and production from the wells in Section 3 is subject to Freehold Royalties of 15%. The wells produce heavy crude oil from the McLaren/Sparky and Lloydminster formation(s). Novacor is the operator of these cash flow positive wells. Current production is approximately 70 barrels per day with potential for 4 additional re-entry wells and two fully equipped locations to be reactivated each capable of an additional 70 barrels in total per day. Two wells in Section 19 are temporarily shut in waiting to be reactivated and commingled with a lower zone at a cost of approximately C$30,000 per well and once commingled will have the potential to add another 10 bpd each. All of the foregoing information was derived from reports provided to the Company by Novacor.

Additionally, a Reserve Report was prepared in August 2024 by Petrotech and Associates detailing 91.5MBBL for total proved and probable oil of those wells currently being produced. Novacor has identified further potential upside in the Sparky GP thru some multi-lateral drill opportunities.

“We are excited to acquire an initial footprint in this very lucrative oil and gas area of Canada and home to some of the largest players in the industry such as Cenovus Energy, Canadian Natural Resources, Baytex Energy, Rife Resources and many others who have made Heavy Oil a staple of their operation, and where numerous opportunities to acquire additional highly economic fields exist,” stated Robin Ross, Trio’s Chief Executive Officer. Mr. Ross further explained, ”that Trio’s relationship with Novacor is very important, because Novacor has a long history of oil and gas development in the area. Trio’s plan is to aggressively grow its footprint in the area utilizing Novacor as an operator of the assets. The initial project has the capability to rapidly double production, and we are looking forward to a long and prosperous relationship with Novacor. Our focus remains on acquiring projects that generate immediate cash flow or offer transformative growth potential with strategic investment like the Asphalt ridge Project in Utah. We believe that this approach aligns with our long-term vision of creating exponential value while managing risk and resources effectively.”

Terms of the Non-binding LOI

The stated purchase price of the Acquisition is CD$2 million (approximately US$1.4 million based on current exchange rates) payable US$650,000 in cash and the remainder in shares of common stock of Trio, which we would agree to use our commercially reasonable efforts to register for resale in a registration statement filed with the United States Securities and Exchange Commission. Upon execution of the LOI, the Company paid Novacor a good faith deposit of $65,000, which will be applied to the cash portion of the purchase price at closing. 

KeyFacts Energy: Acquisitions & Mergers news   l   KeyFacts Energy Industry Directory: Trio Petroleum