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Cloudbreak acquires a 3.25% overriding royalty interest on the Masten Unit Energy Project

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Cloudbreak Discovery is pleased to announce that it has entered into an agreement with G2 Energy Corp. whereby Cloudbreak will provide a portion of the acquisition financing for the Masten Unit Energy Project, located in Cochran County Texas, to G2 in exchange for a 3.25% Overriding Royalty Interest (ORI) in the Project, in addition to other considerations.

Cloudbreak Acquires a 3.25% Overriding Royalty Interest on the Masten Unit Energy Project Cloudbreak acquires a 3.25% qverriding royalty interest on the Masten Unit Energy Project

Cloudbreak Discovery is pleased to announce that it has entered into an agreement with G2 Energy Corp. whereby Cloudbreak will provide a portion of the acquisition financing for the Masten Unit Energy Project, located in Cochran County Texas, to G2 in exchange for a 3.25% Overriding Royalty Interest (ORI) in the Project, in addition to other considerations.

G2 has developed a comprehensive, economic programme of well recompletion and drilling to rapidly grow both oil and natural gas production from the Project. The programme consists of waterfloods and workovers of existing wells as well as new offset wellbores and lateral drilling which G2 plans to initiate on financial close.

Key Terms of the Transaction:

  • Cloudbreak will provide G2 with a US$2 million debenture on a two-year term in exchange for a 3.25% ORI in the Project, in addition to other considerations
  • G2 will pay 12% per annum interest to Cloudbreak, calculated and paid quarterly in cash or shares at the discretion of Cloudbreak on the US$2 million debenture

G2 will grant Cloudbreak;

  • 6 500 000 Warrants with a US$0.30 strike price with a two-year term from financial close. The Warrants are subject to an acceleration clause;
  • Second position lien on the Project;
  • An area of interest providing Cloudbreak with a 1% ORI on any project acquired within a two-mile radius of the Masten Unit lease boundary; and
  • An area of influence giving Cloudbreak the right of first refusal to finance additional acquisitions within five miles of the Project boundary and apply its existing 3.25% ORI to that project in addition to terms settled on as part of an acquisition.

Kyler Hardy, President and CEO of Cloudbreak, commented, "This first royalty acquisition highlights the beginning of a great working relationship between Cloudbreak and G2. We are excited to be working with G2 and look forward to additional regional acquisitions, showcasing how our project generator model can be transitioned to the energy royalty sector. Through this and similar transactions in the future, we see an opportunity to create significant shareholder value by growing Cloudbreak's cash-flow though structured deals and portfolio royalty acquisitions in the natural resources sector."


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Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/31052022/cloudbreak-acquires-a-325-qverriding-royalty-interest-on-the-masten-unit-energy-project/

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