MCF Energy Plans to Acquire Experienced Operator Genexco for Germany's Energy Security
VANCOUVER, BC, Jan. 23, 2023 /CNW/ - MCF Energy Ltd. (TSXV: MCF) (FRA: DC6) ("MCF Energy" or the "Company") has entered into a non-binding Letter of Intent ("Letter of Intent" or "LOI") to acquire all of the shares of Genexco GmbH ("Genexco"), a privately owned German corporation. The acquisition of Genexco (the "Acquisition") will position MCF Energy as a future leader in natural gas exploration in Germany with 100% interests and operatorship of its projects. It provides a significant portfolio and expert team with deep German operating experience. The Acquisition values Genexco at 8 million euros to be paid with shares and cash, subject to certain conditions and milestones.
Genexco was established in 2014 to maximise Germany's energy potential. It holds licences for two natural gas prospects, including the Reudnitz gas accumulation, and has a database of geological, seismic, and well data for 10 additional project areas. Genexco has several exploration and production licence applications underway, which will become assets of MCF Energy after the Acquisition. A NI 51-101 report on the Reudnitz prospect is in progress and more information will be provided on the German projects as soon as possible.
The experienced leadership team of Genexco will become the German management team of MCF Energy, providing the Company with valuable in-house German operating expertise.
- Peter Eckhard Oehms is the CEO of Genexco, a geologist and project manager with 40+ years of experience, who previously worked as a managing director at Wintershall, Germany's largest crude oil and natural gas producer from 1998 to 2008.
- Frank Steinich is the COO of Genexco, a drilling and operations specialist with 35+ years of experience, including work at ITAG, Central European Petroleum, and Rhein Petroleum.
- Matthew Keith is an oil and gas professional with 35+ years of experience, including work at Cairn, Bowleven, and IPC (Lundin). He specialises in exploration, appraisal, well-design, planning, development, and HPHT operations.
- Jürgen Milinski is a legal professional with 35+ years of experience in the energy sector. He was a portfolio manager at Gazprom in the Netherlands and previously supported Engie (Gaz de France) operations in the German and Caspian regions.
- Jan Paul Van Driel is a former head of economics and planning at Shell UK. He brings broad experience in corporate strategy, joint ventures and asset development to Genexco.
Pursuant to the LOI, MCF Energy will pay 5 million euros in shares and 3 million euros in cash to buy Genexco. The right to trade the shares will be restricted, with the restriction ending in three equal tranches over a period of four, eight, and twelve months after the Acquisition. The cash and 2 million euros of shares will be released over an expected time frame of six months as certain targets are met, including receiving certain licences. The number of shares to be issued will be determined on the date of signing the definitive agreement, applying a volume weighted average trading price of MCF stock in the ten preceding trading days, and applying a CAD/EUR exchange rate on the date of the definitive agreement. Both parties agree to negotiate and finalise a definitive stock purchase and sale agreement by January 26, 2023 or extend the date if needed.
"With the Acquisition of Genexco, we're positioning ourselves for success in Germany and taking a major step forward in our mission to ensure Europe's energy security through large-scale natural gas exploration," said James Hill, CEO and Director of MCF Energy.
"There is a window of opportunity in Germany for exploration to revitalise gas production after decades of decline," commented Peter Eckhard Oehms, CEO of Genexco. "New domestic gas supply addresses an urgent need to provide a local, reliable and cost-effective source of energy for the country. Investing in gas exploration is investing in Germany's future energy security and economic growth, and will buy time for the important transition to renewables. With MCF Energy, we are excited to tap into Germany's own natural resources and create a sustainable energy future for the country."
In addition to the Genexco acquisition, MCF Energy has been granted an extension of its option to acquire an additional 20% economic interest in the Welchau-1 well from 21 January 2023 to 28 February 2023.
Under the terms of the Energy Investment Agreement with ADX VIE GmbH ("ADX"), the Austrian subsidiary of ADX Energy Ltd (ASX: ADX), MCF Energy will fund 50% of the Welchau-1 well drilling expenditure to earn a 20% economic interest in the Welchau Area in Austria (see MCF Energy Press Release of November 29, 2022).
MCF Energy has the option ("Option") to elect to fund a further 50% of the Welchau-1 well drilling cost to earn a further 20% economic interest in the Welchau Area by notice to ADX on or before 21 January 2023. This Option election date has been extended from 21 January 2023 to 28 February 2023 on the same terms as previously agreed by the parties. The Welchau-1 well drilling expenditure is budgeted at up to EUR 3,810,000 (C$ 5,540,000).
If MCF Energy exercises the Option to fund the entire Welchau-1 well cost, at the completion of its investment obligations, MCF Energy will hold 40% economic interest and ADX will retain a 60% economic interest in the Welchau Area.
The Company will not undertake work programs at its German interests until relevant licences are granted and acquisition of those interests is approved by the TSX Venture Exchange.
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MCF Energy believes the answer to Europe's energy security is right beneath the surface. The Company's goal is to find new natural gas discoveries in Europe and create wealth for its stakeholders. MCF Energy has secured interests in two significant natural gas exploration projects in Austria and Germany and is evaluating additional opportunities. The Company's leaders have extensive experience in the European energy sector and are working to develop a cleaner, cheaper, and more secure natural gas industry as a transition to renewable energy sources.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
Except for the statements of historical fact, this news release contains "forward-looking information" within the meaning of the applicable Canadian securities legislation that is based on expectations, estimates and projections as at the date of this news release. The information in this news release about the completion of the proposed transaction and financing described herein, and other forward-looking information includes but is not limited to information concerning the intentions, plans and future actions of the parties to the transactions described herein and the terms of such transaction. Factors that could cause actual results to differ materially from those described in such forward-looking information include, but are not limited to, risks related to the Company's inability to perform the proposed transactions.
The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. In connection with the forward-looking information contained in this news release, the Company has made assumptions about the Company's ability to complete the planned transaction and activities. The Company has also assumed that no significant events will occur outside of the Company's normal course of business. Although the Company believes that the assumptions inherent in the forward-looking information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise.
SOURCE MCF Energy Ltd.
MCF Energy Ltd., Jim Hill, CEO, Tel: (604) 609-6110, Email: [email protected]
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