Edge Resources Inc. Settlement of Disputed Invoice (6709P)
22 Februar 2016 - 8:01AM
UK Regulatory
TIDMEDG
RNS Number : 6709P
Edge Resources Inc.
22 February 2016
TSX Venture Exchange Symbol: EDE
AIM Exchange Symbol: EDG 22 February 2016
Calgary, Alberta
Edge Resources Inc. Announces Settlement of Disputed Invoice
Edge Resources Inc. ("Edge" or the "Company") is pleased to
announce that it has settled a disputed invoice with a third party
(the "Third Party"), in the amount of $536,000, inclusive of GST.
Edge paid no cash to settle the dispute and simultaneously removed
approximately $10,000 in associated joint-interest invoices from
its accounts payable.
The dispute related to production and volume allocation errors
in the Gilby area made by the Third Party over an eighteen month
period in 2012 and 2013. The disputed amount has been continuously
disclosed as a contingent liability in Edge's quarterly and annual
financial statements since March 31, 2014 and Edge has vehemently
denied the legitimacy of the invoice since it was received.
The Company settled the entire disputed amount plus additional
associated joint-interest invoices through the assignment of five
loss-making natural gas wells and abandonment liabilities to the
Third Party. The Company incurred no cash costs as part of the
settlement.
The result of the assignment of the interests was:
1. Reserves: Virtually no impact on reserves. All the wells,
with the exception of the one small-working interest well, had not
produced for two years or more and had no proven reserves
assigned;
2. Production: Edge loses approximately 1.3 boe/day. Only one of
the wells, in which the Company had a 12.5% working interest, was
producing. Net production from this single producing wellbore
averaged 7.6 mcf/day (1.3 boe/day) over the last year;
3. Cash Flow: Improvement to Edge's operating cash flow. The
operating fees paid to the Third Party operator were higher than
the revenues from the producing well. Additionally, the ongoing
fixed costs (fees to landowners, capital taxes, etc.) from the
non-producing wells were transferred to the Third Party;
4. Liabilities: Elimination of several abandonment liabilities.
The Company would have been responsible for the abandonment of two
operated, high-working interest, non-producing wellbores and
associated pipelines. Additionally, the Company would have been
responsible for its share of abandonment costs of three
non-operated, low-working interest wellbores that were operated by
the Third Party. Instead, the entirety of those liabilities were
transferred completely to the Third Party; and
5. Liability Management Rating ("LMR"): Improvement to Edge's
LMR. The LMR is a program governed by the Alberta Energy Regulator
that reflects a comparison of a Company's deemed assets to their
deemed liabilities. Through the settlement of this dispute, the
Company's deemed liabilities improved by more than $137,000 (a 10%
improvement) in Gilby.
A condition of the settlement agreement requires the identity of
the Third Party to remain confidential.
Brad Nichol, President and CEO of Edge, commented, "The strength
of our negotiating position was reflected in the exceptionally
positive outcome of this settlement. We turned what appears in our
financial statements as a large, disputed invoice into a reduction
in liabilities and improved cash flow, with an insignificant impact
on production and reserves for virtually no cost. This seems like a
clear victory for Edge shareholders and allows the management team
to finally move on from this nuisance."
Additionally, the Company initially announced in July 2015 that
it was in discussion with a new strategic investor group (the
"Investor Group") with intentions of funding several acquisitions.
The Company has been working with the Investor Group for the last
eight months and now believes that, despite the Investor Group
continuing to state its intentions to fund the acquisition
strategy, further funding from this group is unlikely. The Company
is continuing to look at additional sources of capital for growth
but the macro economic environment for oil and gas companies
remains incredibly challenging and the Company remains dependent on
the support of its bankers in order to continue to operate.
Additional information may also be available at www.edgeres.com
or www.sedar.com or contact:
Brad Nichol - President & CEO
Phone: +1 (403) 767 9905
Sanlam Securities UK Limited Phone: +44 (0)20 7628 2200
(Joint Broker and NOMAD)
Simon Clements / James Thomas
SP Angel Corporate Finance Phone: +44 (0)20 3463 2260
LLP (Joint Broker)
John MacKay / Richard Hail
/ Stuart Gledhill
About Edge Resources Inc.
Edge Resources is focused on developing a balanced portfolio of
oil and natural gas assets from properties in Western Canada.
Management has consistently focused on:
1. Growth through high return on capital employed ("ROCE")
projects - good growth, not growth for the sake of growth
2. Very high or 100% working interests and fully operated assets - controlling our own destiny
3. Pools and horizons with exceptionally high recoverable oil in
place ("ROIP") - pursuit of big prizes
The management team's high success rate is based on the safe,
efficient deployment of capital and a proven ability to execute
operationally; giving Edge Resources a sustainable competitive
advantage.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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