Blue Sky to Acquire Oil and Gas Assets with Requisite Approvals Including Disinterested Shareholder Approval

(TheNewswire)

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Calgary, Alberta – TheNewswire - March 25, 2024 – Blue Sky Global Energy Corp. (“Blue Sky” or the “Company”) (TSXV: BGE) further provides an update to the press release dated November 22, 2023 relating to the Company having entered into a definitive agreement (the “Agreement”) dated November 21, 2023 as amended and dated February 27, 2024, with an non-arm’s length party being, Blue Sky Resources Ltd., which is an Alberta based private oil and gas company (“BSR”) for the purchase of a 50% non-operating interest in certain oil and gas assets owned by BSR that are located in Northeastern British Columbia (“BSR BC Assets”) and 100% of the shares of Blue Sky Paus Ltd., which is an Alberta corporation that is a wholly owned subsidiary of BSR, that holds a Production Sharing Contract (“PSC”) over offshore waters near Indonesia that may be prospective for oil and gas exploration (“BSR Indonesian Assets”) (collectively, the “Acquisition”). The Acquisition is being considered non-arm’s length and a ‘related party transaction’ by the TSXV and is a ‘reverse takeover’ (“RTO”) as such terms are defined in the policies of the TSX Venture Exchange (“TSXV”). Upon completion of the Acquisition, the Company would continue to be an oil and gas exploration company and a Tier 2 Oil & Gas Issuer on the TSXV.

Details of the Acquisition

Pursuant to the Acquisition, the BSR BC Assets will produce approximately 600 barrels of oil and gas equivalent per day of production to the Company from approximately 141 oil wells and 51 gas wells. The BSR Indonesian Assets have nil production and the PSC for this asset covers 8,214 square kilometers that is offshore East Natuna, Indonesia, known as the “Paus Block”. Preliminary works have been completed on the BSR Indonesian assets to date.

At the time of and concurrently with closing of the Acquisition and subject to shareholder approval from the Company, a share consolidation of the Company on the basis of one (1) new share for every five (5) common shares issued will be completed (the “Consolidation”) so that approximately 69,693,695 Company common shares will be issued and outstanding with 59,239,640 to be owned by BSR and 10,545,054 to be owned by existing Company shareholders, subject to the Deferred Consideration Shares (defined below) to be provided to BSR.

The Agreement contemplates that the Acquisitions will be completed as follows:

1. The purchase price shall be CDN $27,500,000 (the “Purchase Price”)

2. The effective date of the Acquisition shall be January 1, 2024, or such date as the parties mutually agree;

3. The Purchase Price shall be paid by the Company to BSR by way of the issuance of approximately 296,198,202 (pre-Consolidation basis and 59,239,640 post Consolidation basis) common shares of the Company to BSR (“Consideration Shares”) at a deemed price of approximately $0.093 (pre-Consolidation basis price and $0.465 post Consolidation basis) per common share, subject to the following:

a. On and following closing of the RTO and the Consolidation, the current Company Shareholders will hold 10,454,054 Company shares and BSR and/or its nominees will ultimately be issued 59,239,640 Company shares, subject to the deferred share issuance structure between the Company and BSR regarding the Consideration Shares, which is structured as follows:

• On closing of the RTO, the Agreement governing the issuance of the Consideration Shares (Deferred Consideration Shares”), requires the deferral of the issuance of the Consideration Shares whereby the Company may only issue Consideration Shares to BSR up to the number that allows the Company to comply with the public float requirements of the TSXV Policies mainly requiring at least 20% of the issued and outstanding shares of the Company to be held by Public Shareholders (as defined by the TSXV) (the “TSXV Public Float Requirements”). Following closing of the RTO, at any time when the Company issues shares to Public Shareholders, a calculation will be considered by the Company and reviewed by the TSXV and at such time a certain number of Deferred Consideration Shares will be provided to BSR or its nominees up to an amount to maintain the TSXV Public Float Requirements for the Company, and such review and issuance will take place from time to time until all such Consideration Shares are issued to BSR pursuant to the RTO. 

b. As such, on closing of the RTO, it is expected that 7,070,146 Consideration Shares will be issued to BSR or its nominees, to ensure compliance with the TSXV Public Float Requirements and the remaining 52,169,494 Consideration Shares will be issued to BSR, as and when available as further Company shares are issued to Public Shareholders.

4. A new ‘control person’ as defined by the policies of the TSXV will be created as BSR and/or its nominees will own over 20% of the Company post closing of the Acquisition (“New Control Person”)

The Acquisition is subject to due diligence, with customary representations, warranties and closing conditions and, shareholder approvals of the parties (including ‘majority of the minority’ approval from disinterested shareholders). The Acquisition also requires approval of the TSXV as it is an RTO pursuant to the applicable policies of the TSXV and is subject to the company resulting from the Acquisition meeting the continued listing requirements of the TSXV.

There is no financing arrangement for or in conjunction with the RTO, no deposit, advance or loan made or to be made between the parties of the Acquisition, and no finder’s fees are being paid in connection with the Acquisition.

Sponsorship

In connection with the Acquisition, the Company intends to apply for and rely on an exemption from the sponsorship requirements of the TSXV.

BSR Assets (Proposed Acquisition)

The BSR Assets are located in Northeastern British Columbia, Canada and the country of Indonesia. The tangible assets and infrastructure, comprising a portion of the BSR BC Assets are owned by BSR and its joint venture partners, while the underlying hydrocarbons are produced based on the terms of the crown leases that govern the land and mineral  rights. A  majority  of  BSR’s  production  and  facilities  are  operated  by  BSR’s employees  and  contractors,  and  a  minority  are  operated  by  BSR’s  joint  venture  partners, depending on the ownership percentage and history of the asset. The BSR Assets being acquired by the Company consist of a 50% net non-operated interest in oil and gas assets located in the Province of British Columbia which are producing approximately  600 boed (on a net basis) with production coming from five primary areas in British Columbia, being (1) Horn River, (2) NEBC Minor, (3) Laprise, (4) Boundary Lake, and (5) Monias, and the major producing regions being Laprise and Boundary Lake.

• Laprise Area: Production from the Laprise Creek Baldonnel Unit #1 commenced in 1960, having produced 387 Bcf gas and 540Mb of condensate to date. This area currently has 31 wells which produce 4100 Mcf/d with 130 bbl/d associated liquids for BSR. Laprise infrastructure consists of a main compressor station for gas handling (B-040-E/094-H-05). The compressor station consists of an inlet screw compressor, 2 inlet separators, a dehydration unit, and 2 sales compressors. Gas and natural gas liquids are sent to North River’s Highway Plant for processing and sales. Geological and reservoir studies have identified opportunities for well optimization and infill drilling to increase production and extend the producing life of this asset. 

• Boundary Lake Area:  Oil production from the Boundary Lake A Pool comes from the Charlie Lake formation, consisting of interests in the Boundary Lake Unit #1, the Dome Boundary Lake Waterflood Project 2, and the PrimeWest Boundary Lake Waterflood Project 1. Since inception of production in 1962, the pool has produced over 240MM bbl oil. The area currently produces 400 bbl/d of oil with associated liquids (500 boed) net to BSR, at a low and stable decline rate. Oil production is gathered at four satellites and processed at two main oil batteries in the area, which comfortably meet all fluid processing requirements. A central water injection plant is located at 2-35-085-14W6, and solution gas is sent to a Whitecap operated facility for processing and sales. Clean oil is trucked to sales points at Taylor and Gordondale for sales via Pembina Pipeline. The property offers infill drilling, recompletion and injector conversions potential to enhance production. 

BSR is the sole shareholder of Blue Sky Paus Ltd. (“BSP”). BSP was incorporated on July 4, 2022 under the Business Corporations Act (Alberta) and was incorporated primarily for the purposes of acquiring oil and gas assets. In February 2023, BSP entered into a production sharing contract (“PSC”) on February 27, 2023 with an effective date of March 13, 2023 with the Special Task Force for Upstream Oil and Gas Business Activities (“SKK Migas”) on an area covering 8,214 square kilometers that is offshore East Natuna, Indonesia, known as the “Paus Block”. SKK Migas is an institution established by the Government of the Republic of Indonesia assigned to manage the exploration of the country’s upstream oil and gas resources under cooperation or production sharing agreements with operators.

The exemption in Section 32.9 of National Instrument 41-101F1 – Information Required in a Prospectus is being relied on to meet the TSXV requirements for the preparation and delivery of the applicable financial statement information for the BSR BC Assets, which permits the delivery of this financial information in the form of carve-out operating statements. See below select annual and interim financial information for BSR BC Assets and for BSP, for detailed financial statements and accompanying management’s discussion and analysis, please see the Information Circular (defined below) that will be filed on SEDAR+ at www.sedarplus.com.

Select Annual Financial Information (BSR BC Assets) (Audited)

 Note:

1. (1)The figures and amounts disclosed in this table are for 100% of the BSR BC Assets but only 50% is to be attributed to the BSR BC Assets as that is what is being acquired by the Company in the Acquisition. 

Select Interim Financial Information (BSR BC Assets) (Audited)

Note:

1. (1)The figures and amounts disclosed in this table are for 100% of the BSR BC Assets but only 50% is to be attributed to the BSR BC Assets as that is what is being acquired by the Company in the Acquisition. 

Select Annual and Interim Financial Information (BSP) (Unaudited)

(United States dollars)

Reserves Report

Closing of the Acquisition remain subject to regulatory approvals including that of the TSXV and approval of the shareholders of the Company (collectively, the “Approvals”). In order to procure those approvals, the Company has commissioned an evaluation of the property that is the subject of the Acquisition and is included in the Information Circular (defined below). The evaluation was performed by Sproule Associates Limited (the “Reserves Report”) and is compliant with National Instrument 51-101. The Reserves Report formed the basis for negotiating the Purchase Price. The Reserves Report included a price forecast that was effective as at September 30, 2023.

Shareholder Approvals

A New Control Person will be created pursuant to the closing of the Acquisition and the Acquisition is considered an RTO, as such and in connection with matters set out below, the Company is preparing an information circular (the “Information Circular”) which has been submitted to the TSXV in accordance with TSXV policies and mailed to Company shareholders (the “Shareholders”). The Company intends to hold an annual general and special meeting of shareholders of the Company on April 29, 2024 to, among other things, seek obtain the requisite Approvals from shareholders, and disinterested shareholders as required for the Acquisition and New Control Person, and to obtain certain other general meeting matter approvals (the “Meeting”). At the Meeting the Company plans to obtain shareholder approvals for the following Meeting matters:

1. Fix the number of directors and elect such directors for the ensuing year; 

2. Appoint the auditors of the Company and fix their remuneration; 

3. Re-approve the Company’s 10% rolling stock option plan; 

4. Approve a share consolidation of the Company on the basis of one (1) new share for every five (5) common shares issued and outstanding as part of and concurrently with closing of the Acquisition; 

5. Approve the Acquisition as constituted as an RTO pursuant to TSXV policies, by disinterested shareholders; 

6. Approve the creation of a New Control Person, being BSR and its principals, as part of closing of the Acquisition, by disinterested shareholders. 

7. Approve the continuance of the Company out of the jurisdiction of Ontario to the jurisdiction of Alberta and to repeal and replace the Company’s current Articles and By-laws in connection with the continuance. 

Non-Arm’s Length Transaction

The Acquisition is being considered a Non-Arm’s Length Transaction by the TSXV, as Mr. Tariq Chaudhary was recently a Director of BSR (resigned prior to negotiations began regarding the Acquisition between the parties) and is a Director of the Company, and Ilyas Chaudhary and Principals and family members of Mr. Ilyas Chaudhary are shareholders of the Company; as well as Mr. Ilyas Chaudhary is a Director and Officer of BSR and the majority shareholder of BSR and following closing of the proposed Acquisition, BSR will own over 20% of the issued and outstanding voting securities of the Company and BSR will be a New Control Person of the Company.

Information Circular and Meeting Materials

In connection with the Meeting, the Information Circular and meeting materials, being made up of the notice of meeting and form of proxy and related meeting materials (collectively, the “Meeting Materials”) will be  mailed by the requisite times to their Shareholders for the Meeting date on April 29, 2024.  Shareholders  are  urged  to  carefully  review  all  Meeting  Materials as they contain important information concerning the Acquisition and the rights and entitlements of  the  Shareholders  in  relation  thereto.  The  Meeting  Materials  will be made  available  on  SEDAR+ under the Company’s SEDAR+ profile at www.sedarplus.com.  The  full terms of the Acquisition and accompanying requisite Approvals are  in  the  Circular.  Subject to receiving all such requisite approvals,  the  Acquisition is anticipated to be completed before the end of May 2024.

Meeting And Protection of Minority Shareholders

At  the  Meeting,  the  Shareholders  will  consider,  and  if  determined  advisable,  approve  among other things, the Acquisition as it is considered an RTO and the creation of the New Control Person, on a disinterested shareholder basis. Pursuant to Multilateral Instrument  61-101  –  Protection  of  Minority  Security  Holders  in  Special  Transactions  and  TSXV  Policy 5.9, because the Acquisition is being considered a Related Party Transaction (as defined in the policies of the TSXV) by the TSXV and there is a creation of the New Control Person, the Acquisition and New Control Person must be approved by at least a majority of all  votes  cast  by  the  disinterested  shareholders  at  the  Meeting which shall exclude  the  votes of Insiders, Principals, Control Persons and Non-Arm’s Length Parties (as  defined  in  TSXV  Policies) to the Company, and persons acting jointly or in concert with such Non-Arm’s Length Parties. The remaining meeting matters must be approved by at least an ordinary resolution (>50%) or a special resolution (66 2/3 %) of all votes cast by the Shareholders on each such resolution, as applicable, in respect of each of these remaining meeting matters at the Meeting.

Directors and Officers of Company

Following closing of the Acquisition, the Directors and Officers of the Company are to remain as the same as they are currently (see disclosed below in the section titled ‘Principals and Insiders’), with the exception of the proposed addition of Mr. Patrick Amantea, to be appointed as a Director of the Company, subject to shareholder approval at the Meeting.

Mr. Amantea, age 41, is a hands-on, business orientated Chartered Professional Accountant with a diverse oil and gas background. He has experience with financial & operational reporting, acquisitions & divestitures, company restructuring,  IFRS, budgeting & forecasting, leading people, internal controls, full cycle accounting and business advisory services. He has completed various projects for both private and public oil & gas companies (ranging from 100 to 9,000 boe/d), including public financial reporting, company restructuring, asset acquisitions & business development and transitional services. Mr. Amantea is currently the Chief Financial Officer of BSR.

Principals And Insiders

Upon closing of the Acquisition, the following individuals would be considered new ‘Principals’ and/or ‘Insiders’, as defined by the TSXV Policies (i) Ilyas Chaudhary, who is a Director and Officer of BSR and majority shareholder of BSR, as BSR will become a new Control Person of the Company pursuant to the Acquisition and hold greater than 20% of the issued and outstanding shares of the Company on closing; and (i)Bushra Chaudhary, who is a shareholder of BSR and the spouse of Ilyas Chaudhary, as she resides at the same address as Mr. Ilyas Chaudhary is also considered a ‘Principal’ pursuant to TSXV Policies; as well as the following Individuals below that are currently ‘Insiders’ of the Company:

Mohammad Fazil, Chief Executive Officer, President and Corporate Secretary and Director

Mr. Fazil, age 61, has been active in venture capital for over 35 years.  He was employed by boutique investment dealers in Canada as a finance professional focusing on funding junior listed issuers on the TSX and TSX Venture exchange.  During his career he has raised over $400 million for venture companies. Mr. Fazil is the founder and President of Lion Park Capital, a private financial advisory firm helping companies raise funding and list on a Canadian stock exchange.  He is the Chairman of the Calgary branch of the TSX Venture Exchange’s Listing Advisory Committee and a member of the National Advisory Committee. Mr. Fazil is currently the President and Director of Florence Once Capital Inc. and 5D Acquisition Corp., CPCs listed on the TSX Venture Exchange.  He is an independent director of Smooth Rock Ventures Corp., listed on the TSX Venture Exchange and Pangea Natural Foods Inc., listed on the Canadian Stock Exchange.

Tas Mann, Chief Financial Officer

Mr. Mann, age 28, is a Chartered Professional Accountant (CPA) currently providing CFO and advisory services through his position with Treewalk, a provider of financial and advisory services to both public and private companies. Mr. Mann obtained his CPA designation while articling with public practice firms based in Vancouver, British Columbia auditing companies in the mining, real estate, construction, financial services, cannabis, and not for profit industries. Mr. Mann has also advised and supported various companies through the public listing process. Mr. Mann currently provides consulting, advisory and financial reporting services to companies listed on the TSX Venture Exchange, Canadian Securities Exchange and the OTC Markets.

Scott Reeves, Director

Mr. Reeves, age 54, is a Partner at the law firm TingleMerrett LLP. Mr. Reeves practice area is focused on securities, corporate finance and commercial transactions for emerging and growth companies, joint ventures and partnerships. He has advised numerous private and public corporations (including registered dealers) in a wide range of business matters including access to capital markets, corporate governance and operational issues both nationally and internationally. Mr. Reeves acts for a large number of TSX and TSX Venture Exchange-listed companies in a wide range of industries, including oil and gas, mining, technology, biotechnology and industrial issuers. Mr. Reeves has extensive experience in financing options, private equity and public offerings, public listings and exchange matters, corporate acquisitions, share and asset acquisitions and dispositions, restructurings, securities regulatory requirements for issuers and dealers and other related business transactions. He also acts a director and/or corporate secretary for many public and private companies, providing detailed corporate governance and continuous disclosure advice to his clients.

Dean Casorso, Chief Operating Officer and Director

Mr. Casorso, age 45, is an engineer with 25 years of experience working on 4 continents.  He has worked throughout North American and internationally and has experience in business and technical aspects of upstream oil and gas and helium business.  He has a Petroleum Engineering Technologist Diploma from SAIT & Masters of Business Administration from the University of Calgary.  President of Fire Creek Resources Ltd. & FCRL Belize Ltd.

Tariq Chaudhary, Director

Mr. Chaudhary, age 53, has over 25 years of experience with public and private companies.  His expertise includes strategic planning, corporate governance, equity financing, acquisition due diligence, and financial reporting for both Canadian and American public companies with international subsidiaries.  Mr. Chaudhary is currently the President of Altair Energy Ltd. He was a Senior Cost Specialist with Canadian Natural Resources Ltd, Business Manager at Syncrude Canada SERP project (a division of Exxon Mobil), and Controller at Saba Petroleum Company (California). Mr. Chaudhary holds a Bachelor of Commerce degree (Accounting) and M.B.A. (Finance) from CCU, California, along with several other financial services certifications, including a diploma in Oil & Gas Accounting from the UOD (Texas, USA)

James Tworek, Director

Mr. Tworek, age 43, has held Director, Senior Management, Analytical and Operations roles in both public and private companies. Mr. Tworek’s 25-year career started in banking in 1998 where he garnered a wealth of experience across diverse industries between Commercial Banking, Mining, Project Finance, Mortgage Brokerage mezzanine debt, Oil and Gas, Hemp/legal Cannabis, and Clean Water/Envirotech industries. Mr. Tworek is also the chief executive officer of Element79 Gold Corp., a public company listed on the Canadian Securities Exchange and a director of Florence One Capital Inc. a capital pool company publicly listed on the TSXV.

Patrick Amantea, Proposed Director

Mr. Amantea, age 41, is a hands-on, business orientated Chartered Professional Accountant with a diverse oil and gas background. He has experience with financial & operational reporting, acquisitions & divestitures, company restructuring,  IFRS, budgeting & forecasting, leading people, internal controls, full cycle accounting and business advisory services. He has completed various projects for both private and public oil & gas companies (ranging from 100 to 9,000 boe/d), including public financial reporting, company restructuring, asset acquisitions & business development and transitional services. Mr. Amantea is currently the Chief Financial Officer of BSR.

Trading Halt & Cautionary Information

The common shares of the Company are currently halted and will remain halted until the requisite approvals are obtained. Additional information on the Acquisition will be disclosed in future press releases, as applicable.

Completion of the Acquisition is subject to a number of conditions, including but not limited to, TSXV acceptance and, disinterested shareholder approvals. The Acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the Acquisition will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Acquisition, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

About Blue Sky Global Energy Corp.

The Company is a publicly-traded entity listed on the TSXV under the symbol “BGE” with assets which are comprised primarily of approximately 180,000 acres of land (“Contracting Area”) located in the Corozal Basin in Belize which may hold prospective oil and gas resources, and which so far includes one discovery, the SBC field. The SCB field contains four wells, two of which have been tested, the SCB#1 and the SCB#2 wells. A wholly owned subsidiary of the Company has entered into a Production Sharing Agreement (“PSA”) with the Government of Belize.  Pursuant to the PSA, this wholly owned subsidiary of the Company holds a 100% contractor position in the Contracting Area and has the exclusive right to conduct all petroleum operations within the Contracting Area.

For More Information

Blue Sky Global Energy Corp.

Mohammad Fazil

President, Chief Executive Officer, Corporate Secretary and Director

Email: [email protected]

Phone Number: 403-613-7310

Cautionary Note Regarding Forward-Looking Statements

This press release contains statements that constitute “forward-looking statements”. Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements, or developments to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements.

Although the Company believes, in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. When used in this press release, the words “estimate”, “project”, “belief”, “anticipate”, “intend”, “expect”, “plan”, “predict”, “may” or “should” and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release include: information relating to the Agreement; and the exploration and development of the company’s assets. Such statements and information reflect the current view of the Company. By their nature, forward- looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements.

The forward-looking statements contained in this news release represent the expectations of the Company as of the date of this news release and, accordingly, are subject to change after such date. Readers should not place undue importance on forward-looking statements and should not rely upon this information as of any other date. The Company undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change.

THE TSXV HAS IN NO WAY PASSED UPON THE MERITS OF THE ACQUISITION AND HAS NEITHER APPROVED NOR DISAPPROVED THE CONTENTS OF THIS PRESS RELEASE.

NEITHER THE TSXV NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSXV) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS PRESS RELEASE.

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