Hillcrest Petroleum Ltd (CVE:HRH) (OTCMKTS:HLRTF) announced Friday that it received loan commitments for gross proceeds of up to C$900,000.
The terms allow the loans to be converted into common shares of the company “at a price equal to market price for the first 12 months and the greater of the market price and $0.10 per share” after that, explained the company.
The loans are set to mature on the sale of certain company assets, the date of conversion or two years from the date of issuance, whichever should happen first.
The interest rate sits at 15% per year and will be paid quarterly until the loans are converted or repaid.
Proceeds stemming from the loan financing will go toward project costs related to the assets and wells in Saskatchewan Joint Venture.
The company announced in October that it was restarting oil production from the West Hazel oil field in Saskatchewan, expecting the reactivation costs to be around C$750,000.
Before being shuttered by its previous owner in 2015, West Hazel field generated over 200 barrels of oil per day.
Initial oil output is expected to be between 150 and 250 barrels per day, but may have the potential to increase to 500 barrels per day as development continues.
Shares of the Vancouver-based company were down 25% to C$0.03 by Friday’s close.
Contact Lenore Fedow at [email protected]