Hillcrest Petroleum Ltd (CVE:HRH) (OTCMKTS:HLRTF) says its development plans for the West Hazel oil field in Saskatchewan have been boosted as the company announced terms of a C$5 million convertible loan.
In a statement on Thursday, the group said it had signed a term sheet with a New York based firm over the financing, which has a C$500,000 first drawdown to be paid within 14 months of closing.
READ: Hillcrest Petroleum raises more than $1 million in up-sized financing to fund West Hazel oil asset in Saskatchewan
That first amount would be used to drill a short lateral well on the West Hazel site, said Hillcrest.
"The impending funding allows the company to proceed with field development activities to increase production and revenues and maximize reserves recovery," Don Currie, Hillcrest CEO, told investors.
"We have previously stated estimates that the field production could be increased to more than 500 barrels per day and will initiate the development when the funding agreements are complete. The company will update our shareholders as expansion plans of the field materialize."
On July 30, the firm said it would increase its working interest at West Hazel to 100% by acquiring the remaining working interest its joint venture partner in exchange for 3 million Hillcrest shares, representing a C$150,000 value.
This agreement in principle met the conditions of the lender for the C$5M loan.
Other terms include that no payments need be made for the first four months after closing and further draws are available upon 75% of the first draw being paid or earlier if both parties agree.
Contact the author at firstname.lastname@example.org