MCF Energy Acquires Accretive Czech Gas Projects with Immediate Production and Growth Potential

VANCOUVER, BC, Feb. 26, 2024 /CNW/ - MCF Energy Ltd. (TSXV: MCF) (FRA: DC6) (OTCQX: MCFNF) ("MCF", "MCF Energy" or the "Company") is pleased to announce its agreement to acquire ("Acquisition") oil and gas production and exploration licences in the Czech Republic, which hold valuable reserves, offer immediate production opportunities, and have potential for further exploration to strengthen Europe's energy security. Located in the Vienna Basin of Czechia within the Carpathian Mountains, the Acquisition consists of three production licences covering 6,880 acres (27.8 sq km), and three exploration licences covering 42,551.5 acres (172.2 sq km).

"This acquisition was driven by the opportunity to quickly start natural gas production by reopening three closed wells and using fifteen ready-to-drill sites in the NT Ridge area," said James Hill, CEO and a Director of MCF Energy Ltd. "The main advantage of this project is the potential to boost production by shallow, low-cost drilling of nearby areas with available pipeline capacity."

Immediate Production Potential

The production licences are NT Ridge (2,800 acres or 11.3 sq km), Krasna NP-823 (497 acres or 11.3 sq km), and LM (3,583 acres or 14.5 sq km).

There are two proved and productive targets, the Miocene sands and Devonian carbonates. Significant untested potential exists in the oil-productive fractured basement.

MCF Energy anticipates returning one currently shut-in production well at NT Ridge to production in Q1 2024. Five additional development locations at NT Ridge and one Proved Undeveloped drilling location are ready to drill this year. At least three additional drilling locations are contemplated in 2025.

Additional Proved Undeveloped locations are present within the production licences. Krasna NP 823 and the LM Production licences are currently under review; both have wells that can be reworked and returned to production at low cost.

Independent Reserve Report

An Independent Reserve report by Boury Global Energy Consultants (the "Report") reviewed the NT Ridge area which is located about 28 km southeast of Ostrava, the third largest city in the Czech Republic. Reviewing the geology, the Report confirmed 15 Proved Undeveloped locations for development having an estimated 11.9 BCF of Proved and Probable reserves within the NT Ridge area.  The Report gives an estimated Net Present Value before tax (discounted at 10%) for the Proved and Probable reserves of US$53.55 million for the NT Ridge area.  The two other production concessions, Krasna NP and LM, are not included in the Report and represent significant additional upside for MCF Energy shareholders.

 Exploration Upside

The exploration licences are Skalice-Ropice (North) (11,712.8 acres or 47.4 sq km), Moravka (South) (14,801.6 acres or 59.9 sq. km) and Trinec (North-East) (16,037.1 acres or 61.9 sq km).

MCF Energy will continue the exploration work started by the previous operator, using improved technology. The Company anticipates developing the Skalice-Ropice (North) exploration licence by drilling four wells in 2025 and five wells in 2026 and one in 2027. Nine of these locations have Proved Undeveloped plus Probable plus Possible reserves, and one is assigned Probable plus Possible reserves.  Drilling will test for proved Miocene and Devonian reservoirs and could prove four potential 'bonus' zones could lead to significantly increased inventory of drilling locations and reserves across the acreage. These potential zones, not evaluated by the Report, include thicker Miocene sands, shallow Silesian reservoirs, thicker Devonian carbonates, and fractured basement targets which have shown to produce oil in other production concessions.

Transaction Details

With the Acquisition, the Company will gain full ownership of the Czech licences. This involves issuing 17.5 million MCF Energy shares to the seller, with resale limits, and a cash payment of US$1,325,000. The 17.5 million consideration shares are subject to voluntary pooling restrictions with releases over a period of 12 months.  Additionally, 350,000 shares will go to Fiore Management & Advisory Corp for their advisory services, which shares are subject to a four month hold period from closing.

Third Source Energy S.R.O. ("Manager"), familiar with local operations, will manage the Czech assets from its office in Prague. Third Source is wholly controlled by Sean Pearson, an energy executive with an 18-year track record of success in resource management and production growth, most recently with TBNG UK (Turkish assets), and previously with DeGolyer & MacNaughton, Aramco and CNRL.  The Manager's compensation includes a set fee of US$48,000 per month in cash, and cash bonuses, based on performance up to a maximum of US$595,000.   In addition, the Manager will be granted a net profit royalty from successful wells varying between 10% and 2.5% for seven years, and a flat 2.5% thereafter.   If, by the later of 24 months from closing, or fiscal year end 2025, less than US$3.7 million has been deployed in connection with MCF's assets or operations in the Czech Republic, the royalty gets extended one year before reverting to a flat 2.5%.   If after 36 months less than US$3.7 million has been deployed, the Manager shall have the option to purchase 50% of the working interest in certain lands for US$370,000.

The Czech assets will be part of MCF Energy Czechia Ltd., a fully owned subsidiary of MCF Energy Ltd.

MCF Energy invites all stakeholders, including shareholders, employees, and the general public, to stay updated on the Company's progress and its role in Europe's energy future, through its corporate website and social media.

About MCF Energy

MCF Energy was established in 2022 by leading energy executives to strengthen Europe's energy security through responsible exploration and development of natural gas resources within the region. The Company has secured interests in several significant natural gas exploration projects in Austria and Germany with additional concession applications pending. MCF Energy is also evaluating additional opportunities throughout Europe. 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. MCF Energy is a publicly traded company (TSX.V: MCF; FRA: DC6; OTCQX: MCFNF) and headquartered in Vancouver, British Columbia. For further information, please visit: www.mcfenergy.com.

Additional information on the Company is available at www.sedarplus.ca under the Company's profile.

Cautionary Statements:

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.

Advisories:

Forward-Looking Information

This press release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to the Company's plans and other aspects of our anticipated future operations, management focus, strategies, financial, operating and production results, industry conditions, commodity prices and business opportunities. In addition, and without limiting the generality of the foregoing, this press release contains forward-looking information regarding the anticipated timing of development plans and resource potential with respect to the Company's right to assets in Czech Republic. Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future.

The forward-looking information is based on certain key expectations and assumptions made by MCF Energy's management, including expectations and assumptions noted subsequently in this press release under oil and gas advisories, and in addition with respect to prevailing commodity prices which may differ materially from the price forecasts applicable at the time of the respective Resource Audits conducted by GCA and Reserve Audits conducted by Boury Global Energy Consultants, and differentials, exchange rates, interest rates, applicable royalty rates and tax laws; future production rates and estimates of operating costs; performance of future wells; resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; the ability to efficiently integrate assets and employees acquired through acquisitions, the ability to market natural gas successfully and MCF's ability to access capital. Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because MCF Energy can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. MCF Energy's actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on future operations and such information may not be appropriate for other purposes.

Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and we disclaim any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

Oil & Gas Advisories

Boe means a barrel of oil equivalent on the basis of 6 Mcf of natural gas to 1 barrel of oil equivalent.  Mcfe means one thousand cubic feet of natural gas equivalent on the basis of 6 Mcfe: 1 barrel of oil.  A boe conversion ratio of 6 Mcf: 1 Boe and 6 Mcfe: 1 bbl. are based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.  Given the value ratio based on the price of crude compared to the price of natural gas at various times can be significantly different from the energy equivalence of 6 Mcf: 1 boe or 6 Mcfe: 1 bbl., using Boe's and Mcfe's may be misleading as an indication of value.

Statements herein are made consistent with Canadian Oil and Gas Evaluation (COGE) Handbook. The resources definitions used in preparing this report are those contained in the COGE Handbook and the  Canadian Securities Administrators National Instrument 51-101 (NI 51-101). Readers should give attention to the estimates of individual classes of resources and appreciate the differing probabilities of recovery associated with each class as explained herein.  "Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. There is a 90% probability that the actual remaining quantities recovered will equal or exceed the estimated proved reserves. "Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. "Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves. "Discovered petroleum initially-in-place" or "discovered resources" or "DPIIP" Definition: That quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in -place includes production, reserves and contingent resources; the remainder is unrecoverable.  "Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure to put the reserves on production. "Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. "Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown. "Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure is required to render them capable of production. They must fully meet the requirements of the reserves classification (proved, probable) to which they are assigned. P = proved undeveloped, PP = Proved + Probable undeveloped, PPP = Proved + Probable + Possible undeveloped "Prospective resources" Definition: Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Both risked and unrisked prospective resources are referred to in this document.

Abbreviations:
Bcf	billion cubic feet
Bcfe	billion cubic feet of natural gas equivalent
Bbl	barrels
Boe	barrels of oil equivalent
M	thousand
MM	million
MMbbls	million barrels of oil
MMBOE	million barrels of oil equivalent
MMBC	million barrels of condensate
Mcfe	thousand cubic feet of natural gas equivalent
MMcfe/d	million cubic feet equivalent per day
Tcf	trillion cubic feet
Km2	square kilometres
€	Euros

 

SOURCE MCF Energy Ltd.

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