Horizon Petroleum closes Poland asset deal w/ San Leon

Executive Summary

• Horizon Petroleum Ltd. has officially closed the acquisition of 100% ownership of its Polish assets (Energia Karpaty Zachodnie Sp Zoo and SpK) from San Leon Energy, holding the Bielsko-Biala and Cieszyn concessions.
• The transaction was finalized under amended terms, replacing the original structure which included share issuance and a Net Profits Interest (NPI). The new terms involve an all-cash payment of $1.6 million (U.S.), eliminating equity dilution for Horizon.
• As part of the deal, the 6% NPI held by San Leon was terminated. In exchange, Horizon’s subsidiary (EKZ) assumed responsibility for the Kety well (plugged and abandoned in 2015), including monitoring and future liability/remediation, and acquired the land plot for PLN 1 plus VAT.

Key Details

• Transaction Status: The acquisition is considered fully closed with the consideration payment discharged and confirmed by San Leon Energy.
• Final Consideration: $1.6 million (U.S.) paid in cash.
• Termination of NPI: The original 6% Net Profits Interest (NPI) was terminated.
• Asset Transfer & Liabilities:
  • EKZ released San Leon Energy from Kety well obligations.
  • EKZ acquired the land plot for the Kety well for PLN 1 plus VAT.
  • EKZ assumes responsibility for monitoring the Kety well and any future liabilities or remediation.
  • The Kety well was drilled by San Leon Energy and PgNIG in 2015 and plugged/abandoned as a dry well, though it still exhales small amounts of methane.
• Concession Transformation: The transformation of the Bielsko-Biala and Cieszyn concessions to the new Polish concession structure and the award of concessions to EKZ was completed on November 19, 2024.
• Strategic Impact: CEO Dr. David Winter stated the deal removes dilution associated with issuing common shares, reduces debt on the balance sheet, and increases Horizon's gas reserves and reserve value.
• Asset Base: Horizon now controls a 1,100-square-kilometre land base in southern Poland, focusing on the Lachowice potential and natural gas resources to enhance Poland's energy independence.
• Original Deal Terms (Superseded): The original agreement involved $1.08 million (U.S.) cash, $1 million in Horizon shares, and a 6% NPI, contingent on concession transformation and shareholder/TSX approvals.

Notable Quotes

• "We are very pleased to have finally concluded the transaction with San Leon. The amended terms benefit both companies. The all-cash consideration meets both companies needs and for Horizon removes the dilution associated with issuing common shares. The termination of the NPI will lead to an increase in Horizon's gas reserves and reserve value and payment of the consideration reduces the debt on our balance sheet. Horizon is now clear to unlock the significant potential reserve value at Lachowice and to develop the natural gas resources across it's 1,100-square-kilometre land base in southern Poland and play a significant role in increasing domestic gas supplies and enhancing Poland's energy independence." — Dr. David Winter, CEO