Prospera Energy Announces Convertible Debt Private Placement and Operations Update

Rhea-AI Summary

Prospera Energy (GXRFF) has announced a $2 million convertible debt private placement offering with a 12% interest rate. The debentures are convertible at $0.05 in the first year and $0.10 in the second year, with interest payable in cash or shares. The company plans to use proceeds for well reactivation, production optimization, strategic acquisitions, and working capital. Key operational updates include: - Balance sheet consolidation initiatives under a single senior secured debt instrument - 20% of oil production allocated to asphalt sales agreement (May-August) for improved netbacks - Service rig mobilization at Cuthbert property for multi-well program - Three locations identified for polymer flood pilot in Luseland pool - Q1 2025 Financial Statements release scheduled for May 21st, 2025

Positive

• Secured lead commitments from company insiders for the convertible debt offering
• Implementation of asphalt sales agreement improving netbacks for 20% of production
• Active well optimization program at Cuthbert property to increase production
• Progress on polymer flood pilot project with three identified locations
• Initiatives for balance sheet consolidation under single debt instrument for better capital flexibility

Negative

• Additional debt burden with 12% interest rate
• Potential dilution for existing shareholders through convertible debentures and warrants
• Subordinate security position (second-priority lien) for new convertible debentures

CALGARY, Alberta, May 12, 2025 (GLOBE NEWSWIRE) -- Prospera Energy Inc. (TSX.V: PEI, OTC: GXRFF) ("Prospera", “PEI” or the "Corporation")

Convertible Debt Offering
Prospera Energy Inc. ("Prospera" or the "Corporation") intends to raise up to $2,000,000 by way of non-brokered private placement. Funds will be raised by offering 12% convertible debentures with the principal amount convertible at $0.05 in the first year and $0.10 in the second year. Applicable interest will be payable in cash or shares at the Corporation’s discretion.

Issuer:	Prospera Energy Inc. (“Prospera” or the “Corporation”).
Issue:	Convertible Debenture with a two-year term.
Offering Amount:	$2,000,000 CAD (the “Offering”).
Conversion Price:	$0.05 if converted within the first year and $0.10 if converted in year two; convertible into units consisting of one common share and one warrant exercisable into another common share at $0.075 for a period of two years from initial closing. The Company reserves the right to force conversion in the event that the shares of the Company trade at $0.125 for a period of ten days or more.
Underlying Shares:	Common shares of the Company listed on the TSX Venture Exchange under the symbol PEI (the “Common Shares”).
Use of Proceeds:	Prospera intends to use the net proceeds of the offering for well reactivation, production optimization, strategic acquisitions and working capital.
Interest:	12% interest calculated quarterly and paid at maturity, or conversion date, whichever comes first. Interest may be paid in cash or in shares at the then market price, at the Company’s discretion.
Dividend Adjustment and Anti-Dilution:	The conversion price and warrants will also be subject to standard anti-dilution adjustments upon, inter alia, share consolidations, share splits, spin-off events, rights issues, and reorganizations.
Offering Basis:	Non-brokered private placement offering.
Target Close Date:	On or before May 31, 2025.
Security	The convertible debenture will be secured by a second-priority lien, subordinate to existing senior debt; pari passu.
Finders Fees	The Company may pay qualified finders a fee of 7% cash and 7% warrants.

The convertible debt offering has lead commitments from PEI insiders and the funds will be used for well reactivations, production optimization, strategic acquisitions, and working capital. Interested parties are urged to contact Prospera directly for further information on this program.

The securities will be offered to qualified purchasers in reliance upon exemptions from prospectus and registration requirements of applicable securities legislation. A finder's fee in cash and/or warrants may be paid to eligible finders in relation to this financing. These private placements are offered in jurisdictions where the Corporation is legally allowed to do so.

Balance Sheet Consolidation:
In addition to the private placement offering, the Corporation is proceeding on initiatives with multiple parties to consolidate its balance sheet under one senior secured debt instrument, allowing the corporation flexibility on capital options and ability to proceed on its business plan through access to incremental working capital. Funds from this private placement along with additional capital sourced through existing financing instruments will aid the company in achieving higher production levels, sustainable cash flow and increased PDP reserves to support this debt consolidation.

Netback Enhancement:
As part of the corporation’s strategic review on oil marketing and sales points, ~20% of the Company’s oil production has now been allocated to a committed asphalt (seasonal) sales agreement for May – August which improves netbacks through optimization of sales pricing and transportation efficiencies.

Service Rig Update:
Following spring break-up conditions, Prospera has mobilized a service rig to its Cuthbert property for a multi-well program which is expected to further increase production. The program is a continuation of the Company’s strategy of low cost, reliable workovers and waterflood optimization in its core assets. Additionally, this service rig program improves monitoring of reservoir response in preparation for the upcoming pipeline projects intended to unlock further injection and production capacity.

Polymer Flood Pilot:
The company has now identified three locations for its polymer flood pilot in the Luseland pool, and is working to confirm the final location where the initial pilot skid and injection will be located. Reservoir simulation, core testing and polymer viscosity modelling are being performed simultaneously to ensure optimal polymer injection.

Q1 2025 Financial Statements:
The Company expects to release its Q1 2025 Financial Statements on May 21^st, 2025, to be followed by an investor conference call on May 22^nd, 2025 at 10 am MST. Investors and interested parties can register for the Q1 2025 live webinar using the following link.

About Prospera
Prospera Energy Inc. is a publicly traded Canadian energy company specializing in the exploration, development, and production of crude oil and natural gas. Headquartered in Calgary, Alberta, Prospera is dedicated to optimizing recovery from legacy fields using environmentally safe and efficient reservoir development methods and production practices. The company’s core properties are strategically located in Saskatchewan and Alberta, including Cuthbert, Luseland, Hearts Hill, and Brooks. Prospera Energy Inc. is listed on the TSX Venture Exchange under the symbol PEI and the U.S. OTC Market under GXRFF.

Prospera reports gross production at the first point of sale, excluding gas used in operations and volumes from partners in arrears, even if cash proceeds are received. Gross production represents Prospera’s working interest before royalties, while net production reflects its working interest after royalty deductions. These definitions align with ASC 51-324 to ensure consistency and transparency in reporting.
It is important to note that BOEs (barrels of oil equivalent) may be misleading, particularly if used in isolation. The BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

For Further Information:

Shawn Mehler, PR
Email: investors@prosperaenergy.com

Chris Ludtke, CFO
Email: cludtke@prosperaenergy.com

Shubham Garg, Chairman of the Board
Email: sgarg@prosperaenergy.com

FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements relating to the future operations of the Corporation and other statements that are not historical facts. Forward-looking statements are often identified by terms such as “will,” “may,” “should,” “anticipate,” “expects” and similar expressions. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding future plans and objectives of the Corporation, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Although Prospera believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Prospera can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Prospera. As a result, Prospera cannot guarantee that any forward-looking statement will materialize, and the reader is cautioned not to place undue reliance on any forward- looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and Prospera does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.

Neither 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 release.

FAQ

What are the terms of Prospera Energy's (GXRFF) May 2025 convertible debt offering?

Prospera is offering $2 million in convertible debentures with 12% interest, convertible at $0.05 in year one and $0.10 in year two. The debentures include warrants and are secured by a second-priority lien.

How will Prospera Energy use the proceeds from its $2M convertible debt offering?

Prospera will use the proceeds for well reactivation, production optimization, strategic acquisitions, and working capital purposes.

What operational updates did Prospera Energy announce in May 2025?

Prospera announced service rig mobilization at Cuthbert property, improved netbacks through an asphalt sales agreement, progress on a polymer flood pilot, and balance sheet consolidation initiatives.

When will Prospera Energy (GXRFF) release its Q1 2025 financial results?

Prospera Energy will release Q1 2025 Financial Statements on May 21st, 2025, followed by an investor conference call on May 22nd at 10 am MST.

What is the conversion price for Prospera Energy's 2025 convertible debentures?

The debentures are convertible at $0.05 per share in the first year and $0.10 per share in the second year, with forced conversion if shares trade at $0.125 for ten days or more.