Trio completes acquisition of cash flow positive oil and gas assets in prolific heavy oil region of Saskatchewan Canada

Rhea-AI Summary

Trio Petroleum Corp (NYSE: TPET) has completed the acquisition of cash flow positive oil and gas assets from Novacor Exploration in Saskatchewan's Lloydminster heavy oil region. The acquisition includes seven producing wells located in two properties, with production subject to Freehold Royalties of 13.5-15% and a GORR of 2%. The purchase price was US$650,000 in cash and 526,536 shares of Trio common stock. The assets feature low operational costs with a competitive lift cost of CDN $10.00 per barrel. Novacor will continue as operator and has the capability to rapidly double production. The strategic acquisition positions Trio alongside major industry players like Cenovus Energy and Canadian Natural Resources, with potential for expansion in this economically attractive region.

Positive

• Assets are cash flow positive with seven producing wells
• Low operational costs at CDN $10.00 per barrel lift cost
• Operator Novacor has capability to rapidly double production
• Strategic location in prolific heavy oil region alongside major industry players
• Favorable regulatory process and market accessibility

Negative

• Production subject to Freehold Royalties of 13.5-15% and additional GORR of 2%
• Share dilution due to 526,536 shares issued as part of purchase price

Insights

Energy Investment Analyst

Trio's acquisition of cash-positive Saskatchewan heavy oil assets diversifies portfolio with low operating costs, providing buffer against price volatility.

Trio Petroleum has strategically expanded its operational footprint beyond California and Utah into the established Lloydminster heavy oil region in Saskatchewan, Canada. The $650,000 cash plus 526,536 shares acquisition from Novacor includes seven producing wells with favorable economics that are already generating positive cash flow.

The acquisition's structure reveals careful capital deployment, with the purchase price split between cash paid in two tranches and equity consideration. This approach preserves Trio's capital flexibility while still securing productive assets, suggesting disciplined financial management for a smaller-cap operator.

What's particularly notable about these assets is their reported CDN $10.00 per barrel lift cost, which provides significant margin protection even in volatile oil price environments. This low operational expense profile is crucial for maintaining profitability across commodity price cycles and represents an important competitive advantage in today's market.

The deal structure—keeping Novacor as operator—is strategically sound, leveraging the seller's established operational expertise while Trio gains exposure to a new basin without immediately assuming operational responsibilities. This arrangement allows Trio to benefit from Novacor's regional experience and existing infrastructure while focusing on identifying additional acquisition targets.

Trio's announcement of immediate workover plans to increase production suggests near-term potential for enhanced cash flow, though specific production volumes and revenue projections are notably absent. The assets include wells producing from the McLaren/Sparky and Lloydminster formations, with royalty obligations of 13.5% plus 2% GORR for Section 19 wells and 15% for Section 3 wells—reasonable terms for the region.

This acquisition represents a meaningful diversification for Trio beyond its original California base, potentially reducing regional regulatory risk exposure while accessing established heavy oil plays with significant development potential and proximity to major operators like Cenovus and CNRL.

Bakersfield, CA, May 21, 2025 (GLOBE NEWSWIRE) -- Trio Petroleum Corp (NYSE American: TPET) (“Trio” or the “Company”), a California-based oil and gas company, today is pleased to announce that it has closed on the balance of certain petroleum and natural gas properties held by Novacor Exploration Ltd. (“Novacor”). More specifically, TPET closed on the remaining Novacor TWP47 assets, located at the South-West quarter of Section 19, Township 47, Range 26W3M. These assets are in the prolific Lloydminster, Saskatchewan heavy oil region (the “Acquisition”). This acquisition strategically positions the Company to expand its operations into one of North America’s most promising heavy oil basins, with upside potential for long term production and reserve growth. Since the Novacor assets are in the heavy oil area, Trio believes they offer economic development and low operational costs. Trio also believes that the market accessibility combined with a favorable regulatory process makes this area very attractive for continued and future development within these lands.

As reported in the Company’s press release on April 10, 2025, the Novacor assets are located at the South-West quarter of Section 19, Township 47, Range 26W3M and the Northeast Section 3, Township 48, Range 24W3M, both in the Lloydminster, Saskatchewan area. There are currently seven producing wells located on the two properties. Production from the wells in Section 19 is subject to Freehold Royalties of 13.5% and a GORR of 2%, and production from the wells in Section 3 is subject to Freehold Royalties of 15%. The wells produce heavy crude oil from the McLaren/Sparky and Lloydminster formation(s). Novacor is the operator of these cash flow positive wells and has the capability to rapidly double production. The area is home to some of the largest players in the industry such as Cenovus Energy, Canadian Natural Resources, Baytex Energy, Rife Resources and many others who have made Heavy Oil a staple of their operation, and where numerous opportunities to acquire additional highly economic fields exist.

Important in this acquisition is Novacor’s ability to address recent fluctuations in global oil prices and their limited impact on the company’s operations. Novacor will continue as operator of the assets. While market volatility is inherent in the energy sector, the Company believes that Novacor’s strategic focus on operational efficiency and low lift costs provides a significant buffer against downward price pressures.

Novacor’s current lift cost stands at a competitive CDN $10.00 per barrel. Trio believes that this low operational expenditure will help ensure Trio maintains strong profitability even in a lower oil price environment. Trio also believes that its commitment to cost management and efficient production techniques will allow it to navigate market fluctuations with greater resilience compared to companies with higher operating costs, thus providing Trio with a significant advantage in its ability to produce oil economically in the current market.

Novacor has a long history of oil and gas development in the area. Trio’s plan is to aggressively grow its footprint in the area utilizing Novacor as an operator of the assets. The Company will continue to seek opportunities for strategic growth and optimization with Novacor’s operational efficiencies and its plan is to deliver consistent value to shareholders through a disciplined approach to operations and cost management.”

Mr. Ross, Trio’s CEO stated, “Our immediate plan is to initiate our workover program to increase production on these newly acquired assets and we believe our next couple of quarters should reflect the benefit of our work. Our focus remains on acquiring projects that generate immediate cash flow or offer transformative growth potential with strategic investment. We believe that this approach aligns with our long-term vision of creating exponential value while managing risk and resources effectively.”

Terms of the Acquisition

The stated purchase price of the Acquisition was US$650,000 in cash paid in two tranches, and 526,536 in shares of common stock of Trio, which were registered for resale in a registration statement which Trio expects to be declared effective by the United States Securities and Exchange Commission in the near future. The Company paid Novacor a good faith deposit of $65,000, which was applied to the cash portion of the purchase price at the initial closing.

About Trio Petroleum Corp

Trio Petroleum Corp is an oil and gas exploration and development company in California, Utah and Lloydminster, Saskatchewan.

Cautionary Statement Regarding Forward-Looking Statements

All statements in this press release of Trio Petroleum Corp (“Trio”) and its representatives and partners that are not based on historical fact are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Acts”). In particular, when used in the preceding discussion, the words “estimates,” “believes,” “hopes,” “expects,” “intends,” “on-track”, “plans,” “anticipates,” or “may,” and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Acts and are subject to the safe harbor created by the Acts. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of the Trio’s control, that could cause actual results to materially and adversely differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth in the Risk Factors sections of the Trio reports filed with the Securities and Exchange Commission (SEC). Copies of such documents are available on the SEC’s website, www.sec.gov. Trio undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Investor Relations Contact:
Redwood Empire Financial Communications
Michael Bayes
(404) 809 4172
michael@redwoodefc.com 

FAQ

What is the purchase price for TPET's Saskatchewan oil assets acquisition?

Trio Petroleum acquired the Saskatchewan oil assets for US$650,000 in cash and 526,536 shares of common stock.

How many producing wells did Trio Petroleum (TPET) acquire in Saskatchewan?

Trio acquired seven producing wells located in two properties in the Lloydminster, Saskatchewan heavy oil region.

What is the operational cost per barrel for TPET's newly acquired Saskatchewan assets?

The lift cost for the acquired assets is CDN $10.00 per barrel.

Who will operate TPET's newly acquired Saskatchewan oil assets?

Novacor Exploration will continue as the operator of the assets.

What are the royalty rates for TPET's Saskatchewan oil assets?

Production is subject to Freehold Royalties of 13.5% and a GORR of 2% for Section 19 wells, and Freehold Royalties of 15% for Section 3 wells.