Mr. Cameron Taylor reports

ROK RESOURCES INC. ANNOUNCES $47.25 MILLION ACCRETIVE SALE OF NON-CORE ASSETS, UPDATE ON TERM DEBT & CAPITAL EFFICIENCIES

Rok Resources Inc. has entered into separate asset purchase and sale agreements to divest of certain non-core assets in Saskatchewan for total combined proceeds of approximately $47.25-million, which includes the sale of Rok's non-operated 2.11685-per-cent interest in the Weyburn unit to Rife Resources Ltd. for total proceeds of approximately $44.5-million, before normal closing adjustments. Two smaller dispositions (the other assets) make up the balance of the dispositions with total proceeds of $2.75-million, before normal closing adjustments.

Weyburn unit

The transaction, by way of definitive sale agreement executed March 22, 2023, will result in gross proceeds that represent approximately 35 per cent of Rok's enterprise value prior to the transaction, while the divestiture of approximately 450 barrels of oil equivalent per day accounts for approximately 11 per cent of its corporate production and approximately 21 per cent of its 2022 net operating income.

Notably, at the time of the asset acquisition, as described in the press release dated March 7, 2022 (FCL acquisition), the Weyburn unit represented approximately 15 per cent of the total production and approximately 28 per cent of annualized net operating income that was acquired, but the gross proceeds from the transaction represent approximately 77 per cent of the total purchase price of $58-million, net of closing adjustments, of the FCL acquisition.

The effective date of the transaction is Jan. 1, 2023. Completion of the transaction is subject to customary conditions, which may include the approval of the TSX Venture Exchange. Closing of the transaction is expected to occur on March 31, 2023.

Strategic rationale

Consistent with Rok's previously announced strategy, the transaction divests significant non-core, non-operated assets and will allow the company to focus on its core properties, which provide significant growth potential through 172 undrilled locations. The $44.5-million in cash proceeds from the Weyburn unit, before normal closing adjustments, will be accretive to existing shareholders of the company by immediately eliminating 90 per cent of Rok's outstanding senior term debt, which will result in interest savings of approximately $5.8-million. By June, 2023, the company's senior term debt is expected to be paid off entirely, providing the company with incremental cash flow of approximately $2.5-million per month, which can be deployed into organic drilling in its core southeast Saskatchewan and Kaybob assets.

"We are very proud of what the Rok team has accomplished in the last 12 months. After closing the FCL acquisition with approximately 3,000 barrels of oil equivalent per day and $46-million net debt to currently producing greater than 3,750 barrels of oil equivalent per day with $15-million of net debt (at closing of the dispositions), we are well positioned to execute a robust development plan through the second half of 2023. We look forward to offering full 2023 guidance at closing," said Cam Taylor, chief executive officer and chairman.

Other assets

The other assets include: (i) approximately 5,000 net acres of fee title land in southwest Saskatchewan; and (ii) approximately 40 barrels of oil equivalent per day of non-core production -- for total proceeds of $2.75-million. The proceeds will be as allocated to working capital for the company's coming 2023 drilling program, details of which are to come in a subsequent press release. The closing of the disposition of the other assets is subject to customary conditions and expected to occur within the coming days.

Capital efficiency update

Management's expertise in the sector, specifically growing companies through the drill bit, combined with in-depth knowledge of the company's existing asset base, has allowed Rok to complete an efficient drilling and recompletion program since the FCL acquisition. In 2022, the company added greater than 1,100 barrels of oil equivalent per day of production to replace its approximately 22-per-cent base decline and exited the year with production in excess of 3,500 barrels of oil equivalent per day. The 2022 drilling and recompletion program was primarily focused on developing existing light oil pools and extending play areas to add new drilling inventory.

An attached table shows a summary of the company's 2022 capital efficiencies.

Financial advisers

Echelon Capital Markets acted as financial adviser to the company with respect to the transaction.

McDougall Gauley LLP acted as legal adviser to the company with respect to the transaction.

About Rok Resources Inc.

Rok is primarily engaged in exploring for petroleum and natural gas development activities in Saskatchewan and Alberta. It has offices located in both Regina, Sask., Canada, and Calgary, Alta., Canada. Rok's common shares are traded on the TSX Venture Exchange under the trading symbol ROK.

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