Questerre Energy Corporation is pleased to announce its plans to consolidate the remaining common equity interest in Red Leaf Resources, Inc. (“Red Leaf”) through an exchange of Red Leaf common shares for Class “A” Common voting shares of Questerre (“Questerre Common Shares”). Red Leaf is a private US-based technology company whose principal assets include its patented HCCO® oil-shale processing technology and mineral leases in the State of Utah. Questerre currently holds approximately 40% Red Leaf’s common equity capital.
Michael Binnion, President, and Chief Executive Officer of Questerre, commented, “Consolidating ownership of Red Leaf is the next step in our oil shale strategy. Their patented HCCO® technology to produce oil from shale with integrated carbon capture remains, in our view, a compelling opportunity to unlock oil shale globally. Together with our PX Energy acquisition, we now have an integrated oil shale platform that combines new technology incorporating carbon capture, existing production and refining operations and access to resources in the state of Utah, Kingdom of Jordan and in Brazil. As a first step, our operations in Brazil can provide an ideal platform to advance a small scale commercial HCCO project.”
Red Leaf’s assets include its patented HCCO® technology, mineral leases in the state of Utah for oil shale, a permit for a wax processing facility and title to over 7,000 acres in the Uintah Basin and cash and investments of over US$9 million. The acquisition values Red Leaf at US$43 million less an applicable discount for lack of control and marketability according to a third party valuation report prepared as of December 31, 2024, resulting in an acquisition price of US$7.5 million subject to working capital adjustments.
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Shareholders representing approximately 40% of Red Leaf’s common shareholders excluding Questerre, representing a majority of the non-Questerre shareholders, have agreed to exchange their Red Leaf common shares for Questerre Common Shares subject to conditions precedent under the terms of the share purchase agreement. It is anticipated the selling shareholders will exercise the provisions under the Red Leaf stockholders agreement requiring the remaining common shareholders to accept the offer on the same terms. Subject to tax and other considerations, the preferred share equity of Red Leaf representing US$1.9 million of principal and accrued dividends intend to participate in this transaction. This participation will be structured through a redemption or acquisition of their ownership by Questerre. A majority of the preferred shares, including those held by the Chief Executive Officer representing over 60% of the outstanding preferred shares, have indicated their support for this transaction.
The exchange ratio is based on the thirty-day weighted average price of $0.31 (US$0.22) per Common Share. Based on Red Leaf’s shares outstanding utilizing a deemed price of US$21 per Red Leaf share and an exchange ratio of 94 Questerre Common Shares for one Red Leaf share, the Company could issue up to a maximum of 20 million Common Shares to the Red Leaf shareholders to acquire all the remaining common equity of Red Leaf. The Common Shares will be issued under applicable prospectus exemptions in Canada and Norway and subject to applicable securities legislation in the United States. Closing of the transaction is subject to receipt of requisite approvals and an initial closing is scheduled for the end of this month.
Questerre is an energy technology and innovation company. It is leveraging its expertise gained through early exposure to low permeability reservoirs to acquire significant high-quality resources. We believe we can successfully transition our energy portfolio.
Questerre is a believer that the future success of the oil and gas industry depends on a balance of economics, environment, and society. We are committed to being transparent and are respectful that the public must be part of making the important choices for our energy future.
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