Sale of Colorado Oil and Gas Interests
Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information for the purposes of Article 7 under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.
2 September 2020
Zoetic International plc
("Zoetic" or the "Company" or the "Group")
Sale of Colorado Oil and Gas Interests
Trading Update
Zoetic International plc (LSE: ZOE), the London-listed vertically integrated CBD company, is pleased to announce that it has agreed to sell its remaining interest in its oil and gas assets located in Colorado, USA (the "Disposal"), as well as continued progress with its core CBD business.
Highlights
· Disposal of the Company's "East Denver" oil and gas assets agreed
· Bank loan of US $276,574 from ANB Bank is now paid in full and the Company now has no borrowings
· Total estimated annual savings of US$1 million from closing natural resources office
· Second international distributor of CBD products in final stages of contract
· Substantial reallocation of resources to the fast-developing CBD business following exit from the major part of the Company's oil and gas business
Sale of Colorado Oil and Gas Interests
The Disposal consists of assets referred to previously as the "East Denver" interests. The assets subject to the sale include a 7.5 per cent working interest in two leases, eight producing wells, associated surface equipment and a connecting gas pipeline (the "East Denver Assets"), held by the Company's wholly owned Colorado subsidiary, Highlands Natural Resources Corporation. The purchaser is True Oil LLC, the operator of the East Denver Assets ("True Oil").
The consideration for the sale of the East Denver Assets is US$376,000, however the Group had a loan secured on the East Denver Assets of US$276,574 from ANB Bank (subject to final non-material adjustment). After paying ANB Bank, settling historic amounts due to True Oil as the operator of the East Denver Assets and the reassignment and repayment of existing bonding arrangements on the East Denver Assets, the final proceeds due to the Company are expected to be less than US$20,000. Completion of the sale is subject to certain procedural matters and a further announcement will be made when completion occurs.
Exit from the Oil and Gas Business
The sale of the East Denver assets, in combination with the sale of the Kansas assets announced on 27 May 2020, and the wind down of the Montana holdings signals the Group's exit from the oil and gas business. This will provide a clean break from the Group's most substantial liabilities and operating costs. With the completion of these sales, the Group will have materially exited the natural resources sector and will be well positioned to continue the growth of its CBD business as an agile and innovative market leader through the reallocation of Group resources.
Whilst the proceeds of these sales will not be substantial, these transactions have enabled the Group to make considerable reductions to ongoing expenditures and eliminate external borrowings. The ongoing cost base of the Group's natural resources operations had developed on the basis of a larger business than was ever achieved. While certain significant costs had already been eliminated during the financial year to 31 March 2020, this financial year will see a much greater reduction in costs, currently anticipated to exceed US$1 million.
This includes both the closure of the Highlands Natural Resources Corporation office in Denver, Colorado (where the lease was negotiated and terminated, saving over 95% of liabilities over the term of the lease) and the termination of employment of the highest paid employees in the Group and consultancy contracts for a number of personnel who were engaged in the running of the legacy natural resources activities. The Board is confident that it has crystallised substantial savings during the current financial year and limited the Group's exposure to the heightened volatility of the natural resources market whilst renewing its focus on the continuing success of its CBD business.
Trading Update
The Company is pleased to announce it is in final negotiations of an international distribution contract. This will be the second contract negotiated for international distribution by the executive team. Further details will be announced when contract is executed. The continued demand by quality distributers for the Company's Chill products reinforces the Boards decision to push the product offerings into the global market. There will be inevitable hurdles to overcome in the everchanging regulatory world of CBD, but the Board believes the Company is well positioned to be first movers in emerging CBD markets.
Trevor Taylor, Co-CEO of Zoetic, commented, "We are pleased to have agreed the sale of our East Denver Assets, which marks the culmination of over a year's effort in transitioning from the Company's origins in the US oil and gas business towards our fast developing CBD business. Making a strategic exit from the Company's legacy operations has refocused our efforts, leaving us with the bandwidth and resources to maximize the potential of our CBD activities."
Antonio Russo, Co-CEO of Zoetic, commented, "We are very pleased with the direction our international go to market plan is headed. The strategic partnerships that are coming together give the Company a lot of momentum as the rest of the world starts to use CBD. They will now see what we have witnessed in Colorado for many years."
**ENDS**
Enquiries
Zoetic International plc c/o IFC Advisory
Trevor Taylor, Co-CEO
Allenby Capital Limited (Financial Adviser and Broker) +44 (0) 20 3328 5656
Nick Harriss
Nick Naylor
IFC Advisory Ltd (Financial PR and IR) +44 (0) 20 3934 6630
Tim Metcalfe
Graham Herring
Florence Chandler
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
Latest directors dealings
- 1 day ago Savannah Energy
- 1 day ago Buccaneer Energy PLC
- 1 day ago Savannah Energy
- 1 day ago Carclo
- 1 day ago Schroder Japan Growth Fund