TPET 8-K
Trio Petroleum Corp (TPET)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): (September 21, 2026)
(Exact name of registrant as specified in its charter)
(State or other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
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If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01. Entry Into a Material Definitive Agreement.
On September 17, 2026, Trio Petroleum Canada, Corp. (“Trio Canada”), a wholly owned subsidiary of Trio Petroleum Corp (the “Company”), entered into a Farmout Agreement (the “Agreement”), with Croverro Energy Ltd. (“Croverro”), pursuant to which Croverro has granted to Trio Canada the right to earn working interests in the petroleum and natural gas rights within certain properties in Alberta and Saskatchewan so described in the Agreement (“Farmout Lands”), through the funding by Trio Canada of up to seven earning programs (“Earning Programs”), with each such Earning Program intended to drill and equip two test wells within areas chosen by Trio Canada and Croverro on the Farmout Lands. Croverro will provide notice to Trio Canada regarding the first such Earning Program by October 1, 2026 (the “Initial Earning Program”), and if Trio Canada so chooses to participate in such Earning Program, Trio Canada will provide Croverrio with a prospect fee in the amount of $450,000 (“Prospect Fee”), or, if Trio Canada chooses not to participate, the Agreement will be deemed to be terminated in accordance with its terms.
After the completion of the Initial Earning Program, Trio Canada will have the option participate in up to an additional six Earning Programs. Trio Canada will be given the option to participate in each such subsequent Earning Program, and if at any time Trio Canada chooses not to participate in any such Earning Program, Croverro will no longer have an obligation to offer Trio Canada the option to participate in any further Earning Programs (subject to certain exceptions as noted in the Agreement). In the event Trio Canada does not participate in all seven potential Earning Programs, Croverro will reimburse Trio Canada a pro rata share of the Prospect Fee for any Earning Programs Trio Canada did not participate. In connection with each Earning Program, Croverro will act as the initial operator for operating procedures applicable to each such Farmout Lands, however Trio Canada will be permitted to take over such operatorship in the case of a change of control or termination of key personnel at Croverro.
For each Earning Program for which Trio Canada shall participate, Trio Canada will be obligated to pay 100% of the drilling, completion and equipping costs for such Earning Program (the “Earning Costs”). Upon completion of each Earning Program, Trio Canada will then be entitled to 80% of Croverro’s pre-earning work interests of such Farmout Lands, including the test wells therein, until the Earning Costs have been repaid, at which such time Trio Canada’s percentage will be decreased to 60% of such pre-earning work interests (subject to the specific ownership and participation terms applicable to each project).
The Agreement contains standard covenants and rights of the parties, including for certain “tag-along” rights, in the case either party receives an offer from a third party to acquire their interest in the Agreement or in the Farmout Lands, and rights to areas of mutual interest in the proximity to the Farmout Lands.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01 Regulation FD
On September 21, 2026, the Company issued a press release announcing the signing of the Agreement. A copy of such release is furnished hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits.
| Exhibit Number | Exhibit | |
10.1* |
||
| 99.1 | Press Release dated September 21, 2026 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Certain exhibits and schedules have been omitted pursuant to Item 601(a)(6) of Regulation S-K. The Company hereby agrees to furnish a copy of any omitted exhibit or schedule to the SEC upon request.
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Trio Petroleum Corp. | ||
| Date: September 21, 2026 | By: | /s/ Robin Ross |
| Name: | Robin Ross | |
| Title: | Chief Executive Officer | |
| 3 |
Exhibit 10.1
FARMOUT AGREEMENT
VARIOUS AREAS ALBERTA & SASKATCHEWAN
THIS FARMOUT AGREEMENT (the “Agreement”) dated for reference as of the 17th day of September, 2026.
BETWEEN:
CROVERRO ENERGY LTD., a corporation having an office in the City of Calgary, Alberta (hereinafter referred to as “Croverro”);
AND
TRIO PETROLEUM CANADA, CORP., a corporation having an office in the City of Calgary, Alberta (hereinafter referred to as “Trio”);
WHEREAS Croverro has agreed to grant to Trio the right to earn eighty (80%) percent of Croverro’s Pre-Earning Working Interest on the terms and conditions hereinafter set forth;
NOW THEREFORE in consideration of the premises and of the covenants and agreements of the Parties, the Parties agree as follows:
| 1. | Interpretation. |
| (a) | Definitions. Each capitalized term used in this Agreement will have the meaning given to it in the Farmout & Royalty Procedure or Operating Procedure, as applicable, and in addition: |
| (i) | “Agreement” is as defined above; | |
| (ii) | “Area” means that portion of the Farmout Lands identified in Schedule “A” under each of the following: Rivercourse Area, Lloyd East Area, Paynton Area, Hillmond Area, Marshall Area and Lloyd South Area; | |
| (iii) | “Earned Lands” means any Farmout Lands in which Trio earns an interest pursuant to Clause 2 of this Agreement; | |
| (iv) | “Earning Costs” means collectively the Drilling Costs, Completion Costs and Equipping Costs in respect of an Earning Program; | |
| (v) | “Farmout Lands” means the lands as set forth in Schedule “A”, as the same from time to time remain subject to this Agreement; | |
| (vi) | “Farmout & Royalty Procedure” means the 2015 CAPL Farmout & Royalty Procedure, as incorporated herein, with the elections and amendments as described in Schedule “B”; | |
| (vii) | “Key Croverro Personnel” means Richard Bennett, Grant Robertson, Michal Holub and Brent Stone; | |
| (viii) | “Operating Procedure” means the 2015 CAPL Operating Procedure, as incorporated herein, together with the 1996 PASC Accounting Procedure, with the elections and amendments as described in Schedule “B” provided that if there is an existing operating procedure applicable to such Farmout Lands, it shall mean such existing operating procedure; and | |
| (ix) | “Operator” means Croverro under the Operating Procedure as provided in Clause 3 of this Agreement. |
| (b) | Schedules. The following Schedules attached hereto are incorporated into and made part of this Agreement: |
| (i) | Schedule “A” which describes the Title Documents, the Farmout Lands and the Pre-Earning Working Interest and Encumbrances; | |
| (ii) | Schedule “B” which describes the elections and revisions to the 2015 CAPL Farmout & Royalty Procedure, the 2015 CAPL Operating Procedure and the 1996 PASC Accounting Procedure; | |
| (iii) | Schedule “C” which specifies the type of drilling and other information required to be supplied by Croverro to Trio pursuant to the 2015 CAPL Farmout & Royalty Procedure (as modified hereby); and | |
| (iv) | Schedule “D” which specifies the Areas of Mutual Interest. |
| (c) | Incorporation by Reference. Except as otherwise provided in this Agreement and subject to the elections and amendments identified in Schedule “B”, the definitions in the Farmout & Royalty Procedure and in the Operating Procedure, respectively, are incorporated by reference into this Agreement. |
| (d) | Croverro Conduct of Earning Operations. |
| (i) | It is acknowledged and agreed by the Parties that, except as otherwise specifically provided for herein, the term “Farmor” in the Farmout & Royalty Procedure shall refer to Croverro, and the term “Farmee” in the Farmout & Royalty Procedure shall refer to Trio. |
| (ii) | Notwithstanding anything to the contrary as may be contained in the Farmout & Royalty Procedure, Croverro shall be responsible for conducting all Operations in respect of the Earning Wells. In that regard, the Farmout & Royalty Procedure shall, wherever the context requires or permits, be so interpreted and construed where necessary “Farmee” shall be replaced with “Farmor” and vice versa, including without limitation, within the following provisions of the Farmout & Royalty Procedure: |
| Article 3.00 | Test Well | |
| Article 7.00 | Abandonment of Wells | |
| Article 9.00 | Well Information to the Farmor | |
| Article 14.00 | Default |
| Notwithstanding the foregoing, in the definition of “Payout”, it shall remain being interpreted as Trio as the “Farmee” and shall not be construed as the “Farmor”. | ||
| (iii) | Without in any way limiting the generality of Article 9.00 (Well Information to Farmor) of the Farmout & Royalty Procedure (as modified hereby), Croverro agrees to automatically provide to Trio the type of drilling and other information set out in Schedule “C” hereto and as provided for in the Farmout & Royalty Procedure. |
| (iv) | The Farmout & Royalty Procedure shall be applied, mutatis mutandis, as modified in accordance with the above and in furtherance to the above, subject to the obligation of Trio to pay 100% of the Earning Costs of the Earning Wells, Clause 11.01 of the Farmout & Royalty Procedure will apply, mutatis mutandis, to all of Croverro’s activities and obligations in respect of the Earning Wells, such that and for clarity, subject to any application of Clause 1(d)(v) of this Agreement to limit Croverro’s responsibility for Losses and Liabilities, Croverro will, with respect to activities hereunder: |
| (A) | be liable to Trio for all Losses and Liabilities that Trio may suffer, sustain, pay or incur; and, in addition |
| (B) | indemnify and hold harmless Trio, its Affiliates and the respective directors, officers and employees of Trio and its Affiliates from and against all Losses and Liabilities that may be brought against or suffered by them or that they may sustain, pay or incur. |
| (v) | Croverro’s obligation under Clause 11.01 of the Farmout & Royalty Procedure and Clause 1(d)(iv) of this Agreement will apply only insofar as the Losses and Liabilities contemplated therein are a direct result of: |
| (A) | any act, omission or failure to act (whether negligent or otherwise) of Croverro, any of its Affiliates or the respective directors, officers, employees, agents or contractors of Croverro or any of its Affiliates with respect to Operations or activities conducted by Croverro or on its behalf hereunder in respect of the Earning Wells; |
| (B) | a breach of a provision of this Agreement by Croverro, any of its Affiliates or the respective directors, officers, employees, agents or contractors of Croverro or any of its Affiliates; or |
| (C) | the Gross Negligence or Wilful Misconduct of Croverro, any of its Affiliates or the respective directors, officers, employees, agents or contractors of Croverro or any of its Affiliates, provided, Croverro’s obligation hereunder will not apply, insofar as the particular act, omission or failure to act resulting in those Losses and Liabilities was done or omitted to be done in accordance with Trio’s written instructions or written approval and that act, omission or failure to act was inherent in those instructions or that approval. |
| 2. | Earning Programs. Croverro hereby grants to Trio the right to earn Working Interests in the petroleum and natural gas rights described in the Farmout Lands, by funding up to 7 earning programs on the following basis: |
| (a) | Initial Earning Program. Croverro shall on or before October 1, 2026 by written notice to Trio, propose to drill, Complete and Equip two (2) Test Wells on that portion of the Farmout Lands within an Area as chosen by Croverro (the “Earning Program”), including the Farmout Lands within such Area to be earned by Trio pursuant thereto (the “Earned Lands”). Trio may, within 10 Business Days of receipt of the Earning Program notice, elect to participate in such Earning Program and be responsible for any and all Earning Costs incurred by Croverro with respect to such Earning Program. Concurrent with its election to participate in the Earning Program, Trio shall pay to Croverro a prospect fee in the amount of CAD $450,000 (the “Prospect Fee”). Upon the election of Trio to participate in the Earning Program and the payment of the Prospect Fee, Croverro shall commence the Earning Program within 90 days and thereafter conduct the Earning Program in accordance with Article 3.00 of the Farmout & Royalty Procedure. Subject to Clause 8 of this Agreement, if Trio does not elect to participate in such Earning Program within 10 Business days of receiving the Earning Program notice, Trio shall be deemed to have elected to not participate in the Earning Program and this Agreement shall terminate. |
| (b) | Earned Interests. Subject to Clause 2(c) of this Agreement, upon completion of the initial Earning Program Trio shall earn: |
| (i) | 80% of Croverro’s Pre-Earning Working Interests in the Test Wells and the Earned Lands, until Payout of the Earning Costs paid by Trio in funding such Earning Program; |
| and thereupon automatically converting to: |
| (ii) | 60% of Croverro’s Pre-Earning Working Interests in the Test Wells and the Earned Lands. |
| For the avoidance of doubt, the Parties confirm that earning with respect to each Earning Program shall occur upon the completion of such Earning Program, and shall be independent of any subsequent Earning Program. Where Croverro holds less than a 100% Working Interest in the Earned Lands, Croverro shall serve any and all required operation notices to third-parties prior to serving the Earning Program notice and Trio’s share of Earning Costs and Croverro’s Pre-Earning Working Interest shall reflect those third-party elections. |
| (c) | Interpretation of Earning and Payout. |
| (i) | The Payout account under any Earning Program shall be calculated on a Test Well by Test Well basis. |
| (ii) | Croverro shall maintain the Payout account in accordance with Article 6.01 of the Farmout & Royalty Procedure and provide Trio with the written statements as provided for therein. |
| (iii) | The payment of the Prospect Fee shall not be included in the Payout account under any Earning Program well. |
| (iv) | If a third party elects not to participate in a Test Well and is thereupon subject to a well penalty pursuant to the applicable operating procedure, Trio shall be entitled to retain the proceeds from the applicable penalty on production from the Test Well as provided for in the applicable operating procedure in respect of the pre-Effective Date Working Interest attributable to the non-participating third-party. |
| (d) | Subsequent Earning Programs. Within 30 days of rig release of the second Test Well in the initial Earning Program, Croverro shall by written notice to Trio, propose to drill, Complete and Equip two (2) Test Wells on that portion of the Farmout Lands within another Area as chosen by Croverro including the associated Earned Lands with such Test Wells. Such second Earning Program shall be subject to the same terms and conditions in this Clause 2, other than the payment of the Prospect Fee. Subject to Clause 2(e) of this Agreement, this Clause 2(d) shall continue until Croverro has issued Earning Program notices in respect of 7 Earning Programs in the aggregate. |
| (e) | Termination of Earning Program & Refund of Prospect Fee. Subject to Clause 8 of this Agreement, if Trio elects not to participate in any Earning Program proposed by Croverro, Croverro’s obligation to issue additional Earning Program notices, and Trio’s right to earn additional Working Interests in the Farmout Lands shall thereupon terminate. In such event, Croverro shall, within ten (10) Business Days of such election, refund to Trio a pro rata share of the Prospect Fee, being CAD $64,000 for each of the remaining Earning Programs which Trio has not or does not participate in. |
| 3. | Application of the Operating Procedure. Upon earning by Trio, such Earned Lands shall become subject to the Operating Procedure and Croverro will be the initial Operator under the Operating Procedure. Without in any way limiting the generality of Clause 1.02 of the Farmout & Royalty Procedure, prior to and while Trio is earning an interest in any of the Farmout Lands, Clause 3.01 of the Farmout & Royalty Procedure and Articles 2.00, 3.00, 4.00, 5.00, 7.00, 8.00 and 9.00 of the Operating Procedure shall also apply, mutatis mutandis, to this Agreement and shall be deemed to be incorporated herein. |
| (a) | Subject to Trio being permitted to legally operate under the Regulations, Trio shall have the option to take over operatorship where Croverro undergoes: |
| (i) | a change of control initiated by William Kujat or his successors; or |
| (ii) | any of the Key Croverro Personnel terminate their employment, contracting, working or professional arrangements (other than by death) with Croverro, or have such arrangements terminated by Croverro, during the Earning Program phase. |
| For the avoidance of doubt, the Parties confirm that the foregoing option to take over operatorship is in addition to Trio’s rights to challenge for operatorship pursuant to Clause 2.03 of the Operating Procedure. | ||
| (b) | From and after earning hereunder, as to those portions of the Farmout Lands so earned, the Operating Procedure (in its entirety) shall govern the relationship of the Parties. |
| 4. | Tag-Along Right. In addition to and without limiting the generality and application of Article 24.00 of the Operating Procedure, and in particular the Clause 24.01 Alternate B (Right of First Refusal), if either Party receives an offer from a third party to acquire any or all of its interest in this Agreement or the Earned Lands, such Party shall, within ten (10) Business Days of receipt of such offer, give written notice thereof to the other Party and thereafter and if directed to do so by the other Party, make all reasonable commercial efforts with the third party to include the other Party’s Working Interests in this Agreement or the applicable Earned Lands in the proposed transaction. |
| 5. | Access to Facilities. Notwithstanding anything to the contrary as may be contained within the Operating Procedure (including, without limitation, the provisions of Article 6.00 thereof), insofar as Trio is taking its Working Interest share of Petroleum Substances produced from Earning Wells in kind in accordance with Subclause 6.01A of the Operating Procedure, Croverro shall use commercially reasonable efforts to facilitate the transportation, handling, compression, disposal and processing of any of Trio’s production and Trio shall pay its proportionate share of actual costs and fees associated with such transportation, handling, compression, disposal and processing. |
| 6. | No Interest Letter. Within ten (10) days of the execution of this Agreement, Croverro will deliver to Trio a mutually agreed upon form of no-interest letter from any claims of security interest in and to all of Croverro’s present and after-acquired personal property. |
| 7. | Mutual Interest Lands. Notwithstanding the provisions of Clause 4 of this Agreement but subject to Clause 8 of this Agreement, the Parties hereby agree to an area of mutual interest being those lands comprising 1 mile surrounding the Farmout Lands (“Area of Mutual interest”) whereby: |
| (a) | with respect to lands within the Area of Mutual Interest associated with those Farmout Lands which have not yet been earned by Trio, the Parties shall offer each other the opportunity to participate for cost in the after acquired lands under Article 8.00 of the Farmout & Royalty Procedure on the basis of Trio as to 60% and Croverro as 40%: |
| (i) | any lands jointly acquired by Croverro as to 40% and Trio as to 60% shall then be included in the Farmout Lands, and Croverro shall issue such additional Earning Program notices in respect of such after acquired lands as is commercially reasonable in the circumstances; |
| (ii) | any lands offered by Trio to Croverro in which Croverro declines to participate shall be acquired solely by Trio and shall not be subject to this Agreement; and |
| (iii) | any lands offered by Croverro to Trio in which Trio declines to participate shall be acquired solely by Croverro and shall not be subject to this Agreement. |
| (b) | with respect to lands within the Area of Mutual Interest associated with those Farmout Lands which have already been earned by Trio, the Parties shall offer each other the opportunity to participate for cost in the after acquired lands on the basis of Trio as to 60% and Croverro as 40%. All such lands shall be governed by the Operating Procedure including the 300% non-participation penalty provided for in Article 10. |
| 8. | Rivercourse Area. With respect to the Farmout Lands in the Rivercourse Area identified in Schedule “A”, the following shall apply: |
| (a) | If Croverro is able to negotiate the acquisition of the working interests of either or both of Taku Gas Limited and Prairie Dog Canada Ltd. (as identified in Schedule “A”) on terms acceptable to both Croverro and Trio, any such acquisition costs shall be paid 100% by Trio and any working interests so acquired shall be split between Trio as to 60% and Croverro as to 40%. For example, if the working interests so acquired is 75%, such working interests shall split 45% to Trio and 30% to Croverro; and |
| (b) | If Croverro serves Trio an Earning Program notice for the Rivercourse Area, Trio shall be entitled to elect to not participate in such Earning Program and such non-participation shall not terminate this Agreement under either Clauses 2(a) or 2(e) and Croverro shall refund Trio $64,000, being the pro-rata portion of the Prospect Fee. |
| 9. | Miscellaneous. |
| (a) | Conflicts. Clause 1.04 of the Operating Procedure incorporated by reference into this Agreement by Clause 1(c) of this Agreement shall apply, except that, in the event of a conflict between this Agreement and the Schedules, the terms and provisions of this Agreement shall prevail. In the event of a conflict between this Agreement and the Title Documents, the terms and provisions of the Title Documents shall prevail, and this Agreement shall be deemed to be amended accordingly. |
| (b) | Laws of Jurisdiction. This Agreement, the Operating Procedure and the relationship between the Parties shall be construed and determined according to the laws of the Province of Alberta and the courts of the Province of Alberta shall have exclusive jurisdiction with respect to any conflicts or disputes arising in relation to this Agreement or the Operating Procedure. Notwithstanding, the Parties agree that the regulations followed in regard to the all operations of the Farmout Lands in Saskatchewan shall be the Regulations in and for the Province of Saskatchewan. |
| (c) | Authority. Each Party covenants that it has good right, full power and authority to enter into this Agreement. |
| (d) | Further Acts. The Parties shall from time to time, and at all times, do all such further acts, and execute and deliver all such further deeds and documents, as shall be reasonably required, in order to fully perform and carry out the terms of this Agreement. |
| (e) | Execution. This Agreement may be signed electronically, including through DocuSign and similar applications. This Agreement may be signed in any number of counterparts (including counterparts by scanned or electronic signature) and each counterpart will be deemed an original, taken together, all counterparts will be deemed to constitute one and the same instrument. Delivery of a printed counterpart (whether or not the counterpart was signed electronically) and electronic delivery (including by email transmission or transmission over an electronic signature platform) of an executed counterpart of this Agreement are each as valid, enforceable and binding as if the signatures were upon the same instrument and delivered in person. |
IN WITNESS WHEREOF the Parties have caused this Agreement to be duly executed.
| CROVERRO ENERGY LTD. | TRIO PETROLEUM CANADA, CORP. | |||
| Per: | /s/ Richard Bennett | Per: | /s/ Robin Ross | |
| Name: | Richard Bennett | Name: | Robin Ross | |
| Title: | President | Title: | Chairman & CEO | |
SCHEDULE “A”
[SCHEUDLE OF THE FARMOUT LANDS]
SCHEDULE “B”
[2015 CAPL FARMOUT & ROYALTY PROCEDURE ELECTIONS AND AMENDMENTS]
SCHEDULE “C”
[WELL INFORMATION REQUIREMENTS]
SCHEDULE “D”
[AREA OF MUTUAL INTEREST]
Exhibit 99.1
Trio Petroleum Announces Lloydminster Heavy-Oil Farm-In And Multilateral Development Program With Croverro Energy
14-well multilateral development inventory across Alberta and Saskatchewan Canada combines existing production, re-entry potential and staged development designed to recycle production cash flow into future drilling
Boca Raton, Florida. - September 21, 2026 - Trio Petroleum Corp (NYSE American: TPET) (“Trio” or the “Company”), today announced the execution of farm-in and development agreement with Croverro Energy Ltd. (“Croverro”), a Calgary-based heavy-oil operator specializing in multilateral horizontal development in the Lloydminster region of Alberta and Saskatchewan.
The transaction provides Trio with a relatively low-cost option to participate in a multi-year development earning program comprising up to 14 new multilateral drilling opportunities - five in Alberta and nine in Saskatchewan - together with a re-entry and producing-property acquisition.
Trio believes the Croverro program is an important step in its previously announced strategy to build a substantially larger Canadian oil and gas business through a combination of acquisitions, development drilling and strategic operating partnerships. In parallel with development of the Croverro assets, and in furtherance of its stated growth strategy, Trio intends to continue evaluating and pursuing additional oil producing-property acquisitions and development opportunities that complement its growing Canadian portfolio.
A fundamental component of the transaction is that Croverro will remain the operator of the development program. Trio believes the combination of Croverro’s specialized multilateral drilling expertise, familiarity with the assets, a substantial inventory of development opportunities and a staged capital program designed to use cash flow from earlier production to contribute toward subsequent drilling, provides Trio with the potential foundation for a significant and scalable Canadian heavy-oil business.
Croverro - A Specialized Lloydminster Multilateral Operator
Trio’s decision to pursue the opportunity was driven not only by the expected quality and scale of the assets, but also by the opportunity to align with Croverro as operator.
Croverro has developed specialized technical and operating expertise in the application of multilateral horizontal drilling to the thin, laterally extensive heavy-oil reservoirs of the Lloydminster region.
Trio’s development approach incorporates geological interpretation, seismic data, existing well control and reservoir modelling in the design and execution of multi-leg horizontal wells intended to maximize reservoir contact and improve development efficiency.
Successful multilateral development requires precise well placement, geo-steering (meaning the practice of adjusting a drill bit’s path in real time based on downhole geological data), drilling execution and an understanding of how individual reservoir intervals behave over the producing life of a well. Croverro has made this type of development a core component of its Lloydminster heavy-oil business. For over twenty years, Croverro has generated revenues from operating multiple multilateral heavy-oil development programs in the region and has continued to attract participation in subsequent development opportunities.
“In June, we provided an update to the market on our growth strategy, and over the past several months, we have begun to implement that strategy, highlighted by our new transaction with Croverro,” commented Robin Ross, Chairman and CEO of Trio Petroleum Corp. “Trio is actively conducting extensive reviews of acquisition and development opportunities across Western Canada, supported by experienced technical and operating professionals in Calgary and the Lloydminster region. We believe the Croverro opportunity represents a strong combination of near-term development potential, scale and operating expertise that fits right into our growth plans. The program provides a substantial inventory of multilateral drilling opportunities positioned for near-term development together with existing production and re-entry potential. With Croverro remaining as operator, we believe the program provides a compelling platform for significant production growth in the Lloydminster heavy-oil region. Croverro was one of the principal reasons Trio became interested in this opportunity. We aren’t simply acquiring a collection of drilling locations; we are aligning ourselves with a highly experienced Lloydminster heavy-oil operator that has made multilateral development a core part of its business. Moreover, our out of pocket investment to capture this opportunity is relatively small compared to our cash on hand, creating the potential for a positive financial result for Trio. In short, we believe Croverro is at the forefront of applying multilateral technology to conventional heavy-oil development in the Lloydminster region, and their technical knowledge, local operating experience and demonstrated ability to drill and operate these specialized wells gives us considerable confidence in the program. Having Croverro remain as operator is critical to our strategy. We believe we have the right assets, the right development approach and, most importantly, the right operating team to execute it.”
Why Multilateral Heavy-Oil Development Matters
Multilateral wells consist of a primary horizontal wellbore with multiple lateral branches extending through the reservoir. This approach can be particularly effective in the relatively thin, laterally extensive heavy-oil reservoirs common throughout the Lloydminster region that covers areas of Alberta and Saskatchewan, Canada.
By placing multiple horizontal laterals into the reservoir from a common wellbore, an operator can substantially increase reservoir contact compared with conventional vertical development.
Greater reservoir exposure can improve oil drainage and recovery while allowing a larger volume of reservoir to be developed from a concentrated surface location. The development approach can also reduce the number of separate well sites, access roads and associated surface infrastructure that might otherwise be required to achieve comparable reservoir exposure.
Trio believes these characteristics provide the potential for:
| ● | Greater reservoir contact; |
| ● | Improved recovery efficiency; |
| ● | More barrels recovered per development dollar; |
| ● | Improved capital efficiency; |
| ● | Reduced surface infrastructure requirements; and |
| ● | A smaller overall surface development footprint. |
Multilateral and extended-horizontal development have become increasingly important tools in the Lloydminster heavy-oil fairway. Trio believes continued improvements in geo-steering, seismic interpretation, reservoir modelling and drilling execution will further enhance the role of multilateral technology in conventional heavy-oil development.
A Material Multi-Year Development Inventory
The contemplated program consists of 14 new multilateral drilling opportunities, to begin almost immediately and conducted over the next eighteen months consisting of:
Alberta - Five New Multilateral Wells
The Alberta inventory includes development opportunities at Lloyd South and Rivercourse across multiple heavy-oil producing intervals.
Saskatchewan - Nine New Multilateral Wells
The Saskatchewan inventory includes development opportunities at Lloyd East, Paynton, Hillmond and Marshall.
In addition to the 14 new multilateral wells, the program includes a separate Rivercourse re-entry opportunity and an oil producing-property acquisition
.
The combination provides Trio with exposure to three distinct sources of potential production growth:
| ● | Existing acquired production; |
| ● | Near-term production potential from the Rivercourse re-entry; and |
| ● | A multi-year inventory of new multilateral drilling opportunities. |
This combination is intended to provide Trio with production and cash flow at different stages of the development cycle rather than relying solely upon future drilling success.
Farm-In and Participation Structure
Upon its election to participate in the initial 2-well earning program, Trio would pay Croverro a prospect fee in the amount of CAD $450,000.
Under the current development agreement, applicable projects are structured whereby Trio funds 100% of applicable development capital of approximately $1.8 million Canadian in exchange for an 80% revenue interest through payout of Trio’s costs, stepping down to a 60% interest after payout, subject to the specific ownership and participation terms applicable to each project.
Certain opportunities within the overall program carry different participation interests and will be governed by their applicable agreements.
Croverro will remain operator, maintaining continuity across geological evaluation, well design, drilling, completion, production operations and subsequent development planning.
Trio can elect not to participate in any subsequent 2-well earning program proposed by Croverro resulting in the termination of future earning program participation except in the non-participation in the Rivercourse Area. In such a case, Croverro shall refund to Trio a pro-rata share of the prospect fee for each of the remaining earning programs including the Rivercourse Area.
Mr. Ross further commented, “The Croverro program builds upon Trio’s existing Canadian operating platform in Alberta and Saskatchewan, where we have established producing operations and an experienced technical and operating team. Trio intends to leverage this existing platform as it aims to expand production through potential acquisitions, optimization of existing assets and development drilling.”
ABOUT TRIO PETROLEUM CORP
Trio Petroleum Corp (NYSE American: TPET) is an independent oil and gas company focused on the acquisition, development and optimization of oil and gas properties in North America. The Company’s strategy is centered on acquiring producing assets at attractive valuations, optimizing existing production and identifying opportunities to develop additional production through drilling and other development activities.
Cautionary Note Regarding Forward-Looking Statements
All statements in this press release of 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 this press release, the words “estimates,” “believes,” “hopes,” “expects,” “intends,” “on-track”, “plans,” “anticipates,” “aim,” “goal,” or “may,” derivations of such words, 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, although not all forward-looking statements are denoted by such words. Any statements made in this press release other than those of historical fact, about an action, event or development, are forward-looking statements. In this press release, forward-looking statements relate, among other things, to the anticipated operational and financial benefits to Trio of its new agreement with Croverro as described herein, as well as Trio’s growth plans and strategies in general. 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 significant 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 and on Trio’s website at https://ir.trio-petroleum.com/sec-filings/. Accordingly, readers should not place undue reliance on any forward-looking statements. Trio undertakes no obligation to update these statements for revisions or changes after the date of this press release, except as required by law.
Investor Relations Contact:
Redwood Empire Financial Communications
Michael Bayes 404 809-4172