en.Wedoany.com Reported - Prospera Energy Inc. (TSXV: PEI; OTC Pink: GXRFF) has announced a non-brokered private placement to issue units at C$0.04 per unit, with total gross proceeds of up to C$12 million, the largest financing in the company's history. The proceeds will be used to reactivate over 140 wells in its inventory awaiting production restoration and to repay corporate debt.
Over the past 20 months, the company has executed a strategic shift focused on reactivating previously shut-in wells from its existing inventory, achieving tangible results. Since the strategic pivot, Prospera has completed the reactivation of 19 wells and over 60 workover operations. Production at its flagship Luseland asset has increased from approximately 54 boe/d to 260 boe/d, a 381% increase, reaching an eight-year high for the field. The payback period for these projects is only 6 to 8 months per well, with commissioning capital efficiency below C$10,000 per boe/d.
Of the total raised, approximately C$10 million will be directly allocated to the workover and reactivation program, with the remaining C$2 million for working capital. The program does not involve new drilling; all funds will be deployed on existing, proven wellbores. Prospera expects dual benefits from production and reserve expansion as shut-in wellbores are restored, thereby supporting its cash flow and asset base.
On the financial front, the offering aims to fundamentally reset the company's balance sheet. Management has assessed the precise capital required to restore positive working capital, resolve going concern issues, and repay all debt within 24 months of closing. Cash flow from the development program is expected to systematically repay the company's senior secured loans, subordinated debt, and gross overriding royalties, totaling approximately C$30 million, with the balance amortized to zero over the next 24 months. The company is also in discussions with senior lenders regarding long-term extensions and refinancing. Net debt is expected to decline significantly over the planned period, gradually transitioning to a net cash position.
In terms of reserves and taxation, each reactivated wellbore is expected to convert shut-in and non-producing wells into proved developed producing reserves, while reducing the company's asset retirement obligations. Prospera has an accumulated tax pool of approximately C$75.8 million, including approximately C$38.1 million in non-capital losses and approximately C$32.1 million in resource pools, which is expected to fully cover forecast pre-tax income, with no cash income tax payable during the development period.
The company also drew a parallel between its strategy and that of Hemisphere Energy, which increased production from approximately 1,400 boe/d to approximately 3,800 boe/d by enhancing recovery from its existing asset base, thereby repaying debt and ultimately reaching a net cash position. Prospera stated it is pursuing the same growth and debt repayment sequence.
Prospera CEO Shubham Garg stated that the past 20 months of work have proven the effectiveness of the new business model, which achieves low-risk growth through existing wellbores rather than relying on high-risk exploration. This financing allows the company to execute its inventory plan at full scale while restoring positive working capital, resolving going concern issues, and establishing a clear path to repay all debt within two years.
Each unit in the offering consists of one common share of the company and one common share purchase warrant. Each warrant entitles the holder to purchase one common share at an exercise price of C$0.06 within two years of closing. If all warrants are exercised, it would provide the company with up to C$18 million in growth capital. The offering is conducted under exemptions from prospectus and registration requirements under applicable securities legislation, and the securities issued will be subject to a statutory hold period of four months and one day. The offering is subject to approval from the TSX Venture Exchange.
The company also announced debt-to-equity settlements. Prospera has reached settlement agreements with three unrelated vendors involving total outstanding trade payables of C$42,800.24, to be settled through the issuance of 996,005 common shares. Two vendors settled C$14,800.24 through the issuance of 296,005 common shares at C$0.050 per share, and one vendor settled C$28,000 through the issuance of 700,000 common shares at C$0.040 per share. Additionally, Prospera updated previously disclosed debt-to-equity settlements, having reached agreements with five unrelated vendors involving total outstanding amounts of C$170,476.02, to be settled through the issuance of 4,100,306 common shares.
Prospera will host a corporate update conference call on June 30, 2026, at 10:00 a.m. Mountain Standard Time. Investors can register to participate via Zoom.
Prospera Energy Inc. is a Canadian energy company focused on crude oil and natural gas exploration, development, and production, headquartered in Calgary, Alberta. Its core assets are located in Saskatchewan and Alberta, including Cuthbert, Luseland, Hearts Hill, and Brooks.
