Westgate Energy announces Agreement to Acquire significant Mannville Stand and Land Position and A US$25 Million Loan

CALGARY, ALBERTA, March 10, 2025 – Westgate Energy Inc. (“Westgate” or the “Company”) (TSXV:WGT), is pleased to announce that it has entered into an asset purchase and sale agreement (the “Acquisition Agreement”) with an arm’s length, large, well-financed private oil and gas company for the strategic acquisition of Mannville Stack focused assets in East-Central Alberta near Frog Lake (the “Acquisition Lands”) for total cash consideration of $7.0 million, before closing adjustments (the “Strategic Acquisition”). The Company’s net cost of the Strategic Acquisition is expected to be approximately $5.7 million.  The Acquisition Agreement was entered into on March 7, 2025 and is expected to close in June 2025.

Acquisition Highlights

Pursuant to the Strategic Acquisition, Westgate will acquire 14.5 sections (3,712 hectares) of primarily contiguous mineral rights, and 58 bbl/d of oil. Up to 57 multi-lateral horizontal well locations have been internally identified by the Company on the Acquisition Lands across three stacked oil bearing Mannville zones.

• 240% increase in Mannville Stack land holdings: The Strategic Acquisition will add to Westgate’s existing 6 sections of Mannville Stack land holdings, for a total of 20.5 sections in the area.

• 243% increase in Mannville Stack horizontal locations: The Company has internally identified up to 57 unbooked multi-lateral horizontal locations on the Acquisition Lands, primarily in the Mannville Waseca Formation, to complement the existing up to 40 unbooked locations identified on the Company’s existing lands in the Cold Lake area.

• 21% increase to corporate production: Westgate is currently producing approximately 275 boe/d of low decline production from its existing assets, and the Strategic Acquisition is expected to add 58 bbl/d of low decline oil production.

• Minimal ARO Acquisition: The Acquisition Lands have very little asset retirement obligations (ARO) and only one producing well. The total undiscounted liability is estimated at approximately $1 million.

• Rationale and timing: The Strategic Acquisition is consistent with Westgate’s strategy of acquiring and subsequently drilling prospective land within the Mannville Stack fairway. An upcoming 2025 drilling plan and production guidance will be provided post-closing of the Strategic Acquisition.

The Strategic Acquisition is subject to, among other things, customary closing conditions, including the accuracy of representations and warranties, the performance of covenants in the definitive agreements and obtaining certain governmental and third-party approvals are received and the Company entering into a master development agreement with the Metis Settlement with respect to the Acquisition Lands.

Financings

Senior Secured Loan

The Company has signed a non-binding term sheet with a Texas-based private credit investment group (the “Lender”) in respect of a potential US$25 million first lien senior secured loan (the “Senior Secured Loan”). Obtaining the Senior Secured Loan is subject to, among other things, the negotiation and execution of definitive agreements in relation thereto and the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange (the “TSXV”). The Senior Secured Loan is expected to carry an interest rate due quarterly of SOFR plus 7.75%, with an SOFR floor of 4.25%, and will mature in four years. Subject to TSXV approval, the Company expects to issue the Lender non-transferable common share purchase warrants of the Company (the “Loan Warrants”) entitling it to acquire up to 12.5% of the fully diluted common shares in the capital of the Company (the “Common Shares”) at the time definitive agreements are executed. Each Loan Warrant will entitle the Lender to acquire one Common Share for five years at an exercise price equal to the greater of: (1) the 40% premium to the trailing 30-day weighted average trading price at the time definitive agreements are executed; and (2) the market price of the Common Shares at the time definitive agreements are executed.

The Company expects to execute definitive agreements in respect of the Senior Secured Loan on or about March 25, 2025, subject to successful negotiation. Once obtained, the Senior Secured Loan is expected to be used to fund drilling on the Company’s existing lands and on the Acquisition Lands.

Insider Private Placement

In connection with the Strategic Acquisition, the Company closed a non-brokered private placement offering of 700 units of the Company (“Private Placement Units”) to Art Agolli, a director of the Company, at a price of $1,000 per Private Placement Unit for gross proceeds of $700,000 (the “Insider Private Placement”). The Company used the gross proceeds from the Insider Private Placement to fund a $700,000 deposit required under the Acquisition Agreement. Each Private Placement Unit is comprised of $1,000 principal amount of convertible unsecured subordinated debentures of the Company (the “Private Placement Debentures”) and 285 common share purchase warrants of the Company (the “Private Placement Warrants”). Subject to TSXV approval, the Private Placement Debentures are convertible at the election of the holder into Common Shares at a conversion price of $0.25 until August 28, 2025 and each Private Placement Warrant entitles the holder to acquire one Common Share at an exercise price of $0.27 until March 7, 2026.

The Private Placement Debentures and the Private Placement Warrants are, and any Common Shares issuance issued thereunder will be, subject to a hold period expiring four months and one day from the date hereof. No finders’ fees were paid in respect of the Insider Private Placement.

Operational Update and 2025 Guidance

The Company has commenced lease construction in preparation for an upcoming two Mannville Stack multi-leg horizontal well program in the Cold Lake area on the lands acquired last year within the Elizabeth Metis Settlement. The Company is currently producing 275 boe/d from its operations at Killam and Richdale.

Following the closing of the Strategic Acquisition and obtaining the Senior Secured Loan, Westgate will provide production and capital guidance for full year 2025. The guidance is planned to include drilling Mannville horizontal multi-leg wells on the Acquisition Lands and the Company’s previously acquired Mannville Stack lands near Cold Lake. The Company’s drilling plans on the Acquisition Lands will be based on, and consistent with, the proposed master development agreement.

Management expects to provide further details in respect of the Strategic Acquisition, including a possible growth profile (i.e. potential production and financial forecasts) assuming a fully funded capital program and certain analogous information (i.e. estimated well economics) from other producers in geographical proximity with Acquisition Lands, in an updated corporate presentation. The updated corporate presentation will be available on March 11, 2025 at www.westgateenergy.ca/investors.

The Company has secured a $1.0 million revolving operating loan with ATB Financial (the “ATB Facility”). The ATB Facility is repayable on demand, are available for borrowing and are guaranteed by Westgate Energy Operations Ltd. (a wholly owned subsidiary of the Company) and secured by a lien over all present and after acquired property of Westgate and Westgate Energy Operations Ltd. The commitment letter amends and restates the prior commitment letter between ATB Financial and Westgate Energy Operations Ltd. The ATB Facility is to be used for the Company’s general corporate purposes, including managing working capital, but excluding capital expenditures and acquisitions.

Management Commentary

Westgate is pleased to be announcing the Strategic Acquisition within its core area of the Mannville Stack fairway. Upon closing, we will have more than tripled our land holdings in the area, and more than doubled our potential horizontal location count. We believe this is a key step in further establishing our position in the area and provides us the pathway to significantly grow the Company through the drill bit and prove up significant reserves via the stacked nature of the Mannville formations within our new footprint.

Regulatory Matters

In respect of the Insider Private Placement, Art Agolli, as a director of the Company, is currently a “related party” of the Company in accordance with Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions (“MI 61-101”). As such, the acquisition of Private Placement Debentures and Private Placement Warrants by Mr. Agolli is considered a “related party transaction” pursuant to MI 61-101. Pursuant to MI 61-101, absent an available exemption, the Company would have been required to obtain minority approval and a formal valuation for the issuance of Private Placement Debentures and Private Placement Warrants to Mr. Agolli. An exemption was available for the issuance pursuant to Sections 5.5(a) and 5.7(a) of MI 61-101, respectively, because neither the fair market value of the subject matter of, nor the fair market value consideration for the transaction insofar as it involves such related parties, exceeds 25% of the Company’s market capitalization. The Company did not file a material change report more than 21 days before the expected closing of the Insider Private Placement as the Company wished to close such on an expedited basis in order to fund the $700,000 deposit required under the Acquisition Agreement. If Mr. Agolli converted and exercised all the Private Placement Debentures and the Private Placement Warrants, he will own 3,825,904 Common Shares, representing 7.0% of the outstanding Common Shares (on a partially diluted basis). Westgate’s board of directors approved the Insider Private Placement with Mr. Agolli abstaining from all discussions and voting in respect thereof.

The Strategic Acquisition constitutes a “Reviewable Transaction” in accordance with TSXV Policy 5.3 – Acquisitions and Dispositions of Non-Cash Assets (as such term is defined in the TSXV Corporate Finance Manual) and therefore remains subject to review and acceptance of the TSXV.

Westgate’s Differentiated Strategy

Westgate is focused on the emerging Mannville Stack fairway located in East-Central Alberta and West Central Saskatchewan. This fairway is characterized by known accumulations of medium and heavy oil which are being ‘unlocked’ via the application of innovative drilling techniques that utilize multi-lateral horizontal drilling. Applying these multi-lateral drilling techniques has yielded some of the strongest oil well economics across Western Canada. The management team and board of Westgate have extensive experience building and leading successful energy companiesin Canada. The collective successes of the leadership group share common characteristics: a strategy of targeting high-quality oil assets with large quantities of oil-in-place, and driving growth through successful drilling as well as strategic merger and acquisition opportunities. This proven blueprint of delivering shareholder value will be foundational to Westgate’s strategy, positioning the Company as one of a select few pure-play, high-growth, publicly traded junior oil companies focused on the Mannville Stack Fairway.

For more information, please visit www.westgateenergy.ca.

Abbreviations

bbl                  barrel

bbl/d               barrel per day
boe                 barrel of oil equivalent
boe/d              barrel of oil equivalent per day
Mcf                  thousand cubic feet

Reader Advisories

In this press release, all references to “$” are to Canadian dollars, unless otherwise stated.

For further information concerning Westgate Energy Inc., please contact:

Dan Brown
Chief Executive Officer and Director

Email: dbrown@westgateenergy.ca

Nick Grafton
Chief Financial Officer

Email: ngrafton@westgateenergy.ca

Phone: 403.984.6724

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