PetroShare Corp. Announces Additional Financing, Provides Operations Update

ENGLEWOOD, CO–(Marketwired – January 03, 2018) – PetroShare Corp. (OTCQB: PRHR), (“PetroShare” or the “Company”), a Colorado-based oil and gas exploration and production company with operations in the Wattenberg Field of the Denver-Julesburg Basin, announced receipt of $5 million in debt financing and the execution of an agreement in principle to obtain an additional $20 million in the form of a Senior Secured Credit Facility with Providence Energy Ltd. and Fifth Partners, LLC and/or related entities (collectively the “Lender”). Providence is an affiliate (through a common management and/or control chain) of the Company’s existing lender and beneficial owner of approximately 12% of its common stock, as well as its working interest partner. The additional $20 million is subject to negotiation and execution of definitive agreements and completion of satisfactory diligence by the Lender. Closing of the second tranche of the financing is anticipated on or before January 28, 2018.

Management Comment

Stephen J. Foley, CEO of PetroShare Corp. remarked, “We are pleased to report that we have agreed in principle with our strategic partner, Providence Energy Ltd and their business associate, Fifth Partners LLC, to significantly expand the scope of our relationship through a new credit facility, of which the first $25 million will be in the form of Convertible Senior Secured Debt. PetroShare received $5 million in proceeds upon signing of the Letter Agreement and anticipates closing on the remaining $20 million of the initial funding by late January 2018. The majority of the proceeds from the second closing will go toward the completion of surface production facilities, pipeline construction and completion costs related to our 14 well operated Shook Pad, as well as retiring current debt. As part of the agreement, the maturity date for the Providence Energy Partners III, LP line of credit has been extended to January 28, 2018 and, if the parties consummate the aforementioned $20 million second funding, will be further extended to June 30, 2018.”

Mr. Foley continued, “This expanded relationship with Providence and Fifth Partners creates an alignment of interests and provides them an option for additional equity investment in our Company, which may further accelerate the development of our assets in the Wattenberg Field and in our Runway area assets. The Runway assets are further east of our Todd Creek Farms prospect in Adams County and extend into Arapahoe and Elbert counties, where other operators are expanding their footprints and increasing their drilling activities. We are very excited about the potential to rapidly develop and grow our asset base with this potential funding, and look forward to collaborating with Providence and Fifth Partners to increase value for all PetroShare stakeholders.”

Operations Update

Fred Witsell, President of PetroShare Corp., commented, “We have progressed on several fronts regarding the development of our asset base despite having limited capital at our disposal over the past couple of quarters. First, we have secured the rights-of-way required to begin pipeline construction and hook up on our Shook pad, and we are in discussions with service providers to have equipment on site by the middle of the first quarter 2018 to begin completion activities. We have also assembled six additional drill site spacing units (DSUs) with surface use agreements across our South Brighton assets and have approximately 100 permits approved, submitted or in process for operated horizontal wells in the area. Industry activity in South Brighton is increasing because of newly-constructed oil and gas pipeline takeaway capacity and we are well positioned with our DSUs and permits to be an early beneficiary of these assets. The new pipeline will also liberate much of the leasehold where we have interests in the southern portion of our Todd Creek Farms assets.”

“Offsetting our Shook Pad in Todd Creek Farms, we are participating as a non-operator in several developments by other operators. We own a working interest in 16 two-mile horizontal wells operated by an established third party, of which four wells are in production and the other twelve wells are scheduled to be completed in the first quarter of 2018. Our full participation in all of these non-operated wells is subject to available capital, and would equate to approximately 1.38 net wells to PetroShare’s interest. These activities, as well as our own, reflect the quality of the geological characteristics of the hydrocarbon bearing formations in the area, which are being borne out in the results of wells that have come into production over the past 12-18 months.”

Senior Secured Debt Facilities Highlights

  • the $25 million will be due two years from the closing date of the second tranche of financing, or in the event we do not close on the $20 million second tranche, the initial $5 million and $3.55 million owed to Providence Energy Partners III, LP plus accrued interest, will be due on January 28th, 2018;
  • the loan bears interest at the greater of three-month LIBOR or 1%, plus 14%;
  • the Company agreed to other covenants while the loan is outstanding, including the Lender’s right to appoint up to three members to the Company’s Board of Directors, not to incur any additional debt, to only sell equity in registered public offerings, and not to engage in certain material transactions

About PetroShare Corp.

PetroShare Corp. is an independent oil and natural gas exploration and development company that targets capital deployment opportunities in established unconventional resource plays. Its current focus is in the Niobrara/Codell formations and adjacent oil and gas producing zones in the Rocky Mountain region with specific targets in the Wattenberg field within the DJ Basin of northeast Colorado. For more information, visit www.PetroShareCorp.com

Caution Concerning Forward-Looking Statements

This press release contains certain forward-looking statements and information, including “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements and information expressed, as of the date of this release, PetroShare’s estimates, forecasts, projections, expectations or beliefs as to certain future events and results. These forward-looking statements include, among others, statements regarding future drilling and completion targets, the benefits that PetroShare expects from transactions and other plans and objectives of management for future operations. Forward-looking statements and information are necessarily based on a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, technical, economic and competitive uncertainties, risks and contingencies, and there can be no assurance that such statements and information will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements and information.

Risks and uncertainties that could cause results or future events to differ materially from current expectations expressed or implied by the forward-looking statements and information include, but are not limited to, receipt of working capital, closing of certain transactions, actions of third parties over which we have no control, the level of success in exploration, development and production activities, possible defects in title to properties, fluctuations in the market price of crude oil and natural gas, industry risks, possible federal and/or state initiatives related to regulation of hydraulic fracturing, risks related to permitting and the projected timeframes to receive the necessary permits, environmental risks and hazards, uncertainty as to calculation of crude oil and natural gas resources and reserves and other risks described in the Company’s annual report on Form 10-K for the year ended December 31, 2016 and other filings with the Securities and Exchange Commission. Readers should not place undue reliance on forward-looking statements or information included herein, which speak only as of the date hereof. PetroShare undertakes no obligation to reissue or update forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information made in this news release are qualified by this cautionary statement.

Investor Relations Contacts

Jon B. Kruljac
303-520-7479
Email: jkruljac@petrosharecorp.com

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