PetroShare Corp., a Colorado-based oil and gas exploration and production company with operations in the Wattenberg Field of the Denver-Julesburg Basin, announced the closing of $20 million in financing in the second tranche of Senior Secured Convertible Debt financing that was previously disclosed on January 3, 2018.  The total amount of the facility is $25 million provided by Providence Wattenberg, LP, an affiliate or related party of one of the Company’s existing working interest partners, and 5NR Wattenberg, LLC.

Senior Secured Convertible Debt Facility Highlights

• The $25 million is due on February 1, 2020, and is convertible into PetroShare’s common stock, at the option of the Lenders, at an average price of approximately $1.45 per share if the Lenders elect to convert the entire principal amount of the loan
• The loan bears interest at the greater of three-month LIBOR or 1%, plus 14%
• The Company issued to Lenders 1.5 million warrants to purchase common stock of the Company at $0.01 per share exercisable for a period of 24 months from the Closing Date
• The Lenders have been granted the right, but not the obligation, to subscribe for up to 50% of all future securities offerings of PetroShare until December 31, 2018 and 25% of any such offering thereafter
• The Lenders have been granted a one-time option, for a 12-month period beginning after expiration of the 24-month original loan term, to purchase up to $25 million of common stock of PetroShare at a 10% discount to the then 30-day VWAP prior to exercise, subject to a minimum of $1.85 per common share
• The Company agreed to other covenants while the loan is outstanding, including the appointment of up to three additional members of the Company’s Board of Directors designated by Lenders, not to incur any additional debt, limitations on the right to sell equity except in certain registered public offerings, financial covenants related to debt to EBITDA and asset to debt ratios and not to engage in certain material transactions without the Lender’s consent.

After fees and expenses, net proceeds amounted to approximately $23.65 million, of which approximately $7.5 million was used to retire the majority of the Company’s senior debt and associated accrued interest and $5 million was used for other liabilities.  The remaining proceeds will primarily be applied to both non-operated and operated activities within the Company’s Todd Creek Farms area and for working capital purposes.  With these funds now in hand, the Company is finalizing the completion plans and timetable for wells on its operated Shook pad that have been drilled, cased and cemented.