8-K: Permex Secures Potential $25M Funding, Resolves Debt Priority

Permex Petroleum Corporation announced a non-binding agreement for up to $25 million in development capital and clarified debt lien priorities, while also receiving a waiver for a prior default.

Summary

• Permex Petroleum Corporation entered into an Intercreditor Agreement on September 3, 2025, establishing equal priority for liens held by 2024 and 2025 Debentureholders.
• An Omnibus First Amendment and Waiver to 2024 Debentures was also executed on September 3, 2025, amending the 2024 Debentures to permit liens granted to 2025 Debentureholders and waiving an Event of Default that occurred on July 11, 2025.
• On September 8, 2025, Permex announced a non-binding Memorandum of Understanding (MOU) with Chisos Ltd. for potential funding of up to US$25 million to develop core Permian Basin assets.
• The initial target tranche of the Chisos funding is US$10 million, intended to fund the drilling of eight vertical wells on Permex's Breedlove asset in the Permian Basin.
• Chisos Ltd. would acquire a non-operating working interest of not more than 50% in the specific wells and leasehold developed, with the financing contingent upon Permex matching funds dollar for dollar.
• James Perry Bryan, owner and founder of Chisos Ltd., is a former Permex Director and beneficially holds approximately 12.75% of current Permex common shares outstanding on a partially diluted basis.

Sentiment

Score: 7

Explanation: The potential for significant capital infusion and the waiver of a default are strong positives. However, the non-binding nature of the MOU and the matching funds requirement introduce some uncertainty, warranting a moderately positive sentiment.

Positives

• Potential to secure up to US$25 million in development capital from Chisos Ltd. for core Permian Basin assets.
• The non-operating structure of Chisos's potential investment indicates confidence in Permex's operational capabilities and development plans.
• Waiver of an Event of Default that occurred on July 11, 2025, resolving a breach under the 2024 Debentures.
• Clarification and agreement on equal priority of liens between 2024 and 2025 Debentureholders through the Intercreditor Agreement, providing stability to debt structure.

Negatives

• The MOU with Chisos Ltd. is non-binding and subject to the negotiation and execution of definitive documentation.
• The financing from Chisos is contingent upon Permex matching funds dollar for dollar, requiring Permex to secure additional capital.
• An Event of Default had occurred on July 11, 2025, indicating a past breach of debenture terms, even though it was subsequently waived.

Risks

• Failure to execute definitive documentation for the non-binding MOU with Chisos Ltd. could prevent the funding from materializing.
• Inability to secure the necessary matching funds required to facilitate Chisos's deployment of capital.
• Operational risks associated with drilling and developing oil and gas assets in the Permian Basin.
• General risks inherent in forward-looking statements, as actual future results may vary materially.

Future Outlook

Permex anticipates potentially funding the full development of its core assets in the Midland Basin through the partnership with Chisos Ltd., with an initial focus on drilling eight vertical wells on its Breedlove asset. The company believes this opportunity could result in significant enterprise value for Permex and its shareholders.

Management Comments

• "We believe that this partnership signifies a tremendous vote of confidence in not only the asset quality of Permexs Midland Basin leasehold but also of the operating team here at Permex."
• "The non-operating structure of Chisoss potential investment speaks to the confidence Chisoss team has in Permexs operational capabilities and development plans, and we believe this opportunity could result in significant enterprise value for Permex and its shareholders by potentially funding the full development of Permexs core assets in the Midland Basin."
• "We also believe that this is a natural partnership given Chisos owner and founder, James Perry Bryans experience with our assets and as a previous member of the Companys board of directors, and we are excited to partner with James Perry Bryan and his team at Chisos."
• "Chisos has a history with this field and understands the potential value that exists across these assets we are excited to partner with Permex to help unlock that value."

Industry Context

The announcement reflects a common strategy in the oil and gas exploration and production (E&P) sector where companies seek external capital to fund asset development, particularly in prolific regions like the Permian Basin. Partnerships involving non-operating working interests allow capital providers to gain exposure to production without direct operational responsibilities, while E&P companies can leverage external funds to accelerate development. The Permian Basin remains a highly active area for such investments due to its significant hydrocarbon reserves.

Related Party Transactions

• The Memorandum of Understanding with Chisos Ltd. is considered a related party transaction as James Perry Bryan, owner and founder of Chisos Ltd., is a former Permex Director and currently beneficially holds approximately 12.75% of Permex common shares outstanding.

Stakeholder Impact

• Shareholders: Potential for increased enterprise value, accelerated asset development, and improved financial stability due to capital infusion and default waiver.
• Creditors (2024 and 2025 Debentureholders): Clarified equal priority of liens provides certainty, and the waiver of a default reduces immediate risk.
• Employees: Potential for increased operational activity and job security due to asset development.

Next Steps

• Negotiation and execution of definitive documentation with Chisos Ltd. regarding the potential US$25 million funding.
• Securing matching funds by Permex Petroleum Corporation to facilitate Chisos's capital deployment.
• Commencement of drilling eight vertical wells on the Breedlove asset, contingent on the initial US$10 million tranche.

Key Dates

Recommendation

The potential for significant capital infusion and the waiver of a default are positive developments. However, the non-binding nature of the MOU and the requirement for Permex to secure matching funds introduce contingencies. Investors should monitor the execution of definitive agreements and the company's ability to secure matching capital before making a strong commitment, thus a 'hold' recommendation is prudent at this stage.

Keywords

Permex Petroleum, Chisos Ltd, Permian Basin, Oil and Gas, Development Capital, Senior Secured Convertible Debentures, Intercreditor Agreement, Event of Default Waiver, Exploration and Production, Midland Basin