PETROSANDS CANADA ANNOUNCES ACQUSITIONS OF STRATEGIC OIL WEIGHTED ASSETS - ACQUSITION OF PRIVATECO - SECURES $10,000,000 CREDIT FACILITY AND STRENGTHENS TEAM

/THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

TSX Venture Exchange
Trading Symbol: PCA

CALGARY, Feb. 25 /CNW/ - PetroSands Resources (Canada) Inc. ("PetroSands" or the "Company")(TSX-V:PCA) is pleased to announce that is has purchased and closed two separate acquisitions.  The Company has acquired a 400 boe/d oil weighted asset located west of the fourth meridian in Alberta for consideration of $16,000,000, subject to customary adjustments (the "Acqusition").  PetroSands has also acquired all the issued and outstanding shares of a private Alberta company "PrivateCo" by issuing 1.75 million common shares of PCA.

OIL ASSET/PRIVATECO ACQUISITION HIGHLIGHTS & STRATEGIC RATIONALE 

• Production metric per flowing boe    $40,000 
• Production metric per flowing boe (Excluding land)  $32,500
• Purchase Price       $16,000,000
• Proved plus Probable Reserves     1,237 MBOE
• P+P Metrics       $12.93/boe
• Total Unbooked Hz Multi-Frac Locations   Up to 10 in total
• P+P RLI       12 yrs
• Effective Date:                        February 1, 2011
• Independent Net Present Value of $20.2 million (10% discount rate and P+P reserves)
• Solid base production, low decline asset less than 15%, and 12 year Reserve Life Index
• Medium crude (24o API) and associated gas is pipeline connected to market
• 100% working interest, all season access, existing vertical well control and 3D seismic
• PetroSands plans and forecasts to drill and complete a series of horizontal multi-frac wells at a cost of approximately $1.2 million per well. The first well has an internally estimated rate of return greater than 200%, 120 mstb recoverable oil, 3.0 times recycle ratio, and IP of up to 90 boe/d. PetroSands plans to drill the first horizontal multi-frac well in the second quarter.
• Total cash consideration of $16.0 million of which $13.0 million was paid at closing and the additional $3,000,000 plus standard adjustments to be paid to vendor on August 15, 2012
• $1,000,000 of cash plus assets in PrivateCo for 1,750,000 shares of PetroSands
• Undeveloped land of 3,600 net acres which PetroSands estimates value of $3.0 million

The aforementioned reserves information is based on an independent engineering evaluation report prepared by GLJ Petroleum Consultants Ltd. effective October, 2010.

The acquired asset is strategically located in a core area and has numerous low-risk vertical and horizontal drilling locations on the acquired lands. Using existing vertical well control and complete 3D seismic coverage, management has identified up to 10 horizontal multi-frac drilling locations, which have the potential to more than double production on the Property to over 1000 boe/d. The Property produces medium oil from Manville formations which management successfully developed at a previous entity.   The Company plans to significantly increase recovery utilizing horizontal multi-frac technology. 

Dundee Securities Ltd. is acting as financial advisor to the company and Fraser Mackenzie Ltd. is acting as strategic advisor.

As a result of the Acquisition, PetroSands is increasing its guidance for 2011 exit production to 1,000 Boe/d - 80% oil and NGL's.  The Acquisition is forecast to be accretive to PetroSands in 2011 on several key metrics, including cash flow and production per share (fully diluted).

INCREASED 2011 GUIDANCE

PetroSands 2011 guidance below includes the addition of the Property's forecast production volumes with capital included for four infill horizontal multi-frac wells on the Property.

___________________________________________________________
|Average 2011 Production:        | 600 boe/d ( 80% oil and NGL's)
|___________________________________________________________
|Exit 2011 Production:              |1,000 boe/d ( 80% oil and NGL's)|
|___________________________________________________________   
|2011 Capital Expenditure:        |$22 million ($4.2 million net of acquisitions)                  
|___________________________________________________________
|2011 Cash Flow:                 |$8.0 million                    
|___________________________________________________________
|Shares Outstanding:      | 22 million basic
|_______________________________ ____________________________
|Bank Debt on Bank Line:         |$(5.7) million drawn on $10.0 million line                                     
|_________________________________ __________________________

PetroSands had secured a $10,000,000 senior credit facility with a financial institution that carries interest at prime plus one percent.  The Company has also confirmed a 150 boe/d multiyear oil hedge at approximately $90-$100 per barrel in conjunction with the new facility.

BOARD OF DIRECTORS & TEAM

The new proposed board of directors is to be comprised of six directors including Brian Prokop as Chairman and director, Greg Busby, Malvin Spooner, Chad Dust, George Paulus, and Alan Cruikshank as directors.

PCA's business strategy is to grow through drilling and acquisitions which lead to lower risk, scalable and repeatable development of medium and heavy oil multiple pool projects primarily in Alberta and Saskatchewan.  In the fourth quarter of 2010 PetroSands initiated a recapitalization plan which later resulted in a series of financings by issuing  0.5 million then 0.2 million and 12.7 million common shares of PCA for gross proceeds totaling $7.3 million dollars which was completed in early 2011.

About PetroSands Canada

PetroSands Resources (Canada) Inc.  is a dynamic new publicly traded junior oil and gas company focused on exploration and development of oil and natural gas in Canada. The Company is focused on strategic acquisitions in its core areas that aggressively expand production, cash flow, and reserves as well as opportunistic transactions in the energy sector. The Company holds in excess of 38,000 net acres of undeveloped land for production and exploration and currently has 22 million common shares outstanding. PetroSands common shares are traded on the TSXV under the trading symbol PCA.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

ON BEHALF OF THE BOARD

FOR FURTHER INFORMATION PLEASE CONTACT:

Chad Dust
Telephone:  (403) 608-6505
Email:   cdust@petrosandscan.com
or
Greg Busby
Telephone:  (403) 540-9312
Email:   gbusby@petrosandscan.com
or
Brian Prokop
Telephone:       (403) 919-1962
Email:               bprokop@petrosandscan.com

FORWARD LOOKING STATEMENTS: This press release contains forward-looking statements. More particularly, this press release contains statements concerning the potential exploration and development opportunities associated with the Acquisition, the expected board and management team of PetroSands following the Acquisition, the potential results of wells drilled and completion techniques, the potential application of secondary and tertiary recovery schemes, the anticipated impact of the Acquisition on PetroSands.

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by PetroSands, including, with respect to the success of future drilling and development activities, the performance of existing wells, the performance of new wells, the successful application of technology, prevailing commodity prices and prevailing royalty regimes. Although PetroSands believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because PetroSands can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals or satisfy the conditions to effecting the closing of the Acquisition, risks associated with the oil and natural gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations changes to existing laws and regulations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in PetroSands' Management Discussion and Analysis which has been filed on SEDAR and can be accessed at www.sedar.com.

The forward-looking statements contained in this document are made as of the date hereof and PetroSands undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Estimates of future net revenue contained in this press release are estimated values and do not represent fair market value.

Meaning of Boe: When used in this press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe per day means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

SOURCE PetroSands Resources (Canada) Inc.

For further information:

Chad Dust
Telephone:  (403) 608-6505
Email:   cdust@petrosandscan.com
or
Greg Busby
Telephone:  (403) 540-9312
Email:   gbusby@petrosandscan.com
or
Brian Prokop
Telephone:       (403) 919-1962
Email:               bprokop@petrosandscan.com

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PetroSands Resources (Canada) Inc.

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