CALGARY, Feb. 22 /CNW/ - GEOCAN Energy Inc. ("GEOCAN" or the "Company")
(TSX: GCA) announces that pursuant to its November 14, 2007 press release when
the Company had established a special committee to assess and recommend debt
reduction strategies, GEOCAN has now agreed to sell all of its heavy oil
assets in the Lloydminster area and in a separate transaction, to sell some
minor Unit and non-Unit interests in the Carrot Creek area of west central
Alberta to undisclosed buyers. The sales proceeds payable to GEOCAN for both
transactions, before normal closing adjustments, will be approximately
$51.4 million. The effective date for the Lloydminster area transaction is
February 1, 2008 and, for the Carrot Creek area transaction is December 1,
2007. Both transactions are subject to industry standard closing conditions.
The transactions are expected to close in late February or early March 2008.
These transactions represent average net December production rates of
1453 BOE/d of heavy oil and associated natural gas from the Lloydminster area
and 43 BOE/d of light oil and natural gas production from the Carrot Creek
area. GEOCAN's interest in its Dee Valley SAGD property, which is comprised of
probable reserves, is also included in the Lloydminster transaction.
The proceeds from the transaction will significantly strengthen the
Company's balance sheet and reduce its total debt to approximately $3 million.
The Company is currently negotiating its go-forward credit facility with its
existing lender and expects to have a facility that will remain significantly
undrawn. Following closing of these transactions GEOCAN will have production
of approximately 1000 BOE/d (95% operated); split 37% light and medium oil and
63% natural gas. The Company will remain strategically focused within three
core areas, namely, east and central Alberta, west central Alberta and
northeastern British Columbia. GEOCAN will continue to hold 137,000 gross
(88,132 net) undeveloped acres of land within its three core areas and, will
have estimated tax pools at yearend 2007 of approximately $43 million.
With a stronger balance sheet the Company will be able to devote cash
flow from operations to optimization plans in its three core areas as well as
to continue to drill and develop internally generated play concepts.
GEOCAN is an oil and gas company that explores for, develops and produces
crude oil and natural gas, in British Columbia and Alberta. GEOCAN shares have
been publicly traded since 1998 and the Company has been listed on the Toronto
Stock Exchange under the symbol "GCA" since 2003. The Company has
55,945,239 common shares issued and outstanding. For further information
regarding GEOCAN please refer to SEDAR at (www.sedar.com) or the Company's
website at (www.geocan.com).
Advisory - Forward-looking Information
This press release may include certain forward-looking statements. These
statements involve known and unknown risks, uncertainties, and other factors
that may cause actual results or events to differ materially from those
anticipated in the forward-looking statements. However, while management
believes these forward-looking statements to be reasonable, the reader cannot
be assured that these expectations will prove to be correct. The reader should
not unduly rely on these forward-looking statements as these statements speak
only as of the date hereof. Additional information about the Company can be
found on www.sedar.com.
Barrel of oil equivalent ("BOE") may be misleading, particularly if used
in isolation. A BOE conversion ratio for natural gas of 1 bbl:6 mcf. This is
based on an energy equivalency conversion method particularly applicable at
the burner tip and does not represent a value equivalency at the wellhead.
For further information:
For further information: Wayne Wadley, President and CEO or Brad Farris,
VP Finance and CFO, GEOCAN Energy Inc., Phone (403) 261-3851, Fax (403)
261-3834, Email email@example.com or firstname.lastname@example.org, Website: