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CALGARY, May 31 /CNW/ - Iteration Energy Ltd. ("Iteration") (TSX-ITX) and Storm Ventures International Inc. ("SVI"), a private Alberta-based oil and gas exploration and production company, are pleased to provide an update with regard to the previously announced strategic business combination to be completed pursuant to a statutory plan of arrangement (the "Arrangement"). The combination will create a new, growth oriented, publicly listed company named Chinook Energy Inc. ("Chinook") with current production of approximately 17,000 boe/d and a deep inventory of repeatable drilling opportunities in both Western Canada and Tunisia.
Mailing of Information Circular
Iteration has commenced mailing of the management information circular and proxy statement ("Information Circular") for the upcoming annual and special meeting of the shareholders and optionholders of Iteration to be held in the Metropolitan Conference Centre, 333 - 4th Avenue S.W., Calgary, Alberta, at 10:00 a.m. (Calgary time) on Monday, June 28, 2010 (the "Meeting") to consider the Arrangement. At the Meeting, Iteration shareholders will also be asked to receive the audited consolidated financial statements of Iteration for the year ended December 31, 2009, together with the auditor's report on those statements, elect the directors of Iteration and appoint the auditors of Iteration at a remuneration to be fixed by the directors of Iteration.
The Information Circular contains detailed information concerning the Arrangement, SVI and Chinook, and has been filed on SEDAR (www.sedar.com) and is available on the Iteration website (www.iterationenergy.com).
Under the Arrangement, Iteration shareholders (including holders of Iteration options who receive Iteration common shares upon the exercise of such Iteration options prior to the effective time of the Arrangement), may elect to receive, for each Iteration common share held, 0.5631 of a SVI common share, $1.83 in cash, or a combination thereof, subject to proration in the event that a minimum aggregate cash payment of $50 million was not met or a maximum aggregate cash payment of $225 million was exceeded pursuant to the elections or deemed elections made by Iteration shareholders, all in accordance with the Arrangement. All of the Iteration options that are unexercised immediately prior to the effective time of the Arrangement shall be cancelled in exchange for the consideration contemplated by the Arrangement.
Upon completion of the Arrangement, SVI will have amalgamated with Iteration to continue as one corporation to be named Chinook Energy Inc., at which time all of the issued and outstanding SVI Shares will become common shares of Chinook (the "Chinook Shares").
In anticipation of the Arrangement, an application has been made to the Toronto Stock Exchange ("TSX") to list the Chinook Shares on the TSX. Listing will be subject to Chinook meeting the original listing requirements of the TSX. It is a condition of the Arrangement that the TSX has approved, subject only to customary conditions, the listing of the Chinook Shares, such that Chinook will be a public company upon completion of the Arrangement.
If the Arrangement is approved by Iteration securityholders at the Meeting and by the Court of Queen's Bench of Alberta, and all other conditions to closing are satisfied or, if applicable, waived, then the Arrangement is expected to become effective on or about June 29, 2010.
SVI Subscription Receipt Private Placement
SVI has closed its previously announced subscription receipt financing led by Alberta Investment Management Corporation, on behalf of certain of its clients ("AIMCo"). SVI issued a total of 38,461,539 subscription receipts ("Receipts") at a price of $3.25 per Receipt for gross proceeds of approximately $125 million (the "Offering"). AIMCo acquired 36,000,000 Receipts pursuant to the Offering. Each Receipt will be exchanged, without payment of any additional consideration or further action, for one common share of SVI, which will subsequently be exchanged for one common share of Chinook, all in accordance with the Arrangement and subscription receipt indenture, subject to the satisfaction of certain conditions (the "Escrow Release Conditions") at or before 5:00 p.m. (Calgary time) on August 16, 2010 (the "Termination Time"), including that all conditions to closing of the Arrangement have been satisfied or waived other than payment by SVI of the cash consideration as required to complete the Arrangement.
The gross proceeds from the sale of the Receipts have been deposited in escrow and will be released to SVI upon delivery to the subscription receipt agent of a notice (the "Release Notice") by SVI and acknowledged by AIMCo, indicating that the Escrow Release Conditions have been satisfied. In the event the Release Notice is not provided to the subscription receipt agent at or before the Termination Time, the arrangement agreement in respect of the Arrangement is terminated at any earlier time, or SVI or Iteration has advised AIMCo, or announces to the public that it does not intend to proceed with the Arrangement, the proceeds from the sale of the Receipts, together with accrued interest thereon, will be reimbursed to the holders of the Receipts.
SVI Tunisia Operations Update
The following is an update on the commencement of SVI's recent exploration drilling program in Tunisia.
Offshore on SVI's Hammamett Permit, the Ensco No. 105 jack up drilling rig spud the Fushia-1 exploration well on May 19, 2010. The well is currently drilling below 900 metres towards a forecast total depth of approximately 2,920 metres. The well is expected to reach total depth in 12 to 14 days following which the well will be evaluated open hole depending on wireline log interpretation and drilling shows. SVI is the well operator with a 35% contractor interest. Partners in the operation and the production sharing contract are Australia-based Cooper Energy (35%) and Emirates-based RAK Petroleum (30%). Irrespective of the results from drilling, SVI intends to permanently plug and abandon the Fushia well following evaluation, as is the normal case with initial exploration wells in the offshore.
The AOS Discoverer No. 4 rig spud the Jenein Centre-1 exploration well on May 27, 2010, and SVI expects to drill the well to approximately 4,400 metres and test primary targets in the Silurian Acacus and secondary targets in the Ordovician Bir Ben Tartar Formations. SVI expects the well to reach its forecast depth in approximately 30-35 days, after which an open hole evaluation of the well will determine whether the well will be cased and completed for production or abandoned. If the open hole evaluation of the well is positive, SVI expects the AOS Discoverer No. 4 rig to perform the completion operation, which could take an additional 20 to 25 days. SVI is the well operator with a 65% contractor interest in the production sharing contract. Swedish-based PA Resources, an active producer both onshore and offshore in Tunisia, is SVI's partner with a 35% contractor interest in the production sharing contract.
SVI intends to provide additional information on its exploration drilling program in Tunisia as appropriate but no later than on completion of operations.
Information regarding SVI' Subscription Receipt Offering and SVI's operations in Tunisia has been provided by SVI.
This joint news release does not constitute an offer to sell or the solicitation of an offer to buy any securities within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act or other laws.
Advisory Regarding Forward-Looking Statements
This joint news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this joint news release contains forward looking statements and information concerning the timing of the Meeting, completion of the Arrangement, treatment of shares and options of Iteration and the Receipts under the Arrangement, listing of Chinook Shares on the TSX, drilling and development plans of the Fushia-1 exploration well and the Jenein Centre-1 exploration well in Tunisia. The forward-looking statements and information are based on certain key expectations and assumptions made by Iteration and SVI, including expectations and assumptions concerning the anticipated completion of the proposed Arrangement, the anticipated timing for completion of the Arrangement and drilling. Iteration and SVI have provided these anticipated times in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the timing of receipt of the necessary regulatory, court and stock exchange approvals and the time necessary to satisfy the conditions to the closing of the Arrangement. Although Iteration and SVI believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Iteration can give no assurance that they will prove to be correct. Since forward-looking statements and information 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 factors include failure to obtain the required securityholder, court, regulatory and other third party approvals and others, which may be found in the Information Circular.
Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements and information contained in this joint news release are made as of the date hereof, and Iteration and SVI undertake 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.
Barrels of Oil Equivalent
Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl (barrel) 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 ITERATION ENERGY LTD.
For further information: For further information: Matthew Brister, President and Chief Executive Officer, Storm Ventures International Inc., Telephone: (403) 265-1619; L. Geoff Barlow, Vice-President, Finance and Chief Financial Officer, Storm Ventures International Inc., Telephone: (403) 265-1619; Brian Illing, President and Chief Executive Officer, Iteration Energy Ltd., Telephone: (403) 261-6883; Willie Dawidowski, Vice President and Controller, Iteration Energy Ltd., Telephone: (403) 261-6883