New West Energy Services Inc. announces definitive acquisition agreement in respect of Terralog Technologies Inc.



    
    /NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES/
    

    CALGARY, Oct. 2 /CNW/ - New West Energy Services Inc. (TSX-V: NWE) ("New
West") today announced that it has entered into a definitive acquisition
agreement (the "Agreement") pursuant to which New West will acquire all of the
outstanding shares of Terralog Technologies Inc. ("TTI") and TTI will become
the sole shareholder of PT Terralog Teknologi Indonesia ("PT TTI"), of which
TTI is currently a minority shareholder (collectively, the "Acquisition"). The
Acquisition will be subject to certain conditions, including acceptance by the
holders of the majority of the outstanding shares of New West, completion of a
private placement offering of common shares or subscription receipts of New
West to raise funds to finance the cash portion of the purchase price of the
Acquisition, receipt of all required third party and regulatory approvals and
other customary conditions, as further described below. The parties expect
that New West will mail a management information circular to all of its
shareholders on October 3, 2008 in respect of the annual general and special
meeting of New West to be held on October 27, 2008 in order to obtain
shareholder approval for the Acquisition and in respect of certain other
matters.

    Transaction Rationale

    New West believes there are a number of benefits resulting from the
Acquisition, including the following:

    
    1.  the combined entity's larger cash flow base will allow for the
        accelerated capture of both companies' future potential while
        maintaining a conservatively managed balance sheet;
    2.  the combined entity will have sufficient experience, resources and
        innovation to enable it to become a leader in meeting environmental
        challenges in the upstream petroleum industry worldwide;
    3.  the combined operations of New West and TTI will be stronger than
        either company alone, enabling New West to more effectively pursue
        opportunities under a variety of economic and regulatory conditions,
        in various international marketplaces;
    4.  the financial strength and size of New West after the Acquisition
        should provide improved liquidity by virtue of the increase in
        consolidated market capitalization; and
    5.  the financial strength and size of New West after the Acquisition
        should provide greater access to capital markets to finance business
        opportunities such as deep well disposal projects in the Middle East
        and Asia-Pacific regions.
    

    Details of Acquisition

    Pursuant to the Agreement, certain shareholders of TTI (the "TTI
Shareholders") will receive an aggregate of 11,365,100 common shares of New
West (the "New West Shares") with a deemed value of $0.25 per share, for an
aggregate value of $3,216,275, and a cash payment aggregating approximately
$3.9 million.
    In addition, Cumulus Holdings LLC ("Cumulus"), the single largest
shareholder of TTI, together with its wholly-owned subsidiary Cirrus Holdings,
LLC ("Cirrus") will receive: (i) a cash distribution from TTI in the aggregate
amount of $3,234,142 in connection with the transfer of certain shares of TTI
held by Cumulus; and (ii) $4,515,858 cash and 1,500,000 New West Shares in
consideration of the acquisition by TTI of common shares of PT TTI and the
repurchase by PT TTI of the preferred shares of PT TTI, held by Cirrus,
resulting in TTI owning all of the outstanding shares of PT TTI. Cumulus will
also receive an "earn out" consisting of a cash payment equal to US$1.00 for
every cubic metre of dry waste volume injected at TTI's Duri Slurry Fracture
Injection ("SFI") project in Sumatra, Indonesia. Such payment will accrue
commencing the day after the closing of the Acquisition and expire on the
earlier of: (i) the date that is five years after the closing of the
Acquisition; and (ii) the date TTI's Duri SFI contract is terminated by either
party thereto, subject to earlier termination in certain circumstances.
    In addition, TTI will transfer to Cumulus certain intellectual property
rights currently utilized by its subsidiary Terralog Technologies USA, Inc.
("TTI USA") in connection with TTI USA's activities in the biosolids disposal
business and will purchase for termination an option held by Cumulus to
purchase all of the shares of TTI USA held by TTI, for consideration of
US$100,000.
    The New West Shares to be issued to the TTI Shareholders and the
shareholders of PT TTI will be issued pursuant to exemptions from registration
and prospectus requirements contained in the securities legislation in several
jurisdictions. An aggregate of 12,865,100 New West Shares to be issued to
certain TTI Shareholders and shareholders of PT TTI will be held in escrow for
a period of 18 months.
    New West entered into an engagement agreement with Octagon Capital
Corporation dated effective September 25, 2008 in order to conduct a private
placement offering on a "best efforts" agency basis of a minimum of
26,400,000 subscription receipts of New West at a price of $0.25 per security
for aggregate gross proceeds of approximately $6,600,000 to finance the cash
portion of the purchase price for the Acquisition (the "Private Placement").
Each subscription receipt will entitle the holder to receive one New West
Share without further payment or action of the holder, concurrently with the
closing of the Acquisition. Completion of the Private Placement is subject to
a number of conditions including, but not limited to, approval of the TSX
Venture Exchange (the "TSXV") and completion of due diligence by the agent.
    The closing of the Acquisition contemplated by the Agreement is subject
to several mutual conditions, including the following:

    
    (a) the transactions contemplated by the Agreement, including the
        Acquisition, shall have been approved by the required majority of
        votes of the shareholders of New West entitled to vote thereon,
        voting in person or by proxy at the annual general and special
        meeting of shareholders of New West to be held on October 27, 2008,
        in accordance with provisions of the Canada Business Corporations Act
        and the TSX Venture Exchange (the "TSXV");

    (b) there shall not exist any prohibition at law against completion of
        the Acquisition;

    (c) the New West Shares to be issued upon completion of the Acquisition
        shall have been conditionally accepted for listing by the TSXV
        subject to New West fulfilling the usual and ordinary listing
        requirements of the TSXV;

    (d) the TSXV shall have granted conditional approval of the Acquisition
        on terms acceptable to the parties to the Agreement, acting
        reasonably;

    (e) the TTI Shareholders shall have terminated the unanimous shareholder
        agreement in respect of TTI;

    (f) there shall not be in force any order or decree restraining or
        enjoining the completion of the transactions contemplated by the
        Agreement;

    (g) New West shall have completed the Private Placement on or before the
        closing of the Acquisition and the net proceeds of such transaction
        shall be available for release concurrently with or immediately
        preceding the closing of the Acquisition;

    (h) all actions shall have been taken to ensure that at the closing of
        the Acquisition the board of directors of New West shall consist of
        four members who shall be William Rand, Joseph Scarlett, Roman Bilak
        and Leo Rothenburg;

    (i) all consents, orders and approvals, including, without limitation,
        regulatory approvals, required or necessary or desirable for the
        completion of the transactions provided for in the Agreement shall
        have been obtained or received from the persons, authorities or
        bodies having jurisdiction in the circumstances, all on terms
        satisfactory to the parties to the Agreement, acting reasonably; and

    (j) at the time of closing of the Acquisition, no action or proceeding
        shall have been instituted or threatened by any person or entity
        before any court or governmental agency to obtain damages in respect
        of the Agreement or to restrain or prohibit the consummation of the
        transactions contemplated by the Agreement.
    

    Pursuant to the Agreement, each of the parties thereto may waive those
conditions which are in its favour.

    About TTI and PT TTI

    TTI is a private company with its head office located in Calgary,
Alberta. It is a leading international service company that specializes in
petroleum geo-mechanics and deep well disposal waste management using slurry
fracture injection technology. PT TTI, has its head office in Jakarta,
Indonesia.
    TTI has been in operation for approximately 8 years. It has gained
international prominence working through PT TTI for the past 4 years in
connection with a long term contract disposing of production wastes at the
Duri oilfield in Sumatra, Indonesia.
    TTI is also currently working under contract in Bergen, Norway providing
technical and engineering support for 5 offshore CRI disposal wells in the
North Sea.
    TTI has made significant business development inroads with other
international concerns that TTI anticipates will start field operations in the
future. While these projects are in various stages of discussions, it must be
noted that final approvals have not yet been given for these projects, and
operating agreements have not been negotiated for these projects.
    In addition, TTI is involved in the development of Carbon Capture and
Storage CO(2) technology.

    TTI and PT TTI Financial Information

    The following table sets out certain financial information of TTI based
on consolidated audited statements for the years ended December 31, 2007 and
2006:

    
       Consolidated Financial Statements of Terralog Technologies Inc.
                               (Canada and USA)

    -------------------------------------------------------------------------
                                                  December 31,   December 31,
                                                     2007           2006
                                                 -------------  -------------
    -------------------------------------------------------------------------
    Revenue                                      $  5,993,370   $  1,780,310
    -------------------------------------------------------------------------
    Direct Expenses                                 5,729,125      2,257,782
    -------------------------------------------------------------------------
    Net Earnings (Loss)                               290,233       (331,032)
    -------------------------------------------------------------------------
    Current Assets                                  2,783,534      2,652,982
    -------------------------------------------------------------------------
    Capital Assets                                    754,131        668,995
    -------------------------------------------------------------------------
    Total Assets                                    4,964,566      4,256,061
    -------------------------------------------------------------------------
    Long Term Liabilities                                   -              -
    -------------------------------------------------------------------------
    Shareholders' Equity                            4,284,719      3,994,486
    -------------------------------------------------------------------------

    The following table sets out certain financial information of PT TTI based
on audited statements for the years ended December 31, 2007 and 2006 (US$):

    -------------------------------------------------------------------------
                                                  December 31,   December 31,
                                                     2007           2006
                                                 -------------  -------------
    -------------------------------------------------------------------------
    Revenue                                      $  6,348,888   $  5,501,892
    -------------------------------------------------------------------------
    Direct Expenses                                 2,472,218      2,710,070
    -------------------------------------------------------------------------
    Net Income                                      1,580,387        933,722
    -------------------------------------------------------------------------
    Working Capital                                 3,181,219      1,400,408
    -------------------------------------------------------------------------
    EBITDA                                          3,458,198      3,138,347
    -------------------------------------------------------------------------
    Total Assets                                    4,438,243      2,575,414
    -------------------------------------------------------------------------
    Long Term Debt                                    368,256        252,338
    -------------------------------------------------------------------------
    Shareholders' Equity                            3,286,929      1,706,542
    -------------------------------------------------------------------------


    About New West

    New West operates in the oil field service industry in Canada. New West
sells chemicals and provides engineering services to oil and gas exploration
and production companies.


    On behalf of the Board of Directors of
    New West Energy Services Inc.

    Robert Chase

    Robert Chase
    President and Director


    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

    Cautionary Statements Regarding Forward-Looking Information
    

    This press 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 statements or information. These forward-looking statements
rely on a number of assumptions concerning future events and are subject to a
number of uncertainties and factors, many of which are outside New West's
control, which could cause actual results to differ materially from such
statements. Forward-looking information includes, but is not limited to,
statements regarding the proposed Acquisition, including expected combined
financial and operating results; the expected amount and timing of operating
synergies; whether and when the transactions contemplated by the Agreement
will be consummated; and expectations, beliefs, goals, objectives, information
and statements about possible future events. Forward-looking information is
based on current expectations, estimates and assumptions that involve a number
of risks which could cause actual results to vary and in some instances to
differ materially from those anticipated by New West and described in the
forward-looking information contained in this press release. Among the factors
that could cause results to differ materially from those indicated by such
forward-looking statements are the failure to realize anticipated synergies;
the result of the review of the proposed Acquisition by various regulatory
agencies and any conditions imposed in connection with consummation of the
proposed Acquisition; failure to receive the approval of the proposed
Acquisition by the shareholders of New West and satisfaction of various other
conditions to the closing of the Acquisition contemplated by the Agreement.
Readers are cautioned not to place undue reliance on such forward-looking
information. No assurance can be given that any of the events anticipated by
the forward-looking information will transpire or occur or, if any of them do
so, what benefits New West will derive therefrom.

    Additional Information

    In connection with the proposed Acquisition, New West expects to mail an
information circular to its shareholders which will be available for review,
in addition to the Agreement, on New West's SEDAR profile at www.sedar.com.





For further information:

For further information: Richard J Collens, Chief Financial Officer,
Telephone: (403) 303-2665, Fax (403) 263-7558, Email: dcollens@newwestdf.com

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NEW WEST ENERGY SERVICES INC.

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