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CALGARY, March 2 /CNW/ - Novus Energy Inc. ("Novus" or the "Company") (TSXV: NVS) is pleased to announce that it has closed its previously announced acquisition of a private company ("PrivateCo") through the amalgamation of PrivateCo with a wholly-owned subsidiary of Novus (the "Transaction").
Under the terms of the Transaction, each common share of PrivateCo has been exchanged for 0.49 of a Novus common share. Novus issued a total of 18,666,211 Novus common shares pursuant to the Transaction (fractional shares being rounded to the nearest whole number). Following completion of the Transaction, Novus has 141,175,063 common shares outstanding, of which approximately 13.2% are held by former shareholders of PrivateCo.
Pursuant to the Transaction, Novus has acquired approximately 214 boe/d of production, 1,151,100 boe of Proven plus Probable reserves (based upon a reserve report prepared by Sproule Associates Limited, as at December 31, 2008), approximately 16,300 net undeveloped acres (25.5 net sections) of land (not including land available under farm in) and positive working capital of approximately $8.0 million.
The core properties acquired in the Transaction are located in the Viking oil resource play in Novus' key operational area of Dodsland, Saskatchewan. Approximately 10.25 net sections of the undeveloped acreage acquired (including 2.25 net sections of land available under farm in) are within the Dodsland area, are operated, and 9.25 net sections (including 1.25 net sections of land available under farm in) have working interests of 100%.
These undeveloped lands provide Novus with a significant expansion opportunity in its key Dodsland operational area. Novus' technical team has identified 25 net horizontal drilling locations targeting the Viking light oil formation on the acreage to be acquired, assuming 4 wells per section. These lands increase Novus' horizontal Viking drilling inventory by over 25%, resulting in the Company having 115 net horizontal Viking oil drilling locations at 4 wells per section based on internal estimates.
The producing assets acquired from PrivateCo are primarily located in the Garrington, Mapleglen, Twining and Watts areas of Alberta. Novus believes that certain of these properties are prospective for horizontal multi stage frac drilling targeting Banff oil, and Viking and Elkton gas.
The cash and working capital acquired through the Transaction further strengthen Novus' balance sheet and Novus will use the additional cash to continue to develop and exploit its large drilling inventory. Novus currently has a cash balance of approximately $26 million in addition to unused bank lines available to fund its drilling program.
Overall, the Transaction provides strategic positioning in the Viking oil resource play, which advances the Company's goal of high impact growth in light oil through development of resource plays in western Canada, and provides it with additional cash to fund its ongoing drilling programs in the area.
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.
This news release will not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. Such securities have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States, or to a U.S. person, absent registration, or an applicable exemption therefrom.
Advisory Regarding Forward-Looking Statements
The information provided above includes references to discovered and undiscovered oil and natural gas resources. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resource.
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 information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning the combined and each of the company's petroleum and natural gas production; reserves; undeveloped land holdings; business strategy; future development and growth opportunities; prospects; asset base; anticipated benefits from the Transaction, including improved operating efficiencies, field optimizations and cost reductions; future cash flows; value and debt levels; capital programs; treatment under tax laws; and oil and natural gas prices. The forward-looking statements and information are based on certain key expectations and assumptions made by Novus and the private company, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws; future well production rates and reserve volumes; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. Although Novus and the private company 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 Novus and the private company 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 include, but are not limited to, the risks associated with the oil and gas industry in general such as 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 reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. There are risks also inherent in the nature of the proposed Transaction, including failure to realize anticipated synergies or cost savings; risks regarding the integration of the two entities; incorrect assessments of the values of the other entity; and failure to obtain the required securityholder, court, regulatory and other third party approvals.
Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Novus's or the combined company's operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), and at Novus' website (www.novusenergy.ca). The forward-looking statements and information contained in this press release are made as of the date hereof and Novus 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.
Disclosure provided herein in respect of barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Figures quoted may not add exactly due to rounding.
SOURCE Novus Energy Inc.
For further information: For further information: NOVUS ENERGY INC.: Hugh G. Ross, President and CEO, (403) 218-8895; Ketan Panchmatia, Chief Financial Officer, (403) 218-8876; Julian Din, VP Business Development, (403) 218-8896