CALGARY, Feb. 10 /CNW/ - AltaCanada Energy Corp. (the "Company" or "AltaCanada")  is pleased to announce the first closing of the Company's refinancing totaling approximately $10,300,000 comprised of $7,700,000 of n
ew equity and the conversion to equity of $2,600,000 of debt. The financing will reduce debt, will provide positive working capital and enable the Company to continue its Montana Bakken exploration program with joint venture/farm-out partners Reliable Energy Ltd. and One Earth Oil and Gas Inc., including the drilling of three new Montana Bakken wells, the first of which the Company expects will be spudded on or about February 24, 2011. AltaCanada's Bakken property represents a large substantially unexplored Bakken fairway that is geologically similar to the emerging Alberta Bakken and the Williston Basin. The three new Bakken wells follow up on AltaCanada's November 2010 Montana Bakken test well which demonstrated Bakken porosity over a 22 foot interval and residual oil saturations in the core. 

The three proposed Bakken wells will be targeting a structure identified on 2D seismic and a geologically mapped truncated edge to the Bakken. The drill depth to approximately 5,000 feet is shallower than commercial production in the Williston Basin which should lead to lower drilling and completion costs. The estimated costs are $750,000 for vertical test wells and approximately $3,500,000 for horizontal wells completed with multistage fracs.  Under the terms of AltaCanada's farm-out and participation agreements, the Company will pay 12% of the costs of the next three wells estimated to total $400,000 and will retain a 30% interest in the wells and nine earned sections per well.

AltaCanada presently holds approximately 400,000 gross acres of contiguous lands in Blaine County, Montana of which more than 120,000 acres are prospective for the Bakken formation and much of the balance is prospective for secondary Jurassic oil targets. The Company is also seeking opportunities to acquire additional acreage within the Bakken trend. 

The refinancing of AltaCanada has been accomplished under agreements with Cornerstone Capital Asset Management L.P., as lead, and Stonecap Securities Inc., through the issuance of convertible preferred shares and represents a significant milestone for the Company including the following elements:

  • The Company's name will be changed to Montana Exploration Limited ("Montana Exploration") reflecting the Company's new focus on its substantial existing acreage position and other potential plays.

  • Charles V. Selby, currently Chairman, will assume the role of Executive Chairman of Montana Exploration effective immediately.

  • The share capital of the Company will be consolidated on the basis of one new share of Montana Exploration for every 10 existing common shares of AltaCanada which will become effective at the opening of trading on Tuesday, February 15, 2011.

  • Subscriptions have been accepted for convertible preferred shares totaling $7.7 million to date, with a follow-on closing scheduled for the week of February 14, 2011. The $7.7 million of subscriptions is comprised of:

    • Under the terms of a participation agreement, AltaCanada's farm-in partner has subscribed for $1.5 million and will have a six month option to acquire AltaCanada's Canadian non-core properties for their full proved and probable independent engineering values using a 10% NVP discount.

    • Insiders and persons sourced by insiders of AltaCanada have subscribed for approximately $3.0 million.

    • The balance of the subscriptions received to date have been comprised of several institutional investors that will be well-positioned to participate in future financing activity by the Company if the current exploration program is successful.

  • Indebtedness of the Company to the National Bank of Canada will be reduced by $2.275 million to a total of $5.7 million and the Company will no longer be in forbearance with the Bank. The Company's current credit facility with National Bank will be extended to November 30, 2011.  The National Bank will be issued 5,000,000 warrants, each to acquire one pre-consolidation common share (500,000 post-consolidation common shares in the aggregate) in consideration for the extension.

  • Approximately $3.3 million of subordinate debt of AltaCanada will also be exchanged for convertible preferred shares. The holder of the remaining subordinated debt has agreed to extend the repayment of such debt until November 30, 2011 and will be granted 1,500,000 warrants, each to acquire a pre-consolidation common share (150,000 post-consolidation common shares in the aggregate) in consideration of such agreement.

  • Remaining proceeds from the first closing estimated at $4 million will be applied to reduce the Company's trade payables, to meet the Company's obligations under the current drilling program, to pursue other exploration activities on the Company's lands and for other general and administrative costs.

Expressed on a post-consolidation, post-name change basis, the convertible preferred shares will be issued by Montana Exploration for consideration of $0.50 per share and may be exchanged by the holder at any time up to 18 months following closing for either:


        a.      A post-consolidation common share of Montana Exploration and one full warrant, which warrant may be exercised for a price $0.80 within 24 months of closing; or
          b.      Secured debentures in the principal amount of $0.05 for each preferred share converted plus interest accrued from the closing date to the date of conversion. The secured debentures shall bear interest at a rate of prime plus 2.5% payable quarterly and the principal on the secured debentures shall be due and payable 24 months from the date of issuance. Interest on the debentures may, at the election of Montana Exploration, be paid by the issuance of additional common shares priced at the prevailing 15 day weighted average share trading price.

Following completion of the first closing of the financing and the consolidation, the Company will have approximately 16.8 million common shares outstanding, as well as approximately 154 million preferred shares outstanding, which in the aggregate may be converted into approximately 15.4 million post-consolidation common shares and warrants exercisable to acquire an additional approximately 15.4 million post-consolidation common shares. In addition, 6.5 million warrants to acquire 650,000 post-consolidation common shares (issued to lenders of the Company) will be outstanding.

The Company is engaged in the acquisition, exploitation and production of crude oil and natural gas reserves in Western Canada and Montana. For more information on the Company, visit


Caution Regarding Forward Looking Information

This press release contains forward-looking statements within the meaning of securities laws, including the "safe harbour" provisions of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "guidance", "may", "will", "should", "could", "estimate", "predict" or similar words suggesting future outcomes or language suggesting an outlook. Forward-looking statements in this press release include, but are not limited to, the drilling of three additional wells, the anticipated date the first well will spud, anticipated drilling costs and the use of proceeds from the financing.

Forward-looking statements and information contained in this press release are based on our current beliefs as well as assumptions made by, and information currently available to, us. Although we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.

By their very nature, the forward-looking statements included in this press release involve inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the beliefs, plans, objectives, expectations and anticipations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the volatility of oil and gas prices; production and development costs and capital expenditures; the imprecision of reserve estimates and estimates of recoverable quantities of oil, natural gas and liquids; the Company's ability to replace and expand oil and gas reserves; environmental claims and liabilities; incorrect assessments of value when making acquisitions; increases in debt service charges; the loss of key personnel; the marketability of production; defaults by third party operators; unforeseen title defects; fluctuations in foreign currency and exchange rates; inadequate insurance coverage; compliance with environmental laws and regulations; changes in tax and royalty laws; the Company's ability to access external sources of debt and equity capital; and the Company's ability to obtain equipment in a timely manner to carry out development activities. Readers are cautioned that the foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Furthermore, the forward-looking statements contained in this press release are made as of the date of this document and we do not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

SOURCE AltaCanada Energy Corp.

For further information:


Charles Selby, Executive Chairman
(403) 265 9091 (ext 247)
(403) 262 8866

Don Foulkes, President & CEO
(403) 265 9091 (ext 248)
(403) 265 9021

Profil de l'entreprise

AltaCanada Energy Corp.

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