HOUSTON, Feb. 1, 2012 /CNW/ - Enhanced Oil Resources Inc. (TSX-V: EOR)
today announced that its indirect wholly-owned subsidiary, Ridgeway
Arizona Oil Corp. (collectively with EOR, the "Company"), has completed
the sale of its interests in the St Johns CO2 and Helium field. The transaction closed pursuant to a purchase and
sale agreement announced November 16, 2011, as amended, with Kinder
Morgan CO2 Company, L.P., a wholly owned subsidiary of Kinder Morgan Energy
Partners, L.P. (NYSE: KMP), for all of the Company's rights, title and
interest in the St Johns gas dome and certain related assets, located
in Apache County, Arizona and Catron County, New Mexico.
Proceeds from the sale were cash of U.S. $29.7 million, including an
escrow of U.S. $4.5 million in respect of post-closing adjustments,
principally for potential environmental and helium appraisal drilling
costs adjustments. In addition, the existing CO2 purchase agreement with Kinder Morgan was amended. This CO2 purchase agreement, which was negotiated by the Company to provide a CO2 source for injection into the Company's oilfields, was amended in this
sale transaction to delay the date required to complete a connection to
the Cortez Pipeline, the date required to first commence taking CO2 deliveries, and eliminating the termination fee payment, if notice of
termination occurs before February 28, 2014.
The closing of the sale was delayed by renegotiation of the Company's
existing helium sales contract with Air Liquide America, Inc., which
was assigned to Kinder Morgan. The parties agreed to be contingently
responsible for and to share in the costs of up to $5.0 million of
future appraisal drilling costs to evaluate helium in certain areas of
the St Johns dome field, only when and if a new CO2 pipeline is ultimately committed by Kinder Morgan.
Barry Lasker, President and Chief Executive Officer of Enhanced Oil
Resources said: "We are pleased to finally close this transaction. The
monetization of St Johns is an important step forward for the Company
and will enable an acceleration of our infill oil development and
exploitation program within our 27,000 acres of San Andres leases in
New Mexico. Ultimately, we anticipate that the cash proceeds and other
consideration provided from this sale will help finance our planned CO2 flood at the 5,000 acre Milnesand field and potentially at the adjacent
20,000 acre Chaveroo field. We are excited to move forward with our
infill and horizontal drilling program at Milnesand and Chaveroo and we
look forward to starting this program as soon as possible."
About Enhanced Oil Resources Inc.
Enhanced Oil Resources Inc. is an early-stage company, with a principal
goal of increasing crude oil and natural gas production through
enhanced oil recovery ("EOR") and infill drilling projects it is
initiating in the Permian Basin on oil fields acquired by the Company
in 2007 and 2008 for that purpose.
Certain statements contained herein are "forward-looking statements" and
"forward-looking information" under applicable securities laws,
including statements regarding beliefs, plans, expectations or
intentions regarding the future relating to Enhanced Oil Resources
Inc.'s operations, business prospects, expansion plans and strategies.
Such forward-looking statements include, among others, that the
monetization of St. Johns will enable acceleration of the infill oil
development and exploitation program, that the cash proceeds and other
consideration provided will help finance the planned CO2 floods.
Forward-looking information typically contains statements with words
such as "intends", "anticipate", "estimate", "expect", "potential",
"could", "plan" or similar words suggesting future outcomes. Readers
are cautioned not to place undue reliance on forward-looking statements
because it is possible that expectations, predictions, forecasts,
projections and other forms of forward-looking information will not be
achieved. Forward-looking statements are based on the opinion and
estimates of management at the date the statements are made, and are
based on a number of assumptions and subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements. Although Enhanced Oil Resources believes
that the expectations reflected in such forward-looking statements are
reasonable, Enhanced Oil Resources can give no assurance that such
expectations will prove to be correct. Assumptions upon which such
forward-looking statements are based include that the proceeds of the
sale will enable acceleration of the infill oil development and
exploitation program and will help finance the planned CO2 floods. Factors that could cause actual results to vary materially from
results anticipated by such forward-looking statements include the
failure of the monetization of St. Johns to enable acceleration of the
infill oil development and exploitation program and the failure of the
cash proceeds and other consideration provided to help finance the
planned CO2 floods. Readers should be aware that the list of factors,
risks and uncertainties set forth above are not exhaustive. Readers
should refer to Enhanced Oil Resources' current filings, which are
available at www.sedar.com, for a detailed discussion of these factors,
risks and uncertainties. The forward-looking statements or information
contained in this news release are made as of the date hereof and
Enhanced Oil Resources 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 laws or regulatory policies.
ON BEHALF OF THE BOARD OF DIRECTORS
Barry D Lasker, CEO
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS
THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
SOURCE Enhanced Oil Resources Inc.
For further information:
For more information visit our Website at www.enhancedoilres.com or please call Don Currie on 1-888-990-3551