Blacksteel Energy Inc. announces letter of intent for business combination
with White North Energy

Trading Symbol: BEY - TSX: V

CALGARY, Feb. 19 /CNW/ - Blacksteel Energy Inc. ("Blacksteel" or the "Company") announces that it has signed a letter of intent (the "LOI") by which it proposes (the "Proposed Transaction") to acquire all of the issued and outstanding shares ("PrivateCo Shares") of White North Energy Corp., a private corporation ("PrivateCo" or "White North") with operations and interests in the Bakken and Lodgepole plays in Southwestern Manitoba, in exchange for common shares of Blacksteel ("Blacksteel Shares"). If completed, PrivateCo would become a wholly-owned subsidiary of Blacksteel. Pursuant to the terms of the LOI, Blacksteel shall exchange 3.2 Blacksteel Shares for each issued and outstanding PrivateCo Share and issue one-quarter of one (1/4) share purchase warrant ("Blacksteel Warrant") of Blacksteel for each Blacksteel Share issued pursuant to the Proposed Transaction. Each whole Blacksteel Warrant will be exerciseable into one (1) Blacksteel Share at an exercise price of $0.62 per share for a period of two years from the date of issuance. Additionally, to the extent any incentive stock options or share purchase warrants of PrivateCo are not exercised prior to the consummation of the Proposed Transaction, Blacksteel shall exchange all such outstanding securities at the same exchange ratio with the exercise price adjusted on the same basis.

Based on a maximum of 5,805,975 PrivateCo Shares being outstanding at closing of the Proposed Transaction it is anticipated that a maximum of 18,579,120 Blacksteel Shares and 4,644,780 Blacksteel Warrants will be issued by Blacksteel resulting in former PrivateCo shareholders holding approximately 49% of the total issued and outstanding Blacksteel Shares.

Upon completion of the Transaction, three directors of Blacksteel would resign from the Board of Directors and three nominees of the PrivateCo would be appointed to fill their vacancies. Additionally, it is anticipated that Jacques Soroka, the President and CEO of Blacksteel will take the position of Chief Operating Officer and Vice-President, Oil Sands of Blacksteel and the President of PrivateCo will take the position of President of Blacksteel. All other management positions of Blacksteel will remain unchanged.

The obligations of the parties to complete the Proposed Transaction is subject to receiving all regulatory approvals including the satisfaction of any conditions of the TSX Venture Exchange (the "Exchange"), the approval of the board of directors of each of Blacksteel and PrivateCo and shareholder approval of the Proposed Transaction and the resulting change to the board of directors of Blacksteel. Additional conditions to the Proposed Transaction include the completion of satisfactory due diligence by each of Blacksteel and PrivateCo, execution of a formal agreement in form and substance satisfactory to the parties and entering into of lock-up agreements of the directors and officers of Blacksteel and the major shareholders of PrivateCo.

White North is a private oil and gas company incorporated in Alberta with its head office located in Calgary, Alberta. White North's operations are based in SW Manitoba and SE Saskatchewan within the prolific Sinclair and Pierson fields. White North holds a land position of approximately 6,025 net acres primarily in the Sinclair area of SW Manitoba. For the month of December 2009, White North's net production averaged approximately 85 bbls/day of light oil.

White North is in the process of obtaining an updated reserve report prepared by an independent qualified reserves evaluator in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities, containing the reserve estimates in respect of White North's current oil and natural gas interests. Once the reserve report becomes available, Blacksteel will issue a subsequent press release summarizing the reserve estimates in accordance with regulatory requirements.

Based on unaudited management prepared financial statements for the nine months ended September 30, 2009, White North had net operating revenues (net of royalties and royalty expenses) of $1,463,980, operating expenses of $387,471, general and administrative expenses of $384,567, and net income for the nine month period of $696,080. As at September 30, 2009, White North had a working capital of $188,145, total assets of $4,769,516 and total liabilities of $387,247 (of which $226,680 were current liabilities).

In announcing the Proposed Transaction Jacques Soroka, President and Chief Executive Officer of Blacksteel stated, "We are excited at the prospect of this potential transaction to obtain an entry position in and production from the high potential Bakken and Lodgepole plays of southwestern Manitoba and to use this cash flow to help finance our continued exploration and development plans."

Blacksteel is a junior oil and gas company with a focus on oil sands development. Its principal business activity is the exploration, exploitation, development and production of petroleum and natural gas resources in the Western Canadian Sedimentary Basin. The Corporation has a 100% working interest in 22 sections (14,080 acres) of Crown oil sands leases in the Peace River area of northern Alberta and a working interest in a natural gas producing property in Grassland, Alberta, approximately 180 km north of Edmonton, Alberta.

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.

Advisory Regarding Forward Looking Statements

This press release contains forward-looking statements. Users of forward-looking statements are cautioned that actual results may vary from forward-looking statements contained herein. Forward-looking statements include, but are not limited to: the completion of the Proposed Transaction, anticipated share capital following completion of the Proposed Transaction, the anticipated composition of the board of directors and management of the Corporation, expectations, opinions, forecasts, projections and other similar statements concerning anticipated future events, conditions or results that are not historical facts. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". While the Corporation has based these forward-looking statements on its expectations about future events as at the date that such statements were prepared, the statements are not a guarantee of the Corporation's future performance and are subject to risks, uncertainties, assumptions and other factors which could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements. Although the Corporation believes that the expectations reflected in such forward-looking statements are reasonable, it cannot give any assurance that such expectations will prove to be correct. The ability of the Corporation to complete the Proposed Transaction and carry out the other matters contained in this press release may be affected by a variety of variables and risks including the ability to obtain the necessary approvals and satisfy regulatory requirements related to the matters contemplated by the Proposed Transactions. In the event that the Proposed Transaction is completed the ability of the Corporation to derive any benefit therefrom will be subject to a variety of variables and risks such as loss of market, volatility of oil and gas prices, currency fluctuations, environmental risks, competition from other producers, ability to access sufficient debt and equity capital from internal and external sources, ability to generate sufficient cash flow from operations to meet current and future obligations, and risks associated with potential future lawsuits and regulatory actions made against the Corporation; as a consequence, actual results could differ materially from those anticipated or implied in the forward-looking statements.

The Corporation's forward-looking statements are expressly qualified in their entirety by this cautionary statement and are made as of the date of this new release. Unless otherwise required by applicable securities laws, the Corporation does not intend nor does it undertake any obligation to update or review any forward-looking statements to reflect subsequent information, event, results or circumstances or otherwise.

%SEDAR: 00024766E


For further information: For further information: Jacques Soroka, President, CEO and Director, Blacksteel Energy Inc., Phone: (403) 453-0060

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890