Bow Valley Energy Ltd. announces acquisition of North Sea development asset and bought deal financing


    CALGARY, March 15 /CNW/ - Bow Valley Energy Ltd. (TSX - BVX) is pleased
to announce the acquisition, by its wholly owned subsidiary Bow Valley
Petroleum (UK) Limited, of a 66.67% working interest in U.K. Block 9/15a and a
15.00% working interest in Block 9/10b West in the U.K. sector of the North
Sea, for total consideration of (pnds stlg)34.65 million (C$78.9 million). The
Company is also pleased to announce that it has entered into a bought deal
financing agreement with a syndicate of underwriters, led by BMO Capital
Markets, for the issuance of 11,000,000 subscription receipts at a price of
$5.95 per subscription receipt on a bought deal basis, for gross proceeds of
C$65,450,000. In addition, the Company has agreed to the terms of a (pnds
stlg)17.5 million credit approved term debt facility with Bank of Scotland.
Closing of the acquisition is expected by the end of May, 2007.
    Block 9/15a contains a portion of the undeveloped Peik field, a Jurassic
aged Brent sandstone natural gas/condensate field discovered in 1985 by well
24/6a-1 drilled in the Norwegian sector and appraised by well 9/15a-1 in the
U.K. sector. The field straddles the U.K./Norway trans-median line, and
unitization and development of the field across the median will be facilitated
by the April, 2005 U.K./Norway Framework Agreement that recently advanced
development of Bow Valley's Enoch and Blane fields. Existing infrastructure in
the area provides four potential offtake routes; Bruce and Beryl in the U.K.,
and Heimdal and Alvheim in Norway, all within approximately 20 km of Peik. The
field is expected to be developed by a sub-sea tie-back to one of these
    Bow Valley engaged Senergy Limited to perform a NI 51-101 compliant oil
and natural gas reserves evaluation of the Peik field (the "Senergy Report").
Based upon the Senergy Report, the interests in the Peik field being acquired
contain total proved plus probable reserves of 13.0 million net boe (60.0 bcf
of natural gas and 3.0 mmboe of condensate). Using the purchase price of
C$78.9 million, the Company is acquiring these reserves at a price of
approximately C$6.07 per boe of proved plus probable reserves. Including
future development capital in the Senergy Report, the total cost of acquiring
and developing these reserves is expected to be approximately C$16.05 per boe.
No proved reserves are attributable to the field as it has not received
development approval. The acquisition almost doubles the Company's 2006
year-end U.K. total proved plus probable reserves to over 26 million boe.
    In the reserves report, Senergy evaluated the field as coming on
production in 2009 at a rate of 4,863 boe/d (21.1 mmcf/d of natural gas and
1,342 b/d of condensate) net to Bow Valley. Although the Senergy Report shows
first production in 2009, based on Bow Valley's recent experience with field
developments, first production is expected sometime in the 2009-2011 period.
    The 9/10b West Block contains the 9/10b-1 natural gas discovery, with
substantial gas-in-place, but low reservoir permeability. It was not evaluated
in the Senergy Report. Further work will be required to determine whether the
discovery could form an economic addition to the Peik development.
    After closing the acquisition, Bow Valley will work with the operator and
the other co-venturer in advancing the Peik field through unitization and
development plan approval, which could occur sometime in 2008. The Peik field
will be the third cross-border unitization that Bow Valley has participated
in, and its sixth North Sea field development.
    R.G. Moffat, President and Chief Executive Officer of Bow Valley Energy
stated: "This acquisition fits our strategy of acquiring and developing
undeveloped assets in the North Sea. The Peik acquisition is expected to
provide Bow Valley with a superior rate of return on our investment. With a
development which could come on stream as early as 2009, the expected
production profile fits well into our visible growth strategy, with the Enoch,
Blane and Chestnut fields expected to come on stream in 2007, and the Ettrick
field in 2008. The development costs for the Peik field are expected to be
funded with cash flow generated by the current U.K. developments."
    Scotia Waterous advised Bow Valley on the acquisition. The acquisition is
subject to U.K. Department of Trade and Industry approval.
    The acquisition is being funded through a term debt facility and a
subscription receipt offering. The Company has agreed to a (pnds stlg)17.5
million credit-approved term debt facility with Bank of Scotland. This
facility has a twelve-month term which can be extended to eighteen months and
is expected to be repaid using proceeds from asset sales, or refinanced using
the Company's current U.K. senior debt facility, once the Peik field receives
field development approval or once the majority of the current development
assets reach and pass defined completion tests, expected to occur within the
term of the facility. This term loan facility is subject to, among other
things, the execution of full documentation as well as due diligence by Bank
of Scotland.
    The Company has entered into a bought deal financing agreement with a
syndicate of underwriters, led by BMO Capital Markets, for the issuance of
11,000,000 subscription receipts at a price of $5.95 per subscription receipt,
for gross proceeds of C$65,450,000. Each subscription receipt will entitle the
holder thereof to receive, without payment of additional consideration, one
common share of Bow Valley Energy Ltd. which will be issuable upon completion
of the Peik acquisition. The gross proceeds from the sale of the subscription
receipts will be held by an escrow agent and invested in short term
obligations issued or guaranteed by the Government of Canada (or other
approved investments) pending completion of the acquisition. Upon completion
of the acquisition, the escrowed funds will be released to Bow Valley and the
common shares will be issued to the holders of the subscription receipts. The
net proceeds will be used to fund a portion of the purchase price in respect
of the Peik acquisition as well as for general corporate purposes, which may
include the expansion of exploration programs in the North Sea.
    If the acquisition does not close on or before September 30, 2007 or the
acquisition is terminated at an earlier time, the escrow agent will return to
the holders of subscription receipts an amount equal to the offering price
thereof and their pro rata entitlements to interest earned on such amount.
    It is anticipated that the closing date of this offering will be on or
about April 5, 2007.

    This press release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities nor shall there be any sale of
securities in any state in the United States in which such offer, solicitation
or sale would be unlawful. The securities offered will not be and have not
been registered under the United States Securities Act of 1933 and may not be
offered or sold in the United States absent registration or an applicable
exemption from such registration requirements.

    Bow Valley Energy Ltd. is an oil and natural gas exploration, development
and production company with operations in western Canada, Alaska and the U.K.
sector of the North Sea. The common shares of the Company trade on the Toronto
Stock Exchange under the symbol BVX.

    The information contained herein summarizes certain information contained
in the Senergy reserves report. Bow Valley provides additional information in
its Annual Information Form and other filings. There is no assurance that the
price and cost assumptions will be attained and variances could be material.
The Bow Valley crude oil, natural gas liquids and natural gas reserves volumes
provided herein are estimates only and there is no guarantee that the
estimated reserves will be recovered. The actual crude oil, natural gas
liquids and natural gas volumes eventually recovered may be greater than or
less than the reserves estimates provided herein. Where amounts are expressed
on a barrel of oil equivalent (boe) basis, natural gas volumes have been
converted to barrels of oil equivalent at six thousand cubic feet to one
barrel of oil equivalent (6 mcf = 1 boe). This conversion ratio is the
conversion used in the oil and natural gas industry and is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. The use of boe's may be
misleading, particularly if used in isolation.

    Certain statements included or incorporated by reference in this news
release constitute forward-looking statements or forward-looking information
under applicable securities legislation. Forward-looking statements or
information typically contain statements with words such as "anticipate",
"believe", "expect", "plan", "intend", "estimate", "propose", or similar words
suggesting future outcomes or statements regarding an outlook. Although the
Company believes that the expectations reflected in such forward-looking
statements or information are reasonable, undue reliance should not be placed
on forward-looking statements because the Company can give no assurance that
such expectations will prove to be correct. Forward-looking statements or
information are based on current expectations, estimates and projections that
involve a number of risks and uncertainties which could cause actual results
to differ materially from those anticipated by the Company and described in
the forward-looking statements or information. The forward-looking statements
or information contained in this news release are made as of the date hereof
and the Company 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. The forward looking statements or information contained in
this news release are expressly qualified by this cautionary statement.

    %SEDAR: 00008379E

For further information:

For further information: Bow Valley Energy Ltd., Robert G. Moffat,
President and Chief Executive Officer, or Matthew L. Janisch, Vice President
Finance & Chief Financial Officer, Phone (403) 232-0292,

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