Breaker Energy Ltd. announces acquisition of liquids-rich natural gas resource property in British Columbia, $34.5 million bought deal equity financing and upward revision to 2008 guidance


    CALGARY, June 23 /CNW/ - Breaker Energy Ltd. ("Breaker" or "Company")
(TSX: WAV.A and WAV.B) is pleased to announce it has entered into an agreement
to acquire a 100% working interest operated property currently producing
approximately 850 boe/d of natural gas and natural gas liquids in British
Columbia. The current production consists of vertical wells producing from an
extensive tight gas sand, with up to 55 meters of gross pay in the Triassic
Doig formation. The Company plans to drill the property using horizontal
multi-frac wells, similar to developments elsewhere in the Montney/Doig
formations of British Columbia.
    This property represents Breaker's third multi-frac horizontal resource
play property, in addition to ongoing light oil success at Irricana and the
Company's large tight gas resource play at Provost which will have its first
horizontal well drilled later in 2008.
    The total purchase price is $63.75 million (before closing adjustments)
and accounting for a portion of the purchase price devoted to undeveloped
land, the price paid is approximately $58.4 million. This equates to
$68,652/boe/d and $17.87/boe on a proved plus probable basis, based on an
NI 51-101 compliant reserve report prepared by the Company's reserve
evaluators effective June 1, 2008. The acquisition is accretive on reserves
per share, production per share and cash flow per share in 2008. The estimated
netback based on mid-June strip prices is approximately $57.94/boe, for a
recycle ratio of 3.2 times calculated on a proved plus probable reserve basis,
with significant future growth potential via horizontal drilling. As a large
proportion of the current reserve value is proved, Breaker's corporate lending
base is expected to increase to $120 million upon closing of the acquisition.
    In connection with this acquisition, Breaker has entered into an
agreement with a syndicate of underwriters led by FirstEnergy Capital Corp.
and including Tristone Capital Inc., Wellington West Capital Markets Inc.,
Blackmont Capital Inc., BMO Capital Markets, CIBC World Markets, Dundee
Securities Corporation, Scotia Capital Inc., and GMP Securities L.P. to sell
3,000,000 subscription receipts for Class A Shares (the "Subscription
Receipts") on a bought deal, private placement basis at an issue price of
$11.50 per Subscription Receipt to raise gross proceeds of $34.5 million.
Closing of the financing is expected to occur on or about July 15, 2008,
subject to the satisfaction of standard conditions, including the receipt of
all necessary regulatory and stock exchange approvals.
    The proceeds of the offering of the Subscription Receipts will be held in
escrow pending Breaker's receipt of all necessary regulatory approvals and the
completion of the acquisition of the Fireweed assets. Upon these conditions
being met, the proceeds of the offering of the Subscription Receipts will be
released to Breaker and each Subscription Receipt will be exchanged for one
Class A Share of Breaker without additional payment. If closing of the
acquisition of the Fireweed assets does not take place by October 31, 2008,
the holders of Subscription Receipts will be entitled to a return of their
full subscription price and their pro rata entitlement to the interest earned
on the escrowed funds.
    This acquisition will be financed with the bought deal financing combined
with the Company's bank line, which is expected to be increased to 
$120 million upon the closing of the acquisition.
    The Fireweed Doig C pool was discovered in 2000, and partly developed
over several years with a total of 22 producing vertical wells, which have
recovered approximately 16 BCF to date. The acquisition includes substantially
all of the pool area, including all currently producing wells. The thick sand
is gas saturated throughout the area, and a large portion of the pool is
undrilled. The property enjoys high netbacks due to significant natural gas
liquids production (approximately 18% natural gas liquids), high heat value
gas, company-owned compression and other facilities, and British Columbia
crown royalties. The sand ranges between 35 meters and 55 meters of gross pay,
with thick but variable net pay. Based on projected average recovery of
approximately 1 BCF per historic vertical well, Breaker believes that
horizontals may ultimately recover 2-5 BCF each, at a cost of approximately 
$5 million per well. Based on 500 meters inter-well spacing, Breaker sees
approximately 16 horizontal well locations in substantially undrained portions
of the pool.
    Breaker plans to drill its first horizontal well on the property in late
2008, with exact timing dependent on obtaining approvals in this all-season
access area. The property is only a few miles from the Alaska Highway, a short
drive northwest of Ft. St. John. The acquisition represents Breaker's first
production in British Columbia, and its second property in the province
complementing the deep Devonian reef exploration project at Monias.
    Breaker's revised 2008 guidance below includes the addition of the
property's forecast production volumes, with capital included to drill one
horizontal multi-frac well on the property which is scheduled to commence
production after year end.

    Acquisition Metrics
    The characteristics of the acquisition are summarized as follows:

    -   The acquisition is accretive on a per share basis to reserves,
        production and cash flow

    -   Purchase Price: $63.75 million ($58.4 million excluding undeveloped
        land value of $5.4 million)

    -   Long Life Reserves
        3.3 million boe (proved plus probable), based on an NI 51-101
        compliant evaluation
        $17.87 per boe (proved plus probable) after land value of
        $5.4 million
        Reserve Life Index of approximately 10.5 years (proved plus probable)

    -   High Quality Production
        Approximately 850 boe/d ($68,652 per boe/d after land value of
        $5.4 million) of high netback natural gas and natural gas liquids
        production (approximately 18% natural gas liquids)

    -   Strong Recycle Ratio
        The estimated netback based on mid-June strip prices is approximately
        $57.94/boe, for a recycle ratio of 3.2 times calculated on a proved
        plus probable reserve basis

    -   Significant Natural Gas Drilling Upside
        16 horizontal multi-frac drilling locations

    -   Large original gas in place with a low recovery factor

    -   100% working interest in Doig formation

    -   Breaker will operate 100% of the acquired working interest wells

    -   Infrastructure - 100% ownership of the dehydration and compression

    -   Approximately 5,500 net acres of undeveloped land

    -   Year-round surface access

    -   Assets are an excellent fit with Breaker's business plan

    Summary, Proforma Overview, Upward Revision to Breaker 2008 Guidance
    This acquisition increases Breaker's drilling inventory to over
400 locations. The increase in drilling inventory consists of long life
horizontal natural gas development wells.
    The guidance below assumes US$105.00/Bbl WTI, CDN$9.50/mcf AECO and
US$/CDN$1.00 for 2008.

                                         New Guidance           Old Guidance
    Average Production Rate              6,375 boe/d            6,000 boe/d
    Exit Production Rate                 7,700 boe/d            6,900 boe/d
    Cash flow                            $104 million           $98 million
    Cash flow per A share                $2.77                  $2.70
    Field Net Back                       $48.48/boe             $48.39/boe
    Capital Program                      $174 million           $105 million
    Year-End Debt                        $89 million            $58 million
    Authorized Bank Line                 $120 million           $95 million
    Unused Bank Line Capacity            $31 million            $37 million
    Q4 Annualized Debt to Cash Flow      0.7 times              0.5 times

    The acquisition is expected to close on or about July 15, 2008, subject
to normal regulatory approvals and preclosing conditions typical of
transactions of this nature.

    Breaker Energy Ltd. is a junior oil and gas company focused on creating
shareholder value by growing per share production and reserves through
acquisitions and a focused exploration, development and exploitation plan.
    Breaker Energy Ltd. has 36,414,737 Class A shares and 900,000 Class B
shares outstanding, and trades on the TSX under the symbols WAV.A and WAV.B.

    This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities of Breaker within the United
States. The securities of Breaker have not been and will not be registered
under the United States Securities Act of 1933, as amended (the "1933 Act"),
or any state securities laws. Accordingly, the shares may not be offered or
sold in the United States or to U.S. persons (as such terms are defined in
Regulation S under the 1933 Act) unless registered under 1933 Act and
applicable state securities laws or an exemption from such registration is

    Forward-looking Statements

    This press release contains forward-looking statements including
management's assessment of future plans and operations, expectations of future
production, cash flow and earnings. These statements are based on current
expectations that involve a number of risks and uncertainties, which could
cause actual results to differ materially from those anticipated. These risks
include, but are not limited to: the risks associated with the oil and gas
industry (e.g. 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 production, costs and expenses and
health, safety and environmental risks), acquisitions, commodity price and
exchange rate fluctuation and uncertainties resulting from competition from
other producers and ability to access sufficient capital from internal and
external sources. Additional information on these and other factors that could
affect Breaker's operations and/or financial results are included in Breaker's
reports on file with Canadian securities regulatory authorities.
    This press release also contains statements concerning the anticipated
offering and the anticipated use of the net proceeds of the offering. Although
Breaker believes that the expectations reflected in these forward-looking
statements are reasonable, undue reliance should not be placed on them because
Breaker can give no assurance that they will prove to be correct. Since
forward-looking statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. The closing of the
offering could be delayed if Breaker is not able to obtain the necessary
regulatory and stock exchange approvals on the timelines it has planned. The
offering will not be completed at all if these approvals are not obtained or
some other condition to the closing is not satisfied. Accordingly, there is a
risk that the offering will not be completed within the anticipated time or at
all. The intended use of the net proceeds of the offering by Breaker might
change if the board of directors of Breaker, determines that it would be in
the best interests of Breaker to deploy the proceeds for some other purpose.
The forward-looking statements contained in this press release are made as of
the date hereof and Breaker 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.

    Note: Boe means barrel of oil equivalent on the basis of 1 boe to
6,000 cubic feet of natural gas. Boe's may be misleading, particularly if used
in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural
gas is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the wellhead.
Boepd means barrel of oil per day.
    In this press release: (i) mmboe means million boe; (ii) boe/d or boepd
means boe per day; (iii) bbls/d means barrels per day; (iv) mcf means thousand
cubic feet; (v) mmcf means million cubic feet; (vi) mcf/d or mcfd means
thousand cubic feet per day; and (vii) mmdf/d or mmcfd means million cubic
feet per day.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

    %SEDAR: 00021180E

For further information:

For further information: Dan O'Neil, President & Chief Executive
Officer, (403) 215-5264; or Max Lof, Vice President, Finance & Chief Financial
Officer, (403) 215-5264,,

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