Breaker Energy Ltd. closes acquisition of liquids-rich natural gas resource property in British Columbia and $34.5 million bought deal equity financing, and announces bank line syndication and increase to $125 million


    CALGARY, July 15 /CNW/ - Breaker Energy Ltd. ("Breaker" or the "Company")
(TSX: WAV.A and WAV.B) is pleased to announce it has closed the previously
announced acquisition of 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. Based on projected average recovery of
approximately 1 BCF per historic vertical well at the new property, 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. Additionally, Breaker has
commenced the evaluation of the potential of the approximately 8,000 acres of
undeveloped Montney rights included in the acquisition.
    Breaker is also pleased to announce it has completed the previously
announced issue of 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. All necessary conditions have been met and the proceeds of the
offering of the Subscription Receipts have been released to Breaker and each
Subscription Receipt has been exchanged for one Class A Share of Breaker
without additional payment. The hold period on these shares expires on
November 16, 2008. The Class A Shares were issued through 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 Inc., Dundee Securities Corporation,
Scotia Capital Inc., and GMP Securities L.P.
    Breaker has also completed the syndication of its bank line which has
been increased to $125 million. The bank syndicate is led by the Bank of Nova
Scotia and includes the Bank of Montreal and the Canadian Imperial Bank of

    Operations Update
    Breaker has commenced drilling programs in most of its core areas
targeting light oil and natural gas. Several new discoveries are being tested
including two sweet light oil pools at Girouxville and natural gas wells at
Medicine Hat and Provost. A recent well at Provost contains up to 7 potential
pay zones based on log analysis, a Breaker record for the area. New 3D seismic
acquisition is being planned to follow up this exciting well.
    High-impact light oil multifrac development continues at Irricana, with
the most recent well brought on production at instantaneous rates exceeding
800 boe/d, equivalent to the best wells ever tested in the pool. Two more
light oil wells at Irricana will be fracced and brought onstream in the next
two weeks. Water flood injection has commenced at the Company's significant
medium oil pool at Provost, while injection is on track to begin later in the
summer at the Company's large light oil pool discovery at East Prairie.
Drilling activity is still ongoing at Irricana, Girouxville, and Provost, with
imminent drilling programs at East Prairie and Millard Lake.
    The company has chosen initial horizontal drilling locations at the new
Fireweed property and has commenced preparations to drill the first well later
in 2008.

    New 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.

    Average Production Rate           6,375 boe/d
    Exit Production Rate              7,700 boe/d
    Cash flow                         $104 million
    Cash flow per basic share         $2.70
    Operating Netback                 $48.48/boe
    Capital Program                   $174 million
    Year-End Debt                     $89 million
    Authorized Bank Line              $125 million
    Unused Bank Line Capacity         $36 million
    Q4 Annualized Debt to Cash Flow   0.7 times

    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. now has 39,420,737 Class A shares and 900,000 Class B
shares outstanding, and trades on the TSX under the symbols WAV.A and WAV.B.
    Breaker's operating netback per boe is defined as revenue less royalties,
operating and transportation expenses on a per boe basis.

    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 anticipated future plans and operations,
expectations of future capital expenditures, average and exit production,
netback, average and year-end debt, annual and quarterly 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.
    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.
    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 fee; (v) mmcf means million cubic feet; (vi) mcf/d or mcfd means
thousand cubic feet per day; and (vii) mmcf/d or mmcfd means million cubic
feet per day.

    The TSX 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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