Gentry Announces Significant Acquisition and Equity Financing


    CALGARY, April 30 /CNW/ - (GNY-TSX) - Gentry Resources Ltd. ("Gentry" or
the "Company") is pleased to announce that it has entered into a Share
Purchase and Sale Agreement to acquire certain oil and natural gas assets
located in central Alberta and the Peace River Arch area of northern Alberta
(the "Acquisition"). The Acquisition has an effective date of April 1, 2007
and is expected to close on or about May 31, 2007, with the closing being
subject to customary industry conditions. Gentry's total consideration under
the agreement is $74.25 million, subject to normal closing adjustments, and
will be financed through this concurrently announced subscription receipts
offering, as well as increased credit facilities.
    These assets are attractive high quality natural gas weighted properties
with significant upside potential. These high netback, high working interest
properties allow the Company to expand its exploration and development program
in West Central Alberta.
    The key attributes of the Acquisition are as follows:

    -   Current production of approximately 1,600 boe/d comprising 80%
        natural gas. Gentry expects to increase production through the
        drilling of approximately 20 wells over the next two years.
    -   Reserves, as estimated by GLJ Petroleum Consultants Ltd., the
        vendor's independent engineering consultants, of 2.51 million boe
        proved reserves and 3.83 million boe proved and probable reserves as
        of December 31, 2006.
    -   Acquisition costs, net of land and seismic values, are $39,000 per
        producing boe, and, based on the December 31, 2006 reserves,
        $25.00/boe on a proved basis and $16.38/boe on a proved plus probable
    -   Operatorship of 85% of current production.
    -   The Reserve Life Index for proved and probable reserves is
        approximately 6.56 years as measured by the GLJ Reserve Report.
    -   Production netbacks estimated at $27/boe for 2007.
    -   Large land blocks with high working interests which will add
        approximately 63,500 net undeveloped acres (100 sections) bringing
        Gentry's total net undeveloped land to approximately 243,000 acres
        (380 sections).

    Acquisition Summary and Metrics

    Excluding the $11.5 million value attributed to undeveloped land and
seismic, the net reserve acquisition cost of $62.75 million results in very
attractive on-stream costs of $39,000 per producing boe based on current
production of approximately 1,600 boe/d. Proved reserve addition costs of
$25.00/boe and proved plus probable reserve addition costs of $16.38/boe are
based on the December 31, 2006 GLJ Reserves Report.

    The Acquisition is accretive on numerous metrics including:

    -   Corporate production increases by 40% to 5,600 boe/d.
    -   Proved plus probable reserves increase by 38% to 13.94 million boe.
    -   2007 funds flow from operations is forecasted to increase 5% to $0.85
        per share.
    -   2007 exit production is forecasted to increase 48% to 6,500 boe/d.
    -   Net undeveloped land increases 35% to 243,000 acres.

        (1) Based on pro-forma December 31, 2006 proved plus probable
        reserves and after giving effect to the closing of the financing
        described further on below.

    The acquisition of these Alberta assets provides Gentry with the
opportunity to produce, develop and explore in several new attractive
multi-zone, high netback areas. These areas will form a cornerstone for
additional production growth, similar to Gentry's successful development of
its Southern Alberta Princess properties where an initial 25 boe/d position in
2002 has grown to over 2,500 boe/d today. During the same period, the net
undeveloped land under control at Princess has grown from a negligible
position to an excess of 128,000 acres (200 sections) with an ability to
acquire an additional 200 net sections.
    Hugh Ross, President & CEO, comments, "Since the federal government's
announcement on income trusts on October 31, 2006, we firmly believe that
capitalizing on our strong technical capabilities, and the very attractive
opportunities currently available in the basin, is a strategy that is in the
best interest of our shareholders. Organic growth has been the cornerstone of
Gentry's success to date and our commitment to our significant drilling
inventory has not changed. This acquisition represents the first in the
continued growth of Gentry and we expect to see more opportunities in the near
    GMP Securities L.P. is acting as Gentry's exclusive financial advisor in
connection with the Acquisition and has advised the Board of Directors of
Gentry that it is of the opinion that the consideration to be paid by Gentry
for the Acquisition is fair from a financial point of view for Gentry's

    Central Alberta Assets

    The Central Alberta lands comprise approximately 67% of the Acquisition's
proved and probable reserve value. There are three core operated high working
interest properties, those being Gilby, Mikwan and Rosevear. Development and
infill drilling opportunities have been identified in each of these areas and
high impact drilling potential also exists. These areas are all located in a
multi-zone gas-prone fairway with medium depth drilling opportunities.

    Peace River Arch Assets

    The Peace River area comprises approximately 28% of the Acquisition's
proved and probable reserves. This region of the arch is characterized by
multi-zone production from various formations including the Dunvegan, Paddy,
Spirit River, Bluesky, Gething, Halfway and Montney. There are a number of
exploration and development locations that the Company plans to drill this

    Forecast Guidance

    At closing, this Acquisition will increase Gentry's production to
approximately 5,600 boe/d. Forecasted 2007 average production is then
anticipated to be 5,000 boe/d while 2007 exit production is forecasted at
6,500 boe/d. The Company expects to spend approximately $50 million on its
2007 exploration and development program.


    In conjunction with the Acquisition, Gentry has entered into an agreement
with a syndicate of underwriters led by GMP Securities L.P. and including
Tristone Capital Inc., Dundee Securities Corporation, Westwind Partners Inc.,
CIBC World Markets Inc., Cormark Securities Inc., and National Bank Financial
Inc.(collectively the "Underwriters"), pursuant to which the Underwriters have
agreed to purchase for resale to the public, on a "bought deal" basis, from
Gentry an issue of 12,500,000 subscription receipts at a price of $4.00 per
subscription receipt and an issue of 3,750,000 common shares in the capital of
the Company at a price of $4.00 per common share, for aggregate gross proceeds
of $65,000,000 (the "Offering").
    Each subscription receipt will entitle the holder to receive one common
share in the capital of the Company, without further payment or action on the
part of the holder, concurrently with and subject to the closing of the
Acquisition. The gross proceeds of the subscription receipt portion of the
Offering will be deposited in escrow pending closing of the Acquisition. If
the Acquisition closes on or before August 01, 2007, the net proceeds of the
sale of the subscription receipts will be released to the Company and used to
pay a portion of the price of the Acquisition.
    The Offering is subject to certain conditions including required
regulatory approvals. The subscription receipts and common shares shall be
distributed in Canada pursuant to a short form prospectus to be filed by the
Company in certain provinces of Canada (collectively the "Jurisdictions")
where such subscription receipts and common shares are sold, and in the U.S.
on a private placement basis pursuant to exemptions from the registration
requirements. Closing of the Offering is expected to occur on or about May 24,
2007. The Company currently has 41,987,258 fully diluted common shares and
will have 58,237,258 fully diluted common shares upon closing the Offering.
    The proceeds from the sale of the subscription receipts will be applied
to partially finance the Acquisition, and the Company will access its credit
facilities for the balance of the purchase price. The proceeds from the sale
of the common shares will be applied to Gentry's 2007 capital expenditure
program. In conjunction with the Acquisition, Gentry is seeking to increase
its credit facilities to $72.5 million.

    This news release shall not constitute an offer to sell or the
solicitation of an offer to buy the securities in any jurisdiction. The
subscription receipts and common shares 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 the registration requirements.

    Forward Looking Statements

    Certain information regarding the Company in this news release including
management's assessment of future plans and operations, reserves and
production estimates, drilling inventory and wells to be drilled, timing of
drilling and tie-in of wells, productive capacity of new wells, and capital
expenditures and the timing thereof, may constitute forward-looking statements
under applicable securities laws and necessarily involve risks including,
without limitation, risks associated with oil and gas exploration,
development, exploitation, production, marketing and transportation, loss of
markets, volatility of commodity prices, currency fluctuations, imprecision of
reserve estimates, environmental risks, competition from other producers,
inability to retain drilling rigs and other services, the timing and length of
plant turnarounds and the impact of such turnarounds and the timing thereof,
delays resulting from or inability to complete the transaction or obtain
required regulatory approvals and ability to access sufficient capital from
internal and external sources. As a consequence, the Company's actual results,
performance or achievements could differ materially from those expressed in,
or implied by, these forward-looking statements and, accordingly no assurance
can be given that any events anticipated by the forward-looking statements
will transpire or occur, or, if any of them do so, what benefits the Company
will derive there from.
    Readers are cautioned that the foregoing list of factors is not
exhaustive. Additional information on these and other factors that could
affect the Company's operations and financial results are included in reports
on file with Canadian securities regulatory authorities and may be accessed
through the SEDAR website (, and the Company's website
( Furthermore, the forward-looking statements
contained in this news release are made as at the date of this news release
and the Company does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be required by
applicable securities law.

    BOE Disclosure: Disclosure provided herein in respect of barrels of oil
equivalent (boe) may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.


For further information:

For further information: Hugh Ross, President & Chief Executive Officer,
(403) 264-6161; Ketan Panchmatia, Chief Financial Officer (403) 264-6161;
Roger Fullerton, Manager, Investor Relations (952) 929-7243; Website:, Email:, TSX Symbol: GNY

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