Regal Energy Ltd. announces unit financing and change of management transaction


    CALGARY, Feb. 10 /CNW/ - Regal Energy Ltd. ("Regal" or the "Corporation")
(TSXV: "REG") announced today that it intends to offer by private placement a
minimum of 83,333,334 units ("Units") at a subscription price of $0.06 for
minimum gross proceeds of $5,000,000. Each Unit consists of one common share
("Common Shares") of the Corporation and one Common Share purchase warrant
("Warrants"). Each whole Warrant will have an exercise price of $0.12 and a
term of 36 months. If, at any time from four months after closing, the daily
volume-weighted average trading price of the Common Shares on the TSXV exceeds
$0.18 for 25 consecutive trading days and the Corporation gives written notice
to the warrantholders within ten trading days of the end of such period, the
expiry date will be reduced to 30 days from the giving of the notice.
Completion of the private placement (the "Closing") is to occur on March 10,
    Concurrent with the Closing, Hugh G. Ross and Michael H. Halvorson will
be appointed to Regal's board of directors (the "Board") and Hugh Mogensen and
Jake Pronk will resign from the Board. Mr. Ross is a former director,
president and CEO of Gentry Resources Ltd. ("Gentry") and Mr. Halvorson, the
president of Halcorp Capital Limited, is a former director of Gentry. Gentry
was an oil and gas exploration, development and production company listed on
the Toronto Stock Exchange until it was acquired by Crew Energy Inc. in August
2008 for a total purchase price of approximately $298 million. Messrs. Ross
and Halvorson left Gentry in connection with the acquisition. Mr. Ross will
replace Curtis Hartzler as President and CEO of Regal. In addition, concurrent
with the Closing, the following individuals will be appointed as officers of
Regal: Ketan Panchmatia (formerly the VP Finance and CFO of Gentry) as VP
Finance and CFO, Greg Groten (formerly the VP Exploration of Gentry) as VP
Exploration, Jack Lane as Manager Operations, and Connie Nischuk as Corporate
Administrator (together with Mr. Ross, the "New Management"). Other officers
may also be appointed at Closing as agreed by the Corporation.
    Messrs. Ross, Panchmatia, and Groten were instrumental in the growth and
success of Gentry. At the time of its acquisition by Crew, Gentry had grown to
approximately 5,000 boe/d of production and grew its land base to over 430 net
sections of undeveloped land. Gentry posted impressive growth during its
existence, through a focus on acquiring, consolidating, and exploiting lower
risk, shallow to medium depth reservoirs primarily located in Southern and
Central Alberta. It is the intention of New Management to employ this strategy
to grow Regal in a similar manner.
    Hugh Mogensen, chairman of the Board, said, "We are pleased to have Hugh
and his team join Regal. At this challenging time in the energy sector,
significant opportunities for growth and consolidation are presenting
themselves. Adding a management team with the skill and experience to
capitalize on the opportunities we feel exist, positions Regal to emerge as a
stronger exploration and production growth company."
    The net proceeds received by the Corporation from the private placement
will be used to repay indebtedness, to fund exploration and development, to
fund acquisitions of petroleum and natural gas assets within western Canada,
and for general corporate purposes.
    The Corporation has also agreed to grant performance warrants equal to
10% of the outstanding Common Shares (including those issued in the private
placement) to the New Management and other appointees to management, subject
to completion of the Closing, approval of the TSXV and shareholder approval to
be sought at the next annual general and special meeting of the Corporation.
Each performance warrant will have an exercise price of $0.06, which will be
adjusted upwards on an equivalent basis for the consolidation of the common
shares of the Corporation on an approximately 15 Common Share for one Common
Share basis. The issuance of the performance warrants will also be subject to
shareholder approval of this consolidation of the Common Shares, which the
Corporation intends to seek at the next annual general and special meeting of
the Corporation. The performance warrants will vest upon the Corporation
achieving growth targets in net asset value per fully diluted share
outstanding (NAV per share), as follows: 1/3 upon an increase in NAV per share
of 25%, 1/3 upon an increase in NAV per share of 33 1/3%, and 1/3 upon an
increase in NAV per share of 50%.
    Closing (including appointment of the new Board appointees and New
Management) is subject to a number of conditions, including completion by New
Management of due diligence within 10 business days of the date hereof and
acceptance of the financing and change of management transaction by the TSXV.
    The securities issued in the private placement will be subject to a hold
period of four months.
    The Corporation intends to pay a finders fee on certain subscriptions for
the financing. The Corporation has also entered into a financial advisory
agreement with Nova Bancorp Securities Ltd., a company related to Harry
Knutson and Rick Wlodarczak who are directors of Regal, under which the
Corporation has agreed to provide a fee in consideration of the provision of
advisory services in connection with the private placement.

    Regal Energy Ltd. is a junior Canadian energy company engaged in the
exploration, acquisition, development and production of crude oil and natural
gas in western Canada. Regal's main areas of focus currently are the Bakken
oil play at Roncott, Saskatchewan, the Garrington natural gas property located
in west central Alberta, the Eight Mile natural gas property located in
northeast British Columbia and the Windfall property in Alberta. Regal is
listed on the TSX Venture Exchange under the symbol "REG".

    This news release will not constitute an offer to sell or the
solicitation of an offer to buy the securities in any jurisdiction. Such
securities have not been registered under the United States Securities Act of
1933 and may not be offered or sold in the United States, or to a U.S. person,
absent registration, or an applicable exemption therefrom.

    Advisory Respecting Forward-Looking Statements:

    This news release contains certain forward-looking information and
statements within the meaning of applicable securities laws. The use of any of
the words "expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans", "intends",
"confident", "might" and similar expressions are intended to identify
forward-looking information or statements. In particular, but without limiting
the foregoing, this news release contains forward-looking information and
statements pertaining to: (i) completion of the private placement including
Regal's ability to raise capital and its ability to obtain all necessary
regulatory relief from applicable securities regulatory authorities, including
the TSX Venture Exchange; (ii) the appointment of the New Management, and
(iii) other expectations, beliefs, plans, goals, objectives, assumptions,
information and statements about possible future events, conditions, results
of operations or performance. Various assumptions were used in drawing the
conclusions or making the projections contained in the forward-looking
statements throughout this news release.
    The forward-looking information and statements included in this news
release are not guarantees of future performance and should not be unduly
relied upon. Forward-looking statements 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
and described in the forward-looking statements. Such information and
statements involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from those
anticipated in such forward-looking information or statements.
    The foregoing list of assumptions, risks and uncertainties is not
exhaustive. The forward-looking information and statements contained in this
news release speak only as of the date of this news release, and Regal assumes
no obligation to publicly update or revise them to reflect new events or
circumstances, except as may be required pursuant to applicable securities

    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.

    %SEDAR: 00023201E

For further information:

For further information: Curtis Hartzler, President and CEO, Telephone:
(403) 218-8876, Fax: (403) 263-4368; Hugh Ross, Telephone: (403) 470-7103

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