DALLAS, June 12 /CNW/ - Saxon Oil Company Ltd. ("Saxon") (TSX VENTURE:
SXN) is pleased to announce that it has completed the acquisition of a 92-mile
gas gathering system in Kansas through its wholly owned subsidiary, Central
Kansas Gas Gathering Company LLC, for an undisclosed purchase price. Saxon
does not want to reveal the purchase price of the gathering system at this
time, because the Company is considering other similar acquisitions.
The gathering system, with associated compression facilities, is the
first of several gas pipeline systems Saxon is targeting for acquisition in
Kansas. Saxon's strategy is to combine its upstream E&P operations with the
acquisition and operations of selective gas gathering and processing systems
to maximize the profitability in both market segments. Saxon will receive
revenue for its own production, as well as fees from third parties for
transporting and processing their gas production.
Due to a convergence of several unique and timely factors, opportunities
exist to exploit untapped gas reserves in Kansas. In early 2007 many Kansas
gas producers and their connecting gas gathering systems, including the system
Saxon purchased, were adversely affected by the unexpected shut-in of a major
transport system and gas processing plant. Although the shut-in plant has had
a detrimental effect on its gas suppliers and their revenue streams, it has
lead to some attractive buying opportunities, several of which Saxon is
targeting. During the due diligence process of this acquisition, Saxon
uncovered several attractive market alternatives and expects operations and
revenues for the gathering system to begin later this year. Gathering systems
typically have operating margins of 15% or more when fully operational.
Before being shut in, the gathering system handled about 600,000 cubic
feet of gas per day, all of it coming from third party producers. However, the
system has an estimated capacity of approximately eight million cubic feet per
day. Saxon plans to increase throughput by drilling and producing gas wells in
which Saxon will have an interest. A detailed evaluation is under way to
assess available acreage in close proximity to the gathering system, and Saxon
plans to begin a leasing and drilling program shortly.
"Kansas is an attractive growth area for Saxon," said Richard G Green,
President and CEO of Saxon Oil Company Ltd. "Acquiring this gas gathering
system is an important first step for us in Kansas and we are pleased with the
work of our alliance partner Milestone Energy in this effort. With Milestone's
help, we have already located several attractive gas development prospects and
hope to begin leasing acreage shortly. At the same time, we have identified
new potential industrial end users for purchasing our gas."
About Saxon Oil Company Ltd:
Saxon Oil Company is a Tier One Texas-based Canadian company, trading on
the TSX Venture Exchange under the symbol SXN. The Company is an independent
oil and gas company engaged in the acquisition, development and production of
oil and natural gas reserves. The Company seeks to deliver strong shareholder
returns through an effective exploration and development program that
incorporates sound business practices with the latest oil field technologies.
The goal is to participate whenever possible with quality partners with
specialized local expertise in project areas rather than prospects. This
strategy should steadily increase proven reserves of oil and natural gas -
which, in turn, will lead to enhanced cash flows and earnings per share.
This press release includes certain "Forward-Looking Statements" within
the meaning of section 21E of the United States Securities Exchange Act of
1934, as amended. All statements, other than statements of historical fact,
included herein, including without limitation, statements regarding plans for
completion, production potential, other targeted areas and expansion and
development plans and objectives of Saxon Oil Company Ltd. are forward-looking
statements that involve various risks and uncertainties. There can be no
assurance that such statements will prove to be accurate and actual results
and future events could differ materially from those anticipated in such
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy and accuracy of this Release.
For further information:
For further information: Saxon Oil Company Ltd. Patrice Nazareno, 1