/NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
TORONTO, Dec. 12 /CNW/ - Suroco Energy Inc. (TSX Venture Exchange: SRN)
(the "Corporation") is pleased to announce that it has entered into a
definitive agreement (the "Agreement") for the arm's length acquisition (the
"Proposed Transaction") of NCT Corporacisn Petrolera Latinoamericana S.L.
("NCT") in exchange for 11,625,000 common shares in the capital of the
Corporation at a deemed price of US$0.80 per share and the issuance of
4,375,000 special warrants (the "Special Warrants") of the Corporation, as
The Board of Directors and management of the Corporation feel strongly
that the acquisition of NCT will result in a number of benefits and
opportunities to the Corporation. It is intended that upon the completion of
the Proposed Transaction, NCT will carry on as a wholly owned subsidiary of
the Corporation with current management of NCT continuing to operate NCT. The
management team of NCT have worked together as senior managers with Petroleos
de Venezuela S.A., the largest national oil company of Venezuela. That
management team and its highly skilled technical support staff are looking at
replicating the success they had in Venezuela for Suroco's shareholders in
other fast growing energy markets in Central and South America. During the
negotiation of the Agreement, management of the Corporation has had an
opportunity to work with NCT's management and are convinced that the
Corporation is entering an exciting period of growth.
NCT is a limited liability company formed under the laws of Spain with
offices in Caracas, Venezuela and Bogota, Colombia and operations in Colombia,
Mexico and Texas, USA. NCT has existing oil production of approximately 202
barrels per day and gas production of approximately 229 boe per day (including
interests to be acquired by NCT pursuant to the Trevino Transaction, as
The Agreement is dated effective December 1, 2007 and has been executed
by the Corporation, NCT and all the holders of outstanding participation units
of NCT (the "Units").
Upon completion of the Proposed Transaction, two of NCT's current
directors, Manuel Trevino and Fernando Puig, will be added to board of
directors of the Corporation. The Corporation's six current directors will
continue as directors of the Corporation.
Manuel Trevino is currently the President and a director of NCT. Mr.
Trevino is a petroleum and natural gas engineer with a Master of Science
degree from Pennsylvania State University. Mr. Trevino has 29 years of
experience in the international oil and gas industry in the areas of strategic
planning, management and business development, both with national and
international businesses. Mr. Trevino has held positions as Principal and
Executive Director of Cerro Negro, Petrozuata, Zuata III, of the Orinoco Oil
Belt's Projects. Mr. Trevino is fluent in English and Spanish.
Fernando Puig is currently a director of NCT. Mr. Puig is a petroleum
engineer with advanced management studies in IESA. Mr. Puig has 34 years of
experience in the Venezuelan oil and gas industry and has held high ranking
positions such as President of PDVSA Gas, President of INTEVEP (Centre for
Research and Development), President of CIED (Corporate University of PDVSA)
and General Manager for Production for the Western Division of PDVSA. Mr. Puig
is fluent in English, Spanish and French.
NCT's assets include the following:
- Suroriente Block: NCT has an indirect 19.8% interest in Consorcio
Colombia Energy ("CCE"). CCE participates with Empresa Colombiana de
Petroleos ("ECOPETROL") in a "Crude Incremental Production Contract"
for the operation of the Suroriente Block, through which CCE holds a
52% participating interest. The Suroriente Block (36,528 hectares) is
located in the southern State of Putumayo in Colombia, along the
southern border with Ecuador. Oil production from NCT's interest in
the Suroriente Block is approximately 166 barrels per day.
- Arjona Field: NCT, through its Colombian branch, holds a 25% interest
in Consorcio Vetra-NCT. Consorcio Vetra-NCT participates with
ECOPETROL in an "Operational Contract for Risk Production of
Discovered, Undeveloped and Inactive Fields" for the Arjona Field,
through which Consorcio Vetra-NCT holds a 65% interest. The Arjona
Field (11,891 hectares) is part of the Chimichagua block, in the
midst of the Central and the Eastern Mountain Ranges in the Valle
Inferior del Magdalena basin in Colombia.
- Hato Nuevo Field: NCT, through its Colombian branch, holds a 16.67%
interest in Consorcio Empesa-NCT. Consorcio Empesa-NCT participates
with ECOPETROL in an "Operational Contract for Risk Production of
Discovered, Undeveloped and Inactive Fields" for the Hato Nuevo
Field, through which Consorcio Empesa-NCT holds a 59% interest. The
Hato Nuevo Field (525 hectares) is an inactive field located
20 kilometres north of the city of Neiva, Colombia, on the eastern
bank of the Magdalena River within the sub-basin of Neiva.
- Hardin Field: The Hardin Field is located in Liberty County, Texas,
approximately 80 kilometres northeast of Houston, Texas. In the area
comprising the Hardin Field, NCT, through its wholly owned United
States subsidiary, holds a 15% participating interest, Crawford
Energy Inc. holds a 30% participating interest and other parties hold
a combined 55% participating interest. NCT, through its United States
subsidiary, also holds interests in various leases and equipment,
which interests range from 4.5% to 15%, which includes 9% of the
revenues from the Barret No. 5 well and an interest entitling it to
15% of the revenues proceeding from the Teten No. 1 and B&B No. 5
wells. These three wells are located in the Hardin Field. Gas
production from NCT's interest in the Hardin Field is approximately
6 boe per day.
NCT has also entered into an agreement (the "Trevino Transaction")
whereby it will acquire from a company owned by Manuel Trevino, a director of
NCT, 6% of the shares of Monclova Pirineo Gas, S.A. de CV ("MPG"), a Mexican
company, in exchange for 704,653 Units to be registered in the name of Mr.
Trevino (the "Trevino Units").
MPG has entered into an agreement with Pemex Exploracion y Produccion
("PEMEX") for the development, operation and maintenance of the Pirineo Block
(3,840 km(2)), a non-associated gas field located in the State of Coahuila,
Mexico. MPG also holds an interest in the Nejo Block (1,165 km(2)), a
non-associated gas field located in Northeast Mexico, through its 40% stake in
Iberoamericana de Hidrocarburos S.A. de CV. ("Iberoamericana"). Iberoamericana
has entered into an agreement with PEMEX for the development, operation and
maintenance of the Nejo Block.
The Trevino Transaction is subject to requisite approvals from PEMEX,
which have been requested and are expected to be obtained in early 2008. The
gas production from the interest in the Pirineo and the Nejo Blocks to be
acquired by NCT pursuant to the Trevino Transaction is approximately 61 boe
per day and 198 boe per day, respectively.
The Special Warrants referenced above will be registered in the name of
Manuel Trevino and will entitle the holder thereof to acquire an aggregate of
4,375,000 common shares of the Corporation in exchange for the Trevino Units,
at no additional cost, in the event that the Trevino Transaction is completed.
The Special Warrants will be deemed exercised upon completion of the Trevino
Transaction and the issuance of the Trevino Units. In the event the Trevino
Transaction is not completed by June 1, 2008, unless extended by mutual
agreement by the Corporation and Mr. Trevino, the Trevino Units will not be
issued to Mr. Trevino and the Special Warrants will expire and confer no right
to acquire common shares of the Corporation.
As described in its previous press releases in respect of the Proposed
Transaction, holders of Units of NCT were given the option to elect to receive
a per Unit cash payment equivalent to the exchange ratio value of the Units
multiplied by US$0.80 for up to 10% of the Units they hold, subject to a
maximum aggregate cash limit of US$1,280,000 (the "Cash Option"). Holders of
an aggregate of 58,244 Units have elected to take the Cash Option and the cash
those holders of Units will receive is $24,234. The aggregate number of common
shares of the Corporation to be issued to those holders pursuant to the
Agreement will be decreased by an equivalent number of common shares of the
Corporation equal to that value which holders of Units receive pursuant to the
Subject to receipt of all necessary consents, approvals, exemptions and
authorizations of governmental and regulatory authorities, including the TSX
Venture Exchange, concurrent with the closing of the Proposed Transaction, the
Corporation has agreed to issue to management and employees of NCT,
performance warrants to acquire up to 3,000,000 common shares of the
Corporation. Such performance warrants will contain terms and conditions
mutually acceptable to the Corporation and NCT, including that such
performance warrants will have an exercise price based upon the Policies of
the TSX Venture Exchange, shall expire three (3) years from the date of grant
and will vest based on performance milestones of aggregate wellhead production
by NCT exceeding net 1,000, 1,500 and 2,000 boe per day for thirty (30)
consecutive days, as determined by the non-interested members of the Board of
Directors of the Corporation.
The Corporation is working diligently to close the Proposed Transaction,
which Proposed Transaction is subject to a number of conditions including, but
not limited to:
(a) the receipt of all necessary consents, approvals, exemptions and
authorizations of governmental bodies, lenders, lessors and other
third parties, including, but not limited to, approval of the
Proposed Transaction by the TSX Venture Exchange;
(b) the approval by the respective board of directors of each of the
Corporation and NCT;
(c) the formation of a committee comprised of three (3) nominees of the
Corporation and two (2) nominees of NCT to address the coordination
of operations between the Corporation and NCT upon completion of the
Proposed Transaction; and
(d) the execution at closing of employment agreements by key members of
the management of NCT that are to the mutual satisfaction of the
Corporation and such managers.
The Corporation will have further announcements upon receipt of approval
of the Proposed Transaction by the TSX Venture Exchange and final results from
the National Instrument 51-101 evaluation of proved and probable reserves and
net present values of reserves of NCT's interests that is being prepared.
There are currently 27,366,606 common shares of the Corporation
outstanding. Upon closing of the Proposed Transaction, the Corporation will
have 38,991,606 common shares of the Corporation outstanding and 43,366,606
common shares in the event that all of the Special Warrants are exercised.
References herein to "boe" mean barrels of oil equivalent derived by
converting gas to oil in the ratio of six thousand cubic feet (Mcf) of gas to
one barrel (bbl) of oil. Boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
The Corporation is a Calgary-based junior oil and gas company, which
explores for, develops, produces and sells crude oil, natural gas liquids and
natural gas in Western Canada. The Corporation's common shares trade on the
TSX Venture Exchange under the symbol SRN.
The TSX Venture Exchange has in no way passed on the merits of the
Proposed Transaction and has neither approved nor disapproved the contents of
the press release. There can be no assurance that the Proposed Transaction
will be completed as proposed or at all. Trading in the securities of the
Corporation should be considered highly speculative.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this press release.
For further information:
For further information: Jeffrey Scott, President and Chief Executive
Officer of the Corporation, Telephone: (403) 232-6252, Facsimile: (403)