Kereco Energy Ltd.
TSX : KCO

June 04, 2007 15:07 ET

Kereco Energy Announces C$70 Million Convertible Debenture Offering and Acquisition of Assets

CALGARY, ALBERTA--(Marketwire - June 4, 2007) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Kereco Energy Ltd. ("Kereco") (TSX:KCO) announces that it has entered into an agreement to sell to a syndicate of underwriters led by BMO Capital Markets on a bought deal basis C$70 million aggregate principal amount of convertible unsecured subordinated debentures due June 30, 2012 (the "Debentures"). The Debentures will bear interest at a rate of 4.75% per annum payable semi-annually, and will be convertible at the option of the holder into common shares of Kereco at a conversion rate of 100.0 common shares per $1,000 principal amount of Debentures, which is equal to a conversion price of approximately C$10.00 per common share. Closing is expected on or about June 25, 2007. The net proceeds from this offering will be to repay indebtedness and for general corporate purposes.

Kereco also announces that it has reached an agreement to acquire assets in the Ferrier area of Alberta from a third party for $36.6 million. The assets being acquired consist of 100% working interest natural gas and NGL production of approximately 700 boe/day, 1.84 mmboe of proved plus probable reserves (internal estimate) and 100% ownership in a 11 mmcf/d natural gas facility. The assets include an established Rock Creek pool with numerous low risk infill operations. The acquisition is an expansion of, and follow up to, the Rock Creek drilling success that Kereco has had in proximity to the area on lands acquired with the Chamaelo Exploration Ltd. corporate acquisition which closed in the fourth quarter of 2006.

The convertible debenture financing is not conditional on the closing of the acquisition, which is scheduled for June 8, 2008.

Kereco is a growth oriented, intermediate natural gas exploration, development and production company operating exclusively in western Canada. Kereco's common shares are publicly traded on the Toronto Stock Exchange under the trading symbol "KCO".

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

Advisory

Certain information set forth in this disclosure, including management's assessment of the future plans and operations of Kereco, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, including the impact of general economic conditions, industry conditions, changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced, volatility of commodity prices, currency fluctuations, interest rate volatility, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources, market valuations with respect to announced transactions and the final valuations thereof and obtaining required approvals of regulatory authorities. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward looking statements. The actual results, performance or achievement of Kereco could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward looking statements will transpire or occur, or if any of them do so, what benefits that Kereco will derive therefrom. Except as required by law, Kereco disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In conformity with Canadian Securities Administrators National Instrument 51-101, natural gas volumes have been converted to equivalent barrels of oil ("boe") using a conversion ratio of six thousand cubic feet ("mcf") to one boe. This ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Readers are cautioned that boes may be misleading, particularly if used in isolation.

Contact Information

  • Kereco Energy Ltd.
    Grant Fagerheim
    President and Chief Executive Officer
    (403) 290-3401
    or
    Kereco Energy Ltd.
    Stephen C. Nikiforuk
    Vice-President, Finance and Chief Financial Officer
    (403) 290-3404