NuLoch Resources Inc.
TSX VENTURE : NLR.A
TSX VENTURE : NLR.B

NuLoch Resources Inc.

July 02, 2009 19:14 ET

NuLoch Resources Enters Into an Agreement to Acquire Private Company

CALGARY, ALBERTA--(Marketwire - July 2, 2009) - NuLoch Resources Inc. (TSX VENTURE:NLR.A)(TSX VENTURE:NLR.B) is pleased to announce that it has entered into an Arrangement Agreement, whereby, subject to certain conditions, NuLoch will acquire all of the issued and outstanding shares of a widely-held, Alberta-based, private, oil and gas company ("PrivateCo").

Under the terms of the agreement, PrivateCo shareholders will receive a total of 8,250,103 Class A common shares of NuLoch with a value of $3.3 million based on a deemed price of $0.40 per NuLoch Class A common share. The total purchase price is approximately $5.5 million including transaction costs and the assumption of PrivateCo's net debt of approximately $2.0 million. NuLoch's bank has expanded its available credit facility, subject to customary closing conditions, to $7.0 million to accommodate the acquisition. Assuming successful completion of the transaction, NuLoch will have 40,429,798 Class A common shares outstanding.

The transaction is expected to be completed pursuant to a Plan of Arrangement under the Business Corporations Act (Alberta) and is subject to normal court, stock exchange and regulatory consents and the approval of PrivateCo shareholders. PrivateCo plans to mail an information circular to its shareholders in July with a shareholder meeting to occur in August.

The transaction has been unanimously approved by the Boards of Directors of NuLoch and PrivateCo. The Board of Directors of PrivateCo has concluded that the transaction is in the best interests of its shareholders and has resolved to recommend that PrivateCo's shareholders vote in favour of the transaction. Certain shareholders of PrivateCo, including all of its directors and officers, representing approximately 30% of the outstanding shares, have agreed to vote their shares in favour of the transaction. PrivateCo has agreed not to solicit any other business combination and a non-completion fee of $200,000 is payable to NuLoch in certain circumstances if the transaction is not completed.

Benefits of the Transaction

PrivateCo's daily sales volumes of approximately 200 boe/d will boost NuLoch's rates by 40% to 700 boe/d and increases the proportion of oil to 41% from 32%. This production can be absorbed into NuLoch's existing operations without adding any significant administrative burden.

PrivateCo operates approximately 140 boe/d from 2 (0.6 net) oil wells that overlap with NuLoch's interest at Balsam, Alberta. This is an area that NuLoch has plans to further develop.

PrivateCo brings 24,000 acres of net undeveloped land, an extensive 2D and 3D seismic database and tax pools in excess of $55 million. Paddock Lindstrom & Associates Ltd., a qualified reserves evaluator, estimated that PrivateCo's gross working interest reserves before royalties, effective as at December 31, 2008, net of properties sold after that date, totalled 277,500 boe on a proved basis and 559,000 boe on a proved and probable basis.



Pro Forma Information
NuLoch PrivateCo Combined
----------- ---------- ----------

Current Sales Volumes
Oil and NGL (b/d) 160 32% 130 65% 290 41%
Natural Gas (mcf/d) 2,040 68% 420 35% 2,460 59%
Combined(1) (boe/d) 500 100% 200 100% 700 100%

Reserve Life Index(2) (years) 12.7 7.7 11.2

Net Undeveloped Land (acres) 53,000 24,000 77,000

(1) Six mcf of natural gas is considered equivalent to 1 barrel of oil
(2) Based upon proved and probable reserves at December 31, 2008 divided by
the product of current daily production rates multiplied by 365 days per
year

Key Metrics
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Estimated total purchase price $ 5,500,000
Purchase price per flowing boe/d $ 27,500
Purchase price per proved and probable boe $ 9.83


Advisories

Use of Barrels of Oil Equivalent (boe)

Disclosure provided herein in respect of boe units may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf of natural gas to 1 bbl of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and may not represent a value equivalency at the wellhead.

Reserves Estimates

There are numerous uncertainties inherent in estimating quantities of oil, natural gas and NGL reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth herein are estimates only. In general, estimates of economically recoverable oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially from actual results. All such estimates are to some degree speculative, and classifications of reserves are only attempts to define the degree of speculation involved. For those reasons, estimates of the economically recoverable oil and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary. Actual production, revenues, taxes and development and operating expenditures with respect to reserves will vary from estimates thereof and such variations could be material.

Forward-Looking Statements

Certain statements in this document or incorporated herein by reference constitute "forward-looking statements". These forward-looking statements can generally be identified as such because of the context of the statements, including words indicating that the Company "believes", "anticipates", "expects", "plans" or words of a similar nature. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions which will, among other things, impact demand for and market prices of the Company's products; industry capacity; the ability of the Company to implement its business strategy, including exploration and development activities; the ability of the Company to complete its capital programs; successful negotiations with bankers and other third parties; the success of exploration and development activities; production levels; government regulations and the expenditures required to comply with them (especially safety and environmental laws and regulations); asset retirement obligations; and other circumstances affecting revenues and expenses.

Neither 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.

Contact Information

  • NuLoch Resources Inc.
    R. Glenn Dawson
    President and CEO
    (403) 920-0455
    (403) 920-0457 (FAX)
    Email: nuloch@nuloch.ca
    or
    NuLoch Resources Inc.
    2200, 444 - 5th Avenue SW
    Calgary, Alberta T2P 2T8