Pan Terra Industries Inc.
NEX BOARD : PNT.H

Pan Terra Industries Inc.

October 09, 2007 17:06 ET

Pan Terra Announces Change of Business

CALGARY, ALBERTA--(Marketwire - Oct. 9, 2007) - PAN TERRA INDUSTRIES INC. ("Pan Terra" or the "Corporation") (NEX BOARD:PNT.H), announces it has entered into a Joint Exploration Agreement dated August 21, 2007 ("Agreement") with a privately held Alberta corporation, an oil and gas exploration and land acquisition company. The private company has secured an agreement in Canada and the United States for 10 years to deploy a proprietary airborne technology for the identification of potential hydrocarbon traps and reservoirs. The technology, known as "Stress Field Detection" ("SFD") is currently being utilized by a number of medium size and emerging exploration and production companies. This airborne survey method offers a unique opportunity to Pan Terra to effectively explore under-explored and under-developed areas in North America.

Pursuant to the Agreement, Pan Terra will be positioned to participate in all prospective oil and gas properties identified by the SFD technology. Through the Agreement, Pan Terra and the private company have already identified a number of prospective areas, which they intend to pursue upon completion of Pan Terra's reorganization and re-listing on the TSXV. As per the Agreement, Pan Terra will pay up to $4,500,000 to the private company on October 31, 2007 to participate in their existing exploration program and to secure a 49% interest in the joint exploration identified by the SFD technology as highly prospective areas go forward.

Additionally, Pan Terra will issue 300,000 common shares to the private company at a deemed issue price of $0.49 per common share.

In addition, Pan Terra announces it has entered into an agreement dated July 12, 2007 regarding the proposed purchase ("Acquisition") of certain producing gas assets from a privately held Alberta company for $500,000 (Cdn.). The assets consist of a producing gas well (which includes a gross overriding interest) situated near Sylvan Lake, Alberta (the "Sylvan Lake Property"). Please refer to the reserve and production figures below for further particulars.

Pan Terra intends that the above noted transactions will constitute a change of business in accordance with the policies of the TSXV. Following the completion of this transaction and the necessary regulatory approvals, Pan Terra will be classified as an oil and gas issuer and Pan Terra will graduate from its current NEX listing to a listing on the TSXV. The Acquisition is an arm's length transaction which will result in a change of management and board of directors for Pan Terra.

Private Placement

Concurrently with closing the re-organization and listing on the TSXV, Pan Terra is seeking to enter into a private placement at this time and will provide details of this financing when it is available.

The proceeds will be used to fund the 2008 joint exploration and land acquisition/work program, optimize the Sylvan Lake Property, and general working capital.

Corporate Reorganization and the Resulting Issuer

Concurrently with closing the acquisition, the private placement, and the re-listing on the TSXV, Pan Terra will file Articles of Amendment with the Alberta Corporate Registry to consolidate its outstanding common shares on the basis of one new common share for every two common shares currently outstanding. It is also intended that Pan Terra will adopt a new name concurrently with closing. Shareholder approval was obtained for the share consolidation and name change at Pan Terra's annual and special shareholders meeting held on December 18, 2006.

As part of its corporate reorganization Pan Terra intends to reconstitute its management and board of directors. Pan Terra's former President, Mr. Don Sandford, has tendered his resignation as President and director of Pan Terra. The board of directors wish to thank Mr. Sandford for his years of dedicated service and wish him well with future endeavors. Mr. Aaron Lane, P. Eng., Calgary, Alberta has been appointed as President of Pan Terra. Mr. Tony Pezzotti, of Burnaby, British Columbia, has also been appointed to the board of directors. Mr. Robert Hartwell, currently a director of Pan Terra, will resign as a director on the closing date. It is also anticipated that the Corporation will be appointing a Chief Financial Officer in the near future. Further particulars of the resulting issuer's management team and board of directors are included below.

Pan Terra is currently preparing a "Filing Statement" in accordance with TSXV policies and a copy of same will be filed on www.sedar.com once the TSXV has conditionally approved matters referred to herein. The board of directors of Pan Terra have unanimously approved the terms of the acquisition and private placement.

The resulting issuer will operate as a junior oil and gas exploration, development and production company and will be sufficiently capitalized to meet its business objectives. Management's intention is to direct its exploration strategy in the Western Canadian Sedimentary Basin.

Reserve Information

Sproule and Associates ("Sproule") has evaluated the Sylvan Lake Property effective May 31, 2007, and has assigned 32 Mboe of proven and probable reserves (net of royalties) with an indicated value of $717,000 discounted at 15% (before income tax) using the Sproule May 31, 2007 escalated price deck.



DETAILED RESERVES AND PRESENT VALUES
SPROULE MAY 31, 2007 FORECAST PRICING

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Summary of the Evaluation of the P&NG Reserves of Rotex Energy Ltd. in the
Sylvan Lake Area of Alberta
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Remaining Reserves
-------------------- Net Present Values
Company Before Income Taxes (M$)
--------------------------------------------------------
Gross Gross Net At 0% At 5.0% At 10.0% At 15.0%
----------------------------------------------------------------------------
Pipeline Gas
(MMcf)
Proved Developed
Producing 164 79 80 556 520 488 460
Total Proved 164 79 80 556 520 488 460
Probable Developed 103 69 66 441 362 303 257
Total Probable 103 69 66 441 362 303 257
Total 267 148 147 997 882 791 717
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Natural Gas Liquids
(Mbbl) - values
included with gas -
Proved Developed
Producing 5.9 5.9 4.0
Total Proved 5.9 5.9 4.0
Probable Developed 5.2 5.2 3.6
Total Probable 5.2 5.2 3.6
Total 11.1 11.1 7.6
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GRAND TOTAL (Mboe)
Proved Developed
Producing 33.3 19.0 17.4 556 520 488 460
Total Proved 33.3 19.0 17.4 556 520 488 460
Probable Developed 22.4 16.7 14.6 441 362 303 257
Total Probable 22.4 16.7 14.6 441 362 303 257
Total 55.7 35.7 32.0 997 882 791 717
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Note: A BOE conversion ratio of 6 Mcf:1 bbl has been used in the calculation
of barrels of oil equivalent or BOEs, and is based on an energy
equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. The use of
the term BOE may be misleading, particularly if used in isolation.
Reserves estimates as disclosed herein have been prepared by Sproule
in accordance with standards contained in the Canadian Oil and Gas
Evaluation (COGE) Handbook, and reserves definitions used in the
preparation of these estimates are as set out by the Canadian
Securities Administrators in National Instrument 51-101 with reference
to the COGE Handbook. The reader is cautioned that estimated reserves
values disclosed herein do not represent fair market value. The oil
price forecasts are based on the NYMEX Division light, sweet
(low-sulphur) crude oil futures contract, which specifies the West
Texas Intermediate crude as a deliverable, and the gas price forecasts
are based on the NYMEX Division Henry Hub natural gas futures
contract. The actual wellhead price of oil will vary with the quality
of the crude and the cost of transportation from the wellhead to the
trading hub in Edmonton. With respect to gas, the actual plantgate
price will vary with the heat content of the natural gas and the cost
of transportation from the plantgate to the trading hub. The Butane
NGL price contained no adjustment and the price of Pentanes (C5+) plus
NGL had price adjustments of -$10.00 per barrel. Forecasts price
assumptions after 2017 are escalated at a rate of 2% thereafter.


The constant pricing results (before taxes) of the May 31, 2007 Sproule
Report on the Sylvan Lake property is as follows.

Sylvan Lake (Reserves M$) PV @ 5% PV @ 10% PV @ 15% PV @ 20%
----------------------------------------------------------------------------
Proved Plus Probable 836 735 656 595

Note: The constant price analysis used for the following figures is based on
May 31, 2007 actual posted prices as determined by Sproule. The
constant prices used in the Sproule Report are as follows: (i) Natural
Gas (Alberta AECO-C - $6.96$/MMBtu); (ii) Natural Gas By-Products
(Butanes - 64.32$/bbl and Pentanes Plus - 64.73$/bbl); and (iii)
Exchange Rate (0.931$U.S./$Cdn.). Appropriate adjustments have been
made to the constant natural gas prices and to the constant natural
gas by-product prices to reflect actual historical prices received for
each area.


Insiders and Board of Directors of the Resulting Issuer

Aaron Lane, Calgary, Alberta - President (current) and Proposed Director

Mr. Lane is a registered Professional Engineer in the province of Alberta (APEGGA). Mr. Lane started his career as a field engineer working for Co-enerco, Gulf Canada, Pennzoil and as a production engineer with Nexen in Lloydminster, Alberta. He was a team lead at Harvest Energy Trust and most recently was Vice President of Operations with Milagro Energy Inc. Through his 14 years of experience, Mr. Lane has worked in various capacities as an exploitation, production and field operations engineer.

Ronald E. Alexander, Calgary, Alberta - Proposed Director

Mr. Alexander is a registered Professional Engineer (Province of Alberta) and a graduate Mining Engineer (Michigan Technological University). Mr. Alexander is currently President and Director of Detector Exploration Ltd., a public company, a Director of Galantis Gold Corporation Ltd., a public company and President of Shunex Resources Ltd. a private petroleum industry consulting corporation. In addition to consulting for numerous Oil & Gas companies, Mr. Alexander's 41 years of exploration consisted of employment with Schlumberger, Frio Oil & Gas, Dorset Resources, Dorset Exploration and Detector Exploration.

Peter Aubry, Calgary, Alberta - Proposed Director

For 30 years Mr. Aubry has been President of Aubry Consultants Ltd., a private resource consulting company. Mr. Aubry is also President of Bopete Resources Ltd. and Westcal Gas Ltd., both private oil and gas companies. During the period 1978 to 2000 he was co-founder and Director of two TSX listed junior oil and gas companies, Zephyr Resources Ltd. and Vero Resources Ltd. and served as Director of Pan Atlas Energy Inc., also a TSX listed junior oil and gas company. Mr. Aubry was a Director of Golden Regent Resources Ltd., a junior mining company involved in exploration in Nevada and overseas. He is presently a Director of Athlone Energy Ltd., a public oil and gas company listed on the TSXV.

Mr. Aubry graduated from Michigan Technological University with a B.Sc. in Geology. In 1996, Mr. Aubry was inducted into the University's Distinguished Alumni Academy for Geological and Mining Engineering and Geology, Geological Sciences and Geophysics.

Antonio Pezzotti, Burnaby, British Columbia - Current Director

Mr. Pezzotti is a retired businessman. Prior to his retirement, Mr. Pezzotti was a co-founder and General Manager of a private British Columbia corporation involved in the steel business. Mr. Pezzotti is an experienced board member who has served on several public company boards, including Offshore Systems International Ltd., First Quantum Minerals Ltd., First Majestic Silver Corp. (currently a director), and Kensington Resources Ltd., which recently merged with Shore Gold Inc.

Murray Tildesley, Victoria, British Columbia - Current Chairman and Director

Mr. Tildesley received his Bachelor of Commerce from Sir George Williams University in 1970. In 1972, he joined the Bank of Montreal as a Financial Analyst. From 1973 to 1975, he served as a Senior Account Manager for Drummondville Business Forms in Montreal. In 1975, Mr. Tildesley was Vice-President of ProSport Publications Inc. up until 1977. Mr. Tildesley joined as President of Inter-Sport Publications Inc. in 1977 where he remains as President to date. Mr. Tildesley joined the board of Kensington Resources Ltd. in 1998 to 2005. He later joined the board of Pan Terra Industries Inc. in 2006 where he remains on the board to-date.

David Heighington, Calgary, Alberta - Proposed Corporate Secretary

Mr. Heighington is a securities lawyer in private practice and operates a securities law boutique based in Calgary, Alberta. Mr. Heighington specializes in corporate and securities law with a particular focus on publicly traded companies. Mr. Heighington currently serves as a director and officer for numerous publicly traded companies listed on the TSXV.

Description of Significant Conditions to Closing

Completion of the change of business is subject to a number of conditions, including but not limited to TSXV acceptance and approval of the Acquisition and by a majority of the shareholders of Pan Terra as well as closing of the Private Placement. The transactions described herein cannot close until the required approvals are obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of TSXV listed companies should be considered highly speculative. Trading will remain halted until Pan Terra has satisfied all conditions and has re-listed on the TSXV.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Sponsorship

No Sponsor has been retained in connection with the Change of Business. Pan Terra is actively pursuing sponsorship as per the request of the TSXV.

Forward-Looking Statements

This press release may include forward-looking statements including opinions, assumptions, estimates and expectations of future results, cash flow and earnings. Forward-looking statements are subject to a wide range of risks and uncertainties and although the Corporation believes that the expectations represented by such forward-looking statements are reasonable; there can be no assurance that such expectations will be realized.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Pan Terra Industries Inc.
    Mr. Aaron Lane
    President
    (403) 262-4315
    or
    Pan Terra Industries Inc.
    210, 600 - 6th Avenue SW
    Calgary, Alberta T2P 0S5