Roadrunner Oil & Gas Inc.
TSX VENTURE : ROA

November 16, 2009 09:00 ET

Roadrunner Oil & Gas Signs LOI to Acquire Bowood Energy Corp.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 16, 2009) - Roadrunner Oil & Gas Inc. ("Roadrunner") (TSX VENTURE:ROA) announces that it has entered into a letter of intent dated October 28, 2009 (the "LOI") with Bowood Energy Corp. ("Bowood") pursuant to which Roadrunner is expected to complete an arm's length acquisition (the "Acquisition") of all of Bowood's issued and outstanding common shares (each, a "Bowood Share").

Summary of the Proposed Acquisition

The LOI contemplates that Roadrunner will issue 5.667 common shares (each, a "Roadrunner Share") for each Bowood Share it acquires. The exchange ratio is based on a deemed value of $0.15 per Roadrunner Share and a deemed value of $0.85 per Bowood Share. There are currently 71,028,330 Roadrunner Shares issued and outstanding (prior to completion of the Private Placement discussed below) and, after completion of the Acquisition, Bowood shareholders are expected to own approximately 85 million Roadrunner Shares. After completion of the Acquisition, Roadrunner will continue to operate in oil and gas exploration, development and production and, as a result, will continue to be classified as an Oil and Gas Issuer on the TSX Venture Exchange ("TSX-V").

Conditions to the Completion of the Acquisition

The obligations of Roadrunner and Bowood to consummate the Acquisition shall be subject to, among other things: (i) the receipt of all necessary regulatory and TSX-V approval; (ii) the receipt of all necessary shareholder and board of director approvals; (iii) the completion of all necessary due diligence, to the sole satisfaction of each of Roadrunner and Bowood, acting reasonably, prior to November 18, 2009; (iv) the receipt by Roadrunner of an exemption from the TSX-V from the requirement for a Sponsorship Report in connection with the Acquisition; and (v) the entering into of a definitive agreement between Roadrunner and Bowood in such form as is mutually agreeable to the parties prior to November 18, 2009. The conditions listed above are for the benefit of, and maybe waived by, Roadrunner and Bowood as it relates to the obligations of the other party to perform or obtain same.

About Bowood Energy Corp.

Bowood is a private, junior energy company that was incorporated under the laws of Alberta and has offices in Calgary, Alberta. Bowood is active in the exploration, development and production of oil and gas reserves in western Canada. Bowood currently has 14,918,624 Bowood Shares issued and outstanding. The Bowood Shares are held by approximately 340 shareholders, only one of which owns more than 10% of the issued and outstanding Bowood Shares (and which does not hold any Roadrunner Shares). Bowood's producing properties are primarily located in southern Alberta, including the Lethbridge, Enchant, Badger and Long Coulee areas. Bowood also holds lands in central Alberta, the Peace River Arch area of northern Alberta and Saskatchewan. In total, Bowood's land holdings are comprised of 86,000 gross acres (134 sections) and 71,000 net acres (110 sections), 44% of which is undeveloped. Bowood has seen significant growth in its production volumes over the past two years from approximately 150 boe/day to the current level of 650 boe/day.

Bowood's production of approximately 650 barrels of oil equivalent (boe) per day consists of 85% natural gas and 15% oil. In addition, Bowood has 100 boe/day of natural gas production shut-in due to the recent downturn in natural gas prices that when economic, can be reactivated at any time. Furthermore, Bowood has 125 boe/day of natural gas production which is awaiting completion and tie-in and will cost the company approximately $250,000 to bring on stream. Bowood's current production base is derived from approximately 50 high working interest wells, the majority of which Bowood operates.

Bowood's land position in southern Alberta is well positioned for future growth. Based on its 2008/2009 drilling and seismic programs, Bowood plans to significantly add to its production base through the drilling of additional wells on Bowood lands and surrounding acreage. Included in these plans are a number of development drilling locations at Bowood's Armada oil pool, which was discovered in 2008.

Bowood's oil and gas assets have the following features:



Current Production: 650 boepd

Proved Producing Reserves: 812 mboe

Total Proved Reserves: 1,098 mboe

Proved plus Probable Reserves: 1,756 mboe

Proved plus Probable RLI: 5.0 years

Undeveloped Land: 31,200 net acres of undeveloped land in
Alberta and Saskatchewan

Drilling Locations: 20 net Conventional locations

Low Operating Costs: Operating costs of approximately $12.00
per boe

Note: reserves evaluated by GLJ Petroleum Consultants Limited, effective
December 31, 2008.


The following is a summary of selected unaudited financial information for Bowood for the most recently completed interim period and audited financial information for Bowood for the most recently completed financial year.



Six Months Ended Year Ended
June 30, 2009 December 31, 2008
---------------- -----------------
(unaudited) (audited)
($000s) ($000s)

Petroleum and natural gas sales
- net of royalties 2,742 9,598

Operating 1,509 3,537
Transportation 45 64
General and administrative 652 1,042
Interest 192 457
Stock based compensation 15 79
Depletion, depreciation, amortization
and accretion 3,088 5,815
Net loss before taxes 2,684 1,396

Future income tax recovery 668 289

Net loss for the period 2,016 1,107


Proposed Directors and Officers

The management team of Bowood has a proven track record of growing junior companies profitably through strategic acquisitions and cost-effective drilling operations. The team has extensive experience throughout western Canada, with particular expertise in its core area of southern Alberta. It is anticipated that the Bowood management team will become the management team of Roadrunner following completion of the Acquisition.

The proposed directors and officers of Roadrunner following completion of the Acquisition are as follows:

Michael J. Kryczka - Director, President and Chief Executive Officer. Mr. Kryzcka has been the President and Chief Executive Officer of Bowood since October, 2003. Mr. Kryzcka was the President of Durness Resources Inc. from 2000 to 2004 and was the President of Dundee Petroleum Corp. from 1995 to 2000.

Robert Mercier - Director and Chief Operating Officer. Mr. Mercier has been the Chief Operating Officer of Bowood since March 2005. Mr. Mercier was the Production Manager of Forte Oil Corporation from 2002 to 2005 and the Vice President of Avalanche Energy Limited from 1998 to 2000.

David Cassidy - Vice President, Exploration. Mr. Cassidy has been the Vice President, Exploration of Bowood since March 2005. Mr. Cassidy was an independent businessman and geologist from 2000 to 2005, prior to which he was the Chief Geologist of Avalanche Energy Limited from 1997 to 2000.

Franco Civitarese - Vice-President, Finance and Chief Financial Officer. Mr. Civitarese has been the Chief Financial Officer and Vice-President, Finance of Bowood since January 2009. Mr. Civitarese was previously the Chief Financial Officer of E4 Energy Inc. from August 2005 to February 2008, prior to which he was Controller of E3 Energy Inc. from October 2003 to January 2005.

Michelle Gahagan - Director. Ms. Gahagan is a member of the Law Society of British Columbia and has practiced as a corporate lawyer for 20 years, specializing in entertainment finance. For the last several years, Ms. Gahagan has served as a director, officer and audit committee member of several public companies in the resource sector including Roadrunner, RPT Resources Ltd. and Northern Rand Resource Corp.

Jim Welykochy - Director. Mr. Welykochy currently serves as Vice President, Corporate Development of Ryland Oil Corporation. Prior to joining Ryland, Mr. Welykochy served as Vice President of institutional sales for PI Financial Corp. where he was responsible for developing relationships with institutional clients with a focus on Canadian listed junior oil and gas companies. Mr. Welykochy was an oil and gas analyst with Genuity Capital Markets, Acumen Capital Finance Partners and Jennings Capital Inc. and also served in investment banking and corporate finance positions with Rogers & Partners Securities Inc. and Loewen, Ondaatje McCutcheon Ltd.

Chris Bloomer - Director. Mr. Bloomer is currently the Senior Vice President and Chief Operating Officer, Heavy Oil and a Director of Petrobank Energy and Resources Ltd. (TSX). Mr. Bloomer has extensive domestic and international experience in the energy industry, spanning both the upstream and downstream sectors. His career began with Shell Canada Limited in 1978 and moved with increasing responsibility to become Director, Liquids Business Centre. From 1993 until 1995 Mr. Bloomer was the Senior Vice President of Castle Energy Corporation (NASDAQ), and Chief Operating Officer of its Canadian interests and natural gas production and pipeline operations in the United States. From 1996 until 1998 he was a Founder, President, Chief Operating Officer and Director of Canadian TALON Resources, Ltd. (TSX). From May 1998 until December 2002 he was a Managing Director of Korn/Ferry International's Calgary office focusing on the domestic and international energy industry. He was also a Director and Chairman of GEOCAN Energy (TSX) from 2002 until November 2005.

Richard Bonnycastle - Director. Mr. Bonnycastle has been the Chairman and President of Cavendish Investing Ltd., a private investment company, since 1968. Mr. Bonnycastle serves as a member on several boards of directors, including, Mosaic Energy Ltd. Twoco Petroleums Ltd., Century Energy Ltd., Network Capital and National Leasing Corporation. Mr. Bonnycastle was also a director of the Canada Development Investment Corporation and TORSTAR Ltd. and has also served as Chairman of Bracknell Corporation, Patheon Inc. and Harlequin Enterprises Ltd.

Finder's Fee and Proposed Private Placement

Subject to and in accordance with the policies of the TSX-V, Richardson GMP Limited ("Richardson") will receive a finder's fee equal to 4% of: (i) Roadrunner's current assets as reported in its balance sheet filed on SEDAR for the most recent completed financial period at the time the Acquisition is completed, and (ii) any cash received or proposed to be received by Roadrunner from the disposition of any assets or interests during the period from the date of such balance sheet to the closing of the Acquisition. The finder's fee will be paid 75% in cash and 25% in Roadrunner Shares at a deemed price of $0.15 per share.

In addition to the above, Roadrunner anticipates completing a private placement of securities and expects to enter into engagement letter with Richardson pursuant to which Richardson will act as agent, on a commercially reasonable efforts basis, in connection with the sale of up to $4,000,000 of Roadrunner Shares by way of private placement (the "Private Placement"). It is anticipated that the engagement letter will include an over-allotment option permitting the sale of up to an additional $1,000,000 of Roadrunner Shares. The Private Placement will be comprised of Roadrunner Shares priced at $0.15 per share and Roadrunner Shares issued on a "flow-through" basis priced at $0.17 per share. Richardson will be paid a cash commission equal to 7% of the gross proceeds raised under the Private Placement and will be entitled to recover its expenses. It is anticipated that the Private Placement will close immediately prior to the Acquisition. The proceeds from the Private Placement will be used to carry on the business plan of the resulting issuer.

About Roadrunner Oil & Gas

Roadrunner Oil & Gas Inc. is a TSX-V Tier 2 corporation engaged in the acquisition, exploration, development and production of oil and gas resources. Projects are currently situated in the states of Michigan, Utah, and Colorado.

Certain statements contained in this press release constitute forward-looking statements and forward looking information (the "forward-looking statements"). These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "budget", "plan", "guidance", "continue", "estimate", "expect", "forecast", "may", "will", "project", "potential", "target", "intend", "could", "might", "should", "believe" and similar expressions. In particular, forward-looking statements in this press release include, but are not limited to, statements with respect to: the proposed completion of the Acquisition, the proposed completion of the Private Placement, drilling plans and timing of drilling, drilling costs, re-completion and tie-in of wells, productive capacity of wells, anticipated or expected production rates, growth expectations, the performance characteristics of oil and natural gas properties, oil and natural gas production levels, expectations regarding the ability to raise capital and commodity pricing.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, level of activity, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking statements.

Some of the risks and other factors that could cause results to differ materially from those expressed in the forward-looking statements include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions, including fluctuations in the prices of oil and natural gas; governmental regulation of the oil and gas industry, including environmental regulation; geological, technical, drilling and processing problems and other difficulties in producing reserves; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; failure to install pipeline facilities as and when expected; failure to obtain industry partner and other third party consents and approvals, when required; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, skilled personnel and supplies; incorrect assessments of the value of acquisitions; geological, technical, drilling, processing and transportation problems; changes in tax laws and incentive programs relating to the oil and gas industry; failure to realize the anticipated benefits of acquisitions and dispositions, including the Acquisition; and the other factors described in our public filings available at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this document are expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking statement to conform such statement to actual results or to changes in our expectations except as otherwise required by applicable securities legislation.

Disclosure provided herein in respect of boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl 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 TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. 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.

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