Ryland Oil Corporation

Ryland Oil Corporation

May 03, 2010 08:00 ET

Ryland Oil Closes Royalty Purchase and Receives Loan Approval

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 3, 2010) - Ryland Oil Corporation (TSX VENTURE:RYD) ("Ryland") is pleased to announce that it has closed the purchase from Eternal Energy Corp. ("Eternal") of a 5% gross overriding royalty on production from all petroleum and natural gas leasehold acreage held by Ryland's wholly owned subsidiary, Pebble Petroleum Inc. ("Pebble"), in southeast Saskatchewan. In consideration for the royalty, Ryland has issued to Eternal 2,145,883 common shares of Ryland at a deemed price of CDN $0.36, and has transferred to Eternal's Canadian subsidiary, EERG Energy ULC, a 100% working interest in 4,480 acres of Crown leases located in the Hardy area of southeast Saskatchewan. A cash payment of US$2.9 million will also be made to Eternal by Ryland on or before June 1, 2010.

The 2,145,883 Ryland shares issued to Eternal are subject to a four month hold period expiring on August 30, 2010. Ryland's royalty purchase from Eternal has been approved by the TSX Venture Exchange ("TSX-V").

Ryland also announces that its wholly owned U.S. subsidiary, Rover Resources Inc., has completed the purchase of Eternal's 10% working in approximately 700 net acres of petroleum and natural gas leases in northern North Dakota at a price of US$1 million. Rover is the holder of the other 90% interest in and to those leases.

Ryland has also received TSX-V approval for a loan facility of up to CDN$6.5 million. The loan has a one year term and bears interest at a rate of 10% per annum, payable quarterly. Ryland will issue up to 3,611,111 bonus shares at a deemed price of $0.36 per share in consideration for the loan. The bonus shares will be issued pro rata as funds are drawn down under the loan facility. The bonus shares will be subject to four month hold periods from the respective dates of their issuance. The Company has drawn down US$1 million of the loan to fund the purchase of Rover's North Dakota acreage referred to above. The loan facility will also be used to fund the final payment of US $2.9 million due to Eternal on June 1, 2010 on account of the royalty purchase. Ryland also intends to use the loan facility to complete the purchase of additional 4% in gross overriding royalties on production from Pebble's acreage previously announced. Those acquisitions are pending.

Gerald J. Shields

Issued and Outstanding: 200,473,418

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

  • Ryland Oil Corporation
    Mr. Jim Welykochy
    Vice-President Corporate Development