Seaview Energy Inc.

Seaview Energy Inc.

June 11, 2009 20:20 ET

Seaview Energy Inc. Announces Execution of Definitive Agreement for the Previously Announced Peace River Arch Asset Acquisition

CALGARY, ALBERTA--(Marketwire - June 11, 2009) -


Seaview Energy Inc. ("Seaview" or the "Company") (TSX VENTURE:CVU.A) (TSX VENTURE:CVU.B) is pleased to announce that it has signed a definitive agreement ("Agreement") in connection with the previously announced acquisition of certain high quality, long life, assets located in the Peace River Arch (the "Transaction") from a senior public oil and gas company ("Vendor") for total consideration of $26.5 million (prior to closing adjustments). The effective date of the Transaction is April 1, 2009, with closing expected to occur in late June.

The Transaction will be financed using a combination of proceeds from a concurrent subscription receipt bought-deal equity financing for gross proceeds of $10.0 million, with an option granted to the underwriters to increase the financing to $15.0 million, and Seaview's expanded credit facility. The combined equity and credit availability will provide Seaview with a strong balance sheet to ensure continued financial flexibility.

Pursuant to the terms of the Agreement with the Vendor, Seaview has agreed to purchase properties located in the Balsam and Boundary Lake areas of northwest Alberta (the "Assets"). The Assets consolidate Seaview's existing working interest in the Company's key Peace River Arch core area. Seaview currently is a working interest holder in over 70% of production associated the Assets to be acquired.

The Assets to be acquired are currently producing an estimated 730 boe/d (90% natural gas weighted). Management has identified numerous opportunities to enhance the value of the Assets, including 10 drilling locations and 4 recompletion opportunities. Seaview's consolidated working interest in these opportunities will increase from an average of 41% to 79%.

The Assets also increase Seaview's ownership in associated gathering systems and processing facilities providing a base for competitive operating costs and increased access to take-away capacity for future production volumes through Company owned infrastructure.

Seaview's total land position in the Peace River Arch will expand by 21% to 141,236 gross acres of land at an average working interest of 42%. In addition, Seaview's undeveloped land position in this area will increase by 22% to 26,752 net acres, at an average working interest of 47.5%.

The Transaction is expected to close on or about June 30, 2009 and will be conditional upon customary regulatory approvals and other typical conditions for this type of transaction.

Seaview has entered into an agreement, on a bought deal basis, with a syndicate of underwriters led by National Bank Financial Inc., and including FirstEnergy Capital Corp., CIBC World Markets Inc., GMP Securities L.P., Macquarie Capital Markets Canada Ltd., Dundee Securities Corporation, and Wellington West Capital Markets Inc. for an offering, on a private placement basis, of 10,526,315 subscription receipts ("Subscription Receipts") at $0.95 per subscription receipt and 4,166,667 Class A shares to be issued on a "flow-through" basis ("Flow-Through Shares") to raise aggregate gross proceeds of $15.0 million. In addition, Seaview has also granted the Underwriters an option to purchase from treasury an additional 5,263,158 Subscription Receipts exercisable at the offering price up to 48 hours prior to the closing of the offering for additional gross proceeds of $5,000,000. Closing of the financing is expected to occur on or about June 16, 2009 and is subject to customary conditions and regulatory approvals, including the approval of the TSX Venture Exchange. Details of the proposed financing can be found in the May 22, 2009 press release.

Strategic Rationale

Seaview's business plan is based upon delivering growth in reserves, production and cash flow per share with a balanced strategy of acquiring, exploiting and exploring for high quality light oil and natural gas assets in Western Canada.

The Transaction consolidates Seaview's core position in the Peace River Arch, further expanding the Company's production, reserves, undeveloped land position and increases its working interest in its drilling inventory. The Assets to be acquired pursuant to the Transaction offer operating synergies with Seaview's existing core areas and are consistent with management's exploration skill set.

Pursuant to the Transaction, Seaview will acquire approximately 730 boe/d of production consisting of 3,990 mcf/d of natural gas, and 65 Bbl/d of crude oil and natural gas liquids. The combination of the producing reserves and the potential additions from the development upside identified on the Assets, will significantly increase the Company's reserve base.

Based on a National Instrument 51-101 independent evaluation of the reserves by Sproule Associates Limited ("Sproule") effective April1, 2009, the Total Proven plus Probable reserves associated with the Assets are 1.8 mmboe. Additionally, 1.6 mmboe of the Total Proven plus Probable reserves are fully developed and are currently on production and 82.0% of the reserves have common working interest with Assets currently owned by Seaview. Based on the acquisition price of $26.5 million, Seaview is acquiring Total Proved plus Probable reserves at a cost approximately $14.42/boe excluding attributed land value of $970,000.

Seaview management has identified an additional 10 drilling locations and four recompletion opportunities on the acquired assets providing future growth opportunities. Seaview's land position in the Peace River Arch will increase to 141,236 gross acres with a 42% average working interest. Seaview's undeveloped lands will increase 22% to 26,752 acres with a 47.5% average working interest.

Seaview is increasing its working interest in its current drilling inventory which will be eligible to benefit from the Alberta Government Royalty Incentives announced on March 3, 2009. The Royalty Incentive Program provides a one time opportunity to maximize the net asset value of the assets by adding new reserves while benefiting from the reduced royalty rates and the drilling credit.

Financial and Operational Benefits of the Acquisition

Seaview expects to achieve a number of key financial and operational benefits from the Transaction, including:

- The Transaction is accretive to Seaview's production per share and 2010 cash flow per share.

- Forecast annualized pro-forma cash flow for Seaview is now expected to increase to $15.5 million ($0.22 per share), assuming 2009 average AECO gas prices of $4.40/GJ, and US$56.50/bbl pricing.

- Estimated G&A expenses per flowing boe are expected to be reduced by approximately $0.57 per boe to $1.90 per boe, as Seaview will not require any material increases to G&A to integrate these Assets into the existing operations.

The strategic merits of the Transaction are significant for Seaview shareholders. The larger, more diversified cash flow base will permit Seaview to embark upon a more aggressive exploration and development program in its Peace River Arch focus area as well as pursue the upside potential on the Assets to be acquired pursuant to the Transaction.

With an expanded inventory of both exploration and development locations, Seaview is well positioned for additional growth potential through a risk balanced capital program.

Seaview is a Calgary, Alberta based company engaged in the exploration, development and production of conventional crude oil and natural gas reserves in Canada. Seaview's strategy is to build shareholder value through a balance of exploration and development drilling complemented by a focused acquisition program.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.

This press release may contain forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, anticipations, expectations, opinions, forecasts, projections, guidance or other similar statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses and health, safety and environmental risks), commodity price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as the 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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