Solara Exploration Ltd.

Solara Exploration Ltd.

May 16, 2006 12:06 ET

Solara Exploration Completes Acquisition

CALGARY, ALBERTA--(CCNMatthews - May 16, 2006) - Solara Exploration Ltd. (TSX VENTURE:SAA.A) (TSX VENTURE:SAA.B) ("Solara"or the "Company") is pleased to announce that it has completed the acquisition of all of the issued and outstanding shares of a privately owned company with operated oil and gas properties in east central Alberta. The properties are currently producing 105 barrels of oil equivalent per day (boe/d) comprised mostly of oil, and an additional 35 boe/d currently being placed on production. The proved and probable oil and gas reserves of the private company were evaluated at December 31, 2005 by GLJ Petroleum Consultants and assigned a value of $7.1 million utilizing a discount rate of 8%. The purchase price for the acquisition was $5.3 million net of working capital adjustments. At closing, the cash sum of $4.39 million was paid by the Company and 884,956 Class A Shares of the Company (the "Shares") were issued to the vendor at a deemed price of $1.13 per Share. The Share price was based on the weighted average trading price of the Shares for the 30 day trading period prior to May 1, 2006. The Shares have a four month hold period expiring on September 15, 2006. The estimated net operating revenue of $500,000 has accrued to Solara from the effective date of January 1, 2006. The transaction received approval from the TSX Venture Exchange on May 12, 2006.

The board of directors of Solara is very pleased with the acquisition which is accretive to the shareholders and is expected to provide additional drilling and optimization opportunities for the Company.

Solara Exploration Ltd. is an emerging junior oil and gas company focused on the exploration, development and acquisition of oil and natural gas in western Canada.

ADVISORY: Certain information regarding the Company including management's assessment of future plans and operations, may constitute forward-looking statements under applicable securities laws and necessarily involve risks associated with oil and gas exploration, production, marketing and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserve estimates, environment risks, competition from other producers and ability to assess sufficient capital from internal and external source. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

15,651,568 Class A Shares
1,044,000 Class B Shares

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

Contact Information

  • Solara Exploration Ltd.
    Donald R. Holding
    President and Chief Executive Officer
    (403) 537-0458
    (403) 537-0462 (FAX)
    Solara Exploration Ltd.
    1800, 444 - 5th Avenue S.W.
    Calgary, Alberta T2P 2T8