Stetson Oil & Gas Ltd.

Stetson Oil & Gas Ltd.

November 16, 2009 07:30 ET

Stetson Closes Acquisition of Producing Oil and Gas Properties and Provides N. Dakota Operational Update

CALGARY, ALBERTA--(Marketwire - Nov. 16, 2009) - STETSON OIL & GAS LTD. (TSX VENTURE:SSN) ("Stetson") is pleased to announce that it has received TSX Venture Exchange approval and now closed its previously announced acquisition of western Canadian producing oil and gas properties from Longford Energy Inc. ("Longford") for a purchase price of $425,000 effective November 15, 2009 (the "Transaction")(See News Release dated September 21, 2009).

Longford's Canadian oil and gas assets are situated in the Lashburn area of Saskatchewan, and the Brazeau and Alder Flats areas of Alberta. Total net production is approximately 45 boepd and net operating income is approximately $25,000 per month. Stetson's daily production is now approximately 175 boepd. Additional volumes are expected to be brought on production from Stetson's Ewing Lake property in the fourth quarter.

At Lashburn, Saskatchewan Stetson has acquired working interests ranging from 16.67% to 85% in four producing oil wells that produce approximately 30 bopd net. Stetson is the Operator of these wells. At Brazeau and Alder Flats, Stetson has acquired interests of 49% and 100% respectively in two wells that have net production of approximately 15 boepd.

The oil and gas reserves on Longford's Canadian oil and gas assets were evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") effective July 31, 2009. The GLJ evaluation estimated total proven and probable reserves of 96,000 barrels of oil equivalent ("boe"), with a net present value, before tax and discounted at 10%, of $1,281,000. Stetson will acquire proven and probable reserves at a cost of $4.43 per barrel of oil equivalent ("boe"). As part of the Transaction, Stetson will also assume abandonment liabilities on two wells and an oil battery located at Alder Flats.

The Transaction is considered a non-arm's length transaction for the purposes of the TSX Venture Exchange because Stetson and Longford have two common directors, being Stan Bharti and Ahmed Said, and two common officers, being Gary Lobb and Patrick Gleeson.


Stetson disclosed in its press release of October 16, 2009 that it was discontinuing the flow back test conducted on the Middle Bakken zone following a ten day test period. The well was shut in and a bottom hole pressure build up was recorded. Upon pulling the pressure recorders from the hole, oil and gas was noted in the wellbore. Based on this, Stetson has installed a pumpjack and will begin pumping the well to production tanks.

Stetson President Bill Ward commented, "the presence of oil and gas in the wellbore is encouraging. We believe that the majority of the remaining load water needs to be recovered from the wellbore to allow us to fully evaluate the Bakken potential".

The decision to further evaluate the Bakken zone has resulted in a postponement of operations to evaluate other potential zones encountered in the well. Stetson has also reviewed available seismic data in proximity to its lands and intends to formulate a strategy for the acquisition of this data with its partners in the coming weeks.

Stetson is an emerging junior oil and gas company with exploration, development, and production programs in Saskatchewan and Alberta, Canada and North Dakota, USA.


BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Net present value, net present value per share, future projected net revenue and similar measures are estimated values and do not represent fair market value.

Cautionary Note Regarding Forward-Looking Information: This press release contains "forward-looking information", within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the effect of the completion of the Transaction on the Company; reserve estimates; estimates regarding future production; the receipt of regulatory approvals; expected management rationalization and benefits therefrom; and the future financial and operating performance of Stetson and its projects. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, political and social risks and uncertainties; risks relating to oil and gas exploration and exploitation activities; oil and gas prices; acquisition risks; risks relating to greater resources, time and attention will be spent on the Acquisition than anticipated; and delays in obtaining regulatory approvals. Although Stetson has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. Stetson does not undertake to update any forward-looking information, except in accordance with applicable securities laws.


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