Surge Resources Inc.
NEX BOARD : SRH

October 01, 2007 18:54 ET

Surge Resources Inc.: Closing of Acquisition, Issuance of Common Shares per Subscription Receipt Financing, New Management and Stock Option Grants

CALGARY, ALBERTA--(Marketwire - Oct. 1, 2007) - Surge Resources Inc. (NEX BOARD:SRH) -

Asset Transaction Closing

Surge Resources Inc. ("Surge") (NEX BOARD:SRH) is pleased to announce that is has completed the previously announced asset acquisition (the "Transaction") from Transeuro Energy Corp. ("Transeuro") (trading symbol "TSU" TSXV). Pursuant to the Transaction, effective May 16, 2007 Surge acquired from Transeuro a 100% interest in four petroleum prospecting licenses (the "Licenses") granted by the government of Papua New Guinea and all related geological, seismic and technical data owned or obtained by Transeuro in relation to the lands represented in the Licences (collectively, the "Assets"). Transeuro was granted a "back in right" whereby, after Surge has drilled and tested three exploration wells on the Assets, Transeuro may elect to acquire a 10% working interest in the Assets by paying to Surge an amount equal to 10% of the exploration and development costs incurred up to that date with respect to the Assets and agreeing, on a go forward basis, to pay 10% of the exploration and development costs incurred after that date.

The Licenses grant the right, among other things, to explore for petroleum and natural gas in an area comprising approximately, in aggregate, 5,841,196 gross (4,526,927 net) acres in Papua New Guinea. The Licences are subject to a 22.5% option held by the government of Papua New Guinea. The Transaction was an arm's length transaction.

As consideration for Transeuro transferring the Assets to Surge, Surge issued to Transeuro 30,000,000 common shares of Surge (the "Consideration Shares"), with a deemed price of $0.85 per share for a total deemed consideration of $25,500,000. The Consideration Shares are subject to an escrow agreement for a period of 36 months (with 3,000,000 Consideration Shares being released upon the issuance of the TSX Venture Exchange bulletin and 4,500,000 Consideration Shares being released every six months thereafter) following the closing of the Transaction.

Private Placement

Further to the subscription receipt private placement previously announced on June 13, 2007 (the "Financing") whereby Surge issued 12,000,000 subscription receipts (the "Subscription Receipts") at a price of $0.85 per Subscription Receipt, including the exercise of the over-allotment option, each Subscription Receipt has been deemed to be exchanged as at the date hereof, without payment of any additional consideration, for one common share of Surge. The escrowed funds in the amount of $10,200,000 held in conjunction with the Financing have been released to Surge. Canaccord Capital Corporation (the "Agent") has been paid a cash commission of 6% of the gross proceeds of the Financing and granted an agent's warrant permitting the Agent to purchase 600,000 common shares of Surge at an exercise price of $0.85 per Common Share for a period of 12 months following the date hereof.

The net proceeds of the Financing will be used to fund the advancement of the assets to be acquired pursuant to the Transaction and for general working capital purposes.

Management and Stock Options

Hal Hemmerich has been appointed to the Board of Directors of Surge and has been appointed to serve as the President and Chief Executive Officer of Surge. Additionally, Arlene Weatherdon has been appointed to serve as Chief Financial Officer of Surge. Ray Antony has resigned as an officer of Surge but continues to sit on the Board of Directors and will serve as the non-executive Chairman of the Board.

Surge has granted 650,000 options to purchase common shares of Surge with an exercise price of $0.85 per common share to directors and officers of Surge and an additional 300,000 options to purchase common shares of Surge with an exercise price of $0.85 per common share to employees and consultants of Surge.

For a more detailed description of the Transaction, the Assets, the Financing and the corporate structure of Surge upon completion of the Transaction please see Surge's Filing Statement filed on SEDAR on August 20, 2007.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Surge Resources Inc.
    Raymond Antony
    President and Director
    (403) 264-6944