U.S. Oil and Gas Resources Inc.
TSX VENTURE : USR

U.S. Oil and Gas Resources Inc.

May 12, 2005 09:30 ET

U.S. Oil and Gas Resources Announces Extraordinary General Meeting

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 12, 2005) - U.S. Oil and Gas Resources Inc. (USR) (TSX VENTURE:USR) would like to announce that it will be holding an extraordinary general meeting for all its shareholders on June 30, 2005. The Company will seek shareholder approval to proceed with the announced amalgamation and transfer of its interests in oil and gas properties in both Canada and the US.

Clarification of Recent Transactions

U.S. Oil and Gas wishes to take this opportunity to explain further to its shareholders the significance and implications of the recent news releases regarding consolidation of its oil and gas interests.

On April 19, 2005, the Company announced that it had entered into an agreement with Consolidated Odyssey Exploration Inc. ("ODE") whereby the companies will combine their respective interests in the Puckett, Iowa, and Pelahatchie oil and gas fields in Mississippi and Louisiana pursuant to a Plan of Arrangement and a horizontal short form amalgamation in which all of the assets and liabilities of USR and ODE will become the assets and liabilities of Amalco. This transaction would result in current USR shareholders receiving one Amalco share for every two USR shares they possess as at the record date of the arrangement. The record date for this transaction has been set for May 30, 2005. Any unexercised warrants and options would be converted to warrants and options of Amalco at the same 2 for 1 ratio.

The Plan of Arrangement/amalgamation will require the approval of the shareholders of USR at the extraordinary general meeting on June 30, 2005.

Further to this release, the Company announced on April 29, 2005 that, pending TSX Venture approval, it had entered into a purchase and sale agreement with Sniper Enterprises Inc. (SNQ.H) ("Sniper") whereby USR will sell to Sniper 100% of its property interests in Alberta, Oklahoma, and Texas. In exchange, Sniper will issue to USR a maximum of 20,000,000 common shares in its capital stock at a deemed price of $0.07 per share for total consideration of $1,400,000. The Company is in the process of giving notice to the regulatory authorities in order to gain approval for the transaction as soon as possible. Once approval is received, the record date will be set to effect the transaction. The Sniper shares would be distributed to all USR shareholders of record as a dividend on a pro-rata basis. The end result of this transaction would not be an exchange of shares. The number of USR shares held by a shareholder will merely be a way to determine his or her proportionate share of Sniper shares. This will not be the case for unexercised warrants or options. If the holders of warrants and options wish to maximize the number of Sniper shares they receive they must exercise the warrants and options prior to the record date of the dividend in order for these shares to qualify for the dividend.

In summary, USR will be selling its non-Mississippi and non-Louisiana properties to Sniper for a pro-rata share of up to 20 million common shares of Sniper. These "bonus" shares will be distributed to all shareholders of USR stock without them having to give up any USR shares. Following this transaction and subject to shareholder and regulatory approval, USR will then amalgamate with ODE, and Amalco shares will be issued to USR shareholders as described above. The end result of these transactions is that shareholders of USR will end up owning common shares of two separate public companies, Amalco and Sniper.

Any USR shareholder that resides in a jurisdiction that does not have a securities law exemption which would permit the distribution of the Sniper shares as a dividend, will receive cash in lieu of the Sniper shares. The Sniper shares that these USR shareholders would otherwise receive will be sold and the net proceeds distributed to the applicable USR shareholders on a pro-rata basis.

Management of U.S. Oil and Gas Resources Inc. believes that these transactions are in the best interests of the Company and the shareholders. Management also wishes to thank its shareholders for their support in the past and looks forward to their continued support through the transition phase.

JURGEN WOLF, Director

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

Contact Information

  • U.S. Oil and Gas Resources Inc.
    Jurgen Wolf
    Director
    (604) 681-1559