Zargon Oil & Gas Ltd.

Zargon Oil & Gas Ltd.

May 06, 2010 09:16 ET

Zargon Energy Trust Announces a Property Acquisition in its Alberta Plains Core Area

CALGARY, ALBERTA--(Marketwire - May 6, 2010) - Zargon Energy Trust (TSX:ZAR.UN) (TSX:ZOG.B) ("Zargon") has entered into an agreement to purchase working interests in various southern Alberta medium and heavy gravity oil pools with approximately 350 barrels of oil equivalent per day of existing production, along with approximately 5.8 thousand net acres of undeveloped land for a cash purchase price of approximately $25 million. The majority of these assets are either situated adjacent to or in the vicinity of Zargon's Little Bow property. These assets bring significant volumes of oil-in-place that may in part, be amenable to tertiary recovery methods through our proposed Little Bow Alkaline Surfactant Polymer ("ASP") chemical flood project. Zargon intends to fund the purchase price of the acquisition through its existing bank credit facilities. This acquisition is subject to customary closing conditions. Closing is anticipated to occur on or about May 31, 2010.

Concurrently, Zargon is packaging and marketing selected non-core minor oil properties that are producing approximately 375 barrels of oil equivalent per day, with the expectation that the sale of the majority of these properties will be concluded by mid summer. In addition to these disposition properties, Zargon recently concluded the sale of 2.5 net sections of mostly non-operated Cardium rights in the Pembina area for a cash consideration of $6.30 million.

Forward-Looking Statements - This document offers our assessment of Zargon's future plans and operations as at May 6, 2010, and contains forward-looking statements including:

- Our future plans for the properties to be acquired, including the amenability of tertiary recovery methods such as Alkaline Surfactant Polymer chemical flooding;

- The anticipated sources of financing and timing of the closing of the property acquisition; and

- Completion of the sale of the selected non-core minor oil properties and the timing thereof.

Such statements are generally identified by the use of words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "should", "plan", "intend", "believe" and similar expressions (including the negatives thereof). In addition, the statement relating to oil-in-place volumes is a forward-looking statement as it involves an implied assessment that the resources can be profitably developed in the future. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, such as those relating to results of operations and financial condition, general economic conditions, industry conditions, changes in regulatory and taxation regimes, volatility of commodity prices, escalation of operating and capital costs, currency fluctuations, the availability of services, imprecision of reserve estimates, geological, technical, drilling and processing problems, environmental risks, weather, the lack of availability of qualified personnel or management, stock market volatility, the ability to access sufficient capital from internal and external sources and competition from other industry participants for, among other things, capital, services, acquisitions of reserves, undeveloped lands and skilled personnel; the inability to satisfy the closing conditions of the property acquisition or to realize the anticipated benefits of the acquisition and the inability to complete the non-core dispositions on the timing indicated or at all. Risks are described in more detail in Zargon's Annual Information Form for the year ended December 31, 2009 which is available on SEDAR at and on Zargon's website. Forward-looking statements are provided to allow investors to have a greater understanding of our business.

You are cautioned that the assumptions, including among other things, future oil and natural gas prices; future capital expenditure levels; future production levels; future exchange rates; the cost of developing and expanding our assets; our ability to obtain equipment in a timely manner to carry out development activities; our ability to market our oil and natural gas successfully to current and new customers; the impact of increasing competition; our ability to obtain financing on acceptable terms; and our ability to add production and reserves through our development and acquisition activities used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. We can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them. The forward-looking information contained in this document is expressly qualified by this cautionary statement. Our policy for updating forward-looking statements is that Zargon disclaims, except as required by law, any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Based in Calgary, Alberta, Zargon's securities trade on the Toronto Stock Exchange (TSX). Trust units of Zargon Energy Trust trade under the symbol "ZAR.UN" and the exchangeable shares of Zargon Oil & Gas Ltd. trade under the symbol "ZOG.B".

In order to learn more about Zargon, we encourage you to visit Zargon's website at where you will find a current shareholder presentation, financial reports and historical news releases.

Contact Information

  • Zargon Energy Trust
    C.H. Hansen
    President and Chief Executive Officer
    (403) 264-9992
    B.C. Heagy
    Executive Vice President and Chief Financial Officer
    (403) 264-9992