Anterra Corporation
TSX VENTURE : ATR

Anterra Corporation
Resolve Energy Inc.
TSX VENTURE : RSE.A
TSX VENTURE : RSE.B

March 07, 2007 14:39 ET

Anterra Corporation and Resolve Energy Announce Strategic Business Combination

CALGARY, ALBERTA--(CCNMatthews - March 7, 2007) - Anterra Corporation ("Anterra") (TSX VENTURE:ATR) and Resolve Energy Inc. ("Resolve") (TSX VENTURE:RSE.A) (TSX VENTURE:RSE.B) are pleased to announce that they have entered into a Standstill Letter Agreement as of March 6, 2007 (the "Agreement") pursuant to which the parties propose to amalgamate (the "Amalgamation"). The transaction is subject to the approval of the shareholders of Anterra and Resolve and the approval of the TSX Venture Exchange. Resolve and Anterra plan on holding special meetings of their respective shareholders prior to May 31, 2007 to consider and approve the proposed transaction. The resulting combined company ("Amalco") will have an existing production base of over 275 BOED, a strengthened asset base, expanded drilling opportunities and greater overall financial strength. The combined entity brings focused exploration and development opportunities that are anticipated to increase production and cash flow in 2007.

Exchange Ratio

Pursuant to the Amalgamation, Anterra and Resolve will amalgamate and continue as a single corporation ("Amalco"). Amalco will have the same capital structure as Resolve. Under the proposed Amalgamation, the existing Class A Shares and Class B Shares of Resolve will be exchanged on a one-for-one basis for Class A Shares and Class B Shares of Amalco. The common shares of Anterra will be exchanged for securities of Amalco on the basis of 0.5714285 of a Class A Share of Amalco and 0.0132 of a Class B Share of Amalco for each common share of Anterra. The existing options in Anterra and Resolve will be exercised or cancelled in conjunction with the Amalgamation. The existing warrants in each of the companies will be exercisable into Class A Shares and Class B Shares of Amalco at the respective exchange ratios set out above.

The Amalgamation will result in the issuance to former Anterra shareholders of an aggregate of approximately 15,910,188 Class A Shares and 367,525 Class B Shares of Amalco (based on the current issued and outstanding shares of Anterra and prior to the exercise of any outstanding options). Former Resolve shareholders will receive 6,343,000 Class A Shares of Amalco and 380,538 Class B Shares of Amalco. After giving effect to the Amalgamation and assuming no existing options or warrants are exercised, Amalco will have issued and outstanding approximately 22,253,188 Class A Shares, 748,063 Class B Shares and warrants entitling the holders to acquire 1,609,316 Class A Shares and 17,037 Class B Shares.

Agreements and Approvals

The parties contemplate that a formal agreement will be executed on or before March 15, 2007 and the Circulars for the special meetings of shareholders for the two companies will be mailed to shareholders on or before March 30, 2007. The proposed Amalgamation is non-arm's length in that J. Ronald Woods is a director of both Anterra and Resolve and Owen C. Pinnell is an officer and director of Anterra and has acted as a promoter of Resolve.

In order to review the proposed Amalgamation, the Board of Directors of Anterra and Resolve formed Special Committees consisting of independent directors of each company to consider the merits and fairness of the transaction to their respective shareholders. The Resolve Special Committee retained independent financial and engineering experts to review the proposed transaction and Acumen Capital Partners ("Acumen") to provide a fairness opinion to the Board. Anterra retained Haywood Securities Inc. ("Haywood") to provide a fairness opinion to the Board with respect to the transaction. Acumen and Haywood have advised the Special Committees of Anterra and Resolve that, subject to satisfactory due diligence and review of the Amalgamation documents, the Amalgamation appears to be fair from a financial point of view to the respective shareholders.

The Boards of Directors of Anterra and Resolve have recommended that their shareholders approve the Amalgamation. It is anticipated that certain shareholders of Anterra, including management, employees and directors holding approximately 40% of the issued and outstanding common shares of Anterra and certain shareholders, including management and directors of Resolve holding approximately 45% of the issued and outstanding Class A Shares, will lockup and vote their shares in favour of the Amalgamation. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Amalgamation will be completed as proposed or at all. Investors are cautioned that, except as disclosed in publicly disseminated press releases of either Resolve or Anterra or the Resolve and Anterra information circulars to be prepared in connection with the Amalgamation, any information released or received with respect to the proposed transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Resolve and Anterra should be considered speculative at this time based on the information contained herein.

Strategic Rationale

The transaction combines two companies with a similar geological and operational focus. Anterra has concentrated its development efforts in the Breton, Matziwin and Suffield areas of Alberta with current production of approximately 275 BOED. In Breton, Anterra has a 100% working interest in the Breton Basal Belly River Unit which presently produces 250 BOED with significant development potential through the drilling of development wells and the implementation of a water flood. In combination with its lower risk development activities, Anterra has developed several high impact Swan Hills Devonian reef prospects in which Resolve is the joint venture partner. Resolve has entered into farmin and participation agreements with Anterra with respect to the McLeod, Judy Creek and Suffield areas in Alberta and the Frontier area in Saskatchewan.

Transaction Highlights

The shareholders of Resolve and Anterra will participate in a larger, growth-oriented, junior oil and gas producer with an enhanced ability to exploit its assets through its cash flow base, financial strength, and an expanded inventory of drilling prospects. Following the completion of the Amalgamation, management estimates that Amalco will have:

- Core operations in Breton, Suffield, McLeod and Judy Creek, Alberta and Frontier, Saskatchewan;

- Daily production of over 275 BOED, comprised of 33% natural gas and 67% light oil and NGLs;

- An approved capital expenditure program of approximately $11 million for 2007 to be funded from cash on hand, cash flow, available bank lines and proceeds from future financings.

- Access to 6,560 gross undeveloped acres; and

- Minimal debt.

This transaction provides enhanced value for both Anterra and Resolve shareholders by consolidating complementary asset bases and increased financial strength with an experienced execution orientated management team supported by a strong board of directors.

Management and Board of Amalco

Management of Amalco will combine the current management of Resolve and Anterra as follows: Owen C. Pinnell, P.Eng, Chairman and Chief Executive Officer, Robert McCuaig, P.Eng, Executive Vice President, Douglas Wine, P. Geologist, Vice President, Exploration, Giles Parker, CA, Vice President Finance and Chief Financial Officer, Gordon W. Marsden, P.Eng. Vice President, Production and Engineering, Alastair J. Robertson, CA, Treasurer and Corporate Secretary.

The Board of Directors of Amalco will be comprised of six directors, of which five will be proposed by Anterra and one will be proposed by Resolve.

About the Parties

Anterra is a Calgary based publicly traded junior oil and gas company. Resolve is a newly formed Calgary based publicly traded junior oil and gas company. Both companies are engaged in the exploration, development and production of oil and natural gas in the Western Canadian Sedimentary Basin.

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.

The TSXV has in no way passed upon the merits of the proposed transaction and has neither approved or disapproved the contents of this news release.

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

Anterra Corporation:

27,842,833 Common shares

Resolve Energy Inc.:

6,343,000 Class A Shares

380,538 Class B Shares

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

Contact Information

  • Anterra Corporation
    Attention: Owen C. Pinnell
    Chairman and CEO
    (403) 215-3280
    or
    Anterra Corporation
    Suite 1420, 1420 - 4th Street SW
    Calgary, Alberta T2R 1M1
    or
    Resolve Energy Inc.
    Attention: Alastair J. Robertson
    Vice President and CFO
    (403) 215-2383
    or
    Resolve Energy Inc.
    Suite 1420, 1420 - 4th Street SW
    Calgary, Alberta T2R 1M1