Argosy Energy Inc.
TSX : GSY

Argosy Energy Inc.

May 01, 2012 09:26 ET

Argosy Energy Inc. Announces Sale of Assets at Ante Creek and the Initiation of a Process to Identify Strategic Alternatives

CALGARY, ALBERTA--(Marketwire - May 1, 2012) - Argosy Energy Inc. ("Argosy" or the "Company") (TSX:GSY) is pleased to announce that it has entered into an agreement to sell its interests in certain lands which includes the Montney formation in the Ante Creek area of Alberta (the "Ante Creek Assets") for total consideration of approximately $5.0 million, after closing adjustments. Proceeds from the sale are intended to be used to reduce corporate indebtedness and provide Argosy flexibility with respect to its operations in the Southern Alberta Bakken play. The sale of the Ante Creek Assets are not expected to have a material impact to corporate production and cash flow.

In addition, the Board of Directors has decided to initiate a process to identify, examine and consider a range of strategic alternatives available to the Company with the objective of enhancing shareholder value (the "Strategic Alternatives Process"). The Company has established a special committee consisting of Mr. Jacob Roorda, acting as Chair, Mr. Brian Mellum and Mr. Peter Salamon (the "Special Committee") and has engaged GMP Securities L.P. and Haywood Securities Inc. to act as co-financial advisors in connection with this process.

The Strategic Alternatives Process may include a number of strategic alternatives, such as: a sale of the shares of the Company either in one or a series of transactions or in the form of a financing, a merger, recapitalization, arrangement, amalgamation, a sale of a material portion of the Company's assets, signing of a joint venture agreement, or consideration of other alternatives as the Special Committee may determine.

The Company's primary asset is a 100% working interest in a 34 section land position within a well developed portion of the Alberta Basin Bakken prospect trend. Argosy has identified up to 100 low-risk development drilling locations that are well defined on a comprehensive, proprietary 3D seismic base. In addition, the Company retains an attractive farm-in option to earn an additional 11 sections prospective for the Big Valley formation which may provide for an additional 20 low-risk development locations if fully earned. The Company has drilled one vertical well and two horizontal wells targeting the Wabamun/Big Valley Formation and currently produces approximately 225 bbls/d from these wells. On the same land base, the Company has mapped an extension of the Penny area Barons oil pool and has identified an additional 96 low risk development locations on this trend.

In addition, the Company currently produces approximately 450 boe/d of natural gas at Claresholm through an 11mmcf/d gas plant (75% working interest). The Company has identified an additional 21 drill ready natural gas prospects on its land base.

The Company cautions that there are no guarantees that the Strategic Alternatives Process will result in a transaction or, if a transaction is undertaken, as to it's term or timing. The Company has not set a definitive schedule to complete its evaluation and does not intend to disclose developments with respect to this Strategic Alternatives Process unless and until the evaluation has been completed and a definitive agreement has been reached.

Argosy is a junior oil and gas company focused on the exploration for and development of oil and natural gas in western Canada.

In this news release the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (Mcf) of natural gas for one barrel (Bbl) of oil based on an energy equivalency conversion method. 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 to the burner tip and does not represent a value equivalency at the wellhead.

Advisory Regarding Forward-Looking Information

This press release contains forward-looking information concerning the anticipated use of the net proceeds of the sale of the Ante Creek Assets, the Strategic Alternatives Process and drilling prospects. Although Argosy believes that the expectations reflected in the forward-looking statements are reasonable, the forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. As such, readers are cautioned not to place undue reliance on the forward-looking information, as no assurance can be provided as to the future results, levels of activity or achievements. Risks include, but are not limited to: uncertainties and other factors that are beyond the control of the Company, risks associated with the oil and gas industry, commodity prices and exchange rate changes, operational risks associated with exploration, development and production operations, delays or changes in plans, risks associated with the uncertainty of reserve obligation to update any forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Corporation. Additional information identifying risks and uncertainties is contained in filings of the Company with Canadian securities regulators, which filings are available under the Corporation's profile at www.sedar.com.

Contact Information

  • Argosy Energy Inc.
    Mr. Peter Salamon
    President and CEO
    (403) 269-8846

    Argosy Energy Inc.
    Mr. Tom Dalton
    Vice President Finance and CFO
    (403) 269-8846

    Argosy Energy Inc.
    2100, 500 - 4th Avenue S.W.
    Calgary, Alberta
    (403) 269-8846
    investor@argosyenergy.com
    www.argosyenergy.com

    GMP Securities L.P.
    Mr. Wade Felesky
    Managing Director, Investment Banking
    (403) 543-3043
    wadef@gmpsecurities.com

    Haywood Securities Inc.
    Mr. Mark Reynolds
    Managing Director, Investment Banking
    (403) 509-1926
    mreynolds@haywood.com