Avatar Energy Ltd.

Avatar Energy Ltd.

December 21, 2011 17:36 ET

Avatar Energy Ltd. Announces Joint Venture to Develop Cardium Lands and Update to Private Placement

CALGARY, ALBERTA--(Marketwire - Dec. 21, 2011) - Avatar Energy Ltd. ("Avatar" or the "Corporation") (TSX VENTURE:AVG), is pleased to announce that it has entered into a joint venture agreement with a major Pembina Cardium player to jointly develop its east Pembina acreage. We anticipate spudding the first joint well in the first quarter of 2012.

Avatar would also like to update its previously announced non-brokered private placement financing. It is anticipated that aggregate gross proceeds from the financing will be approximately $174,500 subject to final acceptance by the TSX Venture Exchange.

Pursuant to the private placement, it is anticipated that 287,500 units ("Units") will be issued at a price of $0.20 per Unit and 531,820 common shares will be issued on a flow-through basis pursuant to the Income Tax Act (Canada) (the "Flow Through Shares") at a price of $0.22 per Flow Through Share. Each Unit is comprised of one common share (a "Common Share") of the Corporation and one common share purchase warrant (a "Warrant"), each Warrant entitling the holder thereof to purchase one additional Common Share (the "Warrant Share") at an exercise price of $0.40 per Warrant Share for a period of 18 months following the closing date of the private placement subject to the terms and conditions of the Warrant (including the right of the Corporation to accelerate the expiry date of the Warrants in certain circumstances). It is anticipated that a finder's fee of $1,320 will be payable, representing 6% of the proceeds from certain subscriptions under the private placement. The common shares to be issued pursuant to the private placement will be subject to a four- month hold period.

The Corporation will use the proceeds of the private placement to fund ongoing operations, development drilling and for general administrative purposes.

Assuming all common shares are issued pursuant to the private placement as contemplated above, there will be 22,337,257 common shares of Avatar outstanding following the completion of the financing.

Avatar is an emerging junior oil and gas company with production in Alberta. The Corporation's area of focus is on properties in the Pembina Cardium light oil play that have long life high quality reserves with repeatable drilling upside.

Cautionary Note Regarding Forward-Looking Statements

Except for the statements of historical fact contained herein, certain information presented herein constitutes "forward - looking statements". More particularly, this press release contains statements concerning the proposed private placement and the spudding of a well pursuant to a joint venture agreement. The forward-looking statements contained in this document are solely opinions and forecasts which are uncertain and subject to risks. Forward-looking statements include but are not limited to uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of known and unknown risks and uncertainties, including, but not limited to: non -performance of agreements in accordance with their terms; the impact of competition; commodity prices; regulatory environment and inability to obtain required regulatory approvals; tax laws and treatment; the ability of the Corporation to raise sufficient capital to complete future projects and satisfy future commitments; labour and material shortages; and certain other risks detailed from time to time in the Corporation's public disclosure documents which can be found at www.sedar.com. The forward-looking statements and information are based on certain key expectations and assumptions made by the Corporation, including the ability to obtain the required TSX Venture Exchange approval. Although the Corporation believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because the Corporation can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. Accordingly, readers are cautioned that the assumption used in the preparation of the forward-looking statements, 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.

The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by law, the Corporation disclaims any intention and assumes no obligation to update or revise any forward- looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. Additionally, the Corporation undertakes no obligation to comment on the expectations of, or statements made, by third parties in respect of the matters discussed above.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Avatar Energy Ltd.
    Mr. Alan D. Jack, P. Eng
    President & Chief Executive Officer
    (403) 517-8818 x.225
    (403) 517-8815 (FAX)

    Avatar Energy Ltd.
    Ms. Lorie J. Hynes, CA
    Chief Financial Officer
    (403) 517-8818 x.226
    (403) 517-8815 (FAX)