Bandon Capital Corp.

April 18, 2007 14:34 ET

Bandon Capital Announces Proposed Acquisition for Qualifying Transaction

CALGARY, ALBERTA--(CCNMatthews - April 18, 2007) - Bandon Capital Corp. (TSX VENTURE:BDN.P) ("Bandon" or the "Corporation"), a capital pool company listed on the TSX Venture Exchange (the "TSXV"), is pleased to announce that it has entered into a Letter Agreement dated April 12, 2007 (the "Letter Agreement") with Richfield Oils Inc. ("Richfield") for an arm's length reverse takeover transaction. The proposed transaction (the "Proposed QT") is a sale of petroleum assets by Richfield to Bandon which will constitute Bandon's Qualifying Transaction in accordance with the policies of the TSXV. The Letter Agreement provides that Bandon will acquire certain Alberta-based petroleum and natural gas properties of Richfield (the "Purchased Assets") in exchange for common shares of Bandon such that Richfield will become the controlling shareholder of Bandon following completion of the Proposed QT. The Letter Agreement provides for the acquisition of the Purchased Assets by Bandon through the issuance of 7,000,000 common shares of Bandon at a deemed price of $0.10 per share for an aggregate purchase price of $700,000. Prior to the Proposed QT, Bandon has issued and outstanding 12,633,975 common shares and 1,220,000 stock options. The common shares of Bandon are currently suspended from trading for failure to complete a Qualifying Transaction within the time provided under the TSXV rules but will recommence trading on completion of the Proposed QT as evidenced by the TSXV bulletin approving the Proposed QT.

As a condition of the Proposed QT, Bandon intends to complete a private placement of $500,000 to $600,000 (the "Private Placement") through the issuance of up to 5,000,000 Flow-Through Common Shares at a price of $0.12 per share. The Private Placement will be primarily offered to the new management, officers and directors of Bandon concurrent with the completion of the Proposed QT. The proceeds of the Private Placement together with the current amount of capital of approximately $900,000 in Bandon will be used primarily for the development of the Purchased Assets in accordance with the reserve reports obtained by Bandon for the Proposed QT. Upon completion of the Proposed QT and if the Private Placement is fully subscribed, Bandon will have 24,633,975 common shares issued and change its name to Bandon Energy Ltd., or a similar name acceptable to the parties and all regulatory authorities.

Pursuant to the Proposed QT, Bandon will acquire a 5.625% to 6.50% working interest in two sections of land in the Hector area, Alberta, a 4.17% to 12.50% working interest after payout in two sections of land in the Westlock area, Alberta and a 100% working interest in one section of land in the Bashaw area, Alberta. Bandon will also have the right to re-enter and take over five existing wellbores completed in the Nisku zone in the Bashaw area, Alberta. The Bashaw property comprises two geophysically defined locations targeting oil in the Nisku zone and five existing wellbores. The proposed development program for the Bashaw area includes re-entering the five existing wellbores to optimize production, drilling one infill development location and drilling one exploratory well targeting the Nisku zone. It is anticipated that third party industry participation/farmout arrangements will be sought to develop and optimize the Bashaw field.

DeGolyer and MacNaughton Canada Limited ("DeGolyer") has evaluated the Bashaw property effective as of December 31, 2006 on the basis that the properties (Net Working Interest) have been acquired by Bandon and has assigned 134,436 STB of total proved reserves with an indicated value of $1,863,000 discounted at 15% (before income tax) using the DeGolyer December 31, 2006 constant price deck. The Purchased Assets (Net Working Interest) located in the Hector and Westlock areas of Alberta have been evaluated by Reliance Engineering Group Ltd. ("Reliance") for Bandon and effective as of December 31, 2006. Reliance has assigned 70,000 MCF of total proven gas reserves and 300 STB of proven light and medium oil reserves with an indicated value of $284,000 discounted at 15% (before income tax) using the Reliance December 31, 2006 constant price deck. Following completion of the Proposed QT, Bandon's share of reserves and cash flow before risk for both areas is summarized below and on the basis that the requisite amount of capital of approximately $1,500,000 is spent on the development of the Purchased Assets.

Working Net Working
Interest Interest Future Cash Flow - Discounted
Remaining Remaining (Constant Product Prices)
Reserves Reserves -----------------------------------
Reserve Light Crude Light Crude Undis-
Category Oil Oil counted at 5% at 10% at 15% at 20%
STB STB M$ M$ M$ M$ M$
Proved Developed
- Non-Producing 170,388 134,436 2,616 2,332 2,083 1,863 1,668
--------- ------------- ------ ----- ------ ------ -------
Total Proved 170,388 134,436 2,616 2,332 2,083 1,863 1,668
Probable 88,732 70,010 2,319 1,961 1,666 1,423 1,223
--------- ------------- ------ ----- ------ ------ -------
Total Proved +
Probable 259,120 204,446 4,935 4,293 3,749 3,286 2,891
The Bashaw property has reserves for light crude oil only and no other
Constant Product Pricing - Canadian $66.98 (STB-Edmonton)

Hector and Westlock
Working Net Working
Interest Interest
Remaining Remaining Future Cash Flow - Discounted
Reserves Reserves (Constant Product Pricing)
Light Light
and and
Reserve Medium Medium Undis-
Category Oil Gas Oil Gas counted at 5% at 10% at 15% at 20%
Producing - 85,000 300 70,000 399 350 313 284 260
------------- ------------- ------ ----- ------ ------ -------
Total Proven - 85,000 300 70,000 399 350 313 284 260
Probable - 6,000 - 8,000 44 36 30 26 22
------------- ------------- ------ ----- ------ ------ -------
Total Proven
+ Probable - 91,000 300 78,000 443 386 343 310 282
Constant Product Pricing - Gas - Canadian $7.36 at Hector and $7.50 at
Westlock (MCF-AECO)
- Light Oil and Medium Oil - Canadian $46.30
Gross Working Interest Remaining Reserves for Light and Medium Oil is not
evaluated as the interest held is a gross over-riding royalty.

Reserve estimates as disclosed herein have been prepared by DeGoyler and Reliance in accordance with standards contained in the Canadian Oil and Gas Evaluation (COGE) Handbook and reserves definitions used in the preparation of these estimates are as set out by the Canadian Securities Administrations in National Instrument 51-101 with reference to the COGE Handbook. The reader is cautioned that estimated reserves values disclosed herein do not represent fair market value.

About Richfield Oils

Richfield is a private oil and gas company, incorporated in Alberta which holds various petroleum and natural gas interests in a number of properties in Alberta. All of the voting shares of Richfield are held by Richard J. Boswell of Calgary Alberta and his family. Mr. Boswell is the sole director and officer of Richfield. Richfield has been acquiring oil and gas properties through purchase and farm-in for the past twelve years.

Proposed Directors and Officers of the Resulting Issuer

The current directors and officers of Bandon, except Sherwood J. Young, intend to resign effective at the date of the special meeting of shareholders to approve certain matters relating to the Proposed QT. It is expected that a new board of directors will be nominated at the special meeting consisting of Sherwood J. Young of Bandon and new directors Richard J. Boswell, Ross O. Drysdale and Paul B. Patton. The special meeting is scheduled for May 31, 2007 and it is anticipated that a meeting circular will be mailed to the Bandon shareholders on or before April 30, 2007.

Richard J. Boswell, Director, President and Chief Executive Officer - Mr. Boswell graduated from the University of Calgary with a Bachelor of Commerce degree and has 27 years of oil and gas industry experience. He was a co-founder and President of Crozet Exploration Ltd, a private resource company, from 1980 to 1987 and was Land Manager of its successor, Crozet Oil & Gas Ltd., from 1987 to 1989. From 1989 to 1992, Mr. Boswell was Land Manager for Hardy Oil and Gas Ltd. a private resource company. From 1992 to 1996, he was an Officer and Director of Stateside Energy Ltd., a publicly listed company. Mr. Boswell was also a founding Director of Tonko Development Ltd., a publicly listed company, from incorporation until its sale in March 2002. From 1996 to present, Mr. Boswell was the founder and President of Richfield Oils Inc., a private oil and gas company. In March, 2006, Mr. Boswell co-founded Mirage Energy Ltd., a public resource company and is presently its Vice President of Land.

Ross O. Drysdale, Director and Corporate Secretary - Mr. Drysdale is a lawyer and Counsel to the law firm of Burstall Winger LLP in Calgary, Alberta. Mr. Drysdale has over thirty years of experience in the legal profession and specializes in corporate and business law with a particular focus on public companies. Mr. Drysdale is a graduate of Mount Allison University (B.A.) and the University of New Brunswick (LL.B). He was admitted to the New Brunswick bar in 1973 and the Alberta bar in 1978. Prior to moving to private practice in 1985, he spent over eight years working as legal counsel for two major oil and gas companies in Calgary. Mr. Drysdale practiced with McCarthy Tetrault LLP, a major Canadian law firm, of which Mr. Drysdale was a partner for 12 years followed by two and one half years as a partner with Baker & McKenzie LLP in Calgary, Alberta. Mr. Drysdale is a director and officer of a number of private and public companies.

Paul B. Patton, Director - Mr. Patton is a professional Geologist with 27 years of oil and gas industry experience primarily involved in exploration and development in both Western Canada and internationally. Mr. Patton worked as a geologist at Shell Canada from 1983 to 1985, Omega Hydrocarbons from 1985 to 1989 and Home Oil from 1990 to 1991. From 1991 to 1993, Mr. Patton worked for Waha Oil and Gas Inc. in Libya. From 1994 to 1996, he worked for Petro Canada as a senior exploration geologist in Western Canada's Sedimentary Basin. From 1996 to 1999, he was a co-founder and VP Exploration at Red Raven Resources Inc., a publicly listed company. Since 2003 he has been the Vice President of Exploration at Blue Parrot Energy Inc., a publicly listed company. Mr. Patton was also a director of Rise Energy Inc. a publicly listed resource company, from 1999 to 2002. He is a director of Silver Swan Resources Ltd, a private company, since 2005, and a director of White Pelican Resources Ltd, a private company since 1992.

Regulatory and Other Matters

The Proposed QT is subject to shareholder approval and the approval of the TSXV. The Proposed QT is also subject to satisfactory due diligence and the delivery of Reserve Reports concerning the Purchased Assets prepared in accordance with National Instrument 51-101 in a form acceptable to the TSXV. Upon completion of due diligence by both parties a formal purchase and sale agreement will be finalized and executed. There can be no assurance that the Proposed QT will be completed as proposed or at all.

The Proposed QT is proposed as Bandon's "Qualifying Transaction" within the meaning of Policy 2.4 of the Exchange (the "Policy"). Bandon's shareholders will be asked to vote upon, among other things, the Proposed QT, election of the directors and the change of name of Bandon. Bandon's shareholders must approve the Proposed QT on the basis of "the majority of the minority". Upon completion of the Proposed QT, Bandon will be a Tier 2 oil and gas company under the policies of the TSXV.

A general policy of the TSX Venture Exchange requires that a sponsor be retained to prepare a sponsor report in compliance with TSXV Policy 2.2. Bandon has applied for an exemption from sponsorship requirements; however, there is no assurance that Bandon will obtain this exemption.

Investors are cautioned that, except as disclosed in the information circular to be prepared in connection with the proposed transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. The TSXV has in no way passed upon the merits of the Proposed QT.


This news release contains certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Corporation's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Corporation's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Corporation will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Corporation or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Corporation does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

12,633,975 Common Shares

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

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