Veteran Resources Inc.

Veteran Resources Inc.

November 04, 2005 10:39 ET

Bear Ridge to Acquire Veteran Resources Inc.

CALGARY, ALBERTA--(CCNMatthews - Nov. 4, 2005) - Bear Ridge Resources Ltd.
("Bear Ridge") and Veteran Resources Inc. (TSX VENTURE:VTI) ("Veteran") are
pleased to jointly announce that the two companies have entered into an
arrangement agreement, whereby Bear Ridge will acquire all of the issued and
outstanding shares of Veteran pursuant to a Plan of Arrangement (the
"Arrangement") to be submitted to the Veteran shareholders for approval in
mid January 2006.

Shareholders of Veteran will receive, in the aggregate, a maximum of
$34,651,059 in cash and a maximum of 17,022,333 Bear Ridge shares, being the
equivalent of $0.48 in cash and 0.2358 of a Bear Ridge share for each Veteran
share. Pursuant to the Arrangement, Veteran shareholders will be entitled to
elect to receive in exchange for their Veteran shares, subject to pro-
rationing in the event that the aggregate elected amounts exceed the maximum
amounts of cash and Bear Ridge shares set out above: (i) 0.3369 Bear Ridge
share for each Veteran share, (ii) $1.60 cash for each Veteran share, or
(iii) a combination of cash and Bear Ridge shares, all as more specifically
set forth in the Arrangement and to be further described in an information
circular to be mailed to Veteran shareholders. Based on the 10-day weighted
average trading price for Bear Ridge of $4.59 and for Veteran of $1.38, the
aggregate consideration under the offer represents a premium of 13.2% to the
10-day weighted average trading price for Veteran shareholders.

Transaction Highlights:

- Concentrated asset base materially increases Bear Ridge's position in the
Peace River Arch (the "PRA") and Northeast British Columbia ("NEBC").
Veteran's focused positions at Earring in the PRA and Gunnell in NEBC are an
excellent fit with Bear Ridge's existing properties and exploration activity
in these regions. Bear Ridge's technical team has a very successful track
record in the multi-zone PRA region and considerable expertise in horizontal
carbonate gas projects analogous to Gunnell.

- Veteran's current production is 2,050 boe per day:
- 80% of current production focused in the PRA and NEBC
- 80% weighted to natural gas - 60% operated production
- High current operating netbacks of approximately $48.00 per boe

- Veteran brings strong drillbit growth potential:
- Solid inventory of over 70 exploitation and exploration opportunities
identified in the PRA and NEBC
- 58,600 net undeveloped acres, 74% of which is situated in the PRA and
NEBC areas - An extensive seismic database consisting of 630 square
kilometers of 3-D and 2,095 kilometers of 2-D

- Proved plus probable reserves of 4.85 million boe at October 1, 2005

- Total acquisition cost of $124.9 million including the assumption of an
estimated $12.3 million of net debt at closing. The acquisition cost, net
of land value, is $113.2 million, based on an undeveloped land value of
$11.7 million (58,600 net acres at $200 per acre)

- Acquisition metrics, based on net acquisition cost of $113.2 million:
- $55,234 per flowing boe
- $23.35 per boe (based on proved plus probable reserves)
- 3.1 times estimated 2006 cash flow (based on AECO gas at CDN $10.00 and
US $55.00 WTI)
- Recycle ratio of 2.1 (current $48.00 netback / P+P cost per boe)

- Significant accretion on a per share basis to Bear Ridge's production, cash
flow, reserves and net asset value:
- 105% on current production per share
- 100% on proved reserves per share
- 130% on proved plus probable reserves per share
- 65% on net asset value per share
- 27% on estimated 2006 average production per share
- 20% on estimated 2006 cash flow per share

Pro Forma Bear Ridge Highlights:

Upon closing of the transaction, Bear Ridge will have the following key
operating and financial characteristics based on preliminary management
guidance for 2006. Bear Ridge will provide updated 2006 guidance subsequent
to the completion of the transaction.

- Estimated January 2006 average production of 4,200 to 4,500 boe per day

- Estimated 2006 average production of 5,200 to 5,700 boe per day, 82%
weighted to natural gas

- Projected 2006 cash flow of $73 to $80 million
- Fully diluted cash flow per share estimated at $1.57 to $1.72
- Operating netbacks of $40.00 per boe
- Above estimates based on AECO gas of CDN $10.00 per mcf and US $55.00 WTI

- Focused asset base in the company's two key operating areas - the PRA and
Central Alberta:
- High quality drilling inventory of 130 gross (85 net) wells
- 106,600 net undeveloped acres
- A significant seismic database consisting of 748 square kilometers of 3-D
and 2,895 kilometers of 2-D

- Estimated 2006 capital program of $80 million

- Risk balanced 2006 drilling program of approximately 65 gross (37 net)

- Strong balance sheet:
- Combined credit facilities of $60 million, based on a commitment dated
November 3, 2005 from a Canadian Chartered Bank
- Combined net debt at closing estimated at $50.4 million, approximately
0.6 times projected 2006 cash flow

- Minimal hedges in place, providing significant exposure to the strong
commodity price environment
- 200 barrels of oil hedged for calendar 2006 (costless collar - US $55.00
WTI to US $73.00 WTI)

- Combined tax pools of $140 million and a forecast tax horizon of 2008 or

Mr. Russell Tripp, Chief Executive Officer of Bear Ridge commented "This
transaction is a very strategic step in our plan to build a significant core
position in the western Peace River Arch and crossing into NEBC. Veteran's
focused asset base is complimentary to Bear Ridge's existing properties and
technical expertise in this region. The high quality prospect inventory that
Veteran has assembled provides a balanced mix of lower risk exploitation and
high impact exploration opportunities and is consistent with Bear Ridge's
drillbit growth strategy."

Mr. Philip Loudon, the President and Chief Executive Officer of Veteran,
added, "We feel this was an excellent opportunity for both the Veteran
shareholders and the Bear Ridge shareholders. We are confident that, given
the Bear Ridge management's track record of profitable growth in the PRA
area, they will be able to further build and exploit the Veteran asset base
and continue to enhance shareholder value."

Bear Ridge Announces Natural Gas Discovery

Bear Ridge has drilled and successfully completed a natural gas well in its
key PRA/NEBC focus area. The well had an extended absolute open flow ("AOF")
test from a single zone in excess of 9 mmcf per day and is expected to
commence production in December 2005 at a facility restricted rate of
approximately 4 mmcf per day. Bear Ridge owns a 100% interest in this new
pool discovery well.

Bear Ridge plans to drill 4 or 5 wells in the immediate vicinity of this
discovery well in 2006 targeting similar prospects and to exploit uphole
zones identified in the discovery well.

Bear Ridge Board of Directors

Bear Ridge is pleased to announce that Mr. David Richards, an existing
director of Veteran, has agreed to join the board of directors of Bear Ridge
upon the successful completion of the Arrangement.

Management and Board Recommendations

The Arrangement has the unanimous support of the boards of directors of both
Veteran and Bear Ridge.

The board of directors of Veteran has concluded that the Arrangement is in
the best interests of its shareholders and will recommend that Veteran
shareholders vote their Veteran shares in favour of the Arrangement.
Directors and officers of Veteran, holding approximately 19% of the fully
diluted common shares of Veteran, have entered into lock-up agreements
whereby they have agreed to vote their Veteran shares in favour of the
Arrangement. Canaccord Capital Corporation has acted as sole financial
advisor to Veteran and has provided a written fairness opinion to the board
of directors of Veteran indicating that they are of the opinion that the
consideration to be received by Veteran shareholders pursuant to the
Arrangement is fair, from a financial point of view.

The board of directors of Bear Ridge has unanimously approved the
Arrangement. Tristone Capital Inc. acted as sole financial advisor to Bear

Veteran and Bear Ridge have each agreed to pay the other party a non-
completion fee in the amount of $3.7 million in certain circumstances if the
Arrangement is not completed. Veteran has agreed to terminate any discussions
with other parties and has agreed not to solicit or initiate discussion or
negotiation with any third party with respect to alternate transactions
involving Veteran and has granted Bear Ridge certain pre-emptive rights if
Veteran receives any other offers.

This press release shall not constitute an offer to sell or a solicitation of
an offer to buy securities in any jurisdiction. The common shares of Bear
Ridge and Veteran will not be and have not been registered under the United
States Securities Act of 1933, as amended, and may not be offered or sold in
the United States, or to a U.S. person, absent registration or applicable
exemption therefrom.

Reader Advisory

Boes may be misleading, particularly if used in isolation. A boe conversion
ratio of six mcf to one 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.

Statements in this press release may contain forward-looking information
including expectations of future production and components of cash flow and
earnings. The reader is cautioned that assumptions used in the preparation of
such information may prove to be incorrect. Events or circumstances may cause
actual results to differ materially from those predicted, as a result of
numerous known and unknown risks, uncertainties, and other factors, many of
which are beyond the control of the companies. These risks include, but are
not limited to; the risks associated with the oil and gas industry, commodity
prices and exchange rate changes. Industry related risks include, but are not
limited to; operational risks in exploration, development and production,
delays or changes in plans, risks associated with the uncertainty of reserve
estimates, health and safety risks and the uncertainty of estimates and
projections of reserves, production, costs and expenses. The reader is
cautioned not to place undue reliance on this forward-looking information.

The reader is further cautioned that the preparation of financial statements
in accordance with generally accepted accounting principles requires
management to make certain judgments and estimates that affect the reported
amounts of assets, liabilities, revenues and expenses. Estimating reserves is
also critical to several accounting estimates and requires judgments and
decisions based upon available geological, geophysical, engineering and
economic data. These estimates may change, having either a negative or
positive effect on net earnings as further information becomes available, and
as the economic environment changes.

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

Contact Information

  • Bear Ridge Resources Ltd.
    Suite 2200, 330 - 5th Avenue S.W.
    Calgary, AB T2P 0L4 Canada
    (403) 537-8440
    (403) 537-8450
    Bear Ridge Resources Ltd.
    Russell J. Tripp
    Chief Executive Officer
    (403) 537-8440
    (403) 537-8450
    Bear Ridge Resources Ltd.
    Douglas C. Hibbs
    (403) 537-8440
    (403) 537-8450
    Bear Ridge Resources Ltd.
    Brian Baker
    Vice President Finance and Chief Financial Officer
    (403) 537-8440
    (403) 537-8450
    Veteran Resources Inc.
    Suite 2200, 635 - 8th Avenue SW
    Calgary, AB T2P 3M3 Canada
    (403) 266-3005
    (403) 263-2569
    Veteran Resources Inc.
    Philip Loudon
    President and Chief Executive Officer
    (403) 266-3005
    (403) 263-2569
    Veteran Resources Inc.
    Peter Henry
    Vice President Finance and Chief Financial Officer
    (403) 266-3005
    (403) 263-2569