Blackhawk Resource Corp.

Blackhawk Resource Corp.

September 02, 2009 09:00 ET

Amalgamation of Blackhawk Resource Corp. and Black Bore Exploration Ltd.

CALGARY, ALBERTA--(Marketwire - Sept. 2, 2009) - Blackhawk Resource Corp. ("Blackhawk" or the "Corporation") (TSX VENTURE:BLR) is pleased to announce that it has closed the acquisition of all of the issued and outstanding common shares of Black Bore Exploration Ltd. ("Black Bore") (the "Transaction"). The Transaction was completed by way of a three cornered amalgamation such that Black Bore is now a wholly owned subsidiary of Blackhawk. For details of the Transaction please refer to the press release of July 13, 2009.

The Corporation is now a Western Canadian based oil and gas company. The board has provided management with a mandate to grow the company through acquisition, development, drilling and land sales with a focus on Alberta and Saskatchewan.

With the closing of the Transaction, Blackhawk will have average daily production of approximately 40barrels of oil equivalent per day ("BOED"). Work has begun on the lands acquired from Black Bore, which is expected to increase the daily production to greater than 75 BOED in the near future. This increase in production will be strictly oil production. The Corporation has also undertaken evaluations of various acquisition targets, with the goal to significantly increase production.

Post closing, Blackhawk's two principal producing properties are Bodo and Wood River. Blackhawk is currently preparing an application to the ERCB to equip a standing well in the Bodo area for water disposal. On-site water disposal will greatly reduce operating costs and allow for further increases in oil production. Blackhawk has four potential new oil well locations in inventory on the Bodo property. At Wood River Blackhawk produces natural gas from the Horseshoe Canyon and Belly River Formations. Blackhawk has three potential new gas well locations in inventory on the Wood River property.

The aggregate consideration paid by Blackhawk for all of the Black Bore common shares was a total of 7,694,671 units of Blackhawk ("Units") at a deemed price of $0.12 per Unit (the "Consideration"). Each Unit consists of one Blackhawk Common Share, one 75 BOED Performance Right and 0.6 of one 150 BOED Performance Right.

Assuming the conversion of all the Performance Rights the Consideration will result in approximately 20,000,000 Blackhawk common shares being issued for all of the Black Bore common shares. Thus, upon completion of the Transaction, there are 37,727,671 Blackhawk common shares issued and outstanding (on a non-diluted basis) plus Performance Rights to acquire approximately a further 12,311,472 Blackhawk common shares.

Concurrent with the Transaction, the following parties comprise the current management team of Blackhawk: David Antony, Chief Executive Officer; Hillar Lilles, President; Mark Lenson, Vice President, Exploration and Charidy Lazorko, Chief Financial Officer.

Blackhawk is also pleased to announce that Mr. Scott Price has joined the Board of Directors. With the closing of the Transaction and the addition of Mr. Price the current Board of Directors includes, Mr. Dave Antony, Mr. Hillar Lilles, Mr. Ray Antony and Mr. Michael Bowie.

Mr. Price, is currently a director of Gran Tierra Energy Inc., an international oil and gas exploration and production company listed on the TSX and NYSEAMEX. Mr. Price has been an officer and director of Solana Resources Limited, Aventura Energy Inc. and Breakaway Energy Inc, all international resource companies. Mr. Price also sits on the board of Birch Lake Capital Inc., a TSX-V listed company.

In connection with the completion of the Transaction the Corporation has granted options to acquire 2,325,000 Common Shares to various directors, officers, employees and consultants at a strike price of $0.15. Of this amount 2,125,000 of the stock options were issued to directors and officers of the Corporation. The options expire five years from the date of grant. The Corporation has determined that exemptions from the various requirements of TSX Venture Exchange Policy 5.9 are available for the granting of the options.

Financial Information

The following information is derived from Black Bore's management-prepared unaudited financial statements for the three month period ended June 30, 2009 and the Blackhawk management-prepared unaudited financial statements for the three month period ended May 31, 2009. In accordance with National Instrument 51-102, Blackhawk will file a Business Acquisition Report for the Transaction prior to December 29, 2009. Such information is subject to all other information contained in the relevant financial statements as filed on

Black Bore
Blackhawk Exploration
Resource Ltd.
Corp.(unaudited (unaudited
as at May 31, as at June
2009) 30, 2009) Pro Forma
Current assets $ 1,208,435 $ 172,558 $ 1,380,993

Long term investments 9,632 - 9,632
Petroleum and natural gas
properties and equipment 629,905 2,393,555 3,023,460
Property, plant and equipment 6,355 - 6,355

Current liabilities 19,641 520,750 540,391

Asset retirement obligations - 270,680 270,680
Future income tax liability 20,000 - 20,000

Black Bore
Blackhawk Exploration
Resource Corp. Ltd. Pro Forma
Oil and gas revenue net
of royalties - $ 76,854 $ 76,854
Other revenue 32,673 - 32,673

Operating costs - 45,908 45,908
Depletion and accretion - 31,000 31,000
Other 242,920 60,969 303,889

Barrel of Oil Equivalent: Where amounts are expressed on a barrel of oil equivalent ("BOE") basis, natural gas volumes have been converted to boe at a ratio of 6,000 cubic feet of natural gas to one barrel of oil equivalent. This conversion ratio is based upon an energy equivalent conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead. Boe figures may be misleading, particularly if used in isolation.

Also, the insiders and spouses of insiders of the Corporation, have placed a total of 6,165,920 Common Shares, 4,465,920 75 BOE/D Performance Rights and 2,679,552 150 BOE/D Performance Rights in escrow. These Common Shares and Rights are releasable pro rata as follows. As the Corporation will initially be a Tier 2 Issuer, as designated by the TSX Venture Exchange, these are released as to 10% on the final TSX Venture Exchange bulletin and as to 15% on each of the 6, 12, 18, 24, 30 and 36 month anniversaries of the initial release date. If the Corporation becomes a Tier 1 Issuer, as designated by the TSX Venture Exchange, these are released as to 25% on the final TSX Venture Exchange bulletin and as to 25% on each of the 6, 12 and 18 month anniversaries of the initial release date.

Further to disclosure requirements of applicable securities laws, Blackhawk reports that as a result of the Transaction, Hillar Lilles, together with his spouse, owns or controls 2,206,700 Blackhawk common shares or approximately 5.8% of the total issued and outstanding Shares of Blackhawk, options to acquire 800,000 Blackhawk common shares ("Options") and Performance Rights to acquire 3,530,720 Blackhawk common shares upon certain production targets being met. Assuming exercise of such Options and conversion of such Performance Rights, Mr. Lilles, together with his spouse, would own or control 6,537,420 Blackhawk common shares or approximately 12.9% of the then issued and outstanding 50,639,143 Blackhawk common shares. The acquisition of these shares was made pursuant to the Transaction. Mr. Lilles, together with his spouse, may increase or decrease their ownership in Blackhawk common shares depending on market conditions or any other relevant factors.

The Transaction herein remains subject to final approval of the TSX Venture Exchange.

Forward-Looking Statements

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward looking statements and information concerning Blackhawk's future operations and prospects. The forward-looking statements and information are based on certain key expectations and assumptions made by Blackhawk, including expectations and assumptions concerning equipment and crew availability, and joint venture partner financial capability. Although Blackhawk 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 Blackhawk 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 Blackhawk's actual results and experience to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to, reservoir performance, labour, equipment and material costs, access to capital markets, interest and currency exchange rates, and political and economic conditions. Additional information on these and other factors is available in continuous disclosure materials filed by Blackhawk with Canadian securities regulators. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this news release or otherwise, and to not use future-oriented information or financial outlooks for anything other than their intended purpose. Blackhawk undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

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.

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