Border Petroleum Inc.

September 09, 2008 18:41 ET

Border Petroleum Inc. Announces Reactivation Transaction

CALGARY, ALBERTA--(Marketwire - Sept. 9, 2008) - Border Petroleum Inc. (formerly, Moneta Resources Inc.) ("Border" or the "Corporation") (NEX:BOP.H) today announced details concerning its proposed reactivation transaction involving the purchase of all of the issued and outstanding securities of Decker Petroleum Ltd. ("Decker"). Decker is a private company that was formed in June 2006 to participate in oil and gas development and exploration prospects.

Border has entered into a non-binding term sheet letter agreement with Decker dated as of July 15, 2008 (the "Letter Agreement") to acquire (the "Acquisition") all of the issued and outstanding shares of Decker in exchange for 31,875,000 units in the capital of Border, subject to adjustment (the "Border Units") with a deemed value of $0.20 per Border Unit. Each Border Unit will consist of one common share of Border (the "Border Common Shares") and one share purchase warrant of Border (the "Border Warrants"). The Border Warrants will each entitle the holder to purchase one Border Common Share at a price of $0.40 per share for a period of one year, subject to acceleration if the trading price of the Border Common Shares exceeds $0.60 per share for thirty (30) consecutive trading days with an average daily trading volume during this period of at least 300,000 shares. The Acquisition, when completed, will constitute the Reactivation Transaction of the Corporation pursuant to Policy 2.6 of TSX Venture Exchange Inc. (the "TSX Venture") Corporate Finance Manual. The Acquisition will also be a "reverse takeover" pursuant to Policy 5.2 of TSX Venture.

The Acquisition is subject to the policies of TSX Venture relating to reactivation transactions of NEX companies, as well as shareholder approval of Border. Upon completion of the Acquisition, Border will be a company focused on oil and gas exploration.

About Decker and the Decker Properties

Decker is a private Calgary based oil and gas company focused on oil and gas development, acquisition and exploration opportunities in British Columbia, Alberta, Saskatchewan and Montana. Decker currently owns 18,560 net acres in the province of Alberta with various operating and non-operating interests. Since inception in June 2006, Decker has acquired its land position at both Crown land sales and through private land purchases. Based on 3D seismic, Decker has identified two exploratory oil locations on its undeveloped 95% working interest land position in Purple Springs located east of Taber, Alberta. In addition to its undeveloped land, Decker currently has operated oil production in the Morinville area located Northeast of Edmonton, Alberta and non-operated oil production in the Randall area North of Slave Lake, Alberta.

Financial Information of Decker

Based on unaudited management prepared financial statements of Decker for the year ended December 31, 2007, Decker had revenue of $216,000, operating expenses of $154,000 and incurred a net loss of $367,000. In addition, as at December 31, 2007, Decker had current assets of $163,000, petroleum and natural gas assets of $1.2 million, total assets of $1.4 million, total liabilities of $1.3 million and shareholders' equity of $126,000.

Based on unaudited management prepared financial statements of Decker for the financial period ended March 31, 2008, Decker had revenue of $145,000, operating expenses of $64,000 and incurred a net loss of $142,000. In addition, as at March 31, 2008, Decker had current assets of $1.5 million, petroleum and natural gas assets of $1.7 million, total assets of $3.2 million, total liabilities of $2.8 million and shareholders' equity of $479,000.

DeGolyer Report Regarding the Decker Properties

Decker has engaged DeGolyer and MacNaughton Canada Limited, an international independent engineering firm, to prepare a National Instrument 51-101 compliant report to be effective August 1, 2008 (the "DeGolyer Report").

Decker Corporate History and Structure

Decker was incorporated under the Business Corporations Act (Alberta) on June 6, 2006. The registered and records office of Decker is located at Suite 2900, Manulife Place, 10180-101 Street, Edmonton, Alberta T5J 3V5 and its head office is located at Suite 700, 602 - 12th Avenue S.W., Calgary, Alberta T2R 1J3.

Decker has 6,714,527 common shares (the "Decker Common Shares") issued and outstanding, which are held by 65 shareholders and has no stock options, warrants or other dilution as of the date hereof outstanding, other than $1,031,000 principal amount of debentures of Decker (the "Decker Debentures").

The largest shareholders of Decker are Kenneth Cugnet of Weyburn, Saskatchewan and Ryan Stevenson of Calgary, Alberta, who own 7.4% and 5.9%, respectively, of the outstanding Decker Common Shares. The balance of the Decker Common Shares are owned by the directors and officers of Decker, as well as other investors, none of whom own more than 10% of the Decker Common Shares.

Summary of the Proposed Reactivation Transaction

Border has entered into the arm's length Letter Agreement, pursuant to which the Corporation has agreed to acquire all of the issued and outstanding Decker Common Shares in exchange for 31,875,000 Border Units. Border has also agreed to acquire the Decker Debentures by the payment of cash equal to the outstanding principal amount of the Decker Debentures, plus accrued unpaid interest. The holders of the Decker Debentures will also be given the alternative of selling each $1.00 principal amount of their Decker Debentures plus accrued and unpaid interest in exchange for five (5) Border Units (the "Debenture Units").

The Acquisition will be completed after Border has completed a private placement to raise gross proceeds of not less than $3,000,000 (the "Border Private Placement"). The Border Private Placement will consist of a minimum of 15,000,000 units of Border at a price of no less than $0.20 per Border Unit. Each Unit will consist of one Border Common Share and one Border Warrant (as described above). Border may engage registered dealers to act as agent (the "Agents") of Border on a "commercially reasonable efforts" basis for the Border Private Placement and in connection therewith will pay a cash commission of 8%. The Agents may also be granted agent's options (the "Border Agent's Options") to purchase up to 10% of the number of Units sold under the Border Private Placement, with each Border Agent's Option entitling the holder to purchase one Unit at a price of $0.20 per Border Unit for a period of 18 months from the closing of the Border Private Placement.

The proceeds of the Border Private Placement will be used by Border to purchase the Decker Debentures, to drill one exploratory oil well at Purple Springs and if considered successful by Border, a second oil well at Purple Springs, as well as one exploratory gas well at Morinville.

After completion of the Acquisition, the Board of Directors of Border will consist of five directors, including four existing Directors of Border, namely Tyler D. Cran, Bryce G. Bonneville, David Greenway, and Ken Berscht, as well as one nominee of Decker, to be announced prior to closing, provided the TSX Venture does not object to such nominations and such persons are eligible to act as directors pursuant to the requirements of the Business Corporations Act (Alberta). After the closing of the Acquisition, the officers of Border will be appointed by the Board of Directors of Border and will include Tyler D. Cran as President and CEO, Ron Stevenson as Chief Financial Officer, as well as additional officers to be determined.

Ron Stevenson was the Chief Executive Officer of Treaty 8 First Nations of Alberta since March 2006 to present, reporting to the executive board of grand chiefs and the elected Chairman of the Board. In this position, Mr. Stevenson was responsible for the overall operations of Treaty 8 First Nations. From 1997 to March 2006, Mr. Stevenson worked as an investment advisor with RBC Dominion Securities Inc. and prior thereto as an investment advisor with Richardson and Partners.

The completion of the Acquisition is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Acquisition is also subject to additional conditions precedent, including shareholder approval of the Corporation, completion of the minimum Border Private Placement, satisfactory completion by due diligence reviews by the parties, board of directors approval of the Corporation and Decker, the entering into of a formal agreement, the entering into of employment agreements and non-competition agreements with certain senior officers of Decker, completion of the Change of Name, as well as certain other usual conditions.

The Acquisition will be an arm's length transaction as the directors, officers and insiders of Border are not directors, officers or 10% shareholders of Decker. Tyler D. Cran, a director of Border, owns Decker Common Shares indirectly through a holding company, which represents less than 10% of the outstanding Decker Common Shares.

Border has agreed to pay an arm's length finder's fee of $370,000 to Elefterios Aligizakis of Vancouver, British Columbia, in connection with the Acquisition, which shall be payable by the issuance of 1,850,000 Border Common Shares with a deemed value of $0.20 per share at the closing of the Acquisition.

Border announces it has reserved a price of $0.25 per share for the grant of stock options to acquire up to 10% of the number of issued and outstanding Border Common Shares (the "Stock Options") in the event the Acquisition and the Border Private Placement are completed. The grant of the Stock Options is subject to regulatory approval. The Stock Options will be granted to directors, officers, employees and consultants of Border on the closing of the Acquisition, as determined by the Board of Directors of Border.

The Corporation has made an application to TSX Venture for a waiver from Sponsorship, but there is no assurance that such a waiver will be granted.

Trading of the Common Shares will not resume until TSX Venture has reviewed the DeGolyer Report regarding the Decker Properties and all other documents required by TSX Venture have been filed. Border will issue a further news release when TSX Venture has received the necessary documentation and trading of the Common Shares is to resume.

As indicated above, completion of the Acquisition is subject to a number of conditions, including but not limited to, TSX Venture acceptance and shareholder approval. The Acquisition cannot close until the required shareholder approval is obtained. There can be no assurance that the Acquisition will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Information Circular of the Corporation to be prepared in connection with the Acquisition, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Neither Decker nor Border will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Border and Decker.

The securities of Border being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Acquisition and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Border Petroleum Inc.
    Tyler D. Cran
    (403) 538-8441
    Decker Petroleum Ltd.
    Ryan L. Stevenson
    (403) 410-6015