Bowood Energy Inc.
TSX VENTURE : BWD

Bowood Energy Inc.

September 07, 2010 13:03 ET

Bowood Announces Alberta Bakken Lease Acquisition, and Joint Venture With Blood Tribe First Nation and Equity Financing

CALGARY, ALBERTA--(Marketwire - Sept. 7, 2010) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Bowood Energy Inc. ("Bowood" or the "Company") (TSX VENTURE:BWD) is pleased to announce that it has entered into an agreement with Kainaiwa Resources Inc. ("KRI"), a corporation wholly-owned by the Blood Tribe First Nation ("Blood Tribe") to acquire, through a leasing arrangement ("Lease"), an interest in 94.75 contiguous sections (60,640 acres) of lands located within the Blood Tribe Reserve in southern Alberta.

The lands being acquired are strategically located in the emerging southern Alberta Bakken play and the Company believes the lands are on trend and highly prospective for Devonian-Mississippian (Bakken equivalent) oil potential and other prospective formations. All of the lands contain the Devonian and Mississippian rights (which includes the prospective Bakken, Three Forks and Banff formations) and the majority of the lands include all petroleum and natural gas rights with only a few (single) shallow zone exclusions.

The Lease will significantly add to Bowood's land position in the southern Alberta Bakken fairway, where the Company will hold a 100% interest in approximately 104,000 net acres (41,600 net hectares), or 162 sections.

In addition, Bowood is pleased to announce that it has filed a preliminary short form prospectus in connection with a public offering of 60,000,000 to 80,000,000 subscription receipts (the "Subscription Receipts") at the price of $0.25 per Subscription Receipt for gross proceeds of $15,000,000 to $20,000,000 (the "Offering"). The Offering is co-led by GMP Securities L.P. and Haywood Securities Inc. (the "Agents").

The Lease

The leasing arrangement will include a joint venture with the Blood Tribe and this arrangement is a continuation of the Company's longstanding relationship with the Blood Tribe. Since 2000, the Company's management team have been working in partnership with the Blood Tribe and have successfully implemented a number of joint ventures to develop resources on the Blood Tribe Reserve. The Company is pleased to be able to continue and expand upon this relationship.

The Lease will have a 5 year term and is subject to mineral royalties substantially similar to Alberta Crown royalties. In addition, Bowood will commit to:

  • a total up front consideration of $14,128,000
  • pay annual rent of $5.00/hectare, amounting to approximately $122,000 per year
  • drill one well to a minimum depth of 1,000 metres in each of the first two years of the Lease and two wells in each year thereafter
  • as part of its strategic joint venture arrangement with the Blood Tribe, the Blood Tribe or its nominee, will have the option to elect, in advance of drilling a well, to participate for a 20% working interest in any such well on the lands. If the Blood Tribe or it nominee elects not to participate in such well, the Blood Tribe or its nominee shall be entitled to a 20% working interest in such well once Bowood has recovered 200% of the total capital cost associated with such well

The Equity Financing

The Company is also pleased to announce it has filed a preliminary short form prospectus qualifying for distribution of a minimum of 60,000,000 and a maximum of 80,000,000 Subscription Receipts at a price of $0.25 per Subscription Receipt for aggregate gross proceeds of $15,000,000 to $20,000,000. The Offering is co-led by GMP Securities L.P. and Haywood Securities Inc. The Offering is being made in Ontario, Manitoba, Saskatchewan, Alberta and British Columbia and will also be offered for sale internationally pursuant to applicable registration or prospectus exemptions as permitted. Closing of the Offering is expected to occur on or about September 21, 2010, and is subject to customary regulatory approvals.

Bowood has also granted the agents an over-allotment option to place, on the same terms, up to an additional 8 million Subscription Receipts for additional aggregate gross proceeds of up to approximately $2 million. The option is exercisable, in whole or in part, by the agents at any time up to 30 days after closing of the Offering. The maximum gross proceeds that may be raised under the Offering is $22,000,000 should this option be exercised in full.

The net proceeds of the Offering will be used to fund the cash purchase price payable by Bowood under the terms of the Lease, as well as for ongoing capital expenditures and general corporate purposes, in addition to paying down the Corporation's existing debt, such debt having been incurred to pay for the Corporation's capital expenditure program during 2010.

The gross proceeds of the financing will be held in escrow pending the completion of the acquisition of the Lease. If the acquisition of the Lease is completed on or before October 29, 2010, and certain escrow release conditions have been fulfilled, the net proceeds will be released to Bowood and each Subscription Receipt will be exchanged for one common share of Bowood for no additional consideration. If the acquisition of the Lease is not completed on or before October 29, 2010, holders of Subscription Receipts will receive a cash payment equal to the offering price of the Subscription Receipts and any interest that was earned thereon during the term of the escrow.

About Bowood Energy Inc.

With operations based in Calgary, Alberta, Bowood Energy Inc. is a TSX-V Tier 2 corporation. Through its wholly owned subsidiary, Bowood Energy Ltd., the Company is engaged in the acquisition, exploration, development, and production of oil and gas resources. Projects are currently situated in the Provinces of Alberta and Saskatchewan.

Bowood Energy Inc.

Robert Mercier, President & CEO

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Bowood in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities to be offered have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a U.S. Person absent registration or an applicable exemption from the registration requirements of such Act or laws.

Reader Advisories

Forward-Looking Statements: Certain information included in this press release constitutes forward-looking statements and information under applicable securities legislation. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, information with respect to: operational decisions and the timing thereof, development and exploration plans and the timing thereof; future production levels; the location and prospective nature of the Lease lands; timing for completion of the Lease acquisition and joint venture arrangement, and the Subscription Receipts Offering, and, the anticipated benefits resulting from the transactions described in this press release. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect.
Although Bowood believes that the expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because Bowood can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things: field production rates and decline rates; the ability of Bowood to secure adequate drilling and production services; the ability of Bowood to complete the acquisition of the Lease and the joint venture arrangement and the other transactions described in this press release and, once completed, to realize the anticipated benefits of thereof; the timely receipt of any required regulatory approvals; the ability of Bowood to obtain and retain qualified staff, equipment and services in a timely and cost efficient manner to develop its business; Bowood's ability to operate the properties in a safe, efficient and effective manner; the ability of Bowood to obtain financing on acceptable terms; the ability to replace and expand oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters; and the ability of Bowood to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Bowood and described in the forward-looking information. The material risk factors affecting Bowood and its business are contained in Bowood's Annual Information Form which is available under Bowood's issuer profile on SEDAR at www.sedar.com. The forward-looking information contained in this press release is made as of the date hereof and Bowood undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws. The forward looking information contained in this press release is expressly qualified by this cautionary statement.

For more information on Bowood Energy Inc. (TSX VENTURE:BWD) and to see the updated corporate presentation please visit our website at: http://www.bowoodenergy.ca.

You may also request additional information by emailing info@bowoodenergy.ca.

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 news release.

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