Bri-Chem Corp.
TSX VENTURE : BRY

Bri-Chem Corp.

March 28, 2011 06:00 ET

Bri-Chem Announces Strategic United States Drilling Fluids Acquisition

EDMONTON, ALBERTA--(Marketwire - March 28, 2011) -

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Bri-Chem Corp. ("Bri-Chem" or "Company") (TSX VENTURE:BRY) a leading Canadian wholesale distributor of oil and gas drilling fluids, steel pipe and piping products is pleased to announce that it has entered into a letter of intent (the "Letter of Intent") to acquire the net assets and business operations of Stryker Ltd., a Denver-based full-service drilling fluids wholesaler, and Stryker Transportation Ltd., its transportation division (collectively, "Stryker"),. Under the terms of the Letter of Intent, Bri-Chem has agreed to make an offer to purchase (the "Stryker Acquisition") certain drilling fluids business assets and business operations of Stryker. The Stryker Acquisition is strategically aligned with Bri-Chem's business plan to pursue growth opportunities in the U.S. and create a wholesale drilling fluid distribution network to service the U.S. unconventional resource plays, in Texas (Barnett & Eagle Ford), Louisiana (Haynesville), and the North-East US (Marcellus).

The total purchase price of US$2,500,000 consists of $1,000,000 cash payable on closing, US$350,000 payable twelve months from closing, US$550,000 by way of assumption of existing bank debt and US$600,000 by way of the issuance of approximately 171,428 common shares of Bri-Chem at a price of $3.50 per share.

Stryker started operations in 2005 as Oilfield Supply Chain Solutions. It has grown over the past 5 years to a $6.5M annual revenue company with 16 employees, 3 warehouses, and a trucking fleet of 7. The corporate group currently operates as two corporations, Stryker Ltd., which is a wholesale distributor of drilling fluid chemicals, and Stryker Transportation Ltd., which provides trucking services to its customers. Stryker has three operating locations: Denver, Colorado, Grand Junction, Colorado and Ulster, Pennsylvania. Denver is the largest of these locations and accounts for approximately 50% of total sales. The Denver warehouse has rail access and packaging equipment to allow custom bagging of products for both the company and its customers. In 2009 Stryker entered into the trucking business and is a common carrier with DOT operating authority. Stryker commenced operating the trucking division to help secure trucking for itself and to allow for more flexibility to meet the needs of its customers.

Don Caron, President and Chief Executive Officer of Bri-Chem, stated that, "The Stryker acquisition is a major step forward for Bri-Chem's USA expansion plans. Stryker operates in many of the major resource plays which require our drilling fluid products. Furthermore, there is no customer overlap with Bri-Chem's current customer base, however, many of our Canadian customers have begun or are in the process of pursuing strategic growth opportunities in the United States which, through Stryker, we can now service them as an independent fluids wholesaler in the U.S."

About Bri-Chem

Bri-Chem is a wholesale distributor of drilling fluids, steel pipe and piping products to the oil and gas industry. Bri-Chem provides over 150 drilling fluid products and is a custom blender of cementing, acidizing and fracturing additives and distributes Oil Country Tubular Goods (OTCG), carbon steel welded and seamless fluid and gas transmission pipe. Additional information about Bri-Chem is available at www.sedar.com or at Bri-Chem's website at www.brichem.com.

Forward Looking Statements

Certain information set forth in this news release contains forward-looking statements or information ("forward-looking statements"), including statements which may contain words such as "could", "should", "expect", "anticipate", "believe", "will", and similar expressions and statements relating to matters that are not historical facts are forward looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, demand for oilfield services for drilling and completion of oil and natural gas wells; volatility in market prices for steel, oil, natural gas, and natural gas liquids and the effect of this volatility on the demand for oilfield services generally, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and the ability to access sufficient capital from internal and external sources. Although the Company believes that the expectations in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward looking information. As such, readers are cautioned not to place undue reliance on the forward looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at www.sedar.com. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, the Company does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

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