Canadian Energy Exploration Inc.

October 21, 2010 02:44 ET

Canadian Energy Exploration Inc. Announces Seismic Review and Option Agreement and Private Placement

CALGARY, ALBERTA--(Marketwire - Oct. 21, 2010) - Canadian Energy Exploration Inc. ("Canadian Energy" or the "Company") (TSX VENTURE:XPL) announces entering into a Seismic Review and Option Agreement ("Agreement") and brokered "bought-deal" private placement.

Seismic Review and Option Agreement

The Company is pleased to announce it has entered into an Agreement with a major oil and gas general partnership (the "Farmor") for mineral rights covering 40,000 acres (62.5 sections) in the Hardy/Minton area of Southeast Saskatchewan. Pursuant to the Agreement the Company has been granted the right to review over 100 square miles of the Farmor's 3D seismic covering all of the Agreement lands. On or before November 1, 2010 the Company has the option to elect to drill three exploratory test wells to each earn a 100% working interest in nine preselected contiguous sections reserving to Farmor a non-convertible sliding scale overriding royalty on all production. The Agreement also provides that if the Company drills the initial three exploratory test wells plus an additional two option wells, all by March 31, 2011, the Company will earn 100% working interest in an approximate total of 35,200 acres (55) sections. The remaining earnable lands can be earned with another option well drilled up to or after March 31, 2011.

If no such drilling election to drill the three exploratory test wells is made by November 1, 2010, the Company will pay $100,000 to the Farmor. If the drilling election is made by November 1, 2010, the first exploratory test well must be spud on or before January 1, 2011 and all exploratory test wells must be drilled and completed, or abandoned, on or before March 31, 2011 or the Company will pay $500,000 to the Farmor. Two of the test wells must be drilled to a minimum total depth of 1800 meters and one test well to a minimum total depth of 2200 meters. The estimated costs associated with drilling and casing, completing or abandoning the test wells range from $950,000 to $1,300,000 for the 1800 meter and 2200 meter test wells, respectively.

Private Placement

Canadian Energy is also pleased to announce that it has entered into an agreement with Haywood Securities Inc. (the "Underwriter") pursuant to which the Underwriter has agreed to place, on a "bought deal" basis, common shares ("Common Shares") at a subscription price of $0.22 per share and Common Shares issued on a "flow-through share" basis, ("Flow- Through Shares") at a subscription price of $0.26 per share (to a maximum of 15,384,615 ($4,000,000) Flow-Through Shares) for aggregate gross proceeds of (Cdn) $7,000,000.00 (the "Offering"). The closing of the Offering is expected to occur on or about November 19, 2010 and is subject to the completion of formal documentation and regulatory approval, including the conditional approval of the TSX Venture Exchange. For further details on the Offering please contact Canadian Energy at the contact information provided below.

The proceeds of the private placement from the sale of Flow-Through Shares will be used to incur certain types of Canadian Exploration Expense ("CEE") and/or deemed CEE as defined in the Income Tax Act (Canada) and such CEE or deemed CEE will be renounced to subscribers of Flow-Through Shares for the 2010 taxation year. The net proceeds from the sale of the Common Shares will be used to fund the Company's ongoing capital program and for general working capital purposes. All securities issued in connection with the Offering will be subject to a four month hold period.

It is anticipated that certain officers, directors and insiders of Canadian Energy will subscribe under the Offering. As a result of the insiders' participation, the private placement may be classified as a "related party transaction" as such term is defined in Multilateral Instrument 61-101 ("MI 61-101"). Canadian Energy currently anticipates that it will be able to rely upon exemptions from the valuation and minority approval requirements contained in MI 61-101.

About Canadian Energy Exploration Inc.

Canadian Energy Exploration Inc. is a junior oil and gas company engaged in the exploration for and development and production of oil and natural gas reserves in Western Canada. The Company's common shares trade on the TSX Venture Exchange under the symbol "XPL".

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Canadian Energy 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.


Certain statements and information contained in this press release, including but not limited to management's assessment of Canadian Energy's future plans and operations, production, reserves, revenue, commodity prices, operating and administrative expenditures, funds from operations, capital expenditure programs and debt levels contain forward-looking statements. In particular, this press release contains statements concerning the anticipated review of seismic data and identification of drilling prospects and establishing a portfolio base and the anticipated closing date of the Offering and the anticipated amount and use of gross proceeds of the Offering. All statements other than statements of historical fact may be forward looking statements. These statements, by their nature, are subject to numerous risks and uncertainties, some of which are beyond Canadian Energy's control including the effect of general economic conditions, industry conditions, changes in regulatory and taxation regimes, volatility of commodity prices, escalation of operating and capital costs, currency fluctuations, the availability of services, imprecision of reserve estimates, geological, technical, drilling and processing problems, environmental risks, weather, the lack of availability of qualified personnel or management, stock market volatility, the ability to access sufficient capital from internal and external sources and competition from other industry participants for, among other things, capital, services, acquisitions of reserves, undeveloped lands and skilled personnel that may cause actual results or events to differ materially from those anticipated in the forward looking statements. Such forward-looking statements, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated in the statements made and should not unduly be relied on. These statements speak only as of the date of this press release. Canadian Energy does not intend and does not assume any obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Canadian Energy's business is subject to various risks that are discussed in its filings on the System for Electronic Document Analysis and Retrieval (SEDAR).

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.

Contact Information

  • Canadian Energy Exploration Inc.
    Larry Buzan
    President and Chief Executive Officer
    (403) 229-2800
    Canadian Energy Exploration Inc.
    Scott Koyich
    Investor Relations
    (403) 215-5979