CapGain Properties Inc.
TSX VENTURE : CPP

CapGain Properties Inc.

March 04, 2015 15:30 ET

CapGain Properties Inc. Agrees to Terms for the Acquisition of Sixteen Oil and Gas Wells

LAKE IN THE HILLS, ILLINOIS--(Marketwired - March 4, 2015) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. WIRE SERVICES

CapGain Properties Inc. (TSX VENTURE:CPP) ("CapGain" or the "Company") is pleased to announce that the Company has entered into a binding term sheet with Landmaster Partners, Inc. ("Landmaster") whereby it will issue common shares of the Company ("Common Shares") and convertible debentures to Landmaster for the aggregate price of US$8,500,000 (the "Purchase Price") in consideration for the assignment of working interests in three oil and gas leases containing sixteen wells located in West Central Texas (the "Proposed Transaction").

The three oil and gas leases, which are identified as the Swenson Brothers Land & Cattle Company Lease (the "Swenson Lease"), in which Landmaster has approximately a 40% working interest, the Lawrence Leonard Lease (the "Leonard Lease"), in which Landmaster has approximately a 55% working interest, and the Herring Lease, in which Landmaster has approximately a 15% working interest, are currently producing approximately 80 barrels oil and 10 mcf gas per day from only five of the sixteen wells. Landmaster has been re-working the wells located on the Swenson Lease and in October of 2014 attempted a new technique on the Swenson Lease resulting in over 270 barrels of oil per day from the first of seven producing wells.

The Leonard Lease contains two wells in which Landmaster believes may not be producing because of previous operator error. Landmaster intends to re-enter the wells and is hopeful that these wells can start production.

The Herring Lease contains five shut-in wells. In December 2014, Landmaster began operations to place these wells back into production.

CapGain expects this acquisition of oil and gas assets to significantly increase the Company's revenue.

The terms of the Proposed Transaction are as follows:

  1. CapGain will complete a consolidation of its Common Shares on a ten (10) for one (1) basis;
  2. Landmaster and/or an affiliate will acquire 7,345,175 Common Shares from Brian Knight, the Company's current President and Chief Executive Officer for US$380,000;
  3. CapGain will satisfy the Purchase Price through the issuance of 30,000,000 pre-consolidated Common Shares at a deemed price of US$0.05 ($1,500,000) and the issuance of a US$7,000,000 convertible debenture (the "Debenture"). The Debenture shall accrue interest at a rate of 6% per annum; and
  4. Landmaster will have the right to nominate a majority of the board of directors of Company upon completion of the Proposed Transaction.

CapGain also wants to provide an update regarding the trading of its Common Shares. The Company has not filed its annual audited financial statements and MD&A, which were required to be filed no later than January 31, 2015. Accordingly, the British Columbia Securities Commission has issued a cease trade order against the Company's securities and the TSX Venture Exchange ("TSXV") has halted trading in the shares of CapGain. CapGain is currently in the process of completing the financial statements and anticipates the resumption of trading shortly thereafter.

The Proposed Transaction is subject to approval by the TSXV.

About CapGain

CapGain is an investment company with a forward moving focus on income producing assets.

Additional information on the operations or financial results of CapGain is included in reports on file with applicable securities regulatory authorities and may be accessed through the TMX website (www.tmx.com) and the SEDAR website (www.sedar.com) under the profile for CapGain.

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.

Forward-Looking Statements, if any

This press release may contain forward-looking statements within the meaning of applicable legislation. All statements included in this report and the documents that we incorporate by reference, are forward-looking statements and can generally be identified by words such as "will," "allow," "outlook," or the negative of these terms, and other comparable terminology.

Various risks and other factors could cause actual results, and actual events that occur, to differ materially from those contemplated by the forward looking statements, such as whether CapGain is able to meet price, performance, quality and delivery requirements. Although CapGain believes that the expectations represented by any forward-looking statements and forward-looking information contained herein are reasonable based on the information available to them on the date of this document, management cannot assure investors that actual results, performance or achievements will be consistent with these forward-looking statements or forward-looking information. CapGain undertakes no obligation to update the information in this press release to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated or unanticipated events.

Contact Information