Caribou Resources Corp.

Caribou Resources Corp.

October 06, 2005 08:00 ET

Caribou Resources Corp. Announces Strategic Acquisition

CALGARY, ALBERTA--(CCNMatthews - Oct. 6, 2005) - Caribou Resources Corp., (TSX VENTURE:CBU), ("Caribou"), is pleased to announce that it has agreed to purchase oil and gas assets from a senior oil and gas producer for approximately $13.5 million. The acquisition represents a consolidation of interests in Caribou's northern core area where the company already has significant operating experience. Closing is expected to occur on October 31, 2005.

Caribou estimates that production from this acquisition will average 250 boe/d (94% natural gas) for the remainder of 2005. The purchase includes an 80% working interest ("WI") and operatorship of a 35 mmcf/d gas plant (built in 1999), a 100% working interest in other significant gas gathering lines and a 20% WI in a 10" and 12" 50 kilometer northern line. The purchase adds over 50,000 net acres of undeveloped lands and takes Caribou's WI in many of its existing lands in the area to 100%.

It has been a key part of Caribou's strategic plan to consolidate its holdings in its northern area and to expand its exploration and development drilling program with control of strategic infrastructure. The acquisition will improve the company's exploration efficiency and operating costs on future development in the area and is accretive on a cash flow and production per share basis.

The acquisition parameters, based on $8.5 million, which is net of interests in undeveloped land, facilities and gathering systems with an attributed value of $5.0 million, are as follows on a reserves, production and net operating income basis:

- Total proven plus probable reserves of 533 mboes based on an internal engineering evaluation

- Reserve cost of $15.95/boe

- Production cost of $34,000/boe/d

- Estimated 2.5 times 2005 net operating income based on $9.79 mcf AECO pricing

Key attributes of the acquisition are:

- Immediately accretive on cash flow and production per share

- Owned undeveloped land increases to over 180,000 net acres with WI increasing up to 100% on many of the lands in the area

- Control and operatorship of significant facilities and infrastructure necessary to improve exploration efficiency and future area operating costs

- Opportunity for optimization and expanded drilling inventory of over 10 locations for winter 05/06

The acquisition will be financed through a bridge facility arranged with Brascan Bridge Lending Fund.

Update on the 2005 Summer/Fall Drilling Program

Caribou as operator, has expended approximately $3 million of a planned $11 million drilling program in Central Alberta.

In the Redwater core area, where Caribou operates a 70% WI in a 2,800 bbl/d oil battery and sales gas pipeline, the company intends to spend approximately $7 million and has one rig under contract. The company has drilled and placed on production the first vertical step out well (100% WI) of the new Basal Quartz oil pool discovered during Q3 2004. One horizontal well, (50% WI), of up to five planned horizontal wells, has also been drilled and placed on production. In addition, the company has re-entered, and placed back on production, one of the original horizontal wells drilled by a previous operator. The company intends to spud the next well in the program within a week.

At Wizard Lake, Caribou is also operator and has an approximate 70% WI in 17 net sections of land, access to extensive infrastructure and a $4 million capital program planned. On the conventional oil and gas front, the company plans to drill up to two Ellerslie gas wells and one deeper Leduc oil prospect. The company's CBM joint venture partner in the Wizard Lake area, Mahalo Energy Inc., has advised that they intend to drill up to 10 wells with Caribou being carried on five of the wells to tie-in. CBU retains the right to participate as to 35% of its original position i.e. 23%, or to take an override on any CBM production.

Current sales production is approximately 1,500 boe/d and the company has 34.8 million common shares outstanding.

With the closing of this transaction and the increased exploration and development and optimization upside provided, the company anticipates increasing its 2005 -2006 winter capital expenditure program from $12 million to up to $25 million.

This news release may contain forward looking statements. Actual results may differ materially from those contemplated. The risks, uncertainties and other factors that could influence actual results are described in documents filed with regulatory authorities.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Caribou Resources Corp.
    Christina M. Fehr
    Vice Chairman & CEO
    (403) 539-4322
    Caribou Resources Corp.
    Ross Robertson
    President & COO
    (403) 539-4316
    Caribou Resources Corp.
    Suite 1545, 101- 6th Ave SW
    Calgary, Alberta T2P 3P4