Castle Rock Petroleum Ltd.

Castle Rock Petroleum Ltd.

August 25, 2005 09:00 ET

Castle Rock Petroleum Ltd.: Acquisition of Private Company

CALGARY, ALBERTA--(CCNMatthews - Aug. 25, 2005) - Castle Rock Petroleum Ltd. (TSX VENTURE:RCK.A) (TSX VENTURE:RCK.B) ("Castle Rock") is pleased to announce that it has entered into an agreement to acquire all of the outstanding shares, in an arm's length transaction, of a private oil and gas company ("Priveco") for $4.3 million. The purchase price will be satisfied with cash of $2,580,000 and the issuance of 1,075,000 Castle Rock Class A Common Shares priced at $1.60 per share. Priveco Shareholders holding approximately 33% of the issued and outstanding shares of Priveco have irrevocably tendered their shares to the transaction.

Priveco's production is primarily natural gas, company operated and located in Castle Rock's southern Alberta focus area. Current production is approximately 75 barrels of oil equivalent ("boe") per day (6 mcf of natural gas equals 1 boe). In addition, a new gas well is expected to be on-stream in early September, adding 375 mcf of natural gas (62 boe) per day of production.

Priveco has working capital of approximately $700,000, no long term debt and 6,000 acres of undeveloped mineral rights which have been valued at $400,000.

The acquisition parameters, based on a net cost of $3,200,000 for reserves, are as follows:

- Proven reserves of 152,900 boe and proven plus probable reserves of 219,100 boe, based on an independent evaluation, effective May 1, 2005, prepared by Paddock Lindstrom & Associates under NI 51-101

- Reserves acquisition cost of $20.93 per proven boe and $14.61 per proven plus probable boe

- Production acquisition cost of $42,667 per boe per day (based on 75 boe per day)

- Production acquisition cost of $24,234 per boe per day (based on 137 boe per day, which includes the incremental production from the new gas well and associated tie-in costs)

The acquisition of the private company, which is subject to a number of conditions including regulatory approval, is expected to close in early September. Post closing, Castle Rock will have 9,075,000 Class A shares and 900,000 Class B shares outstanding.

Castle Rock Petroleum Ltd. is an emerging company engaged in the acquisition, exploration, development and production of oil and natural gas reserves in western Canada.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the information contained in this news release.

Contact Information

  • Castle Rock Petroleum Ltd.
    Roger Hume
    Chairman and CEO
    (403) 290-3262 or Toll free: 1-800-290-3255
    Castle Rock Petroleum Ltd.
    Michael Makinson
    VP Finance and CFO
    (403) 290-3261 or Toll free: 1-800-290-3255