Cobra Venture Corporation

Cobra Venture Corporation

October 25, 2005 17:49 ET

Cobra Venture Corporation Announces Participation Agreement in Multiple Development Well Drill Program, Proposed Private Placement and Corporate Update

CALGARY, ALBERTA--(CCNMatthews - Oct. 25, 2005) - Cobra Venture Corporation (Cobra) (TSX VENTURE:CBV) -

Drilling Program

Cobra Venture Corporation (the "Company") is pleased to announce that it has entered into an agreement to acquire an interest in a Farmout and Participation Agreement with an operating industry partner to immediately commence an initial 4 well drilling program in the Cessford area, Alberta. Through its industry partner, Cobra has access to an extensive inventory of natural gas prospects and is planning an aggressive exploration and development program for 2006. The development properties are held 100% by the operating industry partner and target multiple natural gas prospective zones. The Company has the right to earn a 50% working interest before payout and 25% working interest after payout by paying 50% of all costs associated with the drilling program. The prospect is subject to a 5% overriding royalty on the 25% after payout earned interest. There is a finder's fee payable on the transaction of 100,000 common shares at a deemed issue price of $0.15 per share, subject to regulatory body approval.

Private Placement

To fund this initiative drilling program, the Company has negotiated an arms length, non-brokered private placement of 700,000 common shares at a purchase price of $0.15 for aggregate proceeds of $105,000. In addition, the Company proposes a non-brokered private placement of up to 2,000,000 units at a purchase price of $0.20 per unit. Each unit will be comprised of one (1) common share issuable on a flow through basis and one half (1/2) of a flow through share purchase warrant entitling the holder thereof to purchase one (1) common share on a flow through basis for each full warrant held at an exercise price of $0.30 in the first 12 months after issuance and $0.40 in the next 12 months after issuance. The aggregate proceeds of $400,000 are to be used to fund the initial 4 well exploration initiative.

It is anticipated that certain insiders of the Company may participate in the flow through private placement. The securities issued pursuant to these private placements will be subject to a four (4) month hold period form the date of issuance. The Company anticipates that a finder's fee of 10% may be payable in respect of part or the whole of the flow through private placement.

Stock Options

In accordance with the Company's approved stock option plan the Company has granted stock options to purchase 500,000 common shares of the Company at an exercise price of $0.15 to certain directors, officers and consultants of the Company. These stock options expire five (5) years after the date of issuance.

Operational Update

The Company has completed and closed the sale of a portion of it's non producing freehold lands in southeast Saskatchewan and has received funds in the amount of $1,450,000 as announced in a release of May 27, 2005. The remainder of the unallocated cash assets are currently held in short term deposit banking instruments.

The Company continues to receive monthly net royalty income of approximately $12,000 to $15,000 per month from a portion of the Viewfield, Saskatchewan lands under lease to Bison Resources Ltd.

The current freehold acreage owned by the Company in Saskatchewan is approximately 1280 acres with an average working interest of 75%. In addition, the Company has approximately 5000 acres jointly held under Crown leases in Saskatchewan and Alberta.

The Company currently has unallocated capital of approximately $1,400,000 on hand to be used as general working capital. After the completion of the proposed private placement, the Company anticipates having approximately $2,500,000 of unallocated working capital on hand to fund the multiple development well exploration initiative.

The Company's management and industry consultants are currently reviewing additional industry joint venture participation opportunities and investment strategies and potential acquisitions to enhance Company shareholder value over the next 12 month period.

Cobra Venture Corporation is an emerging energy corporation focused on the acquisition and development of strategic oil and natural gas reserves in the Western Canada. Common shares of the corporation trade on the TSX Venture Exchange under the symbol CBV.

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

Contact Information

  • Cobra Venture Corporation
    Daniel B. Evans
    President and CEO
    (604) 922-2030
    Canadian Toll Free: (888) 888-9122
    US Toll Free: (888) 888-9123