Compass Petroleum Ltd.

Compass Petroleum Ltd.

April 15, 2011 08:07 ET

Compass Petroleum Ltd. Announces $12 Million Bought Deal Financing

CALGARY, ALBERTA--(Marketwire - April 15, 2011) -


Compass Petroleum Ltd. ("Compass" or the "Corporation") (TSX VENTURE:CPO) is pleased to announce that is has entered into an agreement with a syndicate of underwriters, led by Raymond James Ltd. and including Wellington West Capital Markets Inc. and Canaccord Genuity Corp. (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 4,900,000 common shares of the Corporation (the "Common Shares") at an issue price of $2.10 per Common Share. In addition, the Underwriters have agreed to offer for sale, as agents, 800,000 additional Common Shares, on a flow-through basis for purposes of the Income Tax Act (Canada) (the "Flow-Through Shares"), at a price of $2.50 per Flow-Through Share. The agreement entered into between the Corporation and the Underwriters provides that if all 800,000 Flow-Through Shares are not sold to third-party purchasers, the Underwriters will purchase, as principals, a number of Flow-Through Shares that, together with the number of such shares sold to third-party purchasers, aggregates 800,000 Flow-Through Shares. Total gross proceeds from the sale of ordinary Common Shares and Flow-Through Shares (collectively, the "Offering") will be approximately $12.3 million. In addition, Compass has granted the Underwriters a 15% over-allotment option to purchase additional Common Shares for additional gross proceeds of approximately $1.5 million if the over-allotment is exercised in full.

The Common Shares and Flow-Through Shares will be offered by way of a short form prospectus to be filed in Alberta, British Columbia, Manitoba, Saskatchewan and Ontario, and the Common Shares may be offered in the U.S. on a private placement basis pursuant to exemptions from registration requirements. The closing of the Offering is expected to occur on May 6, 2011, and is subject to the satisfaction of certain conditions, including, but not limited to, the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange.

The net proceeds from the sale of Common Shares will be used to fund the Corporation's exploration and development of its west Saskatchewan core area and for general corporate purposes. The agreement entered into between the Corporation and the Underwriters contemplates that the Corporation will incur and renounce to purchasers of Flow-Through Shares Canadian exploration expense ("CEE") in an amount equal to the issue price of the Flow-Through Shares and will renounce such CEE effective December 31, 2011.

Cautionary Note Regarding Forward-Looking Statements

This news release contains certain forward-looking information (collectively referred to herein as "forward looking statements") within the meaning of applicable Canadian securities laws. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "intend", "expect", "may", "will", or similar words suggesting future outcomes. In particular, this news release contains forward-looking statements relating to: (1) anticipated timing of closing of the Offering; (2) the proposed use of proceeds of the Offering; and (3) the exercise of the over-allotment option.

Forward-looking statements are based upon the opinions and expectations of management of the Corporation as at the effective date of such statements. Although the Corporation believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that those expectations will prove to have been correct. Forward-looking statements are subject to certain risks and uncertainties that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. These factors include, but are not limited to, such things as changes in general economic conditions in Canada, the United States and elsewhere, changes in the financial markets in Canada, the United States and elsewhere, the volatility of prices for oil and gas and other commodities, commodity supply and demand, fluctuations in currency and interest rates, the ability to obtain all required regulatory approvals on a timely basis and on satisfactory terms, and new laws and regulations (domestic and foreign). Accordingly, readers should not place undue reliance upon the forward-looking statements contained in this news release and such forward-looking statements should not be interpreted or regarded as guarantees of future outcomes.

Forward-looking statements respecting: (1) anticipated timing of closing of the Offering; (2) the proposed use of proceeds of the Offering; and (3) the exercise of the over-allotment option are based upon the terms of the agreement entered into between the Corporation and the Underwriters.

The forward-looking statements contained in this news release are made as of the date hereof and Compass does not undertake any obligation to publicly update or to revise any of those forward-looking statements, except as required by applicable Canadian securities laws. The forward-looking statements contained herein are expressly qualified by this cautionary statement. Closing of the Offering could be delayed if Compass cannot obtain necessary regulatory approvals within anticipated timelines and will not be completed unless certain conditions customary for transactions of this kind are satisfied.

The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirement. This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there by any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

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

  • Compass Petroleum Ltd.
    Yook L. Mah
    President and CEO
    (403) 261-1911

    Compass Petroleum Ltd.
    Graham Barnes
    (403) 261-1911