Compass Petroleum Ltd.
TSX VENTURE : CPO

Compass Petroleum Ltd.

January 10, 2011 19:19 ET

Compass Petroleum Ltd. Announces Filing of Preliminary Prospectus for $15 Million Offering

CALGARY, ALBERTA--(Marketwire - Jan. 10, 2011) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Compass Petroleum Ltd. ("Compass" or the "Corporation") (TSX VENTURE:CPO) is pleased to announce that it has filed a preliminary short form prospectus in connection with a public offering of common shares of the Corporation for gross proceeds of $15.0 million (the "Offering"). The engagement letter entered into in connection with the Offering provides that the price of each common share will be a price acceptable to the Corporation determined in the context of the market. The Offering is led by Raymond James Ltd., and includes a syndicate of agents consisting of Wellington West Capital Markets Inc. and Canaccord Genuity Corp. (collectively, the "Agents").

Compass has also granted the Agents an over-allotment option to place, on the same terms, up to an additional 15% of the total number of common shares sold in connection with the Offering, for additional aggregate gross proceeds of up to $2.25 million. This option is exercisable, in whole or in part, by the Agents at any time, from time to time, up to 30 days after closing of the Offering. The maximum gross proceeds that may be raised under the Offering will be $17,250,000 should this option be exercised in full. The Offering is being made in the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. Closing of the Offering is expected to occur on or about January 25, 2011, and is subject to customary regulatory approvals.

The Corporation has agreed with the Agents that the net proceeds of the Offering, including any proceeds received upon the exercise of the over-allotment option granted to the Agents, will be used by the Corporation to: (i) fund the Corporation's exploration and development of its west Saskatchewan core area for the remainder of the Corporation's current fiscal year, including the drilling of additional Viking oil wells at Lucky Hills; (ii) repay outstanding bank indebtedness in the approximate amount of $4.2 million, which was incurred in connection with the Corporation's exploration and development activities in its west Saskatchewan core area; and (iii) for general corporate purposes.

A preliminary prospectus containing important information relating to the Offering has been filed with the securities commissions or similar authorities in each of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. The preliminary prospectus is still subject to completion or amendment. Copies of the preliminary prospectus may be obtained from Raymond James Ltd. (Suite 2500, 707-8th Avenue S.W., Calgary, Alberta, T2P 1H5 (Attention: Gregg V. Delcourt)), and is also available electronically at www.sedar.com. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the (final) prospectus has been issued.

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) the pricing of the Common Shares to be sold in connection with the Offering; (2) the maximum gross proceeds of the Offering; (3) anticipated timing of closing of the Offering; (4) the proposed use of proceeds of the Offering; and (5) the exercise of the over-allotment option granted to the Agents.

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) the pricing of the Common Shares to be sold pursuant to the Offering; (2) the maximum gross proceeds of the Offering; (3) anticipated timing of closing of the Offering; (4) the proposed use of proceeds of the Offering; and (5) the exercise of the over-allotment option granted to the Agents are all based upon the engagement letter entered into between the Corporation and the Agents and discussions between the Corporation and the Agents.

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
    or
    Compass Petroleum Ltd.
    Graham Barnes
    CFO
    (403) 261-1911
    info@compasspetroleum.com