Cordero Energy Inc.

Cordero Energy Inc.

October 24, 2006 08:34 ET

Cordero Energy Inc. Announces Bought Deal Flow-Through Financing and Expands Capital Budget

CALGARY, ALBERTA--(CCNMatthews - Oct. 24, 2006) -


Cordero Energy Inc. (TSX:COR) ("Cordero" or the "Company") is pleased to announce today that it has entered into a flow-through common share private placement, on a bought deal basis, with an underwriting syndicate led by Peters & Co. Limited and including Tristone Capital Inc., BMO Nesbitt Burns Inc. and CIBC World Markets Inc. Cordero will issue 1,200,000 flow-through common shares at a price of $8.80 per share for total gross proceeds of $10,560,000 pursuant to certain exemptions from prospectus requirements.

The offering is scheduled to close on or before November 9, 2006 and is conditional upon receiving regulatory approval of the TSX Exchange and completion of definitive documentation.

The Company has increased its 2006 capital program from its previously announced guidance of $65-68 million to $77-80 million to include the expansion of land acquisitions; exploration and development activities; and facility construction. Net proceeds from the offering will be used to fund Cordero's on-going exploration program in central and northern Alberta as well as northeast British Columbia.

The proceeds of the flow-through common share offering will be used to incur Qualifying Expenditures on the continued exploration of Cordero's oil and natural gas properties prior to December 31, 2007.

Cordero shall, pursuant to the provisions in the Income Tax Act (Canada), incur Canadian Exploration Expenses (the "Qualifying Expenditures") after the closing date and prior to December 31, 2007 in the aggregate amount of not less than the total amount of the gross proceeds raised from the issue of flow-through common shares. Cordero shall renounce the Qualifying Expenditures so incurred to the purchasers of the flow-through common shares such that $8.80 per flow-through common share shall be deductible against the subscribers' income for the fiscal year ended December 31, 2006.

Cordero is an independent exploration and development company pursuing conventional oil and natural gas production and reserves as well as coalbed methane development in western Canada. Cordero is based in Calgary, Alberta, and its common shares trade on the Toronto Stock Exchange under the symbol ("COR").

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. Such securities have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Statements in this press release may contain forward-looking statements including expectations with respect to future events and the actions of third parties. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: the underlying risks of the oil and gas industry (i.e. operational risks in development, exploration and production; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserves estimates; the uncertainty of estimates and projections relating to production, costs and expenses and health, safety and environmental factors), commodity price and exchange rate fluctuation and uncertainties.

Contact Information

  • Cordero Energy Inc.
    David Elgie
    President and Chief Executive Officer
    (403) 265-7006
    Cordero Energy Inc.
    Dean Setoguchi
    Vice President and Chief Financial Officer
    (403) 265-7006