Cordero Energy Inc.

Cordero Energy Inc.

November 10, 2005 08:08 ET

Cordero Energy Inc. Announces Details of 2006 Budget and Bought Deal Financing

CALGARY, ALBERTA--(CCNMatthews - Nov. 10, 2005) -


Cordero Energy Inc. ("Cordero" or the "Corporation") (TSX:COR) announces a capital budget of $53 million for 2006. The budget will be allocated to coalbed methane ("CBM") and Belly River development and to ongoing conventional exploration. The Company has also entered into an agreement for a private placement of 2,200,000 common shares, on a bought deal basis, at an issue price of $5.80 per share for total proceeds of $12,760,000. The funds will be used to help finance and expand the Company's exploration and development activities for 2006.

2006 Capital Budget

Cordero's capital budget is forecast at $53 million. The Company plans to continue with an accelerated CBM and Belly River development program at Malmo, Alberta based on continued success to date. Approximately $27 million will be allocated to the area to drill and tie-in 30 to 35 net wells. Planned activities also include the installation of pipelines and facilities relating to wells drilled during the fourth quarter of 2005.

Cordero is positioning itself for growth beyond the development potential at Malmo. Approximately $23 million has been allocated to conventional exploration and development focused in northeast British Columbia as well as central and northern Alberta. Cordero expects to increase its conventional drilling activity, including 4 to 5 wells planned during the first quarter of 2006. The Company plans to continue with its aggressive land and seismic program as it strives to build its inventory of high-impact prospects. The remainder of the $53 million budget will be allocated to corporate and other capital projects.

The capital budget may be expanded during the latter half of 2006 based on exploration success and an expanded Belly River program.

2006 Guidance and Sensitivities

Guidance: Low High

Average production - boe/d 3,100 3,400

Royalties (% of revenue) 17.5 19.0
Transportation ($/boe) 1.35 1.50
Operating ($/boe) 5.80 6.30
General and administrative ($/boe) 2.10 2.35

Capital expenditures ($ million) 50 55

Bought Deal Financing

The Company has entered into an agreement for a private placement of 2,200,000 common shares, on a bought deal basis, at an issue price of $5.80 per share for total proceeds of $12,760,000. The common shares will be issued through a syndicate of underwriters led by Peters & Co. Limited including Tristone Capital Inc., CIBC World Markets Inc. and BMO Nesbitt Burns Inc. Closing, subject to regulatory approval, is expected to occur on or about November 29, 2005.

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