Desco Energy Ltd.
TSX VENTURE : DSE

Arcan Resources Ltd.

Arcan Resources Ltd.

November 03, 2006 17:41 ET

Desco Energy and Arcan Resources Announce Completion of $5 Million Private Placement Financing by Arcan

CALGARY, ALBERTA--(CCNMatthews - Nov. 3, 2006) - Desco Energy Ltd. (TSX VENTURE:DSE) ("Desco") and Arcan Resources Ltd. ("Arcan") announced today that Arcan has completed a non-brokered private placement of common shares, raising proceeds of approximately $5 million. As announced previously, Desco and Arcan entered into an amalgamation agreement on October 11, 2006 providing for a reverse take-over of Desco by Arcan (the "Transaction") pursuant to TSX Venture Exchange ("TSXV") Policy 5.2.

Arcan issued 838,224 units at a subscription price of $6.00 per unit for proceeds of $5,029,344. Each unit was comprised of one ordinary common share issued at a price of $2.80 per share and one common share issued on a "flow-through" basis under the Income Tax Act (Canada) (the "Tax Act") issued at a price of $3.20 per share. Upon completion of the private placement, Arcan has 26,534,045 common shares outstanding.

Arcan intends to use the proceeds of the private placement to fund its oil and natural gas exploration and development program and for general working capital purposes. Arcan has agreed to apply the proceeds of the sale of the common shares issued on a flow-through basis on expenditures qualifying as "Canadian exploration expenses" under the Tax Act. Arcan will renounce the amount of such expenditures to subscribers effective on or before December 31, 2006.

Completion of the Transaction is subject to a number of conditions, including TSXV acceptance and disinterested Desco and Arcan shareholder approval. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the joint management information circular to be prepared in connection with the transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Desco should be considered highly speculative.

Advisory Regarding Forward-Looking Statements

Certain information with respect to Desco and Arcan contained herein, including their respective assessments of future plans and operations, contain forward-looking statements. These forward-looking statements are based on assumptions and are subject to numerous risks and uncertainties, certain of which are beyond Desco's and Arcan's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency exchange rate fluctuations, imprecision of reserve estimates, environmental risks, competition from other explorers, stock market volatility and ability to access sufficient capital. As a result, Desco's and Arcan's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur. In addition, the reader is cautioned that historical results are not necessarily indicative of future performance.


The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Desco Energy Ltd.
    Robert J. Dales
    President and CEO
    (403) 690-3884
    Email: bobdales@telus.net
    or
    Desco Energy Ltd.
    c/o 1000 Canterra Tower
    400 - Third Avenue S.W.
    Calgary, Alberta T2P 4H2
    or
    Arcan Resources Ltd.
    Douglas Penner
    Vice President, Finance and CFO
    (403) 262-0321
    (403) 262-4636 (FAX)
    Email: dpenner@arcanres.com
    or
    Arcan Resources Ltd.
    Suite 3200, 450 - 1st Street S.W.
    Calgary, Alberta T2P 5H1