Elkwater Resources Ltd.

TSX VENTURE : ELW


January 31, 2014 17:45 ET

Elkwater Announces Closing of Financings and Acquisition

CALGARY, ALBERTA--(Marketwired - Jan. 31, 2014) -

NOT FOR DISTRIBUTION TO UNITED STATES NEW WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES OF AMERICA

Elkwater Resources Ltd. (the "Corporation" or "Elkwater") (TSX VENTURE:ELW) announces that the Corporation has entered into a new $4.1 million revolving senior credit facility (the "Facility") with a Canadian chartered bank, closed its previously announced non-brokered private placement (the "Private Placement") by issuing 5,000,000 common shares (the "Shares") at a price of $0.05 per Share for gross proceeds of $250,000, and closed its previously announced non-brokered private placement (the "Debenture Financing") of an aggregate amount of $1,250,000 of non-convertible, secured, subordinated debentures bearing interest at a rate of 2% plus prime and having a term of 2 years.

Proceeds from the three financings were used to complete a previously-announced $625,000 acquisition of oil and gas assets producing approximately 50 boepd (70% gas) located in the Lomond and Pembina areas of Alberta and to pay out the Corporation's existing credit facility. The remainder of the proceeds will be used for general working capital purposes.

Following the Private Placement, the Corporation will have a total of 19,138,965 Shares issued and outstanding. The Shares issued pursuant to the Private Placement and the debentures issued pursuant to the Debenture Financing will be subject to a four month statutory hold period. The Private Placement remains subject to final approval from the TSX Venture Exchange.

Directors and officers of the Corporation subscribed for 2,000,000 Shares (or 40%) of the Private Placement and $800,000 (or 64%) of the Debenture Financing. No fees were payable in connection with such subscriptions. The insider subscriptions were approved by the Corporation's independent directors. Neither the Corporation nor any subscribing insider had knowledge of any material information concerning the Corporation or its securities which had not already been generally disclosed. As a result of closing of the Private Placement, the number of Shares owned or controlled directly or indirectly by Don J. Brown increased from 6,026,250 (42.6%) to 8,026,250 (41.9%).

Forward-looking statements

Some of the statements in this press release are forward-looking, including statements regarding the expected use of proceeds from the Corporation's financings. When used in this press release, the words "expects," "believes," "anticipate," "plans," "may," "will," "should", "scheduled", "targeted", "estimated" and similar expressions, and the negatives thereof, are intended to identify forward-looking statements. Such statements are not promises or guarantees, are based on various assumptions by the Corporation's management, and are subject to risks and uncertainties that could cause actual outcomes to differ materially from those suggested by any such statements, including without limitation, acquisition risks, and delays in obtaining regulatory approvals.

These forward-looking statements speak only as of the date of this press release. The Corporation expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based except as required by applicable securities laws.

Notes Regarding Oil and Gas Disclosure

As used in this press release, "boe" means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As used in this press release, "boepd" refers to barrels of oil equivalent per day.

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

  • Elkwater Resources Ltd.
    Don J. Brown
    President and Chief Executive Officer
    (403) 262-0242 ext. 226