Emerge Oil & Gas Inc.

November 30, 2009 19:22 ET

Emerge Oil & Gas Inc. Announces Closing of Previously Announced Acquisition of Strategic Oil Assets in Lloydminster and Provost

CALGARY, ALBERTA--(Marketwire - Nov. 30, 2009) - Emerge Oil & Gas Inc. ("Emerge" or the "Company") is pleased to announce that it has completed the acquisition of certain oil and natural gas assets located in the Company's core operating and producing area of Lloydminster around the Saskatchewan and Alberta border, and in Provost, Alberta (the "Acquisition"), as detailed in the Company's October 28, 2009 press release. The total consideration for the Acquisition was approximately $85 million, following closing adjustments, consisting of $17 million in common shares of Emerge ("Common Shares"), comprised of 8.5 million Common Shares priced at $2.00 per Common Share, and approximately $68 million in cash which was primarily funded from the net proceeds of a $65,550,000 subscription receipt financing, which was completed on November 19, 2009 (the "Offering"). FirstEnergy Capital Corp. acted as exclusive financial advisor to Emerge in connection with the Acquisition and as lead underwriter in connection with the Offering, which included GMP Securities L.P., Cormark Securities Inc., National Bank Financial Inc. and Peters & Co. Limited as underwriters.

In connection with the closing of the Acquisition, the subscription receipts have now been converted into 32,775,000 special warrants of Emerge (the "Special Warrants"), on a one-for-one basis and for no additional consideration, and the proceeds have been released from escrow to fund the Acquisition. Each Special Warrant issued will be exercisable into one Common Share, without payment of any additional consideration, upon the filing and clearing a final prospectus, or Emerge otherwise qualifying the Common Shares by January 31, 2010 ("Qualification Deadline"). The Special Warrants will be subject to a hold period until qualification of the Common Shares. If a receipt for the final prospectus is not obtained before the Qualification Deadline, the Company shall nevertheless continue to use its best efforts to obtain a receipt or otherwise become a public company, and each holder of Special Warrants will, upon the exercise or deemed exercise of the Special Warrants, receive an additional 0.1 of a Common Share for each Special Warrant so exercised.

Certain insiders, including directors, officers, employees and close business associates of the Company, subscribed for approximately $2.5 million of the Offering on the same price, terms and conditions as all other subscribers. Inclusive of the securities issued in the Offering and the Acquisition, and following qualification of the Special Warrants, Emerge will have 82,975,094 Common Shares outstanding. As of the date hereof, the Company has 3,910,000 stock options outstanding and has a combined debt and working capital deficiency of approximately $17.8 million on a $30 million bank line.

Emerge Oil & Gas Inc. is a Calgary-based, private junior oil and gas company. Emerge currently produces approximately 4,400 barrels of oil equivalent per day ("boe/d") (94% oil), based on field estimates, from its core operating areas. Total estimated production is comprised of 3,470 boe/d from the Lloydminster area of West-Central Saskatchewan and East-Central Alberta, 650 boe/d from the Provost area of East-Central Alberta and 280 boe/d from the Obed region of West-Central Alberta. Emerge's main focus for growth opportunities will be operational efficiencies, well reactivations and drilling opportunities in the Lloydminster and Provost oil producing regions.

Where amounts are expressed on a barrel of oil equivalent ("boe") basis, natural gas volumes have been converted to oil equivalence at 6,000 cubic feet of natural gas to oil barrel of oil equivalent (6:1). The term boe may be misleading, particularly if used in isolation. The conversion ratio of 6:1 is based on an energy equivalency conversion method which is primarily applicable at the burner tip and does not represent value equivalence at the wellhead.

Certain information with respect to Emerge Oil & Gas Inc. ("Emerge") contained herein, including management's assessment of future plans and operations, contains forward-looking statements. These forward-looking statements are based on assumptions and are subject to numerous risks and uncertainties, certain of which are beyond Emerge'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, Emerge'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. Emerge does not intend, and does not assume any obligation, to update or revise these forward-looking statements except as required by applicable securities laws.

Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Emerge's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

Contact Information

  • Emerge Oil & Gas Inc.
    Tom Greschner
    Chairman, President and Chief Executive Officer
    (403) 718-3852
    Emerge Oil & Gas Inc.
    Anita Tonn
    Vice President, Finance and Chief Financial Officer
    (403) 718-3855
    Emerge Oil & Gas Inc.
    Suite 1208, 250 - 2nd Street SW
    Calgary, Alberta, Canada T2P 0C1
    (403) 718-3850