Exito Energy Inc.
TSX VENTURE : EXG.P

April 09, 2012 09:00 ET

Exito Energy Announces Proposed Qualifying Transaction With Bentley Oil & Gas

CALGARY, ALBERTA--(Marketwire - April 9, 2012) - Exito Energy Inc. (TSX VENTURE:EXG.P) ("Exito"), a capital pool company (as defined in Policy 2.4 (the "CPC Policy") of the TSX Venture Exchange (the " Exchange")), is pleased to announce that it has entered into an arms' length binding letter of intent dated April 5, 2012 (the " Agreement") with Bentley Oil & Gas Ltd. ("Bentley"), a private company incorporated under the laws of Alberta, to create a publically listed, light oil focused junior exploration company. The proposed transaction is anticipated to constitute a Qualifying Transaction for Exito pursuant to the CPC Policy.

It is anticipated that the transaction will take the form of an amalgamation or such other form of business combination to be determined by the parties (the "Proposed Transaction"), whereby Exito will acquire all of the outstanding shares of Bentley (the "Bentley Shares") in exchange for the issuance of common shares of Exito ("Exito Shares").

Under the terms of the Proposed Transaction, the common shares of Exito will be consolidated on a 2-for-1 basis resulting in 5,000,000 Exito Shares and 675,000 Exito Share purchase options exercisable at $0.20 outstanding immediately prior to closing of the Proposed Transaction. Bentley shareholders will receive 5.0 Exito Shares for each Bentley Share held. In aggregate 39,247,420 Exito Shares will be issued to Bentley shareholders, representing 88.7% ownership of the entity resulting from the completion of the Proposed Transaction ("Resulting Issuer"). The Proposed Transaction has been contemplated at a deemed, post-consolidation, price per Exito Share of $0.25.

The Proposed Transaction is expected to be completed as a reverse take-over under National Instrument 51-102 - Continuous Disclosure Obligations. It is also anticipated that the name of the Resulting Issuer will be changed to "Artisan Energy Corporation".

As a condition to the Proposed Transaction, Bentley is required to raise a minimum of $5.0 million in new funding (the "Bentley Financing "), the terms of which will be disclosed in a subsequent press release. The definitive agreement in respect of the Proposed Transaction is expected to be entered into following completion of a reserve report by Bentley and the review of Bentley's financials by Exito.

About Bentley

Bentley has a 100% working interest in 19,600 contiguous net acres in two core areas in SE and Central Alberta, with an inventory of 71, development focused, drilling locations. In addition, Bentley has varied working interests in an additional 23,950 gross acres (14,691 net acres) of oil and gas properties in Alberta. Bentley's current oil and gas production is approximately 31 barrels of oil equivalent per day, consisting of approximately 58% light oil. Bentley is an Alberta based private corporation with 7,849,484 Bentley Shares outstanding held by approximately 50 shareholders. As at March 30, 2012 Bentley had working capital of $2.6 million and no debt.

Pursuant to the Proposed Transaction, Bentley has engaged GLJ Petroleum Consultants to provide a reserve report dated effective February 29, 2012 in accordance with National Instrument 51-101 for its three principal oil properties.

According to Bentley's President & CEO, Rick Ironside, "We have been assembling the company's assets for over three years and believe we have created an exceptional starter kit for a junior oil company." Bentley's near term focus will be the development of lower cost light oil opportunities. Subject to the completion of the Bentley Financing, Bentley has plans to drill up to 12 wells in the Chip Lake, Conrad and Ferrybank areas of Alberta in 2012.

Prior to giving effect to the Bentley Financing, TBird Oil Ltd., a private Saskatchewan company controlled by Ron Wanner (a proposed director of the Resulting Issuer), owns or has control or direction over 2,909,091 Bentley Shares, which will represent 32.9% of the Resulting Issuer.

Proposed Board of Directors

Subject to shareholder and Exchange approval, it is expected that the Resulting Issuer's board of directors will consist of the below seven members, five of which are currently considered as independent of management. A number of the proposed directors have previously operated and governed publicly listed companies together (Defiant Energy, Defiant Resources and Barrington Petroleum) and combined the entire board has over 75 years of service on the boards of TMX public companies.

David Evans, Chairman of the Board

  • Founder & Management of several successful E&P companies including Barrington Petroleum, Defiant Energy and Defiant Resources

Rick Ironside, P.Eng, MBA, President, Chief Executive Officer & Director

  • Over 25 years of oil and gas experience, most recently as President of Thunderbird Energy
  • Prior to Thunderbird, Rick was CEO at Defiant Resources, COO at Defiant Energy and Operations Manager at Pan East Petroleum

Rick Young, P.Geol, Chief Operating Officer & Director

  • Over 30 years experience as an oil and gas Geologist
  • Rick held Senior roles at and was instrumental in the growth of Vaquero Energy, Trilogy Resources and Truax Resources

Ron Wanner, Director

  • Founder and principal of several private companies including Viking Surplus Oilfield Equipment, TBird Oil, Venture Well Servicing, and Venture Drilling
  • Current director at Redwater Energy

Tim Dunne, Director

  • Formerly CFO of Barrington Petroleum, Defiant Energy and Defiant Resources
  • Current director at Angle Energy

Richard Cooper, Director

  • President of T.R.L. Investment, a private investment company
  • Director at Pele Mountain Resources
  • Former director at Barrington Petroleum, Defiant Energy and Defiant Resources

Warren Waldegger, Director

  • General Manager of Tbird Oil since 2001
  • Over 17 years of oil industry experience

Proposed Senior Management

In addition to Mr. Ironside and Mr. Young, the proposed senior management team of the Resulting Issuer will be comprised of John Bell and Jeff Leitl.

John Bell, CA: Chief Financial Officer

  • Former CFO of Cirrus Energy
  • Prior to Cirrus, John was Controller at Cirrus Energy and Zapata Energy and held a senior role at Collins Barrow

Jeff Leitl: V.P. Land

  • Former President of JPL Resource Management
  • Prior to JPL, Jeff was VP Land at Sound Energy Trust and Manager Land at Timing Energy

Details of the Proposed Transaction

It is expected that on closing of the Proposed Transaction (the "Closing"), the Resulting Issuer will be a Tier 2 issuer pursuant to the policies of the Exchange. As the Proposed Transaction does not constitute a Non-Arm's Length Qualifying Transaction (as defined in the CPC Policy) it is anticipated that it will not require the approval of the current holders of the Exito Shares. Despite this, the current holders of the Exito Shares will be required to approve by way of special resolutions with 66 2/3% vote of the Exito Shares duly voted at a properly held shareholder meeting: (a) the proposed share consolidation; and (b) the proposed name change as described above. In addition, Exito shareholders may be asked to approve by way of ordinary resolutions (majority vote): (a) the appointment of auditors; and (b) the election of the proposed board of directors of the Resulting Issuer. It is anticipated that the Bentley shareholders will be asked to approve the business combination.

Minimum Financing

Closing of the Proposed Transaction is conditional on Bentley completing the Bentley Financing in conjunction with or immediately prior to the Closing.

The proceeds from the Bentley Financing will be used for exploration and development of oil and gas interests of the Resulting Issuer, costs to complete the Proposed Transaction and for unallocated working capital. There may be circumstances where, for sound business reasons, a reallocation of funds may be necessary in order for the Resulting Issuer to achieve its business objectives.

Sponsorship

Exito intends to make an application to the Exchange for an exemption from the CPC Policy mandated sponsorship requirements in connection with the Proposed Transaction. There is no assurance that such an exemption will be granted.

Conditions to Completion of the Proposed Transaction

The Closing is subject to satisfaction or waiver of terms and conditions, customary or otherwise, including but not limited to, acceptance by the Exchange of the Proposed Transaction, requisite shareholder approval and other applicable approvals. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Exito and Bentley will provide further disclosure, including milestones and the Bentley Financing terms, by way of press release as such information becomes available. The Exito Shares will remain halted until the completion of the Proposed Transaction.

All information contained in this news release with respect to Exito and Bentley was supplied by the parties respectively, for inclusion herein, and Exito and its directors and officers have relied on Bentley for any information concerning Bentley.

About Exito

Exito is a Capital Pool Company created to identify and evaluate potential acquisitions of commercially viable businesses and assets that have the potential to generate profits and add shareholder value.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, 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 management information circular or filing statement 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 a Capital Pool Company should be considered highly speculative.

Forward-Looking Statements

This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of Exito and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of Exito, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Exito's expectations are risks detailed from time to time in the filings made by Exito with securities regulations.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Exito. As a result, Exito cannot guarantee that the Proposed Transaction will be completed and that any forward-looking statement will materialize and the reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and Exito will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

The TSX Venture Exchange Inc. 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

  • Exito Energy Inc.
    Brad Docherty
    President, CEO & CFO
    (403) 472-5767

    Bentley Oil & Gas Ltd.
    Rick Ironside
    President & CEO
    (403) 453-0051