Fortaleza Energy Inc.

September 04, 2014 10:20 ET

Fortaleza Acquires Energy Services Business

CALGARY, ALBERTA--(Marketwired - Sept. 4, 2014) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES.

Fortaleza Energy Inc. ("Fortaleza" or the "Corporation") is pleased to announce that it has exercised its right of first refusal to acquire the Swan Hills Acid Blending facility and related equipment and laboratory (collectively, the "Swan Hills Acid Blending Facility") from Arcan Resources Ltd. ("Arcan") enabling it to provide custom acid blending services for fracture stimulation and production optimization fluids.

Swan Hills Acid Blending Facility

On August 1, 2014, Fortaleza, through its wholly-owned subsidiary Blendforce Energy Services Inc. ("Blendforce"), entered into an agreement with StimSol Canada Inc. ("StimSol"), a wholly owned subsidiary of Arcan, to lease the Swan Hills Acid Blending Facility to provide custom acid blending services for fracture stimulation and production optimization fluids. As part of the agreement, StimSol agreed to provide its personnel to assist Blendforce with its business and granted Blendforce a right of first refusal to acquire the Swan Hills Acid Blending Facility, which is exercisable once Arcan either completes or abandons the arrangement agreement previously announced on June 23, 2014. On August 20, 2014, Arcan announced that it had terminated its arrangement agreement and on September 3, 2014, Blendforce provided notice to Arcan and StimSol that it would exercise its right of first refusal to acquire the Swan Hill Acid Blending Facility. The acquisition is expected to close on October 3, 2014.

Equity Issue

The purchase of the Swan Hills Acid Blending Facility, chemical inventory and working capital will be funded by cash balances and a $1,462,600 equity offering of 18,282,500 common shares at a price of $0.08 per share, completed by way of private placement on August 28th, 2014. Management and Directors of Fortaleza acquired 11,882,500 common shares representing 65 percent of the shares offered in the private placement. Following the private placement, Fortaleza has 81,323,117 common shares outstanding.

On September 2, 2014, Fortaleza granted stock options to employees, officers and directors to acquire 6,354,000 common shares at a price of $0.08 per share. The options vest over a three-year period and expire five years from the date of grant.

Rational and Outlook

The decision to pursue this business opportunity is driven by the active development of a light oil non-conventional resource play of the Beaverhill Lake complex being actively pursued by a number of operators. Multi-stage fracturing is being done with 28 percent acid blends. In addition, the Swan Hills Acid Blending Facility is located in an area where there is significant industry activity pursuing deep basin unconventional plays such as the Montney and Duvernay plays which utilize acid spearhead blends for the completion of each well.

There are approximately 45,000 active producing wells in the immediate service area of the Swan Hills Acid Blending facility, many of which require stimulation and enhance fluids for remediation. A key part of the service offering of Blendforce will be providing custom blending and fluid supply for enhancement and stimulation of producing wells.

Blendforce is examining other locations in western Canada and the United States where it can offer fracture stimulation and production enhancement fluids along with on the expansion of various resource plays in North America.

Mr. J. Cameron Bailey President and CEO of Fortaleza said "the customization and specialization of fluids used in fracture stimulation and production enhancement is vital to resource play development. The acquisition will provide Blendforce with the capability of formulating and delivering specific and specialised fluid formulations for fracture stimulation and production enhancement to the well site at competitive prices and in reduced times for operators."

Caution to Reader

This news release contains forward-looking information. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by Fortaleza at the time of preparation, may prove to be incorrect. The actual results achieved in future periods will vary from the information provided herein and the variations may be material, including that Blendforce will close the acquisition and that the expected sales of acid blends may not materialize.

This news release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The common shares of Fortaleza have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Contact Information

  • Fortaleza Energy Inc.
    Mr. J. Cameron Bailey
    President and Chief Executive Officer
    (403) 398-3345 extension 2450
    (403) 398-3351 (FAX)
    cbailey@fortalezaenergy.com

    Fortaleza Energy Inc.
    Mr. Jamie Jeffs, CA
    Chief Financial Officer
    (403) 398-3345 extension 2470
    jjeffs@fortalezaenergy.com