Glamis Resources Ltd.

Glamis Resources Ltd.

August 27, 2009 19:12 ET

Glamis Announces Q2 Results and Increased 2009 Guidance

CALGARY, ALBERTA--(Marketwire - Aug. 27, 2009) -


Glamis Resources Ltd. ("Glamis" or the "Company") (TSX VENTURE:GLM.A) (TSX VENTURE:GLM.B) announces it has filed on SEDAR its unaudited financial statements and related Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2009. Selected financial and operational information is outlined below and should be read in conjunction with Glamis' unaudited financial statements and related MD&A which are available for review at or

Glamis is also pleased to announce that its Board of Directors has approved a $21.7 million capital program for the remainder of 2009. This level of capital spending is expected to result in a 2009 exit production rate of more than 4,150 Boe/d.


Three Months Ended Six Months Ended
($000s except per June 30, June 30, % June 30, June 30, %
unit amounts) 2009 2008 Change 2009 2008 Change
Petroleum & natural
gas revenue 2,227 3,317 (33) 4,202 5,687 (26)
Funds flow from
operations 674 1,788 (62) 1,096 2,945 (63)
Per share 0.02 0.07 (71) 0.03 0.12 (75)
Net earnings (loss) (472) 566 (183) (1,386) 806 (272)
Per share (0.01) 0.02 (150) (0.04) 0.03 (233)
expenditures, net 1,370 3,057 (55) 2,113 5,640 (63)
Debt and working n/a
capital (deficit) (8,199) 293 (8,199) 293 n/a

Crude oil & NGLs
(bbls/d) 391 318 23 451 309 46
Natural gas (Mcf/d) - 11 n/a - 22 n/a
Total (Boe/d) 391 321 22 451 313 44

Crude oil & NGLs
($/bbl) 62.35 113.68 (45) 51.15 100.00 (49)
Natural gas ($/Mcf) - 11.51 n/a - 9.43 n/a
Average ($/Boe) 62.35 113.48 (45) 51.15 99.65 (49)

Netbacks ($/Boe)
Petroleum & natural
gas revenue 62.35 113.48 (45) 51.15 99.65 (49)
Processing 0.30 0.22 36 0.28 0.11 154
Royalties (4.63) (12.28) (62) (3.59) (9.90) (64)
Operating costs (18.67) (22.83) (18) (18.11) (20.99) (14)
Operating netback 39.35 78.59 (50) 29.73 68.87 (57)


Recapitalization Transaction and New Management Group

On July 20, 2009, Glamis received written consent of a majority of its shareholders approving the reorganization and investment agreement (the "Agreement") with Trent Yanko, Paul Colborne, Dale Mennis and Matt Janisch (the "Investor Group") which provided for a non-brokered private placement (the "Private Placement"), the appointment of a new management team and board of directors (the "New Management Group") and a rights offering (the "Rights Offering") to the current holders of class A shares of Glamis ("Class A Shares").

The New Management Group is led by Trent Yanko as President and Chief Executive Officer, Matt Janisch as Vice-President, Finance and Chief Financial Officer, Curtis Labelle as Vice-President, Production and Dale Mennis as Vice-President, Land. The new Board of Directors of Glamis is comprised of Paul Colborne as Chairman, Trent Yanko, James Pasieka, Randal Brockway, James Bertram and Scott Dawson, who was a member of the Board of Directors prior to the announcement.

Glamis issued a total of 12,227,577 Class A Shares and 27,138,255 Units pursuant to the Private Placement for aggregate proceeds of $15.0 million. The Units issued under the Private Placement were comprised of one Class A Share and one Class A Share purchase warrant exercisable for $0.54 and are subject to contractual escrow with one-third of the Units being released each year following issuance. The Class A Shares issued under the Private Placement are also subject to contractual escrow with one-third of the Class A Shares being released each six months following issuance.

Pursuant to the Rights Offering, each holder of Class A Shares on August 13, 2009 (the "Record Date") received one transferable right (a "Right") for every Class A Share held. Every four Rights will entitle the holder to purchase one Class A Share at a price of $0.38 until the Rights expire at 4 p.m. (Calgary time) on September 4, 2009 (the "Expiry Date"). A maximum of approximately 6,610,090 Class A Shares will be issued pursuant to the Rights Offering for gross aggregate proceeds of approximately $2.5 million. Subscribers for Class A Shares or Units pursuant to the Private Placement will not be entitled to participate in the Rights Offering with respect to any securities acquired under the Private Placement.

Asset Acquisition, Two Private Company Acquisitions and $90 Million Bought Deal Financing

On July 23, 2009, the Company announced an asset acquisition and two private company acquisitions (the "Acquisitions"), as well as entered into a bought deal private placement with a syndicate of underwriters for 60,000,000 Class A shares at a price of $1.25 per Class A share. The Company also granted the underwriters an option to place an additional 12,000,000 Class A shares on the same terms.

Through the Acquisitions, Glamis is acquiring high quality, high netback, light oil assets focused in the Company's southeast Saskatchewan core area for total consideration of approximately $281.6 million based on a deemed price of $1.25 per Glamis Share. The producing properties are predominately operated with high working interests, 3D seismic coverage, control of key producing infrastructure and are associated with a large, light oil prospective undeveloped land base. At the time of the announcement, the Acquisitions were comprised of production of 3,675 Boe/d (93% light oil, average 38 degree API), and proved plus probable reserves of 12.65 MMBoe. The first of the private company acquisitions closed August 18, 2009. The asset acquisition is expected to close on August 31, 2009 and the second private company acquisition is expected to close on September 4, 2009.

The Acquisitions provide Glamis with conventional high impact, high netback light oil assets and a significant position in the Bakken light oil resource play. More than 50 percent of the production from the combined assets is from the Bakken, making Glamis the fourth largest independent producer in the play.

The bought deal private placement of 60,000,000 Class A shares at a price of $1.25 per Class A Share was completed on August 14, 2009. The underwriting syndicate elected to exercise its over-allotment option to increase the offering by 12,000,000 Class A Shares, resulting in the issuance of 72,000,000 Class A Shares for gross aggregate proceeds of $90.0 million.


Glamis' Board of Directors have approved a capital program for the remainder of 2009 of $21.7 million to facilitate the shooting of up to three 3D seismic surveys, undeveloped land acquisition, facility upgrades and the drilling of up to 20 gross (15.8 net) wells, predominately targeting high quality light oil. Drilling will be biased to exploration to fulfill the flow-through obligations inherited through the recent corporate transactions. Consequently, production additions from drilling are heavily risked and any success will have minimal impact to 2009 volumes.

The Company now expects to exit 2009 at more than 4,150 Boe/d, up significantly from the second quarter 2009 average of 391 Boe/d. A capital expenditure budget for 2010 is anticipated to be announced early in the fourth quarter of 2009.

As the Company progresses on the closing of the Acquisitions, we are working diligently on the integration of data, systems and operations. Through the integration process, a number of optimization and efficiency improvement projects have been identified that should lead to near-term production gains and operating cost reduction.

The Company has scheduled a special meeting of the holders of Class A Shares and Class B Shares to be held on September 25, 2009 at which time shareholders will be asked to consider, among other matters, the appointment of an additional Director, consolidation of the Class A Shares on a 6:1 basis and the change of the Company's name from Glamis Resources Ltd. to Legacy Oil & Gas Inc.

We have taken significant and decisive strides to establish Glamis as a premier junior oil and natural gas company. Our light oil, high netback production base, concentrated assets, strong balance sheet, significant light oil resource play exposure and successful consolidation strategy has differentiated Glamis from the rest of the junior sector. We continue to remain opportunistic for further strategic light oil acquisitions to augment our existing inventory of 200 light oil development drilling locations and more than 215,000 net acres of undeveloped land.

Glamis Resources Ltd. is a junior oil and natural gas company formed to generate and develop its own prospects, acquire oil and natural gas assets and participate with joint venture partners in oil and natural gas exploration and development in the Western Canadian Sedimentary Basin. The Company's Class A shares and Class B shares trade on the TSX Venture exchange under the symbols GLM.A and GLM.B.

FORWARD LOOKING STATEMENTS: This press release contains forward-looking statements. More particularly, this press release contains statements concerning the anticipated closing dates of the asset acquisition and private company acquisition, the Company's anticipated 2009 exit rate of production, the Company's anticipated capital expenditure program, the anticipated timing of the release of the Company's 2010 capital expenditure budget and the anticipated near-term production gains and operating cost reduction as a result of optimization and efficiency improvement projects. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including: (i) with respect to the anticipated closing dates of the acquisitions, expectations and assumptions concerning timing of receipt of required shareholder and regulatory approvals and third party consents and the satisfaction of other conditions to the completion of the acquisitions and (ii) expectations and assumptions concerning the success of optimization and efficiency improvement projects, the availability of capital, the success of future drilling and development activities, the performance of existing wells, the performance of new wells and prevailing commodity prices.
Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to obtain necessary regulatory approvals or satisfy the conditions to closing the acquisitions, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in the Company's Annual Information Form which has been filed on SEDAR and can be accessed at The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Meaning of Boe: When used in this press release, Boe means a barrel of oil equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe/d means a barrel of oil equivalent per day. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6 thousand cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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