Hanwei Energy Services Corp.

Hanwei Energy Services Corp.

March 05, 2014 08:00 ET

Hanwei Energy Announces Purchase and Sale Agreement for the Acquisition of 4,000 Acres of Oil and Gas Leases in Alberta

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 5, 2014) - Hanwei Energy Services Corp. (TSX:HE) ("Hanwei" or the "Company"), today announced that the Company has reached an agreement (the "Purchase and Sale Agreement" or "PSA") for the acquisition of certain oil and gas interests from an Alberta-based oil and gas exploration and production company ("Vendor"), occupying some 4,000 acres located approximately 40 km south west of Edmonton, Alberta (the "Lands"), for a purchase price of $1.8 million (plus G.S.T. and customary closing adjustments)(the "Acquisition"). A deposit of $180,000 was paid in accordance with the PSA.

The Acquisition aims to strategically diversify the Company's capital investments, operations and revenue while maintaining its focus within the oil and gas industry. The Vendor commissioned a report (dated March 31, 2013) prepared by an Independent Qualified Reserve Evaluator indicating total oil and gas proved and probable reserve in the Lands of 494 mboe. Upon closing of the Acquisition, the Company plans to commence the preparation of a development program during 2014. Hanwei, through its appointed contractors, will operate the majority of the assets being acquired and will own a 100% working interest in these Lands. It is expected that oil and gas production facilities to be developed within the Lands will utilize Hanwei's fiberglass reinforced plastic pipe products, associated technologies, and expertise.

Upon the Company having obtained certain approvals from the Alberta Energy Regulator (the "AER") and Vendor having obtained TSX Venture Exchange approval, the Acquisition will be closed into escrow (the "Escrow Closing Date"). Subsequent to the Escrow Closing Date and upon approval from the AER for certain well licenses to be transferred from Vendor to the Company (the "Well License Transfer Approval"), the closing consideration shall be released from escrow and the Acquisition shall be deemed closed (the "Closing Date"). Notwithstanding the aforementioned, should the Well License Transfer Approval not be granted by the AER within five months of the date of the PSA then all or a portion of the closing consideration shall be returned to the Company and the PSA shall be deemed terminated. Funding of the Acquisition will be completed by way of a shareholder's loan provided by Hanwei's Chairman and Chief Executive Officer (the "Shareholder's Loan"). The Shareholders Loan is unsecured and for no fixed term, at zero interest rate, and is repayable at call.

The PSA requires a Put/Call Option Agreement to be executed between Vendor and the Company on the Escrow Closing Date (the "Option Agreement"), which Option Agreement will require Vendor to sell and/or the Company to acquire, Vendor's then pooled and working interests, wells and pipelines on and related to a section of lands immediately adjacent to the Lands (the "Option Assets"). The Option Agreement is subject to certain items to be undertaken by Vendor to the satisfaction of the Company within six months of the Closing Date, the purchase consideration for the Option Assets being $500,000 plus G.S.T.

About Hanwei Energy Services Corp.

Hanwei Energy Services Corp. is a leading manufacturer of high and low pressure, fiberglass reinforced plastic pipe products and associated technologies and services for the international oil and gas, and infrastructure industries. Hanwei serves major energy customers in the Chinese and global energy markets.

Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.


The forward-looking information in this press release presents the Company's expectations as of the date of this press release and accordingly is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company does not undertake to update this information at any particular time, except as required by applicable securities legislation.

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