Cyries Energy Inc.
TSX : CYS

Cyries Energy Inc.
Iteration Energy Ltd.
TSX : ITX

Iteration Energy Ltd.

March 03, 2008 06:30 ET

Iteration Energy Ltd. and Cyries Energy Inc. Amend Terms of Proposed Arrangement

CALGARY, ALBERTA--(Marketwire - March 3, 2008) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Iteration Energy Ltd. ("Iteration") (TSX:ITX) and Cyries Energy Inc. ("Cyries") (TSX:CYS) announce that they have entered into an amending agreement (the "Amending Agreement") to the previously announced agreement (the "Arrangement Agreement") whereby Iteration agreed to acquire all of the common shares and warrants of Cyries pursuant to an arrangement (the "Arrangement") under the Business Corporations Act (Alberta).

Pursuant to the terms of the initial Arrangement Agreement, (i) Cyries shareholders would receive 1.475 Iteration common shares for each Cyries common share held and (ii) Cyries warrantholders would receive that number of Iteration common shares that is equal to the result of the amount by which the Weighted Average Trading Price (as defined below) exceeds the exercise price of such Cyries warrant, which amount is then divided by the Weighted Average Trading Price multiplied by 1.475. The Weighted Average Trading Price is the price determined by dividing the aggregate dollar trading value of all Cyries Shares sold on the Toronto Stock Exchange over the five consecutive trading days ending on the trading day immediately preceding the day which is one business day prior to the effective date of the Arrangement by the total number of Cyries common shares sold on such stock exchange during such period.

Under the terms of the Amending Agreement, Iteration will increase the consideration payable to holders of Cyries common shares and Cyries warrants by increasing the share ratio of 1.475 to 1.62. Using the 20 day weighted average trading price on the Toronto Stock Exchange for Iteration and Cyries, this represents a premium of 10.9%. Upon completion of the amended Arrangement, Cyries will be a wholly-owned subsidiary of Iteration and current Iteration shareholders and current Cyries shareholders will own approximately 45% and 55%, respectively, of the combined entity.

In addition, the Amending Agreement provides that the termination fee payable by Cyries to Iteration in certain circumstances will be increased from $13.25 million to $18.0 million.

Iteration increased the consideration payable under the amended Arrangement to recognize the substantial increase in production and cash flow that have resulted from Cyries 2008 first quarter drilling. Further details are provided in a separate press release being issued today by Cyries. Iteration has issued a press release today that provides an operational update together with information from Iteration's reserve report prepared by McDaniel and Associates Consultants Ltd. dated effective December 31, 2007. Iteration achieved a 75% year over year increase in proved plus probable reserves at a FD&A cost including change in future capital of $15.45/boe.

The Boards of Directors of both Iteration and Cyries have approved the Amending Agreement. The Board of Directors of Cyries has also concluded that the amended Arrangement is in the best interests of its securityholders, and has resolved to recommend that securityholders of Cyries vote their securities in favour of the combination. The Directors and Officers of Cyries, who control approximately 13% of the securities to be voted in respect of the transaction, have agreed to vote their Cyries securities in favour of the amended Arrangement. FirstEnergy Capital Corp. is acting as exclusive financial advisor to Cyries with respect to the combination and has advised the Board of Directors of Cyries that it is of the opinion, as of the date hereof, that the consideration to be received by Cyries shareholders pursuant to the amended Arrangement is fair from a financial point of view to Cyries shareholders. Cyries has agreed that it will not solicit or initiate any discussions concerning the pursuit of any other business combination. In addition, Iteration has the right to match any superior proposal, and Cyries has the right to respond to any superior proposal, in the event such a proposal is made.

The amended Arrangement is subject to regulatory and court approval and the approval by a majority of at least two thirds of the holders of common shares and warrants of Cyries, voting as a single class, who vote on the amended Arrangement at the Cyries securityholders meeting to be held on March 7, 2008. Assuming all necessary approvals are obtained, it is anticipated that the amended Arrangement will be completed on March 7, 2008 and in any event no later than March 11, 2008.

Complete details of the terms of the amended Arrangement are set out in the Amending Agreement (which will be filed by each of Iteration and Cyries on SEDAR) and the Arrangement Agreement, which has been filed on SEDAR and is available for viewing under each of Iteration's and Cyries' profile on www.sedar.com.

About Iteration

Iteration is an independent Canadian oil and natural gas exploration, development and production company with its common shares trading on the Toronto Stock Exchange under the symbol "ITX".

About Cyries

Cyries is an independent Canadian oil and natural gas exploration, development and production company with its common shares trading on the Toronto Stock Exchange under the symbol "CYS".

Advisory Regarding Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning completion of the combination and the assessment of the combined company's petroleum and natural gas production reserves, undeveloped land holdings, reserve life index, business strategy, future development and growth opportunities, prospects, asset base and anticipated benefits from the combination including improved operating efficiencies, field optimizations and cost reductions, future cash flows, value and debt levels, capital programs, and future plans. The forward-looking statements and information are based on certain key expectations and assumptions made by Iteration and Cyries, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws, future well production rates and reserve volumes, the timing of receipt of regulatory and security holder approvals, the performance of existing wells, the success obtained in drilling new wells, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of labour and services and the impact of the Province of Alberta's new royalty regime. Although Iteration and Cyries believe that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Iteration and Cyries can give no assurance that they will prove to be correct. Since forward-looking statements and information 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 risks associated with the oil and gas industry in general such as 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 reserves, production, costs and expenses, health, safety and environmental risks, commodity price and exchange rate fluctuations, marketing and transportation, loss of markets, environmental risks, competition, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, ability to access sufficient capital from internal and external sources, failure to obtain required regulatory and other approvals, and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. There are risks also inherent in the nature of the proposed amended Arrangement, including failure to realize anticipated synergies or cost savings, risks regarding the integration of the two entities, incorrect assessments of the values of the other entity, and failure to obtain the required security holder, court, regulatory and other third party approvals. This press release also contains forward-looking statements and information concerning the anticipated completion of the proposed amended Arrangement and the anticipated timing for completion of the amended Arrangement. Iteration and Cyries have provided these anticipated times in reliance on certain assumptions that they believe are reasonable at this time, including assumptions as to the time required to prepare meeting materials for mailing, the timing of receipt of the necessary regulatory and court approvals and the time necessary to satisfy the conditions to the closing of the amended Arrangement. These dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary regulatory or court approvals in the time assumed or the need for additional time to satisfy the conditions to the completion of the amended Arrangement. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this press release concerning these times. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Iteration's, Cyries' or the combined company's operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), in the case of Iteration, at Iteration's website (www.iterationenergy.com), and in the case of Cyries, at Cyries' website (www.cyries.com).

The forward-looking statements and information contained in this press release are made as of the date hereof and Iteration and Cyries undertake 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.

Barrels of Oil Equivalent

"Boe" means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of natural gas. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 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.

Contact Information

  • Iteration Energy Ltd.
    Brian L. Illing
    President and Chief Executive Officer
    (403) 290-4867
    Website: www.iterationenergy.com
    or
    Cyries Energy Inc.
    Don Archibald
    Chairman and Chief Executive Officer
    (403) 232-4157
    Website: www.cyries.com