Juno Capital Corp.
TSX VENTURE : JNO.P

June 08, 2005 14:53 ET

Juno Capital Corp. Announces Proposed Business Combination with Discovery Drilling Group of Companies

CALGARY, ALBERTA--(CCNMatthews - June 8, 2005) -

(Not for dissemination in the United States)

Juno Capital Corp. (TSX VENTURE:JNO.P) ("Juno") is pleased to announce that it has entered into a letter agreement dated June 2, 2005 (the "Letter Agreement") in respect of an arm's length business combination (the "Business Combination") with each of Discovery Drilling Funds Inc., Discovery Drilling Funds 1 Inc., Discovery Drilling Funds 2 Inc., Discovery Drilling Funds 3 Inc. and Discovery Drilling Funds 4 Inc. (collectively, the "Discovery Group"). Pursuant to the terms of the transaction, subject to completion of satisfactory due diligence and receipt of applicable regulatory approvals, Juno intends to acquire all of the issued and outstanding securities of the Discovery Group. The Letter Agreement does not include certain shallow gas assets owned by the Discovery Group which are currently part of a formal sales process.

The common shares of the Discovery Group (the "Discovery Shares") will be acquired on the basis of 4,617.87 Juno Common Shares ("Juno Shares") in exchange for each one (1) Discovery Share. Pursuant to the Business Combination approximately 20,000,000 Juno Shares will be issued at a deemed price of $0.20 per share for aggregate deemed consideration of approximately $4,000,000. Upon completion of the Business Combination former Discovery Group shareholders will hold approximately 84% of the issued and outstanding Juno Shares while existing Juno shareholders will hold 16%, on a fully diluted basis.

Juno is a capital pool company and intends for the Business Combination to be its qualifying transaction as such term is defined by the policies of the TSX Venture Exchange. Upon the successful completion of the Business Combination Juno will be a junior natural resource issuer.

The Discovery Group is a group of 5 private oil and gas companies incorporated under the Business Corporations Act (Alberta) that are engaged in the exploration for, and the development and production of, crude oil and natural gas in the provinces of Alberta, Saskatchewan and British Columbia. The Discovery Group is made up of over 300 security holders who will become shareholders of Juno. No existing Discovery Group security holder will hold more than 10% of the issued and outstanding Juno shares upon completion of the Business Combination.

The Discovery Group's principal producing assets are Strachan, Sunnynook and Pembina, all located in Alberta. The other significant asset is Shackleton/Russelton in Saskatchewan which is currently being offered for sale with Waterous Securities Inc. If an acceptable offer is not received for the shallow gas assets being offered for sale, these properties will be included in the Business Combination.

Selected Financial Information

The following table sets forth certain unaudited pro forma financial information for the Discovery Group as at and for the year ended December 31, 2004. This information was prepared by management of the Discovery Group's and has not been audited.



Discovery Group
------------------
As at and for the
year ended
December 31, 2004
------------------
(unaudited)


Total Revenue, Net of Royalties $ 1,261,418
Net Lease Operating Income(1) $ 712,775
Bank Debt Nil
Working Capital Surplus (Deficit) $ (1,152,627)
Total Assets $ 9,821,364
Share Capital $ 9,898,601
Number of Shares Outstanding
Basic 4,331
Diluted 4,331

Note:
(1) Represents revenue, net of royalties less operating costs.
(2) The information above is derived from the Discovery Group's December
31, 2004 financial statements which include certain shallow gas
assets which are not part of the proposed transaction. Shareholders
will, however, be able to evaluate the pro forma financial position
of the combined entity by referring to the pro forma financial
statements which will be provided in a filing statement expected to
be filed on SEDAR in connection with the proposed transaction.


Reserves Data

The following tables set forth certain reserves data for the Discovery Group. The Discovery Group's reserves information is based on an independent engineering evaluation prepared by Sproule Associates Limited ("Sproule") evaluating the Discovery Group's petroleum and natural gas reserves and the net present values of future net revenue for these reserves using forecast prices and costs as at March 31, 2005. The evaluation was conducted in compliance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.



SUMMARY OF OIL AND GAS RESERVES (EXCLUDING SASKATCHEWAN)
OF THE DISCOVERY GROUP
AS OF March 31, 2005
FORECAST PRICES AND COSTS

RESERVES
------------------
NATURAL GAS
------------------
Gross Net
RESERVES CATEGORY (MMcf) (MMcf)
--------------------------------------- -------- --------

PROVED
Developed Producing 333.0 261.0
Undeveloped
------------------
TOTAL PROVED 333.0 261.0

PROBABLE 303.0 231.0
------------------
636.0 492.0
TOTAL PROVED PLUS PROBABLE
------------------
------------------

Notes:
(1) "Gross", in relation to a company's interest in production or
reserves, means its "company gross reserves", which are the
company's working interest (operating or non-operating) share
before deduction of royalties and without including any royalty
interests of the company.
(2) "Net" means, in relation to a company's interest in production or
reserves, the company's working interest (operating or
non-operating) share after deduction of royalty obligations, plus
the company's royalty interests in production or reserves.
(3) The recovery and reserve estimates of a the Discovery Group's crude
oil, natural gas liquids and natural gas reserves provided above are
estimates only and there is no guarantee that the estimated reserves
will be recovered. Actual crude oil, natural gas and natural gas
liquid reserves may be greater than or less than the estimates
provided above.


THE DISCOVERY GROUP'S NET PRESENT
VALUES OF FUTURE NET REVENUE
----------------------------------------------
BEFORE INCOME TAXES AFTER INCOME TAXES
DISCOUNTED AT DISCOUNTED AT
---------------------- ----------------------
(%/year) (%/year)
0 10 15 0 10 15
RESERVES CATEGORY (M$) (M$) (M$) (M$) (M$) (M$)
------------------------ ------ ------ ------ ------ ------ ------

PROVED
Developed Producing 1772 1554 1471 1354 1173 1105
Undeveloped
------ ------ ------ ------ ------ ------
TOTAL PROVED 1772 1554 1471 1354 1173 1105

PROBABLE 1336 846 709 924 578 482
------ ------ ------ ------ ------ ------

TOTAL PROVED PLUS
PROBABLE 3108 2400 2180 2278 1751 1587
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------

Notes:
(1) It should not be assumed that the estimates of future net revenues
presented in the tables above represent the fair market value of the
reserves. There is no assurance that the forecast prices and costs
assumptions will be attained and variances could be material.
(2) The forecast cost and price assumptions assume increases in wellhead
selling prices and take into account inflation with respect to
future operating and capital costs. The crude oil and natural gas
benchmark reference pricing and inflation and exchange rates
utilized in the Discovery Group's reserve reports were Sproule's
price decks, respectively, as at March 31, 2005.


Discovery Group
excludes
Shackleton/Russelton
---------------------

Average Daily Production(1)
Natural Gas (Mcf/d) 610
NGL (boe/d) 18
Total (boe/d) (2) 120

Notes:
(1) Average daily production is for the year ending March 31, 2005
based on each company's gross working interest.
(2) Barrel of oil equivalent (boe) figures are derived by converting gas
to oil in the ratio of 6,000 cubic feet of gas to one barrel of oil.
Boe's may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 mcf:1 bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead.


Board of Directors and Management

Upon completion of the Business Combination, the directors and senior officers of Juno are expected to include:

Louis R. Dufresne, Director and Non-executive Chairman of the Board

Mr. Dufresne, has been the President and Chief Executive Officer of Lorad Services Inc., a private consulting company involved in energy management and real estate development, since July 2001. Prior thereto, Mr. Dufresne was the Senior Vice-President and a director of Direct Energy Marketing Limited ("DEML") from August 2000 to June 2001. Prior thereto, Mr. Dufresne was the Chief Operating Officer, Senior Vice-President and a director of DEML from January 1997 to August 2000. Prior thereto, Mr. Dufresne held various management positions with DEML from April 1992 to December 1996. DEML was an integrated natural gas wholesaler to residential, small business and commercial customers in Canada that was wholly owned by Direct Energy (formerly Optus Natural Gas Distribution Income Fund ("Optus")), a publicly listed trust. Direct Energy sold all of its assets (including certain ancillary assets) to a subsidiary of Centrica plc in August 2000 for a disclosed purchase price of approximately $912 million. Mr. Dufresne held various non-management positions with Gulf Canada Resources from September 1983 to April 1992. Mr. Dufresne obtained a Bachelor of Science (Mechanical Engineering) degree from the University of Waterloo in October 1983 and received his designation as a Professional Engineer in June 1985.

Sean Kehoe, Director

Mr. Kehoe has been involved in the Investment Banking and Private Placement financing business for over 20 years, focusing principally on the structuring and management of high net worth private client partnerships. He is the Managing Director and co-founder of Discovery Drilling Funds in addition to holding a position as President and CEO of Beringer Capital Partners Ltd. Beringer Capital Partners Ltd, a member of the Limited Market Dealers Association of Canada, is a private investment-banking firm that specializes in the structuring, management and corporate finance of private equity partnerships, venture capital interests and emerging growth companies. Through Beringer and related companies, Mr. Kehoe has been involved in the creation, financing, and management of businesses in industries as varied as software development, film and television production, franchising, cosmetics, millwork, real estate, manufacturing and oil and gas. Mr. Kehoe is one of the founding members of the Limited Market Dealers Association of Canada (LMDA).

Ian E.G. Robertson, Director

Mr. Robertson, has been a director of each of Algonquin Power Management Inc. and Algonquin Power Systems Inc., and has been a senior manager of Algonquin Power Corporation Inc., since January 1988. Algonquin Power Management Power Inc. is the manager (the "Manager") of the Algonquin Power Income Fund (the "Fund"). The Fund acquires interests in hydroelectric generating facilities located in Canada and the United States. The Manager provides design, financing, construction, management, operation and maintenance of independent hydroelectric power facilities. The Manager and Algonquin Power Systems Inc. are both wholly owned by Algonquin Power Corporation Inc. Algonquin Power Systems Inc. provides operations-related services in respect of the facility interests indirectly owned by the Fund. Mr. Robertson received an Engineering degree from the University of Waterloo in June 1982 and a Masters in Business Administration from York University in September 1989. Mr. Robertson received his designation as a Professional Engineer in June 1983 and his designation as a Chartered Financial Analyst in September 2000.

Charles Cook, Director, President and Chief Executive Officer

Over a twenty-year career in the Oil and Gas industry (Mobil, A.E.C./EnCana), Mr. Cook has directed and led large oil and gas investment programs that included responsibility for acquisitions, seismic, drilling, facilities and production.

Mr. Cook's career includes planning and implementing turnaround strategies for underperforming assets, increasing reserves and production, decreasing operating cost and increasing value for shareholders. This included the drilling of new wells, consolidating plants and infrastructure and implementing innovative business deals with both large and small oil and gas companies.

Mr. Cook has served as a Corporate Pension Officer managing a $150 million pension fund (Mobil) including developing the strategy and mandates for both North American and International investments. He has also served as the Manager of Corporate Risk for a large energy company (A.E.C./EnCana), identifying the material financial, investment, operational and market risks that an upstream oil and gas company faces.

William S. Maslechko, Director

Mr. Maslechko, has practiced law at Burnet, Duckworth & Palmer LLP, a Calgary based law firm, since June 1990, and has been a partner since January 1994. Throughout his legal career, Mr. Maslechko has practiced in the areas of corporate finance and securities and mergers and acquisitions. Mr. Maslechko has served as an officer and/or director of a number of public and private companies operating in the oil and gas industry and other industries, and is presently a director of TriOil Ltd., Terraquest Energy Corporation and Vaquero Energy Ltd. Mr. Maslechko obtained a Bachelor of Laws Degree from the University of Toronto in April 1985 and has been a member of the Law Society of Alberta since 1991.

Subsequent to the completion of the Business Combination the directors and officers of Juno will own, or exercise control and direction over, approximately 17% of the Juno Shares.

The closing of the Business Combination is subject to a number of conditions, including: (i) receipt of all requisite regulatory approvals, including approval of the TSX Venture; (ii) no materially adverse change to either party having occurred; (iii) Juno and the Discovery Group having conducted their respective businesses only in the usual and ordinary course of business consistent with past practices; (iv) Juno and the Discovery Group being satisfied with their respective due diligence review of one another; and (v) other conditions typical of a transaction of this nature.

The Business Combination with the Discovery Group constitutes a "Qualifying Transaction" as such term is defined in Policy 5.2 of the TSX Venture Exchange. Juno will apply to TSX Venture for an exemption from the sponsorship requirements of TSX Venture Exchange. Juno is currently suspended and must comply with the policies of the TSX Venture regarding suspensions.

Completion of the Business Combination is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance. There can be no assurance that the Business Combination will be completed as proposed or at all.

Investors are cautioned that, any information released or received with respect to the Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of Juno should be considered highly speculative.


The TSX Venture has in no way passed upon the merits of the Business Combination and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Juno Capital Corp.
    Louis R. Dufresne
    President
    (403) 266-7544
    (403) 262-6072 (FAX)
    or
    Discovery Group
    Sean Kehoe
    Director
    (403) 233-6073
    (403) 269-2686 (FAX)
    Email: skehoe@drillingfunds.com