Latigo Capital Corporation

Warnic 1 Enterprises Ltd.

Valentine Ventures Corp.

Blackwater Capital Corp.

Cumberland Oil & Gas Ltd.

January 28, 2010 15:41 ET

Latigo, Warnic 1, Valentine Ventures, Blackwater and Cumberland Announce Mailing of Joint Information Circular

CALGARY, ALBERTA and VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 28, 2010) -


Latigo Capital Corporation ("Latigo") (TSX VENTURE:LTG.P), Warnic 1 Enterprises Ltd. ("Warnic") (TSX VENTURE:WNCP), Valentine Ventures Corp. ("Valentine") (TSX VENTURE:VVN), Blackwater Capital Corp. ("Blackwater") (TSX VENTURE:BCC.P), all capital pool companies ("CPCs") and Cumberland Oil & Gas Ltd. ("Cumberland"), a privately held oil and gas company, are pleased to announce that in connection with their previous news release dated December 18, 2009, they have mailed a joint information circular and proxy statement ("Information Circular") to their respective shareholders with respect to the previously announced amalgamation of each of Latigo, Warnic, Valentine, Blackwater and Cumberland (the "Amalgamation") to form a new company to be called Cumberland Oil & Gas Ltd. ("Amalco"). The meetings of each of the Latigo shareholders, the Warnic shareholders, the Valentine shareholders (the "Valentine Meeting"), the Blackwater shareholders and the Cumberland shareholders will be held on February 26, 2010. The Amalgamation is intended to constitute the qualifying transaction (the "Qualifying Transaction") for each of the CPCs.

Additionally, Valentine announces that it has cancelled an aggregate of 675,000 common shares, representing one half of the common shares issued to the "founders" of Valentine, which shares were cancelled pursuant to the policies of the TSX Venture Exchange ("TSXV") as a result of Valentine's failure to complete a qualifying transaction within the time period required by the TSXV. At the Valentine Meeting, shareholders of Valentine will be asked to ratify such cancellation (the "Share Cancellation Resolution"), failing which an additional 675,000 common shares of Valentine will be cancelled, representing the remaining shares held by "founders" of Valentine.

In connection with the Share Cancellation Resolution, each of Latigo, Warnic, Blackwater, Valentine and Cumberland have agreed to amend and restate the amalgamation agreement (the "Amalgamation Agreement") dated effective December 18, 2009 to take into account a contingent exchange ratio for shareholders of Valentine in the event that an additional 675,000 common shares of Valentine are cancelled. Pursuant to the Amalgamation Agreement, in the event an additional 675,000 common shares of Valentine are cancelled, every one common share of Valentine will be exchanged for 0.4057 of a common share of Amalco (0.3474 of a common share of Amalco in the event no additional Valentine common shares are cancelled).

Selected Financial Information for Cumberland

The following table sets forth selected audited historical financial information for Cumberland for the year ended December 31, 2008 and the nine (9) months ended September 30, 2009 as well as certain unaudited historical financial information of Cumberland for the three (3) month period ended September 30, 2009 and the year ended December 31, 2007 and selected balance sheet data as at such periods. Such information is derived from the financial statements of Cumberland and should be read in conjunction with such financial statements contained in the Information Circular.

  Unaudited Audited Unaudited
  Three Month Period Ended September 30, 2009 Nine Months Ended September 30, 2009 Year Ended December 31, 2008 Year Ended December 31, 2007
Revenue, net of royalties 82,226 286,950 211,454 -
Operating Expense 75,103 180,725 57,821 -
Net Income (Loss) (318,717) (786,330) (555,001) -
Total Assets 5,349,450 5,349,450 6,371,558 1
Total Liabilities 389,857 389,857 375,369 -
Cash Dividends Declared - - - -
Total Shareholders Equity 4,959,593 4,959,593 5,996,189 1

Reserves Information

The engineering report prepared for Cumberland by its independent engineers, McDaniel & Associates Consultants Ltd. ("McDaniel"), dated November 30, 2009, entitled, "Mechanical Update Evaluation of Natural Gas Reserves Based on Forecast Prices and Costs As of October 1, 2009" (the "McDaniel Report") presents an appraisal of the extent and value of the proved, probable and possible natural gas reserves of Cumberland's properties located in the Province of Alberta. The appraisal was prepared using reserves definitions consistent with those of National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). The McDaniel Report was prepared based on the detailed engineering report entitled "Evaluation of Natural Gas Revenues Based on Forecast Prices and Costs as of December 31, 2008" dated March 17, 2009 (the "March Report"). The tables below set out selected reserves information for Cumberland derived from the McDaniel Report. It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of the reserves.

Reserves Data as of October 1, 2009 (Forecast Prices and Costs)

  Natural Gas
  Gross (MMcf) Net(MMcf)
  Developed Producing 484.7 425.6
  Developed Non-Producing 160.1 137.5
  Undeveloped 0.0 0.0
Total Proved 644.7 563.1
  Probable 242.9 210.9
Total Proved plus Probable 887.6 774.0
  Possible 0.0 0.0
Total Proved plus Probable plus Possible 887.6 774.0

Total Future Net Revenue (Undiscounted) as of October 1, 2009 (Forecast Prices and Costs)

  Revenue Royalties Operating Costs Development Costs Well Abandonment and Other Costs Future Net Revenue Before Income Taxes Income Taxes Future Net Revenue After Income Taxes
  (Thousands of Dollars)
Total Proved                
Total Proved plus Probable 4,709 542 1,797 0 270 2,099 0 2,099
Total Proved plus Probable plus Possible 6,823 797 2,521 0 285 3,221 0 3,221

Net Present Values of Future Net Revenue as of October 1, 2009 (Forecast Prices and Costs)

  Before Future Income Tax Expenses and Discounted at:
  0% 5% 10% 15% 20%
  (M$) (M$) (M$) (M$) (M$)
  Developed Producing 1,456.4 1,262.7 1,106.3 981.2 880.7
  Developed Non-Producing 642.8 538.5 459.9 400.2 353.9
  Undeveloped 0.0 0.0 0.0 0.0 0.0
Total Proved 2,099.2 1,801.3 1,566.2 1,381.4 1,234.6
  Probable 1,121.3 769.1 559.7 429.2 343.4
Total Proved plus Probable 3,220.5 2,570.3 2,125.9 1,810.6 1,578.1
  Possible 0.0 0.0 0.0 0.0 0.0
Total Proved plus Probable plus Possible 3,220.5 2,570.3 2,125.9 1,810.6 1,578.1
  After Future Income Tax Expenses and Discounted at:
  0% 5% 10% 15% 20%
  (M$) (M$) (M$) (M$) (M$)
  Developed Producing 1,456.4 1,262.7 1,106.3 981.2 880.7
  Developed Non-Producing 642.8 538.5 459.9 400.2 353.9
  Undeveloped 0.0 0.0 0.0 0.0 0.0
Total Proved 2,099.2 1,801.3 1,566.2 1,381.4 1,234.6
  Probable 1,121.3 769.1 559.7 429.2 343.4
Total Proved plus Probable 3,220.5 2,570.3 2,125.9 1,810.6 1,578.1
  Possible 0.0 0.0 0.0 0.0 0.0
Total Proved plus Probable plus Possible 3,220.5 2,570.3 2,125.9 1,810.6 1,578.0
  Unit Value Before Income Taxes and Discounted at 10% year
  Developed Producing 2.60
  Developed Non-Producing 3.35
  Undeveloped -
Total Proved 2.78
  Probable 2.65
Total Proved plus Probable 2.75
  Possible -
Total Proved plus Probable plus Possible 2.75

Summary of Pricing and Inflation Rate Assumptions as at October 1, 2009 (Forecast Prices and Costs)

  Oil Natural Gas Edmonton Liquids Prices    
Year WTI Cushing Oklahoma (US$/Bbl) Edmonton Par Price 40° API(Cdn$/Bbl) Hardisty Heavy 12° API (Cdn$/Bbl) Alberta AECO Gas Price(Cdn$/ Mmbtu) Propane (Cdn$/Bbl) Butane (Cdn$/Bbl) Pentanes Plus(Cdn$/Bbl) Inflation Rate %/Year Exchange Rate (Cdn$/US$)
2009 3 month Forecast 70.00 75.10 65.20 5.20 41.20 55.00 77.10 2.0 0.920
2010 74.00 79.40 69.00 6.15 45.10 58.20 81.40 2.0 0.920
2011 80.60 83.80 70.20 6.70 48.10 61.40 85.90 2.0 0.950
2012 87.50 91.00 72.60 7.30 52.30 66.70 93.10 2.0 0.950
2013 94.70 96.50 77.00 7.85 55.80 70.70 98.70 2.0 0.970
2014 99.40 98.30 78.40 8.20 57.30 72.00 100.50 2.0 1.000
2015 101.40 100.30 80.00 8.45 58.50 73.50 102.60 2.0 1.000
2016 103.40 102.30 81.60 8.60 59.70 74.90 104.60 2.0 1.000
2017 105.40 104.20 83.10 8.80 60.90 76.30 106.50 2.0 1.000
2018 107.60 106.40 84.90 9.00 62.20 77.90 108.80 2.0 1.000
2019 109.70 108.50 86.50 9.10 63.30 79.50 110.90 2.0 1.000
2020+ 111.90 110.70 88.30 9.35 64.70 81.10 113.20 2.0 1.000
Thereafter     Escalate oil, gas and product prices at 2.0% per year      

Application for Exemption from Sponsorship Requirements

The CPCs have jointly requested that the TSXV waive the requirement for a Sponsorship Report in connection with the Qualifying Transaction. There are no guarantees that the TSXV will accept such a request to waive the Sponsorship Report requirement, in which case the CPCs will engage a Sponsor to prepare such a report.

Trading Halt of Shares of CPCs

Trading of the shares of the CPCs has been halted and will not resume until the TSXV has accepted all requisite documentation in connection with the proposed Qualifying Transaction. It is currently anticipated that trading in the shares of Latigo, Warnic and Blackwater will resume trading shortly after the TSXV has decided to grant the CPCs an exemption from the requirement for a Sponsorship Report or a Sponsor has been engaged. The Information Circular has been filed and is accessible on the SEDAR profiles for each of the CPCs at It is currently anticipated that trading in the shares of Valentine will remain suspended due to its failure to complete a Qualifying Transaction within the requisite time required by the TSXV.

Subject to all necessary regulatory approvals, including approval of the TSXV, upon completion of the Amalgamation, it is anticipated that the Amalco Shares will be listed and posted for trading on the TSXV. 

Completion of the Amalgamation is subject to a number of conditions, including TSX Venture Exchange acceptance and shareholder approvals (including on a disinterested basis to the extent required). The Amalgamation cannot close until the required shareholder approvals are obtained. There can be no assurance that the Amalgamation will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Information Circular prepared in connection with the Amalgamation, any information released or received with respect to the Amalgamation may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

Certain statements contained in this joint news release constitute forward-looking statements, including, without limitation, completion of the Amalgamation and receipt of all required approvals thereto and the timing thereof, holding of shareholder meetings and the potential outcomes thereof. Information regarding reserves and future net revenue are forward looking information as they involve on assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the party's control including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources, inability to meet or continue to meet listing requirements, the inability to obtain required consents, permits or approvals, including, without limitation, shareholder of the Amalgamation, failure to realize the anticipated benefits of the Amalgamation and the risk that actual results will vary from the results forecasted and such variations may be material. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Amalco's actual results, performance or achievement could differ materially from those expressed in or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits Amalco will derive therefrom. There is no assurance that the necessary approvals for completion of the Amalgamation will be obtained or that some other condition to the closing of the Amalgamation will not be satisfied. Even if such conditions are satisfied, there is risk that closing of the Amalgamation could be delayed and may not meet the timelines anticipated. 
The forward-looking statements contained in this joint news release are made as of the date of this joint news release. Except as required by law, each of the companies disclaim any intention and assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

The TSX Venture Exchange has in no way passed upon the merits of the proposed Amalgamation and has neither approved nor disapproved the contents of this joint news release. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this joint news release.

Contact Information

  • Cumberland Oil & Gas Ltd.
    Alan MacDonald
    Vice President, Finance and Chief Financial Officer
    (403) 237-0790
    Warnic 1 Enterprises Ltd.
    John Dunlop
    (604) 639-3203
    Blackwater Capital Corp.
    Rod McCann
    (403) 253-7887
    Latigo Capital Corporation
    Ric Charron
    (403) 651-0354
    Valentine Ventures Corp.
    Michael Hayduk
    (403) 234-7779