Midway Energy Ltd.

Midway Energy Ltd.

January 27, 2011 19:32 ET

Midway Announces Acquisitions

CALGARY, ALBERTA--(Marketwire - Jan. 27, 2011) - Midway Energy Ltd. ("Midway" or the "Company") (TSX:MEL) is pleased to announce that it has entered into agreements to acquire additional Cardium lands and production in the Garrington area of Alberta and undeveloped lands in the Swan Hills area of Alberta.

Garrington Acquisition

Midway has entered into a non-binding agreement with a major producer to purchase its non-operated working interests in the Garrington area. The acquisition will add approximately 280 boe per day of Cardium oil and solution gas production, all of which is currently operated by Midway, and will add an additional 8 net Cardium "A" Sand drilling locations as well as additional Cardium "B" Sand locations. This acquisition will increase Midway's total Cardium land holdings in the Garrington Cardium trend to 46.3 net sections. The acquisition gives Midway 100% ownership of its key facilities in Garrington and 100% ownership in 38.75 of its sections of Cardium rights.

The purchase price for the acquisition is approximately $29,380,000, payable by the issuance of 2,000,000 special warrants of Midway and $20,000,000 in cash. Each special warrant will be exercisable for one common share of Midway (subject to adjustment in certain circumstances).

The acquisition is expected to close on February 28, 2011. Closing is subject to various closing conditions, including, execution of a definitive agreement and receipt of all regulatory and other approvals, including the approval of the Toronto Stock Exchange.

Swan Hills Acquisition

Midway has also entered into an agreement with a private company to purchase a majority working interest in 7.5 gross (5.65 net) sections of undeveloped land highly prospective for the emerging Beaverhill Lake light oil play in the Swan Hills area of Alberta Midway has focused on acquiring lands in the area which have had vertical production or well control in each of its sections and is confident of the prospectivity of its acquired lands. This acquisition will increase Midway's total inventory of Beaverhill Lake horizontal drilling locations to 50 in the Swan Hills area.

The purchase price for the acquisition is approximately $1,140,000, $1,000,000 of which is payable in cash and the balance of which is payable through the assignment of certain of Midway's minor interests in the area. Pursuant to the agreement, Midway has agreed to drill one Beaverhill Lake horizontal well on the acquired lands prior to year-end and has granted the vendor a 5 percent gross overriding royalty on any new wells drilled on the acquired lands.

The acquisition is expected to close in early February, 2011. Closing is subject to various closing conditions, including receipt of all regulatory and other approvals.

Forward-looking Statements

This news release contains forward-looking statements relating to the Company's plans and other aspects of the Company's anticipated future operations, management focus, strategies, financial and operating results and business opportunities. Forward-looking statements typically use words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future. In particular, this press release contains forward-looking statements relating, but not limited to, the completion of the acquisitions and the timing of closing; the anticipated purchase prices of the acquisitions; the satisfaction of closing conditions of the acquisitions; and the expected benefits to be derived therefrom. These forward-looking statements are based on various assumptions including expectations regarding the properties to be acquired; assumptions concerning the timing of obtaining regulatory approvals and the satisfaction of other closing conditions of the acquisitions; the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures; the timing, location and extent of future drilling operations; estimates of future production and operating costs; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; future exchange and interest rates, Midway's ability to obtain equipment in a timely manner to carry out development activities, impact of increasing competition, ability to market oil and natural gas successfully and the ability of Midway to access capital. While Midway considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodity prices; currency fluctuations; imprecision of reserve estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; general economic conditions in Canada, the U.S. and globally; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.

Although Midway believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements. The forward-looking statements contained in this news release are made as the date of this new release and the company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

51-101 Advisory

In conformity with National Instrument 51-101, Standards for Disclosure of Oil and Gas Activities ("NI 51-101"), natural gas volumes have been converted to barrels of oil equivalent using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. This ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The estimate of future net revenue presented in this press release does not represent fair market value. Readers are cautioned that the term "boe" may be misleading, particularly if used in isolation.

Information Regarding Midway

Midway Energy Ltd. is a public oil and gas exploration and development company, located in Calgary, Alberta with operations pursued in Alberta. Midway currently trades on the Toronto Stock Exchange (TSX) under the Symbol "MEL".

Contact Information

  • Midway Energy Ltd.
    Scott Ratushny
    Chairman and Chief Executive Officer
    (403) 216-2705
    Midway Energy Ltd.
    Douglas K. Smith
    Chief Financial Officer
    (403) 216-2705