NWest Energy Corp.

March 05, 2012 16:08 ET

NWest Energy to Amalgamate with Argentina-Focused Private Company

ST. JOHN'S, NEWFOUNDLAND--(Marketwire - March 5, 2012) - NWest Energy Corp. ("NWest" or the "Corporation") (TSX VENTURE:NWN) announces that it has entered into a non-binding letter of intent dated February 24, 2012 (the "Letter of Intent") with Caribe Oil & Gas Ltd. ("Caribe"), a private Alberta corporation focused on exploration and development of oil and gas properties in Argentina, pursuant to which NWest will amalgamate with Caribe (the "Transaction") to form a new company ("Amalco"). Caribe's management team also includes a number of individuals who have experience operating in both conventional and unconventional oil and gas plays, which is important for operating in Argentina. It is intended that the management of Caribe will assume the key management positions within Amalco upon closing of the Transaction.

The closing of the Transaction is subject to a number of conditions, including but not limited to: (a) NWest and Caribe entering into a definitive amalgamation agreement; (b) Caribe entering into one or more binding purchase agreements in connection with the MOUs (as defined below) or other oil and gas assets located in Argentina (the "Asset Purchase Agreements"); (c) NWest or Amalco completing the Financing (as defined below); (d) completion of a due diligence review to the satisfaction of both NWest and Caribe; (e) approval of the TSX Venture Exchange (the "TSXV"); (f) sponsorship, if required by the TSXV; (g) receipt and acceptance by NWest and by the TSXV of one or more independent reserve reports on the properties acquired pursuant to the Asset Purchase Agreements contemplated herein in compliance with National Instrument 51-101 ("NI 51-101"); and (f) approval by the shareholders of NWest and Caribe.

The Transaction is subject to the policies of TSXV relating to reverse takeovers. Upon completion of the Transaction, Amalco will change its name to a name that is acceptable to the regulatory authorities and the shareholders of NWest and Caribe and will become an oil and gas company focused on the exploration and development of oil and gas properties in Argentina.

Caribe Oil & Gas Ltd.

Caribe was incorporated under the Business Corporations Act (Alberta). The registered office and head office of Caribe are both located at Suite 220, 840 - 6th Avenue S.W., Calgary, Alberta, T2P 3E5. Caribe has 9,051,000 common shares issued and outstanding, and no stock options, warrants, anti-dilution or other rights to purchase Caribe Shares issued or outstanding.

The principal shareholders of Caribe, who each own 20% or more of the outstanding Caribe Shares, are Rakesh Dhir of Vancouver, British Columbia who owns 5,000,000 common shares of Caribe (55.2%); and Pomay Overseas Inc. (David Thompson of Hamilton, Bermuda) who owns 2,850,000 common shares of Caribe (31.5%).

Prior to pursuing transactions in Argentina in 2011, Caribe was focused on the acquisition and farm-in of upstream oil and gas opportunities in the Caribbean and South America. Caribe did not complete any transactions and currently has no production and owns no petroleum or natural gas assets.

Caribe has entered into a memorandum of understanding ("MOU") regarding the acquisition of a 100% working interest in 2 blocks in the southern Neuquen Basin, totalling approximately 12,000 hectares in area, with approximately 60 barrels of oil per day ("bopd") of conventional oil production and potential within the prolific Vaca Muerta shale. Caribe is also a party to an additional MOU (collectively, the "MOUs"), regarding the acquisition of 100% of the shares of a private Argentine company which holds a 100% working interest in a block in the Noroeste Basin of northern Argentina, totalling approximately 680,000 hectares in area, which is currently producing about 70 bopd and has exploration and development potential. Caribe is also in various stages of negotiation and due diligence on a number of additional blocks in the Neuquen and Cuyo basins, with the intention of either acquiring or farming-in for interests in the blocks.

Caribe plans to complete a ten for one consolidation of its current outstanding common shares, issue 3,000,000 common shares of Caribe on a post-consolidation basis (the "Caribe Shares") for services rendered at $0.10 per share, issue up to 7,000,000 Caribe Shares at $0.10 per share and 7,500,000 Caribe Shares a $0.15 per share pursuant to two private placements for anticipated gross proceeds aggregating $1,825,000. Caribe is expected to have approximately 18,500,000 Caribe Shares outstanding and no options or warrants outstanding prior to the closing of the Transaction.

Caribe plans to use the cash proceeds from the two private placements and earlier share issuances to complete its due diligence on the properties described in the MOUs and other properties in Argentina, to pay expenses and deposits associated with entering into the Asset Purchase Agreements, and for the preparation of a NI 51-101 report or reports on one or more of such properties, and for general working capital purposes.

Transaction Terms

NWest currently has 9,474,192 common shares ("NWest Shares") outstanding, plus options to acquire up to 285,000 NWest Shares at an exercise price of $5.00 per NWest Share.

Pursuant to the Transaction, NWest and Caribe will amalgamate to form Amalco and: (a) each NWest Share will be exchanged for one common share of Amalco ("Amalco Share") with a deemed price of the Offering Price (defined below); and (b) each Caribe Share will be exchanged for one Amalco Share with a deemed price of the Offering Price.

In connection with the Transaction, NWest must complete prior to or concurrent with the closing of the Transaction a brokered private placement for gross proceeds of not less than $20,000,000 at a price to be determined in the context of the market (the "Offering Price"), with each Unit consisting of one NWest Share and one-half (1/2) of one warrant (the "Financing"). The net proceeds of the Financing are expected to be used for the purchase of and further exploration and development of the oil and gas assets of Amalco, and for general working capital purposes. Completion of the Transaction is conditional on the successful completion of the Financing.

NWest will enter into a finder's fee agreement whereby one or more third parties who will be paid concurrent with the closing of the Transaction a finder's fee of up to 400,000 Amalco Shares at the Offering Price. In addition, concurrent with the closing of the Transaction the directors of Amalco are expected to each be granted options to purchase 200,000 Amalco Shares at not less than the Offering Price.

The Transaction will be an arm's length transaction as none of the directors and officers of NWest have any ownership or other interest in Caribe.

Board and Management Changes

After completion of the Transaction, the Board of Directors of Amalco will consist of six (6) directors, including Dr. James Buckee, Jacqueline Sheppard, Robert Webb and Wade Dawe, who are all currently or will be directors of NWest, as well as Marc Melnic and Gregg Vernon, provided the TSXV does not object to such nominations and such persons are eligible to act as directors pursuant to the requirements of applicable corporate law. After the closing of the Transaction, the officers of Amalco will be appointed by the Board of Directors of Amalco and are expected to include Marc Melnic as President and Chief Executive Officer, Lori Bobye as Chief Financial Officer, Bill McDougall as Vice-President, Exploration, Jorge Vallmitjana as Manager, Business Development - Argentina and Douglas M. Stuve as Corporate Secretary.

Marc Melnic, President, CEO, and proposed Director of Amalco is a professional engineer with over 17 years of industry experience in senior management roles with companies that include Vero Energy Inc., Enerplus Resources Fund and PanCanadian Petroleum Ltd. Mr. Melnic has a Bachelor of Science degree in Mechanical Engineering from the University of Manitoba and an MBA from Queen's University.

Gregg Vernon, a proposed Director of Amalco is a Professional Engineer and is Chief Operating Officer of PetroMagdalena Energy Corp., a public oil and gas exploration and development company listed on the Toronto Stock Exchange focused on Colombia. He is a Director of Petrodorado Energy Ltd. and Hemisphere Energy Corp., two public companies listed on TSXV. He was the co-founder of Petro Andina Resources Inc., a company focused on oil and gas opportunities in Argentina, which was acquired in 2009 by Pluspetrol Resources Corporation, N.V. for approximately $359 million.

Lori Bobye, the proposed Chief Financial Officer of Amalco is a Certified Management Accountant with 19 years of industry experience in assisting public companies with all aspects of financial services. Ms. Bobye's roles have included Chief Financial Officer of Stealth Ventures Ltd., Controller at Skope Energy Inc., Controller at Peyto Exploration and Development Corp. and numerous senior roles at companies such as Devon Energy Corp., Central Alberta Midstream, Engage Energy Canada, L.P., Avid Oil and Gas Ltd., Husky Energy Inc., Rio Alto Exploration Ltd. and Norcen Energy Resources Ltd.

Bill McDougall, the proposed Vice-President, Exploration of Amalco is a professional geologist with 32 years of industry experience. He was the President of a geological consultancy in Calgary focused on mergers and acquisitions, exploration and development with specialty knowledge in unconventional resources including shale gas and coalbed methane. He has worked for many exploration and production companies such as Apache Canada Ltd., BHP Billiton Ltd., EOG Resources Canada Inc., Burlington, Enerplus Resources Fund, Nexen Inc., Suncor Energy Inc., Talisman Energy Inc. and European Gas Limited. His experience has taken him to evaluate projects in France, Italy, Belgium, United States and Australia. He has a Master of Sciences degree in Geology from the University of Regina.

Jorge Vallmitjana, the proposed Manager, Business Development for Argentina is a Buenos Aires-based lawyer whom has extensive experience in contracts and negotiations and has successfully introduced companies such as Encana Corporation, Nowsco Well Service Ltd. and Veritas Geophysical, among others, into Latin America.

Douglas M. Stuve, the proposed Corporate Secretary of Amalco is a partner with the law firm Burstall Winger LLP of Calgary, Alberta. Mr. Stuve's principal areas of practice are corporate finance and securities law, as well as general corporate commercial law. Mr. Stuve has served as a director of several public companies and is currently Chairman of Athabasca Minerals Inc., and a director of Border Petroleum Corp., New Sage Energy Corp. and E.G. Capital Inc. (all public companies listed on TSXV). Mr. Stuve is a past director of several public companies, including Patfind Inc., the first Capital Pool Company offering completed on the predecessor to TSXV, as well as Deepwell Energy Services Trust (TSX), Tesoro Energy Corp. (TSX), Kelso Energy Inc., Colonia Energy Corp., Regal Energy Inc., Cascadia International Resources Inc., International Technologies Corporation, Sabrich Capital Corporation, Yangarra Resources Ltd., Amalfi Capital Corporation and Lime Hill Capital Corporation. Mr. Stuve holds a Bachelor of Arts degree (with distinction) from the University of Alberta and a Bachelor of Laws degree (LL.B) from Queen's University.

Amalco will issue a news release providing additional information regarding the Financing, Caribe's historical financial statements and other material information regarding the Transaction that requires updating at that time. Trading of the NWest Shares will not resume until the TSXV has reviewed, among other things, an NI 51-101 report on the properties to be acquired pursuant to the Asset Purchase Agreements and all other documents required by the TSXV have been filed. Amalco will issue a further news release when the TSXV has received the necessary documentation and trading of the NWest Shares is to resume.

NWest will be required to obtain a sponsor for the Transaction pursuant to the requirements of TSXV. No sponsor has been retained yet by NWest.

As indicated above, completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable pursuant to TSXV requirements, disinterested shareholder approval. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the information circular of the Corporation to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative. The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this release.

The information regarding the background of the directors and officers of Caribe was provided to NWest by these individuals and has not been verified by NWest.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by NWest.

The securities of Caribe and NWest being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

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

Contact Information

  • NWest Energy Corp.
    Robert Webb
    President & Chief Executive Officer
    (709) 722-3757