Online Energy Inc.
TSX VENTURE : ONL

June 29, 2011 07:30 ET

Online Energy Inc. Announces Strategic Acquisition

CALGARY, ALBERTA--(Marketwire - June 29, 2011) - Online Energy Inc. (the "Company" or "Online") (TSX VENTURE:ONL) is pleased to announce that it has entered into an agreement with an arm's length public company pursuant to which Online has acquired producing oil and gas assets and approximately 2,508 net acres of associated undeveloped land in the Paddle River area of west-central Alberta (the "Acquisition"). Total consideration paid for the Acquisition was $1.0 million. The effective date of the Acquisition is May 1, 2011, and closing occurred on June 28, 2011.

The Acquisition has the following characteristics:

  • Current production of 28 boe/d (46% oil and liquids)
  • 12.25 sections of land (64% average working interest ("WI"))
  • 2,508 net acres of undeveloped land
  • 20% WI in the vertically developed Paddle River Ostracod A & C Oil Pools
  • 100% and 96.5% WI in 2 vertically developed Notikewin liquids-rich gas pools

The Acquisition is within Online's Greater Paddle River core area of operations located in west-central Alberta. Acquired production is from 7 vertical wells including 3 (0.60 net) Ostracod light oil wells and 2 (1.96 net) operated Notikewin liquids-rich natural gas wells.

The Acquisition is strategic in that it provides additional horizontal multi-frac development drilling locations on the Company's two primary development projects within its core area. This additional drilling inventory consists of 38 gross (21.89 net) potential Ostracod horizontal oil locations and 2 gross (1.96 net) potential Notikewin horizontal gas locations.

Within the Greater Paddle River area, Online continues to focus on oil exploration and development projects in the Viking, Ostracod and Nordegg formations and liquids-rich natural gas opportunities in the Notikewin and Nordegg formations. As of the closing of the Acquisition, the Company controls approximately 32,220 net acres of undeveloped land in this area and will continue to accumulate assets through Crown land sales and third-party acquisitions. In addition, the Company controls an upside potential of 163 gross (124.0 net) Ostracod horizontal oil locations, 6 gross (4.2 net) Notikewin horizontal gas locations, 16 gross (16.0 net) Viking and Nordegg vertical oil locations and in excess of 27 gross re-activations, re-entries and re-completions of existing wellbores. This significant and multi-year inventory provides a substantial platform for ongoing reserve and production growth.

The Company is currently preparing to drill its initial Ostracod horizontal multi-frac oil well at Paddle River and is ultimately planning for a multi-well project. Drilling of the initial well is expected to commence upon completion of licensing procedures and the securing of drilling equipment.

Online is also designing an initial horizontal multi-frac well into the Notikewin liquids-rich gas pool on its Niton property.

In addition, the Company's re-entry and re-activation program is set to recommence. Three additional operations are planned and will proceed as equipment availability and surface conditions allow.

Second quarter 2011 production is anticipated to average 315 boe/d and, including production associated with the Acquisition, is currently approximately 350 boe/d.

The Company has 41.3 million shares outstanding and working capital is estimated to be $8.8 million at June 30, 2011.

Online Energy Inc. is a domestic junior oil and gas exploration and production company with assets in Alberta. Online trades on the TSX Venture Exchange under the symbol ONL. The Company has posted an updated shareholder presentation on its website at www.onln.ca.

Cautionary Statements:

This press release contains certain forward-looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward-looking statements are necessarily based upon assumptions and judgments with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Online. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted. In the interest of providing Online shareholders and potential investors with information regarding the

Company, including management's assessment of Online's future plans and operation, certain statements throughout this press release constitute forward looking statements. All forward-looking statements are based on the Company's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. By its nature, such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements. Online believes the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements contained throughout this press release should not be unduly relied upon. These statements speak only as of the date specified in the statements.

In particular, this press release may contain forward looking statements pertaining to the following:

  • the performance characteristics of the Company's oil and natural gas properties;
  • oil and natural gas production levels;
  • capital expenditure programs;
  • the quantity of the Company's oil and natural gas reserves and anticipated future cash flows from such reserves;
  • projections of commodity prices and costs;
  • supply and demand for oil and natural gas;
  • expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and
  • treatment under governmental regulatory regimes.

The material assumptions in making these forward-looking statements include certain assumptions disclosed in the Company's most recent management's discussion and analysis included in the material available on this press release.

The Company's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release as a result of the material risk factors set forth below, and elsewhere in this press release:

  • volatility in market prices for oil and natural gas;
  • liabilities inherent in oil and natural gas operations;
  • uncertainties associated with estimating oil and natural gas reserves;
  • competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;
  • incorrect assessments of the value of acquisitions and exploration and development programs;
  • geological, technical, drilling and processing problems;
  • fluctuations in foreign exchange or interest rates and stock market volatility;
  • failure to realize the anticipated benefits of acquisitions;
  • general business and market conditions; and
  • changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry.

These factors should not be construed as exhaustive. Unless required by law, Online does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.

Estimated values contained in this press release do not represent fair market value.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Online Energy Inc.
    Steve Dabner
    President & Chief Executive Officer
    (403) 262-1901 ext. 228
    sdabner@onln.ca

    Online Energy Inc.
    Thomas Love
    Chief Financial Officer
    (403) 262-1901 ext.227
    tlove@onln.ca
    www.onln.ca