Pace Oil & Gas Ltd.
TSX : PCE

Pace Oil & Gas Ltd.

December 16, 2010 08:26 ET

Pace Oil & Gas Ltd. Announces Closing of Strategic Oil Weighted Asset Acquisitions and $61 Million Bought Deal Financing

CALGARY, ALBERTA--(Marketwire - Dec. 16, 2010) -

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Pace Oil & Gas Ltd. ("Pace" or the "Company") (TSX:PCE) is pleased to announce the closing of its previously announced strategic asset acquisitions and a $61 million bought deal financing of 6,446,000 common shares of Pace ("Common Shares") at a price of $7.75 per Common Share for gross proceeds of $49,956,500 and 1,142,670 Common Shares, to be issued on a "flow-through" basis under the Income Tax Act (Canada) with respect to Canadian exploration expense ("Flow-Through Common Shares"), at a price of $9.70 per Flow-Through Common Share for additional gross proceeds of $11,083,899 (collectively, the "Financing"). The Financing was for aggregate gross proceeds of $61,040,399 (after giving effect to the exercise in full of the Over-Allotment Option granted to the Underwriters) and was raised by a syndicate of underwriters, co-led by National Bank Financial Inc. and Paradigm Capital Inc. and including Cormark Securities Inc., FirstEnergy Capital Corp. and Acumen Capital Finance Partners Limited (collectively, the "Underwriters").

With a total consideration of $52 million, Pace has closed on approximately 1,200 boe/d of the 1,350 boe/d (the "Acquisitions") of the strategic oil weighted assets, with a partial balance left in escrow until December 30, 2010. The Acquisitions solidify and consolidate the Company's interests in two of its core areas – Dixonville area of the Peace River Arch and the Enchant area of Southern Alberta. At Dixonville the Company acquired 100% interest in a keyhole section of its existing waterflood and consolidated additional surrounding lands and associated infrastructure. The Acquisitions will enable the Company to continue with its optimization plans for increased recovery in the Dixonville Montney "C" light oil pool. In Southern Alberta, the Company consolidated a portion of its existing interests and increased its share of existing oil pools and exposure to its Glauconitic lithic channel play.

The net proceeds from the Common Share financing will be used to pay down the bank debt that was drawn to fund the Acquisitions and for general corporate purposes. The net proceeds from the Flow-Through Common Share financing will be used to fund ongoing exploration activities eligible for Canadian exploration expenses which will be renounced in favour of the subscribers of the of the Flow-Through Common Shares effective on or before December 31, 2010.

After giving effect to the offering, Pace has 47,615,800 shares outstanding.

Pace is a growth oriented, intermediate producer with a breadth of oil and gas resource opportunities focused in Alberta. Pace's common shares trade on the TSX under the symbol PCE.

Barrels of Oil Equivalency: Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. In accordance with NI 51-101, a boe conversion ratio for natural gas of 6 mcf:1 bbl has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

FORWARD-LOOKING STATEMENTS

Certain statements contained within this press release constitute forward looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward looking statements. Forward looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. These statements involve 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.

In particular, this press release contains the following forward looking statements pertaining to, without limitation, the following: expectations and assumptions concerning Pace's future production volumes; and anticipated capital expenditures. In addition, statements relating to "reserves" or "resources" are deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the resources and reserves described can be profitably produced in the future.

With respect to the forward looking statements contained in this press release, Pace has made assumptions regarding: future commodity prices; the impact of royalty regimes and certain royalty incentives, the timing and the amount of capital expenditures; production of new and existing wells and the timing of new wells coming on stream; future operating expenses including processing and gathering fees; the performance characteristics of oil and natural gas properties; the size of oil and natural gas reserves; We believe 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 included in, or incorporated by reference into, this press release should not be unduly relied upon. These statements speak only as of the date of this press release or as of the date specified in the documents incorporated by reference into this press release, as the case may be. The actual results could differ materially from those anticipated in these forward looking statements as a result of the risk factors set forth including: volatility in market prices for oil and natural gas; counterparty credit risk; access to capital; changes or fluctuations in production levels; 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; stock market volatility and market valuation of Pace stock; geological, technical, drilling and processing problems; limitations on insurance; changes in environmental or legislation applicable to our operations, and our ability to comply with current and future environmental and other laws; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; and the other factors discussed under "Risk Factors" in our Joint Information Circular dated May 10, 2010 filed on SEDAR. Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward looking statements contained in this press release and the documents incorporated by reference herein are expressly qualified by this cautionary statement. The forward looking statements contained in this document speak only as of the date of this document and Pace does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.

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

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