Petro Viking Energy Inc.
TSX VENTURE : VIK.P

August 31, 2010 14:00 ET

Petro Viking Announces Qualifying Transaction

CALGARY, ALBERTA--(Marketwire - Aug. 31, 2010) - Mr. Irvin Eisler, President of Petro Viking Energy Inc. (TSX VENTURE:VIK.P) (the "Corporation" or "Petro"), a capital pool company, announces it has entered into a Letter Agreement made August 9, 2010 regarding a proposed transaction (the "Transaction") with Deep Creek Oil and Gas Inc. ("Deep Creek"), a privately held company incorporated under the Business Corporations Act (British Columbia), which operates as an oil and gas exploration and development company with various working interests in producing properties in central Alberta and West central Saskatchewan. The Corporation intends that the transaction (the "Transaction") with Deep Creek will constitute its "Qualifying Transaction" for the purposes of Policy 2.4 of the TSX Venture Exchange Inc. ("TSX-V"). Subject to any regulatory, shareholder, director or other approvals that may be required, the completion of satisfactory due diligence by the Corporation and other conditions contained in the Letter Agreement, it is intended that the Corporation will acquire Deep Creek in a reverse takeover transaction which will be effected by way of a three cornered amalgamation or other similar form of transaction. Following completion of the Transaction, it is anticipated the resulting issuer will be classified as a Tier 2 oil and gas issuer.

The Transaction

The Corporation and Deep Creek will amalgamate in accordance with the Business Corporations Act (Alberta) to create a new company under the name "Petro Viking Energy Inc." ("Amalco"). All outstanding securities of Deep Creek will be exchanged for Amalco securities on the basis of 0.22755132 Amalco shares for each 1 Deep Creek share, or an aggregate of 7,200,000 Amalco shares, which will be issued at a deemed issue price of $0.25 per Amalco share for a total purchase price of $1,800,000 CDN. Amalco shall also exchange 1 Amalco share for each existing share of the Corporation, or an aggregate of 9,490,000 Amalco shares to the Corporation's shareholders. Currently, there are 31,646,503 issued and outstanding common shares of Deep Creek and 9,490,000 issued and outstanding common shares of the Corporation. After giving effect to the Amalgamation, Amalco will have 16,690,000 common shares issued and outstanding. It also anticipated that Amalco will grant options to acquire an aggregate of 720,000 Amalco shares at a price of $0.25 per Amalco share to the directors, officers, employees and consultants of Amalco. Upon completion of the Transaction, it is anticipated that the current shareholders of the Corporation will own 57 per cent of the issued and outstanding Amalco shares and the current Deep Creek shareholders will own 43 per cent of the issued and outstanding Amalco shares. The Amalco shares to be issued pursuant to the Transaction will be subject to the escrow requirements of the TSX-V.

The Transaction is non-arm's length and as such it will constitute a "related-party transaction," as that term is defined pursuant to Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions and will be subject to the requirements of same. Accordingly, the Transaction is subject to the approval of the majority of the minority of the Corporation's shareholders. The Transaction will not result in a change of control or management. The Transaction has been reviewed and accepted by the Corporation's independent board of directors being, Kevin Patterson, John Styles, and David Heighington.

It is expected that the Corporation will mail its information circular for the Annual and Special Meeting to approve the Transaction as its qualifying transaction once the TSX-V has conditionally approved the Transaction. It is expected that the Meeting will be held in October, 2010. Trading in the shares of the Corporation will remain halted in accordance with TSX-V policies until all necessary documentation has been filed and approved by the TSX-V.

About Deep Creek Oil & Gas Inc.

Deep Creek was formed to operate in Canada as an oil and gas exploration, development and production company, commencing business operations on November 29, 2006. Deep Creek has, since that time, completed initial financings, implemented an operational structure and business plan, formalized its management team, completed certain corporate reorganizations and acquired various working interests in Alberta and Saskatchewan. Among its assets, Deep Creek has a significant land position near Kindersley, Saskatchewan consisting of a 20% working interest in 42 sections of land. This core area provides numerous Viking drilling prospects.

When a definitive agreement between the Corporation and Deep Creek is reached, which is anticipated shortly, in accordance with the policies of the TSX-V, the Corporation will issue a subsequent press release containing the details relating to sponsorship, summary financial information in respect of Deep Creek, and P&NG reserves information relating to the properties of Deep Creek.

Insiders and Board of Directors of the Resulting Issuer

The current management and directors of the Corporation will remain following the completion of the Transaction. The Corporation may consider adding additional individuals with oil and gas expertise to management and the board as it sees fit. After giving effect to the Transaction it is expected that the directors and officers of the resulting issuer will own, directly and indirectly, 2,697,087 common shares or 16.2% of the outstanding common shares. The following is a description of the proposed directors and officers.

Irvin Eisler – Armstrong, British Columbia – Proposed Chairman of the Board and Director of the Resulting Issuer and currently the President, CEO and Director of the Corporation

Since February 1987, Mr. Eisler has been the President, Chief Executive Officer and a director of GWR Resources Ltd., a junior mining, exploration and development company.

Irvin Eisler currently owns, directly and indirectly, 3,700,000 shares of Deep Creek, and after giving effect to the Transaction, will own 841,940 Amalco shares.

Keith Watts – Lake Country, British Columbia – Proposed President and CEO of the Resulting Issuer and currently the CFO and Director of the Corporation.

Since March 2007, Mr. Watts has been the Chief Executive Officer, Vice-President and a director of Deep Creek Oil & Gas Inc., an oil and gas exploration and development company. Since 1991 to present, Mr. Watts has been an Area Manager and Consultant to AutoGas Propane Ltd., a company that markets and sells petroleum products, equipment, appliances and accessories in British Columbia. From September 2006 to January 2007, Mr. Watts acted as Vice President of Public Relations for Landmark Oil & Gas Corp., an independent energy company engaged in the acquisition and exploration of oil and natural gas properties. In addition, since March 1990, Mr. Watts has acted as the President and a director of Britt Ash Enterprises Ltd., a private company with investments in the restaurant industry.

Keith Watts currently owns, directly and indirectly, 1,285,288 shares of Deep Creek, and after giving effect to the Transaction, will own 292,469 Amalco shares.

André Voskuil – Westbank, British Columbia – Proposed CFO and Director of the Resulting Issuer and currently a Director of the Corporation.

Since December 2006, Mr. Voskuil has been the President, Chief Executive Officer and a director of Deep Creek Oil & Gas Inc., an oil and gas exploration and development company. Since August 2005, Mr. Voskuil has been the President and Director of SKAI Holdings Inc., an executive consulting and management services company. In addition, from September 2003 to December 2004, Mr. Voskuil was the Manager of the Support Division of Akkermans & Partners Group BV, a specialized pension market group in the Netherlands. Mr. Voskuil holds a B.A. in Business Economics (1996) from HogeSchool INHolland, Alkmaar, The Netherlands.

André Voskuil currently owns, directly and indirectly, 1,154,369 shares of Deep Creek, and after giving effect to the Transaction, will own 262,678 Amalco shares.

David D. Heighington LL.B (Hons) – Calgary, Alberta – Proposed Director of the Resulting Issuer and currently a Director of the Corporation.

Mr. Heighington is a lawyer and founder of Heighington Law Firm, a securities law boutique operating in Calgary, Alberta. Mr. Heighington practices in the areas of securities, corporate finance, commercial transactions, natural resources and mergers and acquisitions. Mr. Heighington has acted for a broad range of domestic and foreign issuers, and securities dealers, with a particular emphasis on venture capital and mergers and acquisitions. Mr. Heighington has served as a director and officer of numerous publicly traded companies, including oil and gas exploration and development companies and service companies. Mr. Heighington is a member of the Law Society of Alberta and the Canadian Bar Association.

Kevin Patterson, CFA – Emerald Park, Saskatchewan – Proposed Director of the Resulting Issuer and currently a Director of the Corporation.

Kevin Patterson is a corporate finance professional with experience in financing oil and gas companies. From May 2007 until present, Mr. Patterson was a director of Reece Energy Exploration Corp., a TSX-V listed oil and gas producer that was recently acquired by a major oil and gas company. From May 2002 to May 2007, Mr. Patterson was the President, Chief Executive Officer and a director of Long View Resources Corporation, a TSX-V listed public company engaged in the acquisition, exploration and development of oil and gas properties. Mr. Patterson served as Chairman and Chief Financial Officer of Wedona Energy Inc. and of Wedona Energy II Inc., public oil and gas reporting issuers in Saskatchewan, which amalgamated with Long View Resources Corporation in September 2005. Mr. Patterson is currently the Chief Executive Officer and President of Patterson Capital Corp. a private company engaged primarily in corporate finance activities. From October 2005 until December 2006, Mr. Patterson was the Chief Financial Officer and a director of Durham Capital Corp., a TSX-V listed Capital Pool Company, which completed its qualifying transaction by amalgamating with Sikanni Services Ltd., a TSX-V listed company. Mr. Patterson is also a director of Firebird Capital Partners Inc., an TSX-V listed Capital Pool Company. Mr. Patterson has a degree in Business Administration (1988), completed the Canadian Securities Course in 1991 and is a member of the CFA Institute.

John Styles, P.Eng. – Regina, Saskatchewan – Proposed Director of the Resulting Issuer and currently a Director of the Corporation.

John A. Styles is a professional engineer with experience in the energy industry. Mr. Styles served as a director of Reece Energy Exploration Corp. ("Reece"), a TSX-V listed oil and gas explorer and producer, from May 2007 through April 2009 when Reece was amalgamated with Penn West Energy Trust. Mr. Styles was a director of Durham Capital Corp. until December 2006, a TSX-V listed Capital Pool Company, which company completed its qualifying transaction by amalgamation with Sikanni Services Ltd., a TSX-V listed company. Mr. Styles was Chairman, Chief Operating Officer, Chief Financial Officer and a director of Long View Resources Corporation, a TSX-V listed public corporation engaged in the acquisition, exploration and development of oil and gas properties until its amalgamation with Reece in May 2007. Prior thereto, Mr. Styles served as President and Chief Executive Officer and a director of Wedona Energy Inc. and Wedona Energy II Inc., public oil and gas reporting issuers in Saskatchewan, which companies amalgamated with Long View Resources Corporation in August 2005. Since August 2000, Mr. Styles has served as President, Chief Executive Officer and a director of Pilgrim Energy Inc., a private company engaged in investment and consulting in the petroleum industry. Mr. Styles holds a Bachelor of Science (Honors) degree in Petroleum Engineering from Montana College of Mineral Science and Technology (1987), and is a licensed professional engineer in the Province of Saskatchewan.

Sponsorship of Qualifying Transaction

Sponsorship of a qualifying transaction of a capital pool company is required by the TSX-V unless exempt in accordance with TSX-V policies. The Corporation has applied for an exemption from the sponsorship requirements. There is no assurance that the Corporation will ultimately obtain an exemption from sponsorship.

Description of Significant Conditions to Closing

Completion of the Transaction is subject to a number of conditions, including but not limited to TSX-V acceptance, majority of the minority shareholder approval, and the approval of the Transaction, if it proceeds via an amalgamation, by two-thirds of the votes cast by the shareholders of each of Deep Creek and the Corporation. The transaction cannot close until the required approvals are 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 management information circular or filing statement 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 a capital pool company should be considered highly speculative.

The TSX-V has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

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 release.

Certain information regarding the Corporation contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements.

This news release may contain certain forward-looking information and statements, including without limitation, statements pertaining to: (i) the Corporation's ability to obtain necessary approvals from the TSX-V and from the Corporation's shareholders; (ii) the proposed corporate name change, including the Corporation's ability to obtain necessary approvals from the TSX-V, the Alberta corporate registry, and from the Corporation's shareholders; (iii) a potential new stock trading symbol for the Corporation on the TSX-V, and (iv) the reserve figures in the McDaniel Report may differ from actual reserve amount. All statements included herein, other than statements of historical fact, including are forward-looking information and such information involves various risks and uncertainties. There can be no assurance that such information will prove to be accurate, and actual results and future events could differ materially from those anticipated in such information. A description of assumptions used to develop such forward-looking information and a description of risk factors that may cause actual results to differ materially from forward-looking information can be found in the Corporation's disclosure documents on the SEDAR website at www.sedar.com. The Corporation does not undertake to update any forward looking information except in accordance with applicable securities laws.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of the information contained herein.

Contact Information

  • Petro Viking Energy Inc.
    Mr. David Heighington
    Director
    (403) 237-0018
    David@hlf.ca
    or
    Petro Viking Energy Inc.
    730, 1015 - 4th Street SW
    Calgary, Alberta T2R 1J4