PrimeWest Exploration Inc.

September 09, 2010 12:13 ET

PrimeWest Exploration Inc. Announces Letter of Intent for the Acquisition of Assets From International Sovereign Energy Corp.

CALGARY, ALBERTA--(Marketwire - Sept. 9, 2010) -


PrimeWest Exploration Inc. (the "Corporation") (TSX VENTURE:PWI) and its Chief Executive Officer, Greg Noval, are pleased to announce that the Corporation has entered into a letter of intent dated August 31, 2010 (the "Letter of Intent") with International Sovereign Energy Corp ("ISEC"), whereby the Corporation has agreed to acquire ISEC's 2.7934% working interest in the Wildmere Lloydminster "A" Pool Unit No.1 (the "Proposed Acquisition").

The Corporation is incorporated under the provisions of the Business Corporations Act (Alberta) and has a registered office in Calgary, Alberta. It is a "capital pool company" (the "CPC") under the policies of TSX Venture Exchange (the "Exchange"). As such, it intends for the Proposed Acquisition to constitute the "Qualifying Transaction" of the Corporation as such term is defined in the policies of the Exchange. The Corporation is a "reporting issuer" within the meaning of the Securities Act (Alberta).

ISEC is a Canadian public corporation incorporated under the provisions of the Business Corporations Act (Alberta) with its registered and head office in Calgary, Alberta. ISEC owns and operates an asset base of producing oil and gas properties in Western Canada. ISEC is publicly trading on the TSX under the symbol "ISR" and it is a reporting issuer in the jurisdictions of Alberta, British Columbia and Ontario within the meaning of the Securities Act (Alberta), Securities Act (British Columbia), and Securities Act (Ontario).

The Qualifying Transaction will be carried out by parties dealing at arm's length to one another and therefore will not be considered to be a Non-Arm's Length Qualifying Transaction, as such term is defined under the policies of the Exchange.

It is expected that upon completion of the Qualifying Transaction, the Corporation will meet Initial Listing Requirements for an oil and gas issuer under the policies of the Exchange and will be engaged in the exploration and development of prospective oil and gas properties.

Description of the Properties

The Corporation's Proposed Acquisition is comprised of a 2.7934% working interest in the Wildmere Lloydminster "A" Pool Unit No.1 located in the area of Wildmere in the province of Alberta. Pursuant to Schedule "A" attached to the Letter of Intent, these assets (collectively referred to as the "Assets") include:

  • lands (all lands, interests and P&NG rights as legally described in a geological report dated August 17, 2010);
  • wells and facilities (all wells and tangibles, including but not limited to, surface and downhole equipment, gathering systems, battery site(s) and all treating and compression facilities associated with ISEC's interest in the assets); and
  • seismic (all available 2-D and/or 3-D seismic data).

The Unit is being operated under a pattern water injection enhanced recovery scheme with 80 vertical oil producing wells and 25 water injectors, covering approximately six square miles of land. Gross production rates average 1200 STB/d of oil and 650 Mscf/d of solution gas, which amounts to 35 BOE/d net to the Corporation.

The Unit is currently being operated by Husky Oil Operations Limited, one of the major oil and gas operators in Western Canada. This Property is expected to provide the Corporation with a stable long reserve life production base. Within the Unit, additional potential exists for increased production and incremental reserves recovery through additional drilling and well optimization. A copy of the relevant geological report prepared in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities will be submitted to the Exchange for review and detailed information on the Assets will be included in a subsequent press release.

The Proposed Acquisition

Subject to any regulatory, shareholder, director or other approval that may be required, the completion of satisfactory due diligence by the Corporation and other terms and conditions contained in the Letter of Intent, it is intended that the Corporation will acquire the Assets from ISEC at a purchase price of $2,800,000 in Canadian funds (the "Purchase Price"). Subject to prior Exchange approval, the Corporation is expected to pay a refundable deposit of $225,000 in Canadian funds to be applied against the Purchase Price.

Upon completion of the Proposed Acquisition, the Corporation will conduct the business of oil and gas exploration and development.

Insiders and Board of Directors of the Resulting Issuer

In connection with the completion of the Proposed Acquisition, it is intended that Manjeet Dhillon will resign as Chief Financial Officer of the Corporation. Upon the resignation of Mr. Dhillon, Ross Jones will be appointed as Chief Financial Officer.

The following is a brief description of the residence, position with the Corporation, background and experience of the proposed directors, officers and insiders of the Corporation upon completion of the Proposed Acquisition:

Gregory S. Noval – Turner Valley, Alberta – Chief Executive Officer, President and Director

Mr. Gregory S. Noval is a well-known Calgary businessman and the former Executive Chairman of the Board (June 2007 - April 2009), Chief Executive Officer, Chairman of the Board (June 1996 - June 2007) and director (June 1996 - September 2009) of Canadian Superior Energy Inc. ("Canadian Superior", TSX: SNG; AMEX: SNG). In addition, Mr. Noval served as a director and Chairman of the Board for Challenger Energy Corp. from December 2005 to October 2008. Mr. Noval also founded, served as President and Chief Executive Officer (November 1988 - March 2000) of Canadian 88 Energy Corp. ("Canadian 88", TSX: EEE; AMEX: EEE), which was converted to the Esprit Energy Trust, which was subsequently acquired by Pengrowth Corporation. Prior to forming Canadian Superior and Canadian 88, Mr. Noval was involved in numerous oil and natural gas projects and natural gas processing gathering projects. Mr. Noval has over 20 years of experience in the Canadian and international energy industries in various management capacities for a number of publicly and privately owned companies, including Imperial Oil Limited and Hudson's Bay Oil and Gas Company Limited. In addition, Mr. Noval has been the founder, officer and/or director of several public and private companies involved in the oil and gas, real estate development, farming, ranching and aviation businesses. Mr. Noval is very active in the cattle ranching and the cattle breeding business in Alberta and operates two of Alberta's largest foothills cattle ranches - the Bar-N Ranch & Cattle Company Ltd. and the Bar-N Ghost Pine Ranch Ltd. Mr. Noval holds both Bachelor of Commerce (1976) and Bachelor of Arts (Econ.)(1978) degrees from the University of Alberta (1978) and also has a Bachelor of Law degree from the University of Saskatchewan (1981). 

Ross Jones – Calgary, Alberta – Proposed Chief Financial Officer

Ross Jones was Chief Financial Officer of Rising Sky Energy Ltd, a private junior oil and gas company from August 1, 2006 through November 18, 2009. Prior thereto, Mr. Jones was Chief Financial Officer of Canadian Superior Energy Inc., a TSX listed junior oil & gas company, from November 2004 to June 30, 2006. From 2002 to 2004 Mr. Jones was President of Stevlaur Resources Ltd. an Oil and Gas financial consulting company, and from 1998 to 2001 Mr. Jones vas Vice President of Tikal Resources Corp. a junior oil and gas company listed on the TSX.

Harris L. Dvorkin – Calgary, Alberta – Director

Mr. Harris Dvorkin has over 47 years experience in the restaurant, hospitality and entertainment industries. Mr. Dvorkin has founded and currently manages a number of private companies. These include the Ranchman's Cookhouse and Dancehall Inc. (1972-Present), of which Mr. Dvorkin is a co-founder. Mr. Dvorkin is also the President and Chief Executive Officer of Ranchman's Hospitality Group Inc. (1989-Present), which serves as the operating entity for a number of companies including, Ranchman's Classic Catering Inc., a catering company servicing the province of Alberta, Ranchman's Overland Express Inc., a limousine and luxury transportation company, Ranchman's Rodeo Stock Company Inc., a rodeo event production company, Am-Can International Talent Inc., an entertainment booking agency, and Ranchman's Renegades Inc., a non-profit organization which is raising money for various charities. Mr. Dvorkin is also a member of a number of associations including the Calgary Chamber of Commerce, the Canadian Restaurant & Food Services Association, the Calgary Stampede Rodeo Committee Alumni, the Canadian Country Music Association, the Alberta Safer Bars Council and the Rotary Club of Calgary South.

Michael E. Coolen – Halifax, Nova Scotia – Director

Mr. Michael Coolen has over 35 years in the oil and gas business, 20 of which with Mobil Oil Canada and its successors, and has been involved in numerous oil and gas projects and natural gas processing and gas gathering projects, both onshore and offshore. He has completed various operational and engineering assignments in a variety of senior technical and senior management positions. These have involved many aspects of onshore and offshore exploration and production.

Mr. Coolen worked at Canadian Superior Energy Inc. ("Canadian Superior", TSX: SNG; AMEX: SNG) from July 2001 to April 2009. During his tenure with Canadian Superior, he was responsible for Canadian Superior's operations Offshore Nova Scotia, Canada, operations Offshore Trinidad and Tobago and a variety of other corporate management responsibilities associated with various senior management positions within the Company, including those of Vice President – East Coast Operations (March 2004 –April 2006), President and Chief Operating Officer (April 2006 – April 2009). Mr. Coolen became Chief Executive Officer of Canadian Superior in December 2008, a position he held until April 2009. Mr. Coolen also served as a director of the Canadian Superior from November 2005 to September 2009. Directly prior to joining Canadian Superior, Mr. Coolen was Safety, Health and Environmental Manager, ExxonMobil Canada, seconded to the Sable Offshore Energy Project, offshore Nova Scotia, Canada, as Sable's Manager of Health, Safety and Environment.

Mr. Coolen holds a Bachelor of Science degree from Dalhousie University, Nova Scotia, Canada, a Bachelor of Mechanical Engineering with Distinction from Nova Scotia Technical College, Nova Scotia, Canada, and has a variety of post graduate training, including courses at Dalhousie University, Texas A&M and Oklahoma State University. Mr. Coolen is also a Professional Engineer and a member of the Association of Professional Engineers of Nova Scotia (APENS) and the Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA).

Francis J. Reinhardt Jr. – Kinnelon, New Jersey – Director

Mr. Francis J. Reinhardt Jr. is a managing director of the energy consulting corporation, EnergyInput LLC, which advises clients on conditions and developments in the oil and gas industry (January 2009 – Present). Prior to founding EnergyInput LLC, Mr. Reinhardt acted as managing director of Burnham Securities Inc., a unit of Burnham Financial Group in New York that has corporate finance, research, asset management, brokerage and four mutual funds under its title (March 2005- December 2008). Mr. Reinhardt started his career at Carl H. Pforzheimer & Co., an investment banking and securities brokerage firm, where he spent 10 years as an equities analyst (1956-1966) and 40 years as a partner (1966-2006). Mr. Reinhardt has a Bachelor of Science from Seton Hall University and a MBA from New York University. He is past president of both the National Association of Petroleum Investment Analysts and the Oil Analysts Group of New York, and is a member of the New York Society of Securities Analysts.

Charles W. Chapman – Calgary, Alberta – Director

Mr. Charles W. Chapman is President of Chapman Petroleum Engineering Ltd. (April 1985-Present), and is responsible for all of the diversified professional services of Chapman Petroleum Engineering Ltd., domestically and internationally. Mr. Chapman is also a co-founder and President of TransAction Oil & Gas Ventures Inc., a project management company, which operates drilling ventures and oil and gas production in the Western Canadian Provinces on behalf of client companies (March 2002-Present). He is also Co-Chairman of Caspian Integrated Technologies LLP (CIT) which is a joint venture engineering consulting firm owned 50/50 by Chapman Petroleum Engineering Ltd. and Caspian Energy Research LLP, an active Kazakhstan consulting firm located in Atyrau, RoK (January 2004-Present). In addition, Mr. Chapman is a director (February 2007- Present) and Vice President of Engineering and Operations (July 2005 – Present) of Goldnev Resources Inc. Mr. Chapman provides management assistance for several other private and public companies through consulting arrangements. Mr. Chapman is a professional engineer and received his Bachelor of Mechanical Engineering from the University of Alberta in 1971.

Proposed Financing

Prior to or concurrent with the closing of the Proposed Acquisition, the Corporation expects to complete a non-brokered financing in a minimum amount of $2,000,000 in Canadian funds (the "Financing"). Additional terms of the Financing, including the price per share and the number of shares to be issued, will be announced in a subsequent press release. Any securities issued pursuant to the Financing may be subject to escrow and applicable statutory hold periods. The net proceeds of the Financing, together with the Corporation's existing funds and any necessary debt financing (the details of which will be disclosed in any subsequent press release), will be used by the Corporation to finance the Proposed Acquisition.

Sponsorship of Qualifying Transaction

Sponsorship of a Qualifying Transaction of a Capital Pool Company is required by the Exchange unless an exemption from this requirement can be obtained accordance with the policies of the Exchange. The Corporation intends to apply for an exemption to the sponsorship requirement. However, if an exemption is not obtained, the Corporation will retain a sponsor, the Corporation has not yet retained a sponsor in connection with the Proposed Acquisition, and there is no assurance that an exemption from this requirement will be obtained.

Additional Information

Completion of the Proposed Acquisition is subject to a number of conditions including, but not limited to,
the closing of the Financing, the satisfaction of the Corporation and of ISEC in respect of certain due diligence investigations to be undertaken by each party, the completion of a definitive agreement setting forth the terms and conditions set out in the Letter of Intent, closing conditions customary to transactions of the nature of the Proposed Acquisition, Exchange acceptance and, if required by Exchange policies, majority of the minority shareholder approval. Where applicable, the Proposed Acquisition cannot close until the required shareholder approval is obtained and there can be no assurance that the Proposed Acquisition will be completed as proposed or at all.

If and when a definitive agreement between the Corporation and ISEC is executed, in accordance with the policies of the Exchange, the Corporation will issue a subsequent press release containing the details of the definitive agreement and additional terms of the Proposed Acquisition, including information relating to sponsorship, summary financial information in respect of the Assets, and to the extent not contained in this press release, additional information with respect to the Financing, history of the Assets and the proposed directors, officers, and insiders of the Corporation upon completion of the Proposed Acquisition.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying 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 Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved or disapproved the contents of this press release.

Cautionary statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws relating to the proposal to complete the Proposed Acquisition and associated transactions, including statements regarding the terms and conditions of the Proposed Acquisition and associated transactions. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, the risks that the parties will not proceed with the Proposed Acquisition and associated transactions, that the ultimate terms of the Proposed Acquisition and associated transactions will differ from those that currently are contemplated, and that the Proposed Acquisition and associated transactions will not be successfully completed for any reason (including the failure to obtain the required approvals or clearances from regulatory authorities). The statements in this news release are made as of the date of this release. The Corporation undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Corporation, RSR, the Properties or their respective financial or operating results or (as applicable), their securities.

This news release also includes information expressed in BOEs. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Neither the TSX Venture Exchange, Inc. nor its Regulation Service Provider (as that term is defined under the policies of the TSX Venture Exchange) has in any way passed upon the merits of the Proposed Acquisition and associated transactions and has neither approved nor disapproved of the contents of this press release.

Contact Information

  • PrimeWest Exploration Inc.
    Manjeet S. Dhillon
    Chief Financial Officer
    (403) 974-8861