Rock Energy Inc.
TSX : RE

Rock Energy Inc.

February 14, 2012 22:42 ET

Rock Energy Announces Sale of remaining Montney Natural Gas Assets at Elmworth

CALGARY, ALBERTA--(Marketwire - Feb. 14, 2012) - Rock Energy Inc. (TSX:RE) ("Rock") is pleased to announce that it has entered into a second purchase and sale agreement for the sale of its remaining Montney natural gas assets in Elmworth to a Canadian oil and gas producer. Gross proceeds, including proceeds from the asset sale previously announced on February 9, 2012, total $46 million. Closing of this final transaction is anticipated to occur before the end of February 2012 and is subject to customary asset sale conditions. FirstEnergy Capital Corp. acted as exclusive financial advisor to Rock for this transaction.

This asset sale, along with the asset sale previously announced on February 9th, 2012 have combined production from the Elmworth area of 310 boe per day during the fourth quarter of 2011 with proved reserves of 5.9 million boe and proved and probable reserves of 12.6 million boe (based on the GLJ reserves report effective August 31, 2011). Approximately 40,900 net acres of undeveloped land with petroleum and natural gas rights to the Montney are included in these asset sales.

The sale of the Elmworth natural gas assets marks the conclusion of the previously announced process to review strategic alternatives.

Adjusted for the sale of the Elmworth assets, current production is estimated to be 2,400 boe per day (75% crude oil and natural gas liquids). In addition to an undrawn bank facility of $45 million, Rock will have over $10 million of cash following the closing of the sale of these remaining assets.

With its strong balance sheet, available bank line and inventory of crude oil drilling locations, Rock is well positioned to execute its new business plan, grow oil production through the drill bit, and pursue strategic acquisitions/mergers to complement its existing asset base.

Advisory Regarding Forward-Looking Information and Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "will", "expects", "believe", "plans", "potential" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward looking statements and information concerning the sale by Rock of its remaining natural gas assets in Elmworth.

The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Rock. Although Rock believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Rock can give no assurance that they will prove to be correct. There is no certainty that Rock will achieve commercially viable production from its undeveloped lands and prospects.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Rock are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

We have adopted the standard of 6 mcf:1 barrel of oil equivalent ("boe") when converting natural gas to boes. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an indication of value.

The forward-looking statements and information contained in this press release are made as of the date hereof and Rock undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

For further information please visit our website at www.rockenergy.ca.

Contact Information

  • Rock Energy Inc.
    Allen J. Bey
    CEO
    (403) 218-4380

    Rock Energy Inc.
    John H. Van de Pol
    President & CFO
    (403) 218-4380
    www.rockenergy.ca