RockBridge Resources Inc.
TSX VENTURE : RBE

RockBridge Resources Inc.

July 09, 2012 13:39 ET

RockBridge Announces Details of Merger With Crimson Energy Ltd.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 9, 2012) - RockBridge Resources Inc. ("RockBridge" or the "Company") (TSX VENTURE:RBE) today announced details concerning its merger with Crimson Energy Ltd. ("Crimson"). Crimson is a private company incorporated under the laws of Alberta focused on liquids rich gas development in the Deep Basin area of Central Alberta and a high impact Nisku oil play in West Central Alberta.

The Agreement

RockBridge has entered into a formal amalgamation agreement with Crimson dated July 4, 2012 (the "Agreement"), pursuant to which RockBridge and Crimson have agreed to complete a merger by a three-cornered amalgamation (the "Transaction"). Pursuant to the terms of the Transaction, RockBridge will acquire all of the issued and outstanding common shares of Crimson ("Crimson Shares"), assuming exercise of all outstanding Crimson options pursuant to the amalgamation agreement, for a total purchase price of $4,362,018 with a deemed price of $0.80 per Crimson Share. RockBridge will issue 16 common shares of RockBridge (the "RockBridge Shares") for each Crimson Share for an aggregate total of 87,240,368 RockBridge Shares to be issued in exchange for all of the outstanding Crimson Shares. The Transaction, when completed, will constitute a reverse takeover transaction of RockBridge pursuant to Policy 5.2 of the TSX Venture Exchange (the "Exchange").

RockBridge has entered into Lock-up Agreements with directors and officers of Crimson and related parties, who have agreed, subject to certain standard exceptions, to vote their shares in favour of the Transaction. A total of 3,774,970 Crimson Shares, or approximately 71.3% of the Crimson Shares, together with all outstanding Crimson options, are subject to the Lock-up Agreements.

Non-Arm's Length Transaction

The Transaction will be a non-arm's length transaction. Michael O'Byrne is a director and officer of both RockBridge and Crimson. There are no other common directors or officers. Mr. O'Byrne has been the President, CEO and a director of RockBridge since December 2011 and is a minor shareholder of RockBridge. Mr. O'Byrne is a co-founder and Senior Vice President, Land of Crimson and its major shareholder, holding 41% of the common shares of Crimson. He is also a lender to Crimson.

RockBridge and Crimson had previously entered into agreements with respect to several Crimson properties, as described below.

Conditions of Closing

The completion of the Transaction is subject to the approval of the Exchange and all other necessary regulatory approval. The completion of the Transaction is also subject to additional conditions precedent, including, satisfactory completion of due diligence reviews, a valuation of Crimson by RockBridge and board of directors approval of RockBridge. It is a requirement of the Exchange that RockBridge obtain approval by the vote of RockBridge shareholders who are not non- arm's length parities to the Transaction and to RockBridge.

About Crimson and the Crimson Properties

Crimson has varying working interests in 18 producing wells with an average production of 120 boepd. The wells and associated lands are situated in the West Central Alberta Deep Basin, the Peace River Arch and Northern Alberta.

West Central Alberta

Chambers/Ferrier (Deep Basin)

Crimson has a working interest (WI) in 3 producing gas wells and 6 SI/Standing wells in the Chambers/Ferrier Area. The producing wells in section 1-41-10W5M, (3-01 and 9-01) are operated by TAQA North and produce approximately 4 boepd net to Crimson (6.625% WI). An offsetting well in 8-02 is currently shut-in and is a candidate for a possible workover/recompletion.

The Ferrier 14-06-41-10W5M discovery well was drilled by Husky and Crimson in late 2008 and completed by Crimson in late 2009/early 2010. The well was tested in three zones at a combined rate of approximately 1500 mcf per day and 35bbls/mmcf per day of NGL's and condensate. The well was put on production to the Keyera operated Strachan Deep Cut Gas Plant in October 2011. March 2012 production from the well averaged approximately 80 boepd. Crimson has a 63.1455% WI (APO) in the well and in the offsetting 6-05 wellbore.

Crimson also has varying working interests (8.28-15.6%) in 3 standing wells in the Chambers area (41-11W5M).

Pembina/Violet Grove

In 2011 Crimson acquired a 100% working interest in three sections of land with seismically identified Nisku oil potential from a major oil company in the Violet Grove area of west central Alberta. There are two drilling locations identified from 3D seismic interpretation that were licenced by the previous owner. In 2011 Crimson also re-entered an abandoned well bore in 9-34-47-08 W5M and re-completed the well in the Mannville which tested very low gas rates indicating a tight zone.

RockBridge holds a 50% WI in the 9-34 well, and has the right, subject to further financing, to farm-in on a high impact, light oil project paying 25% of the well costs to earn a 15% WI in the three sections of land.

Harmattan

Crimson has a 35% WI in a Rundle Oil Well located in LSD 14-08-32-02W5M. The well is operated by TAQA North and produces 15-20 boepd (5-7 boepd Crimson WI). Horizontal well potential has been identified on Crimson lands offsetting the 14-08 well. Crimson (50% WI) acquired an additional section of land offsetting the 14-08 well at the October 13, 2010, Alberta Crown Sale.

Kaybob

Crimson participated in the drilling of a deep Duvernay Shale oil/gas test in the Kaybob area (14-15-61-21 W5M). The well encountered 30 metres of Duvernay zone and was subsequently plugged back; intermediate casing set; and the rig released. The operator's future plans are to re-enter the well and drill a horizontal section in the Duvernay. After drilling the test well Crimson farmed out its working interest in the well and surrounding 10 sections of land for Crimson's share of drilling costs and gross overriding royalties (GORR) ranging from 0.7% to 1.18%.

Giroux

Crimson converted its 25% WI to a 12.5% GORR in a standing Montney well at 6-08-66-20 W5M. The well was fracture stimulated by the operator and tested oil, water and gas. The well has been tied into a nearby gas gathering system and averaged 4.5 boepd in March 2012.

Peace River Arch

Wapiti

Crimson has a gross overriding royalty interest in 9 producing gas wells and a working interest in 3 other producing wells in the Steep Creek and Wapiti area, near Grande Prairie in Northwestern Alberta. Crimson's March 2012 production in Wapiti averaged 20 boepd.

Knopcik

RockBridge farmed in on Crimson and re-tested a standing/shut-in Nikanassin gas well at 5-10-74-11 W6M which resulted in proving up gas potential in the well/zone and obtaining an extension to the primary term of the petroleum and natural gas lease. Future plans are to re-stimulate the Nikannassin; re-complete the uphole Dunvegan zone; and commingle production from both zones. Crimson and RockBridge each hold a 50% WI in the well.

Northern Alberta

Little Horse/Randell

Crimson has 3.375% WI in 2 producing oil wells operated by Penn West Petroleum in the Little Horse/Randell area of Alberta.

Cherpeta/Francis

Crimson has a 40.5% WI in 2 producing wells operated by Husky in the Cherpeta/Francis area of Northeastern Alberta. Crimson's WI production in March 2012 was approximately 50 boepd.

Crimson Reserve Report

An evaluation of Crimson's oil and natural gas reserves in respect of the Crimson Properties effective as of March 31, 2012 and dated April 17, 2012 has been prepared in accordance with the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities by Fekete and Associates. The following sets forth the reserves volumes and future net revenues associated with the Crimson Properties. Net present values of future net revenue do not represent fair market value.

Forecast Pricing

Oil Natural Gas
Associated &
Light and Medium NGL'S Non-Associated Mboe
Gross Net Gross Net Gross Net Gross Net
(mstb) (mstb) (mstb) (mstb) (MMcf) (MMcf) (mboe) (mboe)
Proved Developed Producing
6.9

5.1

62.9

45.5

1875.0

1728.0

382.3

338.6
Proved Developed Non-Producing
0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0
Proved Undeveloped 0.6 0.6 0.0 0.0 9.0 9.0 2.1 2.1
Total Proved 7.5 5.7 62.9 45.5 1884.0 1737.0 384.4 340.7
Probable Additional 2.5 1.8 134.0 100.7 3058.0 2820.0 646.2 572.5
Total Proved + Probable 10.0 7.5 196.9 146.2 4942.0 4557.0 1030.6 913.2
Net Present Value Before Tax (all $,000's)
0% (M$) 5% (M) 10% (M$) 15% (M$)
Proved Developed Producing 9686 5838 4140 3234
Proved Developed Non-Producing 0.0 0.0 0.0 0.0
Proved Undeveloped 97.0 76.0 63.0 53.0
Total Proved 9783 5914 4203 3287
Probable Additional 15151 7202 4097 2497
Total Proved Plus Probable Additional 24934 13116 8300 5784
Marketable Reserves Proved Developed Total Proved Total Proved 2P 2P
NOI ($M) Producing NOI Investment NOI Investment NOI
2012 475 60.5 487 60.5 508
2013 668 --- 681 4730.8 2503
2014 648 --- 658 --- 2390
2015 569 --- 578 --- 2006
2016 501 --- 509 --- 1761

Summary of Forecast Pricing and Cost Rate Assumptions as at March 31, 2012

Crude Oil Natural Gas NGL
Cost
Inflation
Rate
Cdn to US
Exchange
Rate
WTI at
Cushing, OK
($US/bbl)
Edmonton
City Gate
($CDN/bbl)
Henry Hub Spot
US $/mcf
($US/Mcf)
Alberta
Direct Spot
Plant Gate
($CDN/Mcf)
Alberta
AECO
Average
($CDN/Mcf)
Propane
Edm Per
($CDN/bbl)
Butane
Edm Per
($CDN/bbl)
2012 2.00% 1.00 $ 100.00 $ 96.00 $ 2.75 $ 2.25 $ 2.50 $ 55.20 $ 72.00
2013 2.00% 1.00 $ 101.00 $ 98.00 $ 3.75 $ 3.20 $ 3.45 $ 56.35 $ 73.50
2014 2.00% 1.00 $ 102.00 $ 100.00 $ 4.50 $ 3.95 $ 4.20 $ 57.50 $ 75.00
2015 2.00% 1.00 $ 103.00 $ 102.00 $ 5.00 $ 4.45 $ 4.70 $ 58.65 $ 76.50
2016 2.00% 1.00 $ 104.00 $ 104.00 $ 5.50 $ 4.95 $ 5.20 $ 59.80 $ 78.00

Financial Information of Crimson

Based on the unaudited management prepared financial statements of Crimson for the financial year ended December 31,2011, Crimson had revenue of $823,849, expenses of $1,697,717 and net loss of $873,868. In addition, as at December 31, 2011, Crimson had total assets of $5,354,612 and current liabilities of $4,730,700. It is expected that more than $4.2 million of the current liabilities, which are loans, will be extended, if not reduced, and become long term liabilities.

Based on the unaudited management prepared financial statements of Crimson for the 3 months ended March 31, 2012 Crimson had revenue of $258,712, expenses of $418,676 and net loss of $159,964. In addition, as at March 31, 2012, Crimson had total assets of $4,265,945 and current liabilities of 4,496,223.

Crimson Corporate History and Structure

Crimson was incorporated as White Max Energy Ltd. under the Business Corporations Act (Alberta) on March 12, 2004. In September 2009, the name was changed to Crimson Energy Ltd. The registered office and head office of Crimson are both located at 900, 2424 - 4th Street SW, Calgary, Alberta T2S 2T4.

Crimson currently has 5,293,148 Crimson Shares issued and outstanding, and 425,000 stock options outstanding. There are no other warrants, anti-dilution or other rights to purchase Crimson Shares issued or outstanding. The principal shareholders of Crimson are Michael J. O'Byrne (41%), James E. O'Byrne (17%) and Bernard W. Goruk (13%) (including related parties).

Sponsorship

RockBridge intends to apply to the Exchange for an exemption from Sponsorship, but there is no assurance that such an exemption will be granted.

Directors and Officers of the Merged Company

The following are the proposed directors and officers of the merged company, on completion of the Transaction, with the positions they are to hold:

James E. O'Byrne, Chairman

Mr. O'Byrne has over 50 years' experience in executive management and petroleum land management. His past experience includes Stanolind (Amoco), Quintana (VP Land), Range Petroleum (President), Berkley Resources (VP Operations). He is currently Chairman of Altima Resources. He is also the past CEO of Crimson Energy.

Bob Petryk, P. Eng., Director

Mr. Petryk is a professional engineer with over 35 years of technical, operational and managerial experience in the O&G industry. He is currently Operations Manager with Transeuro Energy. He was formerly with Forbes Energy Group serving as VP of Operations for Sagres Energy and Operations Manager for Stetson Oil & Gas. He has previously held executive positions at Bankers Petroleum, Redwood Energy, Canadian Fracmaster and Petrorep Resources.

Dario Sodero, Director

Mr. Sodero is a geologist with over 40 years of Canadian and International O&G exploration experience. He is currently President of Planaval Resources Ltd. (a private company) and a director of Cygam Energy Inc. and Candel International Energy Ltd. He has previously worked for Canada Cities Service (Geological Manager), Atlas Yellowknife Resources (President), Coachlight Resources (Co-Founder), Sheer Energy Inc. (Co-Founder) and Cygam (President). He has been a director of RockBridge since 2011.

Roger Giovanetto, Director

Mr. Gianvanetto is a Professional Engineer with technical, operational and managerial experience in the O&G industry in North America and Siberia. He is currently President of R&H Engineering Ltd., a metallurgical, materials and corrosion engineering services company. His previous experience includes the development and management of oilfield chemical operations, corrosion consulting companies and an Alberta based public oil and gas company. He has been a director of RockBridge since 2011 and Equal Energy since 2006.

B.W. (Bernie) Goruk, P. Eng, President, CEO and Director

Mr. Goruk has over 35 years' experience in executive management, petroleum engineering and O&G operations. Former Property Management Team Leader at Amoco which included 20 years of varied experience in conventional O&G and heavy oil operations; drilling/completions; exploitation/ exploration and acquisitions/divestitures. He was a co-founder and Senior VP of Intrepid Energy which grew from 0 to 3000 boepd and $120 million reserve value before being sold to an income trust. He has also worked at Range Petroleum, Segue Energy, Duvernay Oil, and is currently President & COO of Crimson.

Michael J. O'Byrne, Executive VP Business Development/Land

Mr. O'Byrne has over 17 years' experience in petroleum land management and acquisitions at Range Petroleum, Golden Eagle and Unbridled Energy. He is a Co-Founder of Crimson and has been President & CEO of RockBridge Resources since December 2011.

Mark Cutten, CA, CFO

Mr. Cutten has over 37 years in oil and gas accounting experience with private and public companies. He was formerly Controller and CFO of Southward Energy and Pointer Energy. He was formerly Controller for Quintana Exploration and Barnwell of Canada.

Financing Update

RockBridge is continuing with it current offering of up to $3.0 million of flow-through and non flow-through units at $0.05 each, each unit containing one common share and one share purchase warrant each exercisable to purchase one share for two years at $0.15 per share. A small first tranche of the financing was closed as of June 29, 2012 of $160,000 for which it issued 1,700,000 flow through units and 1,500,000 non flow through units.. RockBridge paid commissions of $5,800 cash and issued 116,000 brokers' warrants, exercisable for one share for two years at $0.15. All of the shares issued are subject to a four month holder period.

RockBridge anticipates closing the remainder of the current placement in July, and conducting a further financing in the fall to close concurrent with the Transaction.

About RockBridge Resources Inc.

RockBridge, along with its joint venture projects with Crimson Energy Ltd., has 18% to 50% working interests in five and three quarter sections in the Pembina Cardium oil and gas field in Alberta. In addition, RockBridge has a 1.0% interest in the producing Woodrush project in BC and various interests in non-operating projects in Alberta.

ON BEHALF OF THE BOARD

ROCKBRIDGE RESOURCES INC.

Steve Mathiesen, Chairman

Should you wish to receive Company news via email, please email juliet@chfir.com and specify "RockBridge Resources" in the subject line.

As indicated above, completion of the Transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance and if applicable pursuant to TSX Venture Exchange requirements, majority of the minatory shareholder approval. The Transaction cannot close until the required shareholder approval is 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 information circular of RockBridge 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 the Corporation should be considered highly speculative. The TSX Venture Exchange has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this release.

This news release may include statements about expected further events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. RockBridge cautions that actual performance will be affected by a number of factors, many of which are beyond its control. Future events and results may vary substantially from what RockBridge currently foresees. Discussion on the various factors that may affect future results is contained in RockBridge's recent filings, available on SEDAR.

Reference to BOE means barrels of oil equivalent and is derived by converting gas to oil at the ratio of six thousand cubic feet (mcf) of gas to one barrel (bbl) of oil. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner top and does not represent a value equivalency at the wellhead. References to BOEPD means barrels of oil equivalent per day.

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

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