Sanction Capital Corp.

TSX VENTURE : SRP.H


August 22, 2014 12:06 ET

Sanction Capital Corp. Announces Mailing of Joint Management Information Circular and Disclosure of Resource Information

CALGARY, ALBERTA--(Marketwired - Aug. 22, 2014) -

NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Sanction Capital Corp. ("Sanction") (TSX VENTURE:SRP.H) and Marsa Energy Inc. ("Marsa") are pleased to announce that they have each mailed a joint information circular dated August 14, 2014 (the "Circular") to their respective shareholders respecting their proposed amalgamation (the "Amalgamation"), details of which were previously announced on July 31, 2014. A copy of the Circular is available on Sanction's SEDAR profile at www.sedar.com. Each of the meetings of shareholders of Sanction and shareholders of Marsa will take place on September 11, 2014. The Amalgamation is expected to constitute the Qualifying Transaction (as such term is defined in the policies of the TSX Venture Exchange ("TSXV")) of Sanction.

About Marsa Energy Inc.

Marsa is a junior oil and gas company focused on the Middle East, North Africa and Mediterranean regions. Marsa is engaged in the exploration for and development and production of oil and natural gas. Marsa is active (through its subsidiaries) in Turkey and has offices in Calgary, Canada, Amsterdam, The Netherlands and Ankara, Turkey.

Marsa Resource Information

The following is a summary of the natural gas resources of Marsa based on a prospective resources report and contingent resources report, prepared in accordance with National Instrument 51-101 ("NI 51-101") and COGE Handbook resource definitions by DeGolyer and MacNaughton as at December 31, 2013 and dated July 29, 2014 and July 25, 2014, respectively (collectively, the "Marsa Resource Report"). Detailed information with respect to Marsa's resources are included in the Circular.

Prospective Resources

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. The prospective resources included in the Marsa Resource Report indicate exploration opportunities and development potential in the event a petroleum discovery is made and should not be construed as reserves or contingent resources. DeGolyer and MacNaughton did not perform an economic analysis on these resources; as such the economic status of these resources is undetermined.

The following table sets forth summary information relating to Marsa's gross working interest in prospective resources in 14 gas prospects comprising Exploration Licence AR/MRS/3913 in No. XVII Izmir Petroleum District located in the Thrace Basin in the Republic of Turkey (the "Ortakoy Exploration Licence"), based on the Marsa Resource Report effective December 31, 2013.

Low
Estimate
Best
Estimate
High
Estimate
Mean
Estimate
Gross Prospective Raw Natural Gas Resources, 106ft3 41,366 60,257 87,781 62,910
Gross Prospective Condensate Resources, 103bbl 184 413 928 504
Notes:
1. Low, best, high and mean estimates in this table are P90, P50, P10 and mean, respectively.
2. Pg has not been applied to the volumes in this table.
3. Application of any geological and economic chance factor does not equate prospective resources to contingent resources or reserves.
4. Recovery efficiency is applied to prospective resources in this table.
5. The prospective resources presented above are based on the statistical aggregation method.
6. There is no certainty that any portion of the prospective resources estimated herein will be discovered.If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources evaluated.

Contingent Resources

Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with at project in the early evaluation stage.

The estimated gross contingent resources attributable to the reservoirs evaluated in the Destan and Poyraz fields located in the Ortakoy Block 3913 in the Thrace Basin of Turkey, as of December 31, 2013 are summarized in the following table (for consistency with the categorization of contingent resources terminology used in the COGE Handbook and Petroleum Resources Management System approved in March 2007 by the Society of Professional Engineers, the World Petroleum Council, the American Association of Petroleum Geologists, and the Society of Petroleum Evaluation Engineers, the Low, Best and High estimates of contingent resources summarized below are equivalent to 1C, 2C, and 3C contingent resources estimates, respectively):

Gross Contingent Resources
Marketable Gas
(Mcf)
Condensate
(bbl)
Low Estimate 9,781,324 101,623
Best Estimate 13,845,217 120,898
High Estimate 22,106,467 149,691
Notes:
1. Application of any risk factor to contingent resources quantities does not equate contingent resources with reserves.
2. There is no certainty that it will be commercially viable to produce any portion of the contingent resources evaluated herein.
3. The low estimate is considered to be a conservative estimate of the quantity that will actually be recovered.It is likely that the actual remaining quantities recovered will exceed the low estimate.
4. The best estimate is considered to be the best estimate of quantity that will actually be recovered.It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate.
5. The high estimate is considered to be an optimistic estimate of the quantity that will actually be recovered.It is unlikely that the actual remaining quantities recovered will exceed the high estimate.
6. Quantities shown in this table represent the arithmetic sum of the gross contingent resources attributable to the Destan and Poyraz fields.

Work Program

The business plan for the corporation continuing from the Amalgamation (the "Resulting Issuer") will be further developed by the management team of the Resulting Issuer following the completion of the Amalgamation, at which time the Resulting Issuer will have estimated working capital, assuming the brokered private placement financing of up to 2,400,000 subscription receipts of Marsa at a price of $1.50 per Subscription Receipt for aggregate gross proceeds of $3,600,000 (the "Concurrent Financing") is not completed, of approximately US$6,120,000 and no long term debt.

David Paterson, a registered Professional Geophysicist with APEGA and author of the report prepared by D.W. Paterson & Associates dated July 31, 2014 entitled "Technical Report Ortakoy Licence: AR/MRS/3913 Thrace Basin, Turkey TSX-V Tier II Listing Compliance" (the "Marsa Geological Report") indicated in the Marsa Geological Report that Marsa's planned exploration drilling program is targeting three well defined prospects and has a high chance of success; it being a reasonable program within an overall clear exploration business strategy. Mr. Paterson is not considered to be independent for the purposes of NI 51-101 because he beneficially owns, directly or indirectly 15,000 Marsa Shares, being less than 0.1% of the issued and outstanding Marsa Shares. Upon completion of the Amalgamation, he will own 15,000 shares of the Resulting Issuer, which will be less than 0.1% of the issued and outstanding Resulting Issuer shares.

The following are the proposed business objectives, milestones for achieving those objectives and the estimated costs and target dates associated with those objectives for Resulting Issuer as of the date hereof, assuming the Concurrent Financing is not completed:

Business Objectives Milestones Required
to Achieve Business
Objectives
Target Date for
Achievement of
Milestones
Estimated Costs

(US$)
Increase resources and secure gas deliverability Drill and log the
following wells:
Poyraz N3-1
Poyraz West-1
Poyraz S4-1


August, 2014
September, 2014
October, 2014


$968,000
$1,303,000
$1,338,000
TOTAL $3,609,000

Assuming the Concurrent Financing is completed, in which case the Resulting Issuer will have estimated working capital of approximately US$9,120,000 and contingent upon the success of the drilling of the wells identified above, the following are the additional proposed business objectives, milestones for achieving those objectives and the estimated costs and target dates associated with those objectives for Resulting Issuer as of the date hereof:

Business Objectives Milestones Required
to Achieve Business
Objectives
Target Date for
Achievement of
Milestones
Estimated Costs

(US$)
Increase resources and secure gas deliverability Completion and testing of the following wells:
Poyraz N3-1
Poyraz West-1
Poyraz S4-1


January, 2015
January, 2015
January, 2015


$200,000
$200,000
$200,000
Develop discovered resources into reserves Complete Preliminary Front End Engineering Design (FEED) for facilities and pipeline January, 2015 $1,600,000
TOTAL $2,200,000

Trading Halt

Trading in Sanction's shares was voluntarily halted on July 31, 2014 and will remain halted until the documentation required by the TSXV in connection with the Qualifying Transaction has been reviewed and accepted by the TSXV.

Subject to satisfaction or waiver of the conditions precedent referred to herein and an amalgamation agreement dated July 30, 2014 between Sanction and Marsa, the parties anticipate the proposed Amalgamation will be completed on or before September 30, 2014.

The TSXV conditionally accepted the Qualifying Transaction on August 14, 2014. Completion of the proposed Qualifying Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance. Where applicable, the proposed Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the proposed Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Circular prepared in connection with the proposed Qualifying Transaction, any information released or received with respect to the proposed 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 TSXV has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release.

All information contained in this press release with respect to Sanction and Marsa was supplied by Sanction and Marsa, respectively, for inclusion herein. Sanction and its directors and officers have relied exclusively on Marsa for any information concerning Marsa including, without limitation, all information concerning Marsa's resources and the Resulting Issuer's work program.

ADVISORY: This press release may contain "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein may be forward-looking information. Generally, forward-looking information may be identified by the use of forward-looking terminology such as "plans", " expects" or "does not expect", "proposed", "is expected", "budgets", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. This forward-looking information in respect of Sanction and Marsa reflects Sanction's or Marsa's, as the case may be, current beliefs and is based on information currently available to Sanction and Marsa, respectively, and on assumptions Sanction or Marsa, as the case may be, believes are reasonable. These assumptions include, but are not limited to, details regarding the Amalgamation and Marsa's assumptions regarding potential resource estimates. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Sanction, Marsa or the Resulting Issuer to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: general business, economic, competitive, political and social uncertainties; commodity prices; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting Marsa; timing and availability of external financing on acceptable terms and the drilling and completion of future wells. Although Sanction and Marsa have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

The forward-looking statements contained in this press release represent the expectations of Sanction and Marsa as of the date of this press release and, accordingly, are subject to change after such date. However, Sanction and Marsa each expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.

Reader Advisory Regarding Disclosure of Resources

Unless otherwise indicated, all estimates of resources in this press release have been prepared or evaluated in accordance with the COGE Handbook.

THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.

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

Contact Information

  • Sanction Capital Corp.
    Leif Snethun
    President, Chief Executive Officer and
    Chief Financial Officer
    (403) 617-6808