Avery Resources Inc.

Avery Resources Inc.

July 14, 2005 11:23 ET

Sequoia Oil & Gas Trust and Avery Resources Announce Signing of Letter of Intent for Share Subscription and Formation of Strategic Australian Joint Venture

CALGARY, ALBERTA--(CCNMatthews - July 14, 2005) - Sequoia Oil & Gas Trust ("Sequoia" or the "Trust") (TSX: SQE.UN) and Avery Resources Inc. ("Avery") (TSX VENTURE:ARY) are pleased to announce they have signed a letter of intent to enter into a joint venture agreement (the "Agreement") with respect to Avery's oil and gas development activities in Australia and for Sequoia to invest $4.2 million in Avery, representing approximately 45 percent (47 percent fully diluted) ownership of Avery. The consideration to be paid by Sequoia for the Avery units will be a combination of property and cash. The property, located at Fox Creek in north-central Alberta, is non-operated and contains four producing natural gas wells (sweet gas) and covers two sections (1,280 acres) of developed lands.

The Agreement and participation in Avery will allow Sequoia to establish a strategic foothold in Australia, an area in which Avery has successfully established a strong acreage position on multiple plays. Partnering with Sequoia will allow Avery to benefit from greater financial flexibility in competing for and funding exploration and development opportunities.

Sequoia's executive team has extensive international business and industry experience and is particularly familiar with the Australian oil and gas sector. As well, Sequoia believes that Australia is an attractive international oil and gas play for a trust, as it provides:

- Ample opportunities in producing basins containing relatively mature fields

- Stable geopolitical environment and fiscal regime

- Transparent, predictable and practical regulatory environment, along with a free-market philosophy in both industry and government

- Well-educated human resources

"We are very impressed by the Avery team and what they've accomplished in Australia," said Bradley Johnson, President and CEO of Sequoia. "Their access to deal flow is excellent and will be further enhanced by Sequoia's financial strength and experience. We also believe that Sequoia's participation in the Australian oil and gas business will provide significant future economic growth and value for the Trust's unitholders."

Mr. Johnson said the Trust's primary focus will continue to be on the Western Canadian Sedimentary Basin.

David Little, Chairman and Chief Executive Officer of Avery, said the agreements maximize value for Avery shareholders.

"We are very excited about growing our position in Australia as a result of our joint venture agreement with Sequoia," Mr. Little said. "Working together with Sequoia will significantly enhance our ability to pursue new opportunities and exploit existing ones."

Avery's Australian interests are currently focused on the Katandra discovery in the Vulcan Sub-Basin offshore Australia and the Cooper Basin in Queensland and South Australia. At Katandra, Avery holds a 10 percent interest with an Australian production company in a joint venture that covers 272 square kilometres (km2) (67,000 acres). The discovery well drilled in December 2004 encountered a seven metre column of extremely light (48 degrees API) oil indicating multiple follow-up prospects. For the second half of 2005, Avery plans to participate in a large 3D seismic program in this area. A farm-in with another Australian producer covers 2,650 km2 of land in the Cooper Basin in central Australia, a highly prospective, under-explored producing region, as well as other prospective domestic basins. Several other projects are being negotiated with industry partners in the Cooper Basin, which will be announced as they are concluded.

Sequoia's investment in Avery will consist of the purchase of 16,800,000 units at a price of $0.25 per unit. Each unit includes one common share and one-half of a common share purchase warrant, which entitles Sequoia to acquire one-half of an additional common share at a price of $0.50 per share for a period expiring 24 months from the date on which the warrant is issued.

Avery also announces that the terms of the currently outstanding financing, announced on July 21, 2005, have been amended. A total of up to four million units will be offered for sale at a price of $0.25 per unit. Each unit will consist of one common share and one-half of a common share purchase warrant. Each warrant shall entitle the holder thereof to acquire one additional common share at a price of $0.50 for a period expiring 24 months from the date on which the warrant is issued subject to early expiration in the event that certain price targets are met. The net proceeds of the offering will be used to enable Avery to fund ongoing seismic and exploration drilling expenditures on Avery's projects in Australia and the UK.

Closing of the Agreement and share subscription is anticipated to occur in September 2005, following a meeting of the shareholders of Avery to approve the plans as laid out in the letter of intent. An information circular is expected to be mailed to Avery shareholders in August.

Sequoia is a growth-oriented oil and natural gas trust with a high quality, diversified asset base. Sequoia's units commenced trading on the Toronto Stock Exchange on April 26, 2005 under the symbol "SQE.UN".

Avery is an international junior oil and gas exploration company based in Calgary, Alberta that trades on the TSX Venture Exchange under the symbol "ARY". The company is committed to growing shareholder value through international acquisitions and exploration. Avery's primary interest is in expanding exploration projects in oil and gas basins located in countries that provide significant exploration upside coupled with favourable fiscal and legal systems.

Completion of the transactions is subject to a number of conditions, including, but not limited to, TSX Venture Exchange acceptance. There can be no assurance that the transaction will be completed as proposed or at all.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transactions and neither approved nor disapproved the contents of this news release.

Contact Information

  • Sequoia Oil & Gas Trust
    Anne-Marie Buchmuller
    Manager, Investor Relations
    (403) 451-2057
    Sequoia Oil & Gas Trust
    Bradley Johnson
    President & Chief Executive Officer
    (403) 770-6300
    Sequoia Oil & Gas Trust
    Paul Belliveau
    Vice President & Chief Financial Officer
    (403) 770-6300
    Email: investor@sequoiatrust.com
    Website: www.sequoiatrust.com
    Avery Resources Inc.
    David A. Little
    Chairman & Chief Executive Officer
    (403) 205-2526 or Toll-free: 1-(866)-225-2783
    Avery Resources Inc.
    Bill Bale
    Investor Relations
    (403) 205-2526 or Toll-free: 1-(866)-225-2783
    Email: info@averyresources.com
    Website: www.averyresources.com