Shoreline Energy Corp.
TSX VENTURE : SEQ

May 02, 2011 07:30 ET

Shoreline Energy Corp. Completes $39 Million Offering and Acquires Oil and Gas Assets

Company Completes Prospectus Offering

CALGARY, ALBERTA--(Marketwire - May 2, 2011) -

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Shoreline Energy Corp. (TSX VENTURE:SEQ) (the "Company") is pleased to announce that it has closed its previously announced long form prospectus offering of 3,330,358 unit subscription receipts (the "Unit Subscription Receipts") at a price of $10.00 per Unit Subscription Receipt and 500,000 flow-through subscription receipts (the "Flow-Through Subscription Receipts") at a price of $12.00 per Flow-Through Subscription Receipt for aggregate gross proceeds of $39,303,580 (the "Offering"). The Unit Subscription Receipts and Flow-Through Subscription Receipts (collectively, the "Subscription Receipts") were offered for sale on a commercially reasonable efforts basis in accordance with an agency agreement dated April 20, 2011, between the Company and MGI Securities Inc.(the "Lead Agent") and GMP Securities L.P., Macquarie Capital Markets Canada Ltd., HSBC Securities (Canada) Inc., Jennings Capital Inc., Octagon Capital Corporation, PI Financial Corp., Casimir Capital Ltd. and Clarus Securities Inc. (collectively, the "Agents").

The Company has granted to the Agents an over-allotment option, exercisable at any time on or before the date that is 30 days following closing, to offer for sale up to 499,553 Units (defined below) at a price of $10.00 per Unit, to cover over-allocations, if any, and for market stabilization purposes. If the over-allotment option is exercised in full, gross proceeds of the Offering will be $44,299,110.

The Unit Subscription Receipts and Flow-Through Subscription Receipts (collectively, the "Subscription Receipts") were created pursuant to the terms and conditions of a subscription receipt agreement (the "Subscription Receipt Agreement") among the Company, the Lead Agent, on behalf of the Agents, and Computershare Trust Company of Canada (the "Subscription Receipt Agent"). The Subscription Receipt Agreement required the net proceeds of the Offering to be held in escrow by the Subscription Receipt Agent pending the satisfaction of certain conditions (the "Escrow Release Conditions").

The Agents received a cash commission of 7% of the gross proceeds upon satisfaction of the Escrow Release Conditions. As additional compensation, upon satisfaction of the Escrow Release Conditions, the Company granted to the Agents irrevocable and non-transferable warrants entitling them to purchase that number of (i) common shares in the capital of the Company (the "Common Shares") equal to 7% of the aggregate number of Unit Subscription Receipts sold pursuant to the Offering, (ii) Common Share purchase warrant shares ("Warrant Shares") equal to 7% of the aggregate number of Unit Subscription Receipts sold pursuant to the Offering, and (iii) Warrant Shares equal to 7% of the aggregate number of Flow-Through Subscription Receipts sold pursuant to the Offering (collectively, the "Brokers' Warrants"). The Brokers' Warrants as exercisable at $10.00 per Common Share and $12.00 per Warrant Share, as applicable, for a period of eighteen (18) months following the satisfaction of the escrow release conditions relating to the Subscription Receipts.

The Company used a portion of the net proceeds of the Offering to pay the purchase price for the Assets (as defined below) and expects to use the balance of the net proceeds for appraisal and development drilling, exploration activities, land acquisitions, general and administrative expenses, and working capital requirements.

Company Exchanges Subscription Receipts

The Escrow Release Conditions set out in the Subscription Receipt Agreement were satisfied on April 29, 2011, and each Unit Subscription Receipt and Flow-Through Subscription Receipt was automatically exercised for one Unit and one flow-through Common Share (a "Flow-Through Share"), respectively. Each Unit is comprised of one Common Share and one Common Share purchase warrant (a "Warrant"). Each Warrant entitles the holder to purchase one Common Share (a "Warrant Share") at a price of $12.00 at any time prior to October 29, 2012.

The Toronto Stock Exchange (the "TSX") has conditionally approved the listing of the common shares of the Company under the symbol "SEQ", subject to the Company fulfilling all of the requirements of the TSX. The common shares are expected to begin trading in the Toronto Stock Exchange on Monday, May 2, 2011.

The securities offered have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any U.S. state securities laws and may not be offered or sold in the United States absent registration or an available exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Company Acquires Crude Oil and Natural Gas Assets

The Company is also pleased to announce that it has closed its previously announced acquisition (the "Acquisition") of crude oil and natural gas assets (the "Assets") located in the Peace River Arch area of northwestern Alberta and northeastern British Columbia. The Company acquired the Assets from certain Canadian subsidiaries of a global integrated energy company for an aggregate purchase price of $28,295,042.26, subject to adjustment. The Assets will constitute the Company's primary business going forward.

The Assets are currently producing an estimated 800 to 850 barrels of oil equivalent per day, from over 75,000 net acres of land. In addition to the production, the Company has acquired operated and non-operated interests in several strategic production facilities. Total Proved reserves acquired as of January 1, 2010 were 2.0 million BOE, with an associated net present value (before tax, 10% discount rate) of $26.6 million dollars. Proved plus probable were 2.7 million BOE with an associated net present value before tax of $34.6 million dollars. The reserves were independently evaluated at December 31, 2010 by GLJ Petroleum Consultants utilizing January 1, 2010 price forecasts. In addition to the reserves acquired, the Company has acquired over 40,000 net undeveloped acres and an extensive database of seismic.

Shoreline Energy Corp., is an emerging junior oil and gas company based in Calgary, Alberta. Shoreline offers our stakeholders a combination of value growth through development of oil and gas reserves and production with a specific focus in the Peace River Arch of northwest Alberta. In addition to value growth through development, the Company offers investors a fixed quarterly dividend of $0.20 per share.

Forward Looking Statements

This press release contains forward-looking statements. More particularly, this press release contains forward-looking statements concerning the use of proceeds of the Offering and the timing of the listing of the common shares of the Company on the TSX. These statements are based on current expectations and assumptions regarding, among other things, general economic and industry conditions and the regulatory approval process. The forward looking statements involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated. Such risks include, but are not limited to, those listed under the heading "Risk Factors" in the Company's prospectus. Such forward-looking statements included in this press release should not be unduly relied upon. These statements speak only as of the date of this press release and the Company 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.

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