Shoreline Energy Corp.

Shoreline Energy Corp.

November 24, 2011 08:39 ET

Shoreline Increases Production, Reserves, and Cash Flow Through Acquisition of Three Private Companies and One Gross Over-Riding Royalty

CALGARY, ALBERTA--(Marketwire - Nov. 24, 2011) -


Shoreline Energy Corporation (TSX:SEQ) ("Shoreline" or the "Corporation") is pleased to announce the closing of its previously announced acquisitions of Lakeridge Energy Corp. ("Lakeridge"), Shoreline Acquisition Corp ("SAC") and Shoreline Oil & Gas Ltd. ("SOG") (collectively the "Acquisitions") for aggregate consideration of $20,927,340. The purchase price was paid by the issuance of 1,760,424 units (one unit being comprised of one common share of the Company and one warrant to acquire an additional share of the Company at $12 per share until December 29, 2012) and cash of $3,323,100. Each unit of the Company was issued with an agreed value of $10 per unit.

The transactions were conditional on approval of the shareholders of the Company which was received at the annual and special meeting held on November 14, 2011. In conjunction with the acquisitions, Shoreline has purchased one gross over-riding royalty which applied to a portion of the newly acquired production. Total consideration paid to purchase the royalty was $221,000 in cash and 40,000 common shares of the Company.

These strategic acquisitions are in alignment with the Company's business plan to increase is land holdings, production, reserves, and cash flow in the existing Peace River Arch operating area. Through the acquisitions, Shoreline increases its working interest in multiple oil drilling projects which will continue through the first quarter of 2012 and reduces the overall royalty burden on these same projects resulting in increased net cash flow.

Acquisition Parameters

Acquisitions Company ProForma % Increase
Production (BOED) 650 BOED 1500 BOED 72%
2P Reserves (mBOE) 2,490 5,152 93%
Land (Net Acres) 57,000 130,000 78%
Drilling Inventory >30 locations >60 locations
Common Shares Issued 1,800,424 5,630,782 47%
Cost of Production $32,196 per BOED
Cost of Reserves $8.40 per BOE
Reserve estimates based on independent reserve evaluation performed by GLJ Petroleum Consultants and McDaniel Associates dated 12-31-2010, including SEQ royalty interests.

For 2011, the Company reiterates its capital expenditure budget where between four and six new wells (2.2 to 4.2 net) will be drilled, and 13 wells (8.8 net) will be optimized through restart or work over. Total capital associated with these programs is expected to range between $7.4 and $8.8 million dollars, with risked incremental production additions anticipated to range from 333 to 420 BOED and an approximate oil weighting of 72%.

The Company is anticipating that production from the horizontal oil well drilled in the Bonanza area (previously announced on November 15, 2011) will begin on December 1, 2011 with net production to Shoreline forecast to be 140 BOED. At present, Shoreline has licensed or is in the process of licensing an additional ten wells with the goal of adding oil production and reserves in existing oil accumulations.

The Company currently has 5,630,782 shares outstanding. Trevor Folk, Shaun Alspach and Dan Grisdale are directors and/or officers of the Company. Trevor Folk, Shaun Alspach and Dan Grisdale were each shareholders of Lakeridge and were directors and/or officers of SAC and SOG. Shaun Alspach and Dan Grisdale were officers and/or directors of Lakeridge. Trevor Folk, Shaun Alspach and Dan Grisdale each owned less than 1% of the issued shares of the Company before the transaction and following completion of the transaction each own 0.87%, 2.23% and 1.06% percent of the issued shares of the Company respectively.

By virtue of the fact that Mr. Folk, Mr. Alspach and Mr. Grisdale are directors and/or officers of the Company and shareholders of Lakeridge, these three individuals are each considered to be a related party of the Company. By virtue of the fact that Mr. Folk, Mr. Alspach and Mr. Grisdale received shares of the Company as consideration for the Lakeridge shares purchased by Shoreline, the Lakeridge transaction is considered to be a related party transaction. Multilateral Instrument 61-101 ("MI 61-101") requires an issuer to obtain minority securityholder approval prior to carrying out a related party transaction. The Company qualifies for an exemption from this requirement under Section 5.7 of MI 61-101 and, therefore, minority shareholder was not required in order to approve and carry out the Lakeridge transaction. At the annual and special meeting of the Company held on November 14, 2011, the Lakeridge acquisition was approval by a majority of the holders of shares of the Company voting at the meeting.

The Company is a publicly traded company on the TSX. Further information is available on SEDAR at

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 tip and does not represent a value equivalency at the wellhead.

This press release contains forward-looking statements. More particularly, this press release contains forward-looking statements concerning the completion of the proposed transactions, and the receipt of the necessary approvals in connection with the proposed transactions. 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, the ability of the Company and each of the proposed target companies to obtain the necessary approvals and the ability of the Company to complete the proposed transactions on the terms set forth in each of the definitive agreements. 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.

The TSX has neither approved nor disapproved of the information contained herein.

Contact Information

  • Shoreline Energy Corporation
    Mr. Trevor Folk
    Chief Executive Officer

    Shoreline Energy Corporation
    Calgary Office
    c/o Suite 400, 209-8th Ave SW
    Calgary, Alberta, T2P 1B8

    Shoreline Energy Corporation
    Toronto Office
    Suite 103, 145 King Street West
    Toronto, Ontario, M5H 1J8