Stealth Ventures Ltd.
TSX VENTURE : SLV

November 28, 2011 12:13 ET

Stealth Ventures Ltd. Consolidates Its India Position With a Plan of Arrangement for the Acquisition of 100% Equity of a Company Holding Oil & Gas Assets in India

CALGARY, ALBERTA--(Marketwire - Nov. 28, 2011) - Stealth Ventures Ltd ("Stealth" or the "Company") (TSX VENTURE:SLV) is pleased to announce the signing of a binding agreement to acquire a private company (the "Target Company") that has working interests in producing oil & gas assets coupled with exploration acreages, in India.

Commenting on this development, Subra Subramaniam, CEO of the Company said "this acquisition is a result of the sustained and concerted efforts over the last year, by the entire team at Stealth, which will now provide the Company with a vehicle to launch its unconventional expertise into the South Asian sub-continent, which in turn will benefit the company's share- holders and also the Joint Venture partners and the Government of India as a whole."

The high-lights of the acquisition are:

  • A recognized Operator in the Country
  • A working interest of 30% in producing oil and gas assets.
  • A working interest of 10% in oil and gas exploration acreages.
  • Envisaged proposal for a development plan which will provide the potential for increases to current levels of production and ultimate recovery from the fields
  • Prospective unconventional upsides that exist within the available acreages
  • Operatorship in some of the fields
  • A significant opportunity to showcase Stealth's expertise in unconventional resource opportunities
  • The opportunity to partner with large and successful international companies in India
  • Will help Stealth to locate and negotiate other acquisition opportunities in India

The Assets/Acreages

The Target Company has working interests in producing oil fields (for development), a gas field (for development) and in prospective exploration acreages. All the development assets are currently under production and have a significant upside, both for enhancing production and for exploration upside. The Target Company is the Operator in some of the development assets, which pass on to Stealth as soon as the necessary regulatory formalities have been completed and the necessary approvals from the Government of India have been received.

The entire set of Assets and the exploration acreages are under Production Sharing Contracts (PSC) with the Government of India, and are located in a producing hydrocarbon Basin, in India. All capital commitments under the PSC for the producing blocks have been fulfilled.

There are two wells to be drilled on the exploration blocks by the end of 2012, as per the commitments under the PSC for these blocks, where-in the Company will be required to pay for its working interest of 10% of the costs. The Company estimates their share of these commitments to be approximately $400,000. The Joint Venture partners in these assets/acreages are renowned oil & gas companies, having large acreages/assets both in India and internationally.

The Transaction

The transaction, valued at about USD 45 million, is contemplated as a Plan of Arrangement that involves the acquisition of the entire equity shares of the Target Company. The purchase consideration will be settled with a split of USD 20 million in cash and the equivalent of USD 25 million in non-voting shares of the Company. The Transaction will be completed soon after the required approvals from the Government of India are received.

Farm-In

The Transaction involves the Target Company whose assets were the farm-in target Stealth announced June 27, 2011 ("Farm-in"). With the completion of the Transaction the Farm-In will not be required as the Stealth will own 100% of the Target Company and at that time the Company will withdraw the Farm-in.

The Company, as part of the evaluation process, initiated an independent reserve and resources evaluation report (the "Report") that was completed by Calgary based Deloitte & Touche LLP (AJM Deloitte) and prepared in accordance with NI 51-101 requirements, and is effective June 30, 2011.

The following is an excerpt from the Report:

NI 51-101 Reserves
As at June 30, 2011(Net)
Oil Gas NGL Total BOE
(Mbbls ) (MMcf ) (Mbbls ) (Mbbl )
Proved producing 43.5 680.1 156.8
Proved non-producing 5.7 0.0 5.7
Undeveloped 24.4 132.6 46.4
Total proved 73.5 812.7 209.0
Probable 248.4 1,614.9 517.6
Total proved plus probable (1) 322.0 2,427.6 Nil (1)726.6

NET TO COMPANY
Total discovered petroleum initially-in-place
Low Best High
Petroleum initially-in-place (1) MBoe 8,505 13,809 23,968
Total contingent resources company share
Low Best High
Contingent Resource (1) MBoe 917 2,086 5,611
Production Volumes (*2) MBoe 176 176 176
Reserves (3) MBoe 209 727 727
Remaining contingent resource MBoe 532 1,183 4,708

Notes:

  1. Volumes have been aggregated probabilistically
  2. Cumulative production as of June 20, 2011
  3. Reserves are as of June 30, 2011 working interest sales volume booked to this opportunity.

A Boe conversion rate of 6 Mcf:1 barrel has been used. The conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation. There is no certainty that it will be commercially viable to produce any portion of the resources or the timing of such development.

The significant positive factors attributable to the resource assessment include the following: Source rock, charge, migration, trap and seal are of low risk due to the indication of hydrocarbon on well logs, the successful production of oil and gas from various formations, and oil cuts in the water and mud recovered on drill stem tests. The main geological risk revolves around the reservoir rock.

The negative factors centre on the lack of demonstrated economic productivity to date.

Contingencies which prevent the classification as reserves include factors such as assessment of reservoir deliverability, drilling and testing of additional test wells, aerial extent of reservoir facies, economic, legal, environmental, and political and regulatory matters, or lack of markets.

The specific contingency applicable to all fields is the application of horizontal drilling technology and multi stage completion technology to enhance the ability to economically extract hydrocarbons from low quality reservoirs. This technology has been demonstrated to be very successful in North America but has yet to be applied to the relevant fields in this basin.

The acquisition is subject to customary due diligences by Stealth and is also subject to the regulatory approvals of the Government of India. The necessary documentation required for the submission of the application for obtaining the regulatory approvals, have commenced.

Stealth continues the activities of implementing its business plans and initiatives of assembling a portfolio of unconventional and conventional oil & gas resource plays in India and SE Asia.

Stealth Ventures Ltd. is a Calgary-based junior oil and gas company whose expertise and focus is on "unconventional" hydrocarbon resources from shale, CBM and tight sand reservoirs.

Trading in Stealth Shares on the TSX-V is halted and will remain so until the documentation required pursuant to the Policies of the TSX-V has been reviewed and accepted by the TSX-V. A further news release will be issued at such time.

Further to the shareholder approval at our last AGM, Stealth has now been redomiciled from British Columbia to the Province of Alberta.

We seek Safe Harbor.

STEALTH VENTURES LTD.

Subra Subramaniam

Per: SUBRA SUBRAMANIAM, Chairman & CEO

Forward Looking Statements:

This News Release may contain forward-looking statements based on assumptions and judgments of management regarding future events or results that may prove to be inaccurate as a result of exploration and other risk factors beyond its control, and actual results may differ materially from the expected results.

Additional Advisories

Boes are presented on the basis of one Boe for six Mcf of natural gas. Disclosure provided herein in respect of 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.

Resource and reserve definitions

The term "resources" encompasses all petroleum qualities that originally existed on or within the earth's crust in naturally occurring accumulations, including Discovered and Undiscovered (recoverable and unrecoverable) plus quantities already produces. Accordingly, total resources is equivalent to Total Petroleum Initially-In-Place ("PIIP")

Total Petroleum Initially-In-Place ("PIIP") is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations, prior to production, plus those estimated quantities in accumulations yet to be discovered (equivalent to "total resources").

Production is the cumulative quantity of petroleum that has been recovered at a given date.

Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on: the analysis of drilling, geological, geophysical, and engineering data; the use of established technology; and specific economic conditions, which are generally accepted as being reasonable. Reserves are further classified in accordance with the level of certainty associated with estimates and may be sub-classified on development and production status. Refer to the full definition on Reserves in Section 5.4 of GOGEH.

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 lack of markets. It is also appropriate to classify as contingent resources that estimated recoverable quantities associated with a project in the early evaluation stage, Contingent Resources are further classified in accordance with the level of certainty associated with the estimates and may ne sub-classified based on project maturity and/or characterized by their economic status.

Unrecoverable is that portion of Discovered and Undiscovered PIIP quantities which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur; the remaining portion may never be recovered due to the physical/chemical constraints represented by the subsurface interaction of fluids and reservoir rocks.

Undiscovered Petroleum Initially-In-Place (equivalent to undiscovered resources) is that quantity of petroleum that is estimated, on a given date, to be contained in accumulations yet to be discovered. The recoverable portion of Undiscovered Petroleum Initially-In-place is referred to as Prospective Resources; the remained as Unrecoverable.

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. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub classified based on project maturity.

Reserves, Contingent Reserves and Prospective Reserves should not be combined without recognition of the significant differences in criteria associated with their classification. For example, the sum of Reserves, Contingent Reserves and Prospective Reserves may be referred to as Remaining Recoverable Resources. When resources categories are combined, it is important that each component of the summation also be provided, and that it should be made clear whether and how the components in the summation were adjusted for risk.

Uncertainty ranges

The range of uncertainty of estimated recoverable volumes may be represented by either deterministic scenarios or by probability distribution. Resources should be provided as low, best and high estimates as follows:

Low Estimate: This 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. If probabilistic models are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

Best Estimate: This is considered to be the best estimate of the 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. If probabilistic methods are used, there would be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

High Estimate: This 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. If probabilistic methods are used, there would be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

This approach to describing uncertainty may be applied to reserves, contingent resources, and prospective resources. Here may be significant risk that sub commercial and undiscovered accumulations will not achieve commercial production. However, it is useful to consider and identify the range of potentially recoverable quantities independent of such risk.

THIS NEWS RELEASE MAY CONTAIN FORWARD-LOOKING INFORMATION. ACTUAL FUTURE RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.

Contact Information

  • Stealth Ventures Ltd.
    Subra Subramaniam
    Chairman & CEO
    403-514-9998
    403-514-9995 (FAX)