Tajzha Ventures Ltd.
TSX VENTURE : TJZ

Tajzha Ventures Ltd.

August 16, 2007 09:00 ET

Tajzha Ventures Closes Davey Lake Acquisition and Second Tranche of Private Placement; Kotcho Lake and Brownfield Update

CALGARY, ALBERTA--(Marketwire - Aug. 16, 2007) -

NOT FOR DISTRIBUTION TO THE UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Tajzha Ventures Ltd. ("Tajzha") (TSX VENTURE:TJZ) is pleased to announce that it has closed the acquisition that was referred to in news releases dated June 21 and July 10, 2007 from an arm's length company consisting of producing oil and gas assets in the Davey Lake Area of Alberta ("Assets") for total consideration of $4.15 million. The effective date of the purchase is April 1, 2007. Tajzha has assumed operatorship of the Assets.

Tajzha has entered into conveyance agreements with several arm's length parties whereby the parties collectively acquire 53% of the Assets from Tajzha for $2,199,500. Mr. Ben van Rootselaar, a director of Tajzha, did not acquire an interest in the Assets that was previously disclosed in the June 21, 2007 news release.

Tajzha financed the acquisition through a private placement and a mezzanine loan in the amount of $2,000,000 which has a maturity date of July 31, 2008. As part of the conveyance agreements to sell 53% of the property to a group of participants, the participants agreed to allow Tajzha to leverage their working interests and cash flow as security for Tajzha's loan. Under the terms of the loan agreement, cash flow from the 100% interest in the Assets as well as cash flow from other production that Tajzha may generate in the future is dedicated firstly to monthly debt service payments. Tajzha has agreed to establish a reserve fund of approximately $330,000 for certain participants to pay out shortages that may arise out of Tajzha's debt service obligations. Additional contributions to this account will come from other deposit funds that Tajzha has in place that are expected to be refunded within sixty days. This fund is expected to be sufficient to pay out any cash flow shortages that could arise during the term of the loan. If Tajzha deposits a minimum of $100,000 into the reserve fund by September 4, 2007, the loan will be interest only until the end of October 2007 and blended principal and interest payments ranging from $80-100,000 per month will commence November 30, 2007. If the reserve fund is not established by September 4, 2007, the blended payments will commence September 30, 2007. In addition to the loan for the acquisition, Tajzha has negotiated a development loan facility in the amount of $400,000. Tajzha has granted the lender security on all of Tajzha's assets. In exchange for the leverage provided by the participants, Tajzha has also provided security on all of Tajzha's assets.

Tajzha has received conditional approval from the TSX Venture Exchange for the acquisition and the transaction is subject to final approval of the TSX Venture Exchange.

The Assets consist of a 100% working interest. Production from the property on April 1, 2007 was 136 boed, (64 net Tajzha) of oil, liquids and natural gas from 17 producing wells. Current production is approximately 100 boed from 13 wells as four wells require routine pump changes with the work scheduled to be completed by the end of August and is expected to return production to 136 boed.

Tajzha's technical team is reviewing all wells for workovers, reactivations and recompletions. It is anticipated that workovers will commence in September or October. Other opportunities include infill drilling, step out drilling and water flood optimization and re-configuration.

Costs for the maintenance will be paid out of cash flow and costs for workovers and recompletions will be financed with the development loan that Tajzha has arranged.

Tajzha is also pleased to announce that it has completed the second tranche of its Private Placement on August 10, 2007, and has issued 1,429,000 Flow-Through Units for the aggregate consideration of $500,150. Please refer to the press release issued on May 28, 2007 for the terms of the Flow-Through Units. The Flow-Through Shares and Warrants are subject to a hold period of four months, expiring December 11, 2009. Proceeds from the issue of Flow-Through Shares will be used for general exploration expenditures, which will constitute Canadian exploration expenses, as defined in the Income Tax Act (Canada), and will be renounced for the 2007 taxation year.

The operator of the Kotcho Lake Keg River well has advised that the final operation consisting of deepening the well into the Keg River reef with a special service rig will commence in late August 2007. Problems encountered when drilling through the Slave Point formation and other issues caused costs associated with this well to escalate above the original budget. Tajzha has paid approximately $460,000 to date and it is estimated that Tajzha will incur another $240,000 to complete and tie-in the well should it be successful.

Tajzha has acquired an additional well to be used for water injection at the Brownfield property. This was a key acquisition for the development of this property. Development planning is in process and Tajzha anticipates having a development plan completed by the end of August 2007 with work to commence in September 2007, subject to financing.

ABOUT TAJZHA VENTURES LTD.

Tajzha Ventures Ltd. is a junior oil and natural gas company based in Calgary, Alberta with core operated properties located in the Davey Lake and Provost Areas, Alberta. Tajzha is also a participant in a drilling venture located in North-eastern British Columbia. Tajzha's Common Shares trade on the TSX Venture Exchange under the symbol "TJZ".

Certain statements in this material may be "forward-looking statements" including outlook on oil and gas prices, estimates of future production, estimated completion dates of acquisitions and construction and development projects, business plans for drilling and exploration, estimated amount and timing of capital expenditures and anticipated future debt levels and royalty rates. Information concerning reserves contained in this material may also be deemed forward-looking statements as such estimates involve the implied assessment that the resources described can be profitably produced in the future. These statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated by the Company.

The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in the report are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Tajzha Ventures Ltd.
    Ronnie D. Doman
    President
    (250) 246-4791
    or
    Tajzha Ventures Ltd.
    Terry O. Lashman
    Director
    (604) 684-7929 or 1-800-665-2454
    or
    CHF Investor Relations
    Alison Tullis
    Account Manager
    (416) 868-1079 ext. 233