Thunderbird Energy Corp.

Thunderbird Energy Corp.

July 13, 2011 08:56 ET

Thunderbird Energy Announces US$25 Million Energy Stream Agreement With Sandstorm Metals & Energy

CALGARY, ALBERTA--(Marketwire - July 13, 2011) - Thunderbird Energy Corp. (TSX VENTURE:TBD) ("Thunderbird" or the "Company") today announced that the Company has entered into a US$25 million hydrocarbon purchase agreement (the "Agreement") with Sandstorm Metals & Energy Ltd. ("Sandstorm"). Proceeds from the Agreement will provide a substantial portion of the financing required for a two-year development program at Thunderbird's Gordon Creek, Utah natural gas property that will include drilling 50 new wells and re-working 5 existing wells.

"We are very pleased to announce this innovative financing arrangement with Sandstorm that will have a transformative effect on our company," stated Rick Ironside, President of Thunderbird. "We have reviewed a number of financing proposals over the last couple of years and feel that the Sandstorm structure offers us the best opportunity to aggressively develop our Gordon Creek field in a manner that allows us the greatest flexibility, while also maximizing the benefit to our shareholders and debenture holders."

Under the Agreement, Sandstorm will have the right to purchase 35% of all natural gas produced from Thunderbird's Gordon Creek property at a price equal to the lesser of the prevailing market price and US$1.00 per Mcf of gas delivered plus 20% of the Gordon Creek field gate price received above $4.00/Mcf. As consideration, Thunderbird will receive an upfront payment of US$15 million in 2011 and a further US$10 million in 2012. The Agreement stipulates that Thunderbird will drill 20 new Gordon Creek wells and conduct 5 workover operations in 2011, and will drill 30 new wells in 2012. Sandstorm may participate in future wells drilled at Gordon Creek beyond the initial 50 well program by providing additional production payment advances to Thunderbird at an agreed amount per well.

The Company has provided Sandstorm with minimum before tax cash flow guarantees totaling US$25 million over the period 2012 through 2018, provided that the cash flow guarantees will not be applicable to specific calendar years in which the Gordon Creek field achieves specified minimum production levels. The Agreement also provides Thunderbird with a two-year right to buy back 50% of the future production committed under the Agreement, for a purchase price of US$16.25 million.

Closing of the transaction is subject to regulatory approvals and the completion by Sandstorm of its concurrently announced equity financing. The transaction also requires the approval of two-thirds of the holders of Thunderbird's Gas Linked Debentures.

Thunderbird Energy is a Canadian-based oil and gas exploration and production Company with interests in the US Rockies and mid-continent regions. Thunderbird's holdings include the Gordon Creek, Utah natural gas field, the Rush County, Kansas light oil project and a light oil exploration project in Weston County, Wyoming.

Caution Regarding Forward- looking information

Information in this news release respecting expected cash flows, production levels and prices, as well as the expected closing, timing and impact of the proposed financing transaction constitutes forward-looking information. Statements containing forward-looking information express, as at the date of this news release, the Company's plans, expectations, or beliefs as to future events or results are believed to be reasonable based on the information currently available to the Company. The Company does not undertake to update any such forward-looking statements unless required by applicable securities legislation.

Statements including forward-looking information involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company and its operations to be materially different from estimated costs or results expressed or implied by such forward-looking statements.

There can be no assurance that forward-looking statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Readers should not place undue reliance on forward-looking information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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