Tilting Capital Corp.
TSX VENTURE : TLL.H

April 23, 2012 17:04 ET

Tilting Capital Corp. Announces Letter of Intent to Purchase Oil and Gas Assets, Private Placement and New Board of Directors

CALGARY, ALBERTA--(Marketwire - April 23, 2012) -

NOT FOR DISSEMINATION IN THE UNITED STATES.

Tilting Capital Corp. (the "Corporation" or "Tilting Capital") (TSX VENTURE:TLL.H), today announced the execution of a non-binding letter of intent dated March 26, 2012 for a proposed transaction involving the purchase of certain Colombian oil and gas assets and an option to farm-in on certain Brazilian oil and gas assets.

Summary of the Proposed Transaction

On March 26, 2012, Tilting Capital entered into a non-binding term sheet (the "Term Sheet") with an arm's-length publicly traded company (the "Vendor") outlining the general terms of the proposed transaction (the "Proposed Transaction"). The Term Sheet contemplates the following:

  • Tilting Capital would acquire all of the Vendor's interest in an exploration block in Colombia ("Producing Colombia Block") for a purchase price of $1,250,000 cash. The Producing Colombia Block currently has production of approximately 120 net barrels of oil per day which would be the interest acquired by Tilting Capital. Tilting Capital would also issue to the Vendor 5,000,000 preferred shares or warrants which convert to common shares in the event the Producing Colombia Block is extended by Ecopetrol to the end of the life of the field. If the Producing Colombia Block expires as presently scheduled for December 31, 2013, the preferred shares or warrants would terminate;
  • Tilting Capital would acquire all of the Vendor's interest in another exploration block in Colombia ("Non-Producing Colombia Block") for a purchase price of $500,000 cash;
  • In exchange for 2,000,000 common shares of Tilting Capital at a deemed price of $0.12 per share, the Vendor would grant an option to the Corporation to farm into an exploration block in Brazil ("Brazil Block") to be exercised on or before July 1, 2012. Tilting Capital would earn 50% of such block by paying 100% of all costs up to $5,500,000 for the drilling of an exploration well in accordance with the terms of the Brazil Block's Exploration Permit. The Parties would also enter into an Area of Mutual Interest Agreement for the Brazil opportunities on a 50/50 participation. The Brazil Block is subject to a GORR of which Tilting Capital would assume its proportionate share.

Board of Directors of the Resulting Issuer

In contemplation of the Proposed Transaction, all of the existing directors of Tilting Capital have resigned effective March 23, 2012 and the following directors have been appointed:

Kurt Bordian - Mr. Kurt Bordian is a designated Certified General Accountant, and holds a Bachelor of Commerce (Honours) Degree from the University of Manitoba. He has worked primarily with public companies in the mineral exploration and oil and gas industries over the past 15 years. Mr. Bordian currently serves as a director or officer on a number of resource exploration and development companies and resides in New Westminster, British Columbia.

Jehad Haymour - Mr. Haymour is a partner and tax department manager for Fraser Milner Casgrain LLP's Calgary office. Mr. Haymour's experience includes significant tax structuring and transactional advice on various energy-based projects and has extensive experience in taxation issues specific to the energy sector. Mr. Haymour resides in Calgary, Alberta.

Lee A. Pettigrew - Mr. Pettigrew has 20 years of investment banking experience specializing in oil & gas producers and the energy services industry. Mr. Pettigrew was one of nine founders of Newcrest Capital, and led its oil and gas effort for five years before the firm was bought by TD Bank. After a two year period as a Managing Director in TD's Energy Group, Mr. Pettigrew joined Orion Securities as co-head of its oil & gas group, where he led several billion dollars of transactions for E&P and services companies. Orion was bought by Macquarie Bank in 2007 where Mr. Pettigrew continued as a Managing Director until the spring of 2009. Mr. Pettigrew then founded a private merchant banking firm, Mercari Capital Ltd., with a mandate of principal- based investing in domestic and international junior oil and gas and services opportunities. Mr. Pettigrew resides in Calgary, Alberta.

N. Ross Wilmot will continue as the interim CEO and CFO but is no longer a member of the board of directors.

About Tilting Capital Corp.

Tilting Capital is a corporation under the Canada Business Corporations Act with no active business. Tilting Capital is listed on the NEX board of the Exchange. The NEX board accepts companies previously listed as Tier 1 or Tier 2 issuers on the Exchange which have failed to maintain compliance with the ongoing financial listing standards of the Exchange. The NEX board allows inactive companies to maintain a listing while they complete their reorganizations. In order to qualify for the NEX board, the Corporation must, among other conditions, be a reporting issuer in good standing with all relevant securities regulatory authorities and under corporate law.

As at the date of this press release, the authorized share capital of the Corporation consists of an unlimited number of common shares with no par value, of which 14,044,371 common shares are issued and outstanding. As at the date of this news release, the Corporation had approximately $420,000 of working capital. The Corporation had an accumulated deficit of $17,136,339 at December 31, 2011.

At the Corporation's request, trading in its Common Shares has been halted by the Exchange. Trading is expected to remain halted until (i) the TSX Venture Exchange is satisfied with the material submitted in connection with the Proposed Transaction; and (ii) a sponsor is engaged or a sponsorship exemption is obtained. The parties intend to enter into a definitive agreement or agreements (the "Definitive Agreement(s)") in respect of the Proposed Transaction, which will be subject to require each party to completing its respective due diligence investigation, and approval by the boards of directors of the Vendor and Tilting Capital. As part of the otherwise non-binding Term Sheet, Tilting Capital has agreed to pay all legal fees and other expenses incurred in connection with the Proposed Transaction.

Closing of the Proposed Transaction

It is contemplated that closing of the Proposed Transaction would be subject to a number of terms and conditions including:

  1. execution of the Definitive Agreement(s) by the parties containing customary representations, warranties and covenants applicable for transactions of similar nature and absence of any material adverse change affecting the respective party;
  1. to the extent necessary, receipt of any and all necessary court approvals, stock exchange approvals, shareholder approvals, governmental consents, notifications, and any necessary contractual consents for the Proposed Transaction, including the TSXV and Ecopetrol;
  1. completion of a $3 million private placement of units of the Corporation at $0.15 per unit, each unit to be comprised of one common share and one warrant exercisable for one additional common share at $0.30 expiring five years from closing;
  1. the completion of due diligence;
  1. Tilting Capital will use commercially reasonable efforts to close at the earliest possible date, with closing to occur no later than June 30, 2012; and
  1. approval of the Proposed Transaction by the shareholders of Tilting Capital either by written consent or by shareholder meeting, as required by the Exchange.

About the Colombia Producing Block

All information in this Press Release relating to the assets to be acquired from the Vendor is based upon information provided to the Corporation by the Vendor. Management of Tilting Capital has not yet independently reviewed this disclosure nor has Tilting Capital hired any third party consultants or contractors to verify such information.

The Colombia Producing Block assets comprise the Vendor's various working interests in 14,920 acres of lands in Colombia on which there are currently three producing oil wells and one abandoned well. Current production is 120 barrels per day of heavy oil.

A summary of the Vendor's share of reserves and future net revenue for the Colombia Producing Block will be provided in a subsequent press release based upon an independent DeGolyer and MacNaughton report dated as of June 30, 2011.

About the Colombia Non-Producing Block

All information in this Press Release relating to the assets to be acquired from the Vendor is based upon information provided to the Corporation by the Vendor. Management of Tilting Capital has not yet independently reviewed this disclosure nor has Tilting Capital's management hired any third party consultants or contractors to verify such information.

The Colombia Non-Producing Block assets comprise the Vendor's various working interests in 57,247 acres of lands in Colombia on which there are currently no producing oil wells. The Colombia Non-Producing Block is in the Llanos Basin of Colombia.

A summary of the Vendor's share of reserves and future net revenue for the Colombia Non- Producing area based on an independent Petrotech Engineering Ltd. report dated as of December 31, 2011 will be provided in a subsequent press release.

Commitments for two more 12 month exploratory phases are required under the exploration agreement: one exploratory well and 35 square kilometres of 3D seismic are planned for these phases, respectively. If additional prospects are identified, the work program may be extended.

About the Brazil Block

The Brazil Block is situated in an established in north-central Brazil, which contains a number of producing oil and gas fields. The Brazil lock is approximately 28 square kilometres in size. The exploration contract with the National Petroleum Agency ("ANP") requires the drilling of one exploratory well within six months of the lifting of the current contract suspension. The Brazil Block contract is presently suspended pending official transfer of rights to the new land owner to grant surface access to proposed lease. If additional prospects are identified on the block, the exploration term of the contract can be extended for a further 12 months with a commitment to drill an additional well. In the event of a commercial discovery, a 27 year production contract would be signed with the ANP.

Private Placement

In connection the Proposed Transaction, the Corporation intends to complete a non-brokered $3,000,000 offering of up to 20,000,000 units (the "Units") at a price of $0.15 per Unit. Each Unit will consist of one common share and one common share purchase warrant ("Warrant") of the Corporation. Each whole Warrant will entitle the holder to acquire one common share of the Corporation at a price of $0.30 for a period of five years from the closing date of the Offering. The proceeds from the offering will be used for working capital and for capital requirements of the Corporation's proposed new business of oil and gas exploration and development in Colombia and Brazil.

Sponsorship of the Qualifying Transaction

Sponsorship of a "Change of Business" transaction is required by the Exchange unless exempt therefrom in accordance with the Exchange's policies. Tilting Capital is reviewing the requirement for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the Exchange. If the exemption is not granted by the Exchange, then Tilting Capital would be required to engage a sponsor.

Cautionary Note

As noted above, completion of the Proposed Transaction is subject to a number of conditions including, without limitation, approval of the Exchange and approval of the shareholders of Tilting Capital. The Proposed Transaction cannot close until the required approvals have been obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the continuous disclosure document containing full, true and plain disclosure regarding the Proposed Transaction, required to be filed with the securities regulatory authorities having jurisdiction over the affairs of the Corporation, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. The trading in the securities of Tilting Capital on the Exchange, if reinstated prior to completion of the Proposed Transaction, should be considered highly speculative.

This press release contains forward-looking information. More particularly, this press release contains statements concerning the Proposed Transaction. The information about the target assets contained in the press release has not been independently verified by the Corporation. Although the Corporation believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. Forward-looking information involves known and unknown risks, uncertainties, assumptions (including, but not limited to, assumptions on the performance and financial results of the target assets) and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The terms and conditions of the Proposed Transaction may change based on the Corporation's due diligence on the assets, the entering into a Definitive Agreement and the Proposed Transaction, regulatory and third party comments, consents and approvals and the ability to meet the conditions of the Proposed Transaction in the required timeframes. The forward-looking statements contained in this press release are made as of the date hereof and the Corporation undertakes no obligations 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.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to Exchange acceptance and disinterested Shareholder approval. The transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. 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 the securities in any state in which such offer, solicitation or sale would be unlawful.

Investors are cautioned that, except as disclosed in the management information circular, filing statement or other continuous disclosure document to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Tilting Capital should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

Neither the NEX Board, 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 press release.

Contact Information

  • Tilting Capital Corp.
    Lee Pettigrew
    Director
    (403) 770-1351

    Counsel to the Corporation
    Trevor Wong-Chor
    (403) 698-8711