Torrential Energy Ltd.
TSX VENTURE : TNL.P

Torrential Energy Ltd.

March 09, 2007 18:47 ET

Torrential Energy Ltd. Announces Proposed Acquisition of Paradise Petroleum Inc.

CALGARY, ALBERTA--(CCNMatthews - March 9, 2007) - Torrential Energy Ltd. (TSX VENTURE:TNL.P) ("Torrential"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), is pleased to announce that it has entered into a definitive share purchase agreement (the "Agreement") dated March 1, 2007, in respect of a non-arm's length business combination with a Calgary-based, privately held oil and gas exploration company, Paradise Petroleum Inc. ("Paradise"). Subject to the terms and conditions of the Agreement, Torrential intends to acquire all of the issued and outstanding shares of Paradise for an aggregate purchase price of $1,000,000, less Paradise's working capital deficiency. The purchase price will be satisfied by the issuance of common shares ("Common Shares") of Torrential at a deemed price of $0.20 per share (the "Qualifying Transaction").

Torrential is a capital pool company and intends the acquisition of Paradise to be its qualifying transaction for purposes of the policies of the Exchange. Upon the successful completion of the Qualifying Transaction, Torrential will be a junior natural resource issuer. Torrential anticipates mailing an information circular for an annual and special meeting of Torrential shareholders to approve the Qualifying Transaction and related matters in the near future.

Paradise is a private oil and gas company incorporated in Alberta that is engaged in the exploration for, and the development and production of, crude oil and natural gas in the province of Alberta. Paradise's principal assets are 15% interests in two gas wells located in the Westlock/St. Albert area of Alberta. The wells are currently producing (in the aggregate) approximately 1.5 million cubic feet of gas per day (225 thousand cubic feet per day net to Paradise).

As at the date hereof, the directors, officers and other insiders of Torrential, each of Calgary, Alberta, together with members of their families, hold, directly or indirectly, the following number of Paradise Shares: Tim T. Galbreath, 2,060,100; Alan D. Jack, 1,786,810; Gerald Wendland, 1,786,810; and Craig Albert, 350,000, representing approximately 33.59%, 29.13%, 29.13% and 5.71%, respectively, of Paradise's 6,133,720 outstanding shares (approximately 97.6% in the aggregate). Mr. Galbreath, the President, Chief Executive Officer and a director of Torrential, is also the President, Chief Executive Officer and a director of Paradise. In addition, Mr. Jack is a director of both Paradise and Torrential, and Gerald Wendland, who owns 500,000 Common Shares representing 13.33% of the outstanding shares of Torrential, is also a director of Paradise. Each of the above mentioned individuals resides in Calgary, Alberta.

The closing of the proposed Qualifying Transaction is subject to a number of conditions including: (i) obtaining all necessary regulatory approvals, including the approval of the Exchange of the qualification of the acquisition as Torrential's "Qualifying Transaction"; (ii) obtaining the approval of shareholders of Torrential, including majority of minority approval; and (iii) other conditions typical of a transaction of this nature.

Selected Financial Information

The following table sets forth certain unaudited financial information for each of Torrential and Paradise as at and for the period ended December 31, 2006.



Torrential Paradise
------------------- -------------------------
As at and for the As at and for the
period ended nine month period
December 31, 2006 ended December 31, 2006
------------------- -------------------------
(unaudited) (unaudited)


Total Revenue, Net of
Royalties - $68,987
Bank Debt - -
Working Capital Surplus
(Deficit) $392,297 (413,209)
Total Assets 444,687 1,289,293
Shareholders' Equity 392,297 536,161
Number of Shares Outstanding
Basic 3,750,001 6,133,720
Diluted 4,075,001 6,133,720


Reserves Data

The following tables set forth certain reserves data for Paradise. Paradise's reserves information is based on an independent engineering evaluation prepared by GLJ Petroleum Consultants Ltd. ("GLJ") effective November 30, 2006 evaluating Paradise's petroleum and natural gas reserves and the net present values of future net revenue for these reserves using forecast prices and costs as at January 1, 2007. Forecast prices and costs as at January 1, 2007 were used because GLJ compiles its forecast prices and costs on a quarterly basis. Torrential and Paradise believe any difference in the net present values of future net revenue of Paradise's reserves as a result of the use of the January 1, 2007 forecast as opposed to a December 1, 2006 forecast would be immaterial. The evaluation was conducted in compliance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.



SUMMARY OF OIL AND GAS RESERVES OF PARADISE
as of November 30, 2006 using FORECAST PRICES AND COSTS
as at January 1, 2007

RESERVES
--------------------------
NATURAL GAS
--------------------------
RESERVES CATEGORY Gross (MMcf) Net (MMcf)
----------------------------------------------------------------------------

PROVED
Developed Producing 229 153
--------------------------
TOTAL PROVED 229 153

PROBABLE 62 46
--------------------------

TOTAL PROVED PLUS PROBABLE 292 199
--------------------------
--------------------------
Notes:
(1) "Gross", in relation to a company's interest in production or reserves,
means its "company gross reserves", which are the company's working
interest (operating or non-operating) share before deduction of
royalties and without including any royalty interests of the company.
(2) "Net", in relation to a company's interest in production or reserves,
means the company's working interest (operating or non-operating) share
after deduction of royalty obligations, plus the company's royalty
interests in production or reserves.
(3) Proved reserves are those reserves that can be estimated with a high
degree of certainty to be recoverable. It is likely that the actual
remaining quantities recovered will exceed the estimated proved
reserves. Developed producing reserves are those reserves that are
expected to be recovered from completion intervals open at the time of
the estimate. These reserves may be currently producing or, if shut-in,
they must have previously been on production, and the date of resumption
of production must be known with reasonable certainly.
(4) Probable reserves are those additional reserves that are less certain to
be recovered than proved reserves. It is equally likely that the actual
remaining quantities recovered will be greater or less than the sum of
the estimated proved plus probable reserves.
(5) The recovery and reserve estimates of Paradise's crude oil, natural gas
liquids and natural gas reserves provided above are estimates only and
there is no guarantee that the estimated reserves will be recovered.
Actual crude oil, natural gas and natural gas liquid reserves may be
greater than or less than the estimates provided above.


PARADISE'S NET PRESENT VALUES OF FUTURE NET REVENUE
-----------------------------------------------------------
BEFORE INCOME TAXES AFTER INCOME TAXES
DISCOUNTED AT (%/year) DISCOUNTED AT (%/year)
-----------------------------------------------------------
RESERVES CATEGORY 0 (M$) 10 (M$) 15 (M$) 0 (M$) 10 (M$) 15 (M$)
----------------------------------------------------------------------------

PROVED
Developed
Producing 873 692 629 579 459 417
-----------------------------------------------------------
TOTAL PROVED 873 692 629 579 459 417

PROBABLE 278 177 146 185 117 97
-----------------------------------------------------------

TOTAL PROVED PLUS
PROBABLE 1,152 868 775 764 576 514
-----------------------------------------------------------
-----------------------------------------------------------
Notes:
(1) It should not be assumed that the estimates of future net revenues
presented in the tables above represent the fair market value of the
reserves. There is no assurance that the forecast prices and costs
assumptions will be attained and variances could be material.
(2) The forecast cost and price assumptions assume increases in wellhead
selling prices and take into account inflation with respect to future
operating and capital costs. The natural gas benchmark reference pricing
and inflation and exchange rates utilized in Paradise's reserve report
was GLJ's price deck as at January 1, 2007.


Production

Paradise
----------

Average Daily Production(1)
Natural Gas (Mcf/d) 225
Total (boe/d) (2) 38

Notes:
(1) Average daily production is for the month of December 2006 based on
Paradise's gross working interest.
(2) Barrel of oil equivalent (boe) figures are derived by converting gas to
oil in the ratio of 6,000 cubic feet of gas to one barrel of oil. Boe's
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.


Board of Directors and Management

Upon completion of the Qualifying Transaction, the directors and senior officers of Torrential are expected to be:

Tim T. Galbreath, President, Chief Executive Officer and Director

Mr. Galbreath has 22 years of experience in the oil and gas industry, including in land administration, land negotiations, acquisitions, divestments, joint interests and aboriginal affairs. Since July 2005, Mr. Galbreath has been the Vice President, Land of Rustler Petroleum Inc., a privately held oil and gas company with operations in Alberta. Prior to then, he was a Senior Landman and Manager, Aboriginal Affairs for Bonavista Petroleum Ltd. and has been a land consultant for numerous oil and gas companies. Mr. Galbreath graduated from the Petroleum Land Management program at Mount Royal College in 1984 and also successfully completed a Management Certificate from the University of Calgary in 1989. Mr. Galbreath is a member of the Canadian Association of Petroleum Landmen.

Craig Albert, Vice President, Finance and Chief Financial Officer

Mr. Albert has over 16 years experience in the oil and gas industry, working in various accounting roles from operations and finance to acquisitions and divestitures. Since September 2003, Mr. Albert has been the controller of Rustler Petroleum Inc. and prior to then was a consultant to various oil and gas companies. Mr. Albert has also co-founded a group of residential construction companies. Mr. Albert holds a Diploma of Business Administration (major in accounting) from the Southern Alberta Institute of Technology and is a Certified General Accountant. He is a member of the Certified General Accountants' Association of Alberta.

Alan D. Jack, Director

Mr. Jack has over 25 years of experience in the oil and gas industry and is currently the President of Rustler Petroleum Inc. Mr. Jack holds a Bachelor of Science, Petroleum Engineering from the Montana College of Mineral Science and Technology and is a member of the Society of Petroleum Engineers and the Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA).

Dennis Feuchuk, Chairman of the Board of Directors

Mr. Feuchuk has over 30 years of experience in finance, accounting, audit and income tax in the oil and gas industry. Mr. Feuchuk is currently Vice President, Finance and Chief Financial Officer of PrimeWest Energy Inc., the operating entity of PrimeWest Energy Trust, a Toronto Stock Exchange listed oil and gas trust. Prior to then Mr. Feuchuk was Vice President, Finance and Controller of Gulf Canada Resources Limited and Vice President and Treasurer of Athabasca Oil Sands Trust. Mr. Feuchuk has a Bachelor of Business Management from Ryerson University, has completed the Richard Ivey School of Business Executive Development Program and is a Certified Management Accountant.

Grant A. Zawalsky, Corporate Secretary

Mr. Zawalsky is a partner in the Calgary law firm Burnet, Duckworth & Palmer LLP. Mr. Zawalsky's practice is focused on securities and corporate finance transactions, mergers and acquisitions and corporate governance matters. He has extensive experience with public and private offerings of securities, including initial public offerings, business combinations and restructurings through asset and share acquisitions, plans of arrangements and take-over bids. He also has considerable experience in all dealings with securities regulators including stock exchanges and securities commissions. Mr. Zawalsky is a director of a number of publicly listed companies.

The common shares of Torrential are currently halted at the Company's request and will remain so until Tuesday, March 13, 2007.

Torrential has also granted options to acquire an aggregate of 175,000 Common Shares at a price of $0.20 per share to its directors and officers and a consultant of Torrential, all pursuant to its stock option plan.

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

Investors are cautioned that, except as disclosed in the information circular to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Torrential Energy Ltd. should be considered highly speculative.

ADVISORY: Certain information in this press release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects" and similar expressions. Forward-looking statements in this press release include, but are not limited to, statements with respect to the closing or completion of the Qualifying Transaction. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with oil and gas production, marketing and transportation; loss of markets; volatility of commodity prices; currency and interest rate fluctuations; imprecision of reserve estimates; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; inability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters. Readers are cautioned that the foregoing list of factors is not exhaustive.

Readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward looking statements contained in this press release are expressly qualified by this cautionary statement.

The forward-looking statements contained in this news release are made as of the date of this news release, and Torrential does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.

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

Contact Information

  • Torrential Energy Ltd.
    Tim T. Galbreath
    President and Chief Executive Officer
    (403) 384-0000
    (403) 384-0002 (FAX)
    Email: tgalbreath@torrentialenergy.com
    or
    Torrential Energy Ltd.
    Craig Albert
    Vice President, Finance and Chief Financial Officer
    (403) 384-0001
    (403) 384-0002 (FAX)
    Email: calbert@torrentialenergy.com