TRIPLE 8 ENERGY LTD.
TSX VENTURE : TEE

November 09, 2010 07:30 ET

Triple 8 Announces Completion of Previously Announced Cardium Focused Light Oil Asset Acquisition

CALGARY, ALBERTA--(Marketwire - Nov. 9, 2010) -

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Triple 8 Energy Ltd. ("Triple 8" or the "Company") (TSX VENTURE:TEE) is pleased to announce that it has successfully completed the previously announced acquisition of certain assets located in the Pembina, Niton and Chip Lake regions of west central Alberta (the "Assets") from a public oil and gas company (the "Vendor") for total consideration of $30.0 million (the "Acquisition").

For the month of September, 2010, aggregate production from the Acquired Assets was restricted to 480 boe/d, comprised of 145 bbl/d of light oil and natural gas liquids and 2,000 mcf/d of natural gas. In August, 2010, the first horizontal Cardium oil well (22% working interest), which was on production since May, 2010, was restricted due to flaring and tie-in operations. Once this tie-in operation is finalized, expected completion date in December, production is expected to return to approximately 530 boe/d.

The Acquisition was financed using proceeds from a bought-deal equity financing of subscription receipts for gross proceeds of $31.75 million with a syndicate of underwriters co-led by GMP Securities L.P. and Canaccord Genuity Corp., and including Wellington West Capital Markets Inc., Desjardins Securities Inc., Mackie Research Capital Company and Raymond James Ltd. The equity provides Triple 8 with a strong balance sheet to ensure continued financial flexibility.

Based on a National Instrument 51-101 independent evaluation of the reserves by GLJ Petroleum Consultants Ltd. ("GLJ") effective December 31, 2009, the Total Proven plus Probable reserves associated with the Assets are 2,254 mboe. Additionally, 1,601 mboe of the Total Proven plus Probable reserves are fully developed and are currently on production. Based on the acquisition price of $30.0 million, Triple 8 acquired Total Proved plus Probable reserves at a cost approximately $13.31/boe including land value (for 18,674 net undeveloped acres).

The Acquired Assets are ideal for Cardium multi-stage, horizontal oil wells. The Vendor has drilled and is producing from 1 horizontal well (22% working interest) and is currently conducting completion operations on a second horizontal well (43% working interest) in the North Pembina area.

Triple 8 now has production capacity of 600 boe/day (after lifting of the production restriction associated with flaring and tie-in operations), 53 net drilling locations (32 net Cardium Horizontal oil wells at North Pembina, 15 Boundary Lake oil wells at Paradise, British Columbia and 6 Upper Mannville liquids rich gas wells at Niton) and 26,693 net undeveloped acres of land.

FORWARD LOOKING AND CAUTIONARY STATEMENTS

This press release contains certain forward-looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward-looking statements are necessarily based upon assumptions and judgements with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Triple 8. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.

In the interest of providing Triple 8 shareholders and potential investors with information regarding the Company, including management's assessment of Triple 8's future plans and operation, certain statements throughout this press release constitute forward looking statements. All forward-looking statements are based on the Company's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. By its nature, such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements. Triple 8 believes the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements contained throughout this press release should not be unduly relied upon. These statements speak only as of the date specified in the statements. 

In particular, this press release may contain forward looking statements pertaining to the following:

  • the Acquisition and the Assets;
  • the performance characteristics of the Company's oil and natural gas properties;
  • oil and natural gas production levels;
  • capital expenditure programs;
  • the quantity of the Company's oil and natural gas reserves and anticipated future cash flows from such reserves;
  • projections of commodity prices and costs;
  • supply and demand for oil and natural gas;
  • expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and
  • treatment under governmental regulatory regimes.

The material assumptions in making these forward-looking statements include certain assumptions disclosed in the Company's most recent management's discussion and analysis included in the material available on this press release.

The Company's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release as a result of the material risk factors set forth below, and elsewhere in this press release:

  • volatility in market prices for oil and natural gas;
  • liabilities inherent in oil and natural gas operations;
  • uncertainties associated with estimating oil and natural gas reserves;
  • competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;
  • incorrect assessments of the value of acquisitions and exploration and development programs;
  • geological, technical, drilling and processing problems;
  • fluctuations in foreign exchange or interest rates and stock market volatility;
  • failure to realize the anticipated benefits of acquisitions;
  • general business and market conditions; and
  • changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry.

These factors should not be construed as exhaustive. Unless required by law, Triple 8 does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.

Readers are further cautioned that the preparation of financial statements in accordance with Canadian generally accepted accounting principles ("GAAP") requires management to make certain judgements and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

Cash flow from operations and operating netbacks are not recognized measures under GAAP. Management of Triple 8 believe that in addition to net income, cash flow from operations and operating netbacks are useful supplemental measures as they demonstrate an ability to generate the cash necessary to repay debt or fund future growth through capital investment. Readers are cautioned, however, that these measures should not be construed as an alternative to net income determined in accordance with GAAP as an indication of Triple 8's performance. Triple 8's method of calculating these measures may differ from other companies and, accordingly, they may not be comparable to measures used by other companies. For these purposes, Triple 8 defines cash flow from operations as cash provided by operations before changes in non-cash operating working capital and defines operating netbacks as revenue less royalties and operating expenses.

Readers are also cautioned that this press release may contain the term reserve life index, which is not a recognized measure under GAAP. Management believes that this measure is a useful supplemental measure of the length of time the reserves would be produced over at the rate used in the calculation. Readers are cautioned, however, that this measure should not be construed as an alternative to other terms determined in accordance with GAAP as a measure of performance. The method of calculating this measure may differ from other companies, and accordingly, they may not be comparable to measures used by other companies.

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

Contact Information

  • Triple 8 Energy Ltd.
    Trevor Spagrud
    President & Chief Executive Officer
    (403) 470-5499
    or
    Triple 8 Energy Ltd.
    Doug Bailey
    Chief Financial Officer
    (403) 815-7024