TriStar Oil & Gas Ltd.
TSX : TOG

TriStar Oil & Gas Ltd.

March 09, 2007 12:56 ET

TriStar Oil & Gas Ltd. Announces Acquisitions in Three Core Areas; Bought Deal Financing; and Upward Revision to 2007 Guidance

CALGARY, ALBERTA--(CCNMatthews - March 9, 2007) - TriStar Oil & Gas Ltd. (TSX:TOG) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

TRISTAR MAKES TWO ACQUISITIONS

TriStar Oil & Gas Ltd. ("TriStar") (TSX:TOG) is pleased to announce that it has entered into two separate agreements to acquire certain assets (the "Assets") in its core areas of Ante Creek and Countess, Alberta and in Southeast Saskatchewan for total cash consideration of approximately $55.7 million, after certain closing adjustments (the "Acquisitions").

The Assets fit strategically into three of TriStar's four existing core areas and are comprised of high quality, high netback, light oil and natural gas. The Assets comprise 3.8 Mmboe of proven plus probable reserves, and more than 950 Boepd (greater than 60% light oil) of production.

The asset acquisitions are expected to close on or before March 31, 2007.

The highlights associated with the Acquisitions are set forth below:

COMBINED ACQUISITION METRICS

1. Combined Purchase Price: C$55.7 million (net of certain closing adjustments)

2. Long Life Reserves:

- 3.840 Mmboe proven plus probable reserve (3.476 Mmboe based on NI 51-101 engineering estimates prepared by Sproule Associates Limited for the primary acquisition, and 0.364 Mmboe based on TriStar internal engineering estimates for the second acquisition)

- $14.51 per boe proven plus probable

- $13.46 per boe proven plus probable (net of undeveloped land value of $4 million)

- Long Reserve life index of more than 11 years proven plus probable.

3. High Quality Production:

- greater than 950 Boepd

- $58,600 per producing boe

- $54,400 per producing boe (net of undeveloped land value of $4 million)

4. Strong Recycle Ratio:

- Operating Netback of over $32 per Boe (at US$60/bbl WTI and C$7.50 GJ AECO pricing)

- Greater than 2.2 times recycle ratio based on acquisition cost

5. Net Operating Income Multiple:

- 5.0 times (at US$60/bbl WTI and C$7.50 GJ AECO pricing)

6. Significant Drilling Upside:

- Currently Identified Development Locations - 54 gross (40.5 net)

7. Other Key Attributes

- greater than 80% operated assets

- greater than 80% average working interest

- Land - more than 18,000 net acres of undeveloped land

TRISTAR EQUITY FINANCING

Concurrent with the Acquisitions, TriStar has entered into a bought deal equity financing agreement with a syndicate of underwriters led by Orion Securities Inc. to issue on a private placement basis, 8,600,000 million subscription receipts of TriStar at a price of $4.70 each for gross aggregate proceeds of $40 million (the "Subscription Receipt Offering") and 1,700,000 million flow through common shares at a price of $6.00 for gross aggregate proceeds of $10 million (the "Flow Through Offering"). Closing of the Subscription Receipt Offering is scheduled for March 29, 2007 and the closing of the Flow Through Offering is scheduled for March 19, 2007.

The proceeds of the Subscription Receipt Offering will be held in escrow pending TriStar's receipt of all necessary approvals and the completion of the primary acquisition. Upon these conditions being met, the proceeds of the Subscription Receipt Offering will be released to TriStar and each subscription receipt will be exchanged for one TriStar Share without additional payment. If closing of the primary acquisition does not take place by 5:00 p.m. (Calgary time) on April 30, 2007 or the primary acquisition is terminated at any earlier time, holders of the subscription receipts will be entitled to a return of their full subscription price and their pro rata entitlement to the interest earned on the escrowed funds.

Subscription receipts and flow through common shares issued pursuant to the private placement will be subject to a hold period of four months from the date of closing. The offerings are subject to the receipt of all necessary regulatory and stock exchange approvals.



PROFORMA OVERVIEW; UPWARD REVISION TO TRISTAR 2007 GUIDANCE

The Acquisitions are accretive to TriStar on a reserves, production and
cash flow per share basis.

Upon the closing of the Acquisitions and the Offering, TriStar will have
the following corporate characteristics:

Long Life Reserves: greater than 19.6 Mmboe (P+P); RLI of over
10 years

Production Guidance: Average Rate 2007 (Est): greater than 5,150 Boepd
(75% light oil)
Exit Rate 2007 (Est): greater than 5,900 Boepd
(75% light oil)

Excellent Balance Sheet: Net debt to cash flow of just over one times

Shares Outstanding: 59.5 MM (B); 60.5 MM(FD)(1)
(post equity financing)

Significant Upside: greater than 325 locations
greater than 225,000 net acres of undeveloped
land

(1) Only includes Performance Shares at the average option strike
price is $6.96.


To date in conjunction with the transaction, TriStar has entered into a hedge of 250 barrels of oil per day at a fixed price of $76.60 for the period April 1, 2007 through December 31, 2009. In addition, TriStar has entered into a natural gas costless collar hedge of 2,000 GJs per day with a floor price of $7.50 AECO and a ceiling price of $10.32 AECO for the period November 1, 2007 to March 31, 2008.

Upon completion of the Acquisitions, TriStar will be revising upward the Company's 2007 average daily and exit rate production estimates. TriStar anticipates raising its 2007 average daily production guidance to more than 5,150 Boepd, comprised of 75 percent high quality, long life light oil, and 25 percent natural gas, and its 2007 production exit rate to more than 5,900 Boepd.

TriStar Oil & Gas Ltd. is a Calgary based company active in the acquisition, exploration, development and production of crude oil and natural gas in Western Canada.

This press release contains forward-looking statements. More particularly, this press release contains statements concerning TriStar's projected annual average and exit rate of production of oil and natural gas for 2007 and expected debt and cash flow.

The forward-looking statements are based on certain key expectations and assumptions made by TriStar, including expectations and assumptions concerning prevailing commodity prices and exchange rates, availability and cost of labour and services, the timing of receipt of regulatory approvals, the performance of existing wells, the success obtained in drilling new wells, the performance of new wells and the sufficiency of budgeted capital expenditures in carrying out TriStar's planned activities.

Although TriStar believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because TriStar can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. These risks are set out in more detail in TriStar's annual information form for the year ended December 31, 2005, which can be accessed at www.sedar.com.

The forward-looking statements contained in this press release are made as of the date hereof and TriStar undertakes no obligation 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.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The common shares offered have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and many not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable states securities laws.

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • TriStar Oil & Gas Ltd.
    Brett Herman
    President and C.E.O.
    (403) 268-7800
    (403) 218-6075 (FAX)
    or
    TriStar Oil & Gas Ltd.
    Jason Zabinsky
    Vice President, Finance and C.F.O.
    (403) 268-7800
    (403) 218-6075 (FAX)
    or
    TriStar Oil & Gas Ltd.
    Suite 800, 350-7th Avenue S.W.
    Calgary, Alberta T2P 3N9