TrueStar Petroleum Corporation
TSX VENTURE : TPC

TrueStar Petroleum Corporation

November 01, 2005 15:44 ET

TrueStar Announces Initial Closing of Private Placement

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 1, 2005) - TrueStar Petroleum Corporation (TSX VENTURE:TPC) is pleased to announce that it has completed an initial closing under the previously announced brokered private placement of up to US$5,000,000. The initial closing relates to the sale of 7,685,132 Units for gross proceeds of C$2,459,242. Each Unit was sold at a price of C$0.32 per Unit. Each Unit consists of one common share and one-half of a 2-year warrant. Each full warrant entitles the holder thereof to purchase one common share for C$0.40. The funds from the equity placement will be used for new well costs for TrueStar's re-activated development program and for payment of certain corporate debts, working capital and general corporate purposes. The subscription agreement allows for multiple closings, and the Company expects additional closings in the near term. The placement is being brokered by Fox-Davies CAPITAL of London.

"This is yet another significant milestone event for the Company as management continues to escape the problems created by a lack of capital in the past. The Company intends to add to its inventory of horizontal wells in the Barnett Shale aggressively. The current spread between finding and development costs for natural gas in the Barnett Shale and market prices continues to be compelling," said Robert E. Chamberlain, Jr., CEO of TrueStar. "We believe the investment community is beginning to realize the value of our core Barnett Shale assets in the heart of the fairway in Denton and Tarrant Counties, Texas. The reserve evaluation, recently prepared by Harper & Associates, Inc. of Fort Worth, indicated proved reserves across all categories of 30.6 BCF of gas with future net revenues discounted at 10%, of approximately US$73.6 million. If we assume an exchange rate of US$0.84 to C$1.00 and approximately 77.7 million shares outstanding after today's partial closing of the private placement, the PV10 of the reserves underlying Harper's report is approximately C$1.13 per share. What is particularly noteworthy is that Harper's report does not include any value attributable to the additional core Barnett Shale leasehold acreage TrueStar acquired in the spring of 2005, with the exception of the leases underlying the Prairie Meadows #1H horizontal well," added Mr. Chamberlain.

"Our resumed field activity and capital availability will allow us to realize the values given in the Harper report and provide an exceptional investment opportunity in TrueStar," said Charles Kohlhaas, TrueStar's Chairman.

About TrueStar

The Company's focus is on the efficient development of hydrocarbons in North and Central America while maintaining high standards of environmental responsibility. TrueStar now has interests in 27 producing natural gas wells (19 vertical and 8 horizontal), 1 horizontal well drilled and completing, 1 horizontal well drilled awaiting completion and one horizontal well drilling. Working interest partners involved in the Company's various acreage holdings include publicly-listed Devon Energy (NYSE:DVN) and Carrizo Oil &Gas (NASDAQ NM:CRZO), along with other privately-held entities. TrueStar Petroleum Corporation is an oil and gas exploration and development company.

ON BEHALF OF THE BOARD OF DIRECTORS

Charles A. Kohlhaas, Chairman of the Board


The TSX Venture Exchange Inc. has not reviewed and does not accept responsibility for the adequacy and accuracy of this release.

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