Twoco Petroleums Ltd.

Twoco Petroleums Ltd.

September 03, 2010 16:22 ET

Twoco Petroleums Ltd. Announces Completion of $4.67 Million of Its Equity Financing, Debenture Exchange and Issuance of Credit Facility Warrants

CALGARY, ALBERTA--(Marketwire - Sept. 3, 2010) -


Twoco Petroleums Ltd. ("Twoco" or the "Company") (TSX VENTURE:TWO) is pleased to announce the completion of approximately $4.67 million of its previously announced equity financing and that it has entered into agreements with the holders of the majority of its outstanding unsecured 17% debentures to exchange such debentures for common shares of the Company (the "Debenture Exchange"). Twoco has also issued warrants pursuant to an amending agreement to its credit facility with the Alberta Treasury Branches (the "Bank").

Equity Financing

Twoco is pleased to announce that it has closed approximately $4.67 million of its previously announced equity financing (the "Offering") for 3,255,000 units of the Company ("Units") at a price of $0.23 per Unit and 15,695,000 flow-through units of the Company ("Flow-Through Units") at a price of $0.25 per Flow-Through unit pursuant to the terms of an agency agreement between Twoco and Macquarie Private Wealth Inc. (the "Agent") dated effective July 13, 2010. Each Unit was comprised of one common share of the Company ("Common Share") and one Common Share purchase warrant ("Warrant"). Each Flow-Through Unit was comprised of one Common Share issued as a "flow-through share" ("Flow-Through Share") within the meaning of the Income Tax Act (Canada) (the "Tax Act") and one-half of one Warrant. Each whole Warrant shall be exercisable into one Common Share at a price of $0.30 per Common Share for a period of 24 months from the closing date ("Closing Date") of the Offering. There may be additional closings under the Offering.

The Company intends to increase its capital budget to drill up to 4 horizontal oil wells on four sections of land on the Company's Sparky oil prospect in the Warspite area of Alberta and one horizontal oil well on the Company's Viking prospect in the Bellshill Lake area of Alberta. The net proceeds of the Offering will also be used to drill up to 6 vertical natural gas wells in the Company's Warspite, Colinton, Sunland and Plain operating areas of Alberta and a modest amount of the net proceeds of the Offering may be used for general corporate purposes. The gross proceeds from the issuance of Flow-Through Shares in an amount equal to the portion of the aggregate purchase price for Flow-Through Units which is allocated to the Flow-Through Shares, will be used to incur Canadian Exploration Expenses (as such term is defined in the Tax Act) prior to December 31, 2011 (the "Flow-Through Commitment"). The Company will renounce such Canadian Exploration Expenses to the subscribers of the Flow-Through Units effective on or before December 31, 2010. Subject to satisfying the Flow-Through Commitment and in compliance with the terms of the Amending Agreement (as defined herein), Twoco will review all capital expenditures on a regular basis throughout 2010 and 2011 and adjust spending based on factors such as changes in commodity prices and drilling and production results.

In consideration for its services in connection with the Offering, the Agent and its designated sub-agents were paid a commission equal to $326,263.00 and 3,500 Common Shares. In addition, the Agent received options ("Agent Options") to purchase 1,137,000 Units exercisable for twenty-four months at a price of $0.23 per Unit.

Debenture Exchange

$5,370,000 of the Company's 17% unsecured debentures (the "Debentures"), plus all interest accrued on such Debentures from July 1, 2010 (the most recent interest payment date) to the Closing Date were exchanged for Common Shares at a price of $0.23 per Common Share for an aggregate of 24,054,641 Common Shares. The Debenture Exchange included the exchange of $1,770,000 principal amount of Debentures plus all interest accrued thereon up to the Closing Date held by certain insiders of Twoco for an aggregate of 7,928,629 Common Shares on the same terms as described above.

Credit Facility Warrants

On July 29, 2010, the Company and the Bank entered into an amending agreement (the "Amending Agreement") further amending the terms of the Company's $18 million revolving credit facility (the "Revolving Credit Facility"). In connection with the Amending Agreement, the Company paid the Bank $50,000 at the date thereof and has issued 1,500,000 Warrants to the Bank on September 1, 2010.

Twoco is an oil and gas company engaged in the exploration for, and the acquisition, development and production of, oil and natural gas reserves primarily in the Province of Alberta. Twoco has 57,949,547 Common Shares issued and outstanding as at today's date.

Forward Looking Statements:

Certain information set forth in this news release contains forward-looking statements or information ("forward-looking statements"), including the anticipated use of the net proceeds of the Offering, and proposed changes to the Company's capital budget. The intended use of the net proceeds of the Offering by the Company might change if the board of directors of the Company determines that it would be in the best interests of the Company to deploy the proceeds for some other purpose. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Twoco's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, operational risks in exploration and development, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and the ability to access sufficient capital from internal and external sources. Although Twoco believes that the expectations in our forward-looking statements are reasonable, our forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward looking information. As such, readers are cautioned not to place undue reliance on the forward looking information, as no assurance can be provided as to future results, levels of activity or achievements. The risks, uncertainties, material assumptions and other factors that could affect actual results are discussed in our Annual Information Form and other documents available at Furthermore, the forward-looking statements contained in this document are made as of the date of this document and, except as required by applicable law, Twoco does not undertake any obligation to publicly update or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

This news release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States or to or for the account or benefit of US persons (as such terms are defined in Regulation S under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")), absent registration or an exemption from registration. The securities offered have not been and will not be registered under the U.S. Securities Act or any state securities laws and, therefore, may not be offered for sale in the United States, except in transactions exempt from registration under the U.S. Securities Act and applicable state securities laws.

Neither 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 release.

Contact Information

  • Twoco Petroleums Ltd.
    Wayne A. Malinowski
    President and Chief Executive Officer
    (403) 231-8653
    (403) 237-6048 (FAX)