VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 18, 2013) - WELLSTAR ENERGY CORP. (TSX VENTURE:WSE.H)(FRANKFURT:W6V1) ("WellStar", or the "Company") is pleased to announce that the first well has been drilled and the second well has been spud on its anticipated primary non-operated joint venture ("JV") in Dunn County, North Dakota. The Company expects to have a 40% working interest in each of the wells upon completion of the acquisition from a private Colorado corporation (the "Vendor") of certain non-operated oil and gas properties consisting of approximately 18,271 gross (7,273 net) contiguous acres located in North Dakota (the "Assets") which will constitute a "fundamental acquisition" (the "Acquisition") for the Company under the policies of the TSX Venture Exchange (the "TSXV").
In addition, two wells have recently been drilled and completed in the Bakken formation on the Company's anticipated secondary joint venture lands, which are contiguous to the primary joint venture but have a different operating partner. The wells are currently producing from two drilling units in which the Company has a potential 12.497% and a 5.208% working interest. The Vendor, through consultation with the Company, participated in the FREDERICKS USA 43-26H well (the "Fredericks Well"). Upon closing of the Acquisition, the Company expects to have a 5.208% working interest in the Fredericks Well. The second well, GARY BELL USA 23-36H ("Gary Bell Well") was successfully drilled and completed. The Vendor, through consultation with the Company, went non-consent on the Gary Bell Well. The Company expects to have a 12.497% working interest in the Gary Bell Well upon closing of the Acquisition after a three hundred percent penalty is paid from production revenue. Both wells have been put on confidential well status.
Further to the Company's press releases dated October 24, 2013 and February 22, 2013, the Company entered into a purchase and sale agreement, as amended (the "Purchase Agreement") with the Vendor in connection with the proposed Acquisition. The Company and the Vendor have entered into a second amending agreement (the "Amending Agreement") dated April 3, 2013 whereby the parties have agreed, among other things, to extend the termination date of the Purchase Agreement from April 16, 2013 to May 15, 2013. In addition, pursuant to the terms of the Amending Agreement, the purchase price for the Assets has been increased to US$51,600,000 from US$51,550,000.
Closing of the Acquisition is subject to, among other things, the Company securing satisfactory financing and obtaining approval of the TSXV, including review of a title opinion with respect to the Assets. There can be no assurance that the Acquisition will be completed as proposed or at all. As such, trading in the Company's shares remains highly speculative.
WellStar President Andrew H. Rees commented "Management is extremely pleased that drilling has commenced on its anticipated primary JV and with the success of the two wells recently completed on its potential secondary JV as they mark the first wells drilled on the leases subsequent to the effective date of the Acquisition (being November 1, 2012 in the event that the Acquisition is completed). The Company has potential exposure to 17 gross (5.21 net) wells that have either been recently drilled or are currently scheduled to be drilled. These consist of 3 gross (0.58 net) wells drilled in 2013, 1 gross (0.4 net) well that is currently in progress and 13 gross (4.23 net) additional wells currently scheduled to be drilled; 10 of which are expected to be drilled on the primary JV and 3 of which are expected to be drilled on the secondary JV."
ON BEHALF OF THE BOARD
Andrew H. Rees, President and Chief Executive Officer
Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Except as required pursuant to applicable securities laws, the Company will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by the Company. Readers are cautioned not to place undue reliance on forward looking statements.
Neither the 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.