Xtreme Coil Drilling Corp.

Xtreme Coil Drilling Corp.
Norquay Capital Ltd.

February 06, 2006 11:49 ET

Xtreme Coil Drilling Corp. Announces $40,600,000 Private Placement

CALGARY, ALBERTA--(CCNMatthews - Feb. 6, 2006) -

Xtreme Coil Drilling Corp. and Norquay Capital Ltd. Announce Proposed Amalgamation which will Constitute a Change in Control and Reverse Takeover of Norquay

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.

Proposed Amalgamation

Xtreme Coil Drilling Corp. ("Xtreme") and Norquay Capital Ltd. ("Norquay" or the "Company") are pleased to announce that, on January 24, 2006, the arm's length parties entered into an amalgamation agreement pursuant to which Xtreme and Norquay will amalgamate (the "Amalgamation") such that each former shareholder of Norquay shall receive one common share ("Amalco Share") of the amalgamated corporation ("Amalco") for each 30 common shares of Norquay held, and each former shareholder of Xtreme shall receive one Amalco Share for each one common share of Xtreme held. Pursuant to TSX Venture Exchange (the "Exchange") policies, the Amalgamation when completed is expected to qualify as Norquay's qualifying transaction as a capital pool company. Based on the price per common share for the Offering (as defined below) the deemed price for the Amalco Shares will be $7.00 per Amalco Share. Norquay has 16,666,666 common shares outstanding and Xtreme presently has 17,641,680 common shares outstanding (prior to completion of the private placement discussed below). Following the Amalgamation, Amalco will continue to carry on business under the name "Xtreme Coil Drilling Corp.".

The Amalgamation and related change in management will constitute a change of control of Norquay and a reverse take-over pursuant to Exchange Policy 5.2. Pursuant to the Amalgamation, Norquay will also undergo a change of business from a currently "unclassified" issuer to an "oil and gas services company" in accordance with Exchange policies. Amalco will be subject to Exchange policies.

Xtreme Private Placement Financing

On February 1, 2006, Xtreme entered into an agreement to proceed with a private placement equity financing of up to 5,800,000 common shares at a price of $7.00 per common share, for gross aggregate proceeds of $40,600,000 (the "Offering"). Peters & Co. Limited has agreed to act as agent in respect of the Offering. In consideration for acting as agent, Peters & Co. Limited will receive a commission in respect of the common shares sold. Following the financing, assuming that all 5,800,000 common shares are sold, Xtreme will have 23,441,680 common shares outstanding. Proceeds of the Offering will be used to fund a portion of Amalco's 2006 capital expenditures upon completion of the Amalgamation. Closing of the Offering is expected to occur on or about March 2, 2006.

Pro Forma Capitalization

Following the Amalgamation and the Offering, there will be an aggregate of 23,997,236 Amalco Shares issued and outstanding. There are currently 1,655,000 Xtreme options to purchase common shares outstanding and 2,000,000 Xtreme performance warrants outstanding, which will be exchanged for comparable convertible securities of Amalco on a one for one basis. There are currently 1,666,665 Norquay options to purchase common shares outstanding which will be cancelled pursuant to the Amalgamation Agreement. In addition, there are currently 700,000 agent's options to purchase Norquay common shares outstanding and which will be exchanged for comparable convertible securities of Amalco, such that Amalco will have outstanding agent's options to purchase 23,333 Amalco Shares, each at an exercise price of $4.50. As a result, on a fully diluted basis, there will be an aggregate of 27,675,569 Amalco Shares issued and outstanding following the Amalgamation and the Offering.

Information about Xtreme

Xtreme is a private coil tubing drilling company which commenced business in May, 2005. Xtreme was incorporated pursuant to the Business Corporations Act (Alberta) on May 24, 2005.

Xtreme is in the business of operating as a private drilling contractor using coil tubing drilling rigs, which employ new patent pending coil drilling designs and technology. Xtreme has hired third parties under contract to build these units and expects deliveries to commence in the second quarter of 2006. Xtreme's patents for the designs and technologies are currently pending in the United States. Upon completion of the coil tubing drilling units, Xtreme plans to contract out these rigs to oil and natural gas exploration and development companies in both Canada and the United States. The Company plans to have the majority of its drilling fleet in the USA.

The following table sets forth certain unaudited financial information for Xtreme as at and for the period from May 24, 2005 up until September 30, 2005. The figures below do not reflect the anticipated proceeds to be received by Xtreme through the completion of the financing. This information was prepared by the management of Xtreme and has not been audited.



May 24, 2005 up to September 30, 2005
(unaudited)
------------------------------------------
Total Assets $ 39,853,706
Total Interest Revenue $ 199,497
Total Liabilities $ 123,840
Total Expenses for the Period $ 362,794
Shareholders Equity $ 39,729,866


The current directors of Xtreme are Ric Charron, Randy Charron, Danny Remenda, Kyle Swingle and Tom Wood. The current officers of Xtreme are Tom Wood as Chairman of the Board, Richard Charron as Chief Executive Officer, Kyle Swingle as Chief Operating Officer and Richard Havinga as Vice President, Manufacturing and Engineering.

Prior to completion of the Amalgamation and the Offering, the principal shareholders of Xtreme are Tom Wood, Kyle Swingle and Randy Charron. If all of Mr. Wood's warrants and options were exercised, he would hold approximately 19.50% of the issued and outstanding shares of Xtreme. If all of Mr. Swingle's warrants and options were exercised, he would hold approximately 10.91% of the issued and outstanding shares of Xtreme. If all of Mr. Charron's warrants and options were exercised, he would hold approximately 14.20% of the issued and outstanding shares of Xtreme.

Information about Norquay

Norquay was incorporated pursuant to the provisions of the Business Corporations Act (Alberta) on July 6, 2005. Since incorporation, the business of Norquay has been to identify and evaluate assets or businesses with a view to completing a qualifying transaction as a capital pool company pursuant to Exchange policies. The directors of Norquay are David Tuer, Dennis Chorney and David Hall. The officers of Norquay are Dennis Chorney as President and Chief Executive Officer and John Zang as Secretary. Prior to completion of the Amalgamation, the only person who may be considered a principal shareholder of Norquay is Danny Remenda. If all of Mr. Remenda's options were exercised, he would hold approximately 12.20% of the issued and outstanding shares of Norquay.

Board of Directors and Management of Amalco

The board of directors and management of Amalco will be comprised of the following individuals:

Tom Wood, Calgary, Alberta - Chairman and a Director

President of Round Up Resource Service Inc., a private investment company; prior thereto, Founder and Chairman of Savanna Energy Services, former President, Drilling and Wellbore Service, Plains Energy Services.

Ric Charron, Calgary, Alberta - Chief Executive Officer and a Director

President of Arron Consulting Inc.; prior thereto, Chief Financial Officer - Itres Research Inc., President and Chief Financial Officer - Wrangler West Capital Corp and Chief Financial Officer - Zedi Solution Inc.

Randy Charron, Calgary, Alberta - Director

President of Characo Corporation, a private company, since 1997; prior thereto, Director - Savanna Energy Services. Vice President and Founding Director of Artisan Corporation, an oilfield service company.

Richard Havinga, Calgary, Alberta - Vice President, Engineering

Formerly Vice President, Engineering and Operations - Foremost Industries LLP.

Danny Remenda, Calgary, Alberta - Director

President, Danich Investments Limited; prior thereto, President of Plains Perforating Ltd.

Kyle Swingle, Denver Colorado- Chief Operating Officer Canadian Operations and a Director

Vice President, Rocky Mountain Drilling Division, Grey Wolf Inc.; prior thereto, Founding Director, President /CEO New Patriot Drilling Corp.; prior thereto, President - Precision Drilling USA.

David Tuer, Calgary, Alberta - Director

Director - Norquay Capital Ltd. President - Value Creation Inc. Director -Canadian Natural Resources Limited. Director - Rockwater Capital Corporation. Director and Chairman - Sequoia Oil & Gas Trust. Chairman - AltaLink Management Ltd. Chairman - Calgary Health Region

Principal Shareholders of Amalco

On completion of the Offering and the Amalgamation, Mr. Wood will own, directly or indirectly, or exercise control or direction over, approximately 2,683,334 Amalco Shares and will have performance warrants and options to purchase an additional 941,667 Amalco Shares. If all of Mr. Wood's warrants and options are exercised, he will hold approximately 14.54% of the issued and outstanding Amalco Shares.

On completion of the Offering and the Amalgamation, Mr. Randy Charron will own, directly or indirectly, or exercise control or direction over, approximately 1,782,333 Amalco Shares and will have performance warrants and options to purchase an additional 841,667 Amalco Shares. If all of Mr. Charron's warrants and options are exercised, he will hold approximately 10.56% of the issued and outstanding Amalco Shares.

Mr. Wood and Mr. Charron may in the future take such actions in respect of their shareholdings as they deem appropriate in the light of the circumstances then existing, including the purchase of additional shares or other securities of Amalco through open market purchases or privately negotiated transactions, or the sale of all or a portion of their holdings in the open market or in privately negotiated transactions to one or more purchasers.

Interest of Officers and Directors

Following the Offering and the Amalgamation, the proposed officers and directors of Amalco, as a group, will own, directly or indirectly, or exercise control or direction over, approximately 6,360,774 Amalco Shares and have options or performance warrants to purchase an additional 3,450,000 Amalco Shares. Officers and directors will hold approximately 26.51% of the issued and outstanding shares post-Amalgamation. If all the options and warrants are exercised, the directors and officers as a group will hold approximately 35.74% of the issued and outstanding Amalco Shares.

Change of Control of the Company - Requirements to Completion of the Amalgamation

The Amalgamation and related change in management will result in a change of control of Norquay Capital Ltd.

Completion of the proposed Amalgamation is subject to a number of conditions, including but not limited to, Exchange acceptance and shareholder approval. The proposed Amalgamation cannot close until the required shareholder approval is obtained (being the approval of shareholders of both Norquay and Xtreme holding in excess of 662/3% of the outstanding common shares). There can be no assurance that the proposed Amalgamation will be completed as proposed or at all. In addition, sponsorship of the Amalgamation transaction will be required in accordance with Exchange policies but has not yet been obtained. Norquay shares have not yet begun trading and trading will not commence until such time as sponsorship is obtained and further information on Xtreme Coil Drilling Corp. is made available. Xtreme and Norquay will seek the approval of their shareholders for the amalgamation at meetings of their shareholders, expected to occur on or about April 18, 2006.

Investors are cautioned that, except as disclosed in the publicly disseminated press releases of the Company and the management information circular to be prepared in connection with the Amalgamation, any information released or received with respect to the proposed Amalgamation may not be accurate or complete and should not be relied upon. Trading in the securities of Norquay, a capital pool company, and Xtreme should be considered highly speculative at this time based on the information contained herein.

Cautionary Statements

The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Although the Company and Xtreme believe that the expectations reflected in forward-looking statements are reasonable, they can give no assurances that the expectations of any forward-looking statements will prove to be correct. The Company and Xtreme disclaim any intention and assume no obligation to update or revise any forward looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward looking statements or otherwise, except as required pursuant to applicable securities laws.

The TSX Venture Exchange has in no way passed upon the merits of the proposed Amalgamation and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Xtreme Coil Drilling Corp.
    Mr. Ric Charron
    Chief Executive Officer
    (403) 262-9500 ext. 22
    (403) 262-9540 (FAX)
    Email: Ric.Charron@XtremeCoilDrilling.com
    or
    Xtreme Coil Drilling Corp.
    1402, 500 - 4th Avenue SW
    Calgary, Alberta T2P 2V6
    or
    Norquay Capital Ltd.
    Mr. Dennis Chorney
    President and Chief Executive Officer
    (403) 698-8308
    (403) 698-8324 (FAX)
    or
    Norquay Capital Ltd.
    905, 500 - 4th Avenue S.W.
    Calgary, Alberta T2P 2V6