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SFR Energy Ltd. Provides Update on Proposed Qualifying Transaction

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SFR Energy Ltd. Provides Update on Proposed Qualifying Transaction

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES

Calgary, Alberta CANADA, November 05, 2013 /FSC/ – SFR Energy Ltd (SFQ.P – TSX Venture), (the “Corporation” or “SFR”) a capital pool company listed on the TSX Venture Exchange (the “Exchange” or “TSXV”), is pleased to provide an update to its previously-announced proposed Qualifying Transaction with SoftRock Resources (Bahamas) Limited (“SoftRock”).

SoftRock and SoftRock Properties

SoftRock is a private corporation incorporated under the law of Bahamas which, together with its wholly-owned subsidiary, is an independent international energy company engaged in oil and gas exploration and development. SoftRock owns interests and rights to acquire interests in oil and gas properties in the United States and the Republic of Cameroon. SoftRock’s primary oil and gas interest is a right to earn a 50% working interest in approximately 61,472 gross acres (30,736 acres net) of land located in Sacramento Valley, Mohave County, Arizona (the “Sacramento Valley Assets”). SoftRock also owns a 10% working interest (carried through the initial exploration period) in the 89,943 acre (8,994 acres net) area in Cameroon known as the Bakassi West Block (the “Bakassi West Block”).

Sacramento Valley Assets

SoftRock entered into a farmout agreement (the “Farmout Agreement”) with a private company (“PrivateCo”) owned and controlled by Mr. Don Vandergrift, a director of SFR and the controlling shareholder of SoftRock, on April 1, 2013, pursuant to which SoftRock may earn a 50% interest in all leases and lands owned or thereafter acquired by PrivateCo in the Sacramento Valley. As at June 1, 2012, PrivateCo had leases and lands located in the Sacramento Valley covering approximately 61,472 gross acres. Pursuant to the terms of the Farmout Agreement, SoftRock may earn a 50% interest in such lands by paying 100% of the cost to complete the initial exploratory well on the lands. The cost to acquire certain related seismic and drill and complete such well is estimated to be $4,125,000 ($625,000 for the seismic program and $3,500,000 for the drilling and completion of the well), which, assuming completion of the Qualifying Transaction and the concurrent Offering (as defined below), is expected to be financed with the proceeds of the Offering. The following is a summary of Chapman Petroleum Engineering Limited’s (“Chapman”) estimate of prospective resources attributable to the Sacramento Valley Assets and is based on the National Instrument 51-101 (“NI 51-101″) compliant resource report prepared by Chapman with an effective date of June 1, 2013. There is no certainty that any portion of the estimated prospective resources will be discovered, and if discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources.

-***-

Low Estimate Best Estimate High Estimate

Sacramento Valley Lands (MSTB)(4)(5) (MSTB)(4)(6) (MSTB)(4)(7)

—————————- ————— —————– ————-

Gross(1) 1,700 5,160 16,500

Gross SoftRock(2) 850 2,580 8,250

Net SoftRock(3) 638 1,935 6,188

—————————- ————— —————– ————-

-****-

Notes:

1. Represents an estimate of the prospective oil resources attributable to SoftRock’s and PrivateCo’s 100% interest before deduction of royalties and without including any royalty interests.

2. Represents an estimate of the prospective oil resources attributable to SoftRock before deduction of royalties owned by others assuming it earns a 50% working interest in the Sacramento Valley Lands pursuant to the Farmout Agreement.

3. Represents an estimate of the prospective oil resources attributable to SoftRock after deducting the amounts attributable to royalties owned by others assuming it earns a 50% working interest in the Sacramento Valley Lands pursuant to the Farmout Agreement.

4. As there has been no historical exploratory drilling on the Sacramento Valley lands, Chapman estimated the prospective resources attributable to the Sacramento Valley lands by analogy to the cumulative production of six long-life fields in similar valleys in the Nevada portion of the Basin and Range Geologic Province, as published in 1994 by the Nevada Petroleum Society. Estimated production rates were based on the initial production rate of the similar sized Blackburn Field in Nevada as reported by the Nevada petroleum Society in 1994.

5. In the case of the low estimate, five wells with a maximum production rate of 100 STB/d/well were assumed.

6. In the case of the best estimate, five wells with a maximum production rate of 185 STB/d/well were assumed.

7. In the case of the high estimate, seventeen wells with a maximum production rate of 215/well STB/d were assumed.

8. The significant positive factor relevant to the estimates is the close structural analogy between the Sacramento Valley and the tectonically similar valleys in the Nevada portion of the Basin and Range Geologic Province. The significant negative factor is the lack of any exploratory drilling within the Sacramento Valley.

Bakassi West Block

The Bakassi West Block includes an offshore area within the Rio del Rey Basin in the Republic of Cameroon, with all exploration and development wells on the block expected to be situated in shallow water. SoftRock is carried through the initial exploration period on the Bakassi West Block and assumes its share of development costs upon approval of a commercial discovery. All expenditures made on behalf of SoftRock pursuant to the carried interest are for the account of SoftRock and there are no repayment obligations from SoftRock to its partners associated with that interest. Prior exploration on the Bakassi West Block has been limited to the acquisition of 2D seismic data and the drilling of three exploration wells to the Akata Formation shale zone. Two of such wells were abandoned with the other cased as a gas discovery with three gas zones interpreted on logs in the Aqbada and Akata formations.

The production sharing contract governing SoftRock’s interest in the Bakassi West Block includes the requirement to complete a US$12 million seismic program and drill one exploratory well by the end of the initial exploration term (until June 14, 2016).

Chapman was engaged to evaluate the prospective resources attributable to the Bakassi West Block. The following is a summary of Chapman’s estimate of such prospective resources and is based on the NI 51-101 compliant report titled “Evaluation of Prospective Resources, Bakassi West PSC, Cameroon” prepared by Chapman and dated July 29, 2013 with an effective date of June 1, 2013. There is no certainty that any portion of the estimated prospective resources will be discovered, and if discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources.

-***-

Low Estimate Best Estimate High Estimate

Bakassi West Block(1) (MSTB) (MSTB) (MSTB)

—————————- ————— ————— ————-

Lead 1(2) 11,404 79,831 205,279

Gross(3)

Gross SoftRock(4) 856 5,991 15,407

Net SoftRock(5) 782 3,690 9,248

—————————- ————— ————— ————-

Lead 3(2)

Gross(3) 8,553 59,873 153,959

Gross SoftRock(4) 642 4,494 11,555

Net SoftRock(5) 599 2,925 7,302

—————————- ————— ————— ————-

Lead BWN-4(6)

Gross(3) 32,503 227,518 585,046

Gross SoftRock(4) 2,439 17,076 43,909

Net SoftRock(5) 1,852 10,672 25,270

—————————- ————— ————— ————-

Total(7)

Gross(3) 52,460 367,222 944,284

Gross SoftRock(4) 3,937 27,561 70,871

Net SoftRock(5) 3,097 16,950 41,865

—————————- ————— ————— ————-

-****-

Notes:

1. Chapman estimated the prospective resources attributable to the Bakassi West Block based on reservoir parameters available from published technical literature on similar productive Niger Delta sands and prospect mapping and interpretation using existing geological and geophysical data, with the primary source being a report prepared by the operator of the Bakassi West Block in 2011. The area of each Lead was determined by seismic mapping. Average net pay for each Lead was varied from 70 feet for the low estimates to 700 feet for the high estimates with the best estimates assumed to be 350 feet. This is believed to be a typical range of average net pays for this type of Niger Delta reservoir. Estimated production rates used in calculating the resource estimates were based on wells producing from the Agbada zone in nearby offshore Nigeria, with initial production rates estimated to be between 833 STB/d in the low estimate cases to up to 3,333 STB/d in the high estimate cases. These initial production rate estimates are based on Chapman’s experience evaluating similar reservoirs in the Niger Delta Basin.

2. With respect to the resource estimates for Leads 1 and 3: (i) in the case of the low estimate, three wells with an average initial production rate of 833 STB/d/well were assumed; (ii) in the case of the best estimate, six wells with an average initial production rate of 1,666 STB/d/well were assumed; and (iii) in the case of the high estimate, twelve wells with an average initial production rate of 3,333 STB/d/well were assumed.

3. Represents an estimate of the total prospective oil resources attributable to the Bakassi West Block.

4. Represents an estimate of the total prospective oil resources attributable to SoftRock’s 10% working interest before deduction of royalties owned by others.

5. Represents an estimate of the total prospective oil resources attributable to SoftRock’s 10% working interest after deducting the amounts attributable to royalties owned by others

6. With respect to the resource estimate for Lead BWN-4: (i) in the case of the low estimate, six wells with an average initial production rate of 833 STB/d/well were assumed; (ii) in the case of the best estimate, thirty wells with an average initial production rate of 1,333 STB/d/well were assumed; and (iv) in the case of the high estimate, thirty wells with an average initial production rate of 2,666 STB/d/well were assumed.

7. Columns may not add due to cumulative effects of rounding.

8. The significant positive factor relevant to the Bakassi West Block resource estimates is the close stratigraphic and structural analogy to the adjacent Niger Delta oil fields. The significant negative factor is the significant risk of encountering only gas on the Block.

Corporate Information

SFR is also pleased to announce that Dr. Easton Wren has agreed to act as a consultant to the Resulting Issuer upon the completion of the proposed Qualifying Transaction. Dr. Wren received a B.Sc.(Hons) in Geology and a Ph.D. in Geophysics from the University of Glasgow in Scotland. His professional experience includes positions with Ray Geophysical Company in Libya, the United Nations in Uganda, and Amoco Canada and PanCanadian Petroleum in Calgary. He founded Petrel Consultants, has been an Independent Consultant and a former Director of BowLeven PLC., a company active in Cameroon, and is recently retired as Exploration Vice President but is still a Director of Americas Petrogas Inc., a Calgary company with oil and gas operations in Argentina and a large potash/phosphate project in Peru. Dr. Wren has lectured at U.S. and Canadian universities and has presented industry-oriented courses in the Americas, Europe, Africa, the Middle East, S.E. Asia and Australasia. Dr. Wren was President of the Canadian Society of Exploration Geophysicists (CSEG) and received Honorary Membership. He is the author of several published papers on seismic processing and interpretation and is a past editor of the Journal of the C.S.E.G. In 1987 he was the Distinguished Lecturer for the American Association of Petroleum Geologists (AAPG) and is an active member of S.E.G., C.S.E.G., and A.P.E.G.G.A. He was the producer and host of CFAC-TV Calgary’s “Science Spectrum” documentary programme.

Selected Financial Information

The following information is derived from the management prepared consolidated combined financial statements of SoftRock as at and for the year ended December 31, 2012 and the interim consolidated combined financial statements of SoftRock as at and for the six month period ended June 30, 2013. The financial statements are in the process of being audited and the Corporation expects that audited financial statements will be provided in the disclosure document that will be sent to shareholders of the Corporation in due course.

-***-

Year Ended December 31, Period Ended June 30,

2012 (US$) 2013 (US$)

————————- ———————— ———————–

Current Assets 6,581 2,093

Total Assets 6,681 2,093

Current Liabilities 33,854 43,914

Share Equity 27,173 41,821

Deficit 27,173 41,921

Expenses 25,495 14,648

Net Loss and

Comprehensive Loss (25,495) (14,648)

-****-

Note:

1. The carried interest attributable to SoftRock for the Bakassi West Block includes no associated repayment obligations for the carried amounts paid by the joint venture partners on behalf of SoftRock. Accordingly, nil costs have been recognised to date in the consolidated and combined financial statements related to SoftRock’s carried interest in the Bakassi West Block.

Financing

Concurrent with the Qualifying Transaction, SFR intends to complete a private placement of a minimum of 20,000,000 common shares of SFR (the “Offered Shares”) at a price of $0.25 per Offered Share for gross proceeds of a minimum of $5,000,000 (the “Offering”). It is intended that the proceeds of the Offering be used for the recommended work program on the Sacramento Valley Assets, including drilling of the initial exploratory well in accordance with the Farmout Agreement. The Corporation may pay a finder’s fee of up to 5% in cash to qualified finders on the Offering. It is not expected that any of the funds from the Offering will be used for the Bakassi West Block, nor is funding required for the Bakassi West Block in the next twelve to eighteen months as SoftRock has a carried interest in that project. Upon completion of the Qualifying Transaction, SFR intends to focus its attention and resources on the Sacramento Valley Assets and other than in the ordinary course, does not anticipate making any production decisions on the Bakassi West Block for at least the next twelve to eighteen months. Trading in SFR common shares will remain halted pending receipt and review of acceptable documentation pursuant to the policies of the TSXV.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and, if required under the applicable policies of the Exchange, majority of the minority shareholder approval. The Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

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

All information contained in this press release with respect to the Corporation and SoftRock was supplied by Corporation and SoftRock, respectively, for inclusion herein. SFR and its directors and officers have relied exclusively on SoftRock for any information concerning SoftRock, the Sacramento Valley Assets and the Bakassi West Block.

ADVISORY: This press release may contain “forward-looking information” within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, included herein may be forward-looking information. Generally, forward-looking information may be identified by the use of forward-looking terminology such as “plans”, ” expects” or “does not expect”, “proposed”, “is expected”, “budgets”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, would, or might occur or be achieved. This forward-looking information reflects the Corporation’s current beliefs and is based on information currently available to the Corporation and on assumptions the Corporation believes are reasonable. These assumptions include, but are not limited to, management’s assumptions about the TSXV approval for the Transaction, closing of the Offering and closing of the Transaction announced above. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Corporation to be materially different from those expressed or implied by such forward-looking information. Such risks and other factors may include, but are not limited to: general business, economic, competitive, political and social uncertainties; commodity prices; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting the Corporation; timing and availability of external financing on acceptable terms. Although the Corporation has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

The forward-looking statements contained in this press release represent the expectations of the Corporation as of the date of this press release and, accordingly, are subject to change after such date. However, the Corporation expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities law.

Advisory Regarding Reserves and Resources Information

The determination of resources involves the preparation of estimates that have an inherent degree of associated uncertainty. The estimation and classification of resources requires the application of professional judgment combined with geological and engineering knowledge to assess whether or not specific resource classification criteria have been satisfied. Knowledge of concepts including uncertainty and risk, probability, statistics and deterministic and probabilistic estimation methods is required to properly use and apply resource definitions.

“best estimate” means the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. If probabilistic methods are used, there should be a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate;

“high estimate” means an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. If probabilistic methods are used, there should be a 10% probability (P10) that the quantities actually recovered will equal or exceed the high estimate;

“low estimate” means a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. If probabilistic methods are used, there should be a 90% probability (P90) that the quantities actually recovered will equal or exceed the low estimate;

“MSTB” means 1,000 stock tank barrels

THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.

For further information, please contact:

David Pinkman, CEO

SFR Energy Ltd.

Tel: (403) 863-6034

Email: dpinkman@sfrenergy.com

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.

To view the press release as a PDF file, please click on the following link:

http://www.usetdas.com/pr/sfr11052013.pdf

Source: SFR Energy Ltd (TSX-V: SFQ.P)

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