Storm Resources Ltd. Announces $35 Million of Equity Financings, an Operations Update and Preliminary 2014 Guidance Including Capital Investment of $81 million

CALGARY, ALBERTA–(Marketwired – Oct. 28, 2013) –

STORM RESOURCES LTD. (“Storm“) (TSX VENTURE:SRX) is pleased to announce that it has entered into an agreement for a $30.15 million bought deal financing and intends on concurrently completing a non-brokered financing for up to $5.025 million. In addition, Storm is pleased to provide an operations update and preliminary 2014 guidance that includes capital investment of $81 million.

Equity Financing

Storm has entered into an agreement with a syndicate of underwriters led by FirstEnergy Capital Corp. and including Peters & Co. Limited, National Bank Financial Inc., Clarus Securities Inc., RBC Capital Markets, Cormark Securities Inc. and Macquarie Capital Markets Canada Ltd. (collectively, the “Underwriters“) to issue, on a bought deal basis, 9,000,000 common shares (“Common Shares“) of Storm, at a price of $3.35 per Common Share, for aggregate gross proceeds of $30,150,000 (the “Bought Deal Financing“). In addition, contemporaneously with the completion of the Bought Deal Financing, Storm announces that it will issue up to 1,500,000 Common Shares to certain investors identified by Storm, including directors, officers, and employees of Storm, at a price of $3.35 per Common Share, for aggregate gross proceeds of up to $5,025,000 (the “Non-Brokered Financing“, and together with the Bought Deal Financing, the “Offering“). Aggregate gross proceeds from the Offering are up to $35,175,000 with up to 10,500,000 Common Shares being issued.

The net proceeds of the Offering will be used to partially finance an expanded 2014 capital expenditure program which will be focused on advancing exploitation of the Montney formation in the Umbach area of north eastern British Columbia. The Common Shares issuable pursuant to the Bought Deal Financing will be offered in all provinces of Canada by way of a short form prospectus. The Common Shares issuable pursuant to the Non-Brokered Financing will be offered by way of private placement exemptions in all of the provinces of Canada and will be subject to a four-month hold period under applicable Canadian securities laws.

Closing is expected to occur on or about November 19, 2013 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange.

The Common Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements. This news release does not constitute an offer to sell or the solicitation of any offer to buy nor will there be any sale of Common Shares in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such province, state or jurisdiction.

Operations Update

Production in the third quarter of 2013 was approximately 3,800 Boe per day based on field estimates. September 2013 production averaged approximately 4,360 Boe per day, also based on field estimates. Capital investment during the third quarter of 2013 was approximately $23.5 million which included drilling five horizontal wells (5.0 net) at Umbach and completing three horizontal wells (3.0 net) which began producing on August 25, September 12 and October 19 respectively.

Horizontal well performance has improved with the first three horizontals on Storm’s 100% working interest lands averaging 4.4 Mmcf per day gross raw gas (800 Boe per day sales) over the first 30 days (operated day rates), an improvement of 60% from the first four horizontal wells that came on production in 2011 and 2012. Additional production history is required in order to estimate first year average rates and ultimate recovery for the most recent horizontal wells.

Production guidance for 2013 is unchanged with exit or fourth quarter production forecasted to be 4,500 to 5,000 Boe per day with the completion and tie-in of one additional standing horizontal well (1.0 net). The remainder of Storm’s guidance is unchanged from that provided with the release of second quarter results on August 14, 2013.

An updated presentation is available on Storm’s website at www.stormresourcesltd.com.

Preliminary 2014 Guidance

Proceeds from the Offering will ultimately be used to expand 2014 capital investment in order to accelerate exploitation of the Montney formation at Umbach. Preliminary 2014 guidance is provided below:

Major expenditures in the 2014 capital investment program include:

• $55.0 million at Umbach to drill 11 horizontal wells (11.0 net) with 11 horizontal wells (10.6 net) being completed and tied in; and
• $16.0 million to expand infrastructure at Umbach, which includes $12.0 million to construct a new field compression facility expandable from initial capacity of 12 Mmcf per day to 20 Mmcf per day (additional investment of $2.0 million for the expansion, anticipated to occur in 2015).

The preliminary 2014 budget assumes an average natural gas price at AECO of $3.35 per GJ, an Edmonton Par oil price of Cdn $89 per barrel and $33.0 million of net proceeds are received from the Offering. Assumed commodity prices generally reflect forward strip pricing as of October 23, 2013. Adjusted net debt is forecasted to be $50 million to $55 million at the end of 2014 (including public company investments), which would be approximately 1.0 times annualized funds from operations in the fourth quarter of 2014.

Storm has added additional commodity price hedges in order to ensure that commodity price fluctuations do not affect capital investment and growth in 2014. For all of 2014, a natural gas volume of 9,000 GJ per day (approximately 7,500 Mcf per day) has a floor price of $3.31 per GJ (approximately $4.00 per Mcf). For January to June of 2014, the price of 375 barrels per day of oil was fixed at WTI Cdn $102 per barrel (WTI price in $US per barrel converted to $Cdn per barrel).

The decision to issue equity to accelerate capital investment at Umbach was primarily based on the improvement in horizontal well performance and the size of the opportunity on Storm’s 112 net sections of Montney lands at Umbach. Since 2010, Storm has invested $29 million to accumulate 112 net sections and approximately 25% has been delineated to date with vertical and horizontal wells, while reserves were assigned on just 5% of this land position at the end of 2012. Assuming a field netback of $20 per Boe, a first year average rate of 2.4 Mmcf per day gross raw gas (430 Boe per day), ultimate recovery of 4.3 Bcf gross raw gas per horizontal well and $4.9 million to drill, complete and tie in a horizontal well, the management of Storm estimates that rates of return for horizontal wells exceed 30% on an unrisked basis. This is based on flat pricing of $3.35 per GJ for natural gas and Cdn $89.00 per barrel for Edmonton Par (WTI US $93.00/bbl).

Storm began operations in August, 2010, is headquartered in Calgary, Alberta and is active in the Umbach and Horn River Basin areas of north eastern British Columbia, and in the Grande Prairie area of north western Alberta.

READER ADVISORIES

Forward-Looking Statements – The information in this press release contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “would” and similar expressions. In particular, forward looking statements in this press release includes, but is not limited to: the use of proceeds of the Offering, Storm’s capital program, the anticipated closing date of the Offering, the receipt of required regulatory and third party approvals, production, production guidance, drilling plans and commodity prices. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Storm’s control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions, of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities, including the approval of the TSX Venture Exchange. The intended use of proceeds of the Offering by Storm may change if the board of directors of Storm determines that it would be in the best interests of Storm to deploy the proceeds for some other purpose. Storm’s actual results, performance or achievement could differ materially from those expressed in, or implied by such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that Storm will derive from them.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Storm are included or are incorporated by reference in the company’s MD&A for the three and six months ended June 30, 2013.

The forward-looking statements contained in this press release are made as of the date hereof and Storm undertakes no obligation to publicly update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

Boe Presentation – For the purpose of calculating unit revenues and costs, natural gas is converted to a barrel of oil equivalent (“Boe“) using six thousand cubic feet (“Mcf“) of natural gas equal to one barrel of oil unless otherwise stated. Boe may be misleading, particularly if used in isolation. A Boe conversion ratio of six Mcf to one barrel (“Bbl“) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All Boe measurements and conversions in this report are derived by converting natural gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. Mmcf means 1,000 Mcf.

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.