CALGARY, ALBERTA–(Marketwired – Dec. 30, 2013) – Artisan Energy Corporation (“Artisan” or the “Corporation”) (TSX VENTURE:AEC) announces the following corporate activities:
Viking Light Oil Acquisition
Artisan has signed a purchase and sale agreement (subject to certain closing conditions) with Magnum Energy Inc. (“Magnum”) (TSX VENTURE:MEN), to acquire Magnum’s 50% working interest in 2,720 gross acres (1,360 net acres) of land in the Provost area of Alberta (the “Provost Asset”), which Magnum currently operates. Current production from the Provost Asset is approximately 80 gross boe/d (approximately 40 net boe/d) comprised of 90% light oil producing from the Viking zone. Artisan estimates that the Provost Asset has an additional 17 gross (8.5 net) horizontal development Viking light oil drill locations based on a minimum well density of 4 additional horizontal wells per section. In addition, Artisan recognizes potential to conduct low-cost optimization operations on the existing producing wells and facilities on the Provost Asset to materially increase production.
The purchase price for the Provost Asset is $5,600,000 (the “Purchase Price”), which will be comprised of the following:
In addition, in order to offset the difference between the Purchase Price and the consideration being paid for the Provost Asset, Artisan will receive a $1,000,000 debenture from Magnum (the “Artisan Debenture”). The Artisan Debenture will have a term of 3 years, will bear an interest rate of 9% per annum and will be non-convertible. Magnum will have the right to early repayment of any portion of the Artisan Debenture with no penalty. The Artisan Debenture will have a first security position against all of the assets of Magnum and Magnum will not be permitted to undertake any additional borrowing or subordination of the Artisan Debenture without the consent of Artisan, which shall not be unreasonably withheld.
In addition to customary closing conditions, Artisan’s acquisition of the Provost Asset is conditional on Artisan completing a minimum equity financing of $5,000,000. The issuance of shares by Artisan is subject to the filing and receipt of a prospectus and approval of the TSX Venture Exchange. Following closing of the acquisition of the Provost Asset, Artisan anticipates that it will be in a position to receive a standard borrowing facility from a recognized lending institution in the amount of approximately $5.0 to $5.5 million, to be secured against all of its assets. Closing of the acquisition of the Provost Asset is anticipated to occur on or before February 14, 2014.
Clarus Securities Inc. is acting as financial advisor to Artisan on the acquisition of the Provost Asset.
Farm-out of Various Exploration Operations
Artisan has entered into a farm-out agreement with an arm’s length exploration and production company (the “Farmee”) to complete up to $1.7 million worth of explorationoperationson certain assets currently owned 100% by Artisan. The Farmee has committed to pay 100% of the cost of the following exploration operations (the “Farm-out Operations”):
Artisan has commenced the Farm-out Operations.
About Artisan
Artisan is an oil and gas producer that holds near a 100% working interest in 27,787 core acres of land in Central and S.E. Alberta. Artisan has development oil projects at Ferrybank and Chip Lake, Alberta. Ferrybank is targeting Belly River oil production and Chip Lake is targeting Rock Creek oil production. Artisan also has a Sawtooth development oil project in S.E. Alberta, a Wilrich gas and Nordegg oil exploration project in Central Alberta and is pursuing and testing Bakken oil potential on various lands in S.E. Alberta, having drilled an initial vertical test well to the east of the Ferguson oil pool.
Measurements
Reported production represents sales before the deduction of royalties. Where amounts are expressed on a barrel of oil equivalent (“boe”) basis, natural gas has been converted at a ratio of six thousand cubic feet to one boe. This ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Boe’s may be misleading, particularly if used in isolation.
Advisory
This news release contains forward-looking statements and information (“forward-looking statements”) within the meaning of applicable securities laws relating to the proposed acquisition of oil and gas assets in the Provost area, estimates of additional oil and gas production, anticipated timing and results from operational activities, the timing and occurrence of capital expenditure and plans for further development. Readers are cautioned to not place undue reliance on forward- looking statements. While Artisan believes the expectations reflected in the forward-looking statements are reasonable, actual results and developments may differ materially from those contemplated by these statements depending on, among other things, issues encountered in drilling, completion and tie-in operations, the amount and timing of capital expenditures and factors beyond Artisan’s control. The forward-looking information contained in this news release is made as at the date of this news release and Artisan does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. Readers are urged to consider these factors carefully in evaluating any forward-looking information.
Additional information on other factors that could affect Artisan’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).
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 news release.
Artisan Energy Corporation
John Bell
Vice-President Finance & CFO
(403) 984-9275
Jbell@artisanenergy.ca
www.artisanenergy.ca