CALGARY, ALBERTA–(Marketwired – March 25, 2014) – Quattro Exploration and Production Ltd. (TSX VENTURE:QXP) (“Quattro” or the “Company”) is pleased to announce;
Milo-Clarke Lake, British Columbia
On March 24th, 2014, Quattro closed the acquisition of 100% of Progress Energy Canada, Japex Montney Ltd. and Petroleum Brunei Montney Holdings Ltd’s interests, including all wells, facilities and lands as outlined in the agreement as the Milo-Clarke Lake Region of British Columbia.
The effective date for the acquisition is February 1st, 2014, which increases Quattro’s production in the region by 900 mcf/d (net) bring Quattro’s production at Milo-Clarke Lake up to 1,850 mcf/d (net). On closing, Quattro will become the Operator of Record for the facilities and the associated wells while increasing its ownership in the related facilities to 52%. The facilities are well-maintained, with a designed capacity of 20,000 mcf/d of compression, dehydration and treating. Quattro now holds a 48% operating interest in the wells which in February of 2014 averaged 3,850 mcf/d. The wells are long life in nature and have produced to date a total of 59.6 BCF of gas from the Slave/Pine Point formation and are located within Quattro’s current developed and undeveloped land base. The purchase price was $750,000 plus G.S.T., and the assumption of the associated decommissioning costs estimated to be approximately $680,000 (net) less further post-closing adjustments as would be normally associated with an acquisition of this nature, for a total cost of $1,430,000 or $9,530 per flowing boe/d. The acquisition was funded through the combination of cash on hand and current cash-flow.
Noel, British Columbia
Quattro would also like to announce the sale of its 80% interest in exploration lands located at Noel, BC to Nordic Oil and Gas Ltd. In connection with the sale, Quattro acquires a 2.5% GORR on the lands and retains an option to convert to a 25% net operating interest at the casing point of the first well. The sale price was $300,000 paid by way of the issuance of a securitized Promissory Note for $100,000, due on or before December 2014, yielding 8% interest per annum and 4,000,000 units of Nordic (“Units”), each Unit consisting of one (1) Class A common share of Nordic (“Nordic Shares”) and 4,000,000 purchase warrants (“Nordic Warrants”). Each Nordic Warrant is exercisable into one Nordic Share at a purchase price of $0.05 per share prior to March 20th, 2016.
Quattro has also executed a binding letter of intent for the acquisition from a private Alberta based company of a combination of 1,000 mcf/d of natural gas along with the associated gathering and compression and spare equipment. The results will be, 1,000 mcf/d being added to Quattro’s Donalda facilities and a 600 mcf/day (net) increase in production. The Company also acquired certain additional lands, minerals rights and suspended wells along with the associated undeveloped land. The effective date of the acquisition will be February 1st, 2014.
The acquisition adds additional flexibility and capacity to further increase production through reactivations in the region with the goal of bringing Quattro’s Donalda production to greater than 3,000 mcf/d (net) in the 3rd quarter of 2014. Upon closing the Company’s developed land base at Donalda will be 44,465 acres (net) developed and 27,810 acres (net) of undeveloped lands.
The purchase price is $350,000 plus G.S.T., and the assumption of the associated decommissioning costs estimated to be approximately $925,000 (net) with further post-closing adjustments as would be normally associated with an acquisition of this nature, for a total cost of $1,275,000 or $12,750 per flowing boe/d, which also includes all developed and undeveloped lands. The acquisition is being funded through a combination of cash on hand and current cash-flow. The transaction is scheduled to close on or before April 30th, 2014.
Leonard Van Betuw, President and CEO commented, “As we announced in our February 25th, 2014 news release, these transactions are evidence of the execution of Quattro’s continuing business plan involving the consolidation of its producing asset base and the consolidation of non-operating interests within the Company’s core areas, consisting of an extensive network of processing facilities and pipeline gathering systems. We have a very dedicated team at Quattro, and both the Company and staff, are pleased with its progress in achieving its ambitious goals. The Company continues to advance its remediation plans and with the addition of this 1,500 mcf/d announced today we are aggressively nearing our previously announced production and asset targets as set out for the first half of 2014.”
“The Company is now the operator of record and has a greater than 65% ownership in 8 facilities. Quattro’s operated facilities have a combined capacity of 12,000 BOEPD (net). In Canada it continues to Quattro’s plan to continue to concentrate on being a diversified and efficient operator of these facilities. The Company’s efforts are increasing both volumes and netbacks as we aggressively improve equipment utilization through optimization and consolidation as shown with the announcements made today. Quattro is pleased on how our strategy of developing a diversified, low-risk material growth plan in western Canada is advancing, while we continue our broader commitment to simultaneously improving our corporate value both in western Canada and Central America.”, added Mr. Van Betuw.
About Quattro Exploration and Production Ltd.
Quattro Exploration and Production Ltd. (“QXP”) continues to focus on the conventional exploration and development of oil and natural gas reserves in Western Canada, with an expanding presence in Alberta and British Columbia. It’s core low risk production base will provide the Company the capacity to aggressively pursue a series of high impact exploration and development efforts in Central and South America. Quattro intends to balance this portfolio of activities to assure its shareholders that it achieves material growth in both reserves and production.
This release includes certain statements that may be deemed “forward-looking statements”. All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward – looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company’s registered filings which are available at www.sedar.com.
This news release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered 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 of the U.S. Securities Act and applicable state securities laws.
Barrel (“bbl”) of oil equivalent (“boe”) amounts may be misleading particularly if used in isolation. All boe conversions in this report are calculated using a conversion of six thousand cubic feet of natural gas to one equivalent barrel of oil (6 mcf=1 bbl) and is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
Trading in the securities of Quattro Exploration and Production Ltd. should be considered highly speculative. 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.
Quattro Exploration and Production Ltd.
Leonard Van Betuw
President and Chief Executive Officer
Office (403) 984-3917 or Direct Line (587) 228-7070