SASKATOON, SASKATCHEWAN–(Marketwired – July 14, 2015) – WESTCORE ENERGY LTD. (TSX VENTURE:WTR) (“Westcore” or the “Company”) is pleased to announce that it has entered into a binding letter agreement (the “Letter Agreement”) with 49 North Resources Inc. (“FNR”) and its wholly-owned subsidiary, Allstar Energy Limited (“Allstar”) regarding the acquisition of a 100% working interest in the oil and gas properties of FNR and Allstar, in addition to the subsequent acquisition of all associated oil and gas property and equipment of FNR and Allstar (the “Transaction”). Pursuant to the Letter Agreement, Westcore will obtain a 100% working interest in all of Allstar and FNR’s oil and gas properties and title to all associated property and equipment for an aggregate purchase price of $3,000,000. The purchase price payable under the Letter Agreement will be paid via the issuance upon closing of an aggregate of 15,000,000 common shares of Westcore at a price of $0.10 per share (after giving effect to a five-for-one consolidation of Westcore’s common shares (the “Consolidation”)), in addition to the delivery of a promissory note in the aggregate principal amount of $1,500,000 (the “Promissory Note”). The Promissory Note will bear interest at a rate of 5% per annum, maturing on the date that is two years from the date of issuance and re-payable from the cashflows of operations. Upon repayment of all amounts outstanding under the Promissory Note, title to the associated property and equipment will be conveyed from Allstar and FNR to Westcore.
- The Riverside Field, which is the primary oil and gas property of Allstar, is located approximately 16 kilometres north of the town of Leader in western Saskatchewan, covering total acreage of approximately 23,000 acres. The Riverside Field is highly optimized, with its own water disposal facility, inter-field water hauling capabilities and a portion of the production wells burning casing gas for power instead of propane. With three wells currently on production, Riverside is producing approximately 35 barrels of oil per day. The Riverside Field is also currently disposing of third party production water, which is providing a secondary cash flow stream in addition to oil and gas sales from operations. It should be noted that Westcore currently has a 5.50% working interest in six wells located on the Riverside Field (all of which are presently shut-in), in addition to a 22% working interest in the aforementioned water disposal well (for further details regarding Westcore’s acquisition of such interests, please refer to Westcore’s press release dated April 20, 2015).
- The Flaxcombe Field, recently acquired by Allstar, which consists of approximately 21,000 acres of heavy oil land adjacent to the town of Flaxcombe, Saskatchewan. With three wells currently on production, Flaxcomb is producing approximately 20 barrels of oil per day. The Flaxcombe Field also has a number of standing well-bores and shut-in production which can be re-initiated at any time with limited incremental cost per barrel produced. The Flaxcombe Field also benefits from Allstar’s disposal well located at Riverside, which provides for greater per barrel economics than disposing of production water at third party facilities. A portion of the production wells are also burning casing gas for power instead of propane. The heavy oil produced at Flaxcombe is also a lighter API oil, resulting in a moderately higher selling price per barrel.
- The Red Pheasant Field, which consists of approximately 1,800 acres of oil and gas land under lease from the Indian Oil and Gas Corporation, located on the Red Pheasant First Nation, south of the city of North Battleford in west central Saskatchewan. The Red Pheasant Field is currently shut-in, but has a number of standing wellbores that are capable of being turned on once the market price for heavy oil supports the cost of operating the Red Pheasant wells. When Allstar ceased production, the field was producing approximately 15 barrels of oil per day from three wells.
Except for statements of historical fact, this news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. In particular, forward-looking information in this press release includes, but is not limited to, the potential Transaction, the completion thereof and receipt of required approvals and the potential future production of petroleum products from the properties that are the subject of the Transaction. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions, governmental regulation, including environmental regulation; commodity prices; unanticipated operating events or performance; failure to obtain industry partner and other third party consents and approvals, if and when required; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; competition for, among other things, capital, skilled personnel and supplies; changes in tax laws; and the other risk factors disclosed under our profile on SEDAR at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
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Westcore Energy Ltd.
Vice President and Chief Operating Officer
Phone: (306) 653-2692