Good afternoon!
Please
find enclosed a news release issued today. If you have any questions or
require further information, please do not hesitate to call.
Best
regards,
Sophia Shane
Ph.
604-689-7842
NEWS RELEASE
March 1, 2007
PEARL CLOSES
ACQUISITION OF CIPHER EXPLORATION INC.
CALGARY,
ALBERTA - Pearl Exploration and Production Ltd. ("Pearl" or the
"Company") (TSX Venture: PXX) is pleased to announce the closing
today of the previously announced acquisition by Pearl of all of the issued and
outstanding shares of Cipher Exploration Inc. (“Cipher”) pursuant
to a share purchase agreement between Pearl, Cipher and the shareholders of
Cipher (the “Acquisition”). Cipher was a privately-held oil and
gas company with heavy oil assets in western Canada. As a result of the Acquisition,
Cipher is now a wholly owned subsidiary of Pearl
and the shareholders of Cipher are now shareholders of Pearl.
Pursuant to the terms of the
Acquisition, the gross purchase price of $20 million was reduced by an amount
equal to the aggregate of all long and short-term debt net of working capital
of Cipher for a net purchase price of $9,254,632. The net purchase price was
paid to the Cipher shareholders as shares of Pearl, issued at a deemed price of $4.52 per
share. As a result, Pearl
issued 2,047,502 common shares to the Cipher shareholders pro rata to their
holdings in Cipher. No fractional Pearl shares were issued and any fractional
Pearl share to which a Cipher shareholder was otherwise entitled was rounded up
to the nearest whole Pearl share. Lightyear
Capital Inc. acted as financial advisor to Cipher.
Cipher’s key assets
consist of heavy oil assets in the Ear
Lake, Reward and Eagle Creek areas of Saskatchewan. These are
areas where Pearl either operates assets or are
directly adjacent to existing Pearl assets.
At Ear Lake, Cipher operates 11 producing wells
(100% ownership) on 2,760 net acres of land. Cipher also operates 19 wells
(between 43% and 100% ownership) on 6,930 net acres of land in the Reward
area. Cipher also holds a gross overriding royalty of 2.5% GORR in the Eagle
Creek area. Collectively these properties are estimated to have further
development potential of approximately 100 potential gross drilling locations.
For the three months ended
December 31, 2006, Cipher’s production from the above areas averaged
approximately 350 boe/d with reserves estimated to be 3,509 Mboe on a proved
plus probable basis. The reserves noted are based on an independent reserve
evaluation prepared by Sproule Associates Limited as at June 30, 2006. These
reserves estimates have been prepared utilizing definitions as set out under
National Instrument 51-101. Based on the gross purchase price, this
translates into approximately $57,000 per boe/d and $5.70 per boe.
Pearl is a public company focused
on delivering disciplined growth by establishing a North American portfolio of
oil and gas projects with an emphasis on large resource opportunities.
Additional information on Pearl
is available on our website at www.pearleandp.com.
For
further information, please contact:
Keith Hill - President and Chief Executive Officer
Tel.: (604) 689-7842
Fax: (604) 689-4250
E-mail: khill@namdo.com
|
Arlene Weatherdon - Chief Financial Officer
Tel.: (403) 716-4054
Fax: (403)
265-8324
E-mail: arlene.weatherdon@pxx.ca
|
Sophia Shane – Corporate Development
Tel.: (604) 689-7842
Fax: (604) 689-4250
E-mail:
sophias@namdo.com
|
All references in this release
to boe's are based on a 6 to 1 conversion ratio. Boe's may be misleading,
particularly if used in isolation. A boe conversion of 6 Mcf:1 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.
Forward-looking
statements: This
document contains statements about expected or anticipated future events and
financial results that are forward-looking in nature and as a result, are
subject to certain risks and uncertainties, such as general economic, market
and business conditions, the regulatory process and actions, technical issues,
new legislation, competitive and general economic factors and conditions, the
uncertainties resulting from potential delays or changes in plans, the
occurrence of unexpected events, and the Company’s capability to execute
and implement its future plans. Actual results may differ materially from
those projected by management. For such statements, we claim the safe harbour
for forward-looking statements within the meaning of the Private Securities
Legislation Reform Act of 1995.
The TSX Venture
Exchange has not reviewed and does not accept responsibility for the adequacy
or accuracy of this release.