WellStar Enters Into Definitive Agreement to Acquire Oil & Gas Assets
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 24, 2012) - WellStar Energy Corp. (TSX VENTURE:WSE.H)(FRANKFURT:W6V1) (the "Company" or "WellStar"), is pleased to announce that further to the Company's press release of September 12, 2012, the Company has entered into a purchase and sale agreement (the "Purchase Agreement") dated October 18, 2012, with a private Colorado corporation (the "Vendor"), relating to the Company's acquisition (the "Acquisition") of non-operated oil & gas assets located in North Dakota ("the Assets"). The Acquisition will constitute a "fundamental acquisition" for the Company under the policies of the TSX Venture Exchange (the "TSXV").
Pursuant to the terms of the Purchase Agreement, the Company will pay the Vendor US$51,500,000 for the Assets, subject to adjustment in certain circumstances. Closing of the Acquisition is subject to, amongst other things, the completion of satisfactory due diligence by the Company, the Company securing satisfactory financing, and obtaining the approval of the TSXV, including review of a title opinion and the preparation of a National Instrument 51-101 compliant technical report for the Assets, as applicable. The Company will pay finder's fees for the Acquisition in cash and shares within the maximum amount permitted by the policies of the TSXV.
The Assets consist of significant non-operated working interests in approximately 18,271 gross (7,273 net) contiguous acres in North Dakota. The Assets are operated by an established Bakken exploration and production company with multiple operated drilling rigs and dedicated hydraulic fracturing crews. Based on data provided by the operator, including the current drill schedule in place and forecast, all acreage is currently expected to be held by production by year end 2013.
The Assets are currently producing approximately 450 net barrels of oil per day from multiple wells. There are another 45 gross (10.57 net) locations identified based on the planned drilling of Bakken and Three Forks wells on 1280 acre drill spacing units within the developed portion of the project, representing just 41.6% (3,026 acres) of the net 7,273 contiguous acreage block. The operator has currently scheduled seven gross wells to be drilled in the first seven months of 2013 with an additional four wells currently anticipated to be drilled during the remainder of the year. 2013 capital expenditures on the Assets are currently expected to total approximately US$37 million.
The Company's president and CEO, Andrew H. Rees commented, "I am excited with the opportunity to enter the prolific North Dakota Bakken oil play. Management believes the key to success for a small company such as WellStar in the Bakken is to be aligned as a non-operator with a high quality multi-billion dollar operating partner. This allows a company to enjoy risk diversification, technology transfer and maintain low overhead."
ON BEHALF OF THE BOARD
Andrew H. Rees, President and Chief Executive Officer
Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Except as required pursuant to applicable securities laws, the Company will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by the Company.
FOR FURTHER INFORMATION PLEASE CONTACT:
WellStar Energy Corp.
Andrew H Rees
(604) 669-3041 (FAX)