Avatar Energy Ltd. to Receive Gross Proceeds of $3.12 Million for its Pembina Strawberry Creek Properties
CALGARY, ALBERTA--(Marketwire - Nov. 23, 2012) - Avatar Energy Ltd. ("Avatar" or the "Corporation") (TSX VENTURE:AVG) is pleased to announce that, in furtherance to its previously announced strategic review process, it has entered into a binding letter agreement to sell its working interest in properties located in the Pembina Strawberry Creek area to an arm's length third party for cash gross proceeds of $3.12 million, subject to adjustment (the "Transaction"). The Transaction will close in two tranches with the first tranche (for $1,120,000) expected to close on November 30, 2012 and the second tranche (for $2,000,000) expected to close on or before February 15, 2013. The Transaction is subject to obtaining TSX Venture Exchange ("TSXV") approval and other conditions customary in transactions of this nature.
The Corporation's Pembina Strawberry Creek properties consist of 4.25 gross sections and 3.75 net sections of Cardium formation oil bearing acreage in the Pembina area of Alberta and represent approximately 5% of Avatar's proved reserves as at December 31, 2011 (after giving effect to recent dispositions) and 27% of Avatar's non-current assets as at June 30, 2012.
The net proceeds from the Transaction will be used to repay all indebtedness owing under Avatar's credit facility, satisfy other liabilities and for general corporate purposes. A finder's fee of $124,800 will be paid to CB Securities Inc. for services provided as financial advisor to the board of directors with respect to the strategic review process.
On a post-Transaction basis, Avatar will continue to be listed on the TSXV and will focus on its Pembina Brazeau properties while exploring other opportunities in the Pembina Cardium light oil play that have long life high quality reserves with repeatable drilling upside.
FORWARD LOOKING STATEMENTS
This press release contains forward looking statements. More particularly, this press release contains statements concerning the completion of the Transaction and the amount and use of proceeds therefrom. Although the Corporation believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because the Corporation can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The risks to which the Corporation is subject include, but are not limited to, operational risks inherent in the exploration, development and production of oil and gas; availability of financing; general economic conditions and changes in the capital markets; volatility of oil and gas prices; competition; changes in legislation and the regulatory environment; and uncertainties involved in completion of the Transaction, such as the satisfaction of any closing conditions any obtaining any approvals that may be required from the TSXV. The forward looking statements contained in this press release are made as of the date hereof and the Corporation undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
Avatar Energy Ltd.
Mr. Alan D. Jack, P. Eng
President & Chief Executive Officer
Avatar Energy Ltd.
Ms. Lorie J. Hynes, CA
Chief Financial Officer