Mountainview Energy Ltd. enters into agreement for up to $75 million of financing for its 12 Gage Project, provides operational update and announces non-core asset sale

CUT BANK, MT, Nov. 5, 2012 /PRNewswire/ - Mountainview Energy Ltd. MVW ("Mountainview" or the "Company") is pleased to announce a financing and a non-core asset sale and to provide an operational update.

Financing

Mountainview is pleased to announce that it has entered into a $75.0 million senior secured advancing line of credit facility (the "Facility")  with a major energy capital provider (the "Lender") pursuant to which Cynergy Advisors, LLC acted as sole agent to Mountainview.  Cynergy provides investment banking services to public and private energy related businesses.  In connection with the Facility, Mountainview has assigned its recently acquired 12,579 net acres of oil and gas leaseholds located in Divide County, Montana prospective for the Bakken/Three Forks formations in what the Company calls its "12 Gage Project" to a wholly-owned subsidiary of Mountainview called "Mountain Divide, LLC" (the "Borrower").

The Facility includes an initial borrowing base of $19.0 million, which is to be used to fund the drilling of the Company's initial three wells in the 12 Gage Project. The Facility matures in 32 months and, bears interest initially at 8%. Monthly repayments are required based on 85% of net revenues from the 12 Gage Project. In connection with the Facility, the Lender and the Borrower will have an area of mutual interest ("AMI"), which will be in northern Divide County, North Dakota.  In addition, pursuant to the Facility, upon the earlier of the initial funding or the spudding of the first well in the area by the Borrower, the Lender will be assigned a 39% after pay-out net profits interest (the "NPI") in all of Borrower's oil and gas properties within Divide County, Montana.  The NPI is defined as all revenues received by Borrower, less all operating costs, production taxes, and capital costs incurred by the Borrower.  Payments on the NPI shall commence upon repayment in full of the outstanding Facility. The NPI will automatically reduce to 20% once the Lender achieves a 1.65 x return on investment as stated in the definitive agreements. The Facility is secured by a first priority mortgage and security interest in the 12 Gage properties. The borrowing base under the Facility will be subject to re-determination within 45 days of the third well being turned into sales and thereafter semi-annually. The Borrower is required to maintain a current ratio of 1.0: 1.0.

Operational Update - Williston Basin

Since the closing of the acquisition of the 12 Gage Project, Mountainview has increased its acreage position to 12,800 net acres.  This brings the Company's current acreage position in the Williston Basin to approximately 36,000 net acres.  The Company has contracted with Nabors Rig 460 for a three-well drilling program in the 12-Gage Project targeting the Three Forks formation.   The rig was moved to the Wigness 5-8-1H on November 4, 2012 with drilling operations to commence on November 8, 2012.    Sanjel has been contracted to conduct cementing and fracturing services on this program.  The Company projects well costs, including drilling, completion and tie-in to be $7-7.5 million (gross) per well.  The company has identified 21 total initial drilling locations on its 12 Gage Project.  Along with the Company's Stateline property, the Company currently has identified 46 initial operated drilling locations on its Williston Basin properties. The following table outlines the Company's first three proposed wells.

There are currently at least five operators developing the Middle Bakken and Three Forks formations near the 12 Gage Project: American Eagle Energy Corporation, SM Energy Company, Samson Resources, Crescent Point Energy Corp. and Baytex Energy Corp.  Pursuant to their public announcements, these companies have expanded the development to the north, south and west of the 12 Gage Project.  American Eagle, Samson and SM have all started infill drilling on several spacing units.  American Eagle has moved forward with their drilling program.  To date, American Eagle has drilled a total of 5 gross wells and has another 8 permitted.  American Eagle has announced that it expects to add another rig to its program this year.  American Eagle's acreage position is located directly North of the 12 Gage Project.  The following table illustrates some recent drilling activity that has been made public by the relevant company or regulatory authorities:

Non-Operational Update - Williston Basin

To date the Company has participated in 8 (gross) Bakken/Three Forks wells in the Williston Basin.  The following table lists the wells and their current status which is the last available month's average daily production.

Non-core Asset Sale

Mountainview is also pleased to announce the sale of non-core oil and gas leases located in the Glacier and Toole County, Montana.  The Company has sold a 100% undivided working interest in 4,373.82 net acres of fee and state leases to an arm's length third party for $1,000,000 cash while retaining an overriding royalty interest in the leasehold.

About Mountainview

Mountainview Energy Ltd. is a public oil and gas company listed on the TSX Venture Exchange, with a primary focus on the exploration, production and development of the Bakken and Three Forks Shale in the Williston Basin and the South Alberta Bakken.

About Cynergy Advisors, LLC.

Cynergy is a privately held investment banking firm providing investment banking services to public and private energy-focused and energy-related businesses. Our mission is to provide sound, ethical advice to our clients in order to achieve the most effective capital structure while bridging the gap between the technical aspects of the business with the financial markets.

CAUTIONARY STATEMENTS

Initial Production Levels

Any references in this news release to initial, early and/or test or production/performance rates and/or "flush" production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Additionally, such rates may also include recovered "load oil" fluids used in well completion stimulation. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company. The initial production rate may be estimated based on other third party estimates or limited data available at this time. The initial production is generally estimated using boes.  In all cases in this press release initial production or test are not necessarily indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.

Barrels of Oil Equivalent

Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil.  Boes may be misleading, particularly if used in isolation. A boe conversion ratio 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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency ratio of ^ Mcf: 1 Bbl, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Analogous Information

Certain information in this document may constitute "analogous information" as defined in National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"), including, but not limited to, information relating to the areas in geographical proximity to prospective exploratory lands held or to be to be held by Mountainview or the Borrower.  Such information has been obtained from government sources, regulatory agencies or other industry participants.  Management of Mountainview believes the information is relevant as it helps to define the reservoir characteristics in which Mountainview may hold an interest. Mountainview is unable to confirm that the analogous information was prepared by a qualified reserves evaluator or auditor. Such information is not an estimate of the reserves or resources attributable to lands held or to be held by Mountainview and there is no certainty that the reservoir data and economics information for the lands held or to be held by Mountainview will be similar to the information presented herein. The reader is cautioned that the data relied upon by Mountainview may be in error and/or may not be analogous to such lands to be held by Mountainview.

Forward-Looking Statements

Certain information contained in this press release constitutes forward-looking statements, including, without limitation, information related to the use of proceeds from the Facility, the contents of certain documents related to the Facility, the expected closing date of the Facility, potential drilling locations, Mountainview's operational plans, the timing of spudding, fracturing and other operations on certain wells and the expected closing date of the proposed Vecta transaction.  By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's control including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition from other industry participants, the lack of availability of qualified service providers, personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources, inability to meet or continue to meet listing requirements, the inability to obtain required consents, permits or approvals and the risk that actual results will vary from the results forecasted and such variations may be material.  Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Company's actual results, performance or achievement could differ materially from those expressed in or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom.

The forward-looking statements contained in this press release are made as of the date of this press release.  Mountainview disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Additionally, Mountainview undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Mountainview Energy Ltd.