|
STORM EXPLORATION INC. ANNOUNCES AGREEMENT TO ACQUIRE ASSETS - December 1, 2004
STORM EXPLORATION INC. (SEO – TSX) (“Storm”, the “Company”) is pleased to announce that
it has entered into an agreement to acquire oil and natural gas properties for a total of $37.9 million.
The properties are located in the Peace River Arch region of north west Alberta and north east
British Columbia. The acquisition adds to the Company’s existing areas of operations in that region at
Parkland and Cabin. Current production from the acquired properties amounts to approximately 1,200 barrels
of oil equivalent (Boe) per day, of which 80% comprises natural gas and 20% natural gas liquids.
Based upon an internal evaluation, Storm estimates the properties hold 3,200 MBoe proven plus probable
reserves. Including future development capital, the acquisition cost is equivalent to $14.27 per Boe
for proven plus probable reserves.
Financing of the acquisition will come from an expected expansion of the Company’s existing credit
facilities as well as other identified financing sources.
The transaction is accretive on a per share basis to production and reserves and expands the Company’s
opportunity inventory. Storm has identified 15 to 20 development opportunities on the acquired properties,
including new drills, recompletions, re-entries and tie ins. Production at year end 2004 from Storm’s existing
assets is expected to amount to 1,600 Boe per day and year end debt prior to the acquisition was estimated to be
$5.5 million. As a result of the acquisition, production for 2005 is now expected to average 3,600 - 3,800
Boe per day, an increase of 85% over prior guidance of approximately 2,000 Boe per day. Increased production
will come from optimization and development activities on the acquired assets. Storm’s 2005 capital program
is now expected to be approximately $26 million.
The acquisition has an effective date of December 1, 2004. It is scheduled to close on December 21,
2004 and closing is subject to standard conditions.
The acquisition underscores Storm commitment to disciplined growth through concurrent exploration, development
and acquisition activity. The enlarged platform resulting from this acquisition provides the Company with an
enhanced opportunity base and additional financial capacity to support future expansion.
Storm Exploration Inc. began oil and gas operations effective July 1, 2004. The Company is headquartered
in Calgary, Alberta and is active at Red Earth in northern Alberta, Brazeau – Pembina in west central Alberta,
and at Parkland and Cabin in the Peace River Arch area of north east British Columbia.
The Company will host a conference call on Thursday December 2, 2004 at 2:00 pm Mountain Standard Time.
The call in numbers are 232 – 0994 for Calgary callers and 1–877–385-4099 for all other callers.
The access code is 69516.
Advisory
Certain information set forth in this press release, including management’s assessment of the Company’s
future plans and operations, and management’s assessment of the benefits to be derived from the assets acquired
through the above described acquisition, contains forward looking statements. These forward looking statements
are subject to numerous known and unknown risks and uncertainties, certain of which are beyond the Company’s
control, including the impact of general economic conditions, industry conditions, volatility of commodity
prices, currency fluctuations, imprecision of production and reserve estimates, environmental risks,
competition from other producers, the lack of available qualified personnel or management, stock market
volatility and the ability to access sufficient capital from internal and external sources.
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 events
anticipated by the forward looking statements will transpire or occur, or if any of them do, what costs and
benefits the Company can derive therefrom. The forward looking statements contained in this press release
are made as of the date of this press release and the Company does not undertake to update publicly or
revise any of the forward looking statements included herein in response to new information, future events
or any other circumstances whatsoever. Further, where reserves and production are stated on a barrel of
oil equivalent basis (“Boe”), natural gas volumes have been converted to a Boe equivalent using a ratio of
6,000 cubic feet of natural gas to one barrel of oil. This conversion ratio is based upon an energy equivalent
conversion method primarily applicable at the burner tip and does not represent a value equivalence at the
wellhead. Accordingly, reference to Boes may be misleading, particularly if used in isolation.
For further information please contact:
Brian Lavergne,
President and Chief Executive Officer
Donald G. McLean,
Chief Financial Officer
Phone: 403 – 264 – 3520
Fax: 403 – 264 – 3552
www.stormexploration.com
|
