Strategic Oil & Gas Ltd. Closes Core Area Acquisition
CALGARY, ALBERTA, Dec 28, 2012 (Menafn - MARKETWIRE via COMTEX) --Strategic Oil & Gas Ltd. ("Strategic" or the "Company") (tsxventure:SOG) is pleased to announce that it has closed itspreviously announced acquisition of certain assets in Strategic'score area at Steen River, Alberta, (the "Acquisition"), for cashconsideration of approximately 23.6 million, effective as ofDecember 1, 2012.
SUMMARY OF THE ACQUISITION
Strategic acquired a 100% working interest in 340 boe/d (83% lightoil) of production and over 26 net sections of highly prospectiveland contiguous to Strategic's land position at Steen River. TheAcquisition also includes significant pipelines, facilities and roadsthat are strategic to the Company and provides an immediate increasein efficiencies in current operations, coupled with a decrease infuture infrastructure capital costs. The infrastructure assetsinclude:
--Pipeline and off-loading station at the Mackenzie Highway, resulting in
an immediate reduction in trucking costs and accelerating the full
implementation of the Company's takeaway capacity by rail.
--Pipeline and water disposal capabilities at the West Marlow Field,
resulting in an immediate reduction in trucking costs.
--16 km of all-weather road, allowing unrestricted access to additional
The acquired infrastructure and facilities between Strategic's plantand the existing rail line will allow for an accelerated developmentof a private rail terminal. Furthermore, the acquired facilitysynergies within the field will reduce Strategic's anticipated 2013capital spending allocated to infrastructure and facilities by over12 million.
Key attributes of the Acquisition are as follows:
--Light oil production(1): 280 boe/d
--Associated natural gas production(1): 240 mcf/d
--Total production(1): 340 boe/d (88% light oil)
--Proved plus probable reserves(2): 1.7 mmboe (83% light oil)
--Land: 16,731 net acres (1,328 undeveloped acres)
--Infrastructure: Pipeline, disposal well, roads, offloading station
The transaction metrics are as follows:
--Current Production: 69,411 per producing boe
--Proved Plus Probable Reserves: 13.59 per boe
--Recycle Ratio: 3.1 times
1.Based on forecasted average volumes for January 2013, (includes approx.
140 boe/d (50% oil) of restricted production due to vendor's lack of gas
2.Internal estimates based on October 2012 McDaniel's price deck
EXPANDED CREDIT FACILITY
Strategic has been advised that all approvals have been obtained inrespect to a term sheet with a banking institution pursuant to whichits revolving borrowing base will be increased to 100 million. Thisincrease will allow Strategic to continue to develop its asset baseat Steen River. Strategic expects to exit 2012 with net debt ofapproximately 34 million, providing the Company with significantbalance sheet strength to execute its 2013 capital program.
Strategic is a well-capitalized junior oil and gas company committedto growth by exploiting its light oil assets in Canada. Strategic isprimarily focused on implementing development plans for its light oilproperties, while continuing to review other high impact light oilresource plays. Strategic's common shares trade on the TSX VentureExchange under the symbol SOG.
Additional information, including the Company's most recently filedAIF, is also available at www.sogoil.com and at www.sedar.com.
This news release includes certain information, with management'sassessment of Strategic's future plans and operations, and containsforward-looking statements which may include some or all of thefollowing: (i) forecasted capital expenditures and plans; (ii)exploration, drilling and development plans, (iii) prospects anddrilling inventory and locations; (iv) anticipated production rates;(v) expected royalty rate; (vi) anticipated operating and servicecosts; (vii) the Company's financial strength; (viii) incrementaldevelopment opportunities; (ix) reserve life index; (x) totalshareholder return; (xi) growth prospects; and (xii) sources offunding, including an increased debt facility, which are provided toallow investors to better understand the Company's business. By theirnature, forward-looking statements are subject to numerous risks anduncertainties; some of which are beyond Strategic's control,including the impact of general economic conditions, industryconditions, volatility of commodity prices, currency fluctuations,imprecision of reserve estimates, environmental risks, changes inenvironmental tax and royalty legislation, competition from otherindustry participants, the lack of availability of qualifiedpersonnel or management, stock market volatility and ability toaccess sufficient capital from internal and external sources, andother risks and uncertainties described under the heading 'RiskFactors' and elsewhere in the Company's Annual Information Form forthe year ended December 31, 2011 and other documents filed withCanadian provincial securities authorities and are available to thepublic at www.sedar.com. Readers are cautioned that the assumptionsused in the preparation of such information, although consideredreasonable at the time of preparation, may prove to be imprecise and,as such, undue reliance should not be placed on forward-lookingstatements. The principal assumptions Strategic has made includessecurity of land interests; drilling cost stability; royalty ratestability; oil and gas prices to remain in their current range;finance and debt markets continuing to be receptive to financing theCompany and industry standard rates of geologic and operationalsuccess. Strategic's actual results, performance or achievement coulddiffer materially from those expressed in, or implied by, theseforward-looking statements or if any of them do so, what benefitsthat Strategic will derive there from. Strategic disclaims anyintention or obligation to update or revise any forward-lookingstatements, whether as a result of new information, future events orotherwise, except as required by law.
BOE Presentation: Barrel ("bbl") of oil equivalent ("Boe") amountsmay be misleading especially if used in isolation. All Boe amounts inthis press release are calculated using a conversion of six thousandcubic feet of natural gas to one equivalent barrel of oil (6mcf = 1bbl) and is based on an energy conversion method primarily applicableat the burner tip and does not represent a value equivalence at thewell head.
Neither the TSX Venture Exchange nor its Regulation Services Provider(as that term is defined in the policies of the TSX Venture Exchange)accepts responsibility for the adequacy or accuracy of this release.
Strategic Oil & Gas Ltd.
President and CEO
Strategic Oil & Gas Ltd.
Chief Operating Officer
Strategic Oil & Gas Ltd.
1100, 645 7th Avenue SW
Calgary, AB T2P 4G8
SOURCE: Strategic Oil & Gas Ltd
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