/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
KELOWNA, BC,
May 13, 2014 /CNW/ - Georox Resources
Inc. ("Georox" or the "Corporation") (GXR:TSX-V;
OF6A:FRA) has completed the previously announced (April 21, 2014 press release) acquisition of
certain high working interest producing oil and gas interests in
Red Earth, Alberta, approximately
106 kms north of Lesser Slave Lake (320 kms north west of
Edmonton) from an arm's-length
corporation (the "Red Earth/Otter Acquisition" or the
"Transaction") and has also completed its previously
announced a non-brokered private placement.
Red Earth/Otter Acquisition
The properties subject to the Transaction
consist of working interests in a total of 11.38 sections of land
comprised of 2.125 sections in Red Earth that has nine producing
oil wells and one standing oil well in which Georox acquired a 100%
working interest subject to reduction, in most instances, to a 97%
working interest after payout. In addition, Georox acquired
the well bores to three abandoned wells in which it will hold a
100% working interest in one and a 50% working interest in the two
others. In Otter, located 25 kms to the NW of Red Earth,
Georox acquired a 100% working interests in 9.25 sections of
prospective land.
Georox will become the operator for all wells
except two of the abandoned wells.
Georox believes that there is an opportunity to
drill two additional wells at Red Earth and potential beyond
primary recovery through the implementation of water flood/pressure
support to significantly extend the life and recoverable reserves
from the Red Earth properties. Georox is currently reviewing
and assessing the Red Earth properties in detail to identify
opportunities to enhance production before initiating new
operations.
The purchase price for the Transaction was
approximately $6,100,000 with an
effective date of April 1,
2014. The acquisition metrics work out to a purchase
price of $39,900 per boepd (Proved +
Probable) and $20.38 per boe's
(Proved + Probable) for this light oil property. Reserve life index
is 16.8 years for Proved Developed Producing reserves and 24.8
years for Proved + Probable reserves.
Sproule, independent reservoir engineers,
prepared a report in April 2014 (the
"Sproule Report") in support of Georox's acquisition of the
P&NG reserves of a third party. A Reserves Summary of the
Sproule Report to Georox as at March 31,
2014 is as follows:
APPRAISAL REPORT -
EFFECTIVE DATE MARCH 31, 2014(3) |
PETROLEUM RESERVES
AND ECONOMIC EVALUATION |
RED EARTH,
ALBERTA |
RESERVES NET TO APPRAISED
INTEREST(1)(2) |
|
BEFORE TAX CASH FLOW (000 DOLLARS
CDN) |
|
|
REMAINING RESERVES |
|
Discounted Per Annum @ |
Grand Total |
|
Gross
100% |
|
GXR
Gross |
Net |
|
|
|
|
|
|
|
|
(Mboe) |
|
(MBBL) |
|
(MBBL) |
(MBBL) |
|
0% |
|
5% |
|
10% |
|
15% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed |
|
|
|
|
|
|
|
|
|
|
|
|
|
Producing |
|
234.4 |
|
234.4 |
183.6 |
|
9,662 |
|
8,001 |
|
6,825 |
|
5,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Proved |
|
234.4 |
|
234.4 |
183.6 |
|
9,662 |
|
8,001 |
|
6,825 |
|
5,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Probable Developed
Producing |
|
64.8 |
|
64.8 |
51.6 |
|
2,798 |
|
1,675 |
|
1,083 |
|
749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Probable |
|
64.8 |
|
64.8 |
51.6 |
|
2,798 |
|
1,675 |
|
1,083 |
|
749 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL PROVED +
PROBABLE |
|
299.2 |
|
299.2 |
235.2 |
|
12,460 |
|
9,676 |
|
7,908 |
|
6,710 |
Notes: |
(1) |
The values listed herein do not necessarily represent the fair
market value. |
|
|
(2) |
Numbers may not reflect exact numbers in the Sproule Report
tables due to rounding. |
|
|
(3) |
The price forecasts used in the evaluation were based on
Sproule's March 31st, 2014 pricing model. |
In connection with the Transaction, Georox
utilized $3,415,000 of debt from its
current borrowing facility, as amended, and a short term mezzanine
debt facility of $2.2 million which
will be due on April 30,
2015.
Non-Brokered Private Placement
The Corporation completed a private placement
(the "Private Placement") of 8,450,923 units of the
Corporation ("Units") at a price of $0.065 per Unit for aggregate gross proceeds of
$549,310. Each Unit shall
consist of one common share of the Corporation (a "Common
Share") and one-half of one Common Share purchase warrant (each
whole such warrant, a "Warrant"). The Warrants will
not be listed. Each whole Warrant shall be exercisable for one
Common Share at a price of $0.14 per
Common Share for the period to and including April 30, 2015.
All securities in the Private Placement will be
subject to a four month hold period from closing. In connection
with the Private Placement, agents will be paid an aggregate of
$9,475 finder's fee (10% of the
aggregate subscription price).
The proceeds of the Private Placement were used
in connection with closing the Transaction.
After giving effect to Private Placement, Georox
now has 35,597,108 Common Shares outstanding on a basic basis.
Directors or officers subscribed for 3,896,154
(46.1%) of the Private Placement.
Update
Georox estimates that its current production,
following the Transaction, is approximately 265 boep/d comprised of
175 boe/d of light oil, 73 boe/d heavy oil and 17 boe/d of natural
gas. Georox's estimated production is 66% light oil &
ngls, 28% heavy oil, and 6% solution gas.
About Georox
Georox is a Canadian natural resource company
engaged in the acquisition, exploration and development of oil and
gas properties in Western
Canada.
Production volumes are commonly expressed on
a barrel of oil equivalent ("BOE") basis whereby natural gas
volumes are converted at a ratio of six thousand cubic feet to one
barrel of oil. The intention is to convert oil and natural
gas measurement units into one basis for improved analysis of
results and comparisons with other industry participants. The
term BOE may be misleading, particularly if used in
isolation. The conversion ratio is based on an energy
equivalent method and does not represent an economic value
equivalency at the wellhead.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking
statements relating to the future operations of the Corporation and
other statements that are not historical facts. Forward-looking
statements are often identified by terms such as "will", "may",
"should", "anticipate", "expects" and similar expressions.
All statements other than statements of historical fact, included
in this release, including, without limitation, statements
regarding future plans and objectives of the Corporation, are
forward looking statements that involve risks and
uncertainties. There can be no assurance that such statements
will prove to be accurate and actual results and future events
could differ materially from those anticipated in such
statements. More particularly, it contains forward-looking
statements concerning: (i) production (ii) planned drilling,
development and waterflood activities, (iii) the potential number
of drilling locations at certain of the Transactions properties,
and (v) potential development opportunities associated with the
Transaction.
Although Georox believes that the expectations
and assumptions on which the forward-looking statements are based
are reasonable, undue reliance should not be placed on the
forward-looking statements because Georox 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. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, risks associated with the oil and gas industry in
general (e.g., operational risks in development, exploration and
production; delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections
relating to production, costs and expenses, and health, safety and
environmental risks), commodity price and exchange rate
fluctuations and uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures.
The reader is cautioned that assumptions used in
the preparation of any forward-looking information may prove to be
incorrect. Events or circumstances may cause actual results
to differ materially from those predicted, as a result of numerous
known and unknown risks, uncertainties, and other factors, many of
which are beyond the control of Georox. As a result, we
cannot guarantee that any forward-looking statement will
materialize and the reader is cautioned not to place undue reliance
on any forward-looking information. Such information,
although considered reasonable by management at the time of
preparation, may prove to be incorrect and actual results may
differ materially from those anticipated. Forward-looking
statements contained in this news release are expressly qualified
by this cautionary statement. The forward-looking statements
contained in this news release are made as of the date of this news
release, and Georox does not undertake any obligation to update
publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by Canadian securities
law.
This news release does not constitute an
offer to sell or a solicitation of an offer to buy any of the Units
in the United States. The Units
(or constituent securities) have not been and will not be
registered under the United States Securities Act of 1933,
as amended (the "U.S. Securities Act") or any state securities laws
and may not be offered or sold within the
United States or to U.S. Persons unless registered under the
U.S. Securities Act and applicable state securities laws or an
exemption from such registration is available.
Neither the TSXV nor its Regulation Services
Provider (as that term is defined in the policies of the TSXV)
accepts responsibility for the adequacy or accuracy of this
release.
SOURCE Georox Resources Inc.