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Strategic Oil & Gas Ltd. Announces Agreement to Acquire Gabon Farm-in
(Marketwire Via Acquire Media NewsEdge) CALGARY, ALBERTA, December 5 / MARKET WIRE/ --
Strategic Oil & Gas Ltd. (TSX VENTURE: SOG) ("Strategic" or the "Corporation") announced that it has entered into an arm's length agreement which, when completed, will, subject to the approval of the TSX Venture Exchange (the "Exchange"), see Strategic acquire all the shares of a private company whose sole asset is a farm-in interest in an oil and gas exploration permit off-shore of Gabon.
Gabon Interest
Pursuant to an agreement dated October 3, 2008, between Strategic and Greenfields Petroleum International Company Ltd. ("Greenfields"), and African Petroleum Development Limited ("APD") (together the "Vendors"), Strategic will issue 25,000,000 common shares in the capital of the Corporation at a deemed price of $0.46 per share in exchange for all of the issued and outstanding shares of Gabon Kiarsseny Marin Ltd. ("Gabon Kiarsseny"), a newly incorporated private BVI company owned by Greenfields Petroleum International Company Ltd, and APD of the British Virgin Islands. APD, whose two directors are Christopher Atkinson and Michael Renolds, both of Singapore, and who between them hold the control block of APD, will have a controlling interest in Strategic upon receipt of approximately 15,000,000 of the common shares to be issued pursuant to this transaction. All shares issued will be subject to an escrow agreement, final details of which will be released in a later press release.
The sole asset of Gabon Kiarsseny is a farm out agreement with Tullow Oil Gabon SA in respect to a 33.25% interest in the Kiarsseny G4-208 Permit (the "Permit"), which covers approximately 1,369,552 acres (5,543 sq. km) and is located in the off-shore of northern Gabon, in generally shallow water depths, which are less than 300 feet over 60% of the Permit area. Strategic's primary area of interest contains multiple targets that are located in less than 175 feet of water. To date 24 wells have been drilled in the vicinity of the Permit, most with shows, resulting in 3 sub-commercial discoveries. One of these, the Iguega discovery drilled by Shell Gabon in 1997 tested high quality 37 deg API oil at 3,300 BOPD, a rate which at the time, was constrained by surface equipment and failed to meet the operator's economic hurdles when crude prices were low. The original discovery which identified hydrocarbon resources in several stacked, submarine channel sand units has been re-evaluated by Strategic using recently reprocessed 3D seismic data and advanced 3D reservoir modelling techniques, which have constrained the reservoir model, giving a calibrated estimate of the resource potential. Strategic considers that this accumulation may be viable with a limited drilling and testing program.
In addition, Strategic has identified a "heritage" exploration prospect, which has been evaluated in a 3D geo-model context from existing 2D seismic data. Although well control is limited to one offsetting well, which was drilled with shows in equivalent "non-reservoir" units, Strategic's evaluation has identified a basin floor submarine fan system with associated closure, in a depositional unit, currently untested in this part of the Gabon Sedimentary Basin, but which is a prolific producer elsewhere in the Ogooue Delta Basin Area of Gabon.
Potential targets currently identified by Strategic are generally located in Upper Cretaceous strata, ranging in stratigraphic age from Cenomanian to Campanian. During this period several large delta systems prograded into the northern Gabon offshore from a paleo-Ogooue river system; with these systems only being interrupted briefly during the Turonian by the progradation of a carbonate platform (Sibang Limestone). Associated with these delta systems, particularly during periods of lowered sea level were deep water submarine fan sands that were developed at the base of submarine slope; sometimes via significant incised canyons. Strategic's evaluation shows that the vertical evolution of the various submarine sand systems was from a basin-floor sheeted, sand rich regime to more channelised regimes with lower overall sand content. Although targets exist at several levels within this vertical evolution, Strategic's primary exploration focus will be for sand rich, basin floor fan targets of which the current "heritage" exploration prospect is only one of several potential prospects and leads identified.
An independent engineering report by McDaniels Petroleum Consultants Inc. ("McDaniels") dated November 10, 2008 as at September 30, 2008 has assigned the Gabon property the following contingent and prospective resources:
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Iguega Field - Contingent Resources ('000's of Barrels)
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Low Best High
Estimate Estimate Estimate
1C 2C 3C
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Crude Oil -
Property Gross 1,625 4,875 16,250
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Crude Oil -
Strategic Net (1) 540 1,621 5,403
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Iguega Field - Prospective Crude Oil Resources ('000's of Barrels)
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Un-risked Un-risked Un-risked
Low (P90) Best (P50) Un-risked High (P10) Geol Chance Risked
Estimate Estimate Mean Estimate of Success Mean
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Property Gross 3,657 6,119 5,885 7,800 0.7 to 1.0 5,068
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Strategic Net(1) 1,685
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Second Souffle - Original Oil in Place & Prospective Crude Oil Resources
('000's of Barrels)
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Un-risked Un-risked Un-risked
Low (P90) Best (P50) Un-risked High (P10) Geol Chance Risked
Estimate Estimate Mean Estimate of Success Mean
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Original Oil
in Place 24,579 77,516 104,651 244,469
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Prospective
Resources 4,954 16,444 22,799 54,581 0.13 2,955
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Strategic Net 983
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(1) Strategic net resources are based on a 33.25 percent working interest
share of the property's gross resources.
(2) There is no certainty that it will be commercially viable to produce
any portion of these contingent resources.
(3) There is no certainty that any portion of these prospective resources
will be discovered. If discovered, there is no certainty that it will
be commercially viable to produce any portion of these resources.
Contingent resources are defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters, or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage. Contingent resources are further classified in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by their economic status.
Prospective Resources
Prospective resources are defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity. Pursuant to the farmout agreement, Gabon Kiarsseny is required to spend an estimated $9.6 million to drill, log, test and complete, or drill and abandon, 2 exploration wells by March 31, 2010. Subject to regulatory and working interest partner approval, the program will be operated by Addax Petroleum Gabon Ltd., who has a 42.5% working interest in the Permit. Sonangol Pesquisa e Produccio, SARL currently owns 10% of the Permit. Timing of the exploration program is still being finalized, and the Corporation anticipates that it may have to raise equity to meet its obligation in late 2009.
In return for the farm-in work commitment, Gabon Kiarsseny will earn a 33.25% working interest in the farmout lands with Tullow retaining a 14.25% working interest. The assignment to Gabon Kiarsseny is subject to the approval of the Gabonese government. Furthermore, these interests are subject to the right of the Gabonese government to acquire a 5% working interest in the project, which would reduce all of the working interest partners on a pro rata basis.
Corporate Strategy
As a part of its strategy to acquire a technically proficient management team with the ability to bring both domestic and international opportunities to it, Strategic has agreed to acquire all the shares of ZinMac Inc., (announced July 30, 2008) for 5,000,000 shares, and now all of the shares of Gabon Kiarsseny. In addition to the 25,000,000 shares to be issued to the shareholders of Gabon Kiarsseny, Strategic has agreed to pay US$200,000 to reimburse certain costs incurred by the shareholders. The acquisition of ZinMac is not a condition precedent to the acquisition of Gabon Kiarsseny.
Conditions to Completion of the Transaction
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance, approval of the Farm-out Agreement by the Gabon government and working interest partners, and approval by the shareholders of Strategic. There can be no assurance that the transaction will be completed as proposed or at all. Trading in the common shares of the Corporation will remain halted pending the Exchange's receipt of acceptable documentation. The Corporation has made an application under the policies of the Exchange for an exemption from the Exchange's sponsorship requirements, but there is no assurance such exemption will be granted.
Investors are cautioned that, except as disclosed in the information circular to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the shares of the Corporation is highly speculative.
The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
About Strategic
Strategic is a junior oil and gas company with producing properties located in Northeast and Central Alberta. Production is currently approximately 200 boe/d, with additional production expected to be brought on stream during the 4th quarter of 2008. Strategic currently has a domestic 4 well drill program planned for the next 6 months.
Use of the term barrels of oil equivalent ("boe") or thousands of cubic feet of gas equivalent ("Mcfe") 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.
The TSX Venture Exchange has neither approved nor disapproved of the contents herein.
Contacts:
Strategic Oil & Gas Ltd.
Arn Schoch
President
(403) 870-1245
Copyright ? 2008 Marketwire
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