PROPERTY ACQUISITION / Shenandoah Resources Acquires Properties
SHENANDOAH RESOURCES LTD. - ANNOUNCEMENT
CALGARY, ALBERTA--
Shenandoah is pleased to announce that the company has entered
into a letter of intent with a private oil company to acquire
additional oil and gas properties and other assets in
east-central Alberta and west-central Saskatchewan. The oil
property contains 13 producing and shut-in oil wells capable of
producing at a combined rate of 75 Bopd, with proven reserves of
approximately 136 Mstb and proven plus 1/2 probable reserves of
approximately of 316 Mstb. The gas property contains four shut-in
gas wells capable of producing 750 Mcfpd with proven reserves of
approximately 1.2 Bcf. All shut-in wells are capable of
production and have been shut-in for mechanical or other reasons.
The properties have been evaluated by the company based on
decline curve analysis. Both properties are 100% working interest
and are comprised of approximately 5440 acres (8 1/2 sections) of
Crown and freehold acreage.
In addition to the P&NG rights, the company will also acquire
three service rigs and a large amount of surplus equipment
(tanks, tubing, compressor, pumpjacks, and other equipment). The
company will endeavor to sell the surplus equipment and use the
proceeds to reduce bank debt.
The letter of intent provides for a total purchase price of
$1,430,000. The purchase price will be funded by the issuance of
2,750,000 shares at $0.28 per share, for $770,000, and by
utilizing the company's current bank line for the balance.
The properties contain a number of low to medium risk drilling
location. The company intends to develop its gas prone locations
first while concurrently pursuing other acquisition opportunities
in its core areas.
Following completion of this transaction, and with the
acquisition previously announces on January 11, 1999, Shenandoah
will have production capability of approximately 418 Bopd and
1186 Mcfpd (536 Boepd). Upon closing of both deals, the company
will have 17,322,441 issued and outstanding shares.
The transaction is subject to the normal conditions precedent
including regulatory approvals and a formal agreement.
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