Can West Exploration Inc. & RIO Nevada Energy Inc.
JOINT PRESS RELEASE
October 6, 1999
PROPOSED TAKE-OVER BID
Can West Exploration Inc. (“Can West”) and RIO Nevada Energy Inc. (“RIO Nevada”) are pleased to announce the proposed take-over bid of RIO Nevada by Can West.
The Corporations have entered into a Letter of Intent whereby Can West will make a formal offer to purchase all of the issued and outstanding common shares of RIO Nevada.
As per the agreed upon share exchange ratio, shareholders of RIO Nevada will receive 0.75 shares of Can West for each 1.0 share of RIO Nevada. The acquisition of RIO Nevada by Can West is subject to normal due diligence, shareholder approval and applicable regulatory approvals.
Management, institutional and major shareholders, representing approximately 38 percent of the issued and outstanding common shares of RIO Nevada, have entered into “lock-up” agreements with Can West agreeing to tender their share holdings pursuant to the terms of the offer, subject to Can West making a formal take-over bid on or before October 28, 1999 to all shareholders of RIO Nevada.
Management of Can West and RIO Nevada believe that a single Corporation and management team will result in more effective and efficient management of the properties, reduced overheads, greater access to investment markets, greater access to international projects, improved liquidity and a greater asset base and capitalization.
RIO Nevada brings a quality portfolio of long reserve life producing assets balanced evenly between light oil and natural gas production. The Corporation's net share of Total Proved Reserves is in excess of 523,000 BOE's as determined by an independent engineering firm.
RIO Nevada, as operator with a 100 percent working interest of the shallow gas field in the Nixon Area, Alberta, will initiate a three to five well infill development drilling program scheduled to commence December 1999 which will substantially increase the Corporation's daily natural gas production base.
Can West operates and owns a 100 percent participating interest in two large exploration blocks situated in the Middle Magdalena Basin of Colombia, and owns a 50 percent participating interest in one exploration block in the Upper Magdalena Basin. With these blocks, the Corporation controls over 200,000 net acres of highly prospective land in one of the most prolific oil-producing basins in the world.
Based on the interpretation of an extensive seismic and geological database over the Colombian blocks, Can West has developed many high-quality, multi-pay prospects, several of which reflect recoverable reserve potential in excess of 100 million barrels. The Colombian blocks are on trend with established producing fields and are near existing pipelines and facilities.
The combined Corporation will result in a well-balanced Calgary, Alberta-based international energy company with established production, cashflow and development upside in Western Canada and tremendous growth potential through the successful discovery of new, large oil fields in Colombia.
Can West Exploration Inc's common shares trade on the Vancouver Stock Exchange under the symbol “CWI”.
RIO Nevada Energy Inc.'s common shares trade on the Alberta Stock Exchange under the symbol “RN”.
For further information contact either:
Mr. Christopher Wright OR Mr. David J. Badyk
Chairman President and Chief Executive Officer
Can West Exploration Inc. RIO Nevada Energy Inc.
Telephone: (604) 682-1668 Telephone: (403) 263-6312
Facsimile: (604) 682-5564 Facsimile: (403) 261-2703
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