Ralf,
I am loooong on SUF and will stay that way holding for double digits.....following up a previous post of mine on RRL, see the news below.....IMO, this pick is worth accumulating and holding. The founders built Grad and Walker(bought by Crestar which merged with Gulf Canada which was bought by Conoco) and if they can do it again, here is another penny oil and gas that could hit double digits, assuming they can "do it again" and build production to 10,000 boe/d over the next 4 or 5 years.
cheers,
teevee
Resolution Resources Ltd - News Release
Resolution intends to acquire Voltorb and Devinsharpe
Resolution Resources Ltd RRL
Shares issued 6,394,241 Mar 5 2002 close $.400
Wednesday Mar 6 2002 News Release
Mr. Raymond Antony reports
RESOLUTION RESOURCES LTD. ANNOUNCES PROPOSED ACQUISITIONS AND ...
Resolution Resources has entered into letters of intent to acquire all of the issued and outstanding shares of two private oil and gas companies, Voltorb Resources Ltd. and Devinsharpe Resources Ltd.
Description of Voltorb and Devinsharpe assets and finances
Voltorb was incorporated under the Business Corporations Act (Alberta) in May, 1997, and commenced business operations in September, 2000. Devinsharpe was incorporated under the Business Corporations Act (Alberta) in June, 2000, and commenced business operations in July, 2000.
Voltorb and Devinsharpe each own a 50-per-cent working interest in a producing oil and gas property located in Southern Alberta. The property currently produces approximately 150 barrels of oil equivalent (boe) per day of production net to Voltorb and Devinsharpe (gas at 10:1). Voltorb is the operator of the producing properties. Voltorb also has 13,440 net acres of undeveloped land and approximately $320,000 of working capital with no debt other than trade payables. Devinsharpe has 3,840 net acres of undeveloped lands and approximately $440,000 in working capital with no debt other than trade payables.
Terms of proposed acquisition
Resolution proposes to acquire all of the issued and outstanding common shares of Voltorb in exchange for 5.04 million common shares of Resolution at a deemed price of 35 cents per share, for total deemed consideration of $1,764,000. Resolution also proposes to acquire all of the issued and outstanding common shares of Devinsharpe in exchange for 3.96 million common shares of Resolution at a deemed price of 35 cents per share for total deemed consideration of $1,386,000. There are presently 6,394,241 common shares of Resolution issued and outstanding. The common shares issued pursuant to the proposed acquisition to insiders and related parties of Resolution will be deposited into escrow and released therefrom on terms to be determined in accordance with the requirements of the Canadian Venture Exchange.
Summary of financial information
The following table provides summary financial information of Voltorb for the unaudited financial year ending Dec. 31, 2001, and for Devinsharpe for the six-month period ending Dec. 31, 2001.
FINANCIAL SUMMARY
Year ended Dec. 31, 2001
Voltorb Devinsharpe
Working capital $ 320,000 $ 440,000
Capital assets $1,230,000 $ 980,000
Long-term debt $ -- $ --
Shareholders'
equity $1,340,000 $1,070,000
Cash flow from
operations $14,000 $ --
Earnings before
depletion and taxes $14,000 $ --
Oil and gas assets
The crude oil and natural gas reserves of Voltorb and Devinsharpe have been reported on as at Jan. 1, 2002, by McDaniel & Associates Consultants Ltd. in a report dated Feb. 21, 2002. The following tables, taken from the McDaniel report, is a summary of the share reserves of Voltorb and Devinsharpe on a combined basis as well as the future cash flows before income tax discounted at 12 per cent and 15 per cent, all on an escalated-dollar basis. It should not be assumed that the discounted future cash flow derived from the McDaniel report represents the fair market value of the reserves. The cash flows shown below include a provision for the Alberta Royalty Tax Credit.
SUMMARY OF SHARE RESERVES
Proved Probable Addi-
producing total tional
Crude oil
(mbbl)
Gross 38 15 53
Net 35 12 47
Natural gas
(mmcf)
Gross 878 298 1,176
Net 647 219 866
ESTIMATED VOLTORB AND DEVINSHARPE
SHARE OF PRESENT WORTH VALUES BEFORE
INCOME TAX AS OF JAN. 1, 2002
(Escalating prices)
Discounted Discounted
at 12% at 15%
Proved producing
reserves $2,107,000 $2,008,000
Total proved
reserves $2,107,000 $2,008,000
Total proved
and probable
reserves --
unrisked $2,725,000 $2,564,000
Proposed private placement
In conjunction with the proposed acquisition, the corporation intends to complete a brokered private placement and has engaged Peters & Co. Limited (agent) of Calgary, Alta., on a best-efforts basis for this purpose. It is anticipated that the corporation will issue between 10.5 million and 14.3 million common shares of Resolution under the private placement at a price range of between 35 cents and 38 cents per common share, for gross proceeds of a minimum of $4-million. The private placement will be conducted in the provinces of Alberta, British Columbia and Ontario, and such other provinces as the agent and Resolution may agree prior to the closing of the private placement. The agent will receive a commission of 6.5 per cent of the gross proceeds of the private placement as compensation for its services.
The completion of the proposed acquisition is conditional upon the completion of the private placement.
Farm-in
Resolution has entered into a farm-in agreement with an arm's-length industry partner. The farm-in covers approximately 60 net sections of land (38,400 net acres) located in the same area as the core properties of Voltorb and Devinsharpe. In addition to the right to farm in on this property, Resolution also acquired access to approximately 300 kilometres of proprietary seismic. Under the terms of the farm-in, Resolution is committed to drill a minimum of three wells on the farm-in land prior to June 30, 2002.
Proposed work program
The net proceeds of the private placement will be used for an exploration and development program on the oil and gas properties of Voltorb and Devinsharpe, for additional property acquisitions, and for working capital, as set out below.
Exploration and drilling on
Voltorb/Devinsharpe property
(three or four drilling
locations, seismic etc.) $1,200,000
Farm-in (three-well
commitment) 600,000
Potential production/
exploration acquisitions 1,710,000
Expenses of the
private placement 290,000
General corporate purposes 200,000
----------
$4,000,000
Proceeds received by Resolution in excess of the $4-million will be used by Resolution to acquire oil and gas properties with additional production and for general corporate purposes.
Relationship of Voltorb, Devinsharpe and Resolution
Each of Voltorb and Devinsharpe are private Alberta corporations and, to the knowledge of Resolution management, no shareholder owns or exercises control or direction over more than 10 per cent of the outstanding common shares of Voltorb. To the knowledge of Resolution management, only Stan Grad, a director and officer of Resolution, owns or exercises control or direction over more than 10 per cent of the outstanding common shares of Devinsharpe. However, each of the directors and officers of Voltorb, being Ray Antony, Peter Sider and Alan Breakey, and of Devinsharpe, being Stan Grad and Ron Wiebe, are directors, officers and shareholders of Resolution. The directors and officers of Resolution presently own or exercise control or direction of 1.15 million common shares of Resolution, representing approximately 18 per cent of the total issued and outstanding common shares. Upon completion of the proposed acquisition (before taking into account any common shares issued pursuant to the private placement), the directors and officers of Resolution will own approximately 4,792,000 common shares of Resolution, representing 31 per cent of the total issued and outstanding common shares. As result, Resolution, Voltorb and Devinsharpe are "related parties" for the purposes of certain policies of the Canadian Venture Exchange. However, completion of the proposed acquisition and the private placement will not result in a change of business, change of management, change in the board of directors or change in control of Resolution.
Stock options
The corporation also intends to grant incentive stock options, in conjunction with closing of the proposed acquisition, to certain directors, officers, and employees and consultants of the corporation, and its subsidiaries to acquire, together with existing options, up to 900,000 common shares upon completion of the proposed acquisition and private placement. The corporation presently has 600,000 stock options issued and outstanding. A 35-cent exercise price is hereby reserved for such grant of stock options but, in any event, will be no less than the private placement price per share.
Approvals required
The proposed acquisition and private placement are subject to both shareholder and regulatory approval under policies of the exchange. |
