Ascot Energy Resources Ltd. and Great Northern Exploration Ltd. Announce the Creation of a New Exploration and Production Company and a New Management Team
CALGARY, ALBERTA--Great Northern Exploration Ltd. ("Great
Northern") and Ascot Energy Resources Ltd. ("Ascot") (CDNX symbol
- AER) today jointly announce their intention to merge through an
arms length share exchange transaction pursuant to an agreement
dated May 10, 2002. Under the terms of the agreement Ascot will
issue 6.5 common shares for each share of Great Northern
outstanding at an ascribed value of $1.55 per Great Northern
share. The transaction has been unanimously approved by the board
of directors of both companies and shareholders' meetings for both
companies to approve the transaction are expected to be held in
July 2002.
Upon completion of the merger, the combined company will have
approximately 145.0 million common shares outstanding, which are
proposed to be consolidated on a 1 for 5 basis resulting in 29.0
million basic shares outstanding. The combined company will be
renamed Great Northern Exploration Ltd. The management team of
Great Northern led by Mr. Jim Saunders, President and CEO, Mr.
Bruce Robertson, Executive Vice-President and Mr. Scott Hickerty,
Vice President, Exploration will assume their respective positions
with the new merged company. Each of these individuals were former
executives of Ionic Energy Inc. and were instrumental in the
growth of Ionic. From its beginning in mid-1997, Ionic grew to in
excess of 5,800 boe/day (6:1) and was ultimately sold for in
excess of $190 million in spring 2001.
The Board of Directors of the new merged company will be comprised
of Messrs. Murray Cobbe, Jim Saunders, Warren Steckley and Harvey
Trimble, current directors of Great Northern, and Messrs. Ed Chwyl
and Dennis Gieck, current directors of Ascot.
Great Northern is an Alberta incorporated private oil and natural
gas company which commenced operations in September 2001 with all
of its operations in Alberta. Great Northern currently has 14.05
million shares outstanding. Great Northern has current production
of 250 bbls/d of oil and 1.3 mmcf/d of natural gas (470 boe/d
(6:1)) and has an extensive drill-ready development program. Great
Northern has estimated oil and gas reserves of approximately 2.0
million boe's (6:1) on an established basis. As at and for the
three months ended March 31, 2002, Great Northern had
approximately $5.8 million in cash and positive working capital,
no long term debt, total assets of $14.0 million, revenue of
$776,000 and net income of $108,000 (unaudited).
Pro forma production of the new merged company is approximately
550 bbls/d of oil and 6.3 mmcf/d of natural gas (1,600 boe/d
(6:1)) and total net debt of approximately $9.0 million. The
merged company's total established reserves are estimated to be
approximately 4.0 million boe (6:1). In addition, the merged
company will have 180,000 acres of net undeveloped land. Gilbert
Lausten Jung Associates Ltd. has been engaged to prepare updated
reserve evaluations for both companies. This report will be
included in the information circular to be sent to the
shareholders.
"I am particularly pleased with Great Northern's management teams'
track record and intimate knowledge of Ascot's core areas" stated
Bezo Khadr, President and Chief Executive Officer of Ascot. "This
will make the transition as seamless as possible and with the
stronger pro forma balance sheet, this new management team will
aggressively accelerate the exploitation of Ascot's asset base and
prospect inventory which we have accumulated over the past two
years. I am very excited about this company's future and I have
every confidence that it will deliver the value, growth and
returns that our shareholders expect and demand".
The management team of Great Northern is committed to increasing
shareholder value through a combination of grassroots exploration,
strategic acquisitions and subsequent exploitation. "We are
extremely pleased and look forward to the opportunity to assume
key positions in the management and Board of Directors of the
merged Company" stated Jim Saunders. "Our management team has a
proven track record in creating shareholder value and have
extensive knowledge and assets complementary to Ascot's core
areas; Robsart in S.W. Saskatchewan and Watelet in central
Alberta". Saunders further said, "The combination of proven
management ability, substantial financial strength, the ability to
attract additional financing opportunities and the merged
company's prospect inventory and undeveloped land position will
ensure that it becomes an exciting successful growth oriented
emerging company in the Canadian oil and gas industry."
The Board of Directors of Ascot has received a fairness opinion
from FirstEnergy Capital Corp. that the transaction is fair, from
a financial point of view, to the shareholders of Ascot and has
determined unanimously that the transaction is in the best
interest of Ascot and its shareholders and will recommend that the
shareholders vote in favour of the transaction.
Each company has agreed to pay a non-completion fee of $600,000 to
the other under certain circumstances. Each company has also
agreed not to, directly or indirectly, make, solicit, initiate,
facilitate, encourage or participate in any inquiries, proposals
or offers from, or engage in any discussions or negotiations with,
any person. Shareholders of Ascot (including directors and
management) holding approximately 36% of the fully diluted common
shares have agreed to vote all of their shares in favour of the
transaction. In addition, shareholders of Great Northern
(including directors and management) holding approximately 43% of
shares of Great Northern have agreed to vote in favour of the
transaction. Ascot has agreed to terminate any discussions with
other parties in respect to any other business combination or
transaction and has agreed to provide 48 hours notice to Great
Northern of any inquiry or proposal with respect to an Ascot
take-over bid.
The transaction will be in a form of a merger, will be conditional
on 66 2/3% of the Great Northern shareholders and greater than 50%
of Ascot shareholders voting in favour of the merger, and will be
subject to all requisite regulatory approvals and other customary
conditions, including the approval of the TSX Venture Exchange.
The following is a brief summary of the background of the senior
management of Great Northern:
Jim M. Saunders has been the President, Chief Executive Officer
and a Director of Great Northern since its inception in September
2001. From July 1997 to April 2001, Mr. Saunders was the President
and Chief Executive Officer of Ionic Energy Inc. Prior thereto,
Mr. Saunders was Executive Vice-President, Chief Operating Officer
and a Director of Barrington Petroleum Ltd.
Bruce A. Robertson has been the Executive Vice President of Great
Northern since its inception in September 2001. From August 1997
to April 2001, Mr. Robertson was the Vice President, Land and
Contracts of Ionic Energy Inc. Prior thereto, Mr. Robertson was
Vice-President, Land and Contracts of Barrington Petroleum Ltd.
R. Scott Hickerty has been the Vice President, Exploration of
Great Northern since its inception in September 2001. From
December 2000 to April 2001, Mr. Hickerty was the Vice President,
Exploration of Ionic Energy Inc. Prior thereto, Mr. Hickerty held
various positions at Pinnacle Resources Ltd. and its successor
Renaissance Energy Ltd., finally as Chief Geologist.
Charlton Capital Corp. and FirstEnergy Capital Corp. acted as
financial advisors to Ascot. Peters & Co. Limited acted as
financial advisor to Great Northern.
Completion of this transaction is subject to a number of
conditions, including but not limited to, TSX Venture Exchange
acceptance and disinterested shareholder approval. The transaction
cannot close until the required shareholder approval is obtained.
There can be no assurance that the transaction will be completed
as proposed or at all.
Investors are cautioned that, except as disclosed in the
Management Information Circular to be prepared in connection with
the transaction, any information released or received with respect
to the RTO may not be accurate or complete and should not be
relied upon. Trading in the securities of Ascot should be
considered highly speculative.
The TSX Venture 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.
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FOR FURTHER INFORMATION PLEASE CONTACT:
Ascot Energy Resources Ltd.
Mr. A.M. (Bezo) Khadr
President and Chief Executive Officer
(403) 531-9020
(403) 531-9021 (FAX)
or
Great Northern Exploration Ltd.
Mr. Jim Saunders
President and Chief Executive Officer
(403) 263-5555
(403)263-5567 (FAX) |
