Mountainview Energy Ltd. enters into agreement for up to $75
million of financing for its 12 Gage Project, provides operational
update and announces non-core asset sale
CUT BANK, MT,
Nov. 5, 2012 /CNW/ - Mountainview
Energy Ltd. (TSXV: MVW) ("Mountainview" or the
"Company") is pleased to announce a financing and a non-core
asset sale and to provide an operational update.
Financing
Mountainview is pleased to announce that it has
entered into a $75.0 million senior
secured advancing line of credit facility (the "Facility")
with a major energy capital provider (the "Lender") pursuant to
which Cynergy Advisors, LLC acted as sole agent to
Mountainview. Cynergy provides investment banking services to
public and private energy related businesses. In connection
with the Facility, Mountainview has assigned its recently acquired
12,579 net acres of oil and gas leaseholds located in Divide County, Montana prospective for the
Bakken/Three Forks formations in
what the Company calls its "12 Gage Project" to a wholly-owned
subsidiary of Mountainview called "Mountain Divide, LLC" (the
"Borrower").
The Facility includes an initial borrowing base
of $19.0 million, which is to be used
to fund the drilling of the Company's initial three wells in the 12
Gage Project. The Facility matures in 32 months and, bears interest
initially at 8%. Monthly repayments are required based on 85% of
net revenues from the 12 Gage Project. In connection with the
Facility, the Lender and the Borrower will have an area of mutual
interest ("AMI"), which will be in northern Divide County, North Dakota. In
addition, pursuant to the Facility, upon the earlier of the initial
funding or the spudding of the first well in the area by the
Borrower, the Lender will be assigned a 39% after pay-out net
profits interest (the "NPI") in all of Borrower's oil and gas
properties within Divide County,
Montana. The NPI is defined
as all revenues received by Borrower, less all operating costs,
production taxes, and capital costs incurred by the Borrower.
Payments on the NPI shall commence upon repayment in full of the
outstanding Facility. The NPI will automatically reduce to 20% once
the Lender achieves a 1.65 x return on investment as stated in the
definitive agreements. The Facility is secured by a first priority
mortgage and security interest in the 12 Gage properties. The
borrowing base under the Facility will be subject to
re-determination within 45 days of the third well being turned into
sales and thereafter semi-annually. The Borrower is required to
maintain a current ratio of 1.0: 1.0.
Operational Update - Williston Basin
Since the closing of the acquisition of the 12
Gage Project, Mountainview has increased its acreage position to
12,800 net acres. This brings the Company's current acreage
position in the Williston Basin to
approximately 36,000 net acres. The Company has contracted
with Nabors Rig 460 for a three-well drilling program in the
12-Gage Project targeting the Three
Forks formation. The rig was moved to the
Wigness 5-8-1H on November 4, 2012
with drilling operations to commence on November 8, 2012. Sanjel has
been contracted to conduct cementing and fracturing services on
this program. The Company projects well costs, including
drilling, completion and tie-in to be $7-7.5
million (gross) per well. The company has identified
21 total initial drilling locations on its 12 Gage Project.
Along with the Company's Stateline property, the Company currently
has identified 46 initial operated drilling locations on its
Williston Basin properties. The
following table outlines the Company's first three proposed
wells.
Well Name |
Location |
Working Interest |
Wigness 5-8-1H |
Sec. 5 & 8, T162N-R101W, Divide County, ND |
93.75% |
Olson 35-26-1H |
Sec. 26 & 35, T163N-R101W, Divide County,
ND |
52.23% |
Leininger 3-10-1H |
Sec. 3 & 10, T162N-R101W, Divide County,
ND |
88.28% |
There are currently at least five operators
developing the Middle Bakken and Three
Forks formations near the 12 Gage Project: American Eagle
Energy Corporation, SM Energy Company, Samson Resources, Crescent
Point Energy Corp. and Baytex Energy Corp. Pursuant to their
public announcements, these companies have expanded the development
to the north, south and west of the 12 Gage Project. American
Eagle, Samson and SM have all started infill drilling on several
spacing units. American Eagle has moved forward with their
drilling program. To date, American Eagle has drilled a total
of 5 gross wells and has another 8 permitted. American Eagle
has announced that it expects to add another rig to its program
this year. American Eagle's acreage position is located
directly North of the 12 Gage Project. The following table
illustrates some recent drilling activity that has been made public
by the relevant company or regulatory authorities:
Company |
Well |
Status |
Additional Information |
SM Energy |
Legaard 4-25H |
Completed October 2011;
20-stage frac |
Gross cumulative production: 111,317 bbls of oil
and
98,928 Mcf of Gas; an average of 369 boe/d as of 8-2012 |
SM Energy |
August 4-26H |
Confidential |
Directly North of the planned Olson 35-26H
well. Well spudded
on 8/17/12 |
SM Energy |
Leininger 3-10H |
Confidential |
Directly Northwest of the planned Olson 35-26H
well. Well spudded
on 6/15/12 |
SM Energy |
Carter 9-8HW |
Confidential |
Directly North of two Mountainview DSUs.
Well spudded on 5/17/12 |
American Eagle |
Christianson 15-12-163-101 |
Complete |
Initial 30 day average production rate of 479
boe/d(2) |
American Eagle |
Cody 15-11-163-101 |
Complete |
Initial 30 day average production rate of 438
boe/d(2) |
American Eagle |
Anton 3-4-163-101 |
Complete |
Initial 12 day average production rate of 427
boe/d(2) |
Notes: |
|
(1) |
Information in this table was obtained from public
sources. Please see the cautionary statements at the end of
this news release for some
important information. |
(2) |
The information provided did not provide a break-down of oil,
gas and water amounts that make up these production numbers, nor
was any
further information about the tests made available. Please see the
cautionary statements at the end of this news release for some
important
information. |
Non-Operational Update - Williston Basin
To date the Company has participated in 8
(gross) Bakken/Three Forks wells
in the Williston Basin. The
following table lists the wells and their current status which is
the last available month's average daily production.
|
|
|
|
|
|
|
|
|
Operator |
|
|
Well Name |
Working Interest |
|
|
|
Well Status BOPD |
G3 Operating |
|
|
Olson 1-21-16H |
12.5% |
|
|
|
66 |
SM Energy |
|
|
Wolter 13-23H |
3.25% |
|
|
|
295 |
Hess |
|
|
Strahan 15-22H |
.625% |
|
|
|
115 |
Petro-Hunt |
|
|
Miller 157-101-12C-1-1H |
.787% |
|
|
|
121 |
Samson |
|
|
Zuma 15-22-35-58H |
9.75% |
|
|
|
54 |
Samson |
|
|
Riva Ridge 6-7-33-56H |
~3.24% |
|
|
|
153 |
American Eagle |
|
|
Anton 3-4-163-101 |
3.38% |
|
|
|
Confidential List |
Zavanna |
|
|
Panther 16-21-1H |
2.200533% |
|
|
|
410 |
Non-core Asset Sale
Mountainview is also pleased to announce the
sale of non-core oil and gas leases located in the Glacier and Toole
County, Montana. The Company has sold a 100% undivided
working interest in 4,373.82 net acres of fee and state leases to
an arm's length third party for $1,000,000 cash while retaining an overriding
royalty interest in the leasehold.
About Mountainview
Mountainview Energy Ltd. is a public oil and gas
company listed on the TSX Venture Exchange, with a primary focus on
the exploration, production and development of the Bakken and Three
Forks Shale in the Williston Basin
and the South Alberta Bakken.
About Cynergy Advisors, LLC.
Cynergy is a privately held investment banking firm providing
investment banking services to public and private energy-focused
and energy-related businesses. Our mission is to provide sound,
ethical advice to our clients in order to achieve the most
effective capital structure while bridging the gap between the
technical aspects of the business with the financial markets.
CAUTIONARY STATEMENTS
Initial Production Levels
Any references in this news release to
initial, early and/or test or production/performance rates and/or
"flush" production rates are useful in confirming the presence of
hydrocarbons, however, such rates are not determinative of the
rates at which such wells will continue production and decline
thereafter. Additionally, such rates may also include recovered
"load oil" fluids used in well completion stimulation. While
encouraging, readers are cautioned not to place reliance on such
rates in calculating the aggregate production for the Company. The
initial production rate may be estimated based on other third party
estimates or limited data available at this time. The initial
production is generally estimated using boes. In all cases in
this press release initial production or test are not necessarily
indicative of long-term performance of the relevant well or fields
or of ultimate recovery of hydrocarbons.
Barrels of Oil Equivalent
Barrels of oil equivalent (boe) is calculated
using the conversion factor of 6 Mcf (thousand cubic feet) of
natural gas being equivalent to one barrel of oil. Boes 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. Given that the value
ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
ratio of ^ Mcf: 1 Bbl, utilizing a conversion on a 6:1 basis may be
misleading as an indication of value.
Analogous Information
Certain information in this document may
constitute "analogous information" as defined in National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI 51-101"), including, but not limited to,
information relating to the areas in geographical proximity to
prospective exploratory lands held or to be to be held by
Mountainview or the Borrower. Such information has been
obtained from government sources, regulatory agencies or other
industry participants. Management of Mountainview believes
the information is relevant as it helps to define the reservoir
characteristics in which Mountainview may hold an interest.
Mountainview is unable to confirm that the analogous information
was prepared by a qualified reserves evaluator or auditor. Such
information is not an estimate of the reserves or resources
attributable to lands held or to be held by Mountainview and there
is no certainty that the reservoir data and economics information
for the lands held or to be held by Mountainview will be similar to
the information presented herein. The reader is cautioned that the
data relied upon by Mountainview may be in error and/or may not be
analogous to such lands to be held by Mountainview.
Forward-Looking Statements
Certain information contained in this press
release constitutes forward-looking statements, including, without
limitation, information related to the use of proceeds from the
Facility, the contents of certain documents related to the
Facility, the expected closing date of the Facility, potential
drilling locations, Mountainview's operational plans, the timing of
spudding, fracturing and other operations on certain wells and the
expected closing date of the proposed Vecta transaction. By
their nature, forward-looking statements are subject to numerous
risks and uncertainties, some of which are beyond the Company's
control including the impact of general economic conditions,
industry conditions, volatility of commodity prices, currency
fluctuations, environmental risks, competition from other industry
participants, the lack of availability of qualified service
providers, personnel or management, stock market volatility and
ability to access sufficient capital from internal and external
sources, inability to meet or continue to meet listing
requirements, the inability to obtain required consents, permits or
approvals and the risk that actual results will vary from the
results forecasted and such variations may be material.
Readers are cautioned that the assumptions used in the preparation
of such information, although considered reasonable at the time of
preparation may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. The Company's
actual results, performance or achievement could differ materially
from those expressed in or implied by, these forward-looking
statements and, accordingly, no assurance can be given that any of
the events anticipated by the forward-looking statements will
transpire or occur, or if any of them do so, what benefits the
Company will derive therefrom.
The forward-looking statements contained in
this press release are made as of the date of this press
release. Mountainview disclaims any intention and assumes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by applicable securities laws. Additionally,
Mountainview undertakes no obligation to comment on the
expectations of, or statements made by, third parties in respect of
the matters discussed above.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE Mountainview Energy Ltd.