Blackhawk Resource Corp. ("Blackhawk" or the "Corporation") (TSX VENTURE:BLR) is
pleased to announce that it has closed the acquisition of all of the issued and
outstanding common shares of Black Bore Exploration Ltd. ("Black Bore") (the
"Transaction"). The Transaction was completed by way of a three cornered
amalgamation such that Black Bore is now a wholly owned subsidiary of Blackhawk.
For details of the Transaction please refer to the press release of July 13,
2009.
The Corporation is now a Western Canadian based oil and gas company. The board
has provided management with a mandate to grow the company through acquisition,
development, drilling and land sales with a focus on Alberta and Saskatchewan.
With the closing of the Transaction, Blackhawk will have average daily
production of approximately 40barrels of oil equivalent per day ("BOED"). Work
has begun on the lands acquired from Black Bore, which is expected to increase
the daily production to greater than 75 BOED in the near future. This increase
in production will be strictly oil production. The Corporation has also
undertaken evaluations of various acquisition targets, with the goal to
significantly increase production.
Post closing, Blackhawk's two principal producing properties are Bodo and Wood
River. Blackhawk is currently preparing an application to the ERCB to equip a
standing well in the Bodo area for water disposal. On-site water disposal will
greatly reduce operating costs and allow for further increases in oil
production. Blackhawk has four potential new oil well locations in inventory on
the Bodo property. At Wood River Blackhawk produces natural gas from the
Horseshoe Canyon and Belly River Formations. Blackhawk has three potential new
gas well locations in inventory on the Wood River property.
The aggregate consideration paid by Blackhawk for all of the Black Bore common
shares was a total of 7,694,671 units of Blackhawk ("Units") at a deemed price
of $0.12 per Unit (the "Consideration"). Each Unit consists of one Blackhawk
Common Share, one 75 BOED Performance Right and 0.6 of one 150 BOED Performance
Right.
Assuming the conversion of all the Performance Rights the Consideration will
result in approximately 20,000,000 Blackhawk common shares being issued for all
of the Black Bore common shares. Thus, upon completion of the Transaction, there
are 37,727,671 Blackhawk common shares issued and outstanding (on a non-diluted
basis) plus Performance Rights to acquire approximately a further 12,311,472
Blackhawk common shares.
Concurrent with the Transaction, the following parties comprise the current
management team of Blackhawk: David Antony, Chief Executive Officer; Hillar
Lilles, President; Mark Lenson, Vice President, Exploration and Charidy Lazorko,
Chief Financial Officer.
Blackhawk is also pleased to announce that Mr. Scott Price has joined the Board
of Directors. With the closing of the Transaction and the addition of Mr. Price
the current Board of Directors includes, Mr. Dave Antony, Mr. Hillar Lilles, Mr.
Ray Antony and Mr. Michael Bowie.
Mr. Price, is currently a director of Gran Tierra Energy Inc., an international
oil and gas exploration and production company listed on the TSX and NYSEAMEX.
Mr. Price has been an officer and director of Solana Resources Limited, Aventura
Energy Inc. and Breakaway Energy Inc, all international resource companies. Mr.
Price also sits on the board of Birch Lake Capital Inc., a TSX-V listed company.
In connection with the completion of the Transaction the Corporation has granted
options to acquire 2,325,000 Common Shares to various directors, officers,
employees and consultants at a strike price of $0.15. Of this amount 2,125,000
of the stock options were issued to directors and officers of the Corporation.
The options expire five years from the date of grant. The Corporation has
determined that exemptions from the various requirements of TSX Venture Exchange
Policy 5.9 are available for the granting of the options.
Financial Information
The following information is derived from Black Bore's management-prepared
unaudited financial statements for the three month period ended June 30, 2009
and the Blackhawk management-prepared unaudited financial statements for the
three month period ended May 31, 2009. In accordance with National Instrument
51-102, Blackhawk will file a Business Acquisition Report for the Transaction
prior to December 29, 2009. Such information is subject to all other information
contained in the relevant financial statements as filed on www.sedar.com.
Black Bore
Blackhawk Exploration
Resource Ltd.
Corp.(unaudited (unaudited
as at May 31, as at June
2009) 30, 2009) Pro Forma
----------------------------------------------------------------------------
ASSETS
Current assets $ 1,208,435 $ 172,558 $ 1,380,993
Long term investments 9,632 - 9,632
Petroleum and natural gas
properties and equipment 629,905 2,393,555 3,023,460
Property, plant and equipment 6,355 - 6,355
LIABILITES
Current liabilities 19,641 520,750 540,391
Asset retirement obligations - 270,680 270,680
Future income tax liability 20,000 - 20,000
Black Bore
Blackhawk Exploration
Resource Corp. Ltd. Pro Forma
----------------------------------------------------------------------------
REVENUE
Oil and gas revenue net
of royalties - $ 76,854 $ 76,854
Other revenue 32,673 - 32,673
EXPENSES
Operating costs - 45,908 45,908
Depletion and accretion - 31,000 31,000
Other 242,920 60,969 303,889
Barrel of Oil Equivalent: Where amounts are expressed on a barrel of oil
equivalent ("BOE") basis, natural gas volumes have been converted to boe at a
ratio of 6,000 cubic feet of natural gas to one barrel of oil equivalent. This
conversion ratio is based upon an energy equivalent conversion method primarily
applicable at the burner tip and does not represent value equivalence at the
wellhead. Boe figures may be misleading, particularly if used in isolation.
Also, the insiders and spouses of insiders of the Corporation, have placed a
total of 6,165,920 Common Shares, 4,465,920 75 BOE/D Performance Rights and
2,679,552 150 BOE/D Performance Rights in escrow. These Common Shares and Rights
are releasable pro rata as follows. As the Corporation will initially be a Tier
2 Issuer, as designated by the TSX Venture Exchange, these are released as to
10% on the final TSX Venture Exchange bulletin and as to 15% on each of the 6,
12, 18, 24, 30 and 36 month anniversaries of the initial release date. If the
Corporation becomes a Tier 1 Issuer, as designated by the TSX Venture Exchange,
these are released as to 25% on the final TSX Venture Exchange bulletin and as
to 25% on each of the 6, 12 and 18 month anniversaries of the initial release
date.
Further to disclosure requirements of applicable securities laws, Blackhawk
reports that as a result of the Transaction, Hillar Lilles, together with his
spouse, owns or controls 2,206,700 Blackhawk common shares or approximately 5.8%
of the total issued and outstanding Shares of Blackhawk, options to acquire
800,000 Blackhawk common shares ("Options") and Performance Rights to acquire
3,530,720 Blackhawk common shares upon certain production targets being met.
Assuming exercise of such Options and conversion of such Performance Rights, Mr.
Lilles, together with his spouse, would own or control 6,537,420 Blackhawk
common shares or approximately 12.9% of the then issued and outstanding
50,639,143 Blackhawk common shares. The acquisition of these shares was made
pursuant to the Transaction. Mr. Lilles, together with his spouse, may increase
or decrease their ownership in Blackhawk common shares depending on market
conditions or any other relevant factors.
The Transaction herein remains subject to final approval of the TSX Venture
Exchange.
Forward-Looking Statements
This news release contains forward-looking statements and forward-looking
information within the meaning of applicable securities laws. The use of any of
the words "expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and
similar expressions are intended to identify forward-looking information or
statements. More particularly and without limitation, this news release contains
forward looking statements and information concerning Blackhawk's future
operations and prospects. The forward-looking statements and information are
based on certain key expectations and assumptions made by Blackhawk, including
expectations and assumptions concerning equipment and crew availability, and
joint venture partner financial capability. Although Blackhawk believes that the
expectations and assumptions on which such forward-looking statements and
information are based are reasonable, undue reliance should not be placed on the
forward looking statements and information because Blackhawk can give no
assurance that they will prove to be correct. By its nature, such
forward-looking information is subject to various risks and uncertainties, which
could cause Blackhawk's actual results and experience to differ materially from
the anticipated results or expectations expressed. These risks and uncertainties
include, but are not limited to, reservoir performance, labour, equipment and
material costs, access to capital markets, interest and currency exchange rates,
and political and economic conditions. Additional information on these and other
factors is available in continuous disclosure materials filed by Blackhawk with
Canadian securities regulators. Readers are cautioned not to place undue
reliance on this forward-looking information, which is given as of the date it
is expressed in this news release or otherwise, and to not use future-oriented
information or financial outlooks for anything other than their intended
purpose. Blackhawk undertakes no obligation to update publicly or revise any
forward-looking information, whether as a result of new information, future
events or otherwise, except as required by law.
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