RPT Resources Ltd. ("RPT") (TSX VENTURE:RPT) is pleased to announce that,
following a period of negotiations, it has entered into a letter of intent dated
as of November 19, 2010 which contemplates an arm's length business combination
(the "Transaction") with ArPetrol Inc. ("ArPetrol"). Michelle Gahagan, President
of RPT, stated that, "The board of directors of RPT has been working for some
time to bring this transaction to the letter of intent stage and is excited to
announce the opportunity. The qualifications of the board of directors and
management of ArPetrol are outstanding and we look forward to bringing the
ArPetrol business plan to fruition."
About ArPetrol
ArPetrol is an Alberta private company, based in Calgary, and engaged in oil and
gas exploration and production in Argentina. It owns and operates 100% of the
Faro Virgenes concession in the Province of Santa Cruz which currently produces
natural gas at a rate of approximately 2.1 million cubic feet per day with
associated condensate production of approximately 10 barrels per day. As of
December 31, 2009, the concession had proved plus probable reserves (on a gross
basis) of approximately 7.5 million barrels of oil equivalent (boe) of natural
gas and condensate. See "Oil and Gas Information" below.
About the Combined Entity
Upon completion of the Transaction, the combined entity is expected to be
classified as an Oil & Gas Issuer under the policies of the TSX Venture Exchange
and would focus on expanding ArPetrol's core operations in Argentina and
elsewhere in South America. The combined entity is expected to have cash in
excess of $25 million, including proceeds from a subscription receipt financing
planned in connection with the Transaction, the terms of which are being
negotiated and finalized by RPT and ArPetrol. Further information regarding the
combined entity will be disseminated in a subsequent news release as soon as
further details are available regarding the definitive terms of the Transaction.
Conditions Precedent
The Transaction is subject to a number of conditions precedent including,
without limitation, completion of satisfactory due diligence, receipt of all
required corporate and regulatory approvals (including the approval of the TSX
Venture Exchange), and negotiation and execution of transaction and financing
documents.
Proposed Directors and Officers
The combined entity would have a new management team led by Tim Thomas as
President and Chief Executive Officer and Troy Wagner as Vice President,
Argentina and a new board of directors comprised of Claudio Ghersinich
(Chairman), Abby Badwi, Jeff Boyce, Michelle Gahagan, Tim Thomas and Ronald
Williams.
Timothy J. Thomas, P.Eng. Mr. Thomas is a professional engineer with more
President & CEO, Director than 32 years of oil and gas experience. Most
recently, Tim was Senior Vice President Canadian
Oil and Gas and an officer at Nexen Inc. (TSX,
NYSE), a successful oil & gas company with assets
in Canada, US, UK, Yemen, Nigeria and Colombia. He
served in senior executive roles in Canada, Yemen,
UK and Indonesia. During his 18 year career with
Nexen, he was instrumental in identifying and
positioning the company in the Horn River shale
gas property and maintaining Canadian production
levels through selective investments. While the
President and General Manager in Yemen he
identified and led the capital investments to
raise production to a plateau rate of 230,000
boepd. In addition, he was responsible for a wide
range of upstream exploration and production
projects and business development activities in
Nigeria, Colombia, Vietnam, Pakistan and
Australia. Prior to Nexen, Tim worked for Gulf
Canada (formerly TSX, NYSE) with a focus on the
Arctic and East Coast areas and Texaco (formerly
NYSE) where he worked on both development and
exploration activity in the North Sea.
Troy Wagner, P. Eng. MBA Mr. Wagner is a professional engineer and MBA
Vice President, Argentina graduate with 18 years of engineering and
management experience. Prior to joining ArPetrol
in 2007 as the in-country manager in Argentina,
Mr. Wagner was COO and VP Engineering of Elmworth
Energy/Triangle USA Petroleum (OTC - US), a
company focused on developing domestic and
international shale gas projects. Mr. Wagner also
spent 10 years at NAL Resources Management Ltd.
(TSX) managing assets with combined production of
36,000 boepd. As the Vice President of Operations
at NAL, Mr. Wagner was responsible for leading all
technical and operations staff with annual Capital
and Operating budgets of over $175 million and
$110 million per year, respectively.
Claudio A. Ghersinich, Claudio Ghersinich is an independent businessman
P.Eng. and professional engineer with more than 30 years
Chairman of oil and gas experience. He is a co-founder and
former Executive VP and VP Business Development of
Vermilion Energy Trust (TSX). He serves or has
served on the Board of Directors of various public
companies including Verenex Energy Inc. (formerly
TSX), Vermilion Energy Trust/Inc. (TSX), Aventura
Energy Inc. (formerly TSX), Bulldog Energy Inc.
(TSX), Bulldog Resources Inc. (formerly TSX) and
Pegasus Oil & Gas Inc. (formerly TSXV), and
Valeura Energy Inc. (TSXV), as well as several
private and non-profit organizations. These
companies have operated assets in Canada, Europe,
Libya, Trinidad, Argentina and Australia. He has
been Chairman of ArPetrol since its inception.
Abdel F. Badwi, P. Geol. Abby Badwi is an international energy executive
Director and professional geologist with more than 35 years
experience in the exploration, development and
production of oil and gas fields in North America,
South America, Europe, Asia and the Middle East.
Mr. Badwi has been a director of ArPetrol since
its inception. He is currently President & CEO of
Bankers Petroleum Ltd. (TSX, London-AIM), an oil &
gas company with heavy oil operations in Albania.
Previously, he served as President & CEO of Rally
Energy Ltd. (formerly TSX, Frankfurt) which had
heavy oil operations in Egypt and other assets in
Pakistan and Canada, and which was sold in 2007.
He has been an officer and director of several
Canadian public and private companies and is
currently a director of Bankers Petroleum Ltd.
(TSX, London-AIM), Valeura Energy Inc. (TSXV) and
ArPetrol.
Jeffrey S. Boyce President & CEO of Sure Energy Inc. (TSX).
Director Previously, Mr. Boyce was the President & CEO of
Clear Energy Inc. (formerly TSX) and prior
thereto, President & CEO, co-founder of Vermilion
Resources Ltd. As one of the founders, Mr. Boyce
was directly involved in stewardship of Vermilion
Resources Ltd. which grew from having $200,000 in
the bank in 1994 to a business with a current
enterprise value exceeding $3 billion. Mr. Boyce
has more than 30 years experience in public
financial markets, corporate planning,
negotiating, developing land and exploration
strategies, and managing oil and gas companies.
Mr. Boyce has served on the Board of Directors of
various public, private and non-profit
organizations. These companies have operated
assets in Canada, Europe, Trinidad, Argentina,
Colombia and Australia. Mr. Boyce has been a
director of ArPetrol since its inception.
Michelle Gahagan Ms. Gahagan is currently a principal in a
Director privately-held merchant bank based in Vancouver
and London. Prior to the commencement of her
involvement in merchant banking five years ago,
Ms. Gahagan graduated from Queens University Law
School and practiced corporate law for 20 years,
acting for financiers with respect to syndicated
tax products in the entertainment finance sector.
Ms. Gahagan has extensive experience advising
companies with respect to international tax-driven
structures, mergers and acquisitions. Ms. Gahagan
has successfully completed the Investment
Management Certificate course and is a Qualified
Person under the Financial Services Authority (UK)
regime. Ms. Gahagan has been the president of RPT
Resources Ltd. since the fall of 2009 and is
currently the managing director of Northern Rand
Resource Corp. and a director of Bowood Energy
Corp.
Ronald A. Williams, CA Mr. Williams joined the ArPetrol Board in June
Director 2007 and brings over 19 years of domestic and
international oil and gas industry experience. Mr.
Williams has an extensive background in the areas
of audit, finance and taxation as well as property
and corporate acquisitions. Mr. Williams was the
Vice President, Finance and Chief Financial
Officer of Stonefire Energy Corp. (formerly TSXV)
a public company sold in 2010. Prior thereto, Mr.
Williams was the Director, Finance for Vermilion
Energy Trust (TSX).
Additional members of management, including a new Chief Financial Officer and a
VP Exploration, are expected to be identified before completion of the
Transaction.
Financial Advisors and Sponsor
Raymond James Ltd. is acting as financial advisors to RPT with respect to the
Transaction. If required by the TSX Venture Exchange and subject to the
completion of satisfactory due diligence, Raymond James Ltd. has also agreed to
act as sponsor of the combined entity in connection with the Transaction.
Canaccord Genuity Corp. is acting as financial advisors to ArPetrol with respect
to the Transaction.
Finder's Fee
A finder's fee of 2,000,000 common shares of the combined entity will be issued
to Sam Charanek upon completion of the Transaction. Mr. Charanek is a principal
of CEE Merchant Group and has over 12 years of capital markets consulting
experience.
Annual Meeting of Shareholders
The Transaction is anticipated to constitute a change of business and/or a
reverse takeover in accordance with the policies of the TSX Venture Exchange
and, as such, it is expected that approval of the shareholders of RPT will be
required. As a result, it is anticipated that RPT will cancel its annual and
special meeting of shareholders that is currently scheduled for December 3, 2010
and delay the holding of such meeting until such time as it can present the
Transaction to shareholders for approval.
Resumption of Trading and Further News
It is anticipated that trading of the common shares of RPT will remain halted
pending the dissemination of a comprehensive news release and satisfaction of
all applicable requirements of the TSX Venture Exchange. RPT will issue a
further new release as soon as further details are available regarding the
definitive terms of the Transaction (including the subscription receipt
financing) and the resumption of trading.
About RPT
RPT is a Canadian mineral exploration company based in Vancouver, British
Columbia. Since August 2009, RPT's principal focus has been to search for
mineral properties, primarily zinc oxide mineralization, which may be suitable
for application of the proprietary mineral processing technology developed by
MetaLeach Limited, a wholly owned subsidiary of Alexander Mining PLC.
Oil and Gas Information
ArPetrol's reserve information is summarized in the table below and is taken
from an audit examination dated April 29, 2010 prepared by Gaffney, Cline &
Associates Inc. (the "GCA Report"). The effective date of the GCA Report is
December 31, 2009 and it consists of an audit of the hydrocarbon liquid and
natural gas reserves attributable to ArPetrol's interest in the Faro Virgenes
concession as originally estimated by ArPetrol. The GCA Report has been prepared
using assumptions and methodology guidelines outlined in the Canadian Oil and
Gas Evaluation Handbook and in accordance with National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities.
Natural Gas Natural Gas Liquids
--------------------------------------------
Gross Gross
(MMcf)(1) Net (MMcf) (Mbbl)(1) Net (Mbbl)
--------------------------------------------
Proved Developed Producing 4,402 3,874 76 67
Proved Developed Non-Producing - - - -
Proved Undeveloped 22,031 19,387 382 336
Total Proved 26,433 23,261 458 403
Total Probable 14,229 12,521 246 217
Total Proved Plus Probable 40,662 35,782 704 620
(1) "MMcf" means million cubic feet and "Mbbl" means thousand barrels.
"Gross Reserves" are ArPetrol's working interest (operating or non-operating)
share before deduction of royalties and without including any royalty interests
of ArPetrol. "Net Reserves" are ArPetrol's working interest (operating or
non-operating) share after deduction of royalty obligations plus ArPetrol's
royalty interests in reserves.
"Proved" reserves are those reserves that can be estimated with a high degree of
certainty to be recoverable. It is likely that the actual remaining quantities
recovered will exceed the estimated proved reserves. "Developed" reserves are
those reserves that are expected to be recovered from existing wells and
installed facilities or, if facilities have not been installed, that would
involve a low expenditure (for example when compared to the cost of drilling a
well) to put the reserves on production. "Developed Producing" reserves are
those reserves that are expected to be recovered from completion intervals open
at the time of the estimate. These reserves may be currently producing or, if
shut in, they must have previously been on production, and the date of
resumption of production must be known with reasonable certainty. "Developed
Non-Producing" reserves are those reserves that either have not been on
production, or have previously been on production but are shut in and the date
of resumption of production is unknown. "Undeveloped" reserves are those
reserves expected to be recovered from known accumulations where a significant
expenditure (for example, when compared to the cost of drilling a well) is
required to render them capable of production. They must fully meet the
requirements of the reserves classification (proved, probable, possible) to
which they are assigned.
"Probable" reserves are those additional reserves that are less certain to be
recovered than proved reserves. It is equally likely that the actual remaining
quantities recovered will be greater or less than the sum of the estimated
proved plus probable reserves.
The reserve estimates provided herein are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual natural gas and
condensate reserves may be greater than or less than the estimates provided
herein. The GCA Report includes a number of assumptions made by either Gaffney,
Cline & Associates Inc. or ArPetrol as at the date of the report relating to
factors such as initial production rates, production decline rates, estimated
ultimate recoveries, timing and amount of capital expenditures, marketability of
production, future prices of natural gas, operating costs, well abandonment and
salvage values, royalties and other government levies that may be imposed during
the producing life of the reserves. Many of these assumptions are subject to
change and are beyond the control of ArPetrol.
The term "boe" may be misleading, particularly if used in isolation. A boe
conversion of 6 million cubic feet:1 barrel is based upon an energy equivalency
conversion method primarily applicable at the burner tip and it does not
represent a value equivalency at the well head.
Reader Advisory
This press release should not be considered a comprehensive summary of the
Transaction. Additional information required by the TSX Venture Exchange will be
disseminated at a future date following a satisfactory review by the TSX Venture
Exchange.
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 Transaction may not be accurate or
complete and should not be relied upon. Trading in the securities of RPT should
be considered highly speculative.
Trading of the common shares of RPT will remain halted pending receipt and
review by the TSX Venture Exchange of acceptable documentation regarding the
combined entity following completion of the Transaction. The proposed
Transaction has not been approved by the TSX Venture Exchange and remains
subject to TSX Venture Exchange approval.
Completion of the Transaction is subject to a number of conditions, including
but not limited to, TSX Venture Exchange acceptance. The Transaction cannot
close until the required approvals are obtained. There can be no assurance that
this Transaction will be completed as proposed or at all.
An agreement to sponsor should not be construed as any assurance with respect to
the merits of the Transaction or the likelihood of completion.
Except for statements of historical fact, this news release contains certain
"forward-looking information" within the meaning of applicable securities law.
Forward-looking information is frequently characterized by words such as "plan",
"expect", "project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions "may" or "will"
occur. In particular, forward-looking information in this press release
includes, but is not limited to, statements with respect to timing and
completion of the due diligence relating to the Transaction, the entering into
of the transaction and financing documents, the completion of a planned
subscription receipt financing and the satisfaction of the conditions precedent
to the Transaction (including receipt of TSX Venture Exchange approval).
Although we believe that the expectations reflected in the forward-looking
information are reasonable, there can be no assurance that such expectations
will prove to be correct. We cannot guarantee future results, performance or
achievements. Consequently, there is no representation that the actual results
achieved will be the same, in whole or in part, as those set out in the
forward-looking information.
Forward-looking information is based on the opinions and estimates of management
at the date the statements are made, and are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to
differ materially from those anticipated in the forward-looking information.
Some of the risks and other factors that could cause the results to differ
materially from those expressed in the forward-looking information include, but
are not limited to: general economic conditions in Canada, the United States and
globally; industry conditions, including fluctuations in the prices of oil and
natural gas; governmental regulation of the oil and gas industry, including
environmental regulation; unanticipated operating events or performance which
can reduce production or cause production to be shut in or delayed; failure to
obtain industry partner and other third party consents and approvals, if and
when required; competition for and/or inability to retain drilling rigs and
other services; the availability of capital on acceptable terms; the need to
obtain required approvals from regulatory authorities; stock market volatility;
volatility in market prices for oil and natural gas; liabilities inherent in oil
and natural gas operations; competition for, among other things, capital,
acquisitions of reserves, undeveloped lands, skilled personnel and supplies;
incorrect assessments of the value of acquisitions; geological, technical,
drilling, processing and transportation problems; changes in tax laws and
incentive programs relating to the oil and gas industry; failure to realize the
anticipated benefits of acquisitions and dispositions; and the other factors.
Readers are cautioned that this list of risk factors should not be construed as
exhaustive.
The forward-looking information contained in this news release is expressly
qualified by this cautionary statement. We undertake no duty to update any of
the forward-looking information to conform such information to actual results or
to changes in our expectations except as otherwise required by applicable
securities legislation. Readers are cautioned not to place undue reliance on
forward-looking information.
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