Stealth Ventures Ltd ("Stealth" or the "Company") (TSX VENTURE:SLV)
is pleased to announce the signing of a binding agreement to
acquire a private company (the "Target Company") that has working
interests in producing oil & gas assets coupled with
exploration acreages, in India.
Commenting on this development, Subra Subramaniam, CEO of the
Company said "this acquisition is a result of the sustained and
concerted efforts over the last year, by the entire team at
Stealth, which will now provide the Company with a vehicle to
launch its unconventional expertise into the South Asian
sub-continent, which in turn will benefit the company's share-
holders and also the Joint Venture partners and the Government of
India as a whole."
The high-lights of the acquisition are:
-- A recognized Operator in the Country
-- A working interest of 30% in producing oil and gas assets.
-- A working interest of 10% in oil and gas exploration acreages.
-- Envisaged proposal for a development plan which will provide the
potential for increases to current levels of production and ultimate
recovery from the fields
-- Prospective unconventional upsides that exist within the available
acreages
-- Operatorship in some of the fields
-- A significant opportunity to showcase Stealth's expertise in
unconventional resource opportunities
-- The opportunity to partner with large and successful international
companies in India
-- Will help Stealth to locate and negotiate other acquisition
opportunities in India
The Assets/Acreages
The Target Company has working interests in producing oil fields
(for development), a gas field (for development) and in prospective
exploration acreages. All the development assets are currently
under production and have a significant upside, both for enhancing
production and for exploration upside. The Target Company is the
Operator in some of the development assets, which pass on to
Stealth as soon as the necessary regulatory formalities have been
completed and the necessary approvals from the Government of India
have been received.
The entire set of Assets and the exploration acreages are under
Production Sharing Contracts (PSC) with the Government of India,
and are located in a producing hydrocarbon Basin, in India. All
capital commitments under the PSC for the producing blocks have
been fulfilled.
There are two wells to be drilled on the exploration blocks by
the end of 2012, as per the commitments under the PSC for these
blocks, where-in the Company will be required to pay for its
working interest of 10% of the costs. The Company estimates their
share of these commitments to be approximately $400,000. The Joint
Venture partners in these assets/acreages are renowned oil &
gas companies, having large acreages/assets both in India and
internationally.
The Transaction
The transaction, valued at about USD 45 million, is contemplated
as a Plan of Arrangement that involves the acquisition of the
entire equity shares of the Target Company. The purchase
consideration will be settled with a split of USD 20 million in
cash and the equivalent of USD 25 million in non-voting shares of
the Company. The Transaction will be completed soon after the
required approvals from the Government of India are received.
Farm-In
The Transaction involves the Target Company whose assets were
the farm-in target Stealth announced June 27, 2011 ("Farm-in").
With the completion of the Transaction the Farm-In will not be
required as the Stealth will own 100% of the Target Company and at
that time the Company will withdraw the Farm-in.
The Company, as part of the evaluation process, initiated an
independent reserve and resources evaluation report (the "Report")
that was completed by Calgary based Deloitte & Touche LLP (AJM
Deloitte) and prepared in accordance with NI 51-101 requirements,
and is effective June 30, 2011.
The following is an excerpt from the Report:
NI 51-101 Reserves
----------------------------------------------------------------------------
As at June 30,
2011(Net)
----------------------------------------------------------------------------
Oil Gas NGL Total BOE
(Mbbls) (MMcf) (Mbbls) (Mbbl)
----------------------------------------------------------------------------
Proved producing 43.5 680.1 156.8
----------------------------------------------------------------------------
Proved non-producing 5.7 0.0 5.7
----------------------------------------------------------------------------
Undeveloped 24.4 132.6 46.4
----------------------------------------------------------------------------
Total proved 73.5 812.7 209.0
----------------------------------------------------------------------------
Probable 248.4 1,614.9 517.6
----------------------------------------------------------------------------
Total proved plus probable (1) 322.0 2,427.6 Nil (1)726.6
----------------------------------------------------------------------------
NET TO COMPANY
----------------------------------------------------------------------------
Total discovered petroleum initially-in-place
----------------------------------------------------------------------------
Low Best High
----------------------------------------------------------------------------
Petroleum initially-in-place (1) MBoe 8,505 13,809 23,968
----------------------------------------------------------------------------
Total contingent resources company share
----------------------------------------------------------------------------
Low Best High
----------------------------------------------------------------------------
Contingent Resource (1) MBoe 917 2,086 5,611
----------------------------------------------------------------------------
Production Volumes ((i)2) MBoe 176 176 176
----------------------------------------------------------------------------
Reserves (3) MBoe 209 727 727
----------------------------------------------------------------------------
Remaining contingent resource MBoe 532 1,183 4,708
----------------------------------------------------------------------------
Notes:
1. Volumes have been aggregated probabilistically
2. Cumulative production as of June 20, 2011
3. Reserves are as of June 30, 2011 working interest sales volume booked to
this opportunity.
A Boe conversion rate of 6 Mcf:1 barrel has been used. The
conversion ratio is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
The estimates of reserves for individual properties may not
reflect the same confidence level as estimates of reserves for all
properties, due to the effects of aggregation. There is no
certainty that it will be commercially viable to produce any
portion of the resources or the timing of such development.
The significant positive factors attributable to the resource
assessment include the following: Source rock, charge, migration,
trap and seal are of low risk due to the indication of hydrocarbon
on well logs, the successful production of oil and gas from various
formations, and oil cuts in the water and mud recovered on drill
stem tests. The main geological risk revolves around the reservoir
rock.
The negative factors centre on the lack of demonstrated economic
productivity to date.
Contingencies which prevent the classification as reserves
include factors such as assessment of reservoir deliverability,
drilling and testing of additional test wells, aerial extent of
reservoir facies, economic, legal, environmental, and political and
regulatory matters, or lack of markets.
The specific contingency applicable to all fields is the
application of horizontal drilling technology and multi stage
completion technology to enhance the ability to economically
extract hydrocarbons from low quality reservoirs. This technology
has been demonstrated to be very successful in North America but
has yet to be applied to the relevant fields in this basin.
The acquisition is subject to customary due diligences by
Stealth and is also subject to the regulatory approvals of the
Government of India. The necessary documentation required for the
submission of the application for obtaining the regulatory
approvals, have commenced.
Stealth continues the activities of implementing its business
plans and initiatives of assembling a portfolio of unconventional
and conventional oil & gas resource plays in India and SE
Asia.
Stealth Ventures Ltd. is a Calgary-based junior oil and gas
company whose expertise and focus is on "unconventional"
hydrocarbon resources from shale, CBM and tight sand
reservoirs.
Trading in Stealth Shares on the TSX-V is halted and will remain
so until the documentation required pursuant to the Policies of the
TSX-V has been reviewed and accepted by the TSX-V. A further news
release will be issued at such time.
Further to the shareholder approval at our last AGM, Stealth has
now been redomiciled from British Columbia to the Province of
Alberta.
We seek Safe Harbor.
STEALTH VENTURES LTD.
Subra Subramaniam
Per: SUBRA SUBRAMANIAM, Chairman & CEO
Forward Looking Statements:
This News Release may contain forward-looking statements based
on assumptions and judgments of management regarding future events
or results that may prove to be inaccurate as a result of
exploration and other risk factors beyond its control, and actual
results may differ materially from the expected results.
Additional Advisories
Boes are presented on the basis of one Boe for six Mcf of
natural gas. Disclosure provided herein in respect of 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.
Resource and reserve definitions
The term "resources" encompasses all petroleum qualities that
originally existed on or within the earth's crust in naturally
occurring accumulations, including Discovered and Undiscovered
(recoverable and unrecoverable) plus quantities already produces.
Accordingly, total resources is equivalent to Total Petroleum
Initially-In-Place ("PIIP")
Total Petroleum Initially-In-Place ("PIIP") is that quantity of
petroleum that is estimated to exist originally in naturally
occurring accumulations. It includes that quantity of petroleum
that is estimated, as of a given date, to be contained in known
accumulations, prior to production, plus those estimated quantities
in accumulations yet to be discovered (equivalent to "total
resources").
Production is the cumulative quantity of petroleum that has been
recovered at a given date.
Reserves are estimated remaining quantities of oil and natural
gas and related substances anticipated to be recoverable from known
accumulations, as of a given date, based on: the analysis of
drilling, geological, geophysical, and engineering data; the use of
established technology; and specific economic conditions, which are
generally accepted as being reasonable. Reserves are further
classified in accordance with the level of certainty associated
with estimates and may be sub-classified on development and
production status. Refer to the full definition on Reserves in
Section 5.4 of GOGEH.
Contingent Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology
under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political and regulatory matters, or lack of
markets. It is also appropriate to classify as contingent resources
that estimated recoverable quantities associated with a project in
the early evaluation stage, Contingent Resources are further
classified in accordance with the level of certainty associated
with the estimates and may ne sub-classified based on project
maturity and/or characterized by their economic status.
Unrecoverable is that portion of Discovered and Undiscovered
PIIP quantities which is estimated, as of a given date, not to be
recoverable by future development projects. A portion of these
quantities may become recoverable in the future as commercial
circumstances change or technological developments occur; the
remaining portion may never be recovered due to the
physical/chemical constraints represented by the subsurface
interaction of fluids and reservoir rocks.
Undiscovered Petroleum Initially-In-Place (equivalent to
undiscovered resources) is that quantity of petroleum that is
estimated, on a given date, to be contained in accumulations yet to
be discovered. The recoverable portion of Undiscovered Petroleum
Initially-In-place is referred to as Prospective Resources; the
remained as Unrecoverable.
Prospective Resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective Resources have both an associated chance of
discovery and a chance of development. Prospective Resources are
further subdivided in accordance with the level of certainty
associated with recoverable estimates assuming their discovery and
development and may be sub classified based on project
maturity.
Reserves, Contingent Reserves and Prospective Reserves should
not be combined without recognition of the significant differences
in criteria associated with their classification. For example, the
sum of Reserves, Contingent Reserves and Prospective Reserves may
be referred to as Remaining Recoverable Resources. When resources
categories are combined, it is important that each component of the
summation also be provided, and that it should be made clear
whether and how the components in the summation were adjusted for
risk.
Uncertainty ranges
The range of uncertainty of estimated recoverable volumes may be
represented by either deterministic scenarios or by probability
distribution. Resources should be provided as low, best and high
estimates as follows:
Low Estimate: This is considered to be a conservative estimate
of the quantity that will actually be recovered. It is likely that
the actual remaining quantities recovered will exceed the low
estimate. If probabilistic models are used, there should be at
least a 90 percent probability (P90) that the quantities actually
recovered will equal or exceed the low estimate.
Best Estimate: This is considered to be the best estimate of the
quantity that will actually be recovered. It is equally likely that
the actual remaining quantities recovered will be greater or less
than the best estimate. If probabilistic methods are used, there
would be at least a 50 percent probability (P50) that the
quantities actually recovered will equal or exceed the best
estimate.
High Estimate: This is considered to be an optimistic estimate
of the quantity that will actually be recovered. It is unlikely
that the actual remaining quantities recovered will exceed the high
estimate. If probabilistic methods are used, there would be at
least a 10 percent probability (P10) that the quantities actually
recovered will equal or exceed the high estimate.
This approach to describing uncertainty may be applied to
reserves, contingent resources, and prospective resources. Here may
be significant risk that sub commercial and undiscovered
accumulations will not achieve commercial production. However, it
is useful to consider and identify the range of potentially
recoverable quantities independent of such risk.
THIS NEWS RELEASE MAY CONTAIN FORWARD-LOOKING INFORMATION.
ACTUAL FUTURE RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTEMPLATED.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS NEWS RELEASE.
Contacts: Stealth Ventures Ltd. Subra Subramaniam Chairman &
CEO 403-514-9998 403-514-9995 (FAX)
(TSXV:SLV)
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