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PRESS RELEASE
AUSTRALIAN-CANADIAN OIL ROYALTIES LTD. (OTCBB: AUCAF)
ACOR SIGNS AGREEMENT TO ACQUIRE SURAT BASIN ASSETS ONSHORE AUSTRALIA AND
ANNOUNCES FINANCING
FOR IMMEDIATE RELEASE
CISCO, TX, NOVEMBER 21, 2011 - Australian-Canadian Oil Royalties Ltd. (OTCBB:
AUCAF) ("ACOR" or "the Company") is pleased to announce that the Company has
signed a series of agreements ("the Agreements") with two private Australian
companies (collectively, "the Vendors") and a private Canadian company, to
acquire, amongst other things, a 100% working interest in Petroleum Leases 18
and 40 ("PL 18" "PL 40") and a 50% working interest in Petroleum Lease 280 ("PL
280") (collectively "the Acquisition") in the Surat Basin in Queensland,
Australia.
ACQUISITION HIGHLIGHTS
PL 18, PL 40, and PL 280 are located in the Bowen/Surat Basin in Queensland
Australia. This basin was home to the first oil discovery in Australia, and is
currently the focus of significant coal-seam gas exploration and production
activity.
The assets acquired by ACOR include 5 oilfields: Yellowbank Creek, Thomby Creek,
Louise, McWhirter, Narrows and Beardmore. These fields were developed in the
1970's and 1980's, and have produced some fraction of the estimated oil
originally in place ("OOIP"). ACOR believes that additional oil is recoverable
through the application of well-established enhanced recovery techniques
including downspacing, horizontal drilling, and reservoir pressure maintenance
through waterflooding.
In 2007, the Vendors obtained an independent resource report by CDS Data
Services Pty Ltd. ("CDS Report") to assess the remaining recoverable oil
resources in the 5 fields. The CDS Report provided a range of 3.8 million
barrels of oil equivalent to 6.7 million barrels of remaining recoverable oil
resources. Since 2007, there has been no significant investment in the fields as
the Vendors were unsuccessful in securing the necessary capital to develop the
remaining oil resources (See Cautionary Statements below). The fields are
currently producing 4 barrels of oil per day (bopd) of high quality 51(degree)
oil, which is sold at a premium of approximately US$8.50 to Brent Crude oil. In
the first quarter of 2012, subject to completion of the Acquisition, the Company
will be undertaking a workover program of certain wells on PL 40 and PL 280
which will reactivate two old wells at a cost of A$250,000. The workover program
is anticipated to bring total field production to approximately 25 barrels of
oil per day.
ACQUISITION TERMS
Under the terms of the Agreements, ACOR will issue an aggregate of 21,850,000
common shares of the Company, and issue 5,000,000 Share Purchase Warrants of
ACOR ("the Warrants"). The Warrants have a strike price of US$0.25 per ACOR
share, and will vest if the Company trades at a price above US$1.00 per share
for 10 consecutive days, with a total of 100,000 ACOR shares traded during such
10-day period.
Additionally, the Company has agreed to pay the Vendors US$3.0 million within 12
months of the closing of the Acquisition (the "Deferred Consideration"). The
Vendors have secured a first lien over PL 18, PL 40, and PL 280. The Company
intends to secure a reserve based lending facility to refinance the Deferred
Consideration, which does not accrue interest or other charges within 12 months
of closing.
The Company has also agreed to pay an overriding royalty of 3% to the Vendors on
production attributable to PL 18, PL 40, and PL 280.
After giving effect to the Agreements, ACOR will have 44,595,680 shares issued
and outstanding, 5,000,000 Warrants with a strike price of US$0.25 expiring 24
months from the closing date of the Acquisition and no stock options or other
dilutive instruments issued. The Acquisition is subject to shareholder approval
by only one of the Vendors (and, for clarity, the Acquisition is not subject to
shareholder approval of the other Vendor) from certain shareholders of such
Vendor. In respect of the Vendor that has the shareholder approval condition,
ACOR has received lock-ups representing 51.6% of the issued and outstanding
shares, who have agreed to vote in favor of the Acquisition.
The closing of the Acquisition is anticipated in January 2012, subject to:
completion of the proposed financing described below; Vendors obtaining approval
of the Minister of the State of Queensland, Australia, as well as other required
consents; the renewal of the Authority to Prospect on ATP 582 from Australia and
approval of the shareholders of the Vendors; no material adverse changes in the
Company's financial and operational condition and maintaining its listing on
OTCBB; and other customary closing conditions.
UPDATED RESERVES AND RESOURCES
The Company will be obtaining an updated reserve and resource report over all of
the assets in the Company's portfolio, including the Surat Basin assets to be
acquired and also ACOR's ATP 582 in the Georgina Basin. It is anticipated the
report will be finalized in the first quarter of 2012.
NEW DIRECTORS
Upon closing the Acquisition, two experienced oil industry executives will join
the Board of ACOR: William Petrie Sr. and Jesse Meidl.
Mr. Petrie has in excess of 35 years of experience as a petroleum geologist,
primarily in Western Canada. He began his career with Mobil Oil, leaving after
several years to join the independent sector. He has been involved as President
and Director for a number of public and private oil and gas companies. In these
positions he was responsible for generating, evaluating, and successfully
exploiting oil and gas exploration, development, and acquisition opportunities
throughout North America.
Mr. Meidl has over 15 years of experience in the oil and gas sector. He is Chief
Financial Officer of a private international energy company, headquartered in
London, England. Prior thereto, he was an investment banker in the International
Oil & Gas group of Thomas Weisel Partners in London (Now Stifel Nicolaus). Mr.
Meidl was previously the Chief Financial Officer for Arsenal Energy Inc., an
international exploration company listed on the Toronto Stock Exchange, which
held production assets in Canada and the USA and exploration assets in Egypt,
Colombia and Uzbekistan. He qualified as a Chartered Accountant with KPMG in
Calgary, where he specialized in oil and gas exploration and production and
services. He also holds the ICAEW Corporate Finance qualification and a B. Comm.
Degree from the University of Saskatchewan (Canada).
When Mr. Petrie and Mr. Meidl join the six-person Board, the number of Board
members will increase to eight (8).
PROPOSED FINANCING
ACOR announces that it will sell on a non-brokered, subscription receipt basis,
an aggregate of up to 6 million common shares of the Company at a price of
US$0.35 per share for gross proceeds of up to US $2.1 million. The subscription
receipts will be exchanged for common shares of the Company on closing the
Acquisition.
A 5% finder's fee may be payable on a portion or all of the subscription
receipts.
Net proceeds of the private placement will be used towards the Company's
workover program in the Surat Basin as well as for general working capital
purposes. Common shares issued pursuant to the private placement will be subject
to a hold period in Canada and in the United States.
The securities to be offered will not be registered under the Securities Act of
1933, as amended, and may not be offered or sold in the U.S. absent registration
or an applicable exemption from the registration requirements. This press
release is not being used for the purpose of conditioning the market in the
United States for any of the securities to be offered.
CAUTIONARY STATEMENTS
Certain statements in this material may be "forward-looking statements"
including outlook on oil and gas prices, estimates of future production,
estimated completion dates of acquisitions and construction and development
projects, business plans for drilling and exploration, estimated amount and
timing of capital expenditures and anticipated future debt levels and royalty
rates. Information concerning reserves contained in this material may also be
deemed forward-looking statements as such estimates involve the implied
assessment that the resources described can be profitably produced in the
future. These statements are based on current expectations, estimates and
projections that involve a number of risks and uncertainties, which could cause
actual results to differ from those anticipated by ACOR.
Statements contained in this press release and corporate information relating to
future results, events and expectations are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve known and unknown risks, uncertainties, scheduling,
re-scheduling and other factors which may cause the actual results, performance,
estimates, projections, resource potential and/or reserves, interpretations,
prognoses, schedules or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such statements. Such factors include, among others,
those described in the Company's annual reports on Form 10-K on file with the
U.S. Securities and Exchange Commission ("SEC").
Users are cautioned that these values represent resources, and not reserves as
defined by the SEC. Under SEC standards, mineralization may not be classified as
a reserve unless the determination has been made that the mineralization could
be economically and legally produced or extracted at the time the reserve
determination is made. Mineral resources that are not mineral reserves do not
have demonstrated economic viability. Investors are cautioned not to assume that
all of measured or indicated resources will ever be converted into reserves.
We seek safe harbor.
For further information on ACOR, please visit our website at www.aussieoil.com,
e-mail acor@classicnet.net or call:
1-254-442-2638 (Office)
1-800-290-8342 (Toll Free in the United States
