CANADA ENERGY PARTNERS ANNOUNCES THE ACQUISITION OF HUDSON’S HOPE GAS LTD.
June 26, 2012
VANCOUVER, BRITISH COLUMBIA - Canada Energy Partners (the “Company”) is pleased to announce that it has acquired all of the outstanding shares of Hudson’s Hope Gas Ltd. (“HHG”), the wholly owned subsidiary of GeoMet Inc. (“GeoMet”), which is the 50% owner and Operator of the Company’s Peace River Coalbed Methane (CBM) Project, for a consideration of 2 million shares of the Company. The 2 million shares of the Company issued to GeoMet are subject to a 12 month hold period.
The Company believes this is a strategic acquisition for the following reasons: (1) The acquisition consolidates operations and 100% ownership of the CBM Project into the Company. (2) The acquisition adds approximately 230 BCF of CBM gas resource potential, bringing the CBM project total up to 500 BCF. This resource potential can only be commercialized under higher gas prices. (3) The acquisition secures 100% ownership of the Peace River gas plant which is strategic to both the CBM and Montney Shale developments. (4) It solidifies ownership and control within the Company of the only water disposal wells within a 35 mile radius, which are strategic to both CBM and Montney Shale developments.
As a result of the acquisition, the Company will effectively assume GeoMet’s share of the abandonment liabilities (“P&A”) associated with the CBM Project. Under a new Oil & Gas Commission (“OGC”) policy, the Company, through HHG, will have to post an $800,000 bond for the P&A in November 2012 and an additional $800,000 in September 2013, UNLESS one or more of the following events occur: (1) the Company achieves commercial activity deemed by the OGC to be equal to or greater than $1.6 million, (2) the Company transfers operatorship to another company whose commercial oil and gas activity in the Province exempts it from the bonding obligation, or (3) the Company moves forward with the abandonment of the CBM Project. The Company is already pursuing avenues which will enable it to meet the bonding obligation or to eradicate the bonding obligation.
The Company believes that this acquisition was achieved at a very attractive price due to the depressed gas market; and that the consolidation of interests and operations of the CBM Project, the gas plant, and the disposal wells will be strategic in the advancement of both the CBM and Montney plays when gas prices recover.
Canada Energy is an oil and gas exploration and development company. The Company possesses a large concentrated land position in a high-impact, multi-zone, natural gas-bearing area in northeast British Columbia.
On behalf of the Board of Directors of
Canada Energy Partners Inc.
CANADA ENERGY PARTNERS INC.
1500 – 885 West Georgia St.
Vancouver, BC V6C 3E8
Main Phone: (604) 909-1154 / Facsimile: (604) 488-0319
Attention: John Proust, Chairman
Direct Phone: (604) 696-9020
Attention: Ben Jones, President and CEO
Direct Phone: (225) 388-9900
The TSX Venture Exchange has neither approved or disapproved of the contents of this press release. 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 press release.
Forward Looking Statements: This news release contains forward looking statements relating to expected or anticipated flow rates, timing for drilling and completion operations, future events and operations, number of wells to be drilled, timing of projects and anticipated results that are forward looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the company’s capability to execute and implement future plans. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. There is no representation by the company that actual results achieved during the forecast period will be the same in whole or in part as that forecast.