Brownstone Enters into Oil & Gas Agreement with Dejour Energy and Announces Proposed $12 Million Financing
Brownstone Ventures Inc. (“Brownstone”)(TSX VENTURE:BWN.V – News) announced today that it has entered into a binding letter of intent, subject to regulatory approval, with Dejour Energy (USA) Corp. (“Dejour”), a wholly-owned subsidiary of Dejour Enterprises Ltd. (“DJE”: TSXV), to participate with Dejour and Retamco Operating Inc. (“Retamco”), a private Texas corporation, in the ownership, exploration and development of certain oil and gas properties (conventional and unconventional) in the Piceance Basin, Colorado and the Uinta Basin, Utah.
Pursuant to the agreement, Brownstone will acquire a 10% participating interest (on an 80% net revenue interest) in 267 leases totaling approximately 267,150 gross acres (254,640 net acres) in exchange for US$10,185,626.80 payable by US$6,793,813.08 in cash and the issuance of 2,512,455 common shares of Brownstone (valued at US$1.35 per common share). The consideration will be payable to Retamco directly which will maintain a 25% participating interest in the Resource Project and a 37.5% participating interest in the Overthrust Project (see project descriptions below). Dejour will also maintain a 25% participating interest in the Resource Project and a 12.5% participating interest in the Overthrust Project, with a to-be-arranged operator to acquire a 40% participating interest in both the Resource and Overthrust Projects.
In addition, Brownstone will pay Dejour a fee equal to 2.5% of the US$10,185,626.80 participation fee, payable by issuing 188,623 common shares of Brownstone, as well as grant Dejour a 2.5% back-in right, which, upon well payout, on a well-by-well basis, will reduce Brownstone’s to 10% on a 77.5% net revenue interest.
Key highlights of the Piceance/Uinta Basins are as follows:
– 6000 + square miles estimated to contain more than 300 trillion cubic feet of conventional and unconventional gas in place and as much as 3 billion barrels of oil (as reported in Oil and Gas Investor, August 2005);
– Established resource, with significant deeper exploration upside;
– Low political, economic and development risk;
– Repeatable drilling play utilizing the latest completion techniques that provide for 60-80% recovery rate per well, estimated at 100bcf/section;
– Multiple wells per location, effective drilling economies of scale;
– Well advanced pipeline network, growing with capacity;
– Large natural gas resource play in the mainland US that has attracted major industry players including without limitation Encana Corp., ExxonMobil, Chevron, The Williams Co., Bill Barrett Corporation and Conoco-Phillips.
The project consists of the “Resource Project” and the “Overthrust Project”. The natural gas Resource Project, is a well defined stratigraphic gas resource, covering over 198,561.2 gross acres (188,422.47 net) of leases that include low geologic risk natural gas assets plus the opportunity for deeper Jurassic reserves. The Overthrust Project is a massive deep Overthrust Oil Project covering 68,591 gross (66,218.2 net) acres of leases in the northern Piceance/Uinta Basins with a high reward potential and commensurate risk. This Overthrust Project is a deep seated oil prospect with potential to contain significant levels of oil, directly analogous to the Rangeley field located immediately adjacent, having produced over 1 billion barrels to date.
Brownstone has been advised by Dejour and Retamco and that drilling is expected to commence late 2006.
For further information regarding the Piceance-Uinta Basin please refer to Dejour Enterprises Ltd. press releases dated May 11, 2006 and June 22, 2006, available at www.dejour.com or www.sedar.com.
Brownstone also announced today that it is proposing to complete a non-brokered private placement for up to 8,000,000 units (the “Units”) at a price of $1.50 per Unit for possible aggregate gross proceeds of $12,000,000. Each Unit will consist of one common share in the capital of the Brownstone and one-half of one share purchase warrant (each full share purchase warrant, a “Warrant”). Each full Warrant will entitle the holder to purchase one additional common share of Brownstone at any time within 24 months after the closing date of the financing (the “Warrant Term”) at an exercise price of $2.00 per share. If, following the date that is four months and one day after the closing date of the financing, the closing price of Brownstone’s common shares exceeds $3.50 for 20 consecutive business days, then the Warrant Term shall be automatically reduced and the share purchase warrants will expire on the date that is 30 days following the issuance of a press release announcing the reduced Warrant Term.
Although the financing is non-brokered, Brownstone may pay a commission to agents that arrange for the sale of units. Insiders of Brownstone may purchase up to 25% of the financing. Closing of the private placement is subject to receipt of all necessary regulatory approvals. The securities issued will have a hold period expiring four months and one day from the date of closing.
About Brownstone – Brownstone Ventures Inc. (“Brownstone”) is a Canadian based, energy focused investment company with equity investments in uranium (through its holdings in Mega Uranium Ltd.) and oil & gas. As well, Brownstone has direct interests in oil and gas exploration projects. For additional information, please see Brownstone’s website: www.brownstoneventures.com.
Certain statements contained in this press release constitute forward-looking statements. These statements relate to future events or the future performance of Brownstone. Statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “budget”, “plan”, “continue”, “estimate”, “expect”, “forecast”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements in this press release include, but are not limited to, statements with respect to: completion by Brownstone of the acquisition of the participating interest in the Piceance/Uinta Basins properties and the private placement; the performance characteristics of the Brownstone’s oil and natural gas properties; drilling plans and the timing and location thereof; plans for the exploration and development of the company’s properties; production capacity and levels, and the timing of achieving such capacity and levels; the size of oil and natural gas reserves; projections of market prices and costs; supply and demand for oil and natural gas; expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and capital expenditure programs.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and readers are cautioned not to place undue reliance on forward-looking statements contained in this press release. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: volatility of and assumptions regarding oil and natural gas prices; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; geological, technical, drilling and processing problems; fluctuations in currency and interest rates; product supply and demand; and risks inherent in the company’s foreign operations; changes in environmental and other regulations or the interpretation of such regulations; the possibility that the acquisition of the company’s participating interest and/or completion of the private placement will not be completed and the other factors discussed in this press release and in Brownstone’s filings with Canadian securities regulatory authorities which are available to the public at www.sedar.com.
Statements relating to “reserves” are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking statements contained in this press release are made as at the date hereof and Brownstone undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
The TSX Venture Exchange does not take responsibility for the adequacy or accuracy of this release.
Contact:
Contacts: Brownstone Ventures Inc. Sheldon Inwentash President and C.E.O.
(416) 941-8900
http://www.brownstoneventures.com
Source: Brownstone Ventures Inc.
