Based on CVA's acreage using this as a marker, share price should be well north of $.30/share,
Robert Mercier
BOWOOD ANNOUNCES ALBERTA BAKKEN LEASE ACQUISITION, AND JOINT VENTURE WITH BLOOD TRIBE FIRST NATION AND EQUITY FINANCING
Bowood Energy Inc. has entered into an agreement with Kainaiwa Resources Inc. (KRI), a corporation wholly owned by the Blood Tribe First Nation ("Blood Tribe") to acquire, through a leasing arrangement ("Lease"), an interest in 94.75 contiguous sections (60,640 acres) of lands located within the Blood Tribe Reserve in southern Alberta.
The lands being acquired are strategically located in the emerging southern Alberta Bakken play and the Company believes the lands are on trend and highly prospective for Devonian-Mississippian (Bakken equivalent) oil potential and other prospective formations. All of the lands contain the Devonian and Mississippian rights (which includes the prospective Bakken, Three Forks and Banff formations) and the majority of the lands include all petroleum and natural gas rights with only a few (single) shallow zone exclusions.
The Lease will significantly add to Bowood's land position in the southern Alberta Bakken fairway, where the Company will hold a 100% interest in approximately 104,000 net acres (41,600 net hectares), or 162 sections.
In addition, Bowood is pleased to announce that it has filed a preliminary short form prospectus in connection with a public offering of 60,000,000 to 80,000,000 subscription receipts (the "Subscription Receipts") at the price of
.25 per Subscription Receipt for gross proceeds of $15,000,000 to $20,000,000 (the "Offering"). The Offering is co-led by GMP Securities L.P. and Haywood Securities Inc. (the "Agents").
The Lease
The leasing arrangement will include a joint venture with the Blood Tribe and this arrangement is a continuation of the Company's longstanding relationship with the Blood Tribe. Since 2000, the Company's management team have been working in partnership with the Blood Tribe and have successfully implemented a number of joint ventures to develop resources on the Blood Tribe Reserve. The Company is pleased to be able to continue and expand upon this relationship.
The Lease will have a 5 year term and is subject to mineral royalties substantially similar to Alberta Crown royalties. In addition, Bowood will commit to:
-- a total up front consideration of $14,128,000 -- pay annual rent of $5.00/hectare, amounting to approximately $122,000 per year -- drill one well to a minimum depth of 1,000 metres in each of the first two years of the Lease and two wells in each year thereafter -- as part of its strategic joint venture arrangement with the Blood Tribe, the Blood Tribe or its nominee, will have the option to elect, in advance of drilling a well, to participate for a 20% working interest in any such well on the lands. If the Blood Tribe or it nominee elects not to participate in such well, the Blood Tribe or its nominee shall be entitled to a 20% working interest in such well once Bowood has recovered 200% of the total capital cost associated with such well.
The Equity Financing
The Company is also pleased to announce it has filed a preliminary short form prospectus qualifying for distribution of a minimum of 60,000,000 and a maximum of 80,000,000 Subscription Receipts at a price of
.25 per Subscription Receipt for aggregate gross proceeds of $15,000,000 to $20,000,000. The Offering is co-led by GMP Securities L.P. and Haywood Securities Inc. The Offering is being made in Ontario, Manitoba, Saskatchewan, Alberta and British Columbia and will also be offered for sale internationally pursuant to applicable registration or prospectus exemptions as permitted. Closing of the Offering is expected to occur on or about September 21, 2010, and is subject to customary regulatory approvals.
Bowood has also granted the agents an over-allotment option to place, on the same terms, up to an additional 8 million Subscription Receipts for additional aggregate gross proceeds of up to approximately $2 million. The option is exercisable, in whole or in part, by the agents at any time up to 30 days after closing of the Offering. The maximum gross proceeds that may be raised under the Offering is $22,000,000 should this option be exercised in full.
The net proceeds of the Offering will be used to fund the cash purchase price payable by Bowood under the terms of the Lease, as well as for ongoing capital expenditures and general corporate purposes, in addition to paying down the Corporation's existing debt, such debt having been incurred to pay for the Corporation's capital expenditure program during 2010.
The gross proceeds of the financing will be held in escrow pending the completion of the acquisition of the Lease. If the acquisition of the Lease is completed on or before October 29, 2010, and certain escrow release conditions have been fulfilled, the net proceeds will be released to Bowood and each Subscription Receipt will be exchanged for one common share of Bowood for no additional consideration. If the acquisition of the Lease is not completed on or before October 29, 2010, holders of Subscription Receipts will receive a cash payment equal to the offering price of the Subscription Receipts and any interest that was earned thereon during the term of the escrow.
We seek Safe Harbor.