CUT BANK, MT, Nov. 5, 2012 /PRNewswire/ - Mountainview Energy Ltd. (TSXV: MVW) ("Mountainview" or the "Company") is pleased to announce a financing and a non-core asset sale and to provide an operational update.
Financing
Mountainview is pleased to announce that it has entered into a $75.0 million senior secured advancing line of credit facility (the "Facility") with a major energy capital provider (the "Lender") pursuant to which Cynergy Advisors, LLC acted as sole agent to Mountainview. Cynergy provides investment banking services to public and private energy related businesses. In connection with the Facility, Mountainview has assigned its recently acquired 12,579 net acres of oil and gas leaseholds located in Divide County, Montana prospective for the Bakken/Three Forks formations in what the Company calls its "12 Gage Project" to a wholly-owned subsidiary of Mountainview called "Mountain Divide, LLC" (the "Borrower").
The Facility includes an initial borrowing base of $19.0 million, which is to be used to fund the drilling of the Company's initial three wells in the 12 Gage Project. The Facility matures in 32 months and, bears interest initially at 8%. Monthly repayments are required based on 85% of net revenues from the 12 Gage Project. In connection with the Facility, the Lender and the Borrower will have an area of mutual interest ("AMI"), which will be in northern Divide County, North Dakota. In addition, pursuant to the Facility, upon the earlier of the initial funding or the spudding of the first well in the area by the Borrower, the Lender will be assigned a 39% after pay-out net profits interest (the "NPI") in all of Borrower's oil and gas properties within Divide County, Montana. The NPI is defined as all revenues received by Borrower, less all operating costs, production taxes, and capital costs incurred by the Borrower. Payments on the NPI shall commence upon repayment in full of the outstanding Facility. The NPI will automatically reduce to 20% once the Lender achieves a 1.65 x return on investment as stated in the definitive agreements. The Facility is secured by a first priority mortgage and security interest in the 12 Gage properties. The borrowing base under the Facility will be subject to re-determination within 45 days of the third well being turned into sales and thereafter semi-annually. The Borrower is required to maintain a current ratio of 1.0: 1.0.
Operational Update - Williston Basin
Since the closing of the acquisition of the 12 Gage Project, Mountainview has increased its acreage position to 12,800 net acres. This brings the Company's current acreage position in the Williston Basin to approximately 36,000 net acres. The Company has contracted with Nabors Rig 460 for a three-well drilling program in the 12-Gage Project targeting the Three Forks formation. The rig was moved to the Wigness 5-8-1H on November 4, 2012 with drilling operations to commence on November 8, 2012. Sanjel has been contracted to conduct cementing and fracturing services on this program. The Company projects well costs, including drilling, completion and tie-in to be $7-7.5 million (gross) per well. The company has identified 21 total initial drilling locations on its 12 Gage Project. Along with the Company's Stateline property, the Company currently has identified 46 initial operated drilling locations on its Williston Basin properties. The following table outlines the Company's first three proposed wells.
| Well Name | Location | Working Interest |
| Wigness 5-8-1H | Sec. 5 & 8, T162N-R101W, Divide County, ND | 93.75% |
| Olson 35-26-1H | Sec. 26 & 35, T163N-R101W, Divide County, ND | 52.23% |
| Leininger 3-10-1H | Sec. 3 & 10, T162N-R101W, Divide County, ND | 88.28% |
There are currently at least five operators developing the Middle Bakken and Three Forks formations near the 12 Gage Project: American Eagle Energy Corporation, SM Energy Company, Samson Resources, Crescent Point Energy Corp. and Baytex Energy Corp. Pursuant to their public announcements, these companies have expanded the development to the north, south and west of the 12 Gage Project. American Eagle, Samson and SM have all started infill drilling on several spacing units. American Eagle has moved forward with their drilling program. To date, American Eagle has drilled a total of 5 gross wells and has another 8 permitted. American Eagle has announced that it expects to add another rig to its program this year. American Eagle's acreage position is located directly North of the 12 Gage Project. The following table illustrates some recent drilling activity that has been made public by the relevant company or regulatory authorities:
| Company | Well | Status | Additional Information |
| SM Energy | Legaard 4-25H | Completed October 2011;
20-stage frac | Gross cumulative production: 111,317 bbls of oil and
98,928 Mcf of Gas; an average of 369 boe/d as of 8-2012 |
| SM Energy | August 4-26H | Confidential | Directly North of the planned Olson 35-26H well. Well spudded
on 8/17/12 |
| SM Energy | Leininger 3-10H | Confidential | Directly Northwest of the planned Olson 35-26H well. Well spudded
on 6/15/12 |
| SM Energy | Carter 9-8HW | Confidential | Directly North of two Mountainview DSUs. Well spudded on 5/17/12 |
| American Eagle | Christianson 15-12-163-101 | Complete | Initial 30 day average production rate of 479 boe/d(2) |
| American Eagle | Cody 15-11-163-101 | Complete | Initial 30 day average production rate of 438 boe/d(2) |
| American Eagle | Anton 3-4-163-101 | Complete | Initial 12 day average production rate of 427 boe/d(2) |
| Notes: |
| |
| (1) | Information in this table was obtained from public sources. Please see the cautionary statements at the end of this news release for some
important information. |
| (2) | The information provided did not provide a break-down of oil, gas and water amounts that make up these production numbers, nor was any
further information about the tests made available. Please see the cautionary statements at the end of this news release for some important
information. |
Non-Operational Update - Williston Basin
To date the Company has participated in 8 (gross) Bakken/Three Forks wells in the Williston Basin. The following table lists the wells and their current status which is the last available month's average daily production.
| | | | | | | | | |
| Operator | | | Well Name | Working Interest | | | | Well Status BOPD |
| G3 Operating | | | Olson 1-21-16H | 12.5% | | | | 66 |
| SM Energy | | | Wolter 13-23H | 3.25% | | | | 295 |
| Hess | | | Strahan 15-22H | .625% | | | | 115 |
| Petro-Hunt | | | Miller 157-101-12C-1-1H | .787% | | | | 121 |
| Samson | | | Zuma 15-22-35-58H | 9.75% | | | | 54 |
| Samson | | | Riva Ridge 6-7-33-56H | ~3.24% | | | | 153 |
| American Eagle | | | Anton 3-4-163-101 | 3.38% | | | | Confidential List |
| Zavanna | | | Panther 16-21-1H | 2.200533% | | | | 410 |
Non-core Asset Sale
Mountainview is also pleased to announce the sale of non-core oil and gas leases located in the Glacier and Toole County, Montana. The Company has sold a 100% undivided working interest in 4,373.82 net acres of fee and state leases to an arm's length third party for $1,000,000 cash while retaining an overriding royalty interest in the leasehold.
About Mountainview
Mountainview Energy Ltd. is a public oil and gas company listed on the TSX Venture Exchange, with a primary focus on the exploration, production and development of the Bakken and Three Forks Shale in the Williston Basin and the South Alberta Bakken.
About Cynergy Advisors, LLC.
Cynergy is a privately held investment banking firm providing investment banking services to public and private energy-focused and energy-related businesses. Our mission is to provide sound, ethical advice to our clients in order to achieve the most effective capital structure while bridging the gap between the technical aspects of the business with the financial markets.
CAUTIONARY STATEMENTS
Initial Production Levels
Any references in this news release to initial, early and/or test or production/performance rates and/or "flush" production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Additionally, such rates may also include recovered "load oil" fluids used in well completion stimulation. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company. The initial production rate may be estimated based on other third party estimates or limited data available at this time. The initial production is generally estimated using boes. In all cases in this press release initial production or test are not necessarily indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.
Barrels of Oil Equivalent
Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. 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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency ratio of ^ Mcf: 1 Bbl, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
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