Brookwater Ventures Inc. (TSX VENTURE: BW.H) ("Brookwater") is
pleased to announce that it has entered into a Letter of Intent
dated December 6, 2010 to acquire (the "Acquisition") all of the
outstanding share capital of Agua Grande Exploracao e Producao de
Petroleo Ltda, a private limited Brazilian company ("Agua Grande"),
through the issuance of an aggregate of 13,250,000 common shares of
Brookwater. Mr. Wagner Freire, the President of Agua Grande will
remain as President of the Brazilian subsidiary. Mr. Freire is a
former E&P Managing Director of Petrobras and President of
BRASPETRO, International Division of Petrobras, and a founder of
Starfish Oil & Gas S.A., recently acquired by Sonangol, to
become Sonangol Starfish Oil & Gas S.A. ("Sonangol Starfish").
Mr. Freire and the Agua Grande technical team will strive to expand
the Brazilian property portfolio through their wide reaching
network in the Brazilian industry.
Agua Grande is a party to a Farm-Out Agreement dated November
25, 2010 with Somoil Internacional de Petroleo Ltda. and Sonangol
Starfish, pursuant to which Agua Grande has the right, subject to
the approval of the Brazilian National Petroleum Agency ("ANP"), to
acquire an undivided 30% interest in certain oil & gas
exploration concessions (Block REC-T-166) located in the Reconcavo
Basin in Brazil (the "Concessions").
As one of the conditions to the completion of the Acquisition,
Brookwater intends to complete a non-brokered private placement
(the "Offering") in the aggregate amount of $1,500,000. Brookwater
will be offering 6,000,000 subscription receipts at a price of
$0.25 per subscription receipt, each convertible into one common
share of Brookwater upon completion of the Acquisition. The
Offering proceeds will be held in escrow until the Acquisition is
completed. If the Acquisition is not completed by April 30, 2011,
the Offering proceeds will be returned to subscribers. Pursuant to
the Letter of Intent, Agua Grande will also complete a debenture
financing in the principal amount of $3,500,000, which will be
convertible on closing of the Acquisition, at a deemed price of
$0.25 per share, into an additional 14,000,000 common shares of
Brookwater.
The concession for Block REC-T-166, which covers an area of 30
km2, was awarded to Sonangol Starfish by ANP in 2007 as part of the
bid-round process, and the relevant contract was signed on March
12, 2008. During the contract period (which expires on March 12,
2012), Sonangol Starfish is required to complete an exploration
program consisting basically of seismic surveys and commence the
drilling of an exploratory well.
Block REC-T-166 is well situated in the highly productive
Reconcavo Basin (see Figure 1 below) which has been producing oil
and gas since the late thirties and continues to produce 45,000 b/d
of oil and 66,000 boe/d of gas. The recent discovery of the Jandaia
field, containing 16 million barrels of 42 degrees API oil confirms
the discovery potential of the basin. Block REC-T-166 occurs
immediately west of the large Agua Grande field, which contained
675 million barrels of oil at discovery in 1952 and continues to
produce 3,000 b/d. Figure 2 below shows the location of the major
fields in the basin which are surrounding the REC-T-166 Block.
Sonangol Starfish reprocessed and reinterpreted the 2D seismic
data available and completed a 3D seismic survey in order to define
the potential of Block REC-T-166. Several prospects were
defined.
The Agua Grande E&P staff have independently completed a
detailed review and identified several additional prospects which
will be evaluated by the Joint Venture. Prospects and leads are
related to pre-rift system, rift-Candeias system, rift-Ilhas system
and fractured shales of Gomo Mb. of Candeias Fm. Sonangol Starfish
staff had previously defined the Macauba prospect, related to the
Agua Grande - Sergi pre-rift system and approved the drilling of
1-MAC-1-BA wildcat. Figure 3 illustrates the various producing
structures in the basin and Figure 4 is a seismic section of the
1-MAC-1-BA prospect.
To view Figures 1 - 4 accompanying this press release, please
click on the following link:
http://media3.marketwire.com/docs/bw1221.pdf
In addition to the Macauba prospect, Sonangol Starfish and Agua
Grande E&P have identified other prospects, in different
structural settings, that will be considered for drilling by the
Joint Venture.
In order to acquire its interest in the Concessions under the
Farm-Out Agreement, Agua Grande must (i) pay 50% of the costs and
expenses incurred in relation to the drilling, logging, testing and
completion or plugging and abandonment of one exploration well and
thereafter pay its share of costs incurred in connection therewith;
and (ii) in case of a commercial discovery, pay its share of the
total agreed costs and expenses incurred prior to the execution of
the Farm-Out Agreement.
Agua Grande has commissioned a NI 51-101 report on the
Concessions, which is expected to be completed and filed with the
TSX Venture Exchange (the "Exchange") for review in connection with
the proposed transaction. Further information on the Concessions
and future exploration programs will be announced once the NI
51-101 report has received regulatory approval and has been filed
on SEDAR.
The Acquisition will constitute a Change of Business under the
policies of the Exchange, and will result in the graduation of the
Company from NEX to the TSX Venture Exchange. Completion of the
Acquisition is subject to a number of conditions, including
Exchange acceptance and shareholder approval. The transaction
cannot close until the required shareholder approval is obtained.
There can be no assurance that the transaction will be completed as
proposed or at all.
Investors are cautioned that, except as disclosed in the
disclosure document to be prepared in connection with the
Acquisition, any information released or received with respect to
the transaction may not be accurate or complete and should not be
relied upon. Trading in the securities of Brookwater should be
considered highly speculative. Trading will remain halted pending
further regulatory filings with the Exchange.
The securities of Brookwater to be issued in the financing will
be subject to a four month hold period. The securities of
Brookwater to be issued on the Acquisition will be subject to a
four month hold period, in addition to the escrow requirements of
the Exchange. The parties to the proposed transaction are at arm's
length.
ON BEHALF OF THE BOARD OF DIRECTORS OF BROOKWATER VENTURES
INC.
Scott Ackerman, President & CEO
Information in this press release expressed in barrels of oil
equivalent (boes) is derived by converting natural gas to oil in
the ratio of six thousand cubic feet (mcf) of natural gas to one
barrel (bbl) of oil. Boe may be misleading, particularly if used in
isolation. A boe conversion ratio of 5.7 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.
This news release may contain forward-looking statements. These
statements are based on current expectations and assumptions that
are subject to risks and uncertainties. Actual results could differ
materially because of factors discussed in the management
discussion and analysis section of our interim and most recent
annual financial statement or other reports and filings with the
TSX Venture Exchange and applicable Canadian securities
regulations. We do not assume any obligation to update any
forward-looking statements.
The Exchange has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved the
contents of this press release. Neither 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 release.
Contacts: Brookwater Ventures Inc. Scott Ackerman (778) 331-8508
sackerman@emprisecapital.com
Brookwater Ventures Inc. (TSXV:BW.H)
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