NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES
Latigo Capital Corporation ("Latigo") (TSX VENTURE:LTG.P), Warnic 1 Enterprises
Ltd. ("Warnic") (TSX VENTURE:WNCP), Valentine Ventures Corp. ("Valentine") (TSX
VENTURE:VVN), Blackwater Capital Corp. ("Blackwater") (TSX VENTURE:BCC.P), all
capital pool companies ("CPCs") and Cumberland Oil & Gas Ltd. ("Cumberland"), a
privately held oil and gas company, are pleased to announce that in connection
with their previous news release dated December 18, 2009, they have mailed a
joint information circular and proxy statement ("Information Circular") to their
respective shareholders with respect to the previously announced amalgamation of
each of Latigo, Warnic, Valentine, Blackwater and Cumberland (the
"Amalgamation") to form a new company to be called Cumberland Oil & Gas Ltd.
("Amalco"). The meetings of each of the Latigo shareholders, the Warnic
shareholders, the Valentine shareholders (the "Valentine Meeting"), the
Blackwater shareholders and the Cumberland shareholders will be held on February
26, 2010. The Amalgamation is intended to constitute the qualifying transaction
(the "Qualifying Transaction") for each of the CPCs.
Additionally, Valentine announces that it has cancelled an aggregate of 675,000
common shares, representing one half of the common shares issued to the
"founders" of Valentine, which shares were cancelled pursuant to the policies of
the TSX Venture Exchange ("TSXV") as a result of Valentine's failure to complete
a qualifying transaction within the time period required by the TSXV. At the
Valentine Meeting, shareholders of Valentine will be asked to ratify such
cancellation (the "Share Cancellation Resolution"), failing which an additional
675,000 common shares of Valentine will be cancelled, representing the remaining
shares held by "founders" of Valentine.
In connection with the Share Cancellation Resolution, each of Latigo, Warnic,
Blackwater, Valentine and Cumberland have agreed to amend and restate the
amalgamation agreement (the "Amalgamation Agreement") dated effective December
18, 2009 to take into account a contingent exchange ratio for shareholders of
Valentine in the event that an additional 675,000 common shares of Valentine are
cancelled. Pursuant to the Amalgamation Agreement, in the event an additional
675,000 common shares of Valentine are cancelled, every one common share of
Valentine will be exchanged for 0.4057 of a common share of Amalco (0.3474 of a
common share of Amalco in the event no additional Valentine common shares are
cancelled).
Selected Financial Information for Cumberland
The following table sets forth selected audited historical financial information
for Cumberland for the year ended December 31, 2008 and the nine (9) months
ended September 30, 2009 as well as certain unaudited historical financial
information of Cumberland for the three (3) month period ended September 30,
2009 and the year ended December 31, 2007 and selected balance sheet data as at
such periods. Such information is derived from the financial statements of
Cumberland and should be read in conjunction with such financial statements
contained in the Information Circular.
Unaudited Audited Unaudited
------------------------------------------------------------
Three Month
Period Ended Nine Months Year Ended Year Ended
September 30, Ended September December 31, December 31,
2009 30, 2009 2008 2007
------------------------------------------------------------
Revenue, net of
royalties 82,226 286,950 211,454 -
Operating
Expense 75,103 180,725 57,821 -
Net Income
(Loss) (318,717) (786,330) (555,001) -
Total Assets 5,349,450 5,349,450 6,371,558 1
Total
Liabilities 389,857 389,857 375,369 -
Cash Dividends
Declared - - - -
Total
Shareholders
Equity 4,959,593 4,959,593 5,996,189 1
Reserves Information
The engineering report prepared for Cumberland by its independent engineers,
McDaniel & Associates Consultants Ltd. ("McDaniel"), dated November 30, 2009,
entitled, "Mechanical Update Evaluation of Natural Gas Reserves Based on
Forecast Prices and Costs As of October 1, 2009" (the "McDaniel Report")
presents an appraisal of the extent and value of the proved, probable and
possible natural gas reserves of Cumberland's properties located in the Province
of Alberta. The appraisal was prepared using reserves definitions consistent
with those of National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities ("NI 51-101"). The McDaniel Report was prepared based on the
detailed engineering report entitled "Evaluation of Natural Gas Revenues Based
on Forecast Prices and Costs as of December 31, 2008" dated March 17, 2009 (the
"March Report"). The tables below set out selected reserves information for
Cumberland derived from the McDaniel Report. It should not be assumed that the
estimates of future net revenues presented in the tables below represent the
fair market value of the reserves.
Reserves Data as of October 1, 2009 (Forecast Prices and Costs)
Natural Gas
--------------------------
Gross (MMcf) Net(MMcf)
--------------------------
Proved
Developed Producing 484.7 425.6
Developed Non-Producing 160.1 137.5
Undeveloped 0.0 0.0
--------------------------
Total Proved 644.7 563.1
Probable 242.9 210.9
--------------------------
Total Proved plus Probable 887.6 774.0
Possible 0.0 0.0
--------------------------
Total Proved plus Probable plus Possible 887.6 774.0
--------------------------
--------------------------
Total Future Net Revenue (Undiscounted) as of October 1, 2009
(Forecast Prices and Costs)
Well
Abandonment
Operating Development and Other
Revenue Royalties Costs Costs Costs
-------------------------------------------------------
(Thousands of Dollars)
Total Proved
Total Proved plus
Probable 4,709 542 1,797 0 270
Total Proved plus
Probable plus
Possible 6,823 797 2,521 0 285
Future Net Future Net
Revenue Revenue
Before After
Income Income Income
Taxes Taxes Taxes
---------------------------------
(Thousands of Dollars)
Total Proved
Total Proved plus
Probable 2,099 0 2,099
Total Proved plus
Probable plus
Possible 3,221 0 3,221
Net Present Values of Future Net Revenue as of October 1, 2009
(Forecast Prices and Costs)
Before Future Income Tax Expenses and
Discounted at:
---------------------------------------
0% 5% 10% 15% 20%
------- ------- ------- ------- -------
(M$) (M$) (M$) (M$) (M$)
Proved
Developed Producing 1,456.4 1,262.7 1,106.3 981.2 880.7
Developed Non-Producing 642.8 538.5 459.9 400.2 353.9
Undeveloped 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- -------
Total Proved 2,099.2 1,801.3 1,566.2 1,381.4 1,234.6
Probable 1,121.3 769.1 559.7 429.2 343.4
------- ------- ------- ------- -------
Total Proved plus Probable 3,220.5 2,570.3 2,125.9 1,810.6 1,578.1
Possible 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- -------
Total Proved plus Probable plus
Possible 3,220.5 2,570.3 2,125.9 1,810.6 1,578.1
------- ------- ------- ------- -------
------- ------- ------- ------- -------
After Future Income Tax Expenses and
Discounted at:
---------------------------------------
0% 5% 10% 15% 20%
------- ------- ------- ------- -------
(M$) (M$) (M$) (M$) (M$)
Proved
Developed Producing 1,456.4 1,262.7 1,106.3 981.2 880.7
Developed Non-Producing 642.8 538.5 459.9 400.2 353.9
Undeveloped 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- -------
Total Proved 2,099.2 1,801.3 1,566.2 1,381.4 1,234.6
Probable 1,121.3 769.1 559.7 429.2 343.4
------- ------- ------- ------- -------
Total Proved plus Probable 3,220.5 2,570.3 2,125.9 1,810.6 1,578.1
Possible 0.0 0.0 0.0 0.0 0.0
------- ------- ------- ------- -------
Total Proved plus Probable plus
Possible 3,220.5 2,570.3 2,125.9 1,810.6 1,578.0
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Unit Value Before Income Taxes
and Discounted at 10% year
------------------------------
($/Mcf)
Proved
Developed Producing 2.60
Developed Non-Producing 3.35
Undeveloped -
------------------------------
Total Proved 2.78
Probable 2.65
------------------------------
Total Proved plus Probable 2.75
Possible -
------------------------------
Total Proved plus Probable plus Possible 2.75
------------------------------
------------------------------
Summary of Pricing and Inflation Rate Assumptions as at October 1, 2009
(Forecast Prices and Costs)
Edmonton
Liquids
Oil Natural Gas Prices
-----------------------------------------------------------------
Edmonton Par Hardisty Alberta AECO
WTI Cushing Price 40 Heavy 12 Gas
Oklahoma degrees degrees API Price(Cdn$/ Propane
Year (US$/Bbl) API(Cdn$/Bbl) (Cdn$/Bbl) Mmbtu) (Cdn$/Bbl)
----------------------------------------------------------------------------
2009
3 month
Forecast 70.00 75.10 65.20 5.20 41.20
2010 74.00 79.40 69.00 6.15 45.10
2011 80.60 83.80 70.20 6.70 48.10
2012 87.50 91.00 72.60 7.30 52.30
2013 94.70 96.50 77.00 7.85 55.80
2014 99.40 98.30 78.40 8.20 57.30
2015 101.40 100.30 80.00 8.45 58.50
2016 103.40 102.30 81.60 8.60 59.70
2017 105.40 104.20 83.10 8.80 60.90
2018 107.60 106.40 84.90 9.00 62.20
2019 109.70 108.50 86.50 9.10 63.30
2020+ 111.90 110.70 88.30 9.35 64.70
Thereafter Escalate oil, gas and product prices at 2.0% per year
Edmonton Liquids Prices
--------------------------
Pentanes
Butane Plus(Cdn$/Bbl) Inflation Exchange Rate
Year (Cdn$/Bbl) Rate %/Year (Cdn$/US$)
---------------------------------------------------------------
2009
3 month
Forecast 55.00 77.10 2.0 0.920
2010 58.20 81.40 2.0 0.920
2011 61.40 85.90 2.0 0.950
2012 66.70 93.10 2.0 0.950
2013 70.70 98.70 2.0 0.970
2014 72.00 100.50 2.0 1.000
2015 73.50 102.60 2.0 1.000
2016 74.90 104.60 2.0 1.000
2017 76.30 106.50 2.0 1.000
2018 77.90 108.80 2.0 1.000
2019 79.50 110.90 2.0 1.000
2020+ 81.10 113.20 2.0 1.000
Thereafter Escalate oil, gas and product prices at 2.0% per year
Application for Exemption from Sponsorship Requirements
The CPCs have jointly requested that the TSXV waive the requirement for a
Sponsorship Report in connection with the Qualifying Transaction. There are no
guarantees that the TSXV will accept such a request to waive the Sponsorship
Report requirement, in which case the CPCs will engage a Sponsor to prepare such
a report.
Trading Halt of Shares of CPCs
Trading of the shares of the CPCs has been halted and will not resume until the
TSXV has accepted all requisite documentation in connection with the proposed
Qualifying Transaction. It is currently anticipated that trading in the shares
of Latigo, Warnic and Blackwater will resume trading shortly after the TSXV has
decided to grant the CPCs an exemption from the requirement for a Sponsorship
Report or a Sponsor has been engaged. The Information Circular has been filed
and is accessible on the SEDAR profiles for each of the CPCs at www.sedar.com.
It is currently anticipated that trading in the shares of Valentine will remain
suspended due to its failure to complete a Qualifying Transaction within the
requisite time required by the TSXV.
Subject to all necessary regulatory approvals, including approval of the TSXV,
upon completion of the Amalgamation, it is anticipated that the Amalco Shares
will be listed and posted for trading on the TSXV.
Completion of the Amalgamation is subject to a number of conditions, including
TSX Venture Exchange acceptance and shareholder approvals (including on a
disinterested basis to the extent required). The Amalgamation cannot close until
the required shareholder approvals are obtained. There can be no assurance that
the Amalgamation will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the Information Circular
prepared in connection with the Amalgamation, any information released or
received with respect to the Amalgamation may not be accurate or complete and
should not be relied upon. Trading in the securities of a capital pool company
should be considered highly speculative.
Certain statements contained in this joint news release constitute
forward-looking statements, including, without limitation, completion of the
Amalgamation and receipt of all required approvals thereto and the timing
thereof, holding of shareholder meetings and the potential outcomes thereof.
Information regarding reserves and future net revenue are forward looking
information as they involve on assessment, based on certain estimates and
assumptions, that the reserves described can be profitably produced in the
future. By their nature, forward-looking statements are subject to numerous
risks and uncertainties, some of which are beyond the party's control including
the impact of general economic conditions, industry conditions, volatility of
commodity prices, currency fluctuations, environmental risks, competition from
other industry participants, the lack of availability of qualified personnel or
management, stock market volatility and ability to access sufficient capital
from internal and external sources, inability to meet or continue to meet
listing requirements, the inability to obtain required consents, permits or
approvals, including, without limitation, shareholder of the Amalgamation,
failure to realize the anticipated benefits of the Amalgamation and the risk
that actual results will vary from the results forecasted and such variations
may be material. Readers are cautioned that the assumptions used in the
preparation of such information, although considered reasonable at the time of
preparation may prove to be imprecise and, as such, undue reliance should not be
placed on forward-looking statements. Amalco's actual results, performance or
achievement could differ materially from those expressed in or implied by, these
forward-looking statements and, accordingly, no assurance can be given that any
of the events anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits Amalco will derive therefrom.
There is no assurance that the necessary approvals for completion of the
Amalgamation will be obtained or that some other condition to the closing of the
Amalgamation will not be satisfied. Even if such conditions are satisfied, there
is risk that closing of the Amalgamation could be delayed and may not meet the
timelines anticipated.
The forward-looking statements contained in this joint news release are made as
of the date of this joint news release. Except as required by law, each of the
companies disclaim any intention and assume no obligation to update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by applicable securities laws.
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