Admiral Bay Resources Acquires Cherokee Basin Assets, Arranges Common Stock Offering and Updates Activity in the Appalachian Bas
04 May 2009 - 11:38PM
Marketwired
Admiral Bay Resources, Inc. (TSX VENTURE: ADB) announced today it
has acquired additional producing natural gas assets in the Kansas
Cherokee Basin from an undisclosed private seller for approximately
$2.0 million (US). Based on available data and Admiral Bay
analysis, the assets currently have gross sales of approximately
1.2 million cubic feet of gas per day (mmcf/d) and contain proved
reserves of approximately 8.3 billion cubic feet of natural gas.
Located in Wilson and Neosho counties, the Thayer (Neodesha) assets
are centrally located among existing Admiral Bay operations.
Admiral Bay paid approximately $0.25 per proved thousand cubic
feet (mcf) of natural gas reserves and approximately $1,900 per
daily producing mcf. In addition to existing production, Admiral
Bay believes there are opportunities to enhance existing production
through low-cost workovers and improvements to the gathering system
and field compression, providing an opportunity to return
production to 1.6-1.8 mmcf/d, levels realized prior to the
ownership of the assets which results from its foreclosure on the
field from the previous operator in 2008. The company has also
identified approximately 70 additional in-fill drilling locations.
Admiral Bay believes additional natural gas producing coals and
shales may be accessible from existing wellbores to enhance current
production with only modest expense.
This acquisition should immediately increase Admiral Bay's
current base production by approximately 35% and proved reserves by
nearly 20%, with additional production enhancement possible through
existing well remediation and new development drilling.
"This acquisition is transformational for Admiral Bay as it adds
meaningful scale to both production and reserves in the Cherokee
Basin," Steve Tedesco, President and Chief Executive Officer of
Admiral Bay noted. "Moreover, our ability to complete and fund this
acquisition with both new equity and debt demonstrates the
confidence our equity investors and lenders have in the future of
Admiral Bay."
Tedesco continued, "The Thayer properties provide strong current
production, a solid base of proved natural gas reserves and plenty
of running room for growth at a compelling price. We consider this
to be not only a reaffirmation of our commitment to the Cherokee
Basin but the beginning of a period of significant growth for the
company."
FIG Partners, LLC Energy Research and Capital Group served as
Admiral Bay's financial advisor in the transaction.
To fund the LV Neodesha transaction, Admiral Bay has commenced a
non-brokered private placement of units, to be sold to accredited
investors. The placement, to be priced at $0.064 (CDN) per unit,
will raise up to $2,000,000 (CDN). Each unit will consist of one
common share of Admiral Bay and one-half warrant which will entitle
the holder to purchase one additional common share at $0.09 (CDN)
per share for a term of twelve (12) months and one-half warrant
which will entitle the holder to purchase one additional common
share at $0.128 (CDN) per share for a term of twenty-four (24)
months. Further details of the offering can be found in the
official Subscription Agreement available to accredited investors
from the Company. The Company may pay a finder's fee on a portion
of this private placement. The private placement is subject to
conditional acceptance of the TSX Venture Exchange.
In addition, GasRock Capital LLC, will provide up to an
additional $1.8 million (US) of availability for the purchase and
further development of the acquired assets.
FIG Partners, LLC Energy Research and Capital Group served as
Admiral Bay's global administrative agent in the equity
offering.
In addition to the activity in the Cherokee Basin, Admiral Bay
also announced that it has taken a 50% working interest in up to
6,000 acres in Cambria County, Pennsylvania, providing exposure to
the emerging Marcellus Shale natural gas play. Along with its
partner in the Revloc Appalachia Coal Bed Methane project, Admiral
Bay's acreage appears to be in the fairway for Marcellus
prospectivity as other major public and private exploration
companies are leasing areas contiguous to the Admiral Bay
leasehold. To secure take-away capacity, Admiral Bay has
successfully negotiated pipeline right-of-way and a tap site is in
place. Pipeline construction could begin as early as late 2009.
"Our ability to use our Appalachia Coal Bed Methane development
as an opportunity to become a participant in Marcellus Shale
development is also transformational for Admiral Bay and indicative
of our opportunistic approach to value creation." Added Tedesco,
"As the Marcellus development evolves we will look to this asset to
provide a number of attractive value-enhancing options to the
company."
Admiral Bay Resources Inc. (www.admiralbay.com) is an emerging
unconventional gas production company focused on the development of
projects in the Cherokee Basin in southeast Kansas and the
Appalachian Basin in Pennsylvania. Admiral Bay is listed on the TSX
Venture Exchange under the symbol ADB.
GasRock Capital LLC is a mezzanine project debt and project
equity financier that invests in high quality E&P and midstream
companies in the Oil & Gas industry. GasRock provides capital
for development and acquisition opportunities, and their offices
are located in Houston, Texas.
Statements in this release that are not historical facts are
"forward-looking statements" within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Readers are cautioned
that any such statements are not guarantees of future performance
and that actual developments or results may vary materially from
those in these "forward-looking statements".
The TSX Venture Exchange does not accept responsibility for the
adequacy of this release.
Contacts: Admiral Bay Resources Inc. Steven Tedesco President
& C.E.O. (303) 350-1255 (303) 617-8956 (FAX) Email:
stedesco@admiralbay.com Admiral Bay Resources Inc. Robert Carington
CFO (303) 350-1255 (303) 708-1861 (FAX) Email:
rcarington@admiralbay.com Website: www.admiralbay.com
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