Upper Lake Oil and Gas Ltd. and Monterey Exploration Ltd. combine to create northeast British Columbia gas focused junior exploration company

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[{"type":"text","content":"\n\n\n\nCALGARY, July 3 /CNW/ - Upper Lake Oil and Gas Ltd. (TSX: UP) ("Upper\nLake") and Monterey Exploration Ltd. ("Monterey"), a private oil and gas\ncompany, are pleased to announce that they have entered into an agreement (the\n"Arrangement Agreement") under which, subject to certain conditions, Monterey\nwill acquire all of the issued and outstanding shares (the "Upper Lake\nShares") of Upper Lake (the "Transaction").\n\n\nThe proposed Transaction is intended to create a northeast British\nColumbia ("NEBC") focused, natural gas weighted producer with resource style\nassets including interests in the emerging Montney resource play in NEBC. Upon\nclosing of the Transaction the combined company will have:\n\n\n- An experienced management team, which will comprise the current\n management of Monterey\n- Estimated production of approximately 2,400 boe/d, of which 80% is\n weighted to natural gas\n- 8.3 MMBoe of Proved plus Probable reserves as of December 31, 2007 as\n reviewed by GLJ Petroleum Consultants Ltd. ("GLJ")\n- Reserve Life Index in excess of 9.5 years\n- Undeveloped land base of 90,000 net acres almost entirely located in\n NEBC\n- Strategic, high working interest land position in the heart of the\n Montney resource play\n- Excellent asset overlap (majority of Upper Lake's producing assets\n are located in close proximity to Monterey's interest in the\n Ferrybank Belly River Gas Unit in Central Alberta and Upper Lake's\n undeveloped Montney land position at Tupper complements Monterey's\n existing activities in the Montney in NEBC)\n- Prospect inventory of approximately $150 million, which has the\n potential to provide several years of future drilling opportunities\n at Monterey's current pace of activity\n- Additional mass and free cash flow which can be applied to its\n drilling prospects\n\n\nUnder the terms of the Arrangement Agreement, shareholders of Upper Lake\n("Upper Lake Shareholders") will receive 0.28 of a common share of Monterey (a\n"Monterey Share") for each Upper Lake Share held. Monterey Shares may also be\nissued to certain optionholders of Upper Lake in accordance with the\nArrangement Agreement. Based on Monterey's year-end 2007 net asset value of\n$3.32 per share (calculated with response to Monterey's ind...

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