Jadela Signs Agreement to Assist in Development of Texas Assets
Calgary, Alberta CANADA, August 24, 2012 /FSC/ - Jadela Oil Corp. (JOC - TSX Venture), is pleased to announce that it has entered into a purchase sale and exploration agreement ("PSEA") with an international public oil and gas exploration and production company ("IEPC") to jointly develop, pursuant to the terms of a Joint Operating Agreement, Jadela's Eagle Ford shale mineral rights located in Maverick County, Texas. IEPC has agreed to acquire an undivided 57.5% interest in 20,985 gross acres (15,209 net acres) of leased mineral rights and optioned mineral rights ("Option Assets"), with a further right to increase its interest to an undivided 75% interest. IEPC will also acquire an undivided 15% interest in the 660 net acres and related assets ("660 Acre Assets") that was earned or acquired by Jadela upon drilling the El Indio #1H well. The salient details of the transaction are as follows:
* Jadela's wholly owned subsidiary, Jadela Oil (US) Operating LLC ("Jadela USA"), will sell a 35% co-ownership interest in the Option Assets for US$1,000,000 which amount will be placed in trust pending satisfaction of conditions. From the sale proceeds the sum of US$900,000 would be used to pay consideration to acquire certain options.
* Jadela USA has granted IEPC an option until October 15, 2012 to acquire an additional 17.5% co-ownership interest in the Option Assets for US$500,000.
* IEPC has entered into an agreement to purchase an undivided 22.5% co-ownership interest in the Option Assets plus a 15% co-ownership interest in the 660 Acre Assets from a company related to Jadela.
* After the transactions close, and if IEPC does not exercise its option to acquire an additional 17.5% interest in the Option Assets, Jadela USA will retain a 42.5% co-ownership interest in the Option Assets and a 65% co-ownership interest in the 660 Acre Assets.
* IEPC will be the operator of the Option Assets and Jadela USA will remain the operator of the 660 Acre Assets.
* Conditions to be removed by September 24, 2012
Jadela has sought out a partner to develop its Eagle Ford assets which has demonstrated that it has the geotechnical capabilities and capital to explore, discover and establish hydrocarbons reserves and production and which is of the view that the El Indio #1H well results are not indicative of the lands' true economic potential due to a geo-chemical accident that occurred during a coil tubing operation. As previously reported by Jadela, prior to being shut in for the coil tubing operation, the well was put on an initial production test for a total of 281 flowing hours (11.7 flowing days). The well produced at a rate of 496 boe per day from only 6 of 8 stages which were fracced (1,800 net feet of pay). The oil content was 175 boe per day (2,077 barrels) of high quality light oil with an API ranging between 40 and 45 degrees. The well also produced 319 boe per day (22.394 mmscf of gas) during that period. Jadela is of the view that the results achieved prior to the accident, confirm Jadela's seismic and geophysical interpretation. On Jadela's Eagle Ford lands, the Lower Eagle Ford formation is over 180 feet thick and the Upper Eagle Ford formation is over 300 feet thick. Jadela believes, based on seismic and the core results of the El Indio #1H well, that the Lower Eagle Ford is at a consistent depth, oil bearing and contiguous throughout the leased and optioned acreage. Typical development would likely result in downspacing to 4-8 horizontal wells (4,500 net feet of pay) per section (640 acres) resulting in 100-200 drilling locations.
About Jadela
Jadela is a junior oil and gas exploration company focused on and exploring and developing its Eagle Ford assets located in Maverick County, Texas. For further information, please contact:
Gregory J. Leia, President and CEO
Jadela Oil Corp.
Suite 1510 - 777 - 8th Street SW
Calgary Alberta T2P 3R5
Tel: (403) 265-7544
Fax: (403) 265 4138
E: gleia@jadelaoil.com
Website: www.jadelaoil.com
Reader Advisory
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, but is not limited to, statements with respect to Jadela's exploration activities on its Texas assets and the terms, timing and completion of the proposed transactions. Although we believe that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the transaction will close.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made and are founded on the basis of expectations and assumptions made by the Company. Such forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions, including fluctuations in the prices of oil and natural gas; governmental regulation of the oil and gas industry, including environmental regulation; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; failure to obtain industry partner and other third party consents and approvals, if and when required; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, skilled personnel and supplies; incorrect assessments of the value of acquisitions; geological, technical, drilling, processing and transportation problems; changes in tax laws and incentive programs relating to the oil and gas industry; failure to realize the anticipated benefits of acquisitions and dispositions; and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
Barrels of oil equivalent (boe) are calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl (barrel) 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 of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
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Source: Jadela Oil Corp. (TSXV: JOC)
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