Sequoia Oil & Gas Trust
TSX: SQE.UN
Avery Resources Inc.
TSXV: ARY
CALGARY, Nov. 24 /CNW/ - Sequoia Oil & Gas Trust ("Sequoia") and Avery
Resources Inc. ("Avery") are pleased to announce the closing of Sequoia's
subscription for 16,800,000 Units of Avery (each Unit consisting of one share
and one-half warrant) (the "Subscription") at a subscription price of $0.25
per Unit, for total consideration of $4,200,000. Each whole warrant entitles
Sequoia to acquire one common share of Avery at a price of $0.50 per share for
a period of two years from closing. The Subscription results in Sequoia
holding an aggregate of 16,800,000 common shares of Avery, representing
approximately 44 percent basic (46 percent fully diluted) of the issued and
outstanding common shares of Avery.
The consideration paid by Sequoia consists of a combination of property
and cash. The property, located at Fox Creek in north-central Alberta and
valued at $3,023,000, is non-operated and contains four producing natural gas
wells (sweet gas), covers two sections (1,280 acres) of developed lands, and
will provide Avery with cash flows from approximately 80 barrels of oil
equivalent per day ("boe/d") of production. The balance of the subscription
price - $1,177,000 - was paid in cash.
Sequoia has also loaned to Avery a sum of $1,569,278, repayable on
completion of an equity financing by Avery, but no later than March 1, 2006.
Interest payable by Avery is at a rate of 7.5 percent per annum. The loan is
secured by a fixed-charge debenture, including security in favor of Sequoia
over the Fox Creek property.
Through this transaction, Sequoia has earned the right to appoint four of
Avery's seven Board members. Sequoia's nominees, appointed to Avery's Board of
Directors, are Messrs. Bradley Johnson, President and Chief Executive Officer
of Sequoia Oil & Gas Trust; James Howe, President of Bragg Creek Financial
Consultants Ltd., a private financial consulting corporation; Stephen Peacock,
Managing Director and Partner of Mustang Capital Partners Inc.; and Ian
Towers, President of Dolomite Energy Inc., a private oil and gas company. They
will join Messrs. David Little, Richard Edgar and John Carruthers on the
Board.
Coincident with the Subscription, Sequoia and Avery have entered into an
agreement pursuant to which they will co-operate and grant each other certain
rights of acquisition in regard to exploration and development activities in
Australia. Reciprocal rights of first refusal have been granted with respect
to each party's activities in Australia. For the foreseeable future, Sequoia
will continue to focus on exploitation and development of its properties in
the Western Canadian Sedimentary Basin, with Avery concentrating its business
activities on Australia.
The participation in Avery allows Sequoia to establish an early strategic
foothold in Australia, an area in which Avery has successfully established a
strong acreage position on multiple plays. The transaction with Sequoia now
allows Avery to benefit from greater financial flexibility in competing for
and funding exploration and development opportunities.
"We look forward to a mutually beneficial relationship with Avery whose
management team has already successfully initiated a high level of activity in
Australia," said Bradley Johnson, President and CEO of Sequoia. "As
developments unfold, Sequoia's unitholders will see great value-adds from our
participation in the Australian oil and gas business. We're very pleased to
have the Avery team as our scouts in Australia, while Sequoia's focus will
continue to center on our many exciting development opportunities in Western
Canada."
David Little, Chairman and Chief Executive Officer of Avery, commented:
"Having Sequoia's backing is wonderful news for Avery and its shareholders as
it will allow us to pursue what we believe are great opportunities in a highly
under-explored hydrocarbon-bearing area of the world."
Sequoia is a growth-oriented oil and natural gas trust with a high
quality, diversified asset base. Its mandate is to generate stable monthly
distributions and grow production and reserves per unit by focusing on
low-cost operations, active development of the Trust's resource base and
value-enhancing acquisitions of oil and natural gas properties.
Avery is an international junior oil and gas exploration company based in
Calgary, Alberta that trades on the TSX Venture Exchange under the symbol
"ARY". The company is committed to growing shareholder value through
international acquisitions and exploration. Avery's primary interest is in
expanding exploration projects in oil and gas basins located in countries that
provide significant exploration upside coupled with favorable fiscal and legal
systems.
When converting natural gas to equivalent barrels of oil, Sequoia uses
the widely recognized standard of 6 thousand cubic feet (Mcf) to one barrel of
oil equivalent (boe). However, boes may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 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.
Forward-Looking Statements - Certain information regarding Sequoia and
Avery set forth in this document, including management's assessment of
Sequoia's and Avery's future plans and operations, contains forward-looking
statements that involve substantial known and unknown risks and uncertainties.
These forward-looking statements are subject to numerous risks and
uncertainties, certain of which are beyond Sequoia's and Avery's control,
including the impact of general economic conditions, industry conditions,
volatility of commodity prices, currency fluctuations, imprecision of reserve
estimates, environmental risks, competition from other producers, the lack of
availability of qualified personnel or management, stock market volatility and
ability to access sufficient capital from internal and external sources.
Sequoia's and Avery'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 that Sequoia and Avery will derive therefrom.
THE TSX VENTURE EXCHANGE HAS NEITHER APPROVED NOR DISAPPROVED THE
CONTENTS OF THIS NEWS RELEASE.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
