CALGARY, Alberta and DENVER, July 18 /CNW/ -- Storm Cat
Energy Corporation (Amex: SCU; Toronto: SME) today announced that it has
signed a Definitive Purchase and Sale Agreement (PSA) with Bill Barrett
Corporation (NYSE: BBG) to acquire approximately 25,200 gross acres (17,000
net acres) in the Powder River Basin coalbed methane (CBM) play in Campbell
County, Wyoming for approximately US$30.65 million. The properties are
located in and around Storm Cat's core Powder River operating area allowing
the Company to further capitalize on economies of scale and operating
efficiencies. The acreage is approximately 81% undeveloped, over 90% of which
is located on U.S. federal lands.
With this transaction, Storm Cat is acquiring approximately 10.2 billion
cubic feet (Bcf) of proved reserves, 9.6 Bcf of probable reserves and 7.8 Bcf
of possible reserves. Storm Cat's reserve quantity estimations were evaluated
by Netherland Sewell & Associates (NSAI), a Dallas-based, independent
reservoir engineering firm. Production from the acquired properties is
approximately 6.6 million cubic feet per day (MMcf/d), (approximately
3.0 MMcf/d net), of natural gas from 64 producing CBM wells, 46 of which will
be operated by Storm Cat.
Pro forma for the acquisition, Storm Cat will have approximately 19.8 Bcf
of proved reserves, 13.8 Bcf of probable reserves and 7.9 Bcf of possible
reserves as audited by NSAI. Gross production will be approximately
11.6 MMcf/d (approximately 6.2 MMcf/d net), and acreage will be 39,235 gross
(29,250 net) in the Powder River Basin.
J. Scott Zimmerman, President and Chief Executive officer said: "These
producing Powder River Basin properties that we are acquiring are located in
our core Northeast Spotted Horse operating area and will be immediately
accretive to reserves, production and cash flow. Given the close proximity to
our current Powder River CBM operations, we view this as a strategic fit to
our asset base and an excellent way to provide future reserves and production
growth in the area. Additionally, these properties can be developed using the
multi-seam completion technique that provides for increased recovery and
reduced finding and development costs, ultimately maximizing the value of the
asset. Acquisitions are a key component of our growth strategy. We will
continue to look for acquisitions that can expand core areas allowing us to
leverage economies of scale and to capitalize on the depth of our CBM
technical expertise."
The initial purchase price of US$30.65 million, net of closing
adjustments, is to be paid in cash. The adjustments will be determined by the
terms of the PSA. Storm Cat will have 30 days to perform due diligence and
will have 10 days to close the transaction after that time. The transaction
is expected to close on or before August 29, 2006; however, the Company makes
no assurances that it will successfully close the transaction. Storm Cat
intends to finance the transaction with some combination of cash, bank and
other debt. The PSA is subject to standard closing conditions. Upon closing,
the effective date of the transaction will be July 1, 2006.
About Storm Cat Energy
Storm Cat Energy is an independent oil and gas company focused on the
pursuit, exploration and development of large unconventional gas reserves from
fractured shales, coal beds and tight sand formations. The Company has
producing properties in Wyoming's Powder River Basin, exploitation and
development acreage in Canada and Alaska, and high-risk, high-reward
exploration acreage in Mongolia. The Company's shares trade on the American
Stock Exchange under the symbol "SCU" and in Canada on the Toronto Stock
Exchange under the symbol "SME."
By Order of the Board of Directors
Storm Cat Energy Corporation
J. Scott Zimmerman
President and Chief Executive Officer
/s/ J. Scott Zimmerman
Forward-looking Statements
This press release contains certain "forward-looking statements", as
defined in the United States Private Securities Litigation Reform Act of 1995
relating to matters such as the Company's drilling and other exploration plans
and projected well economics. Forward-looking statements are statements that
are not historical facts; they are generally, but not always, identified by
the words "expects," "plans," "anticipates," "believes," "intends,"
"estimates," "projects," "aims," "potential," "goal," "objective,"
"prospective," and similar expressions, or that events or conditions "will,"
"would," "may," "can," "could" or "should" occur. Forward-looking statements
are based on the beliefs, estimates and opinions of Storm Cat's management on
the date the statements are made; including production and reserve estimates,
and potential benefits to Storm Cat of such acquisitions, and they involve a
number of risks and uncertainties. Consequently, there can be no assurances
that such statements will prove to be accurate and actual results and future
events could differ materially from those anticipated in such statements.
Storm Cat undertakes no obligation to update these forward-looking statements
if management's beliefs, estimates or opinions, or other factors, should
change. Factors that could cause future results to differ materially from
those anticipated in these forward-looking statements include, but are not
limited to receipt of necessary approval from regulatory bodies, the failure
to achieve the anticipated benefits of the acquisition, the failure to close
the acquisition, the volatility of natural gas prices, the possibility that
exploration efforts will not yield economically recoverable quantities of gas,
accidents and other risks associated with gas exploration and development
operations, the risk that the Company will encounter unanticipated geological
factors, the Company's need for and ability to obtain additional financing,
the possibility that the Company may not be able to secure permitting and
other governmental clearances necessary to carry out the Company's exploration
and development plans, and the other risk factors discussed in greater detail
in the Company's various filings on SEDAR (www.sedar.com) with Canadian
securities regulators and its filings with the U.S. Securities and Exchange
Commission, including the Company's Form 20-F for the fiscal year ended
December 31, 2005.
NO STOCK EXCHANGE HAS REVIEWED OR ACCEPTS RESPONSIBILITY
FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.
