"We are in an area of a blanket oil deposit which, with technological improvements, horizontal drilling, and current oil prices, provides an attractive expansion opportunity," said Charles Kohlhaas, Chairman of TrueStar.
The agreement is for leases that cover an area of approximately 694,000 acres. TrueStar's net ownership will be approximately 515,000 acres.
"This is one of the largest acreage positions to be available for many years and gives TrueStar a strategic position in a well-known and prolific producing basin. This acquisition will transform TrueStar by giving us an early-mover position in an expansion area from known fields," said Charles Kohlhaas, Chairman.
Because of the large acreage and number of leases involved, TrueStar will complete its due diligence and purchases of leases in stages extending over a year's time. The first leases purchased will comprise approximately 97,000 net acres. The purchase price for this initial acreage will be paid with 22,000,000 common shares of TrueStar valued at Cdn$0.20 per share and US$2,000,000 in cash. The remaining acreage purchased will be paid for with cash at a price of US$60 per net acre. The TrueStar shares will be issued to the individual members of C&D and TrueStar will have no new insiders as a result of this transaction. The transaction is subject to the approval of the TSX Venture Exchange.
TrueStar is negotiating with several parties for bridge and long-term financing for this transaction as well as selling its Barnett Shale properties.
TrueStar will be able to begin field operations on leases as they are acquired.
The Williston Basin covers an extensive area of southern Saskatchewan, southwestern Manitoba, western North Dakota, eastern Montana, and northwestern South Dakota. The Basin is the site of several hundred fields in both Canada and the US. Large fields in the Area of Mutual Interest of the agreement between TrueStar and C&D are Cedar Creek, Cedar Hills, and Buffalo.
TrueStar Petroleum Corporation is an oil and gas exploration, development, and production company. TrueStar has interests in 33 producing gas wells in the Barnett Shale gas play in Texas and a 10% interest in a license for oil and gas development on 554,000 acres in Guatemala. Working interest partners in Texas include publicly listed Devon Energy, Carrizo Oil & Gas, and EnCana.
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