Trading in Grove common shares has been halted pending de-listing, and Stratic intends to apply to have Grove cease to be a reporting issuer in all jurisdictions of Canada. Stratic has issued a total of 85,445,344 voting common shares to shareholders of Grove in connection with the acquisition.
Concurrent with closing of the acquisition, the 23,018,520 subscription receipts issued by Stratic on March 6, 2007 at a price of $1.35 each were converted into 23,018,520 common shares of Stratic and the proceeds from this issuance were released from escrow. The proceeds of subscription receipt and common share financing of $56,075,004 will be used to fund the continued exploration and development of the company's oil and natural gas properties and for acquisitions and general working capital purposes.
In accordance with applicable securities legislation and stock exchange policies, the common shares issued upon conversion of the Subscription Receipts are subject to a four-month hold period that expires on July 7, 2007. The underwriting syndicate was led by GMP Securities L.P. and included Tristone Capital Inc., Dundee Securities Corporation, Westwind Partners Inc. and Toll Cross Securities Inc. The commission paid to the underwriting syndicate was 6% of the gross proceeds.
Following completion of its acquisition of Grove Energy, Stratic's business is now grouped into three geographical areas that are considered key to the company's future growth:
The North Sea
Stratic holds interests in six discoveries: Bowmore, Breagh, Cairngorm, Crawford and West Don in the UK sector, and Horizon West in the Dutch sector. An active appraisal/development program is planned on these discoveries over the next two years, with the most advanced discovery, West Don, expected to receive its development sanction during 2007.
Stratic's key asset in Italy is the Longanessi/Abbadesse gas discovery located in the Po Valley in the north of the country. This important discovery, which is located partly in Grove's San Marco permit, is currently the subject of unitization negotiations with ENI to determine equity ownership of the field. These negotiations must be completed before a development plan for the field can be submitted to the relevant licensing authorities and development work commence. Stratic also has rights, through a farm-in agreement, to the two blocks to the north and south of the San Marco permit. We expect to conduct an exploratory drilling campaign late in 2007 and into 2008, potentially over all three blocks, to determine whether further gas bearing structures similar in nature to the existing discovery exist.
Stratic's 12.25% interest in eight contiguous blocks in the Black Sea remains important to the company's future. Production from the first phase of discoveries (Ayazli, East Ayazli and Akkaya) will contribute to cash flow in 2007 and we hope to be able to bring on stream two further discoveries, Bayhanli and Alapli, by the end of the year. Development planning work on the second phase of discoveries (Akcakoca, Akcakoca East and Guluc) is underway to determine the optimum development scheme and forward schedule. We hope to be able to test further exploration prospectivity in the areas to the east and west of the current discoveries during the course of 2007.
Stratic also owns interests in acreage in Morocco, Romania, Slovenia, Syria and Tunisia. In the most important of these areas, Syria, we are conducting an extensive 2D seismic survey over a large onshore block some 150 kms east of Damascus. This block, which is located near to a number of significant gas discoveries, is considered to be highly prospective and is likely to be the subject of a drilling campaign in 2008.
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