BrazAlta Hopes to Purchase Canacol Energy

BrazAlta Resources Corp. announced that it has entered into an arm's length binding letter of intent for the acquisition of all of the issued and outstanding common shares and warrants of Canacol Energy Inc., a private Alberta company operating in South America, with agreements to purchase production and exploration assets in Colombia and on-shore Guyana. The Transaction will be satisfied by the issuance of 60,000,000 preferred shares of BrazAlta.

BrazAlta, concurrent with the Transaction, intends to spin out BCH Ltd., the Corporation's subsidiary oilfield service company, to the BrazAlta common shareholders of record on a record date to be established (the Reorganization) on the basis of one BCH share for every ten shares of BrazAlta held. The Preferred Shares issued to Canacol shareholders will be convertible into BrazAlta common shares following completion of the Reorganization. The holders of the Preferred Shares will NOT be entitled to receive any of the BCH shares pursuant to the Reorganization. In conjunction with the Reorganization, BrazAlta's management is considering a number of liquidity options for BCH including a corporate sale or listing of BCH as a publicly traded entity.

The combined company will represent a large regional presence in South America with an extensive portfolio of production, appraisal and exploration assets in the focus region. The attributes of combining BrazAlta and Canacol include:

  • Board and management team with extensive South American experience and expertise
  • Well balanced exploration portfolio with significant growth opportunities
  • Large regional onshore presence in South American countries that have stable political and fiscal environments
  • Excellent exploration upside with over 1,200 square kilometers of land and operatorship opportunities on-shore Brazil
  • 1.4 MMBOE 2P reserves (net) in Brazil as evaluated by DeGolyer and MacNaughton Canada Limited as at June 30, 2007 and current production of 200 BOPD in Brazil (net)
  • Executed a purchase agreement for a 700 net bbl/d operated asset (3,800bbl/d gross) acquisition in Colombia. The Transaction includes a revenue stream of $7.11 per BOPD, escalating through a series of steps to $17.56 per BOPD in 2012, of 2,300 BOPD associated Tariff Oil production that Canacol receives payments for on the balance of the production under operation.
  • Also included in the Transaction is a 51% operated interest in an exploration contract in the Middle Magdallena basin awarded by the ANH in 2007.
  • Farm-in for 10,000 sq km appraisal and exploration asset 65%W.I. (operatorship upon earning) on-shore Guyana with historical sub-salt fractured volcanic discovery that flowed 400 BOPD of 42(i) API light oil
  • Rig availability through BCH
  • Bidding as operator in upcoming Colombian and Brazilian bid rounds
  • As part of the Reorganization it is expected that BrazAlta will continue to have its listing on the TSX Venture Exchange under the name of Canacol Energy Inc.


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