Enhanced Oil Financial Update Shows Positive Cash on Hand
Enhanced Oil Resources Inc. (EOR) provides the following financing update to shareholders.
On Jan. 19, 2008, existing shareholders who purchased approximately 17 million units in a private placement that closed Jan. 19, 2007 have exercised their right to purchase approximately 9,980,000 additional shares in the company at a cost of U.S. $10,010,228. Following the closing of this financing EOR now has available cash, notes receivable and restricted cash of approximately U.S. $32 million.
As part of this financing certain management and insiders (related parties) of the company that took part in this earlier placement have elected to exercise purchase warrants totaling $2,150,000 and the company has agreed to loan the individuals funds required to purchase the warrants for a period of 18 months. The promissory notes will bear interest at a rate of 8% per annum. The shares purchased in these transactions will be held in escrow and will be overseen by an independent escrow committee. The escrow committee will have the right to sell the shares at any time following 12 months to pay off the loan, to the extent the notes have not been paid off earlier. The advances made pursuant to promissory notes to the related parties are exempt from Ontario Securities Commission Rule 61-501, since the aggregate amounts represent less than 25% of the company's market capitalization."The company is very pleased to see so many of our shareholders and management exercise these warrants and invest their confidence and commitment to the company's objectives," EOR Inc.'s President and CEO Barry Lasker reports. "Our company is now in an enviable position of having a robust amount of cash on hand that is more than enough over the next twelve months to allow for the orderly execution of our business plan of further development drilling at St. Johns, further oil field enhancement operations at the Chaveroo and Milnesand oil fields, as well as the strategic pursuit of additional oil field acquisitions where the potential for significant EOR reserves could remain."
Mr. Lasker also stated that, in January, the board had also approved the company's capital expenditure plans for 2008 of approximately $19.0 million (not including contingency allowances of up to another $10.0 million) related to the development of the St Johns gas field and the company's oil fields during the year.