SANTA BARBARA, CA,
May 31, 2012 /PRNewswire/ -
Underground Energy Corp. ("Underground", "UGE" or the "Company")
(TSXV: UGE) (OTCQX: UGGYF) announced today that it has signed
purchase and sale agreements for the acquisition of certain
minority interests in petroleum leases at its Zaca Field Extension
Project as well as at its Burrel,
Buttonwillow and Devil's Den
properties. In addition, through this acquisition, the Company will
also acquire minority interests in small additional prospects in
the San Joaquin Basin,
California.
On November 23,
2011, through its wholly-owned subsidiary, Underground
Energy, Inc., the Company acquired the majority working interests
in petroleum leases at a number of properties in the Santa Maria and San Joaquin Basins for total
consideration of US$5.5 million
($4.6 million in cash and
$0.9 million in assumed liabilities).
The vendors of the interests now being acquired by Underground are
minority working interest holders in certain of the petroleum
leases acquired by the Company on November
23, 2011.
As a result of this acquisition, Underground
will increase its working interest at the Zaca Field Extension
Project from 80% to 96.7%, its working interest at Buttonwillow from 80% to 93.3%, its working
interest at Burrel from 80% to
88.167%, and its working interest at Devil's Den from 92.9% to
98.2%. In addition, the Company's overall acreage in California will increase from 39,481 net acres
to 42,020 net acres and, in particular, the Company's acreage at
the Zaca Field Extension Project will increase to 11,811 net
acres
Under the terms of the purchase and sale
agreements, the aggregate total purchase price is approximately
US$1.3 million and the Company has
the ability to satisfy the consideration in cash or through the
issuance of shares and share purchase warrants of
Underground. In either case, the Company will also issue a
total of 750,000 share purchase warrants to certain of the
vendors. Under the purchase and sale agreements, Underground
has until July 15, 2012 to settle the
consideration and close the transaction. Accordingly,
closing, which is subject to customary terms and conditions,
including approval of the TSX Venture Exchange, is anticipated to
take place on or before July 15,
2012.
"We continue to consolidate our holdings in
petroleum leases at our core assets in the Santa Maria and San
Joaquin basins with a focus on acreage prospective for the
Monterey shale, in particular at
the Zaca Field Extension Project," said Michael Kobler, President and CEO of
Underground. "We have already seen positive initial indications
from our drilling program at the Zaca Field Extension and believe
that the acquisition of these minority interests will be accretive
for the Company as we continue to roll out our business plan and
bring previously underutilized exploration and production
techniques to our core assets."
About Underground Energy Corporation
Underground is focused on identifying, acquiring
rights to, exploring for, developing and producing oil from shale
formations in North America using
the latest exploration and recovery techniques and technologies.
Underground focuses on identifying and acquiring sizable land
positions and prospects in historically prolific but under-explored
shale formations as well as in emerging shale plays that, in both
instances, hold large volumes of prospective resources. Underground
currently holds mineral rights on approximately 70,000 net acres of
prospective lands in California
and Nevada with an initial focus
on the Monterey shale in
California. Underground is listed
on the TSX Venture Exchange under the ticker symbol "UGE" and
quoted on the OTCQX trading platform under the ticker symbol
"UGGYF". For more information on Underground, including a copy of
the Company's latest corporate presentation, please visit
www.ugenergy.com. Underground's regulatory filings are available
under the Company's profile at www.sedar.com.
Cautionary Statements
Statements in this press release contain
forward-looking information and forward-looking statements within
the meaning of applicable securities laws (collectively,
"forward-looking information"). Forward-looking information
is frequently characterized by words such as "plan", "expect",
"project", "intend", "believe", "anticipate", "estimate" and other
similar words, or statements that certain events or conditions
"may" or "will" occur. In particular, forward-looking
information in this press release includes, without limitation,
statements with respect to: (i) the Company's anticipated increase
in working interest at its core asset areas as a result of the
acquisitions and the addition of incremental production; and (ii)
the anticipated closing date of the acquisitions.
Although we believe that the expectations
and assumptions reflected in the forward-looking information are
reasonable, there can be no assurance that such expectations or
assumptions will prove to be correct. In particular, assumptions
have been made that: (i) that the acquisitions will close in
accordance with the terms and conditions of the purchase and sale
agreements; (ii) the conditions to closing the acquisitions will be
fulfilled and the regulatory approvals required to close the
acquisitions will be obtained prior to July
15, 2012; and (iii) the current tax and regulatory regime
will remain substantially unchanged. Certain or all of the forgoing
assumptions may prove to be untrue.
Forward-looking information is based on
the opinions and estimates of management at the date the statements
are made, and are subject to a variety of risks and uncertainties
and other factors (many of which are beyond the control of
Underground) that could cause actual events or results to differ
materially from those anticipated in the forward-looking
information. Some of the risks and other factors could cause
results to differ materially from those expressed in the
forward-looking information include, but are not limited to:
general economic conditions in Canada, the United
States and globally, the risks associated with the oil and
gas industry, commodity prices and exchange rate changes.
Industry related risks could include, but are not limited to:
operational risks in exploration, development and production;
delays or changes in plans; competition for and/or inability to
retain drilling rigs and other services; competition for, among
other things, capital, acquisitions of reserves, undeveloped lands,
skilled personnel and supplies; risks associated to the uncertainty
of reserve and resource estimates; governmental regulation of the
oil and gas industry, including environmental regulation;
geological, technical, drilling and processing problems and
other difficulties in producing reserves; the uncertainty of
estimates and projections of production, costs and expenses;
unanticipated operating events or performance which can reduce
production or cause production to be shut in or delayed; incorrect
assessments of the value of acquisitions; the need to obtain
required approvals from regulatory authorities; stock market
volatility; volatility in market prices for oil and natural
gas; liabilities inherent in oil and natural gas operations; access
to capital; and other risks as detailed in the Company's annual
information form dated April 25, 2012
and available on the Company's SEDAR profile at
www.sedar.com. Readers are cautioned that this list of risk
factors should not be construed as exhaustive.
The forward-looking information contained
in this news release is expressly qualified by this cautionary
statement. Underground does not undertake any obligation to
update or revise any forward-looking statements to conform such
information to actual results or to changes in our expectations
except as otherwise required by applicable securities
legislation. Readers are cautioned not to place undue
reliance on forward-looking information.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Underground Energy Corporation