RPT Resources Ltd. ("RPT") (TSX VENTURE: RPT) is pleased to
announce that, following a period of negotiations, it has entered
into a letter of intent dated as of November 19, 2010 which
contemplates an arm's length business combination (the
"Transaction") with ArPetrol Inc. ("ArPetrol"). Michelle Gahagan,
President of RPT, stated that, "The board of directors of RPT has
been working for some time to bring this transaction to the letter
of intent stage and is excited to announce the opportunity. The
qualifications of the board of directors and management of ArPetrol
are outstanding and we look forward to bringing the ArPetrol
business plan to fruition."
About ArPetrol
ArPetrol is an Alberta private company, based in Calgary, and
engaged in oil and gas exploration and production in Argentina. It
owns and operates 100% of the Faro Virgenes concession in the
Province of Santa Cruz which currently produces natural gas at a
rate of approximately 2.1 million cubic feet per day with
associated condensate production of approximately 10 barrels per
day. As of December 31, 2009, the concession had proved plus
probable reserves (on a gross basis) of approximately 7.5 million
barrels of oil equivalent (boe) of natural gas and condensate. See
"Oil and Gas Information" below.
About the Combined Entity
Upon completion of the Transaction, the combined entity is
expected to be classified as an Oil & Gas Issuer under the
policies of the TSX Venture Exchange and would focus on expanding
ArPetrol's core operations in Argentina and elsewhere in South
America. The combined entity is expected to have cash in excess of
$25 million, including proceeds from a subscription receipt
financing planned in connection with the Transaction, the terms of
which are being negotiated and finalized by RPT and ArPetrol.
Further information regarding the combined entity will be
disseminated in a subsequent news release as soon as further
details are available regarding the definitive terms of the
Transaction.
Conditions Precedent
The Transaction is subject to a number of conditions precedent
including, without limitation, completion of satisfactory due
diligence, receipt of all required corporate and regulatory
approvals (including the approval of the TSX Venture Exchange), and
negotiation and execution of transaction and financing
documents.
Proposed Directors and Officers
The combined entity would have a new management team led by Tim
Thomas as President and Chief Executive Officer and Troy Wagner as
Vice President, Argentina and a new board of directors comprised of
Claudio Ghersinich (Chairman), Abby Badwi, Jeff Boyce, Michelle
Gahagan, Tim Thomas and Ronald Williams.
Timothy J. Thomas, P.Eng. Mr. Thomas is a professional engineer with more
President & CEO, Director than 32 years of oil and gas experience. Most
recently, Tim was Senior Vice President Canadian
Oil and Gas and an officer at Nexen Inc. (TSX,
NYSE), a successful oil & gas company with assets
in Canada, US, UK, Yemen, Nigeria and Colombia. He
served in senior executive roles in Canada, Yemen,
UK and Indonesia. During his 18 year career with
Nexen, he was instrumental in identifying and
positioning the company in the Horn River shale
gas property and maintaining Canadian production
levels through selective investments. While the
President and General Manager in Yemen he
identified and led the capital investments to
raise production to a plateau rate of 230,000
boepd. In addition, he was responsible for a wide
range of upstream exploration and production
projects and business development activities in
Nigeria, Colombia, Vietnam, Pakistan and
Australia. Prior to Nexen, Tim worked for Gulf
Canada (formerly TSX, NYSE) with a focus on the
Arctic and East Coast areas and Texaco (formerly
NYSE) where he worked on both development and
exploration activity in the North Sea.
Troy Wagner, P. Eng. MBA Mr. Wagner is a professional engineer and MBA
Vice President, Argentina graduate with 18 years of engineering and
management experience. Prior to joining ArPetrol
in 2007 as the in-country manager in Argentina,
Mr. Wagner was COO and VP Engineering of Elmworth
Energy/Triangle USA Petroleum (OTC - US), a
company focused on developing domestic and
international shale gas projects. Mr. Wagner also
spent 10 years at NAL Resources Management Ltd.
(TSX) managing assets with combined production of
36,000 boepd. As the Vice President of Operations
at NAL, Mr. Wagner was responsible for leading all
technical and operations staff with annual Capital
and Operating budgets of over $175 million and
$110 million per year, respectively.
Claudio A. Ghersinich, Claudio Ghersinich is an independent businessman
P.Eng. and professional engineer with more than 30 years
Chairman of oil and gas experience. He is a co-founder and
former Executive VP and VP Business Development of
Vermilion Energy Trust (TSX). He serves or has
served on the Board of Directors of various public
companies including Verenex Energy Inc. (formerly
TSX), Vermilion Energy Trust/Inc. (TSX), Aventura
Energy Inc. (formerly TSX), Bulldog Energy Inc.
(TSX), Bulldog Resources Inc. (formerly TSX) and
Pegasus Oil & Gas Inc. (formerly TSXV), and
Valeura Energy Inc. (TSXV), as well as several
private and non-profit organizations. These
companies have operated assets in Canada, Europe,
Libya, Trinidad, Argentina and Australia. He has
been Chairman of ArPetrol since its inception.
Abdel F. Badwi, P. Geol. Abby Badwi is an international energy executive
Director and professional geologist with more than 35 years
experience in the exploration, development and
production of oil and gas fields in North America,
South America, Europe, Asia and the Middle East.
Mr. Badwi has been a director of ArPetrol since
its inception. He is currently President & CEO of
Bankers Petroleum Ltd. (TSX, London-AIM), an oil &
gas company with heavy oil operations in Albania.
Previously, he served as President & CEO of Rally
Energy Ltd. (formerly TSX, Frankfurt) which had
heavy oil operations in Egypt and other assets in
Pakistan and Canada, and which was sold in 2007.
He has been an officer and director of several
Canadian public and private companies and is
currently a director of Bankers Petroleum Ltd.
(TSX, London-AIM), Valeura Energy Inc. (TSXV) and
ArPetrol.
Jeffrey S. Boyce President & CEO of Sure Energy Inc. (TSX).
Director Previously, Mr. Boyce was the President & CEO of
Clear Energy Inc. (formerly TSX) and prior
thereto, President & CEO, co-founder of Vermilion
Resources Ltd. As one of the founders, Mr. Boyce
was directly involved in stewardship of Vermilion
Resources Ltd. which grew from having $200,000 in
the bank in 1994 to a business with a current
enterprise value exceeding $3 billion. Mr. Boyce
has more than 30 years experience in public
financial markets, corporate planning,
negotiating, developing land and exploration
strategies, and managing oil and gas companies.
Mr. Boyce has served on the Board of Directors of
various public, private and non-profit
organizations. These companies have operated
assets in Canada, Europe, Trinidad, Argentina,
Colombia and Australia. Mr. Boyce has been a
director of ArPetrol since its inception.
Michelle Gahagan Ms. Gahagan is currently a principal in a
Director privately-held merchant bank based in Vancouver
and London. Prior to the commencement of her
involvement in merchant banking five years ago,
Ms. Gahagan graduated from Queens University Law
School and practiced corporate law for 20 years,
acting for financiers with respect to syndicated
tax products in the entertainment finance sector.
Ms. Gahagan has extensive experience advising
companies with respect to international tax-driven
structures, mergers and acquisitions. Ms. Gahagan
has successfully completed the Investment
Management Certificate course and is a Qualified
Person under the Financial Services Authority (UK)
regime. Ms. Gahagan has been the president of RPT
Resources Ltd. since the fall of 2009 and is
currently the managing director of Northern Rand
Resource Corp. and a director of Bowood Energy
Corp.
Ronald A. Williams, CA Mr. Williams joined the ArPetrol Board in June
Director 2007 and brings over 19 years of domestic and
international oil and gas industry experience. Mr.
Williams has an extensive background in the areas
of audit, finance and taxation as well as property
and corporate acquisitions. Mr. Williams was the
Vice President, Finance and Chief Financial
Officer of Stonefire Energy Corp. (formerly TSXV)
a public company sold in 2010. Prior thereto, Mr.
Williams was the Director, Finance for Vermilion
Energy Trust (TSX).
Additional members of management, including a new Chief
Financial Officer and a VP Exploration, are expected to be
identified before completion of the Transaction.
Financial Advisors and Sponsor
Raymond James Ltd. is acting as financial advisors to RPT with
respect to the Transaction. If required by the TSX Venture Exchange
and subject to the completion of satisfactory due diligence,
Raymond James Ltd. has also agreed to act as sponsor of the
combined entity in connection with the Transaction.
Canaccord Genuity Corp. is acting as financial advisors to
ArPetrol with respect to the Transaction.
Finder's Fee
A finder's fee of 2,000,000 common shares of the combined entity
will be issued to Sam Charanek upon completion of the Transaction.
Mr. Charanek is a principal of CEE Merchant Group and has over 12
years of capital markets consulting experience.
Annual Meeting of Shareholders
The Transaction is anticipated to constitute a change of
business and/or a reverse takeover in accordance with the policies
of the TSX Venture Exchange and, as such, it is expected that
approval of the shareholders of RPT will be required. As a result,
it is anticipated that RPT will cancel its annual and special
meeting of shareholders that is currently scheduled for December 3,
2010 and delay the holding of such meeting until such time as it
can present the Transaction to shareholders for approval.
Resumption of Trading and Further News
It is anticipated that trading of the common shares of RPT will
remain halted pending the dissemination of a comprehensive news
release and satisfaction of all applicable requirements of the TSX
Venture Exchange. RPT will issue a further new release as soon as
further details are available regarding the definitive terms of the
Transaction (including the subscription receipt financing) and the
resumption of trading.
About RPT
RPT is a Canadian mineral exploration company based in
Vancouver, British Columbia. Since August 2009, RPT's principal
focus has been to search for mineral properties, primarily zinc
oxide mineralization, which may be suitable for application of the
proprietary mineral processing technology developed by MetaLeach
Limited, a wholly owned subsidiary of Alexander Mining PLC.
Oil and Gas Information
ArPetrol's reserve information is summarized in the table below
and is taken from an audit examination dated April 29, 2010
prepared by Gaffney, Cline & Associates Inc. (the "GCA
Report"). The effective date of the GCA Report is December 31, 2009
and it consists of an audit of the hydrocarbon liquid and natural
gas reserves attributable to ArPetrol's interest in the Faro
Virgenes concession as originally estimated by ArPetrol. The GCA
Report has been prepared using assumptions and methodology
guidelines outlined in the Canadian Oil and Gas Evaluation Handbook
and in accordance with National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities.
Natural Gas Natural Gas Liquids
--------------------------------------------
Gross Gross
(MMcf)(1) Net (MMcf) (Mbbl)(1) Net (Mbbl)
--------------------------------------------
Proved Developed Producing 4,402 3,874 76 67
Proved Developed Non-Producing - - - -
Proved Undeveloped 22,031 19,387 382 336
Total Proved 26,433 23,261 458 403
Total Probable 14,229 12,521 246 217
Total Proved Plus Probable 40,662 35,782 704 620
(1) "MMcf" means million cubic feet and "Mbbl" means thousand barrels.
"Gross Reserves" are ArPetrol's working interest (operating or
non-operating) share before deduction of royalties and without
including any royalty interests of ArPetrol. "Net Reserves" are
ArPetrol's working interest (operating or non-operating) share
after deduction of royalty obligations plus ArPetrol's royalty
interests in reserves.
"Proved" reserves are those reserves that can be estimated with
a high degree of certainty to be recoverable. It is likely that the
actual remaining quantities recovered will exceed the estimated
proved reserves. "Developed" reserves are those reserves that are
expected to be recovered from existing wells and installed
facilities or, if facilities have not been installed, that would
involve a low expenditure (for example when compared to the cost of
drilling a well) to put the reserves on production. "Developed
Producing" reserves are those reserves that are expected to be
recovered from completion intervals open at the time of the
estimate. These reserves may be currently producing or, if shut in,
they must have previously been on production, and the date of
resumption of production must be known with reasonable certainty.
"Developed Non-Producing" reserves are those reserves that either
have not been on production, or have previously been on production
but are shut in and the date of resumption of production is
unknown. "Undeveloped" reserves are those reserves expected to be
recovered from known accumulations where a significant expenditure
(for example, when compared to the cost of drilling a well) is
required to render them capable of production. They must fully meet
the requirements of the reserves classification (proved, probable,
possible) to which they are assigned.
"Probable" reserves are those additional reserves that are less
certain to be recovered than proved reserves. It is equally likely
that the actual remaining quantities recovered will be greater or
less than the sum of the estimated proved plus probable
reserves.
The reserve estimates provided herein are estimates only and
there is no guarantee that the estimated reserves will be
recovered. Actual natural gas and condensate reserves may be
greater than or less than the estimates provided herein. The GCA
Report includes a number of assumptions made by either Gaffney,
Cline & Associates Inc. or ArPetrol as at the date of the
report relating to factors such as initial production rates,
production decline rates, estimated ultimate recoveries, timing and
amount of capital expenditures, marketability of production, future
prices of natural gas, operating costs, well abandonment and
salvage values, royalties and other government levies that may be
imposed during the producing life of the reserves. Many of these
assumptions are subject to change and are beyond the control of
ArPetrol.
The term "boe" may be misleading, particularly if used in
isolation. A boe conversion of 6 million cubic feet:1 barrel is
based upon an energy equivalency conversion method primarily
applicable at the burner tip and it does not represent a value
equivalency at the well head.
Reader Advisory
This press release should not be considered a comprehensive
summary of the Transaction. Additional information required by the
TSX Venture Exchange will be disseminated at a future date
following a satisfactory review by the TSX Venture Exchange.
Investors are cautioned that, except as disclosed in the
Management Information Circular to be prepared in connection with
the Transaction, any information released or received with respect
to the Transaction may not be accurate or complete and should not
be relied upon. Trading in the securities of RPT should be
considered highly speculative.
Trading of the common shares of RPT will remain halted pending
receipt and review by the TSX Venture Exchange of acceptable
documentation regarding the combined entity following completion of
the Transaction. The proposed Transaction has not been approved by
the TSX Venture Exchange and remains subject to TSX Venture
Exchange approval.
Completion of the Transaction is subject to a number of
conditions, including but not limited to, TSX Venture Exchange
acceptance. The Transaction cannot close until the required
approvals are obtained. There can be no assurance that this
Transaction will be completed as proposed or at all.
An agreement to sponsor should not be construed as any assurance
with respect to the merits of the Transaction or the likelihood of
completion.
Except for statements of historical fact, this news release
contains certain "forward-looking information" within the meaning
of applicable securities law. 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, but is not limited to, statements
with respect to timing and completion of the due diligence relating
to the Transaction, the entering into of the transaction and
financing documents, the completion of a planned subscription
receipt financing and the satisfaction of the conditions precedent
to the Transaction (including receipt of TSX Venture Exchange
approval). Although we believe that the expectations reflected in
the forward-looking information are reasonable, there can be no
assurance that such expectations will prove to be correct. We
cannot guarantee future results, performance or achievements.
Consequently, there is no representation that the actual results
achieved will be the same, in whole or in part, as those set out in
the forward-looking information.
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 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 that could cause
the 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; industry conditions, including fluctuations in the prices
of oil and natural gas; governmental regulation of the oil and gas
industry, including environmental regulation; unanticipated
operating events or performance which can reduce production or
cause production to be shut in or delayed; failure to obtain
industry partner and other third party consents and approvals, if
and when required; competition for and/or inability to retain
drilling rigs and other services; the availability of capital on
acceptable terms; 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; competition for, among other things,
capital, acquisitions of reserves, undeveloped lands, skilled
personnel and supplies; incorrect assessments of the value of
acquisitions; geological, technical, drilling, processing and
transportation problems; changes in tax laws and incentive programs
relating to the oil and gas industry; failure to realize the
anticipated benefits of acquisitions and dispositions; and the
other factors. 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. We undertake
no duty to update any of the forward-looking information 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.
The TSX Venture Exchange has in no way passed upon the merits of
the proposed Transaction and has neither approved nor disapproved
the contents of this press release. 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.
Contacts: RPT Resources Ltd. Michelle Gahagan President (604)
639-4459 www.rptresources.com