CALGARY, ALBERTA -- (Marketwire) -- 02/19/13 -- Shoreline Energy Corp. (TSX: SEQ) ("Shoreline" or the "Company") is pleased to announce the acquisition of two non-operated working interest asset packages located in Weld County Colorado in the Wattenberg field. The asset packages are in the heart of the world class Niobrara and Codell oil projects, being developed with the use of proven horizontal wells and multiple stage hydraulic fracturing technology. These latest acquisitions are situated in close proximity and are a perfect complement to the royalty and working interest acquisitions the Company announced in the fourth quarter of 2012. Total aggregate purchase price for these acquisitions is US$22.5 million, subject to final closing adjustments, with effective dates of November 1, 2012 and February 1, 2013 respectively.
These new acquisitions bring to Shoreline an average pre-pooled working interest of 14% in approximately 4,500 acres of land. Drilling operations are underway on the acreage and to date 8 new horizontal oil wells are on production. Based on current development plans published by the key operators in the area, there are between 100 and 200 possible horizontal drilling locations on the acquired acreage. Current operating income from the existing vertical oil and gas wells on the lands is approximately $250,000 per month, plus a forecast initial $200,000 to $250,000 per month attributable to the initial 8 recently drilled horizontal producers on Company lands. The Company has engaged the services of a well-respected reserve evaluator to provide an NI 51-101 compliant independent evaluation of the assets to be completed in the second quarter of 2013.
"The closing of these latest acquisitions is a very significant event for Shoreline, further expanding our holdings in what we believe is a world class and highly profitable project. These assets are an excellent fit with our existing assets. Drilling activity has already commenced and the Company has an extensive inventory of drilling locations which could substantially increase cash flow in both the short and longer term," stated Trevor Folk, Shoreline's Chief Executive Officer. "Our total acreage in the Wattenberg Field now spans 31,500 gross acres and includes a combination of passive royalty income generating properties and high impact growth oriented working interest properties. We believe these assets will provide a very attractive return on investment to our shareholders."
The acquisition price comprises $19.2 million of cash plus 600,000 common shares of Shoreline at a price of $3.65 per common share. Shoreline will finance the acquisition with a combination of cash-on-hand, short-term debt and bank debt.
Shoreline is also pleased to announce that based on data available as of November 2012, 21 new horizontal wells were on production on its Weld County royalty lands, with an additional 4 wells drilling and 20 wells awaiting permit approval. Shoreline anticipates receiving its first revenue from the already producing horizontal wells this month. This new royalty revenue, when coupled to new revenue from the previously announced light oil discoveries in its Canadian core operating area, will serve to significantly increase cash flow.
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