HOUSTON, TEXAS -- (Marketwire) -- 03/08/13 -- Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE: KUB) announced today that it has entered into an agreement to acquire a private Ukrainian oil and gas exploration company ("PrivateCo"). PrivateCo assets consist of approximately 70,000 gross acres of undeveloped land and will have the net effect of increasing Cub's aggregate licence position in Ukraine to approximately 244,000 gross (180,000 net) acres.
As consideration for PrivateCo, Cub will issue 55,555,555 common shares at a deemed price of $0.45 per share, representing aggregate consideration to PrivateCo's two shareholders of $25 million (the "Acquisition"). The number of shares to issue to PrivateCo will remain fixed and values Cub at $0.45 per share, representing a 45% increase over Cub's closing share price on March 7, 2013. Cub's Board of Directors has approved the transaction. The Company believes this expansion and consolidation of its core eastern Ukrainian land position has significant economic and strategic value.
Acquisition Highlights:
-- Three 100% working interest licences containing approximately 70,000 acres of undeveloped land that are on trend and contiguous with Cub's core producing areas in eastern Ukraine-- Licences are strategically situated in the producing fairway near the majority of Cub's current production and cash flow and vastly increases prospective drilling inventory-- The recently drilled Krutogorovskoye-7 well, located approximately 15 km from the nearest acquired license, tested in excess of 5.9 MMcf/d of natural gas with an indicated condensate yield of 33 barrels per MMcf (see notes to editors)-- Close proximity of the acquired licences to Cub's existing acreage facilitates access to existing infrastructure and related services
Acquisition Work Plan:
-- Cub plans to begin shooting seismic in the fourth quarter of 2013-- Licence commitment date to commence drilling no later than June 2015-- The work program will be financed through corporate cash flow and dividends from the Company's 30% interest in KUB-Gas LLC-- Management estimates net 2C contingent gas resources of 9.6 bscf and net best estimate prospective resources of 82.6 bscf (1)(2)-- Per managements internal resource assessment, Cub is acquiring best estimate prospective resources and 2C contingent resources for approximately $1.63 per Boe (1)(2)
Agreements and Timing
The transaction will be effected pursuant to the terms of a purchase and sale agreement dated effective March 7, 2013. Completion of the transaction is expected to occur no later than June 1, 2013 and is subject to the satisfaction of standard conditions, including receipt of the applicable stock exchange and Ukraine regulatory approvals.
A copy of the purchase and sale agreement will be filed with Canadian securities regulators and will be available at www.sedar.com.
In connection with the transaction, Canaccord Genuity Corp. advised the Company financially, RPS for valuation purposes and Salans in Kyiv and Bennett Jones LLP in Canada acted as legal advisors.
