CALGARY, ALBERTA -- (Marketwired) -- 08/23/13 -- Atikwa Resources Inc. (TSX VENTURE: ATK) ("Atikwa" or the "Company") wishes to correct serious misinformation being circulated in advance of the Company's annual and special meeting to be held on August 30, 2013 (the "Meeting"). As some of our shareholders may be aware, a small group of shareholders from the Vancouver area (the "Dissidents" or the "Vancouver Group"), with virtually no oil and gas experience and no public company experience have filed a dissident proxy circular dated August 14, 2013, proposing, among other things, that the shareholders of the Company elect them as directors of the Company instead of the directors proposed by management. Management has met with the Dissidents and can confirm that they are mad, but other than that, they have not provided any evidence that they have a plan, oil and gas experience or knowledge, money, or any ability to run this Company or any other public company. Quite the opposite, it is our opinion that if this group is elected they will trigger a swift and certain destruction of all shareholder value in this Company.
Management would like to caution all shareholders in as strong a manner as possible that they should not listen to the Dissidents. If you have voted in favour of this group, we will explain how you can change your vote now. We would also encourage all shareholders to make a special effort to vote today in favour of the new slate of directors proposed by management.
This is a critical vote which will dramatically influence the future of this Company. To vote please visit Proxyvote.com or call English 1-800-474-7493 or French 1-800-474-7501
Honesty and Integrity: The Dissidents central claim in their Circular is that they will act with honesty and integrity. How can Atikwa shareholders have any faith in this statement when many of the statements made by the Dissidents are either untrue, or misleading? The following is a selection of a few of the statements in their Circular that are Not True.
-- On page 14 of the Circular, for Mr. John Chodzicki, it is stated that he has held no position with Atikwa under the heading " Last Position Held with the Company". This is false. Conspicuous by its absence in the profile given in the Dissidents' circular for Mr. Chodzicki is any mention of the fact that Mr. Chodzicki was a consulting engineer to Atikwa for over a year until he was dismissed in 2011 by the Company. Honesty and integrity indeed.-- On page 3 of the Dissidents' circular, they claim that two of the Atikwa nominees (Mr. Baay and Mr. Mitzel) hold positions as directors of Hansar Energy Corp. and would therefore be in a direct conflict of interest in negotiations between Hansar and Atikwa for the acquisition of Hansar's assets. This is not true. Mr. Baay and Mr. Mitzel are both independent and have never been directors of Hansar.
Irresponsible and Damaging Statements in the Dissident Circular: On page 4 of the Dissidents' circular, the Dissidents claim that the Company's joint venture partner has filed a Statement of Claim against Atikwa "for damages resulting from the wrong-doing on the part of Atikwa". Then they go on, without any knowledge of the facts or history of the situation to basically agree with a list of unfounded allegations by the joint venture partner. If elected as directors, shareholders should be very concerned about this apparent public admission of fault on behalf of Atikwa. Is it their position that they will simply agree to the unfounded allegations of the joint venture partner and acknowledge liability for the $2,500,000 in damages claimed? Atikwa's management can assure shareholders the facts involved in this dispute are completely at odds with the allegations made in the statement of claim, which the Dissidents seem anxious to accept without any knowledge of the facts. Atikwa's position on this dispute is clearly set out in its filed statement of defence and counterclaim (the counterclaim is for damages of approximately $11 million) and management is confident that the action taken by its joint venture partner is completely without merit. The real question is what lies behind the Dissidents irresponsible statements concerning this dispute? It appears that the Dissidents' nominees, if elected, plan to rely on this joint venture partner to operate the Company's key properties in Manitoba. This would be consistent with running the Company from a home office in White Rock, B.C., but it is a recipe for disaster. No credible oil and gas company would willingly give up control of its core asset, least of all to a joint venture partner that the Company has had serious problems with. The Dissidents also refer in their circular to two other non-material disagreements with industry service companies that, contrary to their interpretation, actually demonstrate that management has the knowledge, experience and commitment that is required to take service companies to task over the quality and professionalism of the services that they provide.
-- Also on Page 4 of the circular, the Dissidents claim that "Management has allowed leases to expire on key Company assets with no compensation." And that "By allowing the leases to expire, management failed to realize any value for the Company." Once again, these statements are at best completely misleading and further demonstrate the Dissidents lack of understanding of the oil and gas industry. Atikwa did not let the leases expire; leases expire at the end of the government lease period unless you drill them and can demonstrate that they are capable of economic production. The land being referred to was given zero value in our reserve report. With the exception of one section of land in Porcupine hills, these were undrilled natural gas exploration lands that the Company acquired when natural gas was around $6.00 per mcf. They are uneconomic until natural gas gets to at least $4.50 per mcf. Even if the land had been drilled and the wells were successful and capable of production, they would most likely be shut in because of current natural gas prices. The Dissidents state that Management "should have been searching for a viable solution, such as a farmout agreement." Management contacted over 300 companies in the industry in an attempt to sell or farm out these exploration lands during the term of the lease, but there was no interest. The only drilled section of land that expired that was strategic to Atikwa was the Porcupine Hills section. That is the $8,000,000 of net asset value that the Vancouver Group claims Atikwa lost when the land expired. When you spend money on a well that is dry you are not giving away value when you walk away. That value is already gone and for the most part, the Porcupine Hills well is why Atikwa is having the challenges it is facing today. If we had not taken a chance on the Porcupine Hills well, that $8,000,000 would be in our bank account and our cash problems would be solved. Those are the chances you take as a micro cap junior in order to get the market's attention. The prize that we were targeting was 1800 barrels a day, if successful, it would have changed the Company. The Vancouver Group refer in their circular to Atikwa's "excellent asset base", but they fail to acknowledge that Atikwa's "excellent asset base" was found and developed by current management. In the oil and gas business, there are always a mixture of successes and failures. It is after all a business characterized by high risk and high reward and you cannot have one without the other. Atikwa shareholders might ask what happened to the Porcupine Hills land acknowledged to be key by management? For the record, that lease did expire, we quietly reposted it and acquired it at the end of July for a new five year term.-- On page 13 of the circular, the Vancouver Group states that Management let 21 sections expire. It was 3 sections that expired and the reason has already been explained.-- On page 13 the Vancouver Group state that Management attempted to do a consolidation on a 1 for 50 basis. This is not true. Management, after consultation with a number of financing sources proposed to do a consolidation of up to a maximum of 1 for 30. The Company was dealing with a number of financing sources that suggested a range of consolidation numbers, management simply wanted the flexibility to be able to keep financing options open. As a result of the defeat of the proposal, Atikwa was unable to secure the critical funding required to move forward. It should be pointed out that the minimum pricing rules of the TSX Venture Exchange forced Atikwa to consider consolidating its shares; Atikwa's share price prevented it from raising the new equity needed by the Company. Cut off from equity funding, management secured debt financing on the best terms available to it under the circumstances. The Dissidents attack on management for both the attempted consolidation and the terms of Atikwa's debt financing is entirely gratuitous, but it also reveals a fundamental lack of understanding of public company financing.
The Vancouver Group Has No Credible Plan:
-- In a three hour meeting on June 13th 2013, the Dissidents presented management of Atikwa with a memorandum (the "Memo") outlining its "plan" for Atikwa signed by with Mr. May, Mr. Garnett and Mr. Stark. The Memo states that "Peter Shepherd will be appointed President & CEO". Since the time of that meeting Mr. Shepherd has been in ongoing contact with Atikwa and the Hansar Group representing the Vancouver Group. Why does Mr. Shepherd's name not appear in any of the public disclosure filed by the Vancouver Group? Upon further examination, it appears that Mr. Shepherd is also the current President of a TSX Venture listed company that has been suspended. Why does Mr. Shepherd's name not appear in any of the information publicly filed by the Dissidents? What are the Dissidents hiding?-- The Vancouver Group states in the Memo that their "plan is to move the offices and files to White Rock BC and bring in a local accountant as the new CFO." They go on to say that they "will obtain a qualified oil and gas consultant on a contract basis and pay him only when we need his advice and guidance on all matters concerning the oil and gas assets in the Company". We believe that these statements alone demonstrate that this group has absolutely no concept of what is involved in running the day to day operations of a producing oil company.
-- The Vancouver Group goes on to state in the Memo that they plan to "focus on obtaining a debt loan, under reasonable terms, for $7 million dollars, considering we have adequate cash flow and reduced overhead to service this debt." This is no plan for Atikwa. Besides the fact that the Company does not have enough cash flow to service such a debt level, the assertion that any lending institution would give Atikwa a seven million dollar credit facility is pure fantasy. When questioned about the feasibility of obtaining such financing, the Vancouver Group confessed that they had not yet begun to look into any arrangements to secure this financing. As recently as two days ago, Mr. Shepherd (whose involvement with the Dissidents is unexplained) confirmed that the Vancouver Group has not yet arranged to bring any money to the table.
The picture is clear from Atikwa's perspective: the Vancouver Group does not have the experience, knowledge or enough understanding of the oil and gas business or of public companies in general to be able to run our Company. We cannot fault them for being interested in the future of the Company, however, just being angry about how things have turned out is not enough. You need a plan and the people capable of executing that plan. With the Hansar combination (see Atikwa's recent news release dated August 21, 2013), the Company has presented a solid group of individuals, with demonstrated track records in the oil and gas industry. The directors proposed for election by management of Atikwa have a comprehensive plan to recapitalize and build on the quality asset base that already exists in addition to the assets that they bring to the table. At the end of the day, we see only one option and that is to vote For management's slate of directors. Oil is over $100 per barrel, there is a lot of great things that can happen, we just need to avoid getting distracted, we thank you for your support and look forward to getting back to work on our assets.
Your vote has never been more important. Regardless of the number of shares you own, you must take action and cast your vote today. To support your board, vote only Management's Proxy. Discard any proxy that you receive from the Vancouver Group. (GREEN) If you have already voted the proxy from the Vancouver Group, you may change your vote now by simply completing a later dated Management Proxy. You can vote or change your vote to Management's choice on line at www.proxyvote.com or call; English 1-800-474-7493 or French 1-800-474-7501.
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.
This news release contains forward-looking statements relating to the Company's plans and other aspects of the Company's anticipated future operations, strategies, financial and operating results and business opportunities. Factors such as regulatory approvals and other related and external factors may affect the forward-looking statements made in this news release. Forward-looking statements typically use words such as "anticipate", "believe", "project", "expect", "plan", "intent" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future, or consists of statements regarding estimates of future production, operating costs or other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance. Statements regarding reserves are also forward-looking statements, as they reflect estimates as to the expectation that the deposits can be economically exploited in the future. Although the Company believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not unduly rely on forward-looking statements. The forward-looking statements contained in this news release are made as the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 mcf: 1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Atikwa Resources Inc.
President and CEO