Pearl Exploration and Production Ltd.



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  Mar 27, 2006 - 11:54 ET
CORRECTION FROM SOURCE: Pearl Exploration and Production Ltd. Announces Offer to Acquire SignalEnergy Inc.

  CALGARY, ALBERTA--(CCNMatthews - March 27, 2006) - Pearl Exploration and Production Ltd. ("Pearl") (TSX VENTURE:PXX) wishes to add some additional information to the release issued this morning at 9:26 am ET. A new paragraph has been inserted after the ninth paragraph of the release. The complete and corrected release is as follows:

Pearl Exploration and Production Ltd. ("Pearl") (TSX VENTURE:PXX) announced today that it intends to make an Offer (the "Offer") to acquire all of the outstanding shares of SignalEnergy Inc. ("Signal") (TSX: SGI). The Offer and related documents will be mailed to Signal shareholders on or about April 11, 2006 and will be available on SEDAR at www.sedar.com and on Pearl's website (www.pearleandp.com) at that time.

Pearl intends to offer Signal shareholders 0.32 common shares of Pearl for each Signal share, or CDN $1.45 in cash for each Signal share, or a combination thereof, subject to a maximum aggregate cash amount of CDN $35,000,000 (the "Aggregate Cash Amount"). In the event that Signal shareholders collectively elect for more than the Aggregate Cash Amount, the amount of cash they receive will be prorated. Pearl estimates that Signal has approximately 74.6 million shares outstanding (on a fully diluted basis).

The volume weighted average trading price of Signal shares on the Toronto Stock Exchange for the 20 trading days ended March 24, 2006, being the last trading day prior to the date of this announcement, is CDN $1.43. The closing price of Signal shares on March 24, 2006 was CDN $1.46.

The volume weighted average trading price of Pearl shares on the TSX Venture Exchange for the 20 trading days ended March 24, 2006, being the last trading day prior to the date of this announcement, is CDN $5.75. The closing price of Pearl shares on March 24, 2006 was CDN $6.15.

Based on the closing price of Pearl and Signal shares on March 24, 2006, the 0.32 share ratio would result in an effective share price equivalent to Signal shareholders of CDN $1.97 per share.

Full details of the Offer will be included in a takeover bid circular that is expected to be mailed to Signal shareholders on or about April 11, 2006. Completion of the Offer will be subject to, among other things, the acceptance of the Offer, and non-withdrawal, of at least 66 2/3% of the Signal shares (including the Signal shares owned by Pearl or its subsidiaries) on a fully diluted basis. In the event a 90% acceptance threshold is obtained, Pearl would pursue the compulsory conversion of the remaining shares under existing regulatory provisions. If the minimum 66 2/3% acceptance threshold is obtained but a 90% acceptance threshold is not obtained, it would be the intention of Pearl to pursue an amalgamation in order to gain control of the remaining shares. Other conditions will include those typical for a transaction of this nature and receipt of regulatory, stock exchange and third party approvals satisfactory to Pearl.

The Offer will provide Signal shareholders the opportunity to directly participate in a diverse and rapidly growing resource company. Gary Guidry, President of Pearl commented, "We see a great opportunity that will allow Signal shareholders to realize the full value of their existing cash and producing assets by participating in the direct ownership of a fast growing North American oil and gas company with the Lundin Group's proven record of success and increasing shareholder value".

This transaction would provide Pearl with access of up to approximately $75,000,000 in cash and short term assets, as well as various working interests in producing assets in the Buick Creek area located in northeast British Columbia, and the Chigwell / Bashaw area located in central Alberta. The associated net current production of approximately 600 boe/d is 100% weighted to natural gas and natural gas liquids. Additionally, this transaction would provide access to a prospect inventory comprised of coal bed methane and conventional drilling prospects within these areas.

"In completing this transaction Pearl will continue to add to a rapidly building, solid portfolio of North American production and exploration oil and gas assets" said Gary Guidry. Pearl presently holds a 50% interest in the San Miguel development project (a shallow, heavy oil deposit in the Maverick Basin of southern Texas containing two to three billion barrels of oil-in-place), a 30% interest in the Palo Duro development project (a large, emerging shale gas play in northern Texas), a variety of leasehold and royalty interests in California, Texas and Louisiana (including production from oil and gas wells in the South Texas Queen City trend), the rights to an offshore OCS block (Mustang Island Area, East Addition, Area Number TX3A, Block 736), and a strategic working interest investment in Rincon Energy Partners LLC, a U.S. based oil and gas prospect generation company specializing in Gulf Coast and California oil and gas exploration. Additionally, its subsidiary, Pearl Exploration and Production USA Ltd., is the apparent high bidder on four offshore lease blocks on which it bid in the Central Gulf of Mexico Lease Sale held March 15, 2006 in New Orleans, Louisiana. Pearl has also entered into a formal agreement with Pan-Global Energy Ltd. ("Pan Global") (TSX-V: PIE) which will see Pearl acquire all of the shares of Pan-Global. Shareholder acceptance and regulatory approvals are required for this transaction, which is expected to close in mid April, 2006. The transaction will provide Pearl with a 95% interest in the Onion Lake development and exploration project in Saskatchewan (a Dina formation, conventional heavy oil trend with an internally estimated 800 to 1,100 million barrels of oil-in-place). Pearl and Pan Global have previously announced the advancement of an Onion Lake development drilling program along a Dina heavy oil trend.

There has not been an independent assessment of the resources discussed above for the San Miguel and Onion Lake developments. Boe's may be misleading, particularly if used in isolation. A Boe conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

"We see great opportunities," said Gary Guidry, "and we look forward to Signal shareholders joining with us in our strategy of achieving disciplined growth with a North American focus. In a very short period of time, we have established a company with significant development and exploration projects that have the potential to yield substantial production levels over the coming years".

Pearl is a public company focused on delivering disciplined growth by establishing a North American portfolio of oil and gas projects with an emphasis on large resource opportunities. Additional information on Pearl is available on our website at: www.pearleandp.com.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities of Pearl within the United States. The securities of Pearl have not been and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any state securities laws. Accordingly, the shares may not be offered or sold in the United States or to U.S. persons (as such terms are defined in Regulation S under the 1933 Act) unless registered under 1933 Act and applicable state securities laws or an exemption from such registration is available.

Forward-looking statements: This press release contains statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and Pearl's capability to execute and implement its future plans. Actual results may differ materially from those projected by management.

This press release also contains forward-looking statements concerning the anticipated Offer for all of the shares of Signal. Although Pearl believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Pearl can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The Offer could be delayed if Pearl is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned. The acquisition will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the acquisition will not be completed within the anticipated time or at all. In addition, certain information in this press release concerning Signal may change materially from the time of this press release to the date of acceptance of this offer. Accordingly, there is the risk that the assets acquired pursuant to the Offer may differ materially from that disclosed in this press release.

The forward-looking statements contained in this press release are made as of the date hereof and Pearl undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.


The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

FOR FURTHER INFORMATION PLEASE CONTACT:


Pearl Exploration and Production Ltd.
Gary Guidry
President and Chief Executive Officer
(403) 716-4051
(403) 261-1007 (FAX)
gary.guidry@tykoil.com

or

Pearl Exploration and Production Ltd.
Gary Hyde
Chief Operating Officer
(403) 716-4063
(403) 261-1007 (FAX)
gary.hyde@tykoil.com
 
 

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