Mr. David Sidoo reports that East West Petroleum Corp. has entered into a letter agreement dated August 12, 2010 with Sphere Energy Corp. ("Sphere") to acquire Sphere's entire interest in the producing Carbon Property in Alberta (the "Carbon Property"), constituting a "change of business" as contemplated by the policies of the TSX Venture Exchange. This news release has been prepared to fulfill certain disclosure requirements contained in those policies. The acquisition is subject to Exchange and shareholder approval.
The Company has been advised that Sphere is a management company and holds its interest in the Carbon Property in trust for Ucci Energy Corp. as to 93%, and two other companies for the balance.
Purchase Price and Financing
To acquire the Carbon Property, the Company must pay Sphere Cdn$1,200,000. In conjunction with the acquisition, the Company will complete a non-brokered private placement of 10,000,000 units at $0.25 per unit to raise gross proceeds of $2,500,000, each unit consisting of one share and one warrant to buy one share for $0.34 exercisable for a period of three years from closing. Finder's fees will be payable in accordance with the rules of the TSX Venture Exchange, and the placement is subject to Exchange approval. The units are being placed with strategic investors who will assist the Company in its future growth. Management had the ability to place additional units but did not wish the Company to incur any further dilution.
The Carbon Property
The Carbon property is located approximately 50 miles northeast of Calgary, Alberta. Sphere's working interests in this property range from 4.8 to 20% in four producing oil wells and twelve gas wells (eight flowing coal bed methane ("CBM") gas). The wells are producing from the Horseshoe Canyon, Basal Belly River, Belly River, Viking and Glauconitic formations.
Reserves and Production
The estimated net total remaining reserves (proved and probable) of Sphere is 66 MBOE, 83% of it being natural gas. Sphere's net 2010 production is estimated to be 22 BOED and estimated reserve life (RLI) for proven developed producing reserves is 7 years, while RLI for P+P reserves is 9.8 years.
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