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Eurogas Announces the Purchase of Ontario Oil and Gas Assets

April 07, 2010

TORONTO, ONTARIO--(Marketwire - April 7, 2010) -


Eurogas Corporation ("Eurogas" or the "Corporation") (TSX VENTURE:EUG) is pleased to announce it has entered into an agreement to acquire the largest accumulation of oil and natural gas assets in Ontario for a cash purchase price, before closing adjustments, of $131 million (the "Acquisition"). The Acquisition has an effective date of March 1, 2010 and is expected to close on or about May 27, 2010.

The assets are composed of onshore and offshore oil and gas properties in and around Lake Erie, and will provide operating cash flows of at least $2 million per month at current low natural gas price levels. The Acquisition is consistent with the Corporation's strategy of creating long-term value for shareholders by acquiring and developing high quality, long-life assets to complement its 24.6% interest in the $2 billion offshore Castor gas storage project in Spain, expected to be operational in 2012. The Acquisition provides a stable foundation of high netback production with significant low risk development potential. Both oil and gas from Ontario sources attract premium prices due to their unique location adjacent to the large Ontario market.

The assets include growth possibilities from a significant number of development drilling locations as well as opportunities for well re-completions and the optimization of the existing infrastructure system. The Corporation expects further on-going opportunities, including the promising potential for natural gas storage and other Ontario acquisitions.

More specific details of the assets are as follows:

Acquisition Highlights

  • 100% operated production
  • 95% avg. WI in 65,000 acres for onshore oil properties
  • 65% WI in 902,000 acres of offshore gas properties
  • Current net production of 2,640 boed (790 bpd of 420 API oil and condensate; 11.1 MMcf/d gas)
  • 65% ownership in offshore fleet of drilling and completion vessels
  • 65% ownership in 3 gas plants and 3 compressor stations, all located onshore
  • 100% ownership in 4 oil batteries onshore
  • Ownership of 13,400 km of 2D seismic and 317 km2 of 3D seismic
  • Potential for underground gas storage.

Proved Reserves

Management, in conjunction with an independent engineering firm, estimates the reserves as follows:

  • Gas: 66 Bcf with a reserve life index of 16.3 years
  • Oil: 2.0 MMbbl with a reserve life index of 6.9 years

Acquisition metrics

  • Cost per boe of proved reserves is $10.08/boe
  • Acquisition cost of $49,620 currently per flowing boed

The Corporation, as part of the transaction, has the obligation to extend an offer under the same terms and conditions in the Acquisition to the holder of the remaining 35% interest in the offshore assets. The Corporation intends to make such an offer but there is no certainty that the party concerned will agree to sell.


The Corporation has arranged to fund the entire proposed Acquisition using its current cash position of $70 million and through a new bank facility for the difference.


Dundee Securities Corporation is acting as exclusive financial advisor to Eurogas with respect to the Acquisition.

Eurogas Corporation is 54% owned by Dundee Corporation (TSX:DC.A) and is listed on the TSX Venture Exchange under the symbol EUG. The Corporation is engaged in the development of a major underground storage facility off the east coast of Spain. For more information on Eurogas, visit the website

Advisory Regarding Forward-Looking Statements

Certain information set forth in this document, including management's assessment of each of the Corporation's future plans and operations, contains forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Corporation's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The Corporation's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Corporation will derive from them. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Boe Advisory

The term "boe" or barrels of oil equivalent may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil (6 Mcf : 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not always represent a value equivalency at the wellhead.

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