Manitok announces the disposition of its non-core heavy oil assets in the swimming area of alberta for $13.5 million
Tuesday, Apr 10, 2012
Manitok Energy Inc. (the "Corporation" or "Manitok") (TSXV: MEI) is pleased to provide the following information regarding the disposition of its heavy oil assets in the Swimming area of Alberta and various updates.
Swimming Heavy Oil Asset Disposition
On April 5, 2012, Manitok entered into a purchase and sale agreement to dispose of its entire working interest in its heavy oil assets (the "Assets") in the Swimming area of Alberta for total cash consideration of $13.5 million before closing adjustments and related costs (the "Disposition"). The Disposition closed on the same day, April 5, 2012, with an effective date of April 1, 2012. The Assets include production of approximately 350 bbls/d of heavy oil, 13,794 net acres of land and seismic data. The net proceeds from the Disposition, before post-closing adjustments and excluding GST, are approximately $14.0 million.
The Assets were always considered non-core to Manitok's long-term Foothills strategy. Given the current market environment and the interest shown in the Assets, Manitok determined that it was best to monetize the value of its heavy oil property. While the Assets were performing well, Manitok decided that it will focus its resources at Stolberg given the success to date with its Cardium oil drilling program.
The proceeds from the Disposition will allow Manitok to drill more Cardium oil wells at Stolberg in 2012 using less debt.
As a result of the Disposition, Manitok's credit facility has been reduced to $25 million from the previous $30 million. The net proceeds from the Disposition will be used to reduce all current bank indebtedness and fund the current capital expenditure program as required.
Since the last operational update press release dated February 22, 2012, Manitok has drilled both the third and fourth Cardium oil wells in the program. Neither well has been stimulated in any manner to date. Production and build-up tests are currently being conducted on the third well. Production and build-up testing on the fourth well will begin in the near future. The data collected to date has been encouraging in regards to the potential for oil and associated gas production from these two wells. The test results will be released once all of the relevant data has been collected. Manitok spud the fifth Cardium oil well of the program late last week. With the proceeds of the Disposition and assuming normal drilling operations, Manitok anticipates that it will be able to continuously drill about one well per month for the remainder of 2012.
The first Cardium oil well in the program was placed on production over the weekend. The second well from the program is expected to be on production before the end of April.
Source: Manitok Energy
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