HOUSTON, TX, Nov. 16, 2011 /PRNewswire/ - Enhanced Oil Resources Inc. (TSX-V: EOR) today announced that its indirect wholly-owned subsidiary, Ridgeway Arizona Oil Corp. (collectively with EOR, the "Company"), has entered into a purchase and sale agreement with Kinder Morgan CO2 Company, L.P., a wholly owned subsidiary of Kinder Morgan Energy Partners, L.P. (NYSE: KMP), for all of the Company's rights, title and interest in the St Johns dome and certain related assets, located in Apache County, Arizona and Catron County, New Mexico. In addition, upon closing, Kinder Morgan has agreed to amend the CO2 gas sale and purchase agreement with the Company, originally announced on April 20, 2010, modifying the dates of pipeline connection and the date of first deliveries and eliminating the termination fee.
The purchase price is U.S.$30,000,000 for the assets and is subject to certain post-closing adjustments and conditions. Closing is targeted to occur on, or before, December 1, 2011 and is subject to a number of conditions, including the renegotiation of a material third-party contract and regulatory approval by December 31, 2011. SunTrust Robinson Humphrey, Inc. is serving as financial advisor to the Company in connection with the transaction.
Barry Lasker, President and Chief Executive Officer of Enhanced Oil Resources said: "The monetization of St Johns is an important step forward for the Company and will enable an acceleration of our infill oil development and exploitation program within our 27,000 acres of San Andres leases in New Mexico. Ultimately, we anticipate that the cash proceeds and other consideration provided from this sale will help finance our planned CO2 flood at the 5,000 acre Milnesand field and potentially at the adjacent 20,000 acre Chaveroo field. While St Johns offered tremendous long-term potential for the right company, the capital financing risks including our cost of capital and continuing associated carrying costs were considered to be too onerous on a company of our size. The opportunities for oil reserve growth in today's environment both in our San Andres infill projects, our CO2 flood opportunities and other new venture developments are too compelling not to be our immediate focus."
About Enhanced Oil Resources Inc.
Enhanced Oil Resources Inc. is an early-stage company, with a principal
goal of increasing crude oil and natural gas production through
enhanced oil recovery ("EOR") and infill drilling projects it is
initiating in the Permian Basin on oil fields acquired by the Company
in 2007 and 2008 for that purpose.
Forward-Looking Statements
Certain statements contained herein are "forward-looking statements" and
"forward-looking information" under applicable securities laws,
including statements regarding beliefs, plans, expectations or
intentions regarding the future relating to Enhanced Oil Resources
Inc.'s operations, business prospects, expansion plans and strategies.
Such forward-looking statements include, among others, that the
purchase and sale agreement is targeted to close on or about December
1, 2011, that the CO2 gas sale and purchase agreement will be amended, modifying the dates of
pipeline connection and first deliveries and eliminating the
termination fee, that the closing is subject to renegotiation of a
material third-party contract, that the monetization of St. Johns will
enable acceleration of the infill oil development and exploitation
program, that the cash proceeds and other consideration provided will
help finance the planned CO2 floods and that the opportunities for oil reserve growth are too
compelling not to be the immediate focus.
Forward-looking information typically contains statements with words such as "intends", "anticipate", "estimate", "expect", "potential", "could", "plan" or similar words suggesting future outcomes. Readers are cautioned not to place undue reliance on forward-looking statements because it is possible that expectations, predictions, forecasts, projections and other forms of forward-looking information will not be achieved. Forward-looking statements are based on the opinion and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Although Enhanced Oil Resources believes that the expectations reflected in such forward-looking statements are reasonable, Enhanced Oil Resources can give no assurance that such expectations will prove to be correct. Assumptions upon which such forward-looking statements are based include that the purchase and sale agreement will close on or about December 1, 2011, that the CO2 gas sale and purchase agreement will be amended upon closing, that the material third-party contract will be renegotiated and that the purchase and sale agreement will enable acceleration of the infill oil development and exploitation program and will help finance the planned CO2 floods. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include the failure to close the sale and purchase agreement for whatever reason, the failure to amend the CO2 gas sale and purchase agreement as proposed or at all, the failure to renegotiate the material third-party contract, the failure of the monetization of St. Johns to enable acceleration of the infill oil development and exploitation program and the failure of the cash proceeds and other consideration provided to help finance the planned CO2 floods. Readers should be aware that the list of factors, risks and uncertainties set forth above are not exhaustive. Readers should refer to Enhanced Oil Resources' current filings, which are available at www.sedar.com, for a detailed discussion of these factors, risks and uncertainties. The forward-looking statements or information contained in this news release are made as of the date hereof and Enhanced Oil Resources 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 laws or regulatory policies.
ON BEHALF OF THE BOARD OF DIRECTORS
(signed)
Barry D Lasker, CEO
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE
SOURCE Enhanced Oil Resources Inc.
