Valkyries Petroleum Corp. (the “Company”) announces that it has completed the sale of all of its U.S. oil and gas properties to Newmex Minerals Inc. (“Newmex”). Conditional approval from the TSX Venture Exchange has been received for the transaction previously announced on December 22, 2005.
The properties sold to Newmex comprise 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. The net remaining reserves associated with these assets are approximately 99 Mboe Proved (46 Mbbl of oil and 320 MMcf of gas) and 48 Mboe Probable (9 Mbbl of oil and 236 MMcf of gas), based on an independent evaluator’s assessment of working interest plus royalty interest production in accordance with National Instrument 51-101 (Ryder Scott September 1, 2005 — Constant Price Parameters).
In consideration, the Company has received an upfront cash payment of US $5.8 million (as adjusted) and may receive a potential deferred bonus payment. Any bonus payment will be calculated on the basis of US $1 per oil equivalent barrel of additional net proved reserves in respect of 3 selected properties, effective on the second anniversary of the transaction and as certified by an independent reserves evaluator acceptable to both parties. The adjustment date for the transaction is September 1, 2005. No finder’s fee was payable in respect of the transaction.
Valkyries Petroleum Corp. is an upstream oil and gas company with exploration and producing interests in Russia and is currently in advanced stages of evaluation and negotiation on several additional projects in Russia.