TORONTO, Jan. 11 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC") announced today that its subsidiary Waseca Energy Inc. ("Waseca") has completed a $20 million financing by way of a rights offering to existing shareholders. As part of the Rights Offering, SRC purchased 28.34 million common shares of Waseca at $0.60 per common share for a total cost of $17 million. As a result of the Rights Offering, SRC's ownership interest in Waseca has increased from 79.1% to 81.3% on an undiluted basis.
"We are extremely pleased with Waseca's progress to date and are excited by its future prospects," said Kevin Bambrough, President and CEO of SRC. "Waseca has acquired a significant land position and we are pleased to be providing additional funding for its development."
Waseca is a private oil and gas company focusing on heavy oil production from the Lloydminster area on the border of Saskatchewan and Alberta. Waseca raised $31.2 million in October of 2008 in an initial financing through the issuance of 52.2 million common shares, of which SRC purchased 45.3 million common shares for $27.2 million.
Waseca has acquired 16,598 hectares of land (64.09 sections of land), in which it has a 100% working interest. Waseca intends to use funds raised from the Rights Offering to complete its 2010 capital program, which will include drilling approximately 30 exploration wells and 15 development wells (the "Capital Program"). The anticipated cost of the Capital Program (including related land and seismic) is expected to be approximately $27.3 million. The Capital Program is designed to increase Waseca's production to approximately 1,500 bbl/d by the end of 2010 and to generate significant future development opportunities. Waseca's 2009 exit production was 498 bbl/d.
About Sprott Resource Corp.
SRC is a Canadian based company, the primary purpose of which is to invest, directly and indirectly, in natural resources. Through acquisitions, joint ventures and other investments, SRC seeks to provide its shareholders with exposure to the natural resource sector for the purposes of capital appreciation and real wealth preservation. SRC is well positioned to draw upon the considerable experience and expertise of both its Board of Directors and Sprott Consulting Limited Partnership ("SCLP"), of which Sprott Inc. is the sole limited partner. Pursuant to a management services agreement between SCLP and SRC, SCLP provides day-to-day business management for SRC as well as other management and administrative services. For more information, please visit www.sprottresource.com.
Forward-Looking Statements
Certain statements contained herein may constitute "forward-looking statements" or "forward-looking information" under applicable securities laws. Some of the forward-looking statements may be identified by words such as "will", "expects", "intends", "anticipates", "should", "believes", "plans", and similar expressions. Forward-looking statements, which are based on management's current expectations and assumptions, including Waseca's ability to reach its future production targets and implement its capital program at or below its expected costs, involve a number of risks and uncertainties. Actual results or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. Factors that could cause actual results to differ from those expressed in, or implied by, these forward-looking statements include, without limitation, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. No assurance can be given that any events anticipated by these forward-looking statements will occur. These forward-looking statements are made as at the date of this news release. SRC does not undertake any obligation to publicly update or revise any of these forward-looking statements, except as required by applicable securities laws.
