TORONTO, Oct. 20 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC") is pleased to provide an update on the activities of its subsidiary One Earth Oil & Gas Inc. ("OEOG"), which is dedicated to pursuing oil and gas exploration and development opportunities in partnership with the First Nations.
OEOG has entered into joint venture and lease agreements in respect of significant lands on the Ermineskin First Nation (2,235 hectares) ("Ermineskin Lands"). In addition, OEOG has also entered into agreements on lands contiguous to the Ermineskin Lands (1,554 gross hectares) ("Adjacent Lands"). OEOG has also entered into a farm-in and option agreement with a private company in respect of lands which are on the Fort Belknap First Nation and other lands in the area (3,885 gross hectares) (the "Montana Lands"). OEOG retains an option to continue drilling on a rolling option basis covering over 100,000 hectares in Montana.
OEOG drilled and completed one well earlier this year on the Adjacent Lands, which tested positive for gas. OEOG intends to tie-in this well by year-end dependent on market conditions. OEOG intends to drill 6 oil and gas wells over the balance of 2010, 2 on the Ermineskin Lands, 2 on the Adjacent Lands and 2 on the Montana Lands (the "2010 Capital Program"). The wells on the Montana Lands will test the Bakken and Shaunavon zones. OEOG currently has a total of 17 drillable prospects in inventory.
To fund the 2010 Capital Program, SRC purchased 7 million OEOG common shares for $1.00 per common share as part of an $8.1 million private placement recently completed by OEOG (the "Private Placement"). The balance of the common shares issued on the Private Placement was purchased by management of OEOG and other individuals. To date, SRC has contributed a total of $11 million into OEOG and holds and 91% equity interest in OEOG (undiluted).
OEOG's management team consists of Blaine Favel (President and CEO), Gord Harris (COO) and Stephen Austin (CFO). Mr. Favel has over 20 years experience in investment banking and First Nations relations. Both Mr. Harris and Mr. Austin have over 30 years experience in the oil and gas sector with public and private corporations.
About Sprott Resource Corp.
Sprott Resource Corp. ("SRC") is a Canadian based company, the primary purpose of which is to invest and operate 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.
Forward Looking Statements
This press release contains forward-looking statements. More particularly, this press release contains statements concerning the anticipated future corporate plans and initiatives for OEOG, including details of its 2010 Capital Program and its intention to tie-in one completed well. These forward looking statements are based on certain key expectations and assumptions made by management, including expectations and assumptions concerning the success of future drilling and development activities, the performance of existing wells, the performance of new wells, the application of regulatory and royalty regimes, the costs of drilling and completing wells, the costs of marketing oil and gas produced by OEOG, the receipt of cooperation from contractual counterparties where their assistance is required and prevailing commodity prices and exchange rates. Although management believes that the expectations and assumptions on which the forward-looking statements are reasonable, undue reliance should not be placed on the forward-looking statements because management can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the 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. The forward-looking statements contained in this press release may not be appropriate for other purposes and are made as of the date hereof and SRC does not undertake any 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 securities laws.
