VANCOUVER, BRITISH COLUMBIA--(Marketwire -02/16/12)- Nextraction Energy Corp. (TSX-V: NE.V - News) (the "Company" or "Nextraction"), is pleased to announce that construction of the pipeline at the Provost Viking oil project has been completed. The pipeline will transport the solution natural gas produced from the property to a third party pipeline for sales and processing. A multi-well oil battery is currently being constructed and is expected to be completed by the end of February. At that time, the 14-7 horizontal oil well that was drilled and tested in October 2011 (see News Release dated October 6, 2011) will be brought on production. The new battery will be capable of processing additional volumes from future drilling programs.
The Company is currently in the process of securing well licenses for two wells on the property, with the intention of drilling both wells as soon as approvals and appropriate equipment and services become available. Additional drilling locations are being acquired for a potential drilling program in the second half of the year.
Preparations are also underway to re-enter two existing vertical wellbores on the property with Viking oil potential, with one of these wells being on the acreage acquired at the Crown landsale in July 2011.
The Company has entered into a commitment letter with respect to funding of up to $3.9 million for development of the Provost project through a non-revolving term loan facility (the "Loan Facility") with Tallinn Capital Mezzanine Limited Partnership. The Loan Facility has a maturity date of January 15, 2013 and interest shall accrue at the rate of 16% per annum, calculated daily and compounded and payable monthly with principal repayments commencing May 30, 2012. To secure the Company's obligations under the Loan Facility, the Company has deposited a $5,000,000 debenture with the lender providing a security interest in all present and after-acquired personal property, a fixed charge on all oil and natural gas assets, a floating charge over all other present and after-acquired real property and the pledge of the shares of Nextraction's U.S. subsidiary.
In consideration of establishing the Loan Facility, the Company has paid the lender a facility fee of $58,500. The Loan Facility will be drawn down in four tranches, subject to the fulfillment of certain conditions precedent by Nextraction. It is anticipated that the initial tranche, in the amount of $0.9 million, will be drawn down on or about February 23, 2012.
Kent Edney, President, states: "Completion of the pipeline and oil battery is an integral step in the development plans for the Provost project. The Loan Facility allows the Company to take advantage of continued high oil prices by developing its high quality light oil project in the Provost Viking. The Company is well positioned to take the next steps in its development as a high growth Canadian oil company."
About Nextraction Energy Corp.
Nextraction Energy Corp. is a Canadian junior oil and natural gas company engaged in the exploration and development of oil and natural gas resources in the Western Canadian Basin. The Company's model is the "next round of extraction on known plays". Nextraction targets oil focused projects along trends with known reserves that provide low risk, high return development opportunities in both conventional and unconventional resource projects.
Certain statements made and information contained herein may constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation. These statements relate to future events or the Company's future performance, including statements and assumptions with respect to drilling progress, the obtaining of licenses and the anticipated availability of tranches under the Loan Facility. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "may have", "could", "would", "might" or "will" be taken, occur or be achieved. Although management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurance that a forward-looking statement or information herein will prove to be accurate. Forward-looking statements and information by their nature are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These statements speak only as of the date of this Press Release and are expressly qualified, in their entirety, by this cautionary statement.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.