VANCOUVER, BRITISH COLUMBIA--(Marketwire - Mar 1, 2013) - Verona Development Corp. (TSX VENTURE:VDC)(FRANKFURT:V5D) provides the following update in conjunction with the filing of its unaudited interim Financial Statements and Management Discussion & Analysis for the nine month period ended December 31, 2012.
The Company incurred a net gain for the nine months ended December 31, 2012, of $31,087 compared to a net loss of $226,651 for the comparative period. The comparative results between the nine month periods ended December 31, 2012 and 2011 are as expected, with the more significant differences between the nine months periods being as follows:
- Oil sales totaled $277,492 compared to $379,050 for the comparative period. The decrease of $183,209 is due to lower oil production.
- The Company recovered $112,500 in loans receivable that were previously written-off (2011-25,000).
- The Company had a gain of $174,909 through the sale of 6,314,500 its marketable securities for settlement of $378,870 for amounts owing.
During the period, the Company was transferred to NEX. Verona has applied to be reinstated for trading on NEX and is engaged with the TSX Venture Exchange in that process. As part of that process, Mr. Martin Wood was elected to the Board as an independent director and, effective March 1, 2013, and Mr. James Mackie has been appointed Chief Financial Officer of the Company.
Mr. Wood has spent a dozen years in the London banking and financial community, working for N.M. Rothschild, Standard Bank London Ltd. and the Benfield Group. During this time he has worked on over $2BN worth of transactions for the resource sector.
Mr. Mackie is a member of the Association of the Certified General Accountants of British Columbia and Canada. Mr. Mackie has over 15 years of corporate experience in financial management and administration, including corporate governance, government and securities compliance. More recently, he has acted as Corporate Controller for a number of mining exploration companies listed on the Toronto Stock Exchange and TSX Venture Exchange.
Mr. Mackie is replacing the former Chief Financial Officer, Tom Needham C.A, who is retiring from the Company. The Company recognizes with appreciation Mr. Needhams'' contribution to the Verona Development Corp. over the last several years.
In addition, the Company has brought up to date its required filings pursuant to National Instrument 51-101 - "Standards of Disclosure for Oil & Gas Activities". The Company''s Forms 51-101F1, F2 and F3 have been filed with the applicable Securities Commissions and may be viewed under the Company''s profile on SEDAR at www.sedar.com. With those steps taken, and with its most recent quarterly filings complete, the Company expects to be following up with the Exchange in the near future.
Also during the period, the Company engaged in negotiations with Canadian Natural Resources ("CNR"), a general partnership, by its managing partner, Canadian Natural Resources Limited ("CNRL") for the sale of the Company''s 60% working interest in its oil and natural gas projects in the Gainsborough South area of Saskatchewan. The Company originally earned its interest in the property from Strand Resources Ltd. and understands that through a series of transactions CNR came to own Strand''s 40% working interest in the property, together with the battery to which production from the wells is delivered, and assumed responsibility for operating the wells. The Company was not a party to any of those transactions.
Shortly after acquiring the Strand interest, during February, 2008, CNR offered to purchase the Company''s interest. That offer did not reflect the Company''s estimate of the value of its interest and Company declined the offer. CNR subsequently presented to the Company a form of an "effluent processing" agreement and suggested that it would like the Company to start paying dewatering fees to CNR. The Company declined to enter into such an agreement, as it had not paid dewatering charges to Strand and had no obligation to agree to pay dewatering charges to Strand''s successor in title. Nonetheless, CNR thereafter commenced to unilaterally charge the Company for "de-watering", and has failed to pay the Company for its share of oil production.
The Company has no contract with CNR, and it is the Company''s position that there is no basis on which CNR has the right to levy dewatering charges against the Company. Although the Company is required under International Financial Reporting Standards to record such charges as liabilities in its financial statements, the Company denies any liability for such charges. CNR apparently continues to operate the well notwithstanding the fact that its dewatering charges to the Company have consistently exceeded the value of the Company''s 60% share of production from the well since CNR took over operation of the well.
During the nine month financial period ended December 31, 2012, CNR offered to purchase the Company''s interest. The Company made a counter-offer. CNR responded by commencing legal proceedings against the Company in the Court of Queen''s Bench of Alberta (Court File #1201-09029), alleging that the Company is "operator" of the wells, alleging that the Company is a party to a contract with CNR for "effluent processing" and alleging that the Company is indebted to CNR in the amount of approximately $522,000. The Company denies all of those allegations.
Upon receipt of the Company advised the solicitors for CNR that if CNR were to proceed with such a lawsuit, the Company would defend itself and counterclaim against CNR. The Company requested a copy of the contract alleged by CNR. In response, CNR provided an unsigned copy of the form of "effluent processing" contract presented to the Company in 2008 and rejected by the Company. Following additional exchanges between legal counsel, CNR agreed to a suspension of the litigation to permit additional negotiation for the sale of the Company''s interest.
CNR ultimately agreed to pay the Company $75,000 and to eliminate the alleged debt for dewatering charges. Subsequently, however, CNR advised by email that it was prepared to pay only ~$20,000 and was intending to refer the matter back to litigation. The Company reminded CNR of its agreement to purchase the interest for $75,000 and, in response, has been advised that its contact at CNR has sought instructions from CNRL management. The Company is currently awaiting a response. Absent a favourable response, the Company will be claiming against CNR for, among other things, its 60% share of the profit from production and damages.
On Behalf of the Board of Directors
Verona Development Corp.
Gurminder Sangha, Director
This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.