Accretive Acquisition expected to be a significant contributor to
2009 Earnings
Capital City Energy Group, Inc. (OTCBB: CETG) or “Capital City”
announced that as of December 31, 2008 it has completed the acquisition
of Hotwell Services Inc., or “Hotwell” an emerging oilfield service
company operating in the Appalachian Basin. Capital City purchased
Hotwell for $5 million (USD), through the issuance of 2.78 million
shares of restricted common stock valued at $1.80 per share. Based on
current projections, Hotwell could add an additional $2,000,000 in gross
revenue per month and $700,000 per month in net cash flow for 2009.
The acquisition establishes CETG as a preferred provider of horizontal
logging and well completion services, the optimal method of hydrocarbon
extraction for the much publicized, domestic natural gas play, the
Marcellus Shale. Most importantly, the management acquired through the
acquisition of Hotwell are some of the Appalachian Basin’s most talented
and respected field services professionals. The strategic purchase
provides the requisite infrastructure to support the Company’s
aggressive growth plan in the Appalachian Basin, and specifically in the
prolific Marcellus Shale formation, through its locations in Delmont,
Pennsylvania and Clarksburg, West Virginia. The Company anticipates
launching four additional bases of field services operations in the
Basin during fiscal year 2009 to service the extensive backlog of
existing clients as well as the Company’s previously announced E&P
activities.
“We believe the acquisition of Hotwell Services Inc. will significantly
accelerate the Company’s financial prospects and positions it as a
rapidly growing provider of energy field services, specifically within
the Appalachian Basin,” said Timothy Crawford, CEO of Capital City
Energy Group. “In addition to expanding geographically, the transaction
brings an experienced and accomplished management team led by Joseph
Sites. We welcome all of the stakeholders of Hotwell to the Capital City
family.”
In connection with the transaction, Mr. Sites, founder of Hotwell
Services, was named to the position of Executive Vice President of the
parent Company Capital City Energy Group, Inc. and has been appointed to
the Company’s Board of Directors. Mr. Sites will also remain the
President of Hotwell Services, Inc. which will continue to operate under
its current name along with its existing management team and field
services personnel. Throughout his professional career, Mr.
