MOO:TSX
CALGARY, Feb. 10 /CNW/ - Mooncor Oil & Gas Corp. ("Mooncor") is pleased
to announce that it has acquired a 2% gross overriding royalty ("GOR") on the
production from certain production leases, surface leases and basin wells
located in Stellarton, Nova Scotia (the "Stellarton Property").
Mooncor acquired the GOR pursuant to an agreement with East Coast Energy
Inc. ("ECE"), a private company incorporated in Ontario, that shares one
common director with Mooncor. ECE will acquire the rights to the Stellarton
Property concurrently with this transaction. In consideration for Mooncor
acquiring the GOR, Mooncor will lend ECE $325,000 pursuant to a 12% secured
convertible debenture (the "Debenture") maturing on February 5, 2011 (the
"Maturity Date"). The debenture will accrue interest at a rate of 12%, payable
on the last day of each calendar quarter. At the option of Mooncor, the
Debenture plus accrued but unpaid interest thereon may be converted into units
of ECE at a deemed price of $0.18 per unit at any time for that portion of the
Debenture, including accrued interest, that remains outstanding from time to
time. Each unit consists of one common share in the capital of ECE and one
share purchase warrant exercisable for one additional common share in the
capital of ECE at $0.25 per share. The exercise period of Mooncor's warrants
expire on the earlier of (i) February 6, 2012, or(ii) on the Maturity Date in
the event the shares of ECE are publicly listed on or before that date. The
Debenture is redeemable at the option of ECE at any time in accordance with
the provisions of the Debenture.
Mooncor has structured its participation in the Stellarton Property by
way of both a 2% GOR on the Stellarton Property and a convertible debenture,
to best manage its financial resources while leveraging the talent and
resources of the management of ECE. Accordingly, the transaction provides
Mooncor with the following benefits:(i) a 2% GOR in the Stellarton Property
with no further capital commitments, (ii) the repayment of their $325,000
loan, (iii) a 12% return on their $325,000 investment, (iv) additional cash
equal to $500,000 in the event ECE elects to repurchase from Mooncor 50% of
its 2% GOR, (v) a $25,000 due diligence work fee, and (vi) provisions for
oversight over ECE transactions.
Business of Mooncor Oil & Gas Corp.
Mooncor (through its wholly owned operating subsidiary Mooncor Energy
Inc.) is a junior oil and gas exploration and development company, with
unconventional shale gas, light oil and heavy oil projects in Saskatchewan,
Alberta and South Western Ontario. Mooncor is focusing on both its shale gas
opportunities and its oil operations with current emphasis on its recent shale
gas acquisition in Alberta.
This information contains forward-looking statements (forecasts) under
applicable securities laws. Forward-looking statements are necessarily based
upon assumptions and judgments with respect to the future including, but not
limited to, the outlook for commodity markets and capital markets, the
performance of producing wells and reservoirs, and the regulatory and legal
environment. Many of these factors can be difficult to predict. As a result,
the forward-looking statements are subject to known or unknown risks and
uncertainties that could cause actual results to differ materially from those
anticipated or implied in the forward-looking statements.
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this press release.
