earlier this YR.

Sagres Energy closes $3.47-million first tranche

2012-03-12 08:12 ET - News Release


Mr. Gary Wine reports


Sagres Energy Inc. has completed the first tranche of its previously announced equity financing. Pursuant to the closing of the first tranche, the company has issued and sold 57,921,666 units at a price of six cents per unit for gross proceeds of $3,475,300. Each unit comprises one common share of the company and one common share purchase warrant. Each warrant will entitle the holder thereof to acquire one common share of the company at an exercise price of 12 cents per common share for a period of 18 months following the closing date of the offering. If at any time after four months and one day from the closing of the offering the common shares of the company trade at 20 cents per common share or higher (on a volume-weighted adjusted basis) for a period of 20 consecutive days, the company will have the right to accelerate the expiry date of the warrants to the date that is 30 days after the company issues a news release announcing that it has elected to exercise this acceleration right.



+  Assam's interest in El Triunfo that was aquired is Not even refelected in teh Value of this MCap


About the acquisition

Pursuant to the terms of the exploration and production agreement, the participating interest holders are required to drill two further exploration wells. Under the terms of certain private participation agreements with the other participating interest holders in the block, Sagres will earn an undivided 70-per-cent participating interest and assume operatorship in the block by paying 100 per cent of the costs relating to the first of the two wells, including but not limited to land purchase, payment of easements, civil construction for the location and access road, drilling platform, drilling of the well to the required depth, initial testing of the well and social and environmental investment in accordance with the exploration and production agreement. The estimated costs relating to such well are estimated to be $12-million (U.S.). Upon satisfaction of the work commitments associated with the first well, and subject to the approval of the ANH of assignment to Sagres, Sagres will have a 70-per-cent participating interest in the exploration and production agreement and be the recognized operator.

At the election of its participating interest partner, UTE, Sagres has the right to earn an additional participating interest in the block by financing its partner's 30-per-cent share of the work commitment costs associated with the second of the wells. Depending upon the outcome of the first well, the increased participating interest could vary between 5 per cent and 12.5 per cent. The estimated costs relating to the second well are also estimated to be $12-million (U.S.). Subject to the approval of the ANH, Sagres may be entitled to a further assignment of a participating interest. Once the work commitments and costs associated with the wells are fulfilled, Sagres must pay its participating interest proportionate share of all further costs associated with the exploration and production agreement. The purchase price for the acquisition is $2.5-million (U.S.) (subject to certain customary closing adjustments), payable in staggered cash increments. An additional $2.5-million (U.S.) payment is payable in cash or shares of Sagres upon declaration by the ANH of a commercial discovery on the block. Following closing of the acquisition, Sagres will finance its pro-rata share of a letter of credit required under the terms of the exploration and production agreement in the amount of approximately $840,000 (U.S.) to guarantee the completion of the work obligations thereunder.