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Stetson Oil arranges $25-million bought-deal financing

2008-07-14 05:55 MT - News Release

Mr. Bill Ward reports

STETSON OIL & GAS LTD. ANNOUNCES C$25,000,030 "BOUGHT DEAL" FINANCING

Stetson Oil and Gas Ltd. has entered into an agreement with Thomas Weisel Partners Canada Inc. as lead underwriter on behalf of a syndicate of underwriters to purchase, on a bought-deal private placement basis, 45,454,600 subscription receipts of the company at a price of 55 cents per subscription receipt, for total gross proceeds of $25,000,030. The underwriters will arrange for purchases of the subscription receipts.

The underwriters will have the option to purchase up to an additional 9,091,000 subscription receipts at the issue price for a period of up to two days prior to closing for additional gross proceeds of up to $5,000,050.

Each subscription receipt will be automatically exchanged, for no additional consideration, for one common share of the company upon approval by the Bureau of Indian Affairs (United States) of the signed resolution from the tribal council of the three affiliated tribes of the Fort Berthold Reservation in North Dakota to lease oil and gas mineral rights to approximately 8,570 acres of land.

If the Bureau of Indian Affairs (U.S.) does not approve the resolution prior to closing, the proceeds from the offering will be held in escrow by a Canadian trust company for the benefit of the holders of the subscription receipts. The escrowed funds will be invested in interest-bearing or discount obligations of the Government of Canada or a province of Canada, or one of the five largest Canadian chartered banks.

The escrowed funds will be released to the company if the following condition has been satisfied by Sept. 5, 2008:

* The Bureau of Indian Affairs (U.S.) approves the resolution;
* If the release condition has not been satisfied by the outside date, each of the holders of subscription receipts will have the option of either: (i) having returned to it out of the escrowed funds, and to the extent required, out of the general finances of the company, an amount equal to the issue price for its subscription receipts, as applicable; or (ii) exchanging its subscription receipts for common shares.

Stetson Oil plans to use the net proceeds of this financing to finance the acquisition of the North Dakota tribal leases, the 2008 drilling program and general working capital purposes. The underwriters shall receive compensation comprising cash and broker warrants upon closing of the offering, subject to the release condition.

The offering is scheduled to close on or about July 31, 2008, and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange. The securities to be issued under this offering will be offered by way of private placement exemptions in all the provinces of Canada and in the United States on a private placement basis pursuant to exemptions from the registration requirements of the United States Securities Act of 1933, as amended.