Bridge Resources Corp. Announces Completion of Financing and Approval of Durango Plan of Development
8/22/2008 7:16:51 AM - Market Wire
CALGARY, ALBERTA, Aug 22, 2008 (MARKET WIRE via COMTEX News Network) --
Bridge Resources Corp. (TSX VENTURE: BUK) ("Bridge") is pleased to announce it has completed the previously announced Pounds Sterling 35,000,000 Durango project debt financing facility with The Royal Bank of Scotland plc as lead lender for a syndicate including KBC Bank NV and the National Australia Bank Limited. This senior debt facility has a five year repayment term and pays interest on commercial terms based on the LIBOR.
Bridge has converted the June, 2008 $10,000,000 K2 Principal Fund L.P. ("K2") debt facility into a $20,000,000 convertible subordinated note with a five year term ("Promissory Note"). The Promissory Note is convertible into common shares of Bridge ("Common Shares") at a price of $1.50 per Common Share for its duration and pays 10% annual interest in Common Shares of Bridge based on the market price at the time.
In addition, in the event Bridge does not offer to redeem the Promissory Note prior to the due date of the Escalation Fees (as defined herein), it shall be obligated to pay a bonus to K2 in the final three years of the Promissory Note, consisting of $1,000,000 worth of Common Shares in Year 3; $2,000,000 worth of Common Shares in Year 4 and $3,000,000 worth of Common Shares in Year 5 (herein the "Escalation Fees"). Bridge management intends to offer to repay the Promissory Note from Durango cash flow prior to such dates.
With conclusion of financing, the Secretary of State for Business Enterprise and Regulatory Reform ("BERR") has formally granted Field Development Approval for Durango. The Durango 48/21a-4Z well confirmed the pre-drilling independent Contingent Resources estimates by MHA Petroleum Consultants Inc. ("MHA"). Development approval by BERR now allows these Contingent Resources to be reclassified into reserves in accordance with National Instrument 51-101 - Standards for Disclosure of Oil and Gas Activities. Pursuant to a report update dated August 20, 2008, MHA has assigned reserves for the Durango field as follows:
Proved (P90) Proved plus Probable (P50) Gas BCF 29.0 36.7 Condensate MBO 750 950
The Durango Project, managed by ADIL, remains on target for first gas production October, 2008. The Technip Apache pipe laying vessel is scheduled to arrive later this month with the CTC Volantis umbilical laying vessel and the Bluestream Northern River diving support vessel scheduled to arrive early September to complete hook-up of the 14.3 km pipeline between the Durango well-head and the Waveney Platform. Modifications to Waveney Platform, including installation of the Durango sub-sea controls, are being undertaken by ODE under authorization from the platform operator Perenco (UK) Limited.
Bridge will have invested Pounds Sterling 80,000,000 in the UK North Sea from inception in 2005 through first Durango gas production with approximately Pounds Sterling 67,000,000 of this amount on Durango capital expenditures. The management estimated proved and probable reserves finding and development costs for the Durango expenditures are $2.98/mcfe (15.8p/therm) Durango expenditures. Bridge has secured an initial gas price insurance hedge of 50p/therm ($9.73/mcf) for 5.0 BCFG production and plans to supplement this with additional gas and condensate commercial hedges as market conditions warrant.
Subject to rig availability and other factors, Bridge plans to re-invest a significant portion of Durango cash flow in its 2009 six-well drilling portfolio comprising one gas development project appraisal well, three additional Southern North Sea Gas Area exploration wells, and two Central North Sea Oil Area exploration wells. Bridge plans to retain a minimum 50% working interest in the six wells and is currently requesting gross well costs from drilling management companies prior to securing partners.
K2 now owns or controls: (a) the $20,000,000 Promissory Note; (b) 1,250,000 Common Shares (less than 1%); and (c) Common Share purchase warrants to acquire a further 4,000,000 Common Shares at a price of $1.30 per Common Share (collectively the "Warrants"). Assuming the conversion of the Promissory Note in full and the exercise of the Warrants, K2 would hold 18,583,333 Common Shares (not including any Common Shares issuable upon payment of interest or Escalation Fees) or 12.3% of the issued and outstanding Common Shares. K2 may acquire ownership or control over further securities of Bridge in the future depending on market conditions. The securities issued to K2 are subject to a four month statutory hold period.
Bridge expresses thanks and appreciation to its shareholders and financial institutions for their funding and support during this initial growth period.
Statements in this press release may contain forward-looking information including expectations of future operations, commerciality of any gas discovered, operating costs, commodity prices, administrative costs, commodity price risk management activity, acquisitions and dispositions, capital spending, access to credit facilities, income and oil taxes, regulatory changes, and other components of cash flow and earnings. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the company. These risks include, but are not limited to, the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to, operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, or reservoir performance, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The reader is cautioned not to place undue reliance on this forward-looking information.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this information.
Bridge Resources Corp.
Edward J. Davies
Bridge Resources Corp.
Bridge Resources Corp.
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