Quest Oil Corporation QOIL is pleased to announce that the Company has entered an acquisition memorandum with
Longleaf Petroleum LLC, L-Texx Production LP and L-Texx Management LLC of
Arlington, Texas ("Longleaf") for $6,500,000.
The "deemed" purchase price is US$6.5 million including a US$100,000 deposit, 2
million shares of Quest restricted common stock subject to certain liquidation
restrictions and US$1,200,000 payable at the time of closing. In addition, if at
a date which is two years from the date of the closing, the 10 day average
trailing closing price of our common stock is: (i) between US$1.50 and US$2.50,
Quest shall issue to the sellers such additional shares of our restricted common
stock to bring the total value of the stock paid as consideration in the
transaction equal to US$5 million; or (ii) less than US$1.50, the sellers will
be entitled to a cash payment of US$5 million and the sellers shall return to
the corporation all common stock issued in the transaction.
Upon completion of the acquisition, the company's daily production will increase
from approximately 225 BOEPD to around 450 BOEPD. Longleaf's assets comprise
approximately 3,500 acres in Harrison County located 10 miles from Waskom,
Texas. There are 52 producing wells, 8 water disposal wells and 47 idle wells of
which 38 are considered production candidates. The field currently produces
about 200 net BOEPD to Longleaf, from several zones including the
Fredericksburg, Rodessa and Blossom formations. The acquisition includes
approximately 600 acres of deep rights in the Petit and Travis Peak formations.
The acquisition also includes 2 workover rigs, 15 company vehicles, compressors
and associated equipment with a book value of $1,800,000 along with the 7.5 mile
long Dula Pipeline, a gas collection line with a replacement value of over $7
million.
Bill Stinson, Quest's President and CEO, stated: "This landmark acquisition
demonstrates our management's commitment and ability to execute Quest's business
strategy of acquiring mature onshore U.S. assets that hold significant upside
potential through secondary recovery (waterflooding) and enhanced oil recovery
(EOR). We will continue to execute this strategy aggressively and will do so as
long as opportunities such as Longleaf present themselves."
OTHER COMPANY NEWS
Quest announced today that Mr. Cameron King has tendered his resignation as
President and Chief Executive Officer of the Company, effective February 24,
2006. Quest is proud to announce that Chief Operating Officer, Mr. William
Stinson will assume the role of President and CEO. Mr. Stinson brings over 28
years experience in the oil and gas industry, with both technical and management
experience. Mr. Stinson advises, "On behalf of the board, I would like to thank
and commend Mr. King for all his hard work and efforts in establishing the
company in its early stages. I look forward to moving ahead as President and CEO
and will continue the company's vision of being a major force in the oil and gas
sector."
ABOUT QUEST OIL CORPORATION
The Company is committed to the exploration and development of economical oil
and natural gas reserves globally. Quest management is focused on an acquisition
program targeting high quality and low risk prospects. Initially Quest is
focused on the development of North American oil and gas resources allowing
highly leveraged production opportunities in Alberta and Texas, through its 100%
owned subsidiaries Quest Canada Corp. and Wallstin Petroleum LLC.
ON BEHALF OF THE BOARD
Quest Oil Corporation "William Stinson" William Stinson, President/CEO
To find out more about Quest Oil Corporation (OTCBB:QOIL), visit our website at
www.questoil.com.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS: Except for historical
information contained herein, the statements in this news release are
forward-looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve known and unknown risks and uncertainties, which may cause
our actual results in future periods to differ materially from forecasted
results. These risks and uncertainties include, among other things, volatility
of natural resource prices, product demand, market competition, and risks
inherent in our operations. These and other risks are described in our Annual
Report on Form 10-KSB and other filings with the Securities and Exchange
Commission.
CONTACT: Quest Oil Corporation
Darren Hayes, VP Corporate Development
dhayes@questoil.com
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