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The Surge of Creative Capital – Alberta Venture, February 2014

To keep Alberta’s economy growing, borrowers and lenders are creating financial layer cakes

Feb 18, 2014

by Tim Querengesser

Earlier this year, a pump-systems company based in Strathcona County was growing fast but had come upon a roadblock. The company’s founder had re-entered the industry after selling his first successful pumps business and waiting out a five-year non-compete clause. But when it came time to finance his new company, he faced an increasingly typical problem for small Alberta companies despite his successful track record: He couldn’t find the money to do it.

That’s where Kristi Miller, the vice-president of First West Capital, a boutique lending arm of First West Credit Union in B.C. that increasingly completes finance deals in Alberta, came into the picture. “The challenge is that this kind of business is fairly capital intensive,” Miller says. And this is a trend that she notes is happening throughout Alberta. “We’re seeing working capital in rapidly growing, capital-intensive industries as a real issue.”

To get around this challenge, First West and others are trying to help fuel continued growth in Alberta by offering more creative forms of lending. And as Miller and others in the corporate finance world point out, Alberta companies and their many lenders are using creativity and multiple layers of lending to find ways to keep growing the economy while other parts of Canada are to a much smaller degree.

“There’s been a lot of capital for equity, but it hasn’t been as robust in previous years so there’s been a need to get more creative.” – Sonny Mottahed, Black Spruce Merchant Capital

And so it is with that Strathcona-based company. First West is part of a three-layered capital structure that’s continuing to fuel the company’s growth. Royal Bank has extended the company’s credit limit to pay for operations and equipment purchases. The founder has invested what Miller describes as “significant” founder equity. And to this mix First West has added a layer of the increasingly common loan instrument of subordinated debt. “So you’ve got three fairly distinct strata within the capital structure, all of which work together to support growth,” Miller says.

But to put Alberta in perspective, it helps to have a look at the Canadian picture. Ted Mallett, chief economist with the CFIB, says the survey data show that about 61 per cent of its members use outside forms of financing, like a loan or a line of credit, while the rest are self-financing. “That hasn’t changed much over the past five years, since we started asking this question,” Mallett says. “In fact it’s even come down by a hair, by about a percentage point.” Of those that are seeking external funding, the organization also asks where they’re getting it. Again, following the trend of stability, the results haven’t changed much over time, Mallett says. Between 65 and 66 per cent of companies that seek external funding say they’re using chartered banks, while about 16 per cent are using credit unions. For companies not using banks or credit unions, the CFIB data shows that about two per cent find funding through family and friends, one per cent through vendor financing, a miniscule amount using specialty asset finance companies and between eight and nine per cent through government-backed institutions. “All of these trends are very stable over the past four years,” Mallett says. “So we’re not seeing any significant shakeup in those kinds of patterns.”

But then there’s the outlier of Alberta. Sonny Mottahed, CEO and managing partner with Black Spruce Merchant Capital, a boutique investment bank in Calgary that provides advisory services for companies on mergers and acquisitions, says the Canadian market for corporate financing has been equity-driven. “There’s been a lot of capital for equity, but it hasn’t been as robust in previous years so there’s been a need to get more creative,” Mottahed says of security for loans. “And what does that typically mean if equity is not available? Guys are trying to move further up the capital structure – more equity-linked type products, like convertible debentures. Or different types of debt.” As Mottahed says, corporate finance for Alberta’s nano, micro and small cap companies “doesn’t fit in any one box.”

That is certainly the case with Miller’s experience at First West Capital. Fully one-third of her deal flow is in Alberta, which for a B.C.-based lender exploring corporate financing for only the past three years, is telling in itself (indeed, Miller says she expects Alberta to form half her business in just a few more years). First West is rarely the sole provider of capital, Miller says, but is instead a layer in a lending cake. That layer is often either subordinated debt (which stands second in line on a default to a primary lender) or the increasingly common mezzanine debt, which is similar to sub-debt but usually an interim source of capital, as it comes with high interest rates. First Capital is deliberately targeting the mid-market business environment because it sees this as a relatively underserviced niche for financing, Miller says. “There’s a lot going on [there] and there’s a huge demand for capital in that space.”

The demand for capital has seen providers get creative. Perhaps that’s best illustrated by SeedUps Canada, a just-launched crowdfunding service for corporations and lenders in Alberta. Sandi Gilbert, the company’s founder, says SeedUps, based in Calgary, is a service for companies seeking between $250,000 and $2 million in financing. The company should be functioning, she says, but can be pre-revenue. On the investor side, SeedUps is targeted at those who want to put between $1,000 and $10,000 into a promising company (the average, Gilbert says, is expected to be about $4,000 per shareholder). But perhaps the most interesting thing about SeedUps and the idea of crowdfunding itself is how knowledgeable that crowd tends to be when talking about corporate finance.

“Let’s be clear – I don’t think a mining company’s going to be that successful raising capital on a crowdfunding platform,” Gilbert says. “Our first company we’ll be launching has a good consumer following … and people excited about the company that want to invest.” That passion, Gilbert says, brings value. “Often times 30 per cent of the raise [with crowdfunding finance deals] is done within their own network,” Gilbert says.

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Porto Announces Review of Strategic Alternatives to Maximize Shareholder Value

THE WOODLANDS, TX, Oct. 7, 2013 /CNW/ – Porto Energy Corp., (“Porto” or the “Company”) (TSXV:PEC), today announced that that in light of its ongoing capital requirements necessary to advance its oil and gas exploration program in Portugal, it has formed a Special Committee of independent directors and initiated a strategic review process to identify, examine and consider a range of strategic alternatives available to Porto, with a view to preserving and maximizing shareholder value. This process could result in a sale of the Corporation, a private placement or public financing through the issuance of debt, equity or a combination of both, a sale of a material portion of the Corporation’s assets, a merger, business combination or a corporate reorganization, among other alternatives. The Special Committee has retained Black Spruce Merchant Capital Corp. as its financial advisor to assist in the strategic review process.

Corporate Highlights

Porto currently has a working capital balance of approximately $1.3 million and a Portuguese income tax pool of approximately $130.0 million at May 31, 2013. Included in these tax pools are non-capital losses available to carry forward to future years of approximately $37.3 million.

The Company’s independent resource evaluation (the “Report”) performed by Dallas, Texas-based Netherland, Sewell & Associates, Inc. (“NSAI”) effective December 31, 2012 and dated January 10, 2013, assigned a P50 risked recoverable Contingent Resources associated with the Company’s Jurassic reef and other exploration prospects of approximately 44 mmboe and a P50 risked recoverable Prospective Resource mainly attributable to the Company’s Lias Resource and Presalt Conventional prospects of approximately 637 mmboe (535 mmboe on a net working interest basis).

As stated in the Company’s January 31, 2013 press release, work to characterize the Jurassic Lias resource play included finalized aeromagnetic data over the blocks, the drilling and analysis of 23 shallow wells and the development of a Lias deposition model that greatly increased the Company’s understanding of the Lias marls in the central and northern blocks. This work underpinned the Report by NSAI and points to a very prospective unconventional resource play that merits additional technical evaluation.

Review Process

Porto does not intend to disclose developments with respect to the strategic review process unless and until the Board of Directors has approved a definitive transaction or strategic option, or unless otherwise required by law or disclosure of which is deemed appropriate. The Corporation cautions that there are no guarantees that the strategic review will result in a transaction or if a transaction is undertaken, as to its terms or timing.

Porto’s common shares trade on the TSX Venture Exchange under the symbol PEC. Porto currently has 198,954,653 common shares outstanding.

About Porto Energy Corp.

Porto Energy Corp. is an international oil and gas company engaged in the exploration of crude oil and natural gas in Portugal, including the appraisal of a gas discovery. Through its wholly owned subsidiary, Mohave Oil And Gas Corporation (a Texas corporation with branch offices in Portugal), the Company holds working interests in seven concessions in Portugal’s Lusitanian Basin totaling 1.6 million net acres. Through its exploration efforts to date, the Company has identified seven major exploration trends over its concessions and generated more than 45 prospects and leads. Porto Energy’s shares trade on the TSX Venture Exchange under the ticker symbol “PEC”. For more information on Porto Energy visit www.portoenergy.com.

About Black Spruce Merchant Capital Corp.

Black Spruce is a private merchant banking firm focused on providing specialized financing and advisory services to the global energy industry. Our award-winning principals have a history of achieving success for clients based on high-level industry focus, strong industry relationships and innovative transaction skills. Offering advice in project, corporate and credit syndication; equity-linked financings; mergers and acquisitions; and strategic business development. For more information on Black Spruce visit: www.bsmc.ca

Cautionary Statements

No proved, probable or possible reserves have been assigned by the Company at this time. Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. There is no certainty that it will be commercially viable to produce any portion of the resources.

Estimates with respect to resources that may be developed and produced in the future are often based upon volumetric calculations, probabilistic methods and upon analogy to similar types of resources, rather than upon actual production history. Estimates based on these methods generally are less reliable than those based on actual production history. Subsequent evaluation of the same resources based upon production history will result in variations, which may be material, in the estimated resources. Resource estimates may require revision based on actual production experience.

Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable because of one or more contingencies. The contingent resources shown are contingent upon demonstration of the economic viability of the projects. Commercial flow rate testing and documentation of development plans will provide further evidence of economic viability of these projects. If these contingencies are resolved, some portion of the contingent resources estimated may be reclassified as reserves. There is no certainty that it will be commercially viable to produce any portion of the contingent resources.

Low Estimate is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. Using probabilistic methods, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate.

Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Using probabilistic methods, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

High Estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. Using probabilistic methods, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.

Barrels of oil equivalent (BOEs) include oil, solution gas, associated gas and condensate. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1 bbl has been used and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

This press release contains certain forward-looking statements. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe”, “predict” and “potential” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. These forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements that are contained in this press release, except in accordance with applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Porto Energy Corp.
For further information:

Heath Cleaver – Chief Financial Officer
Phone: 1-713-975-1725

Black Spruce Merchant Capital Corp.
Sonny Mottahed – Managing Partner
or
Jeff Barber – Managing Partner
Phone: 1.403.351.1779
Email: info@bsmc.ca

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Porto Energy Engages Black Spruce Merchant Capital to provide Financial Advisory Services

THE WOODLANDS, TX, Aug. 24, 2012 /CNW/ – Porto Energy Corp., (“Porto” or the “Company”) (TSXV:PEC), a company focused on oil and gas exploration, appraisal and development in Portugal, today announced the engagement of Black Spruce Merchant Capital Corporation (“BSMC”) to provide financial advisory services with respect to project and corporate, business combinations as well as equity and debt financings as part of the ongoing development on Porto’s seven concessions in Portugal’s Lusitanian Basin.

Porto is currently actively advancing two of its projects in Portugal.  First, on June 29, 2012Porto through its wholly owned subsidiary, announced a definitive farmout with Petróleos de Portugal – Petrogal (“Galp”) whereby Galp will pay the Company approximately US$7.8 million to earn 50% of the Company’s rights in the Aljuabarrota-3 concession, comprising approximately 300,000 acres, onshore Portugal.  Under the terms of the agreement, the Company intends to drill a Presalt well with a target depth of approximately 3,000 meters.  Drilling is expected to commence in late August, 2012 and take approximately 45-55 days to complete.  This well has a NI51-101 estimate of 588 BCF P50 gross unrisked resources (294 BCF net P50 unrisked resources).  Second, on March 1, 2012, Porto announced a definitive agreement with Sorgenia International B.V., Netherlands (“Sorgenia”), and Rohöl-Aufsuchungs Aktiengesellschaft, Austria (“RAG”), (together the (“Farm-in Partners”), to jointly evaluate the unconventional resource potential of the Lower Jurassic (Lias) stratigraphic interval within Porto’s concessions in Portugal. Porto retains operatorship of the Company’s concessions and the joint venture. With the additions of the two new concessions in May 2012, Zambujal and Peniche, the area to be jointly evaluated is approximately 690,000 acres.  The Lias stratigraphic interval is being pursued as an unconventional resource throughout Europe. Second phase activities, for which Porto will be carried for until phase 3, include the drilling of two deep wells and additional geochemical and geophysical analysis. The costs associated with the two wells will be shared equally between the Farm-in Partners capped at a gross cost of US$10.0 million, net of mobilization and demobilization costs.  Phase 1 of this joint venture is currently underway with the drilling of 19 wells (9 core wells) of which 11 wells have been drilled and logged to date both inside and outside the AMI to determine the outer extent of the Lias interval over the Lusitanian Basin.  The focus of the first phase, which must be completed by December 31, 2012, is on developing a comprehensive geophysical and geochemical analysis of the Lias interval.

Porto continues to pursue interests in its other concessions, most notably its offshore acreage for which the Company has shot and interpreted approximately 1,100 km(2) of seismic data.  Using this data, the Company has mapped approximately 3 – 4 prospective opportunities.

Upon the engagement of BSMC, the Company issued to BSMC 1,000,000 options exercisable at a price of $0.11 per common share for three years to vest one-third every six months from the date of the engagement. In addition, BSMC will be paid a monthly work fee during the term of the engagement, milestone fees in certain circumstances and a financing success fee on the closing of any debt or equity financing provided to Porto.

About Porto Energy Corp.

Porto Energy Corp. is an international oil and gas company engaged in the exploration of crude oil and natural gas in Portugal, including the appraisal of a gas discovery.  Through its wholly owned subsidiary, Mohave Oil And Gas Corporation (a Texas corporation with branch offices in Portugal), the Company holds working interests in seven concessions in Portugal’s Lusitanian Basin totaling approximately 1.9 million net acres. Through its exploration efforts to date, the Company has identified seven major exploration trends over its concessions including unconventional oil and gas resource plays as well as conventional oil and gas targets. Porto Energy’s shares trade on the TSX Venture Exchange under the ticker symbol “PEC”. For more information on Porto Energy visit: www.portoenergy.com.

About Black Spruce Merchant Capital

Black Spruce is a private independent merchant banking company focused on providing executive level and unbiased financial advisory services to the global oil and gas industry. Black Spruce’s award winning principals have a history of achieving success for clients based high-level industry focus, strong industry relationships and innovative transaction skills. Offering advice in project, corporate and debt capital markets; equity-linked financings; mergers and acquisitions; and strategic business development.

Cautionary Statements

No proved, probable or possible reserves have been assigned by the Company at this time. Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. There is no certainty that it will be commercially viable to produce any portion of the resources.

Estimates with respect to resources that may be developed and produced in the future are often based upon volumetric calculations, probabilistic methods and upon analogy to similar types of resources, rather than upon actual production history. Estimates based on these methods generally are less reliable than those based on actual production history. Subsequent evaluation of the same resources based upon production history will result in variations, which may be material, in the estimated resources. Resource estimates may require revision based on actual production experience.

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.

Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Using probabilistic methods, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

This press release contains certain forward-looking statements.  These statements relate to future events or the Company’s future performance.  All statements other than statements of historical fact are forward-looking statements.  The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe”, “predict” and “potential” and similar expressions are intended to identify forward-looking statements.  These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.  These forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements that are contained in this press release, except in accordance with applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Porto Energy Corp. Heath Cleaver – Chief Financial Officer Phone: 1-713-975-1725

Black Spruce Merchant Capital Corp. Sonny Mottahed – CEO Phone: 1-403-351-1779 Email: sonny@bsmc.ca

SOURCE: Porto Energy Corp.

To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/August2012/24/c9295.html

CO: Porto Energy Corp. ST: Texas NI: NP

-0- Aug/23/2012 21:45 GMT

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Tuscany International Drilling Inc. Announces Hiring of Financial Advisors to Conduct Review of Strategic Alternatives

CALGARY, ALBERTA–(Marketwired – April 8, 2013) – Tuscany International Drilling Inc. (“Tuscany” or the “Company”) (TSX:TID) (COLOMBIA:TIDC) is a Canadian-based oilfield services company, offering drilling, completion and workover services to the international oil and natural gas industry.

The Board of Tuscany announces that it has retained Citigroup Global Markets Inc. (“Citi”) and Black Spruce Merchant Capital Corp. (“BSMC”) as its financial advisors to consider a range of potential strategic alternatives for the Company with a goal to enhancing shareholder value.

There can be no assurance that any transaction will occur and that there is no defined timeline for the strategic review. The Company does not intend to comment further regarding the strategic review until such time, if any, as Tuscany determines that disclosure is appropriate or required.

Walter Dawson, President and CEO of Tuscany, made the following statement: “The Board has been focused on the recent decline in Tuscany’s share price, which we do not believe reflects the long-term value of the Company. Therefore, we have taken proactive steps by appointing two well-regarded financial advisors in Citi and BSMC to work alongside us to develop ways to enhance shareholder value.”

While undertaking the strategic review, Tuscany will continue to conduct its business as usual and remains fully-focused on servicing its customers.

About Tuscany
Tuscany, a corporation headquartered in Calgary, Alberta, is engaged in the business of providing contract drilling and work‐over services along with equipment rentals to the oil and gas industry. Tuscany is currently focused on providing services to oil and natural gas operators in South America and Africa. Tuscany has operating centers in Colombia, Brazil, Ecuador and France.

The listing of Tuscany’s common shares on the Colombian Stock Exchange does not imply a certification by the BVC of the value or the solvency of Tuscany.

The Toronto Stock Exchange has not reviewed, nor does it accept responsibility for the adequacy or accuracy of this release.

FOR FURTHER INFORMATION PLEASE CONTACT:

Tuscany International Drilling Inc.
Walter Dawson
Chairman & CEO
(403) 265-8258
(403) 265-8793 (FAX)
or
Tuscany International Drilling Inc.
Matt Moorman
CFO
(403) 265-8258
(403) 265-8793 (FAX)
or
Tuscany International Drilling Inc.
1950, 140-4th Avenue S.W.
Calgary, Alberta
www.tuscanydrilling.com
or
Citigroup Global Markets Inc.
Octavio Molmenti
(713) 821-4701
or
Citigroup Global Markets Inc.
Serge Tismen
(212) 816-6000
or
Citigroup Global Markets Inc.
Grant Kernaghan
(416) 947-5500
or
Black Spruce Merchant Capital Corp.
Sonny Mottahed
Managing Partner
(403) 351-1779
or
Black Spruce Merchant Capital Corp.
Jeff Barber
Managing Partner
(403) 351-1779
or
Black Spruce Merchant Capital Corp
11th Floor, 505 – 3rd Street SW
Calgary, Alberta
info@bsmc.ca

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Calgary Oil Baron Jeff Boyce’s Petroamerica Turnaround In Progress

This interview was published by Tommy Humphreys on October 9, 2012 on CEO.ca.

Please enter http://ceo.ca/pta-update/ to get the whole story.

Since we first wrote about Petroamerica Oil Corp. (TSXV: PTA) on August 16, shares of the Calgary/Bogata-based oil and gas junior have risen over 50% to 52-week highs (chart). Obviously something is up so we decided to take a closer look to see why shares in PTA have more buyers than sellers.

What first attracted us to Petroamerica was the management team, which we detailed in our August article. Jeff Boyce, former CEO and co-founder of the $4.5B+ Vermillion Energy Inc., is a ‘hands-on’

Executive Chairman with a strong track record. CEO Nelson Navarette was formerly second in command at Ecopetrol, the state oil company in Colombia, and he has the connections and expertise to navigate the oil business in that country. Influential resource mogul and billionaire Frank Giustra is also one of the largest shareholders of the company.

We were also impressed by the turnaround strategy being executed by management. When we first spoke with Boyce by phone in August, he told us, “We’ve come out of two years of hell, changing management, cleaning up the company’s asset base. But I like this kind of stuff, I think I have half an idea of what I’m doing, so I stepped up, as did Nelson Navarette and Ralph Gillcrist [EVP Exploration and Business Development], and now we’ve made a major discovery.”

Another press release was issued by PTA last week which the market responded favourably to, announcing current net production of 2714 barrels per day. See: “Petroamerica Announces the Drilling Start-up of the Las Maracas-5 Well…

Following this release we wanted to know what to expect from PTA over the coming months, so weventured to Calgary last week to catch up with Mr. Boyce and learn more.

Our conversations with industry experts before heading to Calgary indicated that the market is positively inclined to Petroamerica, yet still wants to see more evidence that PTA can continue to deliver success.

Mr. Boyce put it succinctly in our meeting last Thursday when he said, “For our company, we’ve got a real nice oil field now at Las Maracas, and we’ve got a little bit of production at Balay. If we can get that other leg of the stool fastened with more exploration success, then the concentration risk is gone, and all of a sudden, this becomes a real company—not just a ‘one asset play.’”

In asking Mr. Boyce how investors might value the company, he suggested focusing on the growth of production, reserves and cash flow on a per share basis. “At 2714 barrels per day, our stock price is trading at less than two times 2013 cash flow per share. What’s a reasonable multiple? That’s for you to decide, but I think we’re trading at approximately half of our base value, not including any exploration upside.”

 

Catalysts

A top priority now for Petroamerica is to prove up its core asset, the Las Maracas oil field, which has been its first major success. One step out well, Las Maracas 5, is currently drilling, with Las Maracas 6 expected to be drilled right after Las Maracas 5.

According to Boyce, Petroamerica also has a number of exploration properties in the Llanos basin, all of which have undergone 3D Seismic surveys. Drill results from the La Casona well on the El Eden block will be out by the end of October. Petroamerica holds at 40% working interest in this block, and the company has handicapped the success of this well at 45%—with the potential of 5-10 million barrels recoverable. Boyce commented that, “El Eden has the potential to double our current production and reserves.”

The next block for exploration will be CPO-1, which is a 50% working interest in a joint venture with the $7B+ Colombian energy producer, Pacific Rubiales. The CPO-1 prospect has a potential size of 7-12 million barrels of recoverable reserves, handicapped at a 40% chance of success after the 3D Seismic survey. CPO-1 is expected to be drilled later this year or early next. In regards to CPO-1 Boyce said, “This is a very prolific area with lots of production around it. Like El Eden, CPO-1 has the potential to be as big or bigger than what we have now at Las Maracas.”

Additional drilling prospects include the Curiara-1 well at El-Porton, which is a block beside El-Eden and will be drilled early next year, with results expected by March 2013. When asked if El-Porton was as large of a prospect as the others, Boyce said, “In terms of potential, we think El-Porton is bigger, but keep in mind, this prospect has a much higher risk profile.”

Balay 4 will also be drilled shortly, as part of a delineation of a reservoir on the property with two wells already in production. Petroamerica has only a 15% working interest in Balay (with Petrobras as operator), so it’s less material to the company, but the field has potential, Boyce says.We also learned Petroamerica has further growth prospects outside of the blocks already mentioned, and more areas to run 3D Seismic surveys.

Another potential catalyst for the company will be the release of an upcoming reserve report, prepared by GLJ Engineering, which should be ready by March 2013. Petroamerica hopes this report will assist the company in obtaining a lower cost reserve-based credit facility in the future.

Additionally, the company is about to ramp up the marketing of its story to investors, beginning with presentations at a Colombian energy conference and the Canaccord Global Resource Conference this October.

Petroamerica also announced the engagement of Sonny Mottahed (Black Spruce Merchant Capital), formerly of Canaccord and Raymond James, as Special Advisor to the company’s board of directors. “Sonny is helping us to communicate the story properly, to find new shareholders, and in sourcing and evaluating new business opportunities. He gives us depth and he owns a lot of stock. He’s a partner, and we’re fortunate to have him involved,” Boyce commented.

 

Challenges

When asked about challenges the company has faced, Boyce indicated that, “One challenge we’ve had is retooling the whole shareholder base. Two years ago production was at zero and our share price was 70 cents. Today the production is at 2714 barrels per day, and the stock price is down here in the mid 20s. People got too excited too early. Now we’re starting to deliver success and we’re getting the right investor base who want to own Petroamerica, who understand the story, and who are a little more patient with their capital, like I am… I will be the last guy out,” Boyce further commented.

It is also difficult to ignore the high share count when evaluating the company, with 578,331,594 outstanding plus warrants and options at time of writing. “I don’t like that there’s so many shares out, but I own them, and I’m not selling,” Mr. Boyce told us. “Keep in mind when looking at the share structure that it’s the market capitalization that counts, and that we could take in a lot of capital at higher prices from our warrants and options.”

We asked Boyce whether a share consolidation was in the cards, and he replied that, “We would only consider a share consolidation on strength, with respect to a business combination or other positive transaction. In the meantime, we’re trying to make this company as successful as possible.”

 

Conclusions

What we like most about Boyce is that he wants results, and not promotion alone, to drive the share price. He commented that, “It’s fine to get people excited–they will believe you. But when I tell you I’m going to deliver, it’s going to be more than I tell you to expect, not less. That’s my philosophy of building success and loyalty in the marketplace… I want you to add 10% or 20% to my story because we’ve under-promised and over-delivered.”

As our time with Mr. Boyce came to an end he told us that, “With Petroamerica, we’ve had one major success. Now, for things to really take off, we need to show the market we’re not just a one-trick pony. I think the odds are, that out of five or six [exploration blocks], one or two are going to work, and when they do, we’ll get a real shot in the arm.”

Our experience shows us that speculating on an oil and gas explorer is never a sure thing — but fortune favours the bold, and it helps to have an experienced captain like Jeff Boyce at the helm. The fate of this company is now up to the drill bit, and at least operationally, now we know what to expect.

Whether you want to add 10% or 20% to the story is up to you.

Disclosure: Please see Petroamerica’s Disclaimer on page 1 of their corporate presentation as this article may contain forward looking statements. Also, Tommy Humphreys owns shares in Petroamerica Oil Corp. and this article is not investment advice. Always do your own due diligence and consult a licensed investment advisor before buying or selling any security.

SOURCE: Petroamerica Oil Corp.

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Petromanas to Acquire Gallic Energy as Part of Continental European Strategy

CALGARY, ALBERTA, October 2, 2012 – Petromanas Energy Inc. (“Petromanas” or the “Company”) (TSXV: PMI) and Gallic Energy Ltd. (“Gallic”) (TSXV: GLC) are pleased to jointly announce that they have entered into an agreement (the “Arrangement Agreement”) whereby Petromanas will acquire 100% of the issued and outstanding class A shares of Gallic (“Gallic Shares”), in exchange for common shares of Petromanas (“Petromanas Shares”), by way of a statutory plan of arrangement (the “Arrangement”). The
transaction is expected to close in the fourth quarter of 2012 provided all required Gallic security holder, court and regulatory approvals are obtained.

Under the terms of the Arrangement, holders of Gallic shares (“Gallic Shareholders”) will receive, in exchange for each Gallic Share held, 0.3736 of a share of Petromanas (the “Exchange Ratio”). The Exchange Ratio represents a value of approximately $0.07 per Gallic Share, based on the volume weighted average price of Petromanas Shares on the TSX Venture Exchange (the “TSXV”) for the ten trading days ended October 1, 2012 and a premium of 11% to the volume weighted average price of Gallic Shares on the TSXV for the same period.

In addition, under the terms of the Arrangement Agreement, all of Gallic’s outstanding options will be exercised in accordance with their terms, or, surrendered or otherwise terminated prior to the closing of the Arrangement. Pursuant to the Arrangement, all holders of Gallic warrants will receive replacement warrants of Petromanas exercisable for Petromanas Shares equal to that number of Gallic Shares which were otherwise issuable upon exercise of the Gallic warrants previously held, multiplied by the Exchange Ratio, with the exercise price adjusted accordingly. Petromanas anticipates issuing an aggregate of approximately 62.65 million common shares in connection with the Arrangement, at a deemed purchase price in respect of the Arrangement of approximately $10 million. After giving effect to the Arrangement, Petromanas will have approximately 693 million common shares outstanding.

“This transaction provides shareholders of both companies with an opportunity to access an expanded portfolio of European assets on favourable terms,” said Glenn McNamara, CEO of Petromanas. “Petromanas has always planned to diversify and complement its Albanian exploration portfolio with additional European assets. The combined exploration assets are focused on proven petroleum producing basins and offer exposure to a variety of play and commodity types while diversifying risk across the portfolio. Our subsurface expertise currently being utilized in Albania is a very good fit for Gallic’s naturally fractured carbonate assets in France’s Aquitaine Basin. In addition, fiscal terms, regional commodity prices and infrastructure access in France are very attractive for conventional assets. We feel this is a cost effective way to expand Petromanas’ exploration portfolio and our solid balance sheet will permit ongoing exploration activities across the unified asset base to proceed in an orderly and timely fashion from a position of strength.”

The Arrangement Agreement provides for, among other things, a non-solicitation covenant on the part of Gallic, subject to customary “fiduciary out” provisions, that entitles Gallic to consider and accept a superior proposal and a right in favour of Petromanas to match any superior proposal. If the Arrangement Agreement is terminated in certain circumstances, including if Gallic enters into an agreement with respect to a superior proposal or if the Board of Directors of Gallic withdraws or modifies its recommendation with respect to the proposed transaction, Petromanas is entitled to a termination payment in cash of $350,860. A complete copy of the Arrangement Agreement will be available under Petromanas’ issuer profile on SEDAR at www.sedar.com.

The Gallic Board of Directors, after consulting with its financial and legal advisors, has unanimously (other than one Gallic director who recused himself from the process of considering the proposed transaction) determined that the Arrangement is in the best interests of Gallic and that the consideration being offered to Gallic Shareholders is fair, from a financial point of view, to the Gallic Shareholders. The Gallic Board has resolved to unanimously recommend that Gallic Shareholders and Gallic warrantholders vote their shares and warrants in favour of the Arrangement at the special meeting (the “Gallic Meeting”) of Gallic Shareholders and warrantholders (voting together as a single class) to be held on or about November 30, 2012.

The directors and senior officers of Gallic have entered into support agreements with Petromanas to vote their Gallic Shares and Gallic warrants in favour of the Arrangement at the Gallic Meeting. Completion of the transaction is subject to customary closing conditions, including court approval of the Arrangement; approval of two-thirds of the votes cast by holders of Gallic Shares and Gallic warrants (voting together as a single class) in person or by proxy at the Gallic Meeting; and applicable government and regulatory approvals by, among others, the relevant authorities in Canada, France and Australia (if required).

Full details of the transaction will be included in an information circular to be mailed to Gallic Shareholders and warrantholders in accordance with applicable securities laws. A copy of the information circular and related documents will be filed under Gallic’s issuer profile on SEDAR at www.sedar.com.

Black Spruce Merchant Capital Corp is acting as financial advisor to Petromanas with respect to the Transaction. Raymond James Ltd. has provided the board of directors of Petromanas with its verbal opinion that, subject to its review of the final form of documents effecting the Transaction, the consideration payable pursuant to the Arrangement is fair, from a financial point of view, to the shareholders of Petromanas. National Bank Financial Inc. is acting as strategic advisor to Petromanas. Petromanas’ legal advisor is Norton Rose Canada LLP.

Gallic’s Board of Directors has received a fairness opinion from Macquarie Capital Markets Canada Ltd. that, subject to the assumptions and limitations contained therein, the consideration to be received by Gallic Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Gallic Shareholders. Gallic’s legal advisor is Davis LLP.

 

About Gallic Energy Ltd.

Gallic is an international oil and gas company with assets in France and Australia. Current operations are focused on France and, in particular, on the Aquitaine Basin where Gallic holds a 100% working interest in approximately 320,000 net acres of exploration lands. Gallic also holds acreage in the prospective Canning Basin in Australia.

For further information with respect to Gallic Energy Ltd. please contact:

William H. (Bill) Smith
President and Chief Executive Officer
Gallic Energy Ltd.
Tel: (403) 930-7533

or

Dean Callaway
Vice President Finance and Chief Financial Officer
Gallic Energy Ltd.
Tel: (403) 930-7534
info@gallicenergy.com

 

About Petromanas

Petromanas is an international oil and gas company focused on the exploration and development of its assets in Albania. Petromanas, through its wholly-owned subsidiary, holds three Production Sharing Contracts (“PSCs”) with the Albanian government. Under the terms of the PSCs, the Company has a 100% working interest in Blocks A, B, D, and E and a 50% working interest in Blocks 2 and 3 that comprise more than 1.4 million gross acres across Albania’s Berati thrust belt.

For further information with respect to Petromanas Energy Inc. please contact:

Glenn McNamara, CEO
Hamid Mozayani, COO
Bill Cummins, CFO
Petromanas Energy Inc.
Suite 1720, 734 – 7th Avenue SW
Calgary, Alberta
Canada T2P 3P8
Tel: +1 403 457 4400
Fax: +1 403 457 4480
Email: info@petromanas.com

Website: www.petromanas.com

The Equicom Group
Nick Hurst
300 5th Avenue SW, 10th Floor
Calgary, Alberta
Canada T2P 3C4
Tel: +1 403 218 2835
Fax: +1 403 218 2830
nhurst@equicomgroup.com

 

Forward-Looking Information

This press release contains forward-looking forward-looking information and statements within the meaning of applicable securities laws and are based on the expectations, estimates and projections of management of Petromanas and Gallic as of the date of this news release unless otherwise stated. The use of any of the words “expect”, “anticipate”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, ”believe”, “plans”, “intends” and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward-looking information and statements concerning: the anticipated benefits of the Arrangement to Petromanas and Gallic and their respective shareholders, including anticipated synergies; the timing and anticipated receipt of required regulatory, court and securityholder approvals for the transaction; the ability of Petromanas and Gallic to satisfy the other conditions to, and to complete, the Arrangement; the anticipated timing of the mailing of the information circular regarding the Arrangement, the holding of the Gallic Meeting and the closing of the Arrangement.

In respect of the forward-looking information and statements concerning the anticipated benefits and completion of the proposed Arrangement and the anticipated timing for completion of the Arrangement, Petromanas and Gallic have provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the time required to prepare and mail securityholder meeting materials, including the required information circular; the ability of Petromanas and Gallic to receive, in a timely manner, the necessary government, regulatory, court, securityholder, stock exchange and other third party approvals, including but not limited to the receipt of applicable competition approvals and foreign government approvals; the ability of Petromanas and Gallic to satisfy, in a timely manner, the other conditions to the closing of the Arrangement; and expectations and assumptions concerning, among other things: commodity prices and interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. The anticipated dates provided may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary securityholder, government, regulatory, court or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. Accordingly, readers should not place undue reliance on the forward-looking information and statements contained in this press release. In respect of the forward-looking information and statements, Petromanas and Gallic have provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions in respect of: prevailing commodity prices, margins and exchange rates; that Petromanas’ future results of operations will be consistent with past performance and management expectations in relation thereto; the continued availability of capital at attractive prices to fund future capital requirements relating to existing assets and projects, including but not limited to future capital expenditures relating to expansion, upgrades and maintenance shutdowns; the success of growth projects; future operating costs; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there are no unforeseen material construction or other costs related to current growth projects or current operations.

Since forward-looking information and statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which Petromanas and Gallic operate in general such as: operational risks; delays or changes in plans with respect to growth projects or capital expenditures; costs and expenses; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; failure to realize the anticipated benefits of the Arrangement and to successfully integrate Gallic and Petromanas; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. Risks and uncertainties inherent in the nature of the Arrangement include the failure of Petromanas or Gallic to obtain necessary securityholder, government, regulatory, court and other third party approvals, or to otherwise satisfy the conditions to the Arrangement, in a timely manner, or at all. Failure to so obtain such approvals, or the failure of Petromanas or Gallic to otherwise satisfy the conditions to the Arrangement, may result in the Arrangement not being completed on the proposed terms, or at all.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of Petromanas, Gallic and the combined company, are included in reports on file with applicable securities regulatory authorities, including but not limited to; Petromanas’ Annual Information Form for the year ended December 31, 2011 which may be accessed on Petromanas’ SEDAR profile at www.sedar.com and the Annual Information Form of Gallic for the year ended December 31, 2011 which may accessed on Gallic’s SEDAR profile.

The forward-looking information and statements contained in this press release are made as of the date hereof and Petromanas undertakes no obligation to update publicly or revise any forward- looking information or statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

SOURCE: Petromanas Energy Inc.

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Petroamerica Announces the Drilling Start-up of the Las Maracas-5 Well, Provides a Production Update for its Colombian Operations, and Announces the Engagement of a Special Advisor to its Board of Directors

CALGARY, ALBERTA, October 1, 2012 – Petroamerica Oil Corp. (TSX-V:PTA) (“Petroamerica” or the “Company”), a junior oil and gas company operating in Colombia is pleased to announce the start of drilling of the Las Maracas-5 well (the “well”) on the Los Ocarros Block in the Llanos Basin of Colombia, which was spud on September 30, 2012. The well is primarily targeting production from the Mirador Formation but it will also test the deeper Gacheta reservoir in a structurally low position. The well is being drilled with the Tuscany 109 drilling rig, and upon its completion, is expected to be followed closely by the Las Maracas-6 well and a possible water disposal well.

The Company further announces that the logistical circumstances previously limiting crude oil production and transportation at the Las Maracas Field no longer apply, and since September 22, 2012 the field has been producing at more than 5,000 barrels of oil per day (“bopd”) with minimal water (less than 3% water cut).

Petroamerica holds a 50% participating interest in the Los Ocarros Block. The contractual operator of the block is Cepcolsa, which has transferred its 50% working interest to Parex Resources Colombia Ltd. Sucursal. Final approval of this transfer by the ANH (Colombian National Hydrocarbon Agency) is pending.

With the increased production coming from the Las Maracas field, at September 29, 2012, the Company’s total working interest production was 2,714 bopd (2,497 bopd net after royalties).

Petroamerica is also pleased to announce the engagement of Sonny Mottahed as Special Advisor to the Corporation’s Board of Directors. Mr. Mottahed will provide strategic and financial advisory services with respect to projects and corporate acquisitions as part of the ongoing development of Petroamerica’s assets in Colombia. Sonny Mottahed is the CEO of Black Spruce Merchant Capital Corp., a private merchant banking firm focused on providing specialized financing and advisory services to the global energy industry.

Additionally, the Company reports that pursuant to the Company’s Stock Option Plan, a total of 7,450,000 stock options have been granted to certain directors, officers, employees and advisors of the Company on October 1, 2012, to be priced at the closing market price 48 hours after issuance. This grant is subject to regulatory approval. The options were issued pursuant to the Company’s stock option plan and expire on October 1, 2022. The options vest in thirds, with one third vesting upon issuance, and one third vesting on each of the first and second anniversaries of issuance.

 

About Petroamerica:

Petroamerica Oil Corp. is a junior oil and gas exploration and production company with activities in Colombia. Petroamerica has production coming from two oil discoveries and has interests in seven exploration blocks, all located in Colombia’s Llanos Basin. Petroamerica’s shares are listed on the TSX Venture Exchange under the symbol “PTA”.

 

Forward-Looking Statement

This news release includes forward-looking statements related to the expected occurrences in relation to the properties identified and with respect to expectations regarding drilling and completion activities and third party approvals of the Company’s activities. A multitude of factors can cause actual events to differ significantly from any anticipated development and although Petroamerica believes that the expectations represented by such forward-looking statements are reasonable; there can be no assurance that such expectations will be realized. These forward looking statements are based upon assumptions that Petroamerica has made concerning the oil and gas industry in Colombia, the reliability of available data regarding the properties, the regulatory environment in which the Company operates and the continuing
market for oil and gas. Risk factors may include the uncertainty of conducting operations under a foreign regime, the availability of labour and equipment, the fluctuating price of oil and gas, the results of drilling and Petroamerica’s dependence upon other participants in the property areas. Neither Petroamerica nor any of its subsidiaries nor any of its officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors, nor do any of the foregoing accept any responsibility for the future accuracy of the opinions expressed in this document or the actual occurrence of the forecasted developments.

Although the Company believes that the expectations represented by the forward-looking statements contained herein are reasonable, undue reliance should not be placed on the forward-looking statements because there can be no assurance that such expectations will be realized. The forward-looking statements contained in this document are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

FOR FURTHER INFORMATION PLEASE CONTACT:

Nelson Navarrete
President and CEO

Colin Wagner
CFO

Ralph Gillcrist
Executive Vice President Exploration & Business Development

Tel Bogota, Colombia: +57-1-629-3534
Tel Calgary, Canada: +1-403-237-8300
Email: investorrelations@pta-oil.com
Web Page: www.PetroamericaOilCorp.com

SOURCE: Petroamerica Oil Corp.

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Porto Energy Engages Black Spruce Merchant Capital to provide Financial Advisory Services

THE WOODLANDS, TX, August 24, 2012 – Porto Energy Corp., (“Porto” or the “Company”) (TSXV:PEC), a company focused on oil and gas exploration, appraisal and development in Portugal, today announced the engagement of Black Spruce Merchant Capital Corporation (“BSMC”) to provide financial advisory services with respect to project and corporate, business combinations as well as equity and debt financings as part of the ongoing development on Porto’s seven concessions in Portugal’s Lusitanian Basin.

Porto is currently actively advancing two of its projects in Portugal. First, on June 29, 2012 Porto through its wholly owned subsidiary, announced a definitive farmout with Petróleos de Portugal – Petrogal (“Galp”) whereby Galp will pay the Company approximately US$7.8 million to earn 50% of the Company’s rights in the Aljuabarrota-3 concession, comprising approximately 300,000 acres, onshore Portugal. Under the terms of the agreement, the Company intends to drill a Presalt well with a target depth of approximately 3,000 meters. Drilling is expected to commence in late August, 2012 and take approximately 45-55 days to complete. This well has a NI51-101 estimate of 588 BCF P50 gross unrisked resources (294 BCF net P50 unrisked resources). Second, on March 1, 2012, Porto announced a definitive agreement with Sorgenia International B.V., Netherlands (“Sorgenia”), and Rohöl-Aufsuchungs Aktiengesellschaft, Austria (“RAG”), (together the (“Farm-in Partners”), to jointly evaluate the unconventional resource potential of the Lower Jurassic (Lias) stratigraphic interval within Porto’s concessions in Portugal. Porto retains operatorship of the Company’s concessions and the joint venture. With the additions of the two new concessions in May 2012, Zambujal and Peniche, the area to be jointly evaluated is approximately 690,000 acres. The Lias stratigraphic interval is being pursued as an unconventional resource throughout Europe. Second phase activities, for which Porto will be carried for until phase 3, include the drilling of two deep wells and additional geochemical and geophysical analysis. The costs associated with the two wells will be shared equally between the Farm-in Partners capped at a gross cost of US$10.0 million, net of mobilization and demobilization costs. Phase 1 of this joint venture is currently underway with the drilling of 19 wells (9 core wells) of which 11 wells have been drilled and logged to date both inside and outside the AMI to determine the outer extent of the Lias interval over the Lusitanian Basin. The focus of the first phase, which must be completed by December 31, 2012, is on developing a comprehensive geophysical and geochemical analysis of the Lias interval.

Porto continues to pursue interests in its other concessions, most notably its offshore acreage for which the Company has shot and interpreted approximately 1,100 km2 of seismic data. Using this data, the Company has mapped approximately 3 – 4 prospective opportunities.

Upon the engagement of BSMC, the Company issued to BSMC 1,000,000 options exercisable at a price of $0.11 per common share for three years to vest one third every six months from the date of the engagement. In addition, BSMC will be paid a monthly work fee during the term of the engagement, milestone fees in certain circumstances and a financing success fee on the closing of any debt or equity financing provided to Porto.

 

About Porto Energy Corp.

Porto Energy Corp. is an international oil and gas company engaged in the exploration of crude oil and natural gas in Portugal, including the appraisal of a gas discovery. Through its wholly owned subsidiary, Mohave Oil And Gas Corporation (a Texas corporation with branch offices in Portugal), the Company holds working interests in seven concessions in Portugal’s Lusitanian Basin totaling approximately 1.9 million net acres. Through its exploration efforts to date, the Company has identified seven major exploration trends over its concessions including unconventional oil and gas resource plays as well as conventional oil and gas targets. Porto Energy’s shares trade on the TSX Venture Exchange under the ticker symbol “PEC”. For more information on Porto Energy visit: www.portoenergy.com.

 

About Black Spruce Merchant Capital

Black Spruce is a private independent merchant banking company focused on providing executive level and unbiased financial advisory services to the global oil and gas industry. Black Spruce’s award winning principals have a history of achieving success for clients based high-level industry focus, strong industry relationships and innovative transaction skills. Offering advice in project, corporate and debt capital markets; equity-linked financings; mergers and acquisitions; and strategic business development.

 

Cautionary Statements

No proved, probable or possible reserves have been assigned by the Company at this time. Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered. Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. There is no certainty that it will be commercially viable to produce any portion of the resources.

Estimates with respect to resources that may be developed and produced in the future are often based upon volumetric calculations, probabilistic methods and upon analogy to similar types of resources, rather than upon actual production history. Estimates based on these methods generally are less reliable than those based on actual production history. Subsequent evaluation of the same resources based upon production history will result in variations, which may be material, in the estimated resources. Resource estimates may require revision based on actual production experience.

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.

Best Estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. Using probabilistic methods, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate.

This press release contains certain forward-looking statements. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe”, “predict” and “potential” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. These forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements that are contained in this press release, except in accordance with applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

For further information:

Porto Energy Corp.
Heath Cleaver – Chief Financial Officer
Phone: 1-713-975-1725

Black Spruce Merchant Capital Corp.
Sonny Mottahed – CEO
Phone: 1-403-351-1779
Email: sonny@bsmc.ca

SOURCE: Porto Energy Corp.

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