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BONANZA ANNOUNCES AMENDMENT TO TERMS OF
December 1, 2009
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Pursuant to the terms of an underlying agreement between the Company and each of Ryan Petroleum, LLC and Radiant Energy, LLC (together the “Underlying Optionors”) dated February 25, 2008 (the “Underlying Option Agreement”), under which the Company originally acquired its interest in the Prospect, the Prospect was stated to consist of 8,555 acres. Based on the acreage of the Prospect set out in the Underlying Option Agreement, the Option Agreement stated that the Prospect consisted of approximately 8,500 acres. As stated in the Company’s press release of November 26, 2009, the Company was informed by the operator of the Prospect (the “Operator”) that certain leases had expired approximately six months ago, effectively reducing the Prospect’s acreage from approximately 8,500 acres to approximately 5,600 acres.
Prior to the entry into the Amending Agreement by the Company and Morgan Creek, the Option Agreement, as amended, granted Morgan Creek a one year option, exercisable up to October 28, 2010, to fund US$2,400,000 of drilling and completion costs in order to acquire the right to a 51% working interest (60% of the Company’s 85% interest) in (a) the first well drilled and (b) the balance of the Prospect. Since the issuance of the November 26, 2009 press release, the Company and Morgan Creek continued to negotiate a further amendment to the Option Agreement due do the discovery of the reduced acreage and the Amending Agreement was entered into on November 30, 2009.
The key terms of the Amending Agreement are as follows:
(a) the terms of the Option granted to Morgan Creek have been amended such that Morgan Creek will now have an option to acquire 70% of the Company’s 85% interest (a 59.50% working interest) in the Prospect, up to October 28, 2010;
(b) the Option will be exercisable by Morgan Creek incurring the full costs of drilling and completing one well on the Prospect, following which, the Option will have been exercised and Morgan Creek will have earned its interest in both (a) that first well and (b) the balance of the Prospect;
(c) where Morgan Creek incurs the full cost of drilling the first well and such first well results in a “dry hole”, meaning that the first well has not been drilled to completion, then Morgan Creek will have the exclusive right and option to participate in any and all further drilling programs on the Prospect and to incur the full costs of drilling a second well to completion on the Prospect, in which case Morgan Creek will have exercised the Option and will have earned its interest in both (a) that well and (b) the balance of the Prospect; and
(d) the Company and Morgan Creek will use their best efforts to negotiate and execute a more formal agreement (the “Amended and Restated Agreement”) to supersede and replace the Option Agreement as amended.
The Amending Agreement and the Amended and Restated Agreement are subject to the approval of the TSX Venture Exchange and all other approvals that may be required.
ON BEHALF OF THE BOARD
“Byron Coulthard”
Byron Coulthard
President/CEO
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 news release.
Disclaimer for Forward-Looking Information
Certain statements in this release are forward-looking statements, which reflect the expectations of management regarding proposed drilling on the Prospect. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management’s current views and are based on certain expectations, estimates and assumptions which may prove to be incorrect. A number of risks and uncertainties could cause our actual results to differ materially from those expressed or implied by the forward-looking statements, including: (1) the Company’s ability to successfully enter into the Amended and Restated Agreement; (2) the inherent uncertainties and speculative nature associated with oil and gas exploration, (3) a decrease in the demand for and/or a decrease in the price of oil and gas, (4) any number of events or causes which may delay development on the Prospect, such as environmental liabilities, weather, mechanical failures, safety concerns and labour problems, and (5) other factors beyond the Company’s control. These forward-looking statements are made as of the date of this news release and the Company assumes no obligation to update these forward-looking statements, or to update the reasons why actual results differed from those projected in the forward-looking statements.
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For further information, please contact:
Bonanza Resources Corporation
+1 604 340-4853
email: info@bonanzaresources.com
website: www.bonanzaresources.com
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
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