Petrostar's JV partner delays due diligence
2011-02-23 16:05 ET - News Release
Mr. Bruce Scafe reports
PETROSTAR FURTHER UPDATES SHAREHOLDERS ON CURRENT PROJECTS
Petrostar Petroleum Corp. is clarifying the news of Jan. 13, 2011, wherein the company updated its shareholders as to the status of announcements made earlier, and is updating the information where necessary.
Regarding the $20-million financing deal with Capital Corp. Merchant Bank of Orlando, Fla.
The terms of this agreement were first announced in Stockwatch on Sept. 7, 2010, and updated on Sept. 30, 2010. The update stated that Capital Corp. Merchant had begun its due diligence as part of its final decision process for granting the financing to Petrostar. This process was estimated to take 60 days but has taken much longer than anticipated. The update from CCMB states that the next step has been taken, and all of the information for third party valuation appraisal has been sent to American Appraisal. American Appraisal has offices in many countries around the world, including Canada. CCMB has indicated that, once a satisfactory final appraisal has been received, CCMB will prepare final closing documents for financing, which would then be filed with the TSX Venture Exchange for approval. This process is estimated to take 15 to 30 days to complete. A multiwell drill program on the company's Bakken area properties is planned to start once financing is completed. The Bakken project will then become a joint venture project between Petrostar and CCMB.
As of Feb. 23, 2011, the appraisal process had not been completed because of the further requests for more extensive geologic reports. Petrostar is currently compiling this information with its geologist and will be forwarding the data to American Appraisal as soon as completed. The cost of the report is estimated to be $19,000 (U.S.) and is the responsibility of Petrostar. Payment will be sent with the additional documentation requested. Once this step is completed and is favourable to CCMB, CCMB has indicated closing documents would be prepared immediately. Once Petrostar has received and accepted the closing documents, these documents would be forwarded to the TSX Venture Exchange for approval. Unfortunately the process of these negotiations has delayed Petrostar's future drill program. The drill program will be postponed until after the winter breakup and completion/approval of financing. Petrostar will continue to update its shareholders as developments occur.
Regarding the sale of the Maidstone and Lashburn heavy oil properties
The terms of this agreement were first announced in Stockwatch on Sept. 29, 2010. On Oct. 15, 2010, it was announced in Stockwatch that the sale for $1.3-million had not completed and the offer was withdrawn. At that time, management decided to accept new offers and market the two properties that made up the original deal as separate entities. The asking price for Maidstone was $750,000, and Lashburn was $550,000 totalling the $1.3-million. The company is in discussion with two different companies interested in the Maidstone property and one company interested in the Lashburn property. Petrostar will announce details of any deal upon completion.
As of Feb. 23, 2011, the company had an offer on the table that was being reviewed. An announcement will be made if accepted.
Regarding the electric tank heater sale
Further to the Stockwatch news release of Oct. 8, 2010, Petrostar and its ETH distributor, King Energy, have received inquiries regarding the ETH and are working on quotes for future sales. Some of the quotes are for specialized heating solutions for different applications than what the ETH was originally designed for; thus, there is additional engineering that needs to be calculated and/or possible modifications needed to the heater to suit individual client needs. These enquires are currently being processed, and further sales are expected. Petrostar's downhole heating tool is currently being reviewed by engineers associated with King Energy. The DHT may require further engineering and design changes; therefore the DHT is not being marketed until the review is complete.
As of Feb. 23, 2011, the company had nothing new to report.
The management of Petrostar wishes to thank its shareholders for their continued support and confidence while these projects work toward their completion. |
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