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Sabrich Capital Corporation Announces Qualifying Transaction(Marketwire (English) Via Thomson Dialog NewsEdge) CALGARY, ALBERTA--(Marketwire - Dec. 21, 2007) - Sabrich Capital Corporation ("Sabrich" or the "Corporation") (TSX VENTURE:SBH.P) today announced details concerning its proposed qualifying transaction with Sentinel Rock Oilsands Corporation ("Sentinel"). The transactions announced today include the completion of a "flow-through" private placement in Sentinel of up to a $3,000,000 and the business combination (the "Business Combination") of Sentinel with Sabrich, which will constitute the Qualifying Transaction of Sabrich pursuant to Policy 2.4 of the TSX Venture Exchange Inc. ("TSX Venture") as agreed in a letter agreement dated December 17, 2007. About Sentinel Sentinel is a private corporation that was formed to participate in the acquisition, exploration and development of heavy oil and oilsands properties in the Province of Alberta. Pursuant to a Farm-In Agreement dated May 19, 2006, and amended September 28, 2007, between Sentinel and Bounty Developments Ltd., Sentinel agreed to drill 3 vertical test wells and a horizontal test well on certain farm-out lands consisting of a 9-section block in the Wabasca area of Alberta (the "Wabasca Property"), adjacent to the Britnell field of EnCana Corporation. In the winter of 2007, Sentinel drilled three wells on the property as the first stage of a farm-in agreement with Bounty Developments Ltd. After Sentinel completes a seismic program and drills three additional wells, Sentinel will own a 75% working interest in the Wabasca Property, which will have no burdens other than crown royalty. Further information regarding the Wabasca Property, including details of a National Instrument 51-101 report regarding the Wabasca Property as at October 31, 2007 prepared by DeGolyer & McNaughton Canada Limited, will be provided after TSX Venture has reviewed and accepted the report. Pursuant to an assignment and novation agreement among Arapahoe Energy Corporation, Sentinel and Poundmaker Energy Corporation, Sentinel acquired a 50% working interest in 2 separate blocks containing 48 sections on the Poundmaker Cree Nation reserve near North Battleford, in Saskatchewan. Sentinel and its partner are reviewing existing seismic data and will, if required, shoot additional seismic and intend to drill 2 to 4 vertical evaluation wells on the property in the first half of 2008. The target is Cummings heavy oil and the land is located 8 miles from the Carruthers field owned by Baytex Energy Trust. In 2008, Sentinel intends to retain a geologist dedicated solely to identifying heavy oil opportunities in the Province of Saskatchewan and will focus on increasing its land base and drilling opportunities in the province. Sentinel Corporate History and Structure Sentinel was incorporated as 1129126 Alberta Ltd. pursuant to the Business Corporations Act (Alberta) on September 23, 2004. On June 27, 2006 it changed its name to Sentinel Rock Oilsands Corporation. The registered and records office of Sentinel, as well as its head office, is located at 700, 602 - 12th Ave. S.W., Calgary, Alberta T2R 1J3. Sentinel is a private corporation with approximately 90 shareholders that is not a reporting issuer and the Sentinel Common Shares are not listed on any stock exchange. Sentinel has 20,389,000 common shares (the "Sentinel Common Shares") issued and outstanding and no stock options, warrants or other dilution as of the date hereof, other than stock options to purchase an aggregate of 1,525,000 Sentinel Common Shares at a price of $0.50 per share until January 26, 2012 (the "Sentinel Existing Options"); and share purchase warrants to purchase an aggregate of 90,000 Sentinel Common Shares at a price of $0.50 per share until January 31, 2009 (the "Sentinel Warrants"). The principal shareholders of Sentinel are Tyler Cran, T. D. Cran Investments Ltd. 1284368 Alberta Ltd., Ross Moulton, Jeff Standen, Arun Dey and Bounty Developments Ltd., which together own an aggregate of approximately 63% of the outstanding Sentinel Common Shares. T. D. Cran Investments Ltd., 1284368 Alberta Ltd. and Bounty Developments are private corporations controlled by Tyler Cran, Bryce Bonneville and William Clark, respectively. Based on unaudited management-prepared financial statements for the nine months ended September 30, 2007, Sentinel had interest income of $13,459, operating expenses of $258,623 and incurred a net loss of $245,164. In addition, as at September 30, 2007 Sentinel had working capital of $177,868, petroleum and natural gas assets of $2,912,114 and liabilities of $403,167 ($83,091 of which were current). Based on audited financial statements for the year ended December 31, 2006, Sentinel had interest income of $3,805, operating expenses of $85,267 and incurred a net loss of $81,462. In addition, as at December 31, 2006 Sentinel had working capital of approximately $1,900,000, petroleum and natural gas assets of $1,161,974 and liabilities of $29,910. Directors and Officers of Sentinel The officers of Sentinel are Tyler D. Cran, President & Chief Executive Officer; Bryce Bonneville, Vice-President, Business Development; and Ross Moulton, Vice-President, Exploration. The directors of Sentinel are Tyler Cran, Bryce Bonneville, Cameron G. Vouri, Laurence Lee and Ken Croft. Mr. Cran, age 58, graduated in 1973 from the University of Alberta. Upon graduation, Mr. Cran worked with Husky Energy Inc. and then with Murphy Oil Company (Canada) Ltd. where he was active in all areas of their land activities. In 1978, Mr. Cran joined Landbank Minerals as a land manager and subsequently formed his own exploration company, Cardinal Energy Ltd., which he sold in 1985. Mr. Cran has since been active in both the energy and real estate industries from 1985 until present. In November 2004 he became president and a founder of Andora Energy Corporation; in April 2007 he became a director and founder of Black Mountain Energy Corporation (2007); and in June 2007 became chairman of Oilsands Real Estate Development Corporation (formerly, Oilsands Development Corporation), now a company involved in the development of large scale real estate holding in Fort McMurray, Alberta. Mr. Bonneville, age 36, graduated from the Faculty of Law, University of Western Ontario in 1997. Prior to that, he obtained a Bachelor of Commerce degree from the University of Calgary in 1993. Mr. Bonneville is a member of the Law Society of Alberta. Since June 1998, Mr. Bonneville has practiced in the area of securities and corporate commercial law, and has had his own firm from January 2001 until the founding of Sentinel in June 2006. Mr. Bonneville has participated on a regular basis in the organization and finance of start-up and ongoing business ventures and negotiation of agreements in mergers and acquisitions transactions. He is a founder of Andora Energy Corporation and Black Mountain Energy Corporation. Cameron G. Vouri, age 43, graduated with honors from the New Mexico Institute of Mining and Technology where he was elected to the Tau Beta Pi Engineering Honors Society. He also received a Diploma in Petroleum Technology from the Southern Alberta Institute of Technology, graduating with honors. He currently serves as President of the Canadian Oil and Gas Business Unit of Provident Energy Ltd. In May 2000, Mr. Vouri joined Founders Energy as heavy oil team leader. In March 2001, he was appointed senior manager of production and engineering, the same year Founders Energy converted into Provident Energy Ltd. Mr. Vouri was named vice president and Chief Operating Officer in 2003 and President of the oil and gas business unit in 2005. Mr. Vouri has over 20 years experience in the exploitation, operations, acquisitions and divestitures of oil and natural gas properties in Canada and the United States. Prior to Provident, he was manager of production and engineering for Koch Industries Canada. Mr. Vouri held positions of increasing responsibility from 1982 onward, working as a petroleum engineer, business leader and manager of business development at Koch Petroleum Canada, Delta-P Test Corporation and Unocal Canada. Mr. Vouri is a member of the Society of Petroleum Engineers and the Association of Professional Engineers, Geologists and Geophysicists of Alberta (APEGGA) and sits on the boards of two energy companies and one technology company. Summary of the Proposed Qualifying Transaction Sabrich has entered into an arm's-length letter agreement dated December 14, 2007 and accepted on December 17, 2007 with Sentinel and the principal shareholders of Sentinel, pursuant to which the Corporation and Sentinel have agreed to complete the Business Combination. The Business Combination will be completed after Sentinel has completed a private placement on a "best efforts" basis (to be completed in one or more closings) of up to 5,000,000 Sentinel Common Shares issued on a "flow-through" basis under the Income Tax Act (Canada) at a price of $0.60 per share for gross proceeds of up to $3 million (the "Sentinel Flow-Through Private Placement"). Sentinel may also complete a private placement of up to 2,000,000 Sentinel Common Shares at a price of $0.50 per share for gross proceeds of up to $1 million (the "Sentinel Common Private Placement"). Sentinel may engage eligible parties to act as agent (the "Agents") of Sentinel on a "best efforts" basis for the Sentinel Flow-Through Private Placement and the Sentinel Common Private Placement. In connection therewith, Sentinel may pay a commission to the Agents of up to 10%, subject to regulatory approval, payable in cash or by the issuance of Sentinel Common Shares with a value of $0.50 per share. The Agents may also be granted agent's options (the "Sentinel Agent's Options") in a number equal to up to 10% of the Sentinel Common Shares sold under the Sentinel Flow-Through Private Placement and the Sentinel Common Private Placement, subject to regulatory approval, with each Sentinel Agent's Option entitling the holder to purchase a Sentinel Common Share at a price of $0.50 per share for a period of up to 12 months from the closing of the Sentinel Flow-Through Private Placement and the Sentinel Common Private Placement. After completion of the maximum Sentinel Flow-Through Private Placement and the Sentinel Common Private Placement, Sentinel will have 27,389,000 Sentinel Common Shares issued and outstanding, as well as the 1,525,000 Sentinel Existing Options, 90,000 Sentinel Warrants and up to 500,000 Sentinel Agents' Options. Sabrich and Sentinel will complete the Business Combination pursuant to an amalgamation to form a new company to be named Sentinel Rock Oilsands Corporation, or such other name as may be agreed upon by the parties hereto ("NewCo"). Pursuant to the terms of the Business Combination: (i) the holders of the Sentinel Common Shares will receive one common share of NewCo (the "NewCo Common Shares") with a deemed value of $0.50 per share for each Sentinel Common Share owned; and (ii) the holders of the Sabrich Common Shares will receive one NewCo Common Share in exchange for each 4.25 Sabrich Common Shares. The Sabrich agents' options, Sabrich stock options, Sentinel Existing Options, Sentinel Warrants and Sentinel Agent's Options shall be replaced with the number of agent's options and stock options of NewCo, as applicable, with substantially similar terms based on the exchange ratio described above. After completion of the Business Combination, the Board of Directors of NewCo will consist of Tyler D. Cran, Bryce G. Bonneville, Cameron G. Vouri, Robert G. Farquharson and one other nominee of Sentinel, as well as Ray Ludwig, a current director of Sabrich. The officers of NewCo will be Tyler D. Cran as President & Chief Executive Officer, Bryce Bonneville as Vice-President, Business Development, and Ross Moulton as Vice-President, Exploration, and individuals to be determined in January 2008 as Vice-President, President and Chief Operating Officer and Vice-President, Finance and Chief Financial Officer. Further announcement on these individuals will be made in due course. Robert G. Farquharson, age 73, is a retired businessman. He graduated from the University of Toronto in 1958 with a Bachelor of Science degree. As a professional engineer, he is an active member of APEGGA. After several years of practice with each of Texaco Exploration Company Ltd., and Canadian Pacific Oil and Gas, a predecessor company of EnCana Corporation, Mr. Farquharson spent 21 years with Murphy Oil Company Ltd., the last 10 years as President and Chief Executive Officer of the company. After leaving Murphy Oil Company Ltd., Mr. Farquharson chaired the Board of Alconsult International Ltd., an international consulting company to the resource sector. He was a director for 10 years of the Canadian Executive Service Organization (CESO), a Canadian and internationally active NGO and chair of CESO for two of those years. Mr. Farquharson served as a director of Andora Energy Corp. between 2005 and 2007. Between 1989 and 1997, he served as a director of both Elan Energy Inc. and CS Resources Ltd. Between 1999 and 2002, he was director of Paratech Energy Services Inc. Throughout his career, Mr. Farquharson has maintained an interest in new and emerging technologies important to the oil and gas business, reservoir drainage strategies, economics of resource development and technology transfer to emerging nations. Mr. Farquharson is recognized as a heavy oil specialist with more than 40 years of experience. Mr. Moulton, age 61, is a professional geologist, who graduated in 1969 from McMaster University with a Bachelor of Science in Geology. From that time until 1974, he worked for Texaco Exploration Canada Ltd. as a geologist in Calgary, Alberta. Between 1974 and 1979, he worked in Indonesia as a Staff Geologist for Petromer Trend Ltd. Mr. Moulton joined Phillips Petroleum Corporation in 1979 and worked for 18 years in Jakarta, Indonesia, at their head office in Bartlesville, Oklahoma, and also in Calgary, Alberta. From 1996 until 2004, Mr. Moulton worked as an Exploration Consultant in Africa and Asia, for numerous companies including Devon Energy, Murphy Oil Corporation, Anderson Exploration and Centurion Energy Ltd. He joined Arapahoe Energy Corp. in 2005 as Exploration Vice President and served until June 2007. He currently serves as a Consultant with Andora Energy Corporation. After completion of the Business Combination and the Sentinel Private Placement (assuming the closing of the maximum of the Sentinel Flow-Through Private Placement and the Sentinel Common Private Placement), NewCo will have approximately 30,047,825 NewCo Common Shares outstanding. Of this amount, the Sentinel shareholders will hold approximately 67.9% of the NewCo Common Shares, the current Sabrich shareholders will hold approximately 8.9% of the NewCo Common Shares and the subscribers to the Sentinel Flow-Through Private Placement and the Sentinel Common Private Placement will hold approximately 23.2% of the NewCo Common Shares, assuming completion of the maximum number of shares to be sold under such private placements. Sabrich has applied for an exemption from the sponsorship requirements in connection with the Business Combination. There is no assurance the exemption will be granted. In connection with the Business Combination, the parties have agreed Al J. Kroontje, an arm's length party, will be paid a finder's fee of $100,000 to be paid at closing by the issuance of 850,340 Sabrich Common Shares (which will be exchanged for 200,000 NewCo Common Shares). Concurrent with the closing of the Business Combination, the existing directors of Sabrich will transfer within escrow an aggregate of 2,300,000 Sabrich Common Shares at a price of $0.075 per share to Sentinel's principal shareholders, directors and officers, subject to the receipt of all necessary regulatory approvals (the "Escrow Transfer"). The completion of the Business Combination is subject to the approval of TSX Venture and all other necessary regulatory approval. The completion of the Business Combination is also subject to additional conditions precedent, including the completion of the Sentinel Flow-Through Private Placement and the Sentinel Common Private Placement for gross proceeds of not less than $2 million prior to January 31, 2008, shareholder approval of the Corporation and of Sentinel, satisfactory completion of due diligence reviews by the parties, board of directors approval of the Corporation and Sentinel, the entering into of a formal agreement, the entering into of employment agreements and consulting agreements with the senior officers of Sentinel, the completion of the Escrow Transfer and certain other conditions. The Business Combination will be an arm's length transaction as the current directors and officers of Sabrich own no interests in Sentinel. Sabrich announces it has reserved a price of $0.50 per share ($0.1176 per Sabrich Common Share) for the grant of stock options to acquire up to 10% of the number of issued and outstanding NewCo Common Shares (the "Stock Options") in the event the Business Combination is completed. The grant of the Stock Options is subject to regulatory approval. The Stock Options will be granted to directors, officers, employees and consultants of NewCo, as determined by the Board of Directors of NewCo following the completion of the Business Combination. Trading of the Sabrich Common Shares will not resume until TSX Venture has accepted the DeGolyer Report and all other documents required by TSX Venture have been filed. Sabrich will issue a further news release at such time as TSX Venture has received the necessary documentation and trading of the Sabrich Common Shares is to resume. As indicated above, completion of the Business Combination is subject to a number of conditions, including but not limited to, TSX Venture acceptance and pursuant to corporate law requirements, shareholder approval. The Business Combination cannot close until the required shareholder approval is obtained. There can be no assurance that the Business Combination will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the Information Circular of the Corporation to be prepared in connection with the Business Combination, any information released or received with respect to the Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative. Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Neither Sentinel nor Sabrich will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Sabrich and Sentinel. The TSX Venture Exchange Inc. has in no way passed upon the merits of the Business Combination and has neither approved nor disapproved the contents of this press release. Contact: Michael L. RousseauSabrich Capital CorporationPresident(403) 816-1947 Bryce BonnevilleSentinel Rock Oilsands CorporationVice President, Business Development(403) 668-0427 2007 - Marketwire |