LITTLETON, Colo., April 11, 2007 (PRIME NEWSWIRE) -- Eternal Energy Corp. (OTCBB:EERG) announces that it has agreed to sell all of the shares that it owns in Pebble Petroleum Inc. ("Pebble Petroleum") to Heartland Resources Inc. ("Heartland"). Eternal Energy owns five percent of Pebble Petroleum. Emerald Bay Holdings Ltd. ("Emerald Bay"), a private Irish corporation, which owns the other ninety-five percent of Pebble Petroleum, has also agreed to sell all of its interests in Pebble Petroleum to Heartland. The agreement is subject to satisfaction of certain material terms and conditions, completion of the financing, completion of satisfactory due diligence and title reviews, approval of the TSX Venture Exchange, and other terms and conditions that are consistent with similar transactions in the oil and gas industry.
Heartland is an Ontario corporation petroleum and natural gas exploration company having its head office in Vancouver, British Columbia. Heartland is a public company, whose shares are listed on the TSX Venture Exchange under the trading symbol "HRI".
Pebble Petroleum is a privately owned British Columbia corporation, which, directly and through its wholly-owned U.S. subsidiary Rover Resources Inc. ("Rover"), holds petroleum and natural gas exploration rights to approximately 150,000 gross and net acres of property in western Canada and the western United States. Pebble Petroleum acquired its PNG rights in Canada pursuant to an agreement with Eternal Energy, Fairway Exploration LLC, a private U.S. corporation controlled by Steven Swanson, and Prospector Oil Corp., a private U.S. corporation controlled by Mr. Richard Findley, who together identified and provided initial analysis of the potential of the prospects. The majority of Pebble's PNG rights are held under Provincial crown leases and licenses in Canada, with a small portion granted over state lands and privately owned properties in the U.S. The properties are exploration properties with no production and no proven reserves.
Pursuant to the agreement, Heartland will cause Pebble Petroleum to pay its entire CDN$882,000 convertible loan to Eternal Energy. The obligation was generated by consultant fees due to Eternal Energy for services it rendered to Pebble Petroleum in October of 2006. Heartland has also agreed to cause Pebble Petroleum to pay its outstanding CDN$17.2 million obligation to Emerald Bay. The obligation was generated by loans made by Emerald Bay to Pebble Petroleum in connection with Pebble Petroleum's successful bids for the 150,000 acres last year. Heartland will also purchase all of the Pebble Petroleum shares from Eternal Energy and Emerald Bay for their initial aggregate subscription price of $300.00. Repayment of the debt due to Eternal Energy and the loan due to Emerald Bay is a condition of closing of Heartland's purchase of the Pebble Petroleum shares.
Heartland has agreed to maintain Pebble's obligation to provide to Eternal Energy a five percent gross overriding royalty interest on all production from each well drilled on the Canadian acreage previously acquired, or subsequently acquired in the prospect, by Pebble Petroleum. In addition, Heartland has agreed to pay to Eternal a US$250,000 spud fee for each of the first eight wells drilled or reentered on the Canadian acreage previously acquired, or subsequently acquired in the prospect, by Pebble Petroleum. Further, Eternal Energy will maintain its ten percent working interest in Pebble Petroleum's North Dakota properties, with the remaining ninety percent held by Rover. Rover and Eternal Energy are joint venture partners for the exploration and development of those prospects, with each party bearing its pro-rata share of acquisition, exploration, and development costs. To date, Rover and Eternal have acquired the PNG rights to approximately 5,000 acres in the U.S., which acquisitions were funded by Rover. Eternal Energy is currently indebted to Rover in the amount of approximately US$42,000 on account of acreage acquisition costs.
In addition to the debt repayments, Heartland has agreed to allot and reserve for issuance to Eternal Energy and Emerald Bay 25,000,000 of its common shares at a deemed price of CDN$0.85 per share on a performance basis tied to Heartland's oil and gas production from Pebble Petroleum's properties. If, at any time during the five-year period following closing of the agreement, the average gross production of crude oil (or natural gas equivalents) on Pebble Petroleum's lands equals or exceeds 1,000 barrels per day for 30 consecutive days, Heartland shall issue 5,000,000 common shares to Eternal Energy and Emerald Bay, to be allocated in accordance with the percentage interests that Eternal Energy (5% or 250,000 shares) and Emerald Bay (95% or 4.5 million shares) held in Pebble Petroleum. Heartland will issue an additional 5,000,000 shares for each incremental 1,000 barrels of average daily production for 30 consecutive days, such that, if Heartland achieves an average of 5,000 barrels per day of crude oil (or natural gas equivalents) production for not less than 30 consecutive days within the five-year period, the entire 25,000,000 shares will issued (1.25 million shares to Eternal Energy and 23.75 million shares to Emerald Bay).
About Eternal Energy Corp.:
Eternal Energy Corp. is an oil and gas company engaged in the exploration for petroleum and natural gas in the State of Nevada and the North Sea. The company was incorporated in Nevada on July 25, 2003 to engage in the acquisition, exploration, and development of natural resource properties.
Forward-Looking Statements:
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain information included in this press release contains statements that are forward-looking, such as statements related to prospects for success in these initial drilling activities. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by, or on behalf of Eternal Energy Corp. These risks and uncertainties include, but are not limited to, those relating to development and expansion activities, planned capital expenditures, future funding sources, anticipated sales, potential contracts, dependence on existing management, financing activities, and domestic and global economic conditions.