VANCOUVER, British Columbia, May 26, 2011 (GLOBE NEWSWIRE) -- Brandenburg Metals Corp (TSX-V:BBM) ("Brandenburg " or the "Company"), is pleased to announce that it has signed a joint venture letter of intent ("LOI") with Houston-based Holloman Energy Corporation ("HEC"), pursuant to which the company can earn an undivided 44% working interest in two onshore concessions known as Petroleum Exploration License 112 ("PEL 112") and Petroleum Exploration License 444 ("PEL 444")(PEL 112 and PEL 444 collectively, the "PELs"). The PELs cover 1,125,000 acres in South Australia's Cooper Basin Western Flank Oil Play. The Department of Primary Industries and Resources of South Australia reports that the Cooper Basin has sourced over 4 billion barrels of oil and 5 trillion cubic feet of recoverable gas. The Cooper Basin has in excess of 120,000 kilometers of 2-D seismic data and more than 1,200 wells in 65 oil and 20 gas fields. The primary "target formations" in both of the licensed areas are the Birkhead, Hutton and the Namur sandstones. Depth for the formations range from 1500-1800 meters.
HEC and the Company intend to enter into a definitive earn-in agreement in relation to the Company's right to earn a 44% working interest in the PELs (the "Acquisition").
Under the terms of the LOI, the Company will earn an undivided 44% working interest in each of the PELs, as follows:
(a) With respect to PEL 112, by paying HEC:
(i) AUD$150,000, on or before June 1, 2011, which will be paid into trust and transferred to HEC on execution of a definitive agreement, to be used for seismic work area clearance on the PEL 112;
(ii) AUD$450,000, on or before June 1, 2011, which will be paid into trust and transferred to HEC on execution of a definitive agreement, to be used for initiating a 3D seismic acquisition program covering approximately 125 square kilometers on PEL 112 (the "PEL 112 Seismic Program");
(the "Conditional PEL 112 Payments")
(iii) AUD $3,050,000, on or before July 1, 2011, to continue to complete the PEL 112 Seismic Program;
(iv) AUD$4,500,000, on or before July 1, 2011, which will be paid into trust and transferred to HEC on completion of the PEL 112 Seismic Program, for use in the conduct of a three well drill program on the PEL 112 (the "PEL 112 Drill Program"). In connection with the PEL 112 Drill Program, the Company will sole fund, with up to AUD$4,500,000, dry-hold costs of three wells on PEL 112. In the event any well drilled as part of the PEL 112 Drill Program tests positively for commercially viable production of oil or gas, HEC and the Company will each pay 50% of the total aggregate completion costs respecting the wells.
(b) With respect to PEL 444:
(i) AUD$150,000, on or before February 1, 2012, for use in seismic work area clearance on PEL 444;
(ii) AUD$450,000, on or before February 1, 2012, for use in initiating a 3D seismic acquisition program covering approximately 125 square kilometers on the PEL 444 (the "PEL 444 Seismic Program");
(iii) AUD $3,050,000, on or before April 31, 2012, to continue to complete the PEL 444 Seismic Program;
(iv) AUD$4,500,000, within 30 days following the initiation of fieldwork on the PEL 444 Seismic Program, for use in the conduct of a three well drill program on the PEL 444 (the "PEL 444 Drill Program"). In connection with the PEL 444 Drill Program, the Company will sole fund, with up to AUD$4,500,000, dry-hold costs of three wells on PEL 444. In the event any well drilled as part of the PEL 444 Drill Program tests positively for commercially viable production of oil or gas, HEC and the Company will each pay 50% of the total aggregate completion costs respecting the wells.
The Conditional PEL 112 Payments will be repaid to the Company in the event HEC and the Company do not enter into a definitive agreement.
The LOI is subject to a number of conditions including certain approvals, and the execution of a definitive agreement.
Beach Energy ("Beach"), one of Australia's largest independent producers, operates Petroleum Exploration License 92 ("PEL 92") which directly abuts the northern border of PEL 112. In 2009, Beach made several new discoveries with an 80 percent success rate using 3D seismic in a north to south line above PEL 112. Starting 30 kilometers north with the Parsons field wells (two with initial production ("IP") in excess of 3,000 barrels of oil per day ("BOPD")) followed next by the Perlubie field (IP of 3000 BOPD), next the Perlubie South (IP 740 BOPD) and ending less then 15 kilometers North of PEL 112 with the Butlers Field Discovery (IP 2600 BOPD).
In February 2011, Beach announced commencement of an 11 well drill program on PEL 92.
During the period from February 23, 2011 to May 6, 2011, Beach drilled 4 wells (Parsons-3, Parsons-4, Butlers-2 and Butlers-3) on PEL 92, all of which were successful. The wells encountered oil columns ranging from 9 to 3 meters in the Namur sandstone. The Parsons-3 well flowed at a rate of more than 5,000 barrels/day of oil during cleanup with no water. Beach expects the additional production from the Parsons-3 and Parsons-4 wells will increase its daily production from PEL 92 to around 6,000 barrels/day.
The Company has agreed to pay finders' fees, in relation to the Acquisition, of a maximum issuance of 2,000,000 common shares or units, to Acqua Capital Group, subject to TSX Venture Exchange (the "Exchange") approval.
HEC (http://www.hollomanenergy.com) (OTCBB:HENC) is an international oil and gas exploration and development independent. It is a subsidiary of Houston-based Holloman Corporation ("Holloman") (http://www.hollomancorp.com), one of the largest employee owned engineering, procurement and construction companies in the United States. Holloman's operations extend to three continents and include plant and pipeline construction, oil & gas exploration, mineral exploration, and international heavy-equipment leasing. Holloman's primary focus is on the natural resource, water, and wastewater industries. Its clients include some of the world's largest corporations.
"Holloman is very pleased to have Brandenburg join us in exploring and developing our Cooper/Eromanga holdings," stated Mark Stevenson, Chairman and CEO of HEC and President of Holloman. "We believe PEL 112 and PEL 444 have real value and will provide the basis for successful operations for both organizations. We look forward to long and mutually beneficial relationship."
Brandenburg has assembled its technical team for this project. Mr. Douglas M. MacLellan has joined Brandenburg as a 'technical director' and has assumed the office of Chief Operating Officer. In addition, Brandenburg has engaged the independent petroleum engineering firm of Apex Energy Consultants Inc. ("Apex"). Apex provides energy related technical services both domestically and internationally. Apex has extensive experience in projects in Australia, working in the Cooper and Eromanga basins. Most recently Apex was involved with Drillsearch Energy N.L. on the PEL 92 concession, immediately adjacent to the PEL 112 concession.
There has been substantial 2D seismic and geological work done on PEL 112 and PEL 444. To date, in its review of available data Brandenburg has identified 30 prospective oil leads on those properties, of which 10 have been characterized as "high-priority". Independent engineering studies indicate these high priority leads have a risked, Potential Resource Estimate of 30 million barrels of oil contained primarily in the three target formations.
The Company also wishes to announce that it will be conducting a partially brokered partially non brokered financing (the "Private Placement") for gross proceeds of up to $12,500,000. The Private Placement will be an offering of units of the Company at a price of $0.35 per unit, with each unit comprised of one common shares and one half of one warrant (each whole warrant, a "Warrant"). Each Warrant will entitle the holder to purchase an additional share (a "Warrant Share") of the Company for a period of two years from the closing date of the Private Placement at a price of $0.55 per Warrant Share.
The Company may pay commission consisting of 8% in cash and issue 8% in broker's warrants in connection with the brokered portion of the Private Placement. A Finder's Fee of 8% in cash may be paid on the non-brokered portion of the Private Placement, which may close separately from the brokered portion.
The proceeds from the Private Placement will be used for general working capital and for drilling the PELs.
The Acquisition is a "Fundamental Acquisition" in accordance with the policies of the Exchange. Both the Acquisition and the Private Placement are subject to Exchange approval.
On behalf of the Board of Directors
BRANDENBURG METALS CORP.
Karl Antonius
President & CEO
We seek Safe Harbor.
Neither the TSX Venture Exchange nor any other regulatory authority accepts responsibility for the adequacy or accuracy of this release.