SAN FRANCISCO, May 7, 2012 (GLOBE NEWSWIRE) -- Heavy Earth Resources, Inc. ("Heavy Earth" or the "Company") (OTCBB:HEVI) is pleased to announce it completed the acquisition of Deep Core, Inc., a Cayman Islands company ("Deep Core") and its subsidiary, DCX, S.A.S., a Colombian simplified shares corporation ("DCX"). As a result of the transaction, Deep Core has become a subsidiary of Heavy Earth and DCX will continue as the operating subsidiary of Deep Core. The Company's common stock will continue to be eligible for trading on the OTC Bulletin Board under the symbol (OTCBB:HEVI).
"Our strategy is to increase shareholder value through strategic acquisitions, exploration and appraisal drilling, development and production of oil and gas properties in under-explored regions in Central and South America. We're focusing on deploying advanced seismic techniques to define prospects, forming partnerships and joint ventures to spread our operational costs and risks and identifying and acquiring what we believe will be highly probable and profitable drilling and working interest assets located in regions with proven hydrocarbon systems that we believe have a short window of payback, a high internal rate of return and recoverable resources," said Grant Draper, the Company's Chief Executive Officer.
Colombian Oil and Gas Projects
DCX is a Colombian oil and gas exploration and production company, with a 50% working interest in the 23,169 hectare Morichito Exploration and Production Contract ("Morichito block"), located in the prolific Llanos Basin.
In March 2012, DCX declared its Morichito-5 discovery to be "commercially viable" and announced plans to start production in 2013. DCX's 50% working interest in the Morichito block is located to the south adjacent to C&C Energia's productive Cachicamo and Cravoviejo blocks and to the north of CEPSA's 20,000 BOPD Caracara Field and Hocol, S.A.'s 20,000 BOPD Guarrojo block. Based on data obtained from DCX's discovery well, we believe the exploration plays on the Morichito Block are of the same type as in these adjacent blocks.
Grant Draper, the Company's Chief Executive Officer added, "When new management took over the Morichito block, their business objectives were refocused to establishing a track record of value creation starting with the acquisition of 94 km2 of 3D seismic and a road improvement program which should allow us to be in a position to identify new drilling targets and commence production in January 2013."
Share Exchange Agreement
Under the terms of the Share Exchange Agreement, the Company issued 250,000 shares of the Company's common stock in exchange for all of the outstanding shares of Deep Core and 8,574,042 shares of the Company's common stock in exchange for the conversion of the outstanding principal and accrued interest due on outstanding convertible promissory notes (the "Notes") of Deep Core at a conversion price of US$0.40 per share. Prior to the closing of the Share Exchange Agreement, Deep Core issued the Notes to nine note holders in exchange for an aggregate of US$3,422,203.50 in proceeds.
Also, in connection with the Share Exchange Agreement, the Company raised US$200,000 through a private placement pursuant to which the Company issued 500,000 shares of common stock at a price of US$0.40 per share and David Choi, our officer and director, agreed to cancel 9,324,042 shares of common stock.
Following the consummation of all of the transactions contemplated by the Share Exchange Agreement, the Company has 69,376,000 issued and outstanding shares of common stock.
Additional information regarding the transactions described in this press release is set forth in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission in May 4, 2012.
About Heavy Earth Resources, Inc.
Heavy Earth Resources, Inc. is a junior oil and gas exploration, development and production company managed by experienced professionals and focused in under-explored regions and basins with proven petroleum geology fundamentals in Central and South America. The Company's shares are listed on the OTC Bulletin Board under the symbol "HEVI".
This press release contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) concerning future events and the Company's growth and business strategy. Words such as "expects," "will," "intends," "plans," "believes," "anticipates," "hopes," "estimates," or the negative thereof, and other variations on such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include, but are not limited to, risks associated with drilling and production programs on the Morichito Block resulting from geological, technical, drilling, seismic and other unforeseen problems; unexpected results of exploration and development drilling and related activities on the Morichito Block; continued availability of capital and financing to fund exploration and development drilling activities; increases in operating costs; availability of skilled personnel; unpredictable weather conditions; the impact of political and economic instability in Colombia; the ability to obtain required approvals of regulatory authorities in Colombia; senior management's general inexperience in oil and gas operations in Colombia; members of senior management not being based in Colombia, and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.
Cautionary Note to U.S. Investors - The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only reserves that comply with the definitions presented at Rule 4-10(a) of Regulation S-X. We use certain terms in this press release that the SEC's guidelines strictly prohibit us from including in filings with the SEC. Examples of such disclosures would be statements regarding "probable," "possible," or "recoverable" "reserves," and "resources" among others. U.S. Investors are urged to consider closely the disclosure in our Current Report on Form 8-K filed on May 3, 2012, and other filings available at www.sec.gov or from us at Heavy Earth Resources, Inc., 625 Second Street, Suite 280, San Francisco, California 94158.