April 16, 2007
MegaWest Energy Corp., (the "Company" or "MegaWest"), a publicly held Canadian oil and gas company (OTCBB: MGWSF) (Cusip: #585168 107) announces the closing of the Kentucky Reserves non conventional oil and gas acquisition by its wholly owned subsidiary MegaWest Energy USA Corp. ("MegaWest USA").
The Company's President and CEO, George Stapleton stated; "MegaWest has now completed the next significant step towards becoming a non-conventional oil and gas resource exploration and development company by completing the acquisition of the Kentucky Reserves Prospect from Kentucky Reserves LLC. MegaWest will continue to acquire large blocks of oil and gas rights known to contain substantial deposits of heavy oil."
Further to our letter of intent with Kentucky Reserves, LLC and its unit holders, MegaWest USA has completed the acquisition of all of the issued and outstanding membership units of Kentucky Reserves, LLC, whose assets include oil, gas and mineral leases located in the Edmonson, Warren and Butler counties in Kentucky, for the purchase price of US$3,000,000 and 5,000,000 restricted common shares. Ongoing leasing activities have increased the total acreage included under the Kentucky Reserves Prospect to just over 27,000 net mineral acres. MegaWest USA acquired a 62.5% working interest in the shallow rights (being all tar sands formations to the base of the Beech Creek limestone formation, including the Caseyville, Tar Springs, Hardinsburg and Big Clifty sandstones) plus an additional 37.5% working interest in the deep rights, which may be prospective for conventional oil or natural gas.
In accordance with the Acquisition Agreement, MegaWest USA will be responsible for 62.5% of the administration costs (including delay rentals) within the area covered by the leases; and has agreed to undertake a US$15,000,000 work program within the area covered by the leases. This work program, which will focus on determining the most effective way of extracting heavy oil/bitumen from the leases, must be completed within 30 months. The work program will consist of such testing and evaluation activities as the drilling, logging and coring of wells, formation and fluid testing, and the construction of one or more heavy oil production pilot projects that may utilize steam, water flooding, solvent injection, electro-thermal heating, or the like. Should MegaWest USA be unable to expend the work program commitment within the 30-month period, we will be subject to a 37.5% penalty on the unexpended amount of the work program commitment. The Company is continuing to acquire land in the area and preliminary testing and evaluation work is expected to commence in the near term.
ON BEHALF OF THE BOARD OF DIRECTORS
George T. Stapleton, II, President & Director
For further information please visit the Company’s new website at www.megawestenergy.com or, contact:
| Kelly Sledz 1.403.984.6342 info@megawestenergy.com |
Mike Parker 1.888.506.7979 MParker@sweetwatercapital.net |
Forward-Looking Statement Disclaimer
This news release contains “forward-looking statements”. Statements in this press release, which are not purely historical, are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include, among others, the expectation and/or claim, as applicable, that (i) the Company will acquire and exploit non-conventional oil and gas properties in Western North America, (ii) the Company will develop its heavy oil opportunities, (iii) the Company will establish proven and producing reserves this year, and (iv) the Company will be successful in recovering oil for any of its future prospects.
It is important to note that actual outcomes and the Company's actual results could differ materially from those in such forward-looking statements. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others: (i) the failure to complete the acquisition of the shares of Trinity Sands Energy LLC and/or the Membership Units of Kentucky Reserves, LLC for whatever reason, (ii) the failure to complete the acquisition of the assets from Deerfield Energy LLC for whatever reason, (iii) the continued demand for oil and gas, (iv) the failure by the Company and others to identify and acquire other oil and gas prospects, (v) the failure to raise any proceeds necessary to complete any acquisitions of any other oil and gas prospects, (vi) the uncertainty of the requirements demanded by environmental agencies, (x) the Company’s ability to raise debt or equity financing for operations, (xi) the Company’s ability to maintain qualified employees or consultants, and (xii) the likelihood that no commercial quantities of oil and gas are found or recoverable on any properties in which the Company has an interest. The risks and uncertainties that could affect future events or the Company’s future financial performance are more fully described in the Company’s quarterly reports (on Form 6-K filed in the US and on Form 51-102F1 filed in Canada), the Company’s annual reports (on Form 20-F filed in the US and Canada) and the other recent filings in the US and Canada. These filings are available at www.sec.gov in the US and www.sedar.com in Canada.