SAN DIEGO, May 25, 2007 (PRIME NEWSWIRE) -- Surge Global Energy, Inc. (OTCBB:SRGG) ("Surge" or the "Company"), a shareholder of Signet Energy, Inc. ("Signet"), a working interest partner in the Sawn Lake Oil Sands Development, today announced that Signet has executed a letter of intent with Andora Energy Corporation ("Andora") and its controlling shareholder Pan Orient Energy Corp. ("Pan Orient") setting forth the principal terms and conditions upon which Andora and Signet have agreed to enter into a business combination (the "Combination").
The Combination will be effected by way of a plan of arrangement under the Business Corporations Act (Alberta) whereby the security holders of Signet will receive, in aggregate, 17,500,000 common shares of Andora (subject to adjustment) with an agreed value of Signet of CDN$50 million.
Certain shareholders of Signet, including Surge, representing not less than 35% of the issued and outstanding common shares of Signet, have entered into an agreement with Andora pursuant to which such shareholders have agreed to support and vote in favour of the Combination, subject to receipt by Signet of a fairness opinion from Genuity Capital Markets.
The obligation of Signet and Andora (collectively the "Parties") to complete the Combination will be subject to certain conditions which include the completion of a definitive arrangement agreement (the "Arrangement Agreement"). An information circular detailing the Combination will be mailed to security holders of Signet not later than June 29, 2007 and a meeting of security holders of Signet will be held on or before August 15, 2007 to approve the Combination.
Under the Arrangement Agreement, each of the Parties has agreed that it will not discuss or negotiate with any third party or entertain or consider any enquiries or proposals relating to its assets or securities or any other business combination. Each of the Parties has agreed to pay the other a "break fee" of CDN$750,000 if the Combination is not completed under certain circumstances, including the acceptance by Signet of superior proposal.
In accordance with the letter of intent, the Board of Directors of Andora will be comprised of Andora's existing Board of Jeff Chisholm, Michael Hibberd, Gerald Macey, Robert Farquharson and Tyler Cran with two representatives of Signet, being Greg Cave and Leigh Cassidy, joining the Board upon the combination.
Upon completion of the transaction contemplated herein, the combined company will be focused on development of the South and Central Sawn Lake Heavy Oil Pool area, holding the majority of the known probable reserves and possible reserves based on the below noted NI 51-101 independent reserves evaluation prepared on behalf of Andora.
About Andora
Andora is a private oil and gas company owned approximately 67% by Pan Orient. Andora's assets include various percentage interests in 84 sections of oil sands permits and a gross overriding royalty on various interests held by Deep Well Oil and Gas Inc., all located in the Sawn Lake heavy oil project area of Alberta. Prior to the contemplated Signet transaction described above, Andora's net interest currently includes 179.4 million barrels of recoverable probable plus possible (97.4 million barrels probable and 82.0 million barrels possible) heavy oil reserves as evaluated by independent reserve engineers with an effective date of December 31, 2006, prepared in accordance with National Instrument 51-101 (NI 51-101). Andora also holds an effective 2.4% net gross overriding royalty (3% of an 80% working interest) on interests in the thickest net oil pay sections of the pool, which is payable by Deep Well Oil and Gas Inc. Information concerning Andora is also contained on its website at: www.andoraenergy.com
About Signet Energy
Signet is a Calgary based independent private company focused on the delineation of and development of heavy oil production from the oil sands resource located in the Sawn Lake area of Alberta's Peace River oil sands region. Signet has earned a 40% working interest in 11,520 acres of the leases of the Sawn Lake property, of which 7,680 acres is to be confirmation pursuant to a farmout agreement, through the completion of a 3 well program for which Signet was responsible for 80% of the costs. An independent geological and engineering analysis of the oil sands asset of the Sawn Lake property indicates that there are approximately 1.7 billion barrels of bitumen in place contained within the 44,480 acres of oil sands leases and permit of the entire Sawn Lake property. Information concerning Signet is also contained on its website at www.signetenergy.ca.
About Surge Global Energy, Inc.
Surge Global Energy, Inc. is an early stage oil and gas exploration and production company. Surge believes that it has one of the largest footprints among the junior exploration and production companies in the Peace River and Athabasca oil sands regions of Canada, with 49 net sections of land in two key areas. Surge also has an interest in an exploration stage oil and gas project in Argentina and is looking to identify, acquire and develop working interests in other underdeveloped oil and gas projects in socially and politically stable regions. For more information please visit our investor center at: www.surgeglobalenergy.com
The Surge Global Energy, Inc. logo is available at http://www.primezone.com/newsroom/prs/?pkgid=2471
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include the statements regarding the Company's expectations, hopes or intentions regarding the future, including, but not limited to, general economic conditions, market and business conditions; potential production and industry capacity and estimates. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Additional risks and uncertainties include the possibility that Surge will not discover bitumen, oil or gas in the quantities the Company currently anticipates. To fund the probable and proven reserve development cost effort, we anticipate raising a significant amount of capital which will result in substantial future dilution to existing shareholders. Other risks and uncertainties of the Company's business could cause actual results to differ and are discussed under the heading "Risk Factors" and in other sections of the Company's SB-2/A filed with the SEC on February 14, 2007, the Company's Form 10-K for the 2006 fiscal year and in the Company's other periodic reports filed from time to time with the SEC. All forward-looking statements in this document are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statements.