HOUSTON, Feb. 27, 2006 (PRIMEZONE) -- Quest Oil Corporation (OTCBB:QOIL) is pleased to announce that the Company has entered an acquisition memorandum with Longleaf Petroleum LLC, L-Texx Production LP and L-Texx Management LLC of Arlington, Texas ("Longleaf") for $6,500,000.
The "deemed" purchase price is US$6.5 million including a US$100,000 deposit, 2 million shares of Quest restricted common stock subject to certain liquidation restrictions and US$1,200,000 payable at the time of closing. In addition, if at a date which is two years from the date of the closing, the 10 day average trailing closing price of our common stock is: (i) between US$1.50 and US$2.50, Quest shall issue to the sellers such additional shares of our restricted common stock to bring the total value of the stock paid as consideration in the transaction equal to US$5 million; or (ii) less than US$1.50, the sellers will be entitled to a cash payment of US$5 million and the sellers shall return to the corporation all common stock issued in the transaction.
Upon completion of the acquisition, the company's daily production will increase from approximately 225 BOEPD to around 450 BOEPD. Longleaf's assets comprise approximately 3,500 acres in Harrison County located 10 miles from Waskom, Texas. There are 52 producing wells, 8 water disposal wells and 47 idle wells of which 38 are considered production candidates. The field currently produces about 200 net BOEPD to Longleaf, from several zones including the Fredericksburg, Rodessa and Blossom formations. The acquisition includes approximately 600 acres of deep rights in the Petit and Travis Peak formations. The acquisition also includes 2 workover rigs, 15 company vehicles, compressors and associated equipment with a book value of $1,800,000 along with the 7.5 mile long Dula Pipeline, a gas collection line with a replacement value of over $7 million.
Bill Stinson, Quest's President and CEO, stated: "This landmark acquisition demonstrates our management's commitment and ability to execute Quest's business strategy of acquiring mature onshore U.S. assets that hold significant upside potential through secondary recovery (waterflooding) and enhanced oil recovery (EOR). We will continue to execute this strategy aggressively and will do so as long as opportunities such as Longleaf present themselves."
OTHER COMPANY NEWS
Quest announced today that Mr. Cameron King has tendered his resignation as President and Chief Executive Officer of the Company, effective February 24, 2006. Quest is proud to announce that Chief Operating Officer, Mr. William Stinson will assume the role of President and CEO. Mr. Stinson brings over 28 years experience in the oil and gas industry, with both technical and management experience. Mr. Stinson advises, "On behalf of the board, I would like to thank and commend Mr. King for all his hard work and efforts in establishing the company in its early stages. I look forward to moving ahead as President and CEO and will continue the company's vision of being a major force in the oil and gas sector."
ABOUT QUEST OIL CORPORATION
The Company is committed to the exploration and development of economical oil and natural gas reserves globally. Quest management is focused on an acquisition program targeting high quality and low risk prospects. Initially Quest is focused on the development of North American oil and gas resources allowing highly leveraged production opportunities in Alberta and Texas, through its 100% owned subsidiaries Quest Canada Corp. and Wallstin Petroleum LLC.
ON BEHALF OF THE BOARD
Quest Oil Corporation "William Stinson" William Stinson, President/CEO
To find out more about Quest Oil Corporation (OTCBB:QOIL), visit our website at www.questoil.com.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS: Except for historical information contained herein, the statements in this news release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, volatility of natural resource prices, product demand, market competition, and risks inherent in our operations. These and other risks are described in our Annual Report on Form 10-KSB and other filings with the Securities and Exchange Commission.