VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/19/15 -- Hanwei Energy Services Corp. (TSX: HE) ("Hanwei" or the "Company"), is pleased to announce that it has executed a Lease Issuance and Drilling Commitment Agreement (the "Commitment Agreement") with a Canadian company (the "Lessor") for certain oil and gas interests occupying some 9.5 sections (approximately 6,000 acres) located approximately five kilometers south of Chestermere, Alberta (the "Chestermere Lands").
Under the terms of the Commitment Agreement the Company has been granted exclusive production rights within the Chestermere Lands on the basis that it drills and completes at least one oil and gas well to a depth of 2,100 meters (the "Ellerslie Formation") within an initial two-year term ending on July 30, 2017 (the "Primary Term"). Upon completion of this drilling commitment the Primary Term would be extended for a further one-year period ending on July 30, 2018 (the "Extended Primary Term"). The Lessor would issue a petroleum lease to Hanwei for each quarter section oil well spacing unit drilled by Hanwei during the aforementioned three-year period.
The Commitment Agreement executed for the Chestermere Lands aims to strategically grow the Company's oil and gas operations and revenue, complimentary to its current Leduc Lands, and in a manner that deploys capital in a staged manner over time. Hanwei has paid to the Lessor at execution of the Commitment Agreement consideration (including a Primary Term rental) of approximately $88,000. The Lessor will receive a royalty payment of 17.5% of the market value of all petroleum substances produced, saved and marketed by the Company from the Chestermere Lands. A hydraulically fracked vertical well on a neighboring property in the same geological formation had previously produced 200 bbld of oil and 750 mcfd of gas. The Company is undertaking further geological assessment to finalize an initial drill program for this property, with extensive 2-D seismic data provided to Hanwei by the Lessor as part of the Commitment Agreement. As of the date of this news release the Company has $8 million of cash and cash equivalents on hand including short-term, liquid investments.
About Hanwei Energy Services Corp.
Hanwei Energy Services Corp. is a leading manufacturer of high and low pressure, fiberglass reinforced plastic pipe products and associated technologies and services for the international oil and gas, and infrastructure industries. Hanwei serves major energy customers in the Chinese and global energy markets. The Company owns producing oil and gas rights located in Alberta, Canada.
www.hanweienergy.com
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.
FORWARD-LOOKING INFORMATION
The forward-looking information in this press release presents the Company's expectations as of the date of this press release and accordingly is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While the Company may elect to, the Company does not undertake to update this information at any particular time, except as required by applicable securities legislation.
Contacts:
Hanwei Energy Services Corp.
Graham Kwan
Executive VP, Strategic Development and Corporate Affairs
604-685-2239 x108
gkwan@hanweienergy.com
Hanwei Energy Services Corp.
Yucai (Rick) Huang
Chief Financial Officer
604-685-2239 x106
yhuang@hanweienergy.com
