| ||July 13, 2011|
Thunderbird Energy Announces US$25 Million Energy Stream Agreement with Sandstorm Metals & Energy
| ||Calgary, Alberta July 13, 2011 - Thunderbird Energy Corp. (TSX-V: TBD) ("Thunderbird" or the "Company") today announced that the Company has entered into a US$25 million hydrocarbon purchase agreement (the "Agreement") with Sandstorm Metals & Energy Ltd. ("Sandstorm"). Proceeds from the Agreement will provide a substantial portion of the financing required for a two-year development program at Thunderbird's Gordon Creek, Utah natural gas property that will include drilling 50 new wells and re-working 5 existing wells. |
"We are very pleased to announce this innovative financing arrangement with Sandstorm that will have a transformative effect on our company," stated Rick Ironside, President of Thunderbird. "We have reviewed a number of financing proposals over the last couple of years and feel that the Sandstorm structure offers us the best opportunity to aggressively develop our Gordon Creek field in a manner that allows us the greatest flexibility, while also maximizing the benefit to our shareholders and debenture holders."
Under the Agreement, Sandstorm will have the right to purchase 35% of all natural gas produced from Thunderbird's Gordon Creek property at a price equal to the lesser of the prevailing market price and US$1.00 per Mcf of gas delivered plus 20% of the Gordon Creek field gate price received above $4.00/Mcf. As consideration, Thunderbird will receive an upfront payment of US$15 million in 2011 and a further US$10 million in 2012. The Agreement stipulates that Thunderbird will drill 20 new Gordon Creek wells and conduct 5 workover operations in 2011, and will drill 30 new wells in 2012. Sandstorm may participate in future wells drilled at Gordon Creek beyond the initial 50 well program by providing additional production payment advances to Thunderbird at an agreed amount per well.
The Company has provided Sandstorm with minimum before tax cash flow guarantees totaling US$25 million over the period 2012 through 2018, provided that the cash flow guarantees will not be applicable to specific calendar years in which the Gordon Creek field achieves specified minimum production levels. The Agreement also provides Thunderbird with a two-year right to buy back 50% of the future production committed under the Agreement, for a purchase price of US$16.25 million.
Closing of the transaction is subject to regulatory approvals and the completion by Sandstorm of its concurrently announced equity financing. The transaction also requires the approval of two-thirds of the holders of Thunderbird's Gas Linked Debentures.
Thunderbird Energy is a Canadian-based oil and gas exploration and production Company with interests in the US Rockies and mid-continent regions. Thunderbird's holdings include the Gordon Creek, Utah natural gas field, the Rush County, Kansas light oil project and a light oil exploration project in Weston County, Wyoming.
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