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Highpine Oil & Gas Limited to Acquire Kick Energy Corporation

Posted on: Thursday, 1 June 2006, 18:00 CDT

CALGARY, June 1 /PRNewswire-FirstCall/ -- Highpine Oil & Gas Limited (TSX: HPX) ("Highpine") and Kick Energy Corporation (TSX: KEC) ("Kick") are pleased to announce that they have entered into an acquisition agreement, whereby Highpine will acquire all of the issued and outstanding shares of Kick pursuant to a Plan of Arrangement (the "Arrangement"). The Arrangement is subject to approval by the Court of Queen's Bench of Alberta, applicable regulatory authorities and Kick shareholders no later than August 10, 2006. Under the Arrangement, shareholders of Kick will receive 0.32 of a class "A" common share of Highpine for each common share of Kick. The exchange ratio is consistent with the market values of the two companies during the period of negotiation.

This transaction both strengthens and extends Highpine's dominant position in the prolific Pembina Nisku exploration trend with new undeveloped lands, including adding approximately 30 high working interest Nisku drilling prospects and strategic production and pipeline facilities. In addition, Highpine is pleased to announce that Mr. Tim Hunt, the President and Chief Executive Officer of Kick, has agreed to join the board of directors of Highpine upon the successful completion of the Arrangement.

"I am very excited to be able to announce the acquisition of Kick," said Mr. Gordon Stollery, Chairman and Chief Executive Officer of Highpine. "This acquisition adds additional Nisku drilling prospects and facilities that will allow for development of new oil and gas production and reserves, alternative production take-away options which will give better control of onstream times and will allow for more capital efficient Nisku development where both companies have competing or adjacent lands. Drilling of several of these prospects, in addition to Highpine's Nisku locations, is expected to commence immediately, using two drilling rigs, and is anticipated to continue throughout the year."

Mr. Tim Hunt, President and Chief Executive Officer of Kick, added, "Our Pembina Nisku position is a natural consolidation and expansion to Highpine's dominant position and will help create an even stronger entity to develop the fairway in the most economic manner. Highpine clearly maintains the competitive advantage on its prospective lands and Kick's lands will extend that to the southwest. The combined company's light oil and gas prospects will be of the highest quality in the Pembina Nisku trend which will be to the benefit of both shareholder groups."

Pro Forma Highpine Highlights:

Highpine will continue to be a light oil and natural gas (with liquids) exploration company with its core asset base located in an exciting oil exploration play on the prolific Pembina Nisku trend. Highpine also has diversified oil and gas exploration and development opportunities in Joffre, Chip Lake, Windfall/Sakwatamau, McLeod/Goodwin, Ante Creek and Wilson Creek/Ferrier, collectively known as its West Central Alberta Gas Fairway.

Pro forma, the 2006 exit production is estimated to be between 23,000 to 25,000 boe/d. Current total productive capability, including behind-pipe production is estimated to be 21,000 to 22,000 boe/d. Pro forma reserves are estimated at 37.3 million barrels of proved plus probable reserves. Combined undeveloped land holdings will be in excess of 300,000 net acres.

At Pembina, pro forma, Highpine will have: - Total undeveloped land of approximately 184,000 acres. - An average working interest of approximately 80%. - A 3-D seismic base of in excess of 1,000 square miles, that essentially covers the entire Nisku play. - Approximately 120 distinct seismically defined locations at an approximate 75% working interest with several contingent locations and/or additional leads/opportunities in the Nisku play. - Control of facilities with a capacity net to Highpine in excess of 20,000 bbls/d. - Enhanced opportunities for natural gas (with liquids) from widespread Cretaceous horizons.

In addition to Pembina, Highpine will continue to have core areas at Joffre, Chip Lake, Windfall/Sakwatamau, McLeod/Goodwin, Ante Creek and Wilson Creek/Ferrier. Highpine's West Central Alberta Gas Fairway has over 102,000 net acres of undeveloped land and a drilling inventory in excess of 50 drilling locations, at an average working interest of approximately 70%. This inventory targets high quality, medium depth, medium risk, multi-zone natural gas with associated liquids in West Central Alberta.

On a combined basis, the two companies have a 2006 capital expenditure budget of $230 million and intend to drill approximately 80 to 100 gross wells in 2006. 2006 production guidance, assuming full calendar year production from each company, is estimated to average between 18,000 and 20,000 boe/d. Total combined bank debt is approximately $75 million as of May 31, 2006 and Highpine, on closing of the Arrangement, will have approximately 67.6 million basic class "A" common shares outstanding.

Management and Board Recommendations

The Arrangement has the support of the board of directors of both Kick and Highpine.

The board of directors of Kick has concluded that the Arrangement is in the best interests of its shareholders and will recommend that Kick shareholders vote their Kick shares in favour of the Arrangement. Directors, officers and employees of Kick, holding approximately 30% of the fully diluted common shares of Kick, have entered into lock-up agreements whereby they have agreed to vote their Kick shares in favour of the Arrangement. GMP Securities L.P. has provided the board of directors of Kick with their opinion, subject to their review of the final form of the documents effecting the Arrangement, that the consideration to be received pursuant to the Arrangement is fair, from a financial point of view.

The board of directors of Highpine has approved the Arrangement and has received an opinion from FirstEnergy Capital Corp. that the transaction is fair, from a financial point of view, subject to a review of the final form of documents effecting the Arrangement.

Kick has agreed to pay Highpine a non-completion fee in the amount of $10 million in certain circumstances if the Arrangement is not completed. Kick has agreed to terminate any discussions with other parties and has agreed not to solicit or initiate discussion or negotiation with any third party with respect to alternate transactions involving Kick and has granted Highpine certain pre-emptive rights if Kick receives any other offers.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy securities in any jurisdiction. The class "A" common shares of Highpine will not be and have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States, or to a U.S. person, absent registration or applicable exemption therefrom.

READER ADVISORY

Boes may be misleading, particularly if used in isolation. A boe conversion ratio of six mcf to one bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Statements in this press release may contain forward-looking information including expectations of future production and components of cash flow and earnings. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the companies. These risks include, but are not limited to; the risks associated with the oil and gas industry, commodity prices and exchange rate changes. Industry related risks include, but are not limited to; operational risks in exploration, development and production, delays or changes in plans, risks associated with the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of reserves, production, costs and expenses. The reader is cautioned not to place undue reliance on this forward-looking information.

The reader is further cautioned that the preparation of financial statements in accordance with generally accepted accounting principles requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses. Estimating reserves is also critical to several accounting estimates and requires judgments and decisions based upon available geological, geophysical, engineering and economic data. These estimates may change, having either a negative or positive effect on net earnings as further information becomes available, and as the economic environment changes.

Highpine Oil & Gas Limited

CONTACT: Highpine Oil & Gas Limited, Suite 4000, 150 - 6th Avenue S.W.,Calgary, Alberta, T2P 3Y7, Canada; A. Gordon Stollery, Chairman and ChiefExecutive Officer or Greg N. Baum, President and Chief Operating Officer orHarry D. Cupric, Vice President, Finance and Chief Financial Officer,Telephone: (403) 265-3333, Facsimile: (403) 265-3362, Website:http://www.highpineog.com/; Kick Energy Corporation, Suite 1720, 734 - 7thAvenue S.W., Calgary, Alberta, T2P 3P8, Canada, Mr. Tim Hunt, President andChief Executive Officer or Ms. Ulla Fuss, Vice President, Finance and ChiefFinancial Officer, Telephone: (403) 262-9801, Facsimile: (403) 264-3268,Website: http://www.kickenergy.ca/

Source: PRNewswire-FirstCall

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