Rock Energy Expands Elmsworth Montney Sale

Sold additional AB Montney gas assets in Elmworth area, gaining 120 BOE/d, 1.7 MMBOE proved.

Rock Energy Inc., Calgary, (Toronto: RE) has entered a second purchase and sale agreement for the sale of its remaining Alberta Montney gas assets in Elmworth to an undisclosed Canadian oil and gas producer for approximately C$10 million.

Gross proceeds, including proceeds from the previously announced asset sale, total C$46 million.

Approximately 40,900 net acres of undeveloped land with petroleum and natural gas rights to the Montney are included in these asset sales.

Production on the new sales assets are approximately 120 barrels of oil equivalent per day. Proved reserves are 1.7 million barrels equivalent.

The combined asset sales have total production from the Elmworth area of 310 barrels of oil equivalent per day during the fourth quarter of 2011. Proved reserves as of Aug. 31, 2011, were 5.9 million barrels equivalent and proved and probable reserves were 12.6 million barrels equivalent.

The sale of the Elmworth gas assets marks the conclusion of the previously announced process to review strategic alternatives. Adjusted for the sale of the Elmworth assets, current production is estimated to be 2,400 barrels equivalent per day (75% crude oil and natural gas liquids). In addition to an undrawn bank facility of $45 million, Rock will have more than $10 million of cash following the closing of the sale of these remaining assets.

FirstEnergy Capital Corp. is financial advisor to Rock Energy.

The deal is anticipated to close by the end of February.