Bronco Signs Amending Agreement and Provides Operations Update
For Immediate Release
March 10, 2008: Calgary, Alberta. Bronco Energy Ltd. (“Bronco” or the “Company”) (TSX: BCF) is pleased to announce the signing of an Amending Agreement to its Joint Venture Agreement with the Bigstone Cree Nation (“BCN”) and Bigstone Oil & Gas Ltd. (“BOGL”), and provide an operations update relating to drilling, battery start-up, and gathering and sales pipelines construction.On March 5, 2008, Bronco executed an Amending Agreement to its Joint Venture Agreement with BCN and BOGL. The terms of the Amending Agreement will have a material impact on the economic viability of Bronco’s Grand Rapids Project. The following is a summary of the amended terms:
• Upon approval from the Toronto Stock Exchange (“TSX”), 400,000 common shares of Bronco will be issued to BOGL and held in trust by BOGL’s legal counsel pending the issuance of amended oil leases containing an oil royalty rate reduction to a flat 3%, or other oil royalty rate approximating 3%, for Enhanced Thermal Oil Recovery Projects (as defined in the Amending Agreement). The oil lease amendments are subject to the approval of Indian Oil and Gas Canada (“IOGC”).
• Under the terms of the Amending Agreement, BCN and BOGL have agreed to increase Bronco’s working interest on Enhanced Thermal Oil Recovery Projects to 100% before payout and 85% after payout. Bronco will pay 100% of capital costs and expenses associated with these projects.
• Bronco has agreed to assign a 10% carried working interest to BOGL in the Crown lands that were purchased by Bronco in July 2007. The Crown lands comprise 32,000 acres located approximately 20 miles north of the BCN Reserve Lands currently being developed by Bronco. The primary prospect on these lands is the Grosmont Carbonates.
• BCN has granted Bronco an option, exercisable on the payment of $300,000, to acquire an oil and gas lease to be issued by IOGC for 12,800 acres of Treaty Land Entitlement (“TLE”) lands in proximity to existing BCN Reserve Lands in the Wabasca, Alberta area. The TLE lands form part of an agreement in principle between BCN and the Governments of Canada and Alberta that was signed on October 12, 2007, wherein certain Crown lands selected by BCN will become BCN Reserve Lands. The primary prospects on these additional lands are the Wabiskaw and Grand Rapids oil sands pools.
• BCN has also granted Bronco a right-of-first-refusal, exercisable on the payment of $200,000, to participate in any project on an additional 6,400 acres of TLE lands in proximity to existing BCN Reserve Lands in the Wabasca, Alberta area. This right-of-first refusal extends for a period of five years after the TLE lands are officially granted Reserve status.
• Bronco has agreed to undertake certain employment related initiatives for the benefit of BCN members. Specifically, Bronco has agreed to identify employment opportunities and to assist BCN to develop a program to train its members for various employment opportunities related to oil and gas development on BCN Reserve Lands.
• Bronco and BCN have also agreed to jointly establish a mentoring program, wherein a limited number of positions will be created for BCN members which will parallel positions of existing Bronco employees. BCN will pay all salaries, wages and expenses of BCN members employed in such positions.
Drilling operations on Bronco Rig #1 have resumed following a regulated shutdown after a fatal accident on February 13, 2008. Bronco expresses its sincere condolences to the family of the victim, Oscar Auger, and BCN, of which he was a member.
Bronco has now completed the construction phase of its oil battery processing facility. This work has been completed on time and on budget, despite the extreme cold winter. The commissioning phase of the battery start-up has been initiated. With the achievement of this significant milestone, Bronco will begin production from its growing inventory of 43 horizontal wells drilled to date. Infield gathering pipelines and permanent facility construction on the production pads is also complete. The sales oil and condensate supply pipelines are constructed and pressure tested, and operation of the sales line will begin when the surface tie-in work is finished. Bronco anticipates the sales line will be tied in and delivering oil by the middle of Q2 2008. In the interim, the sales oil will be trucked from the facility to sales delivery terminals in the region.
Bronco’s Board of Directors has also been expanded with the appointment of James V. Esposito, RET. Mr. Esposito will fulfill board duties in addition to his responsibilities as Bronco’s Executive Vice President and COO.
Bronco’s year end reserves analysis is ongoing with McDaniel & Associates Consultants Ltd. and is now expected by mid March.
FOR FURTHER INFORMATION PLEASE CONTACT:
Brian Alford, President and CEO
James V. Esposito, Executive VP and COO
David Johnson , VP Finance and CFO
Phone: (403) 699-8383
Fax: (403) 693-0038
OR VISIT THE COMPANY’S WEBSITE AT WWW.BRONCOENERGY.CA