Midway Energy Ltd. has signed a purchase and sale agreement to acquire additional Cardium lands and production in the Garrington area of Alberta and has entered into an agreement with a syndicate of underwriters for a bought deal private placement of units for gross proceeds of $21,000,000.

Garrington Acquisition

Midway has entered into a binding purchase and sale agreement to purchase oil and gas properties in the Garrington area. The acquisition will add approximately 600 boe per day of Cardium, Viking and Glauconitic oil and solution gas production, the majority of which will be operated by Midway, and will add an additional 11 net Cardium "A" Sand drilling locations. This acquisition will increase Midway's total Cardium land holdings in the Garrington Cardium trend to 67 net sections.

The purchase price for the acquisition is approximately $37,150,000, payable in cash, subject to final closing adjustments. The acquisition is expected to close on or about February 17, 2012.

The acquisition provides Midway with low decline, stable crude oil and natural gas production in its core operating area. In addition to the drilling upside on the property, Midway believes that completing a short tie in of this production into its 100% working interest facilities in Garrington will provide significant additional value. Midway also expects that it can substantially reduce operating costs on the property and also increase the liquids yields on the natural gas by over 30% to (approximately 85 barrels/MMcf) as Midway's facilities are tied into a deep cut facility in the area. It is expected that the physical tie in of this production will be completed prior to the end of the March 2012.

The Company engaged Sproule Associates Limited ("Sproule") to prepare an independent engineering report on the reserves to be acquired pursuant to the acquisition as at January 1, 2012, incorporating the tie in to Midway's facilities. The following tables disclose selected information relating to these reserves together with information relating to Midway's reserves as at December 31, 2011 as evaluated by Sproule.

Tags: Midway Energy Ltd.