Chinook Energy has entered into a purchase and sale agreement with the City of Medicine Hat to sell certain oil producing assets located in the Mannyberries area of South Eastern Alberta (the "Divested Assets") for consideration of approximately $36.2 million, subject to customary closing adjustments (the "Transaction"). Closing of the Transaction is anticipated to occur on about February 14, 2012, with an effective date of January 1, 2012 and is subject to customary conditions for an asset divestiture of this nature. The City of Medicine Hat has received City Council approval to proceed with the Transaction. Chinook's third quarter 2011 average production from the Divested Assets was approximately 345 boe/d (94% oil).

In the short term, the proceeds of the Transaction are anticipated to be used to reduce current bank debt and improve Chinook's balance sheet. Chinook estimates its bank debt on the closing date of the Transaction will be approximately $100 million. The disposition permits Chinook to monetize assets at a competitive price and is anticipated to provide Chinook with increased financial flexibility to pursue the Company's inventory of crude oil and liquids rich drilling projects in its core areas both domestically and internationally.

Tags: Chinook Energy