-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D7vu7IXeHAWqXJ2fBvlgeojCgRc15WNoF8ZfqaKYiTdm2eEOLwibtPOtlQAfF/AJ Np17WVuDhj4PcTVgZZDzqA== 0001079974-05-000262.txt : 20050630 0001079974-05-000262.hdr.sgml : 20050630 20050630145223 ACCESSION NUMBER: 0001079974-05-000262 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050624 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Other Events FILED AS OF DATE: 20050630 DATE AS OF CHANGE: 20050630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARETE INDUSTRIES INC CENTRAL INDEX KEY: 0000820901 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-DIRECT MAIL ADVERTISING SERVICES [7331] IRS NUMBER: 841063149 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-16820-D FILM NUMBER: 05928108 BUSINESS ADDRESS: STREET 1: 7102 LA VISTA PLACE STREET 2: STE 100 CITY: NIWOT STATE: CO ZIP: 80503 BUSINESS PHONE: 3036523113 MAIL ADDRESS: STREET 1: 7102 LA VISTA PLACE STREET 2: SUITE 100 CITY: NIWOT STATE: CO ZIP: 80503 FORMER COMPANY: FORMER CONFORMED NAME: TRAVIS INDUSTRIES INC DATE OF NAME CHANGE: 19930614 FORMER COMPANY: FORMER CONFORMED NAME: TRAVIS INVESTMENTS INC DATE OF NAME CHANGE: 19890427 8-K 1 aret8k_6282005.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Date of Report (Date of Earliest Event Reported): June 24, 2005 ------------ ARETE INDUSTRIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Colorado 33-16820-D 84-1508638 --------------------------- ------------ ------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 7102 La Vista Place Suite 100, Niwot, Colorado 80503 ------------------------------------------------------------------------------ (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number including area code: (303) 652-3113 -------------- N/A -------------------------------------------------------------- (Former name or former address, if changed since last report): Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [] Written Communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)] [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)] Item 1.01 Entry Into a Material Definitive Agreement Acquisition by Subsidiary of Certain Mineral Interests from an Affiliate of Subsidiary's President On June 24, 2005, Colorado Oil and Gas, Inc. ("COG") a majority owned subsidiary of Arete Industries, Inc., the registrant, entered into a Mineral Purchase Agreement (the "Agreement") to acquire a pool of Oil and Gas Interests, consisting of Mineral Interests and Overriding Royalty Interests under certain producing oil and gas wells in Colorado, Texas, Wyoming and Oklahoma, from an affiliate of COG's President and Chairman for a gross purchase price of $200,000 (the "Purchase Price.") The Agreement is dated effective July 1, 2005 (the "Effective Date.") The Purchase Price is payable in the form of a Secured Promissory Note in that amount at 12% simple interest, payable interest only for 12 months from the Effective Date. Interest payments may be deferred for 120 days if COG lacks sufficient revenue to make the payments before such non-payment would be considered an event of default. The Secured Promissory Note will be tendered on the Effective Date of the Agreement in exchange for Mineral Assignment Agreements including the Mineral Interests. Because the transaction was not considered made at arm's length, the Agreement provides for adjustment of the Purchase Price upward or downward to reflect actual value of the Mineral Interest as determined by an independent appraisal to be made by COG's Consulting Petroleum Engineer. The Agreement provides that the Purchase Price will be adjusted to a minimum of $150,000 and a maximum of $250,000 based on the appraisal. In the event that the appraised value is less than $150,000, COG can reject the purchase without penalty, or accept the value at $150,000, which would become the adjusted Purchase Price, and Principal Amount of the Secured Promissory Note; and if the appraised value exceeds $250,000, COG will increase the Purchase Price and correspondingly the Principal Amount of the Secured Promissory Note to no more than $250,000 without further obligation to the Seller. On or a reasonable time after the Effective Date, the Mineral Interests will be Assigned to COG through Mineral Assignment Agreements, and will be pledged against the Secured Promissory Note, secured by appropriate forms of Mineral Mortgages, that all will be recorded in the counties and states in which the Mineral Interests are situated. COG will begin receiving production payments from the Mineral Interests after July 1, 2005 forward. Default provisions in the Agreement provide that in the event that COG is liquidated, files for or is adjudicated a bankrupt, or other event of insolvency, the Mineral Interests will be reconveyed to the Seller in exchange for cancellation of the Secured Promissory Note, except in the case that COG has made any advance principal payments in excess of 30% of the Principal Amount of the Note, as adjusted, in which event COG has the right to liquidate the Mineral Interests and retain the proceeds less the outstanding Principal Balance plus any accrued interest through the date of the reconveyance on default. COG has the right to resell the Mineral Interests at any time subject to a first right of refusal by the Seller to match any bona fide third party offer within a set time frame set forth in the Agreement. The disclosure under this Item 1.01 provides summary information of the definitive Agreement as specified in the required disclosure under Item 1.01 of Form 8-K promulgated by the Securities and Exchange Commission, and is qualified the detailed provisions of the definitive Mineral Purchase Agreement and Schedule of Properties which have been contemporaneously submitted by Registrant as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference. Item 8.01. Other Events. The Registrant, on June 24, 2005, issued a Press Release disclosing that it has entered into an Agreement to purchase the Mineral Interests described in Item 1.01 of this Current Report. The Registrant voluntarily submits a copy of the referenced Press Release hereto as an exhibit under Item 601 (20) of Regulation SB and incorporates it herein by reference. The terms and conditions and other information required under this Current Report, under Item 1.01 pertaining to the Agreement is disclosed in that Item and the Exhibit 99.1 included in this Current Report. SIGNATURE Pursuant to the requirements of Section 13 or 15(a) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. ARETE INDUSTRIES, INC. Date: June 30, 2005 By: /s/ THOMAS P. RAABE ------------------------- Thomas P. Raabe, President, Chief Executive Officer, and Chairman of the Board of Directors EXHIBIT INDEX Exhibit Number Description -------------- ----------------------------------------- 10.1 Mineral Interest Purchase Agreement dated June 24, 2005 and Schedules thereto. 99.1 Press Release dated June 24, 2005. EX-10 2 arete8kex101_6192005.txt AGREEMENT Exhibit 10.1 MINERALS PURCHASE AGREEMENT This Agreement is dated effective July 1, 2005, and entered into this 24th Day of June, 2005, by and between Zephyr Bay Sports Partners, LLC., a Colorado Limited Liability Company (the "Seller") and Colorado Oil and Gas, Inc., a Colorado Corporation (the "Buyer"). RECITALS I. Seller is owned by William W. Stewart, President, Director and Shareholder of Buyer. Seller owns a pool of minority mineral interests in certain oil and gas leases located in Colorado, Wyoming, Texas and Oklahoma and has offered to sell these interests to the Buyer for $200,000 (the "Purchase Price") in the form of a Secured Promissory Note. The leases and interests are set forth in detail in Schedule A, attached hereto and incorporated herein by reference (the "Mineral Interests.") II. Buyer is a majority owned subsidiary of Arete Industries, Inc., a Colorado corporation that is publicly traded on the NASDAQ over the counter market. Buyer is a development stage company seeking to acquire small interests in oil and gas leases including passive investments as well as developmental properties. Buyer's board of directors has authorized the Buyer to engage in the proposed transaction set forth in this Agreement, as follows: AGREEMENT 1. Seller agrees to sell to Buyer and the Buyer agrees to buy the Mineral Interests for the Purchase Price on the terms set forth below. 2. Seller grants, bargains and conveys the Mineral Interests described in Schedule A to Buyer free and clear of any and all encumbrances, liens, claims and judgments, for consideration payment of the Purchase Price of $200,000 subject to adjustment, as provided in Paragraph 4, below. 3. The Purchase Price will be paid with a Secured Promissory Note in favor of Seller in the amount of the Purchase Price, plus 12% simple interest, payable interest only on a monthly basis for 12 months beginning one month following the Effective Date. Interest payments may deferred if the Buyer does not have sufficient revenue to make payments for up to 120 days before the Secured Promissory Note will be deemed in default. There will be a balloon payment of all principal amounts and accrued interest due 12 months from the Effective Date (the "Due Date.") There will be no prepayment penalty in the event of partial payments of principal during the term of the Note. The Secured Promissory Note shall be secured exclusively by a first lien or mortgage on the Mineral Rights themselves. In the event of dissolution or liquidation of the Buyer during the term of the Note, such event would be deemed an event of default and the Mineral Interests would be reconveyed to Seller in cancellation of the indebtedness, Minerals Purchase Agreement June 27, 2005 Page 2 of 4 EXCEPT, that in the event the Buyer makes any principal payments in excess of 30% of the Purchase Price during the term of the Secured Promissory Note, the Buyer shall have the option, upon such event of default, to sell the Mineral Interests to a third party or to the Seller (who shall have a first right of refusal to match any bona-fide third-party offer). If Buyer has made such principal payments and elects not to sell the Mineral Interests as provided in the preceding sentence, then Seller shall repay Buyer any amount of such principal payments, less any accrued and unpaid interest on the Secured Promissory Note as of the date of default. 4. The Purchase Price shall be subject to adjustment to actual market value as determined by a third party appraiser selected by mutual agreement of the Seller and Buyer (with Mr. Stewart abstaining from any board of directors' vote in making such selection.) The appraisers' valuation shall be binding on both Parties hereto. Such adjustment shall be to not less than $150,000 nor more than $250,000 and the original principal amount of the Secured Promissory Note and Purchase Price shall be retroactively restated to such amount. In the event that the appraised value is less than $150,000, the Buyer may reject the purchase without penalty or obligation to the Seller whatsoever. In the event that the appraised value is greater than $250,000, the Purchase Price shall be reset to $250,000 without any further or other obligation arising from such circumstance to the Seller other than the referenced interest only payments of the Secured Promissory Note, and the principal amount on the Due Date. 5. Buyer may sell all or any portion of the Mineral Interests to a third party for cash consideration at any time, PROVIDED that, Seller shall have a first right to match any bona-fide third party offer within 15 days of receipt of written notice from Buyer of such bona-fide third party offer. Buyer may also refinance the Mineral Interests at any time provided that Seller receives full payment of all outstanding principal and accrued interest at the time of closing of such refinance. Buyer may not pledge any or all its right title and interest in the Mineral Interests except subject to the lien of the Seller evidenced by this Agreement, and any subsequent security interests recorded subsequent to the date of this Agreement, nor without first obtaining a written subordination agreement, subordinating the lien of the Seller to the Pledgee, from the Seller. 6. Seller shall provide Buyer with Assignment Agreements for the Mineral Interests in such form as is required to properly record such Assignment of the Mineral Interests in the proper county office in each county and state in which the Mineral Interests are located on or before the Effective Date, or within a reasonable time thereafter, with the consent of the Buyer, which consent shall not be unreasonably withheld. Buyer shall execute and deliver any security agreements and financing statements, or Mineral Interest Mortgages, necessary to perfect Seller's security interest in the Mineral Interests, through proper recording in appropriate county offices where the Mineral Interests are located. In the event that circumstances prevent the proper recording of Mineral Interest Assignments or perfection of security interests as the means for carrying out the provisions of this Agreement, Seller shall provide the Parties with appropriate legal agreements binding the operator or manager of the total pool of mineral interests in which the Mineral Interests are included, sufficient to transfer title to the Mineral Interests to the Buyer and perfect the Seller's security interest under the Secured Promissory Note. Minerals Purchase Agreement June 27, 2005 Page 3 of 4 7. In no event shall either Party cause any liens or encumbrances to attach to the Mineral Interests prior to or subsequent to the Effective Date of this Agreement except with the knowledge and consent of the other Party, and the Parties hereto agree to indemnify and hold harmless, the other from and against any such claims, liens, encumbrances, and agree to sue and defend any claim or cause of action which may give rise to an encumbrance or imposition of the lien of any judgment, claim, assessment or encumbrance upon the Mineral Interests at their sole cost and expense. 8. This Agreement shall be binding upon the Parties, their respective officers, directors, managers, members, shareholders, and their successors, trustees, receivers and permitted assigns. Seller may not assign the Secured Promissory Note, nor any security interest arising therefrom in whole or in part without the express written permission of the Buyer. This Agreement will survive and be deemed not to have merged into any Assignment Agreements as to the Mineral Interests, as well as any Mortgage or Collateral Agreement providing security to the Secured Promissory Note. In the event of any real or apparent conflict of terms between the various agreements and undertakings described herein, the more specific term of one such document will govern over a general term in any of the others. If any of the terms and conditions of this Agreement shall be deemed unenforceable by operation of statute, by the common law, or by any judgment or decree of court, such event shall not affect the enforceability of any other term of provision herein, or in any of the collateral documents described herein. 9. Each Party agrees to execute such other and further documents to carry out the purpose and intent of this Agreement and of the collateral agreements and undertakings contemplated herein, including any documents required by way of further assurances of any Party reasonably required in furtherance of the purposes stated herein. 10. Notices: Any notices required to be given, shall be given for any purpose to the last known address of the Party to receive the notice: if by first class mail, three days after posting in the US Mail shall be the effective date of the notice, or by courier if a delivery receipt is provided, the date delivered by the courier to the office address of the recipient; or if by facsimile, the latter of the date of the facsimile or the date that a confirmed copy was posted in the US Mail. No notices by email shall be deemed given unless followed with a conformed copy, and then shall be effective three days after posting the conformed copy in the US Mail. Minerals Purchase Agreement June 27, 2005 Page 4 of 4 11. By their signatures below, the Parties hereby acknowledge and represent that the signatory has full legal authority to execute this Agreement and the collateral agreements and undertakings contemplated herein on behalf of the Parties who are entities and thereby to bind the Parties fully to the terms, conditions, agreements and undertakings, herein. Dated as of the day first above written to be effective as of the Effective Date. SIGNATURES BUYER: COLORADO OIL AND GAS, INC. BY: /s/ John R. Herzog ---------------------------------------- John R. Herzog, Exec. VP 7260 Osceola St. Westminster, Colorado 80030 SELLER: Zephyr Bay Sports Partners, LLC. BY: /s/ William W. Stewart ---------------------------------------- William W. Stewart, Manager 9544 So. Chesapeake St Highlands Ranch, CO 80126 Page 1 of 4 Schedule A to Mineral Purchase Agreement Dated June 27, 2005 SECURED PROMISSORY NOTE AMOUNT: $200,000 Douglas County, Colorado -------- July 1, 2005 1. For value received, the undersigned, Colorado Oil & Gas, Inc., a Colorado Corporation, its successors or assigns (collectively the "borrower") promises to pay Zephyr Bay Sports Partners, LLC, a Colorado Limited Liability Company, or order (the "Note Holder") the principal sum of Two Hundred Thousand and 00/100ths Dollars ($200,000), with interest on the unpaid principal balance from the July 1, 2005 until paid in full at the rate of twelve percent (12%) per annum. Interest only shall be payable on a monthly basis for twelve (12) months beginning August 1, 2005. Interest payments may be deferred if the Buyer does not have sufficient revenue to make payments for up to 120 days before this Secured Promissory Note is deemed in default. The entire principal amount and all unpaid and accrued interest shall be due and payable on August 1, 2006. 2. Payments received for application to this Note shall be applied first to the payment of accrued interest at the rate specified above, and the balance applied in reduction of the principal amount hereof. 3. Borrower may prepay the principal amount outstanding under this Note, in whole or in part, without penalty. Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent payments. 4. This Note shall be senior secured to all indebtedness and obligations of Colorado Oil and Gas, Inc. 5. Collateral. The Borrower grants to Note Holder a first priority interest in the Borrower's mineral rights and override royalties in the properties described in Exhibit "A" to this Note. The Borrower grants a first priority interest in the principal amount no greater than Two Hundred Thousand and 00/100ths Dollars ($200,000.00). The Borrower shall take all reasonable steps to assist the Note Holder's perfection of the interest in the collateral described in this paragraph and in Exhibit "A", attached and incorporated herein. 6. The Borrower represents that no secured indebtedness or obligations exist against it and promises not to secure indebtedness or obligations in the future without the written consent of the Note Holder. Page 2 of 4 Schedule A to Mineral Purchase Agreement Dated June 27, 2005 7. Due On Sale. The outstanding and unpaid proceeds to the Borrower received pursuant to this Promissory Note shall become due and payable to the Note Holder, along with any accrued interest in the event that: (a) the Borrower sells any or all interest in the mineral rights and override royalties in the properties described in Exhibit "A", (b) there is a sale or other transfer of a majority of the ownership interests of the Borrower. 8. This Note shall not be assigned, sold, or otherwise transferred without the written consent of the Borrower. Said consent shall not be unreasonably withheld. 9. The Borrower and all other parties to this Note, whether as endorsers, guarantors or sureties, agree to remain fully bound hereunder until this Note shall be fully paid and waive demand, presentment and protest and all notices thereto and further agree to remain bound, notwithstanding any extension, renewal, modification, waiver, or other indulgence by any holder or upon the discharge or release of any obligor hereunder or to this Note. No modification or indulgence by any holder hereof shall be binding unless in writing; and any indulgence on any one occasion shall not be an indulgence for any other or future occasion. The rights of any holder shall be cumulative and not necessarily successive. This Note shall take effect as a sealed instrument and shall be construed, governed and enforced in accordance with the laws of the Colorado. 10. Venue for any and all disagreements arising from this Secured Promissory Note shall be placed in the County of Douglas, State of Colorado. COLORADO OIL AND GAS, INC. Secured Party Name and Address 7260 Osceola Zephyr Bay Sports Partners, LLC. Westminster, Co 80030 9544 South Chesapeake Street Highlands Ranch, Colorado 80126 By: /s/ John R. Herzog ---------------------------------- John R. Herzog Its Executive Vice President Page 3 of 4 Schedule A to Mineral Purchase Agreement Dated June 27, 2005 EXHIBIT "A" Well Legal Description - -------------------------------------------------------------------------------- 1. Ray #1-22 Sec. 22, T20N, R23W, Ellis County, OK - -------------------------------------------------------------------------------- 2. Ruthie#1-22 Sec. 22, T20N, R23W, Ellis County, OK - -------------------------------------------------------------------------------- 3. Danny Scott #2-25 Sec. 25, T12N, R20W, Custer County, OK - -------------------------------------------------------------------------------- 4. Danny Scott #3-25 Sec. 25, T12N, R20W, Custer County, OK - -------------------------------------------------------------------------------- 5. Sherry-Beth #2-26 Sec. 26, T12N, R20W, Custer County, OK - -------------------------------------------------------------------------------- 6. Sherry-Beth #4-26 Sec. 26, T12N, R20W, Custer County, OK - -------------------------------------------------------------------------------- 7. Sherry Beth #5-26 Sec. 26, T12N, R20W, Custer County, OK - -------------------------------------------------------------------------------- 8. Sherry-Beth #7-26 Sec. 26, T12N, R20W, Custer County, OK - -------------------------------------------------------------------------------- 9. Sherry-Beth #9-26 Sec. 26, T12N, R20W, Custer County, OK - -------------------------------------------------------------------------------- 10. Hagar #3-8 Sec. 8, T11N, R20W, Washita County, OK - -------------------------------------------------------------------------------- 11. Thompson #2-9 Sec. 9, T11N, R20W, Washita County, OK - -------------------------------------------------------------------------------- 12. Buck 1-13 Sec. 1, T2N, R11ECM, Texas County, OK - -------------------------------------------------------------------------------- 13. Campbell Farms 1-25 Sec. 25, T9N, R6W, Grady County, OK - -------------------------------------------------------------------------------- 14. Pickering 1-18 Sec. 18, T10N, R25W, Beckham County, OK - -------------------------------------------------------------------------------- 15. Goodwin #1-27 Sec. 27, T14N, R20W, Custer County, OK - -------------------------------------------------------------------------------- 16. Combs #1-28 Sec. 28, T8N, R17W, Washita, OK - -------------------------------------------------------------------------------- 17. Harden #3-29 Sec. 29, T14N, R21W, Roger Mills, OK - -------------------------------------------------------------------------------- 18. Arapahoe Unit Cheyenne County, CO - -------------------------------------------------------------------------------- 19. Shaw E Unit #1 Adams County, CO - -------------------------------------------------------------------------------- 20. Shaw #2 Adams County, CO - -------------------------------------------------------------------------------- 21. Peoria 24 Arapahoe County, CO - -------------------------------------------------------------------------------- 22. Peoria J Sand Unit Arapahoe County, CO - -------------------------------------------------------------------------------- 23. Lutz #1 Weld County, CO - -------------------------------------------------------------------------------- Page 4 of 4 Schedule A to Mineral Purchase Agreement Dated June 27, 2005 24. Sack Dreyer #1 Weld County, CO - -------------------------------------------------------------------------------- 25. Jankowsky 1-9 Sec. 9, T6N, R20E, Latimer County, OK - -------------------------------------------------------------------------------- 26. Wade #1-17 Sec. 17, T13N, R17W, Custer County, OK - -------------------------------------------------------------------------------- 27. DL Sanders 1-24 Sec. 24, T10N, R24W, Beckham County, OK - -------------------------------------------------------------------------------- 28. Aderholt #1 Sec. 9, T15N, R23W, Roger lls County, OK - -------------------------------------------------------------------------------- 29. John G #1-11 Sec. 11, T10N, R26W, Beckham County, OK - -------------------------------------------------------------------------------- 30. Bass #1-34 Sec. 34, T8N, R17W, Washita County, OK - -------------------------------------------------------------------------------- 31. Fulton #2-8 Sec 8, T5N, R11W, Caddo County, OK - -------------------------------------------------------------------------------- 32. Hill #1-28 Sec. 28, T10N, R25W, Beckham County, OK - -------------------------------------------------------------------------------- 33. Lister #1-32 Sec. 32, T10N, R24W, Beckham County, OK - -------------------------------------------------------------------------------- 34. Maxine #1-22 Sec. 22, T11N, R26W, Beckham County, OK - -------------------------------------------------------------------------------- 35. Blevins #1-22 Sec. 22, T11N, R26W, Beckham County, OK - -------------------------------------------------------------------------------- 36. Biggers "A" #1 Sec. 8, T3N, R14E, Pittsburg County, OK - -------------------------------------------------------------------------------- 37. Lambert #1-10 Sec. 10, T5N, R12E, Pittsburg County, OK - -------------------------------------------------------------------------------- 38. Lambert #2-10 Sec. 10, T5N, R12E, Pittsburg County, OK - -------------------------------------------------------------------------------- 39. Brown #1-5 Sec. 59, H&GN Survey, Block A7, Wheeler County, TX - -------------------------------------------------------------------------------- 40. Boeckman #1 Sec. 20, T18N, R11W, Blaine County, OK - -------------------------------------------------------------------------------- 41. Boeckman #2-20 Sec. 20, T18N, R11W, Blaine County, OK - -------------------------------------------------------------------------------- 42. The Federal 44-22 Sec. 22, T56N, R73W, Campbell County, WY - -------------------------------------------------------------------------------- EX-99.1 3 aret8kex991_6282005.txt PRESS RELEASE Exhibit 99.1 COMPANY PRESS RELEASE Arete Industries, Inc. Subsidiary to Acquire a Pool of Small Producing Oil and Gas Interests. Colorado Oil and Gas, Inc. Buys Mineral Interests and Overriding Royalty Interests in Colorado, Texas, Oklahoma and Wyoming. For Immediate Release Friday June 24, 2005 NIWOT, Colorado, June 24, 2005 (Business Wire) Arete Industries, Inc. (OTC - Bulletin Board: ARET) announced today that its subsidiary, Colorado Oil and Gas, Inc. (COG), agreed today to purchase a pool of minor mineral interests and with producing wells operated by third parties in Colorado, Texas, Oklahoma and Wyoming from a company owned by the subsidiary's president. The purchase follows the Company's plan to buy small producing assets to provide asset value and cash flow to support further acquisition activities. The purchase will be in the form of an assignment of these interests to COG for a price of $200,000 in the form of a secured promissory note in that amount with interest only payable monthly and a 12 month balloon payment. The effective date will be July 1, 2005. The purchase was not at arm's length, and the mineral interests will be appraised by a third party petroleum engineer. Following receipt of the appraisal, the purchase price will be adjusted upward or downward, to a minimum of $150,000 and a maximum of $250,000. If the appraisal is less than $150,000, COG may reject the purchase, and if greater than $250,000, the price will not be adjusted above that amount. The mineral interests currently generate approximately $1,900 of income per month. About the Company. Arete Industries, Inc., a development stage company, is a publicly traded holding company with several subsidiaries. Its subsidiary, Colorado Oil and Gas, Inc. ("COG") was formed to pursue the acquisition of small producing oil and gas properties and mineral interests, as an entry strategy to developing into a full size oil and gas company. The Company has one other subsidiary, Aggression Sports, Inc. dba Arete Outdoors, an outdoor sports equipment manufacturing company that has been inactive since 2001. The Company continues to seek other business acquisitions. Statement as to Forward Looking Statements. Certain statements contained herein, which are not historical, are forward-looking statements that are subject to risks and uncertainties not known or disclosed herein that could cause actual results to differ materially from those expressed herein. These statements may include projections and other "forward-looking statements" within the meaning of the federal securities laws. Any such projections or statements reflect Arete's or COG's current views about future events and financial performance. No assurances can be given that such events or performance will occur as projected and actual results may differ materially from those projected. Important factors that could cause the actual results to differ materially from those projected include, without limitation, COG's inability to meet the conditions to acquiring its current project including providing financing to pay the purchase price or discovery of material title or environmental defects that cannot be resolved; the volatility in commodity prices for oil and gas, the presence or recoverability of estimated reserves, the ability to replace reserves, environmental risks, drilling and operating risks, exploration and development risks, competition, government regulation or other action, the ability of management to execute its plans to meet its goals and other risks inherent in their businesses that are detailed in their Securities and Exchange Commission ("SEC") filings. For Further Information Contact: Company Contact: Arete Industries, Inc. Colorado Oil and Gas, Inc. Karen Hemmerle, Corporate Communications Bill Stewart, President Email: ir@areteindustries.com Email: ir@areteindustries.com ---------------------- ---------------------- Arete Industries, Inc. Colorado Oil and Gas, Inc. 7102 La Vista Place, Suite 100 7260 Osceola Street Niwot, Colorado 80503 Westminster, Colorado 80030 Voice: 303-652-3113 Voice: 303-427-8688 Fax: 303-652-1488 ### -----END PRIVACY-ENHANCED MESSAGE-----