K2 Energy to issue new debenture for up to C$1.17 million in debt restructuring

By Sheri Kasprzak

Atlanta, March 23 - K2 Energy Corp. said it will issue a new debenture to a debenture holder and replace an existing debenture with operating netbacks from the company's production.

The company plans to issue a debenture for between C$1 million and C$1,171,574, depending upon the value attributed to the production netbacks, to Aquilon Capital Corp.

Aquilon holds a debenture for C$1,971,574 due May 31, 2005 from K2.

The current debenture is being restructured so that Aquilon will receive assigned production from all current and future wells in its Palmer/Tesoro unit and Key Trout field.

The new debenture will mature March 31, 2006. The replacement debenture will be redeemable for common shares at a price equal to the price per share K2 receives in a subsequent equity financing.

In other news, K2 has entered into an agreement with the Blackfeet Tribal Council to relinquish K2's exploration rights in its western lands on the Blackfeet Indian Reservation, terminate its obligations regarding the land and extend its yearly deadline for drilling and completing obligations on its eastern lands on the reservation from April 18 to Aug. 31 of each year. In exchange for the extension, K2 will pay the tribal council $250,000.

Based in Calgary, Alta., K2 Energy is an oil and natural gas exploration company.

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