Forest Gate Corporate Update: Oil & gas deal due diligence still in progress; Sourcing a rig to drill Pershing

Symbol & exchange: FGE-V

MONTREAL, Feb. 15 /CNW Telbec/ - Forest Gate Energy reports that it is continuing its due diligence on the acquisition of oil and gas assets located in south-western Saskatchewan and is currently busy sourcing a rig to drill its Pershing gold property in Quebec. The company says it believes that the oil and gas acquisition could close this week.

On the mineral exploration side, Forest Gate Energy will be undertaking an exploratory drill campaign before spring break-up and is in the process of sourcing a rig to drill its Pershing gold property in Quebec. The company has approached several diamond drill rig suppliers for a quote to undertake the drilling program on its 100 percent owned Pershing gold property located near Val D'Or, Quebec. "There is a lot of exploration going on in Quebec and so it is a tight market for rigs and personnel. We are presently speaking with a couple companies who have indicated that they may be able to slot us in between contracts," said Edward Procyshyn, Manager, Mineral Exploration.

With regards to the company's oil business, Forest Gate is deep into the due diligence process on its acquisition. As previously announced (FGE news release, December 23, 2010), upon closing of the transaction, Forest Gate will own a non-operated 20 percent interest in oil and gas licenses encompassing 19,848 acres in south-western Saskatchewan in areas known as Rangeview, Divide and Katherine. The remaining 80 percent interest is owned and operated by Trafina Energy Ltd., a publicly-traded oil and gas company based in Calgary.

Subsequent to Forest Gate's December 23 news release, Trafina Energy reported (see Trafina news release, Jan. 10, 2011) it had placed its first horizontal well in the Upper Shaunavon formation into production. Trafina reported that the horizontal well is producing at a gross oil flow rate of 60 barrels per day.

Prior to the completion of the horizontal hole in the Upper Shaunavon formation, the Range and Divide properties net production to Forest Gate would have been 18 barrels oil and 10 barrels of oil equivalent in gas. The first horizontal well just completed by Trafina in the Upper Shaunavon will bring net production to Forest Gate of 30 barrels of oil and 10 barrels of oil equivalent in gas.

Trafina reports that it intends to drill at least two additional wells in the Upper Shaunavon and at least two wells in the Madison formation at Rangeview and Divide in 2011.  

"We have been working very hard on this deal and for good reason.  It doubles our oil production in the immediate term and has the low-risk, development potential that could make Forest Gate cash-flow positive by the end of 2011 or sooner," said Michael Judson, President and Chief Executive Officer. "It is a significant building block for the company."

About Forest Gate Energy
Forest Gate Energy Inc. is a publicly listed oil and gas exploration and production, and non-energy resource company trading on the TSX Venture Exchange under the symbol FGE. The Corporation is seeking to increase shareholder value through participation and development of energy and other resources in Canada and internationally.

FORWARD-LOOKING STATEMENTS

BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, the estimated values disclosed in this release do not represent fair market value.

Certain statements regarding Forest Gate, including management's assessments of future plans and operations and Forest Gate's anticipated financial performance, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond Forest Gate's control. These risks may cause actual financial and operating results, performance, levels of activity and achievements to differ materially from those expressed in, or implied by, such forward-looking statements.

Such factors include, but are not limited to: the impact of general economic conditions in Canada and the United States; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced; competition; the lack of availability of qualified personnel; fluctuations in commodity prices; the results of exploration and development drilling and related activities; imprecision in reserve estimates; the production and growth potential of Forest Gate's various assets; fluctuations in foreign exchange or interest rates; the ability to access sufficient capital from internal and external sources; and obtaining required approvals of regulatory authorities.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States.  The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. 

This news release is not for distribution to United States newswire services or for dissemination in the United States.

Neither TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this release.

SOURCE FOREST GATE ENERGY INC.

For further information:

ROBERT KRAMBERGER, V-P, INVESTOR RELATIONS
1-866-666-3040 
RKRAMBERGER@FORESTGATE.CA   
WWW.FORESTGATE.CA

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FOREST GATE ENERGY INC.

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