Shares outstanding: 19.4 Million
Symbol & exchange: FGE-V
MONTREAL, Dec. 9 /CNW Telbec/ - Forest Gate Energy Inc. ("Forest Gate" or the "Company") reports that it has acquired from Vanterra Energy Inc. ("Vanterra") interests ranging from 52% to 70% in all Utah oil licenses (the "Licenses") belonging to Vanterra (the "Transaction").
The Licenses are located in Cedar Valley, Iron County, Utah and are as follows:
- Federal Lands - 52% interest in approximately 2,560 gross acres, with a
term of 10 years, from February 2006 to January 2016.
- Freehold lands - 52% to 70% interest in approximately 2,600 acres, with
a term of 5 years from June 2005 to June 2010, renewable to June 2015.
Forest Gate and Vanterra are planning to re-drill a 4,000-foot well targeting the Dakota sands at 2,600 to 2,800 feet on which Forest Gate has received an independent report prepared in accordance with National Instrument 51-101 on such initial potential producing well. The report, effective as at November 1, 2009 was prepared by Chapman Petroleum Engineering Ltd and is available for public viewing on SEDAR at www.sedar.com (the "Chapman Report").
"We have identified five potential targets in this area," said Don Vandergrift, Forest Gate's President and Chief Operating Officer, "With four potential Dakota Sands with initial production potential of 50 to 200 BOPD per target."
"Additionally, the basement target has a potential of up to 500 BOPD," added Mr. Vandergrift. "This is right up our alley, since our technical team has had considerable experience and success in recent basement discoveries such as the Neuquén basin of central Argentina."
Forest Gate has partnered with Vanterra to explore for oil in the Basin and Range Geologic Province of Utah. Proposed target is an offset to the Southern Utah Oil Company #1 well drilled in 1949, which had significant oil shows reported in the Dakota sandstone as well as the basal sandstone of the well. The 1949 Schlumberger electrical log indicated good permeability and high resistivities within the Dakota sandstone.
Furthermore, a 1981 Geologic evaluation by Wesgo Resources Ltd., Calgary, calculated prospective resources of 3.3 million barrels per section (640 acres) which is equal to 412.5 thousand barrels per 80 acre spacing unit. This is in line with the Chapman Report that calculated prospective resources per 80 acre spacing unit of 375.0 thousand barrels for the Low Case, 1.017 million barrels for the High Case and 696.0 thousand barrels for the Best Case.
Forest Gate and Vanterra are targeting oil in the Cedar Valley Neogene Sub-Basin of Utah, which lies within what is known as the Basin and Range Geologic Province, loosely running north to south from northern Nevada to southern Arizona, and east to west from Utah to California.
A 2007 survey run by the United States Geological Survey, covering the eastern section of the Basin and Range Geologic Province, concluded that there is a fully risked mean of approximately 1.3 billion barrels of prospective oil resources yet to be discovered in the neogene sub-basins and ranges of the area.
Under the terms of the Transaction, the Company undertook to pay 100% of the cost to drill, case and complete the initial well on the lands covered by the Licenses, which is estimated to cost $1,185,000. Facilities and tie-in costs of this well and all subsequent development costs on the lands would be paid 52% by the Company and 48% by Vanterra et al. The Company and Vanterra have until June 1st, 2010 to drill the initial well.
Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery (geological chance of success) and a chance of development (economic, regulatory, market and facility, corporate commitment or political risks). The chance of commerciality is the product of these two risk components. These estimates have not been risked for either the chance of discovery or the chance of development. There is no certainty that any portion of the prospective resources will be discovered. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development or that it will be commercially viable to produce any portion of the prospective resources.
About Forest Gate Energy
Forest Gate Energy Inc. is a publicly listed oil & gas exploration and production company trading on the TSX Venture Exchange under the symbol FGE with 19.4 million shares outstanding. The Company is seeking to increase shareholder value through participation and development of oil & gas exploration and production projects in Canada and internationally.
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.
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. This transaction is subject to TSX Venture Exchange Approval.
SOURCE Forest Gate Energy Inc.
For further information: For further information: Robert Kramberger, V-P, Investor Relations, 1-866-666-3040, firstname.lastname@example.org, www.forestgate.ca