SHARES OUTSTANDING: 19 MILLION
SYMBOL & EXCHANGE: FGE-V
MONTREAL, Oct. 13 /CNW Telbec/ - Forest Gate Energy Inc. ("Forest Gate" or the "Company") is pleased to report that it has completed the acquisition of a 70% equity interest in all Arizona oil and gas licenses (the "Licenses") belonging to Vanterra Energy Inc. (the "Transaction").
Additionally, Michael Judson, Chairman and Chief Executive Officer, is pleased to appoint Donald B. Vandergrift as President and Chief Operating Officer and Curtis Hartzler as Vice President, Operations. Furthermore, Forest Gate has added Mr. Vandergrift and Dr. Easton A. Wren to its Board of Directors. Robert Kramberger, having served as interim Board member during the transition phase, has resigned from the Board of Directors and remains Vice President, Investor Relations.
"Our management team and board have been profoundly improved," said Michael Judson, "We now have the technical expertise to act as operators enabling us to more effectively manage project risk. It also exposes Forest Gate to higher quality deal-flow and investors."
In consideration for the 70% equity interest in the Licenses, Forest Gate has issued to Vanterra 2,690,000 Forest Gate common shares, 5,250,000 subscription receipts convertible into Forest Gate common shares without any additional consideration and 7,300,000 warrants at an exercise price of $0.25 per share, which warrants will expire on the second anniversary of their issuance.
The common shares, subscription receipts and warrants issued under the Transaction are subject to a customary 4 month hold period. No such subscription receipt or warrant may be converted or exercised by Vanterra if, as a result of that conversion or exercise, Vanterra would hold more than 15% of Forest Gate's outstanding common shares.
Under the terms of the Transaction, the Company undertook to pay 100% of the cost to drill, case and complete the initial exploratory well on the lands covered by the Licenses, which is estimated to cost $2,500,000. Facilities and tie-in costs of this well and all subsequent development costs on the lands would be paid 70% by the Company and 30% by Vanterra. The Company and Vanterra have until December 31, 2010 to drill the initial well.
Vanterra and Forest Gate are targeting oil in the Sacramento Valley Neogene Sub-Basin of Arizona which lies within what is known as the Basin and Range Geologic Province which loosely runs north to south from northern Nevada to southern Arizona and east to west from Utah to California.
The Railroad Valley Neogene Sub-Basin, located in Nevada and central in this Basin and Range, has produced over 42 million barrels of oil. One well in the Bacon Flats pool tested at a stabilized rate of 13,000 barrels of oil per day (BOPD) and produced at a initial 2000 BOPD for an accumulative of approximately 1.0 million barrels(i). Wells in the Grant Canyon (GC) pool produced at rates up to 4200 BOPD. One well, the GC #3 produced at these high rates water-free for over 10 years recovering over 15 million barrels of oil(ii).
A 2007 survey run by the United States Geological Survey (USGS), 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.
Forest Gate and Vanterra are planning to drill an 11,000 foot well targeting the Navajo sands at 6000 feet, the Mississippian carbonates at 9,160 feet, and the Devonian carbonates at 10,160 feet. A drill site has been selected using the results of a seismic program acquired by Phillips Petroleum in 1981 and subsequently licensed to Vanterra. The area is very accessible for drilling equipment and has been approved for drilling by both the Federal and State land agencies.
In 2008, Vanterra conducted both geochemical and geo-electromagnetic surveys covering 50 stations over the southern portion of the prospect area. Geochemical sampling tested for methane, ethane, propane, butane, ethylene and propylene and confirmed an active hydrocarbon system in the vicinity. The geo-electromagnetic survey showed consistently Direct Hydrocarbon Indicators at depths consistent with interpreted depths for Devonian and Mississippian carbonates.
Vanterra is currently negotiating for an additional 10,784 acres (16.85 sections) of freehold minerals in the prospect area.
Forest Gate has received an independent report on the Licenses prepared in accordance with National Instrument 51-101. Such report is available for public viewing on SEDAR at www.sedar.com. See news releases dated September 8, 2009 and September 14, 2009 for further details on The Transaction.
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 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.
(1) Nevada Bureau of Mines and Geology, Special Publication MI-2005, The
Nevada Mineral Industry 2005, p. 67 et al.,
(2) Kansas Geological Society Bulletin, September-October 2003, Volume
78, Number 5,
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