Gale Force Petroleum closes transactions, hedges production
MONTREAL, May 14 /CNW Telbec/ - Gale Force Petroleum Inc. (TSX Venture: GFP, the "Corporation") today announced that it has closed several transactions to conclude the restructuring of its debts, re-finance the Corporation and acquire significant new assets (the "Transactions"). Full details of the Transactions were described in news released by the Corporation on March 29, 2010, April 12, 2010, and May 14, 2010, and are also described in a detailed Filing Statement disclosure document, which was published on SEDAR on May 5, 2010.
TRANSACTIONS SUMMARY
The Transactions are summarized as follows:
- The Corporation has acquired the Buccaneer Assets, the Wells Ranch working interest and the Pine Mills working interests, which are oil and gas properties and assets located in Texas, Oklahoma and Tennessee. - The Corporation has concluded a private placement financing, with gross proceeds of CA$1,741,500 through the issuance of 6,966,000 Units at $0.25 per Unit. Each Unit is comprised of one common share and one half of a Warrant with an exercise price of $0.375 expiring on April 29, 2011. In connection with the private placement, the Corporation issued 114,500 Units and paid $106,250 in finder's fees to finders who are at arm's-length to the Corporation. - The Corporation has concluded a Debt Forgiveness and Conversion transaction with respect to its CA$1,830,281 secured loan to forgive CA $980,281 of the loan and convert the balance into equity securities of the Corporation. - Subject to TSX Venture Exchange approval, the Corporation amended its stock option plan and issued stock options under the new plan. The amended stock option plan would permit the Corporation to issue up to 1,500,000 options, which is less than 10% of shares of the Corporation issued and outstanding. The Corporation has also issue options to Directors and Officers to purchase an aggregate 1,376,000 shares of the Corporation at a price of $0.33, which expire on May 15, 2015.
CAPITAL STRUCTURE
The Corporation has issued common shares, preferred shares, warrants and options, to conclude the Transactions, which are described in the table below. Also, to correct an omission in issuance of shares under the Proposal to Creditors, completed by the Corporation in August, 2009, the Corporation has issued 1,510 common shares of the Corporation to a creditor under the terms of the Proposal to Creditors.
The table below sets forth the capital structure of the Corporation as of today:
------------------------------------------------------------------------- Issue / Quantity Exercise / (Issued or Conversion Shareholder Group Securities Underlying) Price ------------------------------------------------------------------------- Previous Shareholders Common Shares 1,244,697 - ------------------------------------------------------------------------- Secured Lender Common Shares 1,600,000 $0.25 ------------------------------------------------------------------------- Acquisitions Common Shares 5,423,031 $0.25 ------------------------------------------------------------------------- Private Placement Common Shares 6,966,000 $0.25 ($1,741,500) ------------------------------------------------------------------------- Finder's Fees Common Shares 114,000 ------------------------------------------------------------------------- TOTAL Common Shares I&O 15,347,728 ------------------------------------------------------------------------- Balance of Sale, Balance of Sale 1,200,000 $0.25 Acquisition ------------------------------------------------------------------------- Warrants Warrants 3,985,639 $0.375 ------------------------------------------------------------------------- Employee Options Options 124,000 $0.25 ------------------------------------------------------------------------- Employee Options Options 1,376,000 $0.33 ------------------------------------------------------------------------- Series I Preferred Shares Series I Preferred 2,644,706 $0.25 Shares ------------------------------------------------------------------------- TOTAL Fully Diluted 24,678,073 -------------------------------------------------------------------------
HEDGING
To hedge the risks associated with a decline in oil prices, and to help ensure that the Corporation has adequate revenues to cover overhead and service its debts, the Corporation has purchased "floors", consisting of a series of put options, costing a total US$80,100, for 1000 barrels per month of crude oil at US$70.00 per barrel, for 18 months, from June 2010 to November 2011.
ABOUT GALE FORCE PETROLEUM INC. - www.GaleForcePetroleum.com
Gale Force Petroleum is a public corporation with a focus on the development and exploitation of oil and gas resources in mature basins, building shareholder value by making accretive acquisitions and developing its properties. It will own oil and natural gas properties in Texas, Oklahoma, Tennessee and Kentucky.
Forward looking statements:
Statements included herein, including those that express management's expectations or estimates of our future performance, constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are based on assumptions and estimates that are subject to various risks and uncertainties including the risks disclosed under the heading "Business Risks" in the Corporation's periodic filings on SEDAR, for example, in its Management Discussion and Analysis for the annual exercise ended June 30, 2009. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Corporation does not assume the obligation to update any forward-looking statements.
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
For further information: Michael McLellan, Chairman and CEO, (514) 333-9292
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