Shares outstanding: 142 Million
Symbol & exchange: FGT-V
MONTREAL, May 12 /CNW Telbec/ - Forest Gate Resources Inc. is pleased to
announce that it has entered into an agreement to acquire, subject to certain
conditions, 90% of all of the issued and outstanding shares of Atlantis
Deepwater Production, Inc. and 90% of all of the issued and outstanding
securities of Impact Exploration & Production, LLC, both privately held
Houston, Texas-based oil and gas ventures.
In consideration for the securities of Atlantis and Impact, Forest Gate
would issue a certain number of common shares from its share capital so that
the sellers, as a whole, would own 50% of Forest Gate's outstanding common
shares upon completion of the transaction but before taking into account the
concurrent financing. Concurrently with the completion of this transaction,
Forest Gate expects to close a non-brokered private placement financing
whereby it intends to raise between $500,000 and $2.5 million under existing
market terms and conditions and consolidate its common shares on a 10 for 1
One of the seller, Angus Energy LLP, is a privately-held Edinburgh,
Scotland-based exploration and production company co-owned and run by Jonathan
Tidswell. Mr. Tidswell was formerly a consultant to Forest Gate on
international exploration and production. In addition to being President of
Angus Energy LLP, Jonathan Tidswell is currently President of Wellmack Ltd.,
an oil services company based in Aberdeen, Scotland. Tidswell started his
career with Halliburton Energy Services working as a logging engineer and in
production enhancement and well intervention. He also worked with Wintershall
Libya as drilling engineer, drilling supervisor and petroleum engineer.
Atlantis and Impact were established by Mr. Tidswell utilizing the
expertise of industry specialists, Richard Sharp and Matthew Fabre, to take
advantage of onshore and offshore opportunities in oil and gas exploration and
production in Texas and Louisiana. Messrs. Sharp and Fabre have extensive
experience in the area.
Forest Gate has not verified the technical information as the following
information was provided by Atlantis and Impact's management and trading will
remain halted until the filing of an acceptable 51-101 report.
The Offshore Opportunity
Atlantis has signed an agreement on February 26, 2009 with a third party,
enabling it to acquire interests ranging from 57.3% to 100% in the High Island
98-L (HI-98L) project located in Gulf of Mexico off the coast of Texas.
According to Atlantis, HI-98L produced 600 barrels of oil per day before being
shut-in in September 2008.
HI-98L currently consists of five well bores and a single processing
platform with multiple primary separation and measurement components,
secondary processing facilities, and sales measurement readings. All
hydrocarbons are transported by a single 8" multiphase pipeline and routed 6
miles to the terminal facility for separation, treatment and sales.
Five wells have been drilled and completed with two wells capable of
immediate production. According to Atlantis, production could re-commence at
HI-98L as early as August with optimization and acceleration possible. The
HI-98L field is located in 40 feet of water and encompasses multiple state
leases on High Island 98L and a federal lease on the opposite side of the 3
league line in the same block.
In the coming months, Atlantis will acquire HI-98L for US$500,000 plus
the assumption of the third party's share of the plug and abandonment
The siph davisi "C" and "A" sands are the primary producers in the
immediate area, having produced over 50 BCF from 2 traps. The "C" sand is
locally prevalent and has accounted for 33 BCF. Quality of the thinner "A"
sand varies significantly, providing a stratigraphic element to its
production. The A sand has accounted for production of 17 BCF. There are no
apparent wet wells in the A sand. Minor production has been made from thin
discorbis b sands above the siph davisi section, and the normal-pressured amph
b above that.
In the NE/4 of HI_98L, United Meridian Corporation (UMC) drilled its
successful #1 well in 1996. That well has produced from siph davisi "A" and
"C" sands, plus a thick "B" sand channel, which is the target of one of the
prospects discussed below. The UMC well has produced 10.9 BCF. Target depths
are approximately 9000'. Drill site water depths range from 35-40'.
A 3D seismic survey was performed by Eastern Geophysical in the early
90's. At least three processed versions have been generated. The original
interpretation was made on the Kelman 2003 pre-stack time migration. In
2006-07, GeoCenter produced an updated PSTM, on which the current
interpretation was made.
In addition, Atlantis is presently negotiating with another third party
to enter into an agreement with such third party, which would enable Atlantis
to acquire the gathering system and terminal facility to compliment the HI-98L
acquisition. The terminal facility includes gas and oil separation,
dehydration and oil storage facilities.
The acquisition of the gathering system assets, while not a necessity,
will offer significant advantages to Atlantis. It is through this facility
that the HI-98L production will be transported and sold. Thus, Atlantis will
be able to own and control where it stores, gathers and transmits its oil and
gas. In addition to the P&A liability, the gathering system assets require
minimum upgrades totalling US$300,000 in order to effect upgrades to the
According to Atlantis, the terminal facility consists of a high pressure
separator, low pressure separator, skimmer/treater, gas dehydration, glycol
reclamation, flare stack and scrubber, 35,000 barrel storage tank,
interconnecting pipe, barge/tanker/truck loading station, related real estate
and downstream sales pipeline. Photos and video of the HI-98L platform are
available on Forest Gate's website at www.forestgate.ca.
The Onshore Opportunity
Impact is currently finalizing lease agreements for onshore assets with
current production and hydrocarbon exploration potential with current
production being at 48 barrels of oil per day. These assets have an aggregate
lease hold of 7,100 net mineral acres in southeast and south Texas.
Impact interprets the potential existence of significant pay zones in
deeper structures based on geological and geophysical work.
The New Company
Upon the completion of this transaction, Forest Gate will change its name
to Forest Gate Energy. The new company will maintain its primary operations
office in Houston, Texas with its corporate office to be maintained in Canada.
The new management team will consist of existing Forest Gate management,
Atlantis management and Angus management. Atlantis has several petroleum
engineers on contingency immediately available to begin and oversee production
and start up. These engineers have worked for Petrobras, Texaco and Shell in
their deepwater production division and have over 40 years combined experience
in petroleum engineering offshore and onshore in Texas, Louisiana and Gulf of
The assets described in this press release are currently the only assets
owned by Atlantis and Impact.
"We are very pleased to be teaming up with Forest Gate," said Jonathan
Tidswell, President of Angus Energy, LLP. "I think we have formed a very
skilful, resourceful and entrepreneurial oil company."
"We are acquiring superb assets and a very experienced and talented
technical team," said Michael Judson, Chief Executive Officer of Forest Gate.
The completion of the transaction will be subject to customary conditions
and Forest Gate shareholders passing a resolution approving the transaction.
About Forest Gate Resources
Forest Gate Resources Inc. is an international oil & gas exploration and
production company. The Company is seeking to increase shareholder value
through participation and development of oil & gas exploration and production
projects in Canada and internationally.
This news release contains certain disclosure that may be subject to
National Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities ("NI51-101"). This disclosure has not been prepared in compliance
with NI51-101 and Forest Gate makes no claims to the contrary. Accordingly,
investors should not and cannot rely upon any such disclosure for the purposes
of making any decision to trade Forest Gate's securities. Forest Gate will
seek to comply with all applicable disclosure obligations, including the
preparation of NI51-101 reports for the properties owned by Atlantic and
Impact, as soon as is possible. The economic viability of these properties has
not been established and there is no guarantee that it will be.
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.
Accordingly, Forest Gate gives no assurance nor makes any representations
or warranty that the expectations conveyed by the forward-looking statements
will prove to be correct and actual results may differ materially from those
anticipated in the forward looking statements. Actual results may differ
materially from results contemplated by the forward-looking statements. When
relying on forward-looking statements to make decisions, investors and others
should carefully consider the foregoing factors and other uncertainties and
should not place undue reliance on such forward-looking statements. Forest
Gate does not undertake to publicly update or revise any forward-looking
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.
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.
For further information:
For further information: Robert Kramberger, V-P, Investor Relations,
1-866-666-3040, firstname.lastname@example.org; www.forestgate.ca