SHARES OUTSTANDING: 15.2 MILLION
SYMBOL & EXCHANGE: FGE-V
MONTREAL, Sept. 8 /CNW Telbec/ - Forest Gate Energy Inc. ("Forest Gate"
or the "Company") reports that it has entered into an agreement with Vanterra
Energy Inc. ("Vanterra") to acquire, subject to certain conditions, a 70%
equity interest in all Arizona oil and gas licenses (the "Licenses") belonging
to Vanterra (the "Transaction").
Upon completion of the Transaction and in consideration for the 70%
equity interest in the Licenses, Forest Gate would issue 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 to be issued under
the Transaction will be subject to a customary 4 months 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.
Vanterra is a private oil and gas exploration and development company
owned by Don Vandergrift, a well known Calgary-based petroleum engineer.
Vanterra is 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(1). Wells in the Grant Canyon (GC) pool
produced at rates up to 4200 BOPD. One well, the GC No.3 produced at these
high rates water-free for over 10 years recovering over 15 million barrels of
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.
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
The area is very accessible for drilling equipment and has been approved
for drilling by both the Federal and State land agencies.
The Arizona Licenses are located in Mohave County, Arizona and are as
- Federal Lands - 100% interest in approximately 7800 acres, with a term
of 10 years, from July 2007 to July 2017.
- State Lands - 100% interest in approximately 3200 acres, with a term of
5 years from February 2007 to February 2012, renewable by request.
- Freehold lands - 90% interest in approximately 12,800 acres, with a
term of 5 years from August 2006 to August 2011, renewable by request.
Vanterra is currently negotiating for an additional 10,784 acres (16.85
sections) of freehold minerals in the prospect area.
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 15.2 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, <a href="http://www.kgslibrary.com/bulletins/2003/bulletin_2003_Sept-Oct/bulletin_2003_Sept-Oct.PDF">www.kgslibrary.com/bulletins/2003/bulletin_2003_Sept-</a>
For further information:
For further information: Robert Kramberger, V-P, Investor Relations,
1-866-666-3040, firstname.lastname@example.org; www.forestgate.ca