MONTREAL, Aug. 18 /CNW Telbec/ - Gale Force Petroleum Inc. (TSX Venture: GFP, the "Corporation") today announced that it has closed the purchase of certain "Kilgore Properties". The Corporation had previously announced the signing of a Letter of Intent to purchase the Kilgore Properties on June 2, 2010.
The Kilgore Properties consist of mainly 100% working interests in oil properties in Gregg and Rusk Counties, approximately 25 miles from the Corporation's existing base of operations in East Texas. The properties include 34 wells, of which 3 are on production producing approximately 10 barrels of oil per day.
The Kilgore Properties are estimated to have a total of 280,000 barrels of remaining proved oil reserves, located on ten leases. Using a flat $75.00 crude oil price, these reserves are estimated to have undiscounted future net cash flows of $11.4 million, or, using a 9% discount rate, discounted future net cash flows of US$5.5 million. Today, the Corporation completed the purchase of five of the ten leases, having an estimated 93,100 barrels of remaining proved oil reserves. On these five leases, the reserves are estimated to have undiscounted future net cash flows of $3.9 million, or, using a 9% discount rate, discounted future cash flows of $2.0 million. The Corporation paid US$290,000 for the purchase of these five leases, and assumed abandonment retirement obligations associated with the leases estimated to have a present value of US$119,349.
The Corporation will continue to evaluate the title and environmental aspects of the remaining five leases, expecting their purchase to close in about one month, subject to there being no defects in title or unusual abandonment retirement obligations. The remaining five leases have a total purchase price of US$210,000 and would require the assumption of abandonment retirement obligations estimated to have a present value of US$134,267.
Greater information about the oil reserves of the Kilgore Properties will be made available as part of the Corporation's annual reserves data filings, expected in September, 2010. Please note that the estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties owned by the Corporation due to the effects of aggregation, and the estimated values disclosed herein do not represent fair market value.
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 owns 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."
SOURCE Gale Force Petroleum Inc.
For further information: For further information: Michael McLellan, Executive Chairman, +1.514.221.2030