DALLAS, July 24, 2014 /CNW/ - Gale Force Petroleum Inc. (TSXV: GFP) (OTCQX: GFPMF) (the "Company") today announced that it has entered into an agreement to sell an 81% working interest in its properties in Henderson and Anderson Counties, Texas (the "Texas Reef Properties") as well as its 90% interest in a 4-mile natural gas gathering system on the properties, for an aggregate selling price of US$5,850,000. The transaction is expected to close on or before August 22, 2014.
The Company will retain an average 12% working interest plus a 3% overriding royalty interest in its existing four producing wells on the Texas Reef Properties, and an average 9% working interest plus a 5% overriding royalty interest throughout its remaining 3,500 undeveloped net acres.
The purchaser is an experienced, well-capitalized private E&P operator with operations in several states in the Southern USA (the "Purchaser"). The Purchaser has recently drilled six vertical wells and two horizontal wells immediately adjacent to the Company's Texas Reef Properties (the Company and the Purchaser have overlapping and integrated land positions). Upon closing, the Purchaser will become the operator of the existing and future wells throughout the Texas Reef Properties. Horizontal drilling of several wells is planned.
"The Company will benefit from the new operator's experience drilling and operating in the area, while participating in the upside with its retained interests," said Michael McLellan, Chief Executive Officer. "Also, this property divestiture will allow Gale Force to make significant debt repayments and free up capital to make investments in other core properties."
With the proceeds from the sale of the properties, the Company expects to make an approximate $2.5 million reduction in its senior bank facility, fully pay off any outstanding subordinate notes, and have approximately $2.5 million remaining for its capital development programs.
ABOUT GALE FORCE PETROLEUM INC. − www.GaleForcePetroleum.com
Gale Force Petroleum is a public corporation focused on acquiring and exploiting underdeveloped oil and gas reserves in mature basins, bringing operational expertise and capital to lower-risk, development-type projects. The Company currently owns producing oil and gas properties in Texas, Tennessee and West Virginia.
Neither the 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: Michael P. McLellan, CFA, Chief Executive Officer at +1.888.440.3411.