2009-05-04-2009-05-04-2009-05-04

Acquired KS Cherokee Basin assets, gaining 1.2 MMcf/d, 8.3 Bcf proved.

Admiral Bay Resources Inc. (Toronto Venture: ADB) has acquired additional producing gas assets in the Kansas Cherokee Basin from an undisclosed private seller for approximately US$2 million. The Thayer (Neodesha) assets are in Wilson and Neosho counties. Current production is approximately 1.2 million cubic feet of gas per day. Proved reserves are approximately 8.3 billion cubic feet of gas. The deal is valued at approximately $0.25 per proved thousand cubic feet (Mcf), and approximately $1,900 per daily flowing Mcf, according to the company. Admiral Bay expects to enhance production through workovers and improvements to the gathering system and field compression. Prior to the field being foreclosured in 2008, production was 1.6 million to 1.8 million cubic feet per day. The company has also identified approximately 70 additional in-fill drilling locations. The acquisition will increase Admiral Bay's production by 35% and proved reserves by nearly 20%. "This acquisition is transformational for Admiral Bay as it adds meaningful scale to both production and reserves in the Cherokee Basin," says Admiral Bay president and chief executive Steve Tedesco. "Moreover, our ability to complete and fund this acquisition with both new equity and debt demonstrates the confidence our equity investors and lenders have in the future of Admiral Bay." The deal is being funded by a nonbrokered private placement of units. GasRock Capital LLC will provide up to an additional US$1.8 million for the purchase and further development of the assets.