2009-06-12-2009-01-01-2009-01-01

To acquire 59 net sections of Montney shale rights in BC, AB.

Sabretooth Energy Ltd., Calgary, (Toronto: SAB) plans to trade 59 net sections of Montney shale-play oil and gas rights and C$1 million in cash to HFG Holdings Inc., Plano, Texas, (Toronto: HFG) for 161.5 million HFG common shares valued at C$0.20 each. As part of the deal, Sabretooth has also agreed to a C$1-million tie-in commitment and will provide certain wells and seismic interpretation to HFG. The company's Montney assets are valued at C$32.3 million. HFG plans to privately place 100 million common shares at C$0.25 each on a flow-through basis for proceeds of C$25 million, which will help fund Sabretooth's Montney opportunity in northeastern British Columbia and northwestern Alberta. After the transaction, HFG will become a Montney pure-play company, owned 61% by Sabretooth. HFG management will consist of Sabretooth's current management team. "Sabretooth will effectively raise C$25 million of capital in an extremely tight capital environment to fund the drilling and completion of its Montney assets, while at the same time allowing Sabretooth's existing shareholders the benefit of capturing the as-yet-unrealized value associated with Sabretooth's Montney assets through its share ownership of HFG. HFG's 2009 capital program is anticipated to include the completion of the Red Creek horizontal well A15-01-86-22 W6M as well as the drilling and completion of four additional Montney wells, of which three are to be drilled as horizontal wells," Sabretooth reports. The assets contributed by Sabretooth include the Red Creek well at A15-01-86-22 W6M, which is awaiting completion; an undrilled development well at Gordondale; undeveloped Montney oil and gas rights at Mica, Oak/Stoddart, Sinclair, Nig/Birley, Red Creek and Two Rivers; as well as seismic interpretation and the Montney reserves applicable to two pre-existing vertical Montney wells at Oak. Sabretooth's recently drilled and completed horizontal well at Gordondale is not included in the transaction. The deal is being led by Dundee Securities Corp. and includes Tristone Capital Inc. and Research Capital Corp.