Gale Force To Gain Two Texas Projects In Separate Deals
To acquire various interests in Texas Reef properties covering 7,500 gross lease acres lease in E TX, gaining 35 BO/d & 200,000 Cf/d.
Gale Force Petroleum Inc., Dallas, (Toronto Venture: GFP) plans to purchase oil and gas properties and assets in East Texas in two separate deals for a total C$8.45 million in cash and stock.
The first deal concerns the Texas Reef properties which Gale Force plans to acquire from an undisclosed seller for C$4.25 million. Gale Force will pay C$3.5 million in cash and issued C$750,000 in units.
The Texas Reef properties consist of 7,500 gross acres (2,400 net) under lease in East Texas, with three producing wells. Gale Force plans to purchase approximately 75% working interests in each the three existing wells on the properties and an 80% working interest in the remainder of the acreage.
The properties have complex geology with proved reserves from multiple zones, and numerous potential proved undeveloped locations for low-risk development drilling.
Production is 35 barrels of oil and 200,000 cubic feet per day.
Gale Force plans to primarily use funds drawn from its $15-million bank facility.
Gale Force chairman and chief executive Michael McLellan says, “The Texas Reef Properties will add to the company’s growing inventory of development prospects, providing a clear pathway for continued growth in production and cash generation. We believe that the Texas Reef Properties will help increase total oil and gas production by September 2012 to over 600 barrels equivalent per day net to the company.”
The second deal concerns an option on a Texas oil and gas lease in South Texas from privately held, Friendswood, Texas-based Great GulfCan Energy Inc. for C$4.2 million in units.
The lease features one well with no current production, and an exclusive right to purchase Great GulfCan’s tax losses for a limited period post-transaction. Great GulfCan is at arm’s length from the company.
At closing, G. Scott Paterson, Great GulfCan’s chairman, would be appointed to Gale Force’s board as co-chairman. Paterson is a firector of Lions Gate Entertainment Corp. (NYSE: LGF), vice-chairman of Neulion Inc. (Toronto: NLN) and chairman of Apogee Silver Ltd. (Toronto Venture: APE).
McLellan says, “The GGC Asset purchase will provide Gale Force with additional equity and assets that will assist us in accelerating our growth, and we look forward to Mr. Paterson joining the company’s Board”, said Mr. McLellan.
Gale Force existed 2011 producing 275 barrels equivalent per day and is currently producing 300 barrels equivalent per day (90% oil) and should it achieve production of 600 barrels equivalent per day in September 2012.
The Great GulfCan transaction is expected to close by May 15.