NewsSymbol & exchange: FGE-V
Forest Gate Closes Acquisition of Oil & Gas Production
Montreal, Québec, February 24, 2011 – Forest Gate Energy reports that it has closed its acquisition of oil and gas assets located in south western Saskatchewan from a private, Calgary-based company.
As a result of the transaction Forest Gate owns a non-operated 20 percent interest in oil and gas licenses encompassing 19,848 gross acres in south western Saskatchewan. The remaining 80 percent interest is owned and operated by Trafina Energy Ltd., a publicly-traded oil and gas company based in Calgary, Alberta.
The licenses are located in areas known as Rangeview, Divide and Katherine. Rangeview and Divide are currently producing 30 barrels per day of oil and the equivalent of 10 barrels of oil per day in gas production net to Forest Gate. Production is from the Upper Shaunavon (18 degree API), and Madison formations (10 degree API). Katherine has known hydrocarbon reserves.
Forest Gate’s combined oil and gas production from Saskatchewan and Alberta is approximately 80 barrels per day of oil equivalent. The weighting is in favour of oil production with approximately 50 of the 80 barrels in oil and 30 in gas.
Forest Gate and its partner, Trafina Energy, intend to drill at least two additional horizontal wells in the Upper Shaunavon formation and at least two horizontal wells in the Madison formation at Rangeview and Divide in 2011.
“In March, we will be drilling a new horizontal well, which will once again target the Upper Shaunavon formation at Divide,” said Michael Judson, President Chief and Executive Officer of Forest Gate.
As a result of this transaction Forest Gate also has been able to attract new technical talent in Calgary, says Judson. “The relationship is in the process of being formalized but we have recruited a highly experienced oil and gas operator to join us in helping build the company. This individual was responsible for putting together the play at Divide, Rangeview and Katherine.”
“We are also extremely pleased to be working with Trafina Energy”, said Judson. “They have a track record of success in the Canadian Western Sedimentary Basin.”
The total consideration for the acquisition was $1.5 million. Forest Gate issued to the private company 7.35 million shares, assumed its bank line of credit of $350,000 and various liabilities the private company had with its joint venture partner in the amount of $100,000. Forest Gate will also make an additional cash payment of approximately $50,000 by March 31, 2011, subject to normal industry adjustments.
The Transaction is subject to final approval of the TSX Venture Exchange. Conditional approval was granted on January 20, 2011.