DALLAS, TX, March 8, 2012 /CNW Telbec/ - Gale Force Petroleum Inc. (TSXV: GFP) (OTCQX: GFPMF) ("Gale Force" or the "Company") released its financial reports for the interim periods ended December 31, 2011. The Company also announced that it has signed agreements to acquire greater interests in the Texas Reef Properties. The Company then provided an update on the Great Gulfcan Energy assets purchase and it announced that it has entered into swap agreements locking in profitable oil sale prices for some of its production through the end of 2013.
The following are some of the key highlights from the financial reports for the six and three month periods ended December 31, 2012:
- Production grew rapidly during the quarter again. As previously announced on January 10th, 2012, the Company exited 2011 with gross production of 275 BOE per day (90% oil) with current production over 300 BOE per day (90% oil).
- At the property level, the Company generated $989,972 of cash for the 6 months or $644,397 for the three months.
- After deducting general, administrative and financing expenses from property level cash generated, the Company generated $397,616 of cash for the 6 months or $336,166 for the three months (i.e. there is no "burn" as the company is cash-flow positive from total operations).
- The Company earned net profits of $617,707 during the six months and lost $350,416 during the 3 months. The variation between cash generation and net income is mainly due to foreign exchange fluctuations, which have no impact on the underlying cash-flows of the business.
- To continue development operations, the Company had $671,231 in cash available at year end (including line of credit, but not including funds raised on January 31, 2012).
"The financial results show Gale Force has been consistent in the execution of its plan to grow rapidly through accretive acquisitions and low-risk development", said Michael McLellan, Chairman & CEO. "We are on track for even higher reserves growth and increases in production and cash-flow over the coming periods".
The Company was delayed in publishing the financial reports due to issues regarding the transition from Canadian GAAP to IFRS reporting standards, which were brought to the Company's attention only shortly prior to the filing deadline. As a result of the lateness in publishing the financial reports, a cease trade order (CTO) was issued and trading in the Company's shares was suspended. The Company has corrected the deficiencies and filed the applications for removal of the CTO and reinstatement to trading.
The Texas Reef Properties
The Company announced today that it has signed agreements to acquire greater interests in the shallow oil zones on the undrilled acreage that are the primary target for development by the Company, up to an 87% working interest from the 80% working interest previously disclosed. The Texas Reef Properties acquisition was previously announced on February 8, 2012. The Texas Reef Properties consist of 7,500 gross acres/2,400 net acres under lease in East Texas, with three wells currently producing 35 barrels of light crude oil and 200 MCFs of high-BTU gas per day. The Texas Reef Properties have complex geology with proved reserves from multiple zones, and numerous potential proved undeveloped locations for low-risk development drilling.
The GGC Assets Purchase
The Company has received a second non-refundable deposit of $100,000 from Great Gulfcan Energy Inc. under the agreement to purchase the "GGC Assets", as previously announced on February 8, 2012. The GGC Assets consist of approximately CA$3.2 million in cash, an option on a Texas oil and gas lease in South Texas with one well with no current production and an exclusive right to GGC's tax losses for a limited period of time.
The Company has also lock-in highly-profitable sales prices on part of its forecast production by entering into production swaps, pursuant to requirements of its $15 million bank facility, as described in the following table:
|July 2012 through December 2012||3,000 bbls per month||$||103.72|
|January 2013 through December 2013||3,000 bbls per month||$||99.97|
ABOUT GALE FORCE PETROLEUM INC. − www.GaleForcePetroleum.com
Gale Force Petroleum is a public corporation focused on acquiring and exploiting underdeveloped and undervalued 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, Oklahoma, Tennessee and West Virginia.
Cautionary statement concerning use of BOEs:
The BOE (Barrel of Oil Equivalent) unit of measure may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Forward looking statements:
Statements included herein, including those that express management's expectations or estimates of our future performance, constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are based on assumptions and estimates that are subject to various risks and uncertainties, including the risks disclosed under the heading "Risks and Uncertainties" in the Company's periodic filings on SEDAR, for example, in its Management Discussion and Analysis for the year ended June 30, 2010. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not assume the obligation to update any forward-looking statements, except as required under applicable law.
"Neither 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."
Michael McLellan, CFA, Chairman & CEO, +1.514.221.2030