- Closes Great Gulfcan Assets Purchase -
- Begins Development Expected To Triple Production Year-Over-Year -
DALLAS, TX, June 4, 2012 /CNW Telbec/ - Gale Force Petroleum Inc. (TSXV: GFP) (OTCQX: GFPMF) (the "Company" or "Gale Force") announced today that it has concluded the purchase of assets from Great Gulfcan Energy Inc. ("GGC"), including $3.1 million in cash, an option on an oil and gas lease in South Texas with one currently non-producing well, and a right of first refusal to purchase GGC's tax losses.
G. Scott Paterson, GGC's Chairman, was appointed to Gale Force's Board of Directors as the Company's Co-Chairman. GGC is at arm's length from the Company and there were no finder's fees payable in conjunction with the transaction.
"The GGC Asset purchase provides Gale Force with additional cash that will assist us in accelerating our growth, and we look forward to Mr. Paterson's contribution to the Board", said Michael McLellan, Co-Chairman & CEO. "With the proceeds of the transaction, Gale Force now has sufficient capital to pursue its planned development and drilling programs that are expected to triple production year-over-year."
GGC Asset Purchase Terms
The purchase price for the GGC Assets was CA$4.2 million, paid through the issuance of units of the Company (the "Units") comprised of one preferred share with an issuance price of 25 cents per share (the "Preferred Shares") and one-half warrant exercisable at 30 cents per share until April 11, 2014 (the "Warrants"). In the aggregate, 16.8 million Preferred Shares and 8.4 million GGC Warrants were issued in consideration for the purchase, distributed to the shareholders of GGC.
The Warrants issued shall be listed for trading on the TSX Venture Exchange, with the listing expected to be initiated in June 2012.
The Preferred Shares (and their underlying common shares) are subject to resale restrictions, such that 50% of them are not transferable until June 1, 2013 and the remaining 50% are not transferable until December 1, 2013. The Preferred Shares earn no dividend, but are convertible 1:1 into common shares of the Company by the holder at any time or by the Company if the 20-day average trading price of the Company's common shares is over 30 cents provided there is average trading volume over 200,000 shares per day, using the combined trading volumes on the TSX Venture Exchange and the OTCQX market.
Mr. Paterson was appointed to Gale Force's Board of Directors as the Company's Co-Chairman. Mr. Paterson is also a Director of Lions Gate Entertainment Corp. (NYSE: LGF), Chairman of Automated Benefits (TSXV: AUT), Vice-Chairman of Neulion Inc. (TSX: NLN) and Chairman of Apogee Silver Ltd. (TSXV: APE) as well as Chairman of GGC. Mr. Paterson spent 16 years in the investment industry last serving as Chairman & CEO of Yorkton Securities from October 1998 to December 2001 during which time Yorkton raised over $9 billion as lead and/or co-managing underwriter. Mr. Paterson has served the securities industry as Chairman of the Canadian Venture Exchange, Vice-Chairman of the Toronto Stock Exchange, Governor of the Investment Dealers Association of Canada and as a Director of each of the Canadian Investor Protection Fund, Canadian Securities Institute and the Canadian Securities Advisory Council. Mr. Paterson is also involved in many charitable and community organisations.
Interim Financial Statements
The Company announced today that it published its interim financial statements for the period ended March 31, 2012. Some of the key highlights included:
- Production grew during the quarter again for the eighth straight quarter.
- According to IFRS rules, the Company recorded significant non-cash expenses for fluctuations in the estimated value of outstanding warrants (embedded derivative liabilities) and crude oil hedges. These non-cash charges caused the Company to report a net loss. Without these charges, the Company earned a slight operating profit.
- At the property level, the Company generated $1,526,197 cash for the 9 months or $572,224 cash during the three months.
- After deducting all cash expenses, including G&A and financial expenses, the Company generated $693,005 cash for the 9 months and $308,699 cash during the three months.
The Company also announced that it has published its restated interim financial statements in compliance with IFRS rules, for the periods ended September 30, 2011 and December 31, 2011, which are available on SEDAR.
The Company also announced that 950,000 stock options were issued to directors and consultants under the terms of the Rolling Stock Option Plan approved by the shareholders on January 12, 2012, with each new option issued having an exercise price of 28 cents, and all new options vesting in six equal quarterly instalments. The options issuance is subject to the approval of the TSX Venture Exchange.
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.»
"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