Forest Gate Energy Inc.
Symbol & Exchange: FGE-V
Forest Gate Energy To Acquire An Interest In Arizona Oil & Gas Licenses
Montreal, QC – September 8th, 2009 –Forest Gate Energy Inc. (“Forest Gate” or the "Company") reports that it has entered into an agreement with Vanterra Energy Inc. (“Vanterra”) to acquire, subject to certain conditions, a 70% equity interest in all Arizona oil and gas licenses (the “Licenses”) belonging to Vanterra (the “Transaction”).
Upon completion of the Transaction and in consideration for the 70% equity interest in the Licenses, Forest Gate would issue to Vanterra 2,690,000 Forest Gate common shares, 5,250,000 subscription receipts convertible into Forest Gate common shares without any additional consideration and 7,300,000 warrants at an exercise price of $0.25 per share, which warrants will expire on the second anniversary of their issuance.
The common shares, subscription receipts and warrants to be issued under the Transaction will be subject to a customary 4 months hold period. No such subscription receipt or warrant may be converted or exercised by Vanterra if, as a result of that conversion or exercise, Vanterra would hold more than 15% of Forest Gate’s outstanding common shares.
Vanterra is a private oil and gas exploration and development company owned by Don Vandergrift, a well known Calgary-based petroleum engineer. Vanterra is targeting oil in the Sacramento Valley Neogene Sub-Basin of Arizona which lies within what is known as the Basin and Range Geologic Province which loosely runs north to south from northern Nevada to southern Arizona and east to west from Utah to California.
The Railroad Valley Neogene Sub-Basin, located in Nevada and central in this Basin and Range, has produced over 42 million barrels of oil. One well in the Bacon Flats pool tested at a stabilized rate of 13,000 barrels of oil per day (BOPD) and produced at a initial 2000 BOPD for an accumulative of approximately 1.0 million barrels . Wells in the Grant Canyon (GC) pool produced at rates up to 4200 BOPD. One well, the GC #3 produced at these high rates water-free for over 10 years recovering over 15 million barrels of oil .
A 2007 survey run by the United States Geological Survey (USGS), covering the eastern section of the Basin and Range Geologic Province, concluded that there is a fully risked mean of approximately 1.3 billion barrels of prospective oil resources yet to be discovered in the neogene sub-basins and ranges of the area.
Forest Gate and Vanterra are planning to drill an 11,000 foot well targeting the Navajo sands at 6000 feet, the Mississippian carbonates at 9,160 feet, and the Devonian carbonates at 10,160 feet.. A drill site has been selected using the results of a seismic program acquired by Phillips Petroleum in 1981 and subsequently licensed to Vanterra.
In 2008, Vanterra conducted both geochemical and geo-electromagnetic surveys covering 50 stations over the southern portion of the prospect area. Geochemical sampling tested for methane, ethane, propane, butane, ethylene and propylene and confirmed an active hydrocarbon system in the vicinity. The geo-electromagnetic survey showed consistently Direct Hydrocarbon Indicators at depths consistent with interpreted depths for Devonian and Mississippian carbonates.
The area is very accessible for drilling equipment and has been approved for drilling by both the Federal and State land agencies.
The Arizona Licenses are located in Mohave County, Arizona and are as follows:
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Federal Lands – 100% interest in approximately 7800 acres, with a term of 10 years, from July 2007 to July 2017.
- State Lands – 100% interest in approximately 3200 acres, with a term of 5 years from February 2007 to February 2012, renewable by request.
- Freehold lands – 90% interest in approximately 12,800 acres, with a term of 5 years from August 2006 to August 2011, renewable by request.
About Forest Gate Energy
Forest Gate Energy Inc. is a publicly listed oil & gas exploration and production company trading on the TSX Venture Exchange under the symbol FGE with 15.2 million shares outstanding. The Company
is seeking to increase shareholder value through participation and development of oil & gas exploration and production projects in Canada and internationally.
For more information please contact:
Robert Kramberger,
V-P, Investor Relations
1-866-666-3040
rkramberger@forestgate.ca
www.forestgate.ca
FORWARD-LOOKING STATEMENTS
Certain statements regarding Forest Gate, including management’s assessments of future plans and operations and Forest Gate’s anticipated financial performance, may constitute forward-looking statements under applicable securities laws and necessarily involve known and unknown risks and uncertainties, most of which are beyond Forest Gate’s control. These risks may cause actual financial and operating results, performance, levels of activity and achievements to differ materially from those expressed in, or implied by, such forward-looking statements.
Such factors include, but are not limited to: the impact of general economic conditions in Canada and the United States; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced; competition; the lack of availability of qualified personnel; fluctuations in commodity prices; the results of exploration and development drilling and related activities; imprecision in reserve estimates; the production and growth potential of Forest Gate’s various assets; fluctuations in foreign exchange or interest rates; the ability to access sufficient capital from internal and external sources; and obtaining required approvals of regulatory authorities.
Neither TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or the accuracy of this release. This transaction is subject to TSX Venture Exchange Approval.
