DALLAS, TX, Aug. 27, 2014 /CNW/ - Gale Force
Petroleum Inc. (TSXV: GFP) (OTCQX: GFPMF)
("Gale Force" or the
"Company") today announced that it has concluded the sale of
an 81% working interest in its properties in Henderson and Anderson Counties, Texas (the "Texas Reef Properties") as
well as its 90% interest in a 4-mile natural gas gathering system
on the properties, for an aggregate selling price of US$5,850,000. Per the terms of the purchase
and sale agreement, US$567,000 of the
purchase price will be held in escrow for sixty days following
closing, or longer, if there are any title or environmental issues
to be resolved.
The Company has retained an average 12% working interest plus a
3% overriding royalty interest in its existing four producing wells
on the Texas Reef Properties, and an average 9% working interest
plus a 5% overriding royalty interest throughout another 3,500
undeveloped net acres.
The purchaser, an experienced, well-capitalized private E&P
operator with operations in several states in the Southern USA, has taken over as operator of
the Texas Reef Properties.
"The Company will benefit from the new operator's experience
drilling and operating in the area, while participating in the
upside with its retained interests," said Michael McLellan, Chief Executive Officer.
"Also, the Company has made significant debt repayments and freed
up capital for investment in core properties."
With the proceeds of the sale, the Company has repaid
US$3,000,000 of its senior bank
facility. The borrowing base of the facility is now
$1,750,000 and the maturity date has
been extended to January 1,
2016. Also, the next date for a borrowing base
redetermination will be January 1,
2015, at which time it will be determined if monthly
borrowing base reductions are needed. The facility is
currently an interest-only facility, with an interest rate that
remains unchanged at 5% per annum.
The Company also repaid all other subordinate notes, including
the seller's note issued upon the purchase of Texas Reef interests
announced on February 26, 2014, which
had an outstanding balance of US$350,000, the bridge loan to Primatlantis
Capital, which had an outstanding balance of US$255,000, and the note payable to Iroquois
Capital Opportunity Fund, which had an outstanding balance of
CA$33,000.
Further to the announcement made on August 18, 2014, the closing of the Thunder
Properties sale has been delayed. The Company expects to
announce a revised closing date in the near future.
ABOUT GALE FORCE PETROLEUM INC. −
www.GaleForcePetroleum.com
Gale Force Petroleum is a public corporation focused on
acquiring and exploiting underdeveloped 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, Tennessee and West
Virginia.
Neither the 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.
SOURCE Gale Force Petroleum Inc.