Gale Force has signed a letter of intent to purchase interests in properties in East Texas (the "Colgate Properties").
The Colgate Properties are located within 5 miles of the Company's existing properties in East Texas and consist of mainly 100% working interests in oil and gas properties that are currently producing, in the aggregate, 105 barrels per day.
"This acquisition will significantly increase the Company's overall production, revenues and cash generation," said Michael McLellan, Chairman and CEO. "Due to its proximity and size, the acquisition will build scale and integrate well into our existing operations in East Texas."
The purchase price for the Colgate Properties is US $2.75 million in cash and CA $1 million in Units of the Company issued at a price of $0.30 per Unit. Each Unit consists of one common share of the Company and one common share purchase warrant of the Company. Each warrant entitles the holder thereof to purchase one common share for $0.50 for a period of 18 months following the Closing Date.
The purchase of the working interests in the Colgate Properties is subject to due diligence and financing, and it is a condition of the agreement that the purchase be concluded prior to the end of 2010. To finance the purchase, the Company expects to obtain bank debt financing for a significant portion of the cash purchase price, with the balance of funds required being raised in a private placement of Units.
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