Petroflow Energy Ltd. has entered into a definitive purchase and sale agreement to sell its San Juan Basin coal bed methane property (Juniper). The sale, which is still subject to due diligence on the part of the purchaser, is scheduled to close in May, 2008 for gross cash proceeds of $US 29 million.
The Company expects that after adjustment of its current borrowing base, the asset sale will effectively increase the Company's available borrowing capacity by $US 17 million less commissions and other costs attributable to the sale. In conjunction with the Company's previously announced credit facility (see April 14, 2008 news release) the Juniper sale will add approximately $US 51 million to the Company's available funds since the end of 2007.
Based on the December 31, 2007 reserve report, compiled by Haas Petroleum Engineering Services Inc., sale of the Juniper property will only reduce the value of the Company's proved reserves (discounted at 10%) by approximately 12% and its proved plus probable reserves (discounted at 10%) by approximately 10%.
"With this sale, combined with anticipated cash flow from operations for 2008, and the new banking facility, we believe that funding for our 2008 capital program is in place" states Petroflow's President and CEO Mr. John Melton. It is the Company's intention to use most of the available funds to continue its ambitious drilling program in Oklahoma. The Company is targeting to drill 30 wells in the Hunton dewatering resource play in 2008.
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