Sabretooth Energy provided an update on its progress on the strategic direction to focus on unconventional gas Exploration and Development, primarily in British Columbia.
Recent activity includes:
Sale of West Central and Fireweed Conventional Assets
Further to the Company's media release dated May 8, 2008, Sabretooth has agreed to sell its West Central conventional assets in Alberta and Saskatchewan as well as its Fireweed property in North East British Columbia for an aggregate purchase price of $22.5 million.
The proceeds of the sale will be used to reduce the working capital deficit of the Company by $22.5 million and allow the Company to focus on unconventional gas exploration and development. Current bank lines are being revised for the sale of the properties and new drilling results and are expected to be released with second quarter results in August. The Company anticipates cash flow from operations and available bank lines will fully fund its 2008/2009 unconventional gas focused drilling program.
Sabretooth will retain approximately 6.5 million boe of Proven and Probable reserves (4.2 million boe of Proven reserves) (December 31, 2007, GLJ Petroleum Consultants Ltd.) from the Gunnell, Mica, Sinclair, Peace River Arch and Oak areas based on forecast prices at January 1, 2008.
The Gunnell property is being retained because of its strategic fit as an unconventional gas asset, proximity to other assets in British Columbia, favourable reserve life index and cash flow, and upside potential.
Threshold bid values on the Peace River Arch property were not met during the sale and these assets are therefore being retained by the Company. An active farm-out campaign is being pursued.
Acquisition of Montney prospective lands in British Columbia
Sabretooth was successful in acquiring 8 additional net sections of prospective Montney lands at recent British Columbia land sales. Sabretooth now has approximately 60 net sections of Montney rights with 50 of those sections in North East British Columbia and 10 sections in Alberta.
Red Creek Montney Horizontal, British Columbia
The Company has reached total depth in its first horizontal Montney well at Red Creek. Completion is expected to take place in early August. The well encountered consistence and favourable reservoir throughout the horizontal section and liberated significant gas through the drilling process. Licensing is underway on future drilling locations at Red Creek.
Gunnell Jean Marie Horizontal, British Columbia
At Gunnell, the first two wells of the summer drilling program were tied in in June. Due to favourable results, the program was expanded from 4 wells to 5, and the fifth well is currently drilling. The remaining wells are expected to be tied in in August. Additionally 2 more wells have been proposed by the operator for Q4 2008.
Mica, British Columbia
At Mica, our Q1 oil discovery was tied-in in July and an offset well was drilled. The well encountered multiple prospective zones and completions are underway. The Company plans to drill a horizontal well for the Montney in 2008 at Mica.
Stoddart, British Columbia
Completions are underway on the well drilled at Stoddart in June. The well encountered multiple prospective pay zones and at least one follow up is anticipated for Q3.
Sabretooth anticipates adding a horizontal well to the 2008 budget for the Gordondale area where the Company sees potential on its land directly adjacent to prolific development horizontal wells recently put on production by a major Operator in the area.
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