28 Jun 2010 07:00
SOLO OIL PLC
("Solo" or "The Company")
28 June 2010
CANADIAN OIL INVESTMENT UPDATE
Solo Oil plc, the AIM listed International Oil and Gas Exploration and Development Company, today announces a commercial and operational update on its investment in Reef Resources Ltd ("Reef").
As announced on 29 April 2010, the Company agreed commercial terms of a $1,650,000 CAN participating loan agreement to Reef for financing the development of a proven oil and gas production asset in Ontario. Solo receives 60% of net production revenue post tax until loan repayment and 50% net earnings thereafter from the funded developments.
The Company has now conducted all technical, legal and commercial due diligence to complete the conditions of the loan agreement.
Under terms of the agreement, the Solo Chairman, Mr. David Lenigas, has been nominated to the board of Reef as the Solo representative, subject to approval by the TSX Venture Exchange.
Subsequent to the issue of the stage 1 loan payment of $750,000 CAN by the Company on 14 May, production facilities have been restarted, tested and operating as per standard performance levels.
The local natural gas utility company is in the process of finalizing analysis of the Company natural gas prior to commencing sales production from the facility. Subject to confirmation of acceptable gas analysis by the utility the Company will restart sales production as planned. In the meantime the Company will re-start the facility before end of June 2010, recycle and conserve gas, produce oil from two pumping oil wells and recover natural gas liquids through its gas liquids extraction process.
Reef successfully negotiated purchase of the main processing plant compressor from a lease arrangement and this will have a positive impact on the Company's balance sheet, positive net operating income and lower overall operating costs.
The completion program and scheduling of the first horizontal well to increase production are being finalised, and this program shall be executed as soon as rig services and fracturing equipment are mobilised in July.
The Company anticipates reporting the stage 1 production results by August 2010.
Competent Person's Statement:
The information contained in this announcement has been reviewed and approved by Fraser S Pritchard, Board Advisor for Solo Oil Plc (member of the SPE) who has over 20 years relevant experience in the oil industry.
Enquiries:
Solo Oil PLC: +44 (0) 20 7016 5100
David Lenigas/Kiran Morzaria
Beaumont Cornish - Nominated Adviser +44 (0) 20 7628 3396
Roland Cornish
Astaire Securities: +44 (0) 20 7448 4400
Jerry Keen/Toby Gibbs
NOTES TO EDITORS
Solo Oil Plc is petroleum resources exploration and development company, with objectives to acquire and develop a diverse portfolio of direct and indirect interests in exploration, development and production oil and gas assets which are based in the Americas, Europe and Africa. More information on Solo can be found at www.solooil.co.uk.
Reef is an incorporated oil and gas exploration and production company with existing assets in Ontario and ongoing negotiations and options for the acquisition of other assets in Canada. Reef's strategy is to build shareholder value through internally generated exploration and development drilling through selective acquisitions, joint ventures and farm-ins. Reef's primary asset in Ontario has estimated proved and probable reserves of 35,533 boe and 159,370 boe respectively as assessed by a qualified reserves evaluator in July 2009. The Ontario production asset is currently shut-in awaiting development financing.
The Ontario asset also has gas storage rights and a gas re-injection permit for gas re-cycle arbitrage and enhanced oil recovery. A key component of Reef's strategy is to identify and exploit undervalued prospects in the Ontario basin by utilizing the company's 23,500 acres of proprietary 3D seismic. In addition to its Ontario asset, Reef has identified multiple oil and gas acquisition and development opportunities throughout Canada.
Reef has established a four stage production development program on its Ontario asset which includes the drilling of a series of multi-zone well targets (vertical and horizontal) and executing recompletions and tie-ins. The loan from Solo covers the first two stages of expenditure on this program. The successful execution of this program will also enable Reef to capitalize on the gas storage and gas recycling rights on the acreage once depleted.
Reserves are estimated with an effective date of July 31, 2009. Additional information on the reserves of Reef may be found in the filings made by Reef on SEDAR pursuant to National Instrument 51-101 of Canada.
GLOSSARY
boe = barrels of oil equivalent calculated on the basis of six thousand cubic feet of gas equals one barrel of oil
REEF RESOURCES ANNOUNCEMENT
REEF RESOURCES LTD. ANNOUNCES BOARD ADDITION AND CORPORATE/OPERATIONAL UPDATE
June 25, 2010 - Calgary, Alberta - Reef Resources Ltd. (REE - TSX.V) ("Reef" or the "Company") announces a proposed addition to its Board of Directors, an update on the loan status with Solo Oil Plc, and an operational update on its Ausable Ontario property.
Reef is pleased to announce that the Solo Oil Plc Chairman, Mr. David Lenigas, has been nominated to the Reef Board of Directors, subject to approval by the TSX Venture Exchange. David Lenigas holds a Bachelor of Applied Science in Mining Engineering. He has extensive international experience operating in the public company and natural resources environment and is currently the Chairman of Lonrho plc, LonZim Plc, Leni Gas & Oil Plc, Templar Minerals Limited, Solo Oil Plc and Lonrho Mining Limited and is an Executive Director of Vatukoula Gold Mines Plc, and non-Executive Director of Zest Group Plc.
Reef's President, Arnie Hansen, commented:
"Reef is excited to have David join our Board of Directors. He brings a wealth of experience and expertise to our company. We look forward to his contributions in growing Reef into a successful company".
In other developments, Solo Oil Plc has now conducted all technical, legal and commercial due diligence to complete the conditions of the $1,650,000 CDN participating loan agreement announced on April 28, 2010. Solo Oil Plc, an AIM listed company, provided the loan for the development of Reef's proven oil and gas production reserves in Ontario. The loan does not bear interest with Solo receiving 60% of net production revenue post tax until loan repayment and 50% net earnings thereafter from the funded developments. Reef has received $750,000 of the loan to date.
Subsequent to the receipt of the stage 1 loan payment of $750,000 on 14 May, production facilities have been restarted, tested and operating as per standard performance levels.
The local natural gas utility company is in the process of finalizing analysis of the Company natural gas prior to commencing sales production from the facility. Subject to confirmation of acceptable gas analysis by the utility the Company will restart sales production as planned. In the meantime the Company will re-start the facility before end of June 2010, recycle and conserve gas, produce oil from two pumping oil wells and recover natural gas liquids through its gas liquids extraction process.
As announced previously, Reef successfully negotiated purchase of the main processing plant compressor from a lease arrangement and this will have a positive impact on the Company's balance sheet, positive net operating income and lower overall operating costs.
The completion program and scheduling of the first horizontal well to increase production are being finalised, and this program shall be executed as soon as rig services and fracturing equipment are mobilised in July. The Company anticipates reporting the stage 1 production results by August 2010.
Reef was formed to participate in the exploration, development and production of conventional crude oil and natural gas reserves in Ontario and western Canada. The Company's strategy is to build shareholder value through internally generated exploration and development drilling and through selective acquisitions.
The Company's Ontario asset has gas storage rights, gas re-injection permit for gas recycle, NGL recovery, arbitrage and enhanced oil recovery. A key component of Reef's Ontario strategy is to identify and exploit undervalued prospects in the Ontario basin by utilizing the company's 23,500 acres of proprietary 3D seismic. In addition to its Ontario Properties, Reef has identified multiple oil and gas acquisition and development opportunities throughout Canada.
For more information please contact:
Arnie Hansen Larry Olson
President & CEO Vice President, Finance
T: (403) 251-9447 T: (250) 460-2640
Forward Looking Statements - this news release contains certain forward-looking statements, which include assumptions with respect to raising funds and future capital expenditures. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. Estimated reserve valuation is based on proved plus probable reserves, reflecting the net present value (future net revenue) using forecast prices discounted at 10% before tax with an effective date of July 31, 2009. Additional information on the reserves of Reef may be found in the filings made by Reef on SEDAR pursuant to National Instrument 51-101. It should not be assumed that the estimate of net present value (future net revenue) represents the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material.
This news release contains certain forward-looking statements, which include assumptions with respect to the valuation of Reef's reserves, funds raised from a financing and future capital expenditures. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. All such forward looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
In this press release, the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of 6,000 cubic feet (mcf) of natural gas for one barrel (bbl) of oil based on an energy equivalency conversion method. Boe's may be misleading particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Neither 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. Not for distribution to US Newswire Services for dissemination in the United States.