Greentree Gas & Oil Ltd.

Greentree Gas & Oil Ltd.

September 14, 2010 17:16 ET

Greentree Announces Forbearance Agreement and Operations Update

LONDON, ONTARIO--(Marketwire - Sept. 14, 2010) - Greentree Gas & Oil Ltd. (TSX VENTURE:GGO) ("Greentree" or the "Company") announces that it has entered into a forbearance agreement (the "Agreement") with the Company's banking institution (the "Bank"), wherein the Bank has agreed to refrain from exercising certain of its rights and remedies under the lending agreement between Greentree and the Bank until December 10, 2010 (the "Forbearance Period"). The Agreement pertains to the debenture security for the demand loan payable by the Company to the Bank in the amount of $1,925,000. The interest rate on the demand loan has been increased to prime plus 5% per annum. The Agreement is designed to provide Greentree time to pursue strategic alternatives for the Company in an effort to enhance shareholder value. The Company has engaged Ernst & Young Orenda Corporate Finance Inc. as the Company's financial advisor to assist Greentree in identifying and considering strategic alternatives. Strategic alternatives may include, but are not limited to, a possible merger, amalgamation, reorganization or corporate sale, or any other business combination, major financing, or the sale of some or all of the assets of the Company, or any another combination of the above that would be considered to be in the best interest of Greentree to maximize shareholder value.

Greentree also announces an update on the operating performance of the Company for the first half of 2010. For the six-month period ended June 30, 2010, the Company recorded positive cash flows of $198,181 compared to a loss of $163,204 reported for the similar period in 2009. Greentree's revenues for the six-month period ended June 30, 2010 were $1,015,064, which represents a 54% increase over $660,889, reported for the similar period in 2009. The Company's cash flow and revenues for the six-month period ended June 30, 2010, were positively impacted by one-time accounting adjustments aggregating $ 116,095 related to a revised working agreement with Wavefront Technology Solutions Inc. ("Wavefront") for the Company's Rodney South pool. Under the terms of the revised agreement, Wavefront converted from a 70% royalty interest to a 50% working interest in the project.

In terms of expenses, the Company reports a 33% reduction in general and administrative expenses over the six-month period ended June 30, 2010 to $135,708 compared to $203,664 reported in the similar period in 2009. The savings were achieved through a combination of staff reductions and streamlining of communications and other administrative expenditures. The Company's operating expenses increased marginally by 4% for the six-month period ended June 30, 2010 to $448,285 compared to $430,524 in the similar period in 2009. The increase is attributed to costs associated with a 36% rise in Greentree's oil production for the six-month period ended June 30, 2010 compared to the similar period in 2009 and with one-time accounting adjustments related to the revised agreement with Wavefront.

Greentree Gas & Oil Ltd. is based in London, Ontario and is an explorer and producer of oil and natural gas in southwestern Ontario.

Reader advisory:

Some statements in this news release that are not historical facts, including statements about plans and expectations regarding meeting filing deadlines, payment of obligations, regulatory actions and filing of Annual Filings are forward-looking. Investors are cautioned that the forward-looking statements of the Company may include certain estimates, assumptions and other forward-looking information. The actual future events, performance, developments and/or results may differ materially from any or all of the forward-looking statements, which include current expectations, estimates and projections, in all or part attributable to general economic conditions, and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including potential actions by securities regulatory authorities, natural gas/oil prices, reserve estimates, drilling risks, future production of gas and oil, rates of inflation, changes in future costs and expenses related to the activities involving the exploration, development and production of gas and oil hedging, financing availability and other risks related to financial activities.

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, accuracy or contents of this release.

Contact Information

  • Greentree Gas & Oil Ltd.
    Duncan Hamilton, M.Sc., P. Geol.
    (519) 681-9355
    (519) 681-3887 (FAX)
    Greentree Gas & Oil Ltd.
    207-209 Consortium Court
    London, Ontario, N6E 2S8