Gulf Shores Resources Ltd.
TSX VENTURE : GUL

Gulf Shores Resources Ltd.

February 21, 2007 16:30 ET

Gulf Shores Resources Ltd.: Brokered Private Placement With Canaccord Adams

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Feb. 21, 2007) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS

Gulf Shores Resources Ltd. (the "Company") (TSX VENTURE:GUL) has entered into a brokered private placement agreement with Canaccord Adams (the "Agent"), whereby the Agent has agreed to offer, on a commercially reasonable efforts basis, up to 7.5 million units (the "Units") at a purchase price of CDN$0.80 per Unit. Each Unit consists of one common share and one half of one transferable share purchase warrant. One full warrant shall entitle the holder to acquire one additional common share for a period of two years following closing of the offering at a purchase price of CDN$1.00. The Company has granted the Agent an over-allotment option to increase the offering by up to an additional 2,500,000 Units. The proceeds of this private placement will be used to fund the Company's Block 12/17 drilling commitments, Quad 30 seismic costs, other projects in the North Sea, and for general working capital.

The Company shall pay the Agent a commission equal to 8.0% of the gross proceeds raised and issue that number of Agent's Warrants equal to 10% of the Units sold under the offering. Each Agent's Warrant shall be exercisable into one common share at a price of $0.80 for 24 months following closing of the offering. A Corporate Finance and Administration Fee will be paid upon closing.

In accordance with securities legislation currently in effect, the securities issued pursuant to the Offering will have a restricted "hold" period of four months from the date of closing of the Offering. This private placement is subject to the acceptance by the TSX Venture Exchange.

As previously announced, Gulf Shores Resources Ltd. is paying US$101,250 and 12.5% of the cost of drilling, testing, completing and equipping a test well to earn a 9.4% interest in the 255 square kilometre (approximately 63,000 acre) Laurel Valley project located in Quad 14 in the North Sea. The block is located 24 km south of the 639 million barrel Claymore field, 20 km south of the 132 million barrel Scapa field, 23 km southwest of the 465 million barrel Scott field and nine kilometres north of the 592 BCF Goldeneye field. 3D seismic coverage indicates that the block contains three potential hydrocarbon horizons. The Operator, Oilexco North Sea Limited, is expected to commence the drilling of the well on or about March 15, 2007 using the Transocean Sedco 712 semisubmersible rig.

As previously announced, Gulf Shores Resources Ltd. is paying US$75,000 and 15% of the cost of drilling, testing, completing and equipping a test well to earn a 10% interest in the 970 square kilometre (approximately 240,000 acre) Lytham & St. Annes project located in Quads 41 and 42 in the North Sea. The proposed location is seven kilometres south of the 41/5-1 gas discovery on the block. 3D seismic coverage indicates that the block contains three potential hydrocarbon horizons. Lundin Petroleum AB is the Operator and has contracted the Global SantaFe Galaxy II jack-up rig to drill this project in Q2 or Q3, 2007.

As previously announced, Gulf Shores Resources Ltd. has entered into an agreement to earn an interest in the 72.5 square kilometre (approximately 18,000 acre) Ridgewood project located in Block 12/17 in the North Sea. The proposed location is 35 kilometers northeast of the 170 million barrel Beatrice field and nine kilometres from the nearest proven Jurassic oil accumulation. Seismic coverage shows a structure containing two potential hydrocarbon bearing zones in the Jurassic. Subject to regulatory authority approval, Gulf Shores Resources Ltd. is paying US$2.7 million representing 15% of the drilling and testing costs for the first well to earn a 10% interest in the project. A drilling site survey is currently underway. Lundin Petroleum AB is the Operator and has contracted the Global SantaFe Galaxy II jack-up rig to drill this project in Q3, 2007.

As previously announced, subject to regulatory authority approval, Gulf Shores Resources Ltd. is paying 20% of the cost of acquiring new 3-D seismic and 13.33% of the cost of drilling a test well to earn a 10% interest in a 422 square kilometer (approximately 104,000 acre) block located in Quad 30 in the UK North Sea. Recently acquired seismic indicates the block contains several Jurassic and Permian plays. A well drilled into one of the Jurassic plays logged oil but the well was abandoned due to insufficient zone thickness. 3-D seismic on the block indicates that the Jurassic thickens to the northwest of that well. Lundin Petroleum AB is the operator of this project. New 3-D seismic is to be acquired on this block in Q3 or Q4, 2007. A finder's fee of 75,000 shares is payable in connection with this acquisition.

Gulf Shores Resources Ltd. is reviewing other North Sea exploration projects.

In the Williston Basin area of Manitoba, Canada, Gulf Shores Resources Ltd. owns various working interests in 20 development well locations. Ten locations have been drilled to date resulting in ten producing oil wells. Further drilling is planned.

ON BEHALF OF THE BOARD

Michael Turko, President

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Gulf Shores Resources Ltd.
    Mr. Gerald Otterman
    (604) 683-3309 or Toll Free: 1-866-292-2601
    (604) 844-2834 (FAX)