Petro-Reef Resources Ltd.

Petro-Reef Resources Ltd.

July 22, 2011 09:15 ET

Petro-Reef Resources Ltd. Announces Flow Through Share Equity Offering and Increase in Bank Credit Facility

CALGARY, ALBERTA--(Marketwire - July 22, 2011) - Petro-Reef Resources Ltd. (TSX VENTURE:PER) ("Petro-Reef") has entered into a private placement financing agreement with Emerging Equities Inc. ("EEI") to sell up to $3.0 million in flow through common shares on a commercially reasonable best efforts basis.

Under the terms of the agreement, Petro-Reef will issue by way of private placement a maximum of 7,500,000 flow through common shares at a price of $0.40 per share for gross proceeds of $3.0 million. The offering is scheduled to close on or about August 18, 2011, and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange.

Proceeds of the offering will be used to finance Petro-Reef's exploration program, with the gross proceeds from the sale of the flow through shares used to incur eligible Canadian Exploration Expenses which will be renounced in favour of the subscribers of the flow through shares effective on or before December 31, 2011.

The offering will be on a private placement basis to accredited investors and other eligible purchasers in Alberta, British Columbia and Ontario and the securities issued will be subject to resale restrictions for four months after the closing.

EEI will receive a cash commission equal to 6% of the gross proceeds of the offering, and options to acquire that number of shares equal to 6% of flow through shares issued. Each option will be exercisable to acquire one common share at a price of $0.40 until 12 months after closing.

Also, Petro-Reef has arranged for a drawdown on the Development Credit Facility with its lender in the amount of $3.2 million for the drilling, completion and tie-in of development wells at Alexander, Alberta. The drawdown has increased the total funds available to Petro-Reef under its credit facilities from $11.0 million to $14.2 million.

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

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