Reef Resources Ltd.
TSX VENTURE : REE

Reef Resources Ltd.

September 30, 2011 09:30 ET

Reef Resources Ltd. Announces Agency Agreement With Jacob Securities Inc.

CALGARY, ALBERTA--(Marketwire - Sept. 30, 2011) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES FOR DISSEMINATION IN THE UNITED STATES.

Reef Resources Ltd. (TSX VENTURE:REE) ("Reef" or the "Company") announces that it has entered into an Agency agreement with Jacob Securities Inc. in connection with a brokered private placement. Jacob Securities will act as Reef's agent in raising up to $ 2 million of a Flow Through and non-Flow Through common share offering on a best efforts basis. Pricing and terms to be announced upon closing which is anticipated to occur within the next 5 – 10 business days.

Solo Oil Plc., an AIM listed company, which currently holds a 23.8% Working Interest in Reef's Ontario properties will acquire up to an additional 14.3% Working Interest for $1.5 million upon Reef raising a minimum of $1.5 million via the brokered private placement.

The funds secured by Reef as a result of the Working Interest sale and private placement will be used to complete two additional wells in the Ausable pinnacle reef, tie-in an existing standing gas well in the Airport South reef, acquire pressurization natural gas for recycling in the Ausable reef, further execute on its existing field optimization program which includes the installation of additional venturi hydraulic pumps in its existing Ausable wells #2, 4 and 5 as well as provide working capital.

Ausable Reef Update:

The Company has successfully completed the previously planned hydraulic venturi downhole pump in the Ausable # 1 well. The testing process is currently underway and once stabilized rates of production are achieved they will be announced. The hydraulic unit is designed to operate efficiently with the light oil and condensate currently being produced from the Ausable reef and will provide optimum production flow rates. Once operating and design configuration is established as result of this test the system will be installed in Ausable # 5, Ausable # 2 and Ausable # 4 wells.

Following the installation of the venturi pump in Ausable # 5 the Company will be in a position to accurately report production flow rate in addition to production potential with the previously announced Enhanced Oil Recovery (EOR) and cyclic natural gas liquids (NGL's) program. Under the EOR program, reservoir analysis and design work to date indicates re-pressurization of the reservoir will have a significant positive impact on overall field production and recovery factors. Results and updates of the Company's optimization program and implementation of the cyclic gas EOR program will be released once fully operational

The Ausable # 2 horizontal well is currently undergoing clean up and flow testing will follow completion of the clean up process. A further announcement will be made once the well is on stream.

Footnote: The Company's Ontario asset has gas storage rights, gas re-injection permit for gas recycle, NGL recovery, enhanced oil recovery and arbitrage. 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.

The term barrels of oil equivalent ("BOE") may be misleading, particularly if used in isolation. In accordance with NI 51-101, a BOE conversion ratio of six thousand cubic feet per barrel (6mcf/bbl) of natural gas to barrels of oil equivalence is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All BOE conversions herein are derived from converting gas to oil in the ratio mix of six thousand cubic feet of gas to one barrel of oil.

Forward Looking Statements — 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.

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.

Contact Information

  • Reef Resources Ltd.
    Arnie Hansen
    President & CEO
    (403) 251-9447
    2020 - 801 6 Ave SW
    Calgary, AB T2P 3W2

    Reef Resources Ltd.
    Larry Olson
    Vice President, Finance
    (250) 490-3378