Reef Resources Ltd.

Reef Resources Ltd.

July 12, 2011 09:30 ET

Reef Resources Ltd. Announces Closing of Transaction With Solo Oil PLC and Successfull Completion of Ausable # 5 Oil Well

CALGARY, ALBERTA--(Marketwire - July 12, 2011) -


Reef Resources Ltd. (TSX VENTURE:REE) ("Reef" or the "Company") reports that Solo Oil Plc has now completed the first portion of its acquisition of a 38.1% direct working interest (WI) in the Company's South Western Ontario assets.

As envisaged in the Heads of Agreement announced May 24, 2011 Solo has now completed the acquisition of a 23.8% working interest in the Company assets in SW Ontario. Acquisition of the first tranche of assets was concluded by the conversion of Solo's existing CDN$1.65 million participating loan, the payment of CDN$200,000 on signature of the Heads of Agreement and a further payment of CDN$650,000 at completion.

Solo is now working with Reef who, under the May 24, 2011 Heads of Agreement, is required to conclude an additional CDN$1.5 million of funding from a third-party in order to meet the required conditions by Solo in providing a further CDN1.5 million against agreed work plans to acquire a further 14.3% interest.

It is anticipated this will be concluded shortly and Solo will increase its stake to the intended 38.1% final WI. At that time Solo will have paid a total of CDN$4.0 million to acquire 38.1% working interest.

The Company also reports that the Ausable #5 well completion has been successful. Initial test results after acidization and during flow back and clean up indicate the well has met or exceeded our expectations. Due to the oil foaming, which is caused by a combination of high gas oil ratio and very light gravity oil, flowing volumes were difficult to obtain using conventional swabbing methods. The Company now plans to tie-in the well to the central Ausable process facility within the next 7 – 10 days so as to conduct an online test to better determine oil, gas and gas liquids production rates. It is anticipated that flow test results will be provided by August 1, 2011.

A fishing program at Ausable #2 horizontal well to recover stage frac tools is currently being finalized with the intent of starting fishing operations, using the service rig from Ausable #5, on or before July 25, 2011.

Additionally, the Company is currently completing the design for a more efficient pumping configuration to be deployed in all the Ausable wells. The new design is hoped to improve down-hole pumping efficiencies thereby increasing oil and gas liquids production. The objective is to have these production improvements complete by September 2011.

Arnie Hansen, President and CEO of Reef stated, "We are extremely happy that Solo has closed this phase of the transaction and that they continue to be excellent and supportive partners for Reef. The results of Ausable #5 well further reinforce our long term objectives to jointly develop the Ontario assets."

The Ontario properties include the Ausable, Airport North and Airport South reefs as well as surface equipment, a 23,000 acre 3D seismic survey and other associated gas storage and reinjection rights.

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.

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