Reef Resources Ltd.
TSX VENTURE : REE

Reef Resources Ltd.

November 02, 2011 09:23 ET

Reef Resources Ltd. Announces Revised Terms of Previously Announced Equity Offering

CALGARY, ALBERTA--(Marketwire - Nov. 2, 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 revised the terms of the previously announced brokered private placement being led by Jacob Securities Inc. (the "Offering")

The Company plans to raise a minimum of $1.5 million to a maximum of $2.5 million in equity. A maximum of $2 million of the Offering will be raised as flow through common shares at an issue price of $0.11 per flow through share with the balance of the Offering being comprised of non-flow through Units at $0.10 per Unit. Each Unit is comprised of one common share and one-half common share purchase warrant with each full warrant being exercisable into one common share at an exercise price of $0.25 per share for a period of 12 months from the date of issuance.

Jacob Securities has secured a lead order of up to $500,000 from an institutional investor representing up to 10% of the outstanding common shares of Reef on a "post-closing" basis. Closing of the Offering is expected to occur during the week of November 7, 2011.

Solo Oil Plc., an LSE - 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 following closing of the minimum $1.5 million under the Offering.

On Friday, October 7, 2011, the Company announced the successful production testing of its Ausable well #1 using hydraulic venturi downhole pump technology. The computed average daily production rate over the test period was 103 bopd with an estimated stabilized rate of 50 to 70 bopd.

The funds secured by Reef as a result of the working interest sale and Offering 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 nos. 2, 4 and 5, as well as for general working capital.

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) 651-7871
    2020 - 801 6 Ave SW
    Calgary, AB T2P 3W2

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