Reef Resources Ltd.

Reef Resources Ltd.

December 21, 2010 14:25 ET

Reef Resources Ltd. Receives Well License and Settles Debt for Shares

CALGARY, ALBERTA--(Marketwire - Dec. 21, 2010) -


Reef Resources Ltd. (TSX VENTURE:REE) ("Reef" or the "Company") has been issued a well license for the new Reef Ausable #5 vertical well northwest of London, Ontario. The 615 metre vertical well is expected to be spudded by the end of January with results reported in first quarter 2011.

The vertical well will be cored in order to accomplish key objectives for the company including:

  • Define the cap rock integrity for future gas storage. This is invaluable for gas storage planning and licensing.
  • Finalize drill locations and trajectories for the proposed four horizontal wells planned for 2011. The cored data will be correlated to the Company's existing 3D seismic.

The Company plans to drill the four horizontal wells in two stages. Two drilled in 1st quarter 2011 and two during 2nd quarter 2011. The horizontal wells are for the Natural Gas Recycling and Enhanced Oil Recovery ("EOR") program. Two horizontal wells will be used for injecting natural gas to pressurize the reef and two horizontal wells, as well as existing wells, will be production wells. The production wells will produce oil and natural gas liquids from the recycled natural gas. The EOR pilot program of injecting natural gas is already producing oil with minimal gas injection.

Solo Oil Plc has advanced the final tranche of the $1.65 million participating loan to Reef to fund the drilling of the vertical well. A finder's fee of 5.8%, split in shares and cash, was agreed to be paid upon final receipt of the Solo funding and this will be executed immediately.

Reef has reached agreements with a number of creditors and management team members to settle outstanding debt of $274,817 through the issuance of 2,631,506 (1,444,673 flow through common shares and 1,186,833 common shares). The shares will have a four month hold period.

The debt settlement and the finder's fees are subject to TSX approval.

Reef was formed to participate in the exploration, development and production of conventional crude oil and natural gas reserves in Ontario and western Canada. The Company's strategy is to build shareholder value through internally generated exploration and development drilling and through selective acquisitions.

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
    Reef Resources Ltd.
    Larry Olson
    Vice President, Finance
    (250) 460-2640
    Reef Resources Ltd.
    665 8th St. SW
    Calgary, AB T2P 4H5