Regal Energy Ltd.

Regal Energy Ltd.

November 30, 2006 19:24 ET

Regal Energy Announces Completion of Private Placement Financing and Operations Update

CALGARY, ALBERTA--(CCNMatthews - Nov. 30, 2006) -

Not for distribution in the United States of America

Regal Energy Ltd. ("Regal" or the "Corporation")(TSX VENTURE:REG) is pleased to announce that it has completed its previously announced private placement (the "Private Placement") and in conjunction with the Private Placement, Regal has restructured its board of directors. Regal is also pleased to provide an operations update.

Private Placement Financing

The Corporation today completed the sale of 4,166,666 Flow-Through Shares at $0.24 per share and 5,000,000 Common Shares at $0.20 per share for gross proceeds of $2,000,000. Nova Bancorp Securities Ltd. acted as agent in connection with the Private Placement. As previously announced, the Corporation intends to use the proceeds from the Private Placement to fund the exploration and development of Regal's properties located in Alberta and British Columbia. Concurrent with the closing of the Private Placement, the Corporation has reconstituted its board of directors to consist of Richard M. Wlodarczak (Chairman), Robert M. Nicolay, Al J. Kroontje, Harry L. Knutson and Douglas O. McNichol.

The Corporation also announces that it has completed an additional private placement of 312,500 Flow-Through Shares at $0.24 per share for gross proceeds of $75,000. An additional 104,167 Flow-Through Shares at $0.24 per share for gross proceeds of $25,000 are expected to be sold within one week. Insiders of the Corporation subscribed for a total of 250,000 Flow-through shares for gross proceeds of $60,000.

Operations Update

Garrington, Alberta

On October 5, 2006, Regal purchased certain developed and undeveloped lands in the Garrington area of Alberta. The acquisition was effective September 1, 2006 and included a 100% interest in two producing Edmonton gas wells and varying interests in 5.25 sections of land, including three sections of varying rights to the base of the Mannville zone. Regal now holds an interest in six producing Edmonton gas wells, including one Edmonton gas well that commenced production on November 27, 2006, one completed Mannville gas well scheduled for tie-in during January 2007 and one well that is scheduled to be cased later today. Regal intends to operate the drilling of two additional wells targeting Edmonton sands prior to the end of December 2006.

On November 3, 2006, Regal agreed to drill three additional Mannville test wells to extend its initial farm-in agreement covering more than 30 sections of land. These test wells are expected to be drilled by the end of February 2007. Upon completion of the drilling of the three test wells, the Corporation will have the right to continue earning option lands by electing to drill additional option wells on a 90 day, well by well, rolling option basis.

On November 3, 2006, the Corporation also entered into a sub-participation and farmout letter agreement with a Canadian exploration and production company ("ExploreCo") encompassing certain lands and rights within its initial farm-in agreement and certain lands recently acquired by the Corporation. ExploreCo has agreed to drill three Mannville test wells on the Corporation's initial farm-in lands and owned lands within the same timeframe as the Corporation's commitments under its initial farm-in agreement. Each test well will earn certain rights in one section and an adjoining section of land excluding certain shallow rights which have been excluded to the benefit of the Corporation. Upon completion of the drilling of the three test wells, ExploreCo will have the right to continue earning option lands by electing to drill additional wells on a 90 day, well by well, rolling option basis.

On November 24, 2006 Regal entered into a fourth farm-in agreement covering one section of land at Garrington. Regal is committed to drill an Edmonton sand test well by the end of 2006 by paying 100% of the costs to earn 100% of the farmor's interest, subject to a 15% overriding royalty before payout, and 50% of the farmor's interest after payout.

Eight Mile, British Columbia

Regal recently announced that it agreed to participate in a natural gas prospect located in northeast British Columbia by way of farm-in. The Corporation entered into an area of mutual interest ("AMI") covering 35 square miles of land in northeast British Columbia, located south of Fort St. John, called the Eight Mile Prospect. The Corporation has agreed to drill and complete two wells in the initial program. Drilling of the first well commenced on October 23, 2006 and was cased as a potential gas well on November 6, 2006. Drilling of the second well is scheduled to commence by December 4, 2006. Regal will have a series of option wells following the drilling of the second commitment well. The farmor holds a 100% interest in 21 sections within the AMI and the majority of the farm-out lands are contiguous. Under the terms of the agreement, Regal will pay 40% of the farmor's share of drilling and completion costs. For each earning well, Regal will earn 40% of the farmor's working interest in the section, subject to a 12% convertible overriding royalty before payout and a 24% working interest after payout and a 24% working interest in a second contiguous section. Regal's share of equipping and tie-in costs will be based on its after payout working interest. Drilling of the proposed locations will target natural gas in the Triassic Doig formation as the primary zone, with secondary targets in the Charlie Lake and Halfway zones.

ADVISORY - Certain information regarding Regal set forth in this release, including management's assessment of the Company's future plans, operations and operational results may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with oil and gas exploration, production, marketing, and transportation such as loss of market, volatility of prices, currency fluctuations, imprecision of reserves estimates, environmental risks, competition from other producers and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.

Issued and Outstanding Common Shares: 32,188,345

The TSX Venture has not reviewed and does not accept any responsibility for the adequacy or accuracy of this release.

Contact Information

  • Regal Energy Ltd.
    Douglas O. McNichol
    President and Chief Executive Officer
    (403) 509-2581
    Regal Energy Ltd.
    Wayne R. Wilson
    Vice President Finance and Chief Financial Officer
    (403) 509-2584