SignalEnergy Inc.

February 19, 2007 23:59 ET

SignalEnergy Inc. Operations Update, $30 Million Distribution, Name Change and Plan of Arrangement


CALGARY--(CCNMatthews - Feb. 19, 2007) - SignalEnergy Inc. (TSX:SGI) ("Signal" or the "Corporation") provides an update to its operations and announces, shareholder approval of the Plan of Arrangement, a $30 million distribution to shareholders as part of the Arrangement, and a change of name to Fortress Energy Inc.

Operations Update

Signal previously announced a $15 million capital budget under which all drilling operations are now complete. The Corporation drilled 11 development wells, 2 exploration wells and performed 7 recompletions all in the Ladyfern area. The capital expenditure program has resulted in 8 new wells which will be tied in by the end of the first quarter and will enable the Corporation to bring 420 boe/d of new gas production on stream. The Corporation is pursuing upgrading the processing capability at the Ladyfern facility to include refrigeration to allow the processing of greater volumes of liquids rich gas.

Through its exploration efforts the Corporation has identified two new gas accumulations at the Mearon South and Square Creek areas. In the Square Creek area the Corporation completed one well that was drilled in 2006 which tested 1.5 mmcf/d and has drilled an additional well to delineate the pool. The second delineation well has demonstrated controlled flow rate of 4.6 mmcf/d over a 72 hour period. The Corporation has elected to drill a third well in 2007 to further evaluate the accumulation. Signal owns a 50% working interest in the wells and has an interest in 26 gross (13 net) sections of land in the area.

In Mearon South the Corporation has an interest in 14 gross (4.5 net) sections of land and has recompleted two wells drilled in 2006 one of which tested gas rates 400 mcf/d establishing the existence of a new pool. Further drilling in the area is planned in 2008.

The Corporation owns an interest in 4 gross (2 net) sections of land in the Velma area where two Blue Sky wells in which it owns a 50% working interest were drilled and completed in 2006. The wells are capable of producing in excess of 200 boe/d net production. Production from these wells had been subject to a common carrier application, however the decision did not allow the Corporation access to competitors' processing facilities. As a consequence the Corporation is examining its alternatives in order to bring the production on stream. This may include constructing a pipeline to allow the gas to be processed at the Corporation's Ladyfern facility.

Production in January was approximately 780 boe/d. In addition approximately 70 boe/d was shut-in due to facility constraints in the Ladyfern area.

Plan of Arrangement and $30 Million Cash Distribution

At the Special General Meeting of Shareholders held on February 15, 2007, Shareholders voted 99% in favour of the Arrangement and the reorganization of the Corporation. Accordingly, the Corporation is proceeding with court approval of the Arrangement on February 20, 2007 and the Arrangement is expected to be completed shortly thereafter. Under the election available under the Arrangement, Shareholders holding 60,481,275 shares elected to receive cash.

Therefore such Shareholders will have their elections pro-rated to the maximum of $30,000,000 of available cash on the basis of $1.30 per share. The balance shall be satisfied, along with Shareholders who elected or were deemed to elect to receive the share consideration, by the issuance of one share of Fortress Energy Inc. for each five Signal shares currently held.

New Name - Fortress Energy Inc.

As part of the Arrangement and reorganization of the Corporation, the business and operations of the Corporation will be carried on under the name Fortress Energy Inc. As stated, it is expected that the Arrangement will be completed on or about February 20, 2007 and trading will begin under the name Fortress Energy Inc. thereafter subject to compliance with TSX policies. The new trading symbol will be "FEI".

BOE Presentation

Natural gas reserves and volumes recorded in thousand cubic feet are converted to barrels of oil equivalent ("boe") on the basis of six thousand cubic feet ("mcf") of gas to one barrel ("bbl") of oil. The term "barrels of oil equivalent" may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalent at the wellhead.

Caution to Reader

This news release contains forward-looking statements and the reader is cautioned not to place undue reliance on these statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. This specifically includes estimated volumes and timing of future production, business plans for exploration, development and drilling, anticipated budget costs for items including drilling, plant and equipment and the timing of the completion of the Arrangement and reorganization of the Corporation. By their nature, risks and uncertainties, both general and specific, contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur.

The common shares of Signal have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

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