TRAFINA Energy Ltd.
TSX VENTURE : TFA.A

TRAFINA Energy Ltd.

May 26, 2006 18:28 ET

TRAFINA Announces Sale in the Wetaskiwin Area of Alberta

CALGARY, ALBERTA--(CCNMatthews - May 26, 2006) - TRAFINA Energy Ltd. (TSX VENTURE:TFA.A) announces that it has agreed, in principle, to sell substantially all of its coalbed methane and conventional rights in the Mannville group in the Wetaskiwin area of Alberta for a purchase price of $7.5 million (subject to closing adjustments) and a 1% non-convertible gross overriding royalty (subject to limited deductions). The interests being sold consist of approximately 2,848 net hectares of CBM rights, with one producing horizontal well and 4 non-producing horizontal CBM wells, and have been operated by the Buyer under a Farmout and Area of Mutual Interest Agreement with TRAFINA dated March 30, 2005. The Area of Mutual Interest will terminate upon closing. Of TRAFINA's reserves reported in its National Instrument 51-101 Oil and Gas Activities Statement as at December 31, 2005, the interests being sold constituted approximately 77.6 mmcf of proved plus probable reserves, made up of 38.8 mmcf of proved producing reserves and 38.8 mmcf of probable reserves, based upon forecast prices and costs.

TRAFINA intends to use the cash proceeds at closing to pay outstanding bank indebtedness, with the balance being added to working capital and available for expenditure on its on-going exploration and development programs, including its oil development program in the Wetaskiwin area of Alberta.

Completion of the transaction is subject to various conditions, including negotiation and execution of definitive agreements, approval by TRAFINA's Board of Directors and approval by senior management of the Buyer. Closing is targeted for the end of June, 2006.

TRAFINA is a Canadian based emerging energy Company with production of approximately 400 BOE/d, headquartered in Calgary, Alberta and trading on the TSX Venture Exchange under the symbol TFA.A.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • TRAFINA Energy Ltd.
    Roland T. Valentine
    Chairman & CEO
    (403) 263-0800
    (403) 263-0811 (FAX)
    or
    TRAFINA Energy Ltd.
    J. Terry McCoy
    President
    (403) 263-0800
    (403) 263-0811 (FAX)
    Website: www.trafinaenergy.ca