SOURCE: UnionTown Energy Inc.

UnionTown Energy Inc.

May 17, 2011 09:45 ET

UnionTown Energy Inc. (UTOG) Advances Funds to Complete Acquisition of Teton River Oil and Gas Property

Previous Test Well Produces Forty-Nine Barrels of Oil per Day; the Company Believes the 11,000-Acre Property Can Support 900 Additional Wells

BILLINGS, MT--(Marketwire - May 17, 2011) - UnionTown Energy Inc. (OTCBB: UTOG) is pleased to announce that it has advanced an additional US$175,000 in trust towards the close of its previously announced acquisition of the Teton River property. Teton River is an 11,000-acre oil and gas property located in northwest Montana.

On April 12, 2011, Uniontown reported it had signed a letter of intent to acquire the property and advanced an initial non-refundable deposit of $100,000.

UnionTown has now advanced a total of $US275,000, representing the full purchase price of the property, towards the completion of the acquisition. The terms of the definitive agreement have been finalized and will be disclosed upon execution of the agreement and completion of the SEC 8-K filing.

Under the terms of the acquisition agreement, UnionTown is required to spend an additional US$1,000,000 within the next 12 months on development of the property. In return, the company will receive an 85% working interest before payout, followed by a 70% working interest after payout. The Teton River property carries a 75% net revenue interest.

UnionTown's primary reservoir target at Teton River is the Swift Sandstone oil field. Down-dip oil on the Belt Island High was first identified around 1980 and led to exploration efforts in the area.

Nearby, the Bannatyne and Utopia oil fields are currently producing from the Swift formation. UnionTown believes that Swift Sandstone displays better porosity, oil saturation, permeability and feet of pay than that evident in either of the nearby fields.

UnionTown is further encouraged by the fact that previous exploration wells drilled on the Teton River property have shown positive oil results. One of the drilling efforts was a test well that produced 49 barrels of oil per day. The well log showed that the well produced from the Swift Sandstone formation.

The well log also reported a 30-foot pay zone, with oil porosity of 22% and 75% saturation. The company believes that 900 additional wells can be drilled on the property with 12 acre spacing. An independent geological report is currently being formulated to estimate the potential reserve, which will be reported on once determined.

"Oil exploration and development has reached an exciting stage in northwest Montana, and we consider Teton River to be a high-potential acquisition based on the production history in nearby oil fields and the well records of previous wells drilled on the property," said UnionTown President and CEO Darren Stevenson. "Moreover, Teton River is a heavy oil play, and with heavy oil currently selling for more than $US90 per barrel, we believe there is a great opportunity in developing this promising oil prospect."

Teton River is the fourth acquisition that UnionTown has undertaken in the last two months. When Teton River is combined with the three previously announced properties -- Musselshell, New Miami and Darby Block -- the total acreage under contract now exceeds 43,000. The Company believes that the Teton River geological report, which is close to completion, will significantly add to the company's estimated reserves.

About UnionTown Energy Inc.

UnionTown Energy Inc. is an exploration-stage company that is building towards becoming an oil and gas producer. We are proudly engaged in the acquisition and exploration of oil and natural gas properties located within America's borders. Our focus is on low-risk opportunities with high potential for near-term production and rapid cash flow. The company has recently completed acquisitions of the Musselshell and New Miami properties. The company is also undertaking the acquisition of the Darby Block and Teton River properties, with both properties under contract. We recently commenced a drill program at New Miami and are moving rapidly on all our properties to bring wells to production. UnionTown continues to develop a strong pipeline of potential acquisitions with the goal to adding more highly prospective properties to our oil and gas land package. For more information about our company, please visit www.UnionTownEnergy.com.

Safe Harbor
Except for historical information contained herein, the matters set forth above may be forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ from those in the forward-looking statements. Words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to UnionTown, the potential reserves, production and ability to establish wells on the Musselshell, New Miami Prospect, Darby Block Property, and the Teton River, identify forward-looking statements. Such forward-looking statements are based on the current beliefs of management, as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors such as the nature of business negotiations, the operational details of oil and gas properties, the competitive environment within the industry, the ability of UnionTown to expand its operations, the level of costs incurred in connection with UnionTown's expansion efforts, economic conditions in the industry and UnionTown's financial strength. UnionTown does not undertake any obligation to update such forward-looking statements. Investors are also directed to consider all other risks and uncertainties.

Contact Information

  • Contact
    Patrick Smyth
    UnionTown Energy Inc.
    Phone: (702) 530-3241