CANADA GAS TO PARTICIPATE IN TWO BAKKEN OIL PROJECTS
ANNOUNCES $300,000
PRIVATE PLACEMENT & SHARES FOR DEBT SETTLEMENT
PRESS RELEASE
Vancouver, British Columbia, Canada � May
25th, 2009 � Canada Gas
Corp. (tsx.v: CJC) (otc-bb: CJCFF) (Frankfurt:YXE) (�Canada
Gas� or the �Company�) is pleased to
announce Letters of Intent (�LOI�) to acquire and participate in two Bakken and Nisku/Birdbear
Formation oil projects in the province of Saskatchewan. The Company also
announces a $300,000 private placement financing and a $272,000 share for debt
settlement, all executable at a price of $0.10 per share.
In the first transaction, Canada Gas has
signed an LOI acquire 100% of a licensed copy of approximately 450 miles of 2D seismic
data in southwestern Saskatchewan from an individual
resident in the province of Alberta (the �Vendor�). The Company will
process and interpret this data in search of Bakken
Formation light oil prospects, and reserves the right to pursue 100% ownership
of any prospective lands within the seismic area. In consideration,
Canada Gas will pay the Vendor $25,000 cash and $125,000 in shares of the
Company, to be issued at a deemed price of $0.10 per share (aggregate 1,250,000
shares), subject to the approval of the TSX Venture Exchange (the
�Exchange�). These shares shall be subject to a four month hold.
In the second transaction, Canada Gas has
signed an LOI with Kinetex Multi Component Services
Inc., an Alberta based oil and gas service company (collectively �Kinetex�) to participate, with Kinetex
or one of its affiliate or subsidiary companies, in approximately 84 square
miles of 3D seismic survey over prospective Bakken
and Nisku/Birdbear Formation targets in southwestern Saskatchewan. The Company will pay 25%
of the agreed upon turnkey cost to earn a 25% interest in the data, receive a
licensed copy of the data, and earn the right to participate for a 50%
participation interest in any land acquisitions within the 84 square mile
seismic area for a period of two years.
Within this 84 square mile area, Kinetex already controls approximately 10 square miles of
acreage upon which Kinetex has already shot 2D
seismic and identified three Nisku/Birdbear Formation
structures. After completing the 3D seismic program, Canada Gas will also
have the option to drill an approximately 2000 meter test well
targeting these prospective Bakken and Nisku/Birdbear Formation targets. Within this 10
square miles of existing acreage, Canada Gas will pay 90% and an
affiliated company will pay 10% of the cost of this well, where, upon drilling
to a depth sufficient to penetrate the Nisku/Birdbear
Formation, Canada Gas will earn a 75% working interest before payout and a 50%
working interest after payout in the drilled lease block. There are four
earning lease blocks within these 10 square miles, and upon completion of the
test well, Canada Gas will have 60 day rolling options to drill additional
earning wells on this acreage on the same terms.
These projects offer year round access and
as such the Company looks to commence the 3D seismic program in the 3rd
Quarter of 2009 and spud the test well no later than October 1st,
2009. Under the terms of the agreement, it is anticipated Canada Gas will
be the Operator of both projects.
The Company will prepare formal agreements
for these transactions containing conventional industry terms, including a
satisfactory due diligence condition and approval of the Company�s Board of
Directors as well as Exchange and other regulatory approvals as required.
The transactions are subject to a finders fee of $20,000 payable in shares of
the Company at an ascribed price of $0.10 per share (aggregate 200,000 shares),
such shares being subject to exchange approval and a four month hold period
following the date of issuance.
The Company also announces that it is
cancelling the previously announced private placement financing (April 15th,
2009), and instead announces a private placement financing for 3,000,000 units
priced at $0.10 per unit for gross proceeds of $300,000. The Vendor has
agreed to personally subscribe for a minimum of $150,000 of this private
placement, and will arrange for his associates and/or affiliated companies to
participate for up to $100,000 at a price of $0.10 per unit. Each unit
will consist of one share and one share purchase warrant, each warrant being
exercisable into one common share at a price of $0.15 in the first year and
$0.26 in the second year. Proceeds of the private placement will be used
for working capital purposes and finders fees may be payable on this transaction,
subject to Exchange approval.
In addition, the Company announces shares
for debt arrangements with a majority of its existing debt holders. Creditors
holding payables of $272,000 have agreed to convert their debt into shares of
the Company at a conversion price of $0.10 per share (aggregate 2,720,000),
subject to Exchange approval. These shares will be subject to a 4 month
hold period from the date of closing.
President and CEO Chad McMillan comments
that �management is excited about these developments, as together they
strengthen the Company, enhance its existing holdings, and offer new
opportunities to shareholders. These projects offer affordable entry,
scalable potential, alluring targets and multiple unique leverage
characteristics while also positioning the Company to enhance its management
team and pursue other opportunities in the near term.�
These transactions are all subject to TSX
Venture Exchange and regulatory approval.
For more information on Canada Gas Corp.,
please visit www.canadagas.ca
or call 1.888.685.5851.
~ABOUT CANADA GAS~
Canada Gas Corp. (tsx.v: CJC; Frankfurt:
YXE; otc:bb: CJCFF) has two natural gas projects located in the foothills
region of the prolific petroleum and natural gas bearing Western Canadian
Sedimentary Basin, northeastern British Columbia, as well as access to two
Saskatchewan Bakken prospecting projects. The Prophet River and Trutch
projects feature varying PNG rights to multiple prospective target horizons,
multiple prospective development locations and flexible logistics, including
interests in four producing gas wells at Trutch while the Saskatchewan plays
provide early stage acquisition, exploration and development opportunities
across prospective Bakken and Nisku/Birdbear bearing lands.
FORWARD LOOKING STATEMENTS
This release includes certain statements
that may be deemed �forward-looking statements�. All statements in this
release, other than statements of historical facts, that address future
production, reserve potential, exploration drilling, exploitation activities
and events or developments that the Corporation expects are forward-looking
statements. Although the Corporation believes the expectations expressed in
such forward-looking statements are based on reasonable assumptions, such
statements are not guarantees of future performance and actual results or
developments may differ materially from those in the forward-looking
statements. Factors that could cause actual results to differ materially from those
in forward looking statements include market prices, exploitation and
exploration successes, continued availability of capital and financing, and
general economic, market or business conditions. Investors are cautioned that
any such statements are not guarantees of future performance and those actual
results or developments may differ materially from those projected in the
forward-looking statements. For more information on the Corporation, Investors
should review the Corporation�s registered filings what are available at
www.sedar.com.
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.