Grifco International, Inc. Announces Program of 7 Wells in Crockett County, Texas
Business Wire "US Press Releases "
CONROE, Texas--(BUSINESS WIRE)--
Grifco International, Inc. (OTC Pinksheets GFCI) announced today the exercise of its option for 100% of the working interest ("WI") and 75% of the Net Royalty Interest in 208 gas leases located in the Permian Basin geologic formation in Crockett County, Texas. The Permian Basin is the 6th largest known producing, proven and probable recoverable hydrocarbon basin in the world--larger than the North Slope Alaska USA.
Under the terms of the option, the Company will begin spudding on 7 drill sites in the next 30 days. Each drill site will take approximately 2 weeks to complete. It will take another 2-3 weeks for commercial production.
The proven reserves of gas in the 208 drill sites are 109 billion cubic feet based upon an expert geologist report. The closing price of gas on the New York Mercantile Exchange as of December 8, 2006 was $7.56 per cubic foot of gas. Cost of the option, drilling and production costs is estimated at $1.75 per cubic foot.
There are five different pay zones with the first 6 wells targeted in the shallow pay zone at 5,000 ft. Other pay zones are located in the geologic formations composed of San Andres; Canyon Sandstone; Pennsylvanian Strawn Limestone; and Ordovician Ellenburger Dolomite. The cost of drilling in deeper pay zones is higher than in shallow zones.
The net proceeds from the 7 drill sites will be used by the Company to expand drilling operations to the remaining 208 drill sites and to finance the repurchase up to 25,000,000 of its shares in the public market place.
About Grifco International, Inc.
Grifco International is a leading provider of oil and gas services equipment, specializing in the conception, architecture, and development of tools for the coil tubing, wire line, and snubbing industries throughout the United States, China, Mexico, South America, the Middle East and Africa. Grifco holds and owns design rights and manufacturing facilities for producing more than 6,000 products for the oil and gas industry with more than 150 clients, boasting the biggest names in the business, including Halliburton, Exxon Mobil Corp, and Schlumberger. For more information, please visit: www.grifco.org.
Safe Harbor Act
The statements contained in this news release include "forward-looking statements" within the meaning of Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those forward-looking statements as such statements involve risks and uncertainties that can impact the delivery of, meeting of, or exceeding of such expectations.
Grifco International, Inc. Shareholders to Receive Warrants for Preference Shares with 33 1/3% Stake in N.R.I. on Gas Properties
Business Wire "US Press Releases "
CONROE, Texas--(BUSINESS WIRE)--
Grifco International, Inc. (Pink Sheets: GFCI) announced toady that it has agreed to spin off its Precision Drilling & Exploration, Inc. ("PDEI") subsidiary to Universal Energy Resources, Inc. ("UERI") in consideration of receiving a warrant stake in the Net Royalty Interest or N.R.I. on gas leases located in Crockett County, Texas.
UERI is an independent private company formed in August 2006 by Jim Dial to act as the operating manager and general partner of gas leases under option in Crockett County, Texas, and elsewhere. UERI will operate at arm's length from GFCI in order to protect GFCI's shareholders and assets from the liabilities inherent in the drilling and exploration industry.
As compensation to its shareholders for the asset separation of PDEI, all GFCI shareholders of record as of close of business 5 p.m. (PST) on December 25, 2006, will be issued callable warrants entitling each warrant holder the right, but not the obligation, to convert into a series of preference drilling participation shares of PDEI, as follows:
Series A Preference Drilling Participation Shares:
All GFCI shareholders as of the Record Date will be issued a total of 20,000,000 two-year warrants converting on a 1:1 basis into Series A Preference Drilling Participation Shares of PDEI at a price of $.20 per warrant. Series A Preference Drilling Participation Shares entitle the owner to a mandatory dividend of 33 1/3% on the Net Royalty Income from gas production realized on a total of 10 certain gas leases in Crockett County, Texas. Warrant Holders must convert in minimum traunches of $400,000 per gas well to be spudded.
Series B Preference Drilling Participation Shares:
All GFCI shareholders as of the Record Date will be issued a total of 20,000,000 three-year warrants converting on a 1:1 basis into Series B Preference Participating Drilling Shares of PDEI at a price of $.25 per warrant. Series B Preference Participating Drilling Shares entitle the owner to a mandatory dividend of 33 1/3% on the Net Royalty Income from gas production realized on a total of 10 certain gas leases in Crockett County, Texas. Warrant Holders must convert in minimum traunches of $500,000 per gas well to be spudded.
Series C Preference Drilling Participation Shares:
All GFCI shareholders as of the Record Date will be issued a total of 20,000,000 four-year warrants converting on a 1:1 basis into Series C Preference Participating Drilling Shares of PDEI at a price of $.30 per warrant. Series C Preference Participating Drilling Shares entitle the owner to a mandatory dividend of 33 1/3% on the Net Royalty Income from gas production realized on a total of 10 certain gas leases in Crockett County, Texas. Warrant Holders must convert in minimum traunches of $600,000 per gas well to be spudded.
The warrants will be issued pursuant to Rule 144 but they along with the Series A, B and C Preference Participating Shares upon conversion will be subject to a registration rights agreement. Upon registration, the warrants will become "callable" upon 45-day advance written notice. Any warrants that are not registered become "free trading" in two years pursuant to Rule 144K. The Series A, B and C Preference Participating Shares upon registration will be qualified for trading on a secondary market such as the Pink Sheets or OTCBB.
GFCI shareholders as of the Record Date will be notified in writing as to the number of warrants they are entitled to along with contact information regarding the warrant agent. A warrant agent will be designated at the time of issuance of the warrants. The warrant agent will be paid its customary fees and expenses at the time of exercise of the warrants or registration, whichever is earlier. Shareholders who have their GFCI shares in "street name" and have designated themselves with their broker on the OBO list will be notified by their broker as to their entitlement to the warrants.
Jim Dial, President of GFCI, stated, "We believe that the warrant compensation package lets our shareholders participate within the commercialization of the gas leases under option in Crockett County, Texas, with significant upside potential."
The Crockett County, Texas, gas leases are located in the Permian Basin, which is the sixth largest proven petroleum-producing region in the world ahead of the prolific North Slope Alaska reserves. Based upon our review of historic drilling logs, geologist reports, and other anecdotal information available, we believe that each well is capable of producing in excess of $3,000,000 in N.R.I. during its life.
About Grifco International, Inc.
Grifco International is a leading provider of oil and gas services equipment, specializing in the conception, architecture, and development of tools for the coil tubing, wire line, and snubbing industries throughout the United States, China, Mexico, South America, the Middle East and Africa. Grifco holds and owns design rights and manufacturing facilities for producing more than 6,000 products for the oil and gas industry with more than 150 clients, boasting the biggest names in the business, including Halliburton, Exxon Mobil Corp., and Schlumberger. For more information, please visit: www.grifco.org.
Safe Harbor Act
The statements contained in this news release include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those forward-looking statements as such statements involve risks and uncertainties that can impact the delivery of, meeting of, or exceeding of such expectations.
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