Friday Jan 25 2002 News Release
Mr. Gary Conn reports
ONTEX ACQUIRES ROYALTY INTEREST IN NATURAL GAS PROPERTIES
Ontex Resources has entered into an agreement to acquire a royalty interest in the natural gas production from certain properties, approximately 2,000 acres, in the southeastern portion of Bayham township in Elgin county, Ontario.
Pursuant to an agreement between Ontex and Southern Ontario Natural Gas Ltd., Ontex has agreed to transfer to Southern 200,000 common shares of Pifher Resources Inc. (CDNX: YFP) in exchange for the assignment of the royalty interest to Ontex. Southern has agreed to hold the Pifher shares for five years after closing of the deal. The royalty interest was originally reserved by Southern from the gas and oil leases which Southern sold to Echo Energy Inc. pursuant to a purchase and sale agreement entered into in August, 2000. The royalty interest constitutes a gross overriding royalty of 5 per cent of the natural gas production from the properties, increasing to 10 per cent on the earlier of the date that all capital costs relating to the drilling and development of the properties have been recovered and Aug. 23, 2005.
Upon transfer of the 200,000 Pifher shares to Southern, Ontex will continue to hold 1,113,387 common shares of Pifher representing 28.9 per cent of the number of shares of Pifher outstanding today. Ontex and Pifher respectively own 750,000 and 1.5 million common shares of Echo, representing approximately 12 per cent and 24 per cent of the outstanding shares of Echo.
The completion of this transaction is subject to receipt of regulatory approval.
Echo is a private company established in 2000, shortly before its first acquisition of gas exploration properties. In 2001, Echo raised equity financing of approximately $2.5-million to finance natural gas exploration programs on Echo's properties in Bayham township, and other properties that it may acquire in the future.
Echo has notified Ontex that it has completed the drilling of 12 gas wells on its properties and that it has received a gas reserve estimation from an independent consulting geologist. Following receipt of a copy of the report, which is expected within one week, Ontex will publish the estimation
WELL WELL WELL done!
Positive developments on the gas properties is very welcome news. At yesterdays close of Pifher, Ontex obviously feels $700,000 dollars spent on this royalty is a profitable long term acquisition. I like the sound of that as not only the royalty but the percentage ownership in these properties through Pifher and Echo should add substantial value to the Ontex capital assets already in place with the additional diversification to a second resource and potential long term positive cash flows.
Sounds like we get the scope of this project within a week or so.
Also see that news is out on Pifher and drilling has commenced on the other pifher properties.
Would expect the market should like this news.
I know I do.
Best of trading
Mark |
