GFP ANNOUNCES INCREASE IN BORROWING BASE OF LINE OF CREDIT TO $2.2 MILLION
Thursday, June 10th, 2010
Montreal, June 10, 2010 – Gale Force Petroleum Inc. (TSX Venture: GFP, the “Corporation”) today announced that it has obtained an increase in the borrowing base on its line of credit with Park Cities Bank of Dallas, Texas, to US$2.2 million. The line of credit is subject to renewal in October, 2010, earns a variable interest rate currently at 6.5% per annum, requires a monthly US$30,000 reduction of the borrowing base or repayment of the line, as the case may be, and is currently drawn by the Corporation to $790,000.
Further withdrawals from the line of credit also require the Corporation to have oil price hedges in place on 60% of its proved developed producing production, mitigating the risks of the increase in debt and providing the Corporation more predictable cash flows, but increasing the cost of capital of further withdrawals. The Corporation already has some hedges in place, as announced on May 14, 2010.
The newly available funds may be used by the Corporation for the contemplated purchase and development of either of the Kilgore Property or Wood County Property, announced by the Corporation on June 2, 2009, or for the development of its existing properties.
Further withdrawals from the line of credit also require the Corporation to have oil price hedges in place on 60% of its proved developed producing production, mitigating the risks of the increase in debt and providing the Corporation more predictable cash flows, but increasing the cost of capital of further withdrawals. The Corporation already has some hedges in place, as announced on May 14, 2010.
The newly available funds may be used by the Corporation for the contemplated purchase and development of either of the Kilgore Property or Wood County Property, announced by the Corporation on June 2, 2009, or for the development of its existing properties.