ZURICH--(BUSINESS WIRE)--Octagon 88 Resources Inc. (OCTX) or “the Company” is pleased to announce that a private placement subscription agreement has been accepted and closed by an established Swiss based fund as the subscriber in the amount of $750'000 USD. The subscriber has agreed to purchase 136'364 units of the Company’s common stock at a price of $5.50 per unit, each unit consisting of one share of common stock and one share purchase warrant, entitling the holder to purchase one additional share of common stock at an exercise price of $6.50 per share for a period of two years from the date of acceptance of the Subscription.
Management is confident that with the proceeds of the subscription funds received on 30.01.2014, that the Company can commence planning the spudding of the first light oil project consisting of four sections in the Red Earth area.
Red Earth Project
The Company signed a farm in agreement with the owner on January 22, 2013. Terms of that agreement were renegotiated in early January 2014 to model the farm in agreement terms to be more representative of a purchase of the negotiated working interest in the leases. Octagon 88 Resources will earns direct working interest of 50 percent by participating in the drilling costs on the first of 4 planned drill locations. The JV partners agreed to pay from production a total amount of $2,500,000. - and a 3% residual GORR for 100 percent working interest which is fully earned after spudding the first well. The other participants are industry companies with similar interests in the Peace River area. The Red Earth Project consists of 4 contiguous sections of P&NG leases, a ( 40 API) Keg River formation with P3 reserves of 1.2 Mill bbls light sweet crude oil recoverable, NPV(10%) $20,000,000CAD; the evaluation given is based on the project’s last 3D seismic program. Other wells produced in the past have been known to be prolific long term producers.
The first of two drill targets currently being surveyed and planned to be spudded for the end of Q2 2014. Initial productions by other producers in the area have shown single wells producing 300 to 500 bbl/d of light sweet crude oil. The extensive long term Keg River developments in the area possess quick net backs on capital with low operating costs.
Management believes the cash flows derived from this conventional oil project will be major step to upgrading its listing to a more senior level. Senior securities legal counsel has been retained for this goal and the company will advise the shareholders on its progress as it advances.
Octagon 88 Resources Inc. has acquired substantial light and conventional heavy oil assets in Northern Alberta. The CEC North Star project has been substantially de-risked which leads the company to emerge as a development stage oil and gas company. The current program schedule entails working with the operator of these properties to bring on production and cash flow through the company’s direct working interests, and indirect investments spread throughout the projects.
Octagon 88 Resources is the largest publicly traded shareholder of CEC North Star currently holding thirty-point seven (30.7%) of its shares. To maintain this position management determined it was advisable to subscribe for C$ 500,000. - in this project financing and has recently closed its subscription.
This press release contains forward-looking statements concerning future events and the Company's growth and business strategy. Words such as "expects," "will," "intends," "plans," "believes," "anticipates," "hopes," "estimates," and variations on such words and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Forward looking statements in this press release include statements about our drilling development program. These statements involve known and unknown risks and are based upon a number of assumptions and estimates that are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of the Company. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the timing and results of our 2014 drilling and development plan. Additional factors include increased expenses or unanticipated difficulties in drilling wells, actual production being less than our development tests, changes in the Company's business; competitive factors in the market(s) in which the Company operates; risks associated with oil and gas operations in the United States; and other factors listed from time to time in the Company's filings with the Securities and Exchange Commission including the Company's Annual Report on Form 10-K for the year ended June, 2013. The Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.
Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as "probable," "possible," "recoverable" or "potential" reserves among others, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. Investors are urged to consider closely the disclosure in our filings with the SEC.