HOUSTON, April 4, 2011 (GLOBE NEWSWIRE) -- EFL Overseas Inc. (OTCBB:EFLO) ("EFLO" or "the Company"), announces completion of a Farmout and Participation Agreement for the acquisition of a net working interest ranging from 21.25% to 42.5%, in a 2,629 acre oil and gas lease located in southwest Texas.
"We are pleased to initiate exploration operations," stated EFLO President, Keith Macdonald. "Our first test well is drilling. We look forward to building upon this momentum as we pursue our broader business objectives."
Under the farmout agreement, EFLO may spend up to $1,050,000 on the exploration and development of oil and/or gas production from the San Miguel formation on the lands covered by the lease. That agreement provides for the acquisition of rights only insofar as that lease covers from the surface to the base of the San Miguel formation. To earn its initial 21.25% working interest (net revenue interest 15.94%), the Company is obligated to drill and complete a vertical test well to a target depth of 3,500 feet (the "Test Well"). It is also obligated to perform an injection operation on the Test Well. If the Test Well is prospective for production in commercial quantities, the Company is required to equip the Test Well and place it on production in a timely manner. If it is determined that the Test Well is not prospective for production in commercial quantities, the Company will be responsible for its abandonment. EFLO estimates its costs related to the Test Well will range from $500,000 to $600,000. The lease has no proven reserves or current production from the San Miguel formation. There were no preexisting relationships between the parties to the farmout agreement.
EFLO may increase its working interest in the lease from 21.25% to 42.5% (net revenue interest from 15.94% to 31.875%) by spending the entire funding commitment of $1,050,000 in the performance of obligations pertaining to the Test Well. To the extent the Company has not expended its funding commitment on the Test Well, it may increase its working and revenue interests by undertaking additional operations on the lease.
About EFL Overseas and the Kotaneelee
Beginning in 2010, EFLO also announced pursuit of an acquisition of certain working interests in the Kotaneelee gas facility and its related proven and producing gas fields located in the Yukon Territory, Canada. EFLO is currently a party to negotiations with multiple interest holders in those assets.
Forward-Looking Statements: This press release includes forward-looking statements as determined by the U.S. Securities and Exchange Commission (the "SEC"). All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that the Company believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to acquire and develop specific projects, the ability to fund operations and changes in consumer and business consumption habits and other factors over which the Company has little or no control. The Company does not intend (and is not obligated) to update publicly any forward-looking statements. The contents of this press release should be considered in conjunction with the warnings and cautionary statements contained in the Company's recent filings with the SEC. There can be no assurance that EFLO will be successful in completing the Kotaneelee acquisition(s).
ON BEHALF OF THE BOARD OF DIRECTORS
EFL Overseas Inc.