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| | Thu Dec 11, 2008
Derek Obtains Twelve Beam Pumping Units In Addition To Previously Announced Steam Generator Transaction.
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| | Derek Oil & Gas Corporation is pleased to announce that their management has secured from a U.S.A. governmental agency the use of twelve beam pumping units. This transaction is an addition to the previously announced steam generator lease agreement
(See July 8, 2008 News Release). The Company wishes to acknowledge the cooperative relations with the U.S.A governmental agency in aiding the advancement towards the goal of achieving commercial petroleum production at our Wyoming based LAK Ranch
Project.
Six of these beam pumping units will be deployed on the Company's existing pilot vertical steam drive production wells. Management believes that this equipment change will improve productivity, lifting efficiencies, steam drive response and enable higher bottom-hole temperatures. The remaining six beam pumping units will be utilized later in 2009. Previous artificial lift in our pilot project consisted of progressive cavity pumping units that could not withstand the reservoir temperatures reached during a thermal recovery project.
With respect to the expected improvement in production efficiencies, Mr. Robert Hurkmans, the Company's Chief Operating Officer, stated " having additional steam capacity has prepared us for future opportunities to expand the LAK Ranch heavy oil
reserves and this change in artificial lift from progressive cavity to beam pumping units will give us a reliable method to produce our reserves.
The budgeted expenditure for the beam pumping unit transaction amounts to US$125,000, which will be financed by a loan to Derek Oil & Gas Corporation. The loan is to be secured by a promissory note payable in 12 months and bears interest at 9%
per annum. The note holder has the option to convert the principal into shares of the Company at a conversion rate of Cdn$0.10 per unit at any time during the term of the loan. Each unit shall consist of one common share and one common share purchase warrant. Each warrant is convertible into a further common share of the Company at an exercise price of Cdn$0.20 for a period of two years from the date of advancement of the loan funds. The note and loan agreement are subject to regulatory approval.
Derek Oil & Gas Corporation is a Canadian based, publicly traded oil exploration, development and production company that utilizes enhanced oil recovery (EOR) techniques to develop new production from reservoirs in North America. Derek's current
focus is on the further development and increasing production from their prime property located in NE Wyoming's prolific Powder River Basin.
Derek Oil & Gas Corporation is trading in Canada on the TSX Venture Exchange with the symbol DRK.
ON BEHALF OF THE BOARD
Mr. Barry C.J. Ehrl, President and C.E.O.
For further information please contact Derek's Corporate Communications Department at:
Telephone: 1-888-756-0066 or (604)-331-1757
Corporate E-Mail: info@derekoilandgas.com
Website: http://www.derekoilandgas.com
The TSX Venture Exchange has neither approved nor disapproved the information contained herein. This document includes forward- looking statements. Forward-looking statements include, but are not limited to, the continued advancement of Derek Oil & Gas Corporation's LAK Ranch project. When used in this document, the words "potential", "plan", "could", "estimate", "expect", "intend", "may", "should", and similar expressions
are intended to be among the statements that identify forward-looking statements. Although Derek believes that their expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forwardlooking statements include the potential that Derek's LAK Ranch project will experience technological and mechanical problems, geological conditions in the reservoir may not
result in commercial levels of oil and gas production, and other risks. |
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