Derek Oil & Gas Corporation today reported, subject to regulatory approval, the closing of a private placement financing of 1,065,000 units priced at $0.10 per unit to raise proceeds of $106,500. Each $0.10 unit consists of one common share and one five-year term common share purchase warrant exercisable at $0.10. Units issued pursuant to this placement will be subject to a four-month hold. Proceeds will be used for general corporate purposes.
The Company also reported, subject to regulatory approval, the granting, pursuant to its existing stock option plan, of 2,225,000 incentive stock options exercisable at $0.10 per share for a term of five years.
Derek would also like to clarify the terms of the royalty extension announced on March 4, 2009. The bonus payment due under the extension agreement until production reaches 600 barrels a day is limited to the royalty (3.3%) times the number of barrels produced per month times the price realized for oil sales in excess of a $70.00 floor price. For example, should production in June be 500 barrels and the realized price for oil for the month was $100.00 the bonus would be 500 times $30.00 ($100.00 realized price less $70.00 floor) times 0.033 (the royalty) or $495.00. Derek would receive a royalty of 500 times $70.00 (the floor) times 0.033 (the royalty) or $1,155.00. When the realized price for oil is less than the $70.00 floor, as is currently the case, no bonus payment is payable.
Derek Oil & Gas Corporation is a Canadian based, publicly traded oil exploration and production company that utilizes enhanced oil recovery 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
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
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 forward-looking 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.