TYLER, Texas, April 19, 2010 (GLOBE NEWSWIRE) -- Pegasi Energy Resources Corp. (OTCBB:PGSI), an East Texas based oil and gas exploration and production company headquartered in Tyler, Texas, today is pleased to announce the execution of its second Lease Fund agreement with Calston Exploration USA Inc. in Houston, TX, a subsidiary of Calston Exploration in Calgary, Canada. The $4.7M will be used to renew or extend existing leasehold Pegasi presently has and to acquire new leasehold in the Cornerstone Project. The agreement allows for Calston to earn a 50% interest in existing leases that Pegasi holds within the Area of Mutual Interest without diluting the Companies' net interest in the leasehold. Calston pays for 100% of the cost for a 50% interest. The Company earlier reported a Lease Fund agreement for up to $4M with an independent company in Houston, TX. The agreements cover two separate areas controlled by an AMI within the Companies' large Cornerstone Project.
Management Comments
Mr. Mike Neufeld, President and CEO, said, "These agreements allow us to protect our present position and to add to our acreage and drilling inventory. We anticipate that this arrangement will result in drilling of new wells on the mutually purchased acreage in 2010. The Company presently has approximately 20,000 gross and 14,000 net acres of which we own an 80% interest in." In addition, Mr. Neufeld said, "This completes another important step in our strategic plan of not only maintaining our position but adding to it with hopes of doubling our position in the area. Our main emphasis will be to develop our oil potential through horizontal drilling in addition to drilling several shallow gas plays which could quickly add to our cash flow and reserve position. This is part of a multi-well program we plan to begin first of the second quarter 2010."
The Cornerstone Project area has produced over 400 million barrels of oil and 2.3 trillion cubic feet of gas. The Company is focused on applying new horizontal drilling and multistage frac technology to substantially increase the recovery of the substantial reserves which remain.
About Pegasi Energy Resources Corporation
Pegasi Energy Resources Corporation is an organic growth-oriented independent oil and gas exploration and production company headquartered in Tyler, Texas. Pegasi is focused on a repeatable, low geological risk, high potential project in the active East Texas oil and gas region. The Company's strategy is focused on establishing a portfolio of drilling opportunities to exploit undeveloped reserves to grow production, as well as undertaking exploration to grow future reserves. Additional information concerning Pegasi Energy is available at www.pegasienergy.com.
The Pegasi Energy Resources Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4682
Forward Looking Statements
Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission ("SEC") 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 and potential, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 8-K, filed with the SEC on March 24, 2009, available from us at our principal executive offices at 218 N. Broadway, Suite 204, Tyler Texas 75702. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
The statements in this press release regarding Pegasi Energy's expectations with respect to the timing of testing and drilling operations, transportation of crude oil, and the construction of the pipeline, the ability of Pegasi Energy to plan a full field development, including additional drilling, facilities and pipeline to handle new production as appropriate through 2010, and the expectation as to sources of funding, are 'forward-looking statements' within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934. Although these forward-looking statements reflect the good faith judgment of management, forward-looking statements are inherently subject to known and unknown risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements including, but not limited to, in the case of these forward-looking statements: unexpected delays in drilling or pipeline or other transportation infrastructure completion due to equipment failure or other unforeseen reasons; unforeseen events, such as unexpected difficulties in drilling or unexpected discoveries, may cause Pegasi Energy to reallocate resources, which may delay drilling, surveys, design plans, transportation infrastructure development and production or alter the mix of development drilling and exploration drilling in Pegasi Energy's portfolio; and unexpected costs may decrease funds available to carry out Pegasi Energy's plans described in this press release, which could delay or prevent execution of these plans. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Pegasi Energy assumes no obligation to update these forward-looking statements to reflect any event or circumstance that may arise after the date of this release, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures, including the risk factors, made by Pegasi Energy in its reports filed with the Securities and Exchange Commission, in particular under the caption "Risk Factors" of its 8-K filed on March 24, 2009, which attempt to advise interested parties of the risks and factors that may affect Pegasi Energy's business. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, Pegasi Energy's actual results may vary materially from those expected or projected.