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Strategic acquisition positions Red Fork Energy to dominate East Oklahoma gas holdings

Last updated: 08:27 29 Oct 2009 EDT, First published: 09:27 29 Oct 2009 EDT

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US-focused oil and gas exploration and production company Red Fork Energy Limited (ASX:RFE) has increased by 125% its total holdings at East Oklahoma USA after completing the acquisition of  approximately 63,000 acres located in the area immediately south of its existing East Oklahoma project (EOK Central).

The acquisition positions Red Fork as the dominant acreage holder in the East Oklahoma gas discovery area, with more than 110,000 acres held in an area stretching from Wagoner County in the south, north to the Kansas border, said Red fork managing director David Prentice.

This new project (EOK South) is serviced by extensive gas sales and transportationinfrastructure and it fast tracks the execution of the company’s development of the discovery with immediate cash flow from existing wells, enormous potential from already drilled and tested pre-production wells and a large inventory of new potential drillable locations.

The new project includes a large number of existing production and pre-production wells (in excess of 80 wells).

It already houses significant infrastructure, including an extensive gas gathering and water disposal system, operational central treating and compression facilities as well as approximately 25 miles of large diameter gas transportation pipe which delivers gas to the spot market.

EOK South is currently producing at the rate of approximately 1,000,000 cubic feet of gas per day lifting the company’s current total daily production rate to approximately 3,000,000 cubic feet of gas equivalent, generating annual gross revenue of approximately US$5 million per annum at the current spot price.

Importantly, the Company expects to rapidly and significantly increase production from EOK South through a programme aimed at improving the efficiency of existing wells and bringing already drilled and tested wells on line.

This programme of work will commence immediately.

The acquisition also adds to the company’s already large inventory of potential drilling locations, taking the total to in excess of 1,400 potential locations (based on ultimate development of the acreage on 80 acres spacing’s). The company’s reserves of natural gas at East Oklahoma will also be significantly boosted through this acquisition and it will immediately commission its independent reserve engineers Lee Keeling & Associates to prepare a report on the current and potential reserves for this new project.

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