Market Wire Incorporated: Delta Oil & Gas to Raise $2,000,000 in Private Placement at $4.40 per Share

Delta Oil and Gas, Inc. (OTC BB: DOIG) is pleased to announce that the Board of Directors has authorized management to undertake an equity financing of $2,000,000 through a private placement of its securities to two investors. The equity financing is expected to be comprised of approximately 454,000 shares of restricted common stock at the price of $4.40 per share.
Management expects the equity financing to be completed within ten business days. The placement is designed to strengthen the Company's balance sheet and is expected to be used to finance the Company's upcoming capital expenditures including Delta's drilling in the Hillspring and Todd Creek areas in the Southern Alberta Foothills, the completion of the Company's potential Devonian gas well on its Strachan prospect and potential additional drilling in and around the Cache Slough prospect located in the Sacramento basin in California. The Company is also actively pursuing other exploration opportunities both in North America and overseas. A commission of 7.5% will be paid on the private placement.
The following are Delta's current projects:
Hillspring Prospects
Earlier this year, Delta Oil & Gas acquired a 10% working interest in 640 gross sections of land in the Hillspring area of Alberta. The operator of the Hillspring prospect has drilled 4 wells adjacent to the lands Delta has acquired. The operator is currently reviewing the data on these 4 wells along with additional seismic testing, and it is anticipated that a well will be drilled on Delta's land in 2006.
Todd Creek Prospect
Delta's Todd Creek Well located in 13-28-9-2W5 in the Southern Foothills area of Alberta, Canada, has been drilled, completed and classified as a new natural gas pool discovery. Log analysis shows that the well has intersected two gas formations with a combined net pay of over 80 feet. Preliminary natural gas reserve estimates for this well exceed 700 Million Cubic Feet of gas.
Construction of a new gas processing plant just south of this Todd Creek discovery has commenced, and Delta expects to tie its anticipated gas production into this gas plant by spring of 2006. The gas plant is initially capable of accommodating 10 million cubic feet of gas per day with significant expansion capabilities. While Delta will have no direct interest in the plant, the immediate access to market for its anticipated production from the area is of substantial benefit.
Strachan Prospect
Total depth of 13,650 feet has been reached on Delta's potential natural gas well in its recently acquired, highly prospective property in the Deep Basin along the edge of the Alberta foothills belt approximately 80 miles Northwest of Calgary Alberta. (“Strachan Prospect”). Preliminary results indicate the presence of a potential Devonian gas well. Casing has been inserted to total depth, and a full testing program is underway.
The original Strachan gas pool was discovered 35 years ago; however, in November 2004, Shell Oil announced a new Leduc Pool discovery at Ricinus with potential one trillion cubic feet gas reserves.
Cache Slough Prospect
Delta's Cache Slough Well, located near Sacramento, California, has been drilled, completed and classified as a significant new natural gas pool discovery. Review of the preliminary data indicates that the well tested at flow rates exceeding our expectations. Delta and partners have elected to tie-in the well to a nearby gas pipeline to accommodate the natural gas production. Despite a setback suffered as a result of recent heavy flooding in the area due to higher than average rainfalls, the pipeline is expected to be completed before the end of February 2006. Results are expected to be announced after the well has commenced commercial production. Future drilling plans with regards to the Cache Slough prospect will be announced in the first quarter of 2006.
About Delta Oil and Gas
Delta Oil and Gas is a growing exploration company focused on developing North American oil and natural gas reserves. The Company's current focus is on the exploration of its land portfolio comprised of working interests in highly prospective acreage in the Southern Alberta Foothills area, its interest in the Cache Slough Project in California and its newest interest in the Strachan Prospect. Delta Oil & Gas is seeking to expand its portfolio to include additional interests in Canada and the USA.
On behalf of the Board of Directors,
DOUGLAS N. BOLEN, B.A., LL.B., President
Safe Harbor Statement
This news release includes statements about expected future events and/or results that are forward-looking in nature and subject to risks and uncertainties. Forward-looking statements in this release include, but are not limited to time frames, expectations for completion; the analysis of results and the intention to drill. Actual outcomes and the Company's results could differ materially from those in such forward-looking statements. Factors that could cause results to differ materially include general factors that affect all companies that explore for oil and gas, such as the uncertainty of the requirements demanded by environmental agencies, the fact that oil and gas extraction and production is risky, the potential that no commercial quantities of gas are found or recoverable, the price of oil and gas, geological problems that prevent us from reaching drilling targets and specific risks such as the Company's ability to raise financing.
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