Gale Force Petroleum

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Msg  14 of 24  at  5/5/2011 2:19:53 PM  by


The following message was updated on 5/5/2011 2:20:19 PM.



MONTREAL, May 5, 2011 -- Gale Force Petroleum Inc. (TSXV: GFP) ("Gale Force" or the "Company") today announced that it has closed a CA$5,000,000 straight equity private placement financing, has made changes to its Board of Directors and hired new technical personnel.

Ruben Alba and Charles Marleau have joined the Company's Board of Directors, and Mazen Haddad, Stephen R. Hood, Joseph F. Langston Antoinette Lizzi, and John Trosclair have stepped down. It was a condition of the private placement that the Company's Board of Directors be reduced to 5 members.

"The private placement represents a strong endorsement of Gale Force's business plan, and will provide us with significant development and acquisition capital to continue to grow our business", said Michael McLellan, Chairman and CEO. "The Company should also benefit from its new, experienced Directors, industry investors and additional technical and operational personnel".


The Company received gross proceeds of CA$5,000,000 in a private placement financing through the issuance of 14,090,909 "Common Shares" at $0.22 per share and 8,636,364 Series II Preferred Shares "Series II Preferred Shares" at a price of $0.22 per share.

The Series II Preferred Shares were issued to Iroquois Capital Opportunity Fund ("ICO Fund"), which is a specialized private equity fund focused on investments in the oil and gas industry. The Series II Preferred Shares are non-voting, pay no dividend, and are convertible 1:1 into Common Shares at the election of the ICO Fund or the Company, subject to a conversion limit of 9.99%, whereby the shares cannot be converted should ICO Fund, in conjunction with any Common Shares it already holds, own greater than 9.99% of the Company's voting Common Shares.

In connection with the private placement, the Company paid an aggregate of $134,479 in cash commissions, issued 96,854 common shares at a price of $0.22 per share with an aggregate value of CA$21,308, and issued 2,105,324 non-transferable broker's warrants ("Broker's Warrants") to members of the selling group and various other finders. Each Broker's Warrant entitles its holder to acquire one Common Share at an exercise price of $0.22 at any time on or before May 4, 2013.

All of the securities issued by the Company in connection with this private placement are subject to resale restrictions which expire on September 5, 2011.

The selling group was led by Palos Merchant Bank, and included All Group, MGI Securities and Raymond James, all of which are at arm's length from the Company.

After paying the fees associated with the financing, the Company repaid the bridge loan of $600,000 it had obtained on March 1, 2011. The remaining funds are to be used principally for development of the Company's existing properties, but also for prospective acquisitions, working capital and general corporate purposes.


Of the members of the Board of Directors stepping down, Antoinette Lizzi, CMA, will continue to serve as the Company's Chief Financial Officer, while each of the other departing members, Mazen Haddad, Stephen R. Hood, Joseph F. Langston and John Trosclair, P.E., have agreed to continuing serving as Advisors to the Company for a period of two years.

Ruben Alba, who has joined the Board of Directors, and will also serve as Chairman of the Reserves Committee, received his Chemical Engineering Degree from New Mexico State University and has worked in the oil and gas industry for over 13 years with Halliburton Energy Services and Superior Well Services. He has an intelligent, energetic and unique approach to complex reservoir problems involving geochemistry, geomechanics, surface logistics and environmental concerns. Ruben has introduced new and novel technologies involving new fluid chemistry as well as completion processes to reservoirs requiring cutting edge technology. Ruben now works with Iromad, a specialized oil and gas technical consultancy (described below). Prior to joining Iromad, Ruben worked in the management of technical and laboratory staff in both Halliburton Energy Services and Superior Well Service. He holds two patents in unique completion technologies and is adept to the challenges of unconventional reservoirs.

Charles Marleau, who has also joined the Board of Directors, and will serve as a member of the Reserves Committee and Audit Committee, is President and Co-Founder of Palos Management. He is responsible for managing and trading the investment funds and supervises administration of the fund. Charles graduated from McGill University with a Bachelor's degree in Economics and completed the Canadian Investment Manager designation. He serves on Board of Directors of numerous private companies, a private school and a Canadian public company. Charles is also a member of the Institutional Equity Traders Association, Montreal University Club, Montreal Oil Club and the Young Entrepreneurs Organization.

The following table summarizes the current Directors and Officers of the Company:

|Board of Directors |Officers |
|Michael McLellan - Chairman of the|Michael McLellan - Chairman and |
|Board |CEO |
|Guillaume Dumas - Chairman of the |Emery Johnson - COO |
|Audit Committee | |
|Ruben Alba - Chairman of the |Antoinette Lizzi - Vice-President|
|Reserves Committee |and CFO |
|Robert Johnson |Guillaume Dumas - Corporate |
| |Secretary |
|Charles Marleau | |

The Company has also signed a one year mandate with Iromad, a specialized oil and gas consultancy to provide the Company with technical and operational expertise. The fees earned under the one-year mandate will be US$278,000. A description of Iromad and the nature of the services it provides can be found below.

The Company also announced that, subject to shareholder approval, it has amended its stock option plan to a "rolling plan", which would permit the Company to issue up to 10% of the number of issued and outstanding common shares. The Company also issued 900,000 options with an exercise price of $0.33 to directors and consultants, vesting immediately, subject to the provisions of the Company's stock option plan. The stock option plan amendment and stock option issuance are subject to shareholder approval and TSX Venture Exchange approval.

ABOUT GALE FORCE PETROLEUM INC. − Gale Force Petroleum is a public corporation focused on acquiring and exploiting undervalued oil and gas reserves in mature basins, bringing operational expertise and capital to lower-risk, development-type projects. The Company currently owns producing oil and gas properties in Texas, Oklahoma and Tennessee.

ABOUT PALOS MERCHANT BANK L.P. Palos Merchant Bank L.P. ("Palos") engages in merchant banking activities and provides a variety of corporate finance services including: capital-raising, credit syndication, buyout financing, advice on mergers and acquisitions, restructuring and due diligence. There are two major differences between Palos and traditional investment banks: (1) Palos invests its our own money alongside other investors, typically as the lead investor, and (2) Palos does not engage in underwriting. Palos Merchant Bank also becomes involved in the governance of the companies in which it invests, usually by taking an active role at the Board of Directors level. The managers of the Palos have extensive experience in corporate finance, private equity, venture capital and seed financing.

ABOUT IROQUOIS CAPITAL OPPORTUNITY FUND, L.P Iroquois Capital Opportunity Fund, L.P. ("ICO Fund") is a private equity fund focused on investments in the oil and gas industry. ICO Fund invests in low risk oil and gas assets and in technologies that increase production, improve recovery factor and reduce costs to apply these technologies to change the economics of the targeted assets. The fund is managed by a seasoned team that includes former senior national oil company executives, former senior oil service executives, oilfield technology venture capitalists and financiers experienced at structuring investments in the oil and gas industry.

ABOUT IROMAD LLC Iromad was formed through the convergence of veteran oil and gas professionals, innovative technologists, leading entrepreneurs, and experienced investment professionals. Iromad's vision is to facilitate the delivery of technologies for the enhanced development of mature oil and gas assets and unconventional hydrocarbons, providing cutting-edge solutions to issues faced by national oil companies and independent petroleum producers. Iromad focuses on solutions that will increase recoverable reserves, enhance production, and reduce lifting costs. This demands a long-term perspective, breadth and depth of expertise, and solid project management in order to outlast the cyclic nature of oil and gas commodity markets.

Forward looking statements: Statements included herein, including those that express management's expectations or estimates of our future performance, constitute "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements are based on assumptions and estimates that are subject to various risks and uncertainties, including the risks disclosed under the heading "Risks and Uncertainties" in the Company's periodic filings on SEDAR, for example, in its Management Discussion and Analysis for the year ended June 30, 2010. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not assume the obligation to update any forward-looking statements, except as required under applicable law.

"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."


Michael McLellan, CFA, Chairman & CEO, +1.514.221.2030

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