SALT LAKE CITY, Aug. 14, 2002 (PRIMEZONE) -- Freedom Oil & Gas, Inc. (Salt Lake City, Utah), a wholly-owned subsidiary of The Majestic Companies, Ltd. (OTCBB:MJXX), announced that it has entered into an agreement in principle to acquire from HEGCO, Inc. approximately 6,000 gross acres under lease in Arkansas, including the Edgmond #1 well, in exchange for 110,000 shares of Majestic Series A Preferred Stock (which are convertible into 550,000 common shares). Freedom is informed that HEGCO's investment in the El Grande prospect and Edgmond #1 well exceeded $2 million. Hewitt Energy Group, Inc. agreed to exchange approximately $700,000 in securities and notes for a minority interest with Freedom in the project, among other consideration from Freedom. The agreement in principle is subject to the approval of HEGCO's secured creditors, the Canadian Court handling HEGCO's receivership, and execution of a definitive written purchase agreement. Freedom's objective is to develop potential natural gas production previously discovered in the lease block.
HEGCO's previous engineering report of May 1999 indicated potential production rates from a flow test of the Edgmond #1 well in the range of 1,200 mcf/d to 4,250 mcf/d, subject to clean-up of load water on the reservoir. Freedom stated that, subject to current third-party discussions regarding obtaining suitable financing and/or bringing in another joint interest partner, it plans to re-enter and recomplete the Edgmond #1 well within 90 days, and, if the well proves to be commercially productive, it then plans to construct a gas pipeline to connect the well to an existing interstate pipeline.
The re-entry of the El Grande project's Edgmond #1 well has been best regarded as a "proof of concept" well which confirmed the existence of natural gas in this particular region of the Arkoma Basin -- a natural, gas-rich region in Arkansas. With successful re-entry and drilling operations, this acreage block would provide cash flow to Freedom once it is completed. The Company is dedicated to properly exploiting this and other important projects within the Company as it continues to seek to build and grow shareholder value. It should be noted that this important acquisition is being made with no additional dilution to Majestic's current shareholder base.
For additional information please contact Investor Relations, at 1-866-238-1185, between the hours of 9-5 p.m., Eastern Time.
Note: Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934 and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.
On behalf of the Board: J. David Gowdy, Chairman and CEO
This news release has been prepared by management of The Majestic Companies, Ltd. who take full responsibility for its contents. The SEC has neither approved nor disapproved of the contents of this news release. This news release may include 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 and Exchange Act of 1934, as amended, with respect to achieving corporate objectives, development of project interests, the companies' analysis of opportunities in the acquisition, and certain other matters. These statements are made under the "Safe Harbor" provisions of the United States Private Securities Litigation Reform Act of 1955 and involve risks and uncertainties which could cause actual results to differ materially from those in the in the forward-looking statements contained herein.