Gear Energy Announces $85 Million Asset Acquisition and Increased 2014 Capital Budget

CALGARY, ALBERTA--(Marketwired - April 24, 2014) -

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Gear Energy Ltd. ("Gear" or the "Company") (TSX:GXE) is pleased to announce today that it has entered into an agreement to acquire (the "Acquisition") heavy oil assets focused near the Company's core producing areas of Wildmere, Alberta and Maidstone, Saskatchewan (the "Assets"). The Assets include over 2,000 boe per day of high working interest, operated heavy gravity crude oil production (98 percent oil). The purchase price for the Assets is $85 million, payable in cash. The effective date of the Acquisition is March 1, 2014 and the closing of the Acquisition is expected to occur on or about May 1, 2014 (the "Closing").

The Assets fit Gear's strategy of targeting underexploited, geographically focused production with low risk development locations and simple solutions to increase production value by lowering operating costs. The Assets all produce from heavy oil reservoirs analogous to those that the Gear team have been successfully developing in the area for the past four years.

Gear estimates total corporate production at Closing of over 7,000 boe per day. The Acquisition provides a material increase in low risk future drilling opportunities and Gear's team has already identified 175 net drilling locations on the Assets. This will increase Gear's drilling inventory to approximately 400 locations. Gear has also identified approximately 60 net recompletion opportunities on existing vertical wells. Based on current 2014 drilling pace, Gear's drilling inventory will now be greater than five years.

Acquisition Metrics

Price:	$85 million
Production:	2,000 boe/d, 98 percent heavy oil (12-13 API)
Ownership:	91 percent working interest and 95 percent operated
Land:	Over 40,000 net acres of land
Inventory:	175 drilling locations, 60 recompletions

Gear intends to fund the acquisition with existing lines of credit and existing cash flow. After the Acquisition closes, we are estimating that Gear will have a relatively low net debt to cash flow ratio of less than one times projected twelve month cash flow.