Royalite Petroleum Company
Inc.
Signs Option Agreement to Acquire
Additional Utah Hingeline Acreage
October 4, 2007 – Austin, Texas; Royalite
Petroleum Company Inc. (OTCBB: RYPE) (“Royalite”) has
entered into an option agreement with Central Utah Lease
Acquisition , LP (“CULA”) to purchase leasehold
interests in approximately 108,000 acres located in Juab and
Sanpete Counties, Utah. The acreage block is located directly north
of Wolverine Gas and Oil Company’s 70,000 acre Federal Unit
and on trend with the Covenant Oil field, the largest onshore oil
field discovered in the United States since the East Anschutz Ranch
Field was discovered in 1979.
Under the agreement, Royalite will issue CULA
200,000 shares of its common stock as consideration for an option
to purchase an undivided 62.5% WI in CULA’s 66,700 net acres
and become the Operator. Royalite will have the option to purchase
the 41,688 net acres (80% NRI) for $11.26 million plus 7.3 million
common shares of Royalite. The option must be exercised on or
before November 21, 2007 and the closing date is November 26, 2007.
In the event the option is exercised, Royalite will be required to
pay $1.5 million and assign 7.3 million shares of its common stock
to CULA. The cash balance of $9.6 million is scheduled to be paid
in semi-annual installments beginning December 31, 2007 and ending
on June 15, 2009. As additional consideration, Royalite will be
required to carry CULA as a 25% working interest owner through the
completion or plugging of two wells drilled to the top of the
Jurassic Navajo formation or 12,000 ft., whichever is less.
Drilling of the first carried well shall commence on or prior to
two years of the closing date and the second well shall commence on
or prior to the three year anniversary of the closing date. Each
carried well drilled will initially earn Royalite a 160 drilling
unit surrounding Royalite’s selected drilling locations.
After the two wells have b
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