Universal Bioenergy Signs Letter of Intent for Multi-Million Dollar Natural Gas Development Project With ProGas Energy Services Inc. GlobeNewswire “Press Releases “
IRVINE, Calif. , Oct. 13, 2010 (GLOBE NEWSWIRE) — Universal Bioenergy Inc. (Pink Sheets:UBRG), anenergy company, has signed a Letter of Intent with ProGas Energy Services Inc. , of Texas , tojointly develop anewly discovered or recently discoveredoil and gas field located in Texas’s Gulf Coast natural trend in Jim Wells County, Texas . The plans include the development often initial wells, and the potential development ofup to 110 oil and gas wells from this field, tosupply oil and natural gas for Universal’s customers nationwide.
This joint venture isa major step for the Company and has three major benefits to Universal and its shareholders.First, it allows Universal to acquire natural gas reserves from the ground, for a small fraction of the purchase costs thatit currently pays to other producers, that it markets natural gas for. Second, it would provide Universal with a source of natural gas of its own, which can be marketed to itsmajor utility gas customers throughout the U.S. While most gas marketers are limited to a 1% to 2% profit on the spread of natural gas prices, (less than 1 cent per mcf),Universal’s exploration costs for its share of the field is estimated to be less than 10% of the current NYMEX price for October, which is $3.40 per mcf, allowing Universal to earn a 90% gross profit, or $3.00 per mcf at current prices,on the spread of gas that it owns in the field and that it sells into the market place.This will give Universal a distinct advantage in the marketplace and a considerably higher profit margin for gas that is sold to its customers. Third, while many gas marketing companies have to buy gas from others,their ability to purchase gas is somewhat subject to availability. Universal will be able to supply the natural gas produced, thatit owns, as well as the natural gas of the other industry partners in the development of the field, such as Progas Energy, who have offered Universal the right to market their gas.
“We’re very excited about working with ProGas Energy Services on this development project. We intend to move veryquickly towards negotiating a final signed agreement. We feel this is another monumental step towards building greater value for our shareholders”, says Universal’s Sr. Vice president Solomon Ali .
The final terms and conditions of the transaction will be determined in the definitive agreement. No assurances can be provided that a definitive agreement will be executed. Execution of a definitive agreement is subject to, among other things, confirming due diligence by Universal,and other conditions and approvals by both companies’ managementandboard of directors.No assurances can be made that the estimatedamount of gaswill be reached or the NYMEX price will be maintained.