June 26, 2008
New Well Drilled at Primate, Saskatchewan-Greencastle Receives Record Monthly Royalty
Greencastle Resources Ltd. ("Greencastle," or the "Company,")(TSX VENTURE: VGN) is pleased to report that development continues at the Primate section in west central Saskatchewan, where Greencastle holds a gross overriding royalty after making the initial heavy oil discovery in 2003. Recently, the project operator completed a new well which has now commenced production. The Primate section now has 11 producing heavy oil wells and two gas wells.
Greencastle's revenue, derived from the royalty on production, has continued to improve since the beginning of the year. Greencastle's monthly royalty revenue has increased from about $170,000 in January to over $270,000 in April, the latest month for which payment has been received. Due to a lag from production to collection and sale, initial royalty income from the recently completed well is not expected until August. It should be noted that initial production rates may not reflect long-term production rates from any given well and they can vary dramatically both positively and negatively.
Heavy oil trades at a discount to lighter oil. This discount, known as the differential, has been steadily decreasing over the past several months as the price for heavy oil rises. In a recent Canaccord Capital Corp. research report, oil and gas analyst Kyle Preston stated: "...we believe that differentials will remain strong and continue to improve over time as more US refineries adapt to Canadian heavy crude and as more access is gained to refineries in the Gulf Coast region. As these more favorable differentials stabilize, we would expect investors to start paying more for Canadian heavy oil..."
Greencastle's strong balance sheet and royalty income continue to provide a solid financial foundation for the Company.
This news release includes certain "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Without limitation, statements regarding potential mineralization and resources, exploration results, and future plans and objectives of the Company are forward looking statements that involve various degrees of risk. The following are important factors that could cause the Company's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world wide price of commodities, general market conditions, risks inherent in exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital. The Company relies on litigation protection for forward looking statements.
No Stock Exchange has reviewed nor accepted responsibility for the adequacy or accuracy of this news release.
Contacts: Greencastle Resources Ltd. Anthony Roodenburg CEO (416) 367-4571
SOURCE: Greencastle Resources Ltd.