IGPG Ignis Petroleum Group Inc (CE)

Ignis Petroleum Group, Inc. (OTCBB:IGPG) today provides an update for its shareholders on the Company. Several changes have been implemented over the last twelve to eighteen months, most notably the management structure. After the departure of Mr. Piazza, day to day management of the Company has been taken over by Mr. Geoff Evett, who now acts as CEO and Chairman of the Board. The four areas Mr. Evett has been concentrating his efforts on have been the restructuring of Ignis�s capital structure, especially in view of the convertibles outstanding with the Company�s senior creditor, rationalizing the cost structure of the organization, assessment of the current project portfolio and, finally, the identification of new projects. Cost rationalization Management has been downsized and many other costs the previous Management carried have been cut. As a result, Ignis is now generating a positive cash flow, enabling the organization to put in place its restructuring program. Projects The ACOM A6 well has been productive and has generated a positive cash flow for the company. The well is currently under a workover and production is anticipated to restart as soon as this is completed. Upon recommencement of production, the Company will assess the feasibility of adding production capacity, both in terms of investment required and in terms of logistics capacity. The latter is of importance as the capacity to transport oil out of the area seems to be near full capacity at present. The project with W. B. Osborn Oil & Gas Operations ("WBO") to develop the field located in Montague and Cooke Counties, Texas, continues to progress and add to production. The project has recently reached breakeven and Silverpoint Capital, the capital provider for the project, has only now started to recoup its investment. The way the deal is structured is that Ignis will start earning its working interest once Silverpoint has recovered its original investment plus a certain return. Even though no revenues are accruing to Ignis from this project as yet, the fact that it has reached breakeven and has started to generate a positive cash flow has created definite value to the Company. At present there are no exploration or exploitation activities at the Sherburne project as Management has decided that certain technicalities make the economic viability of the project too risky a prospect to pursue at present. The rights, however, have been retained. The Barnett Shale wells (unrelated to the WBO project) to date have proven unproductive and Management has decided to, for the time being, not engage in risky investments on this project. Capital Structure As announced recently, Ignis and the Company�s senior creditor have executed a new agreement under which the conversion price of the debentures held has been fixed at $0.03. This is the first step in the recapitalization process for the company and one management deems imperative to start building shareholder value. Without the agreement, the overhang of the convertibles would be of an uncertain magnitude, effectively rendering further investment in the Company a very tough prospect. With the agreement executed, the overhang is now quantifiable and allows for management to pursue further opportunities. As announced, the dialogue with the creditor is positive and constructive and Management expects further announcements to be made regarding the capital restructuring. New Projects The Board of Directors has deemed the Liberty Hills project, which the Company was pursuing, as not suitable for the Ignis portfolio. As a result, the Company is now in a position to actively pursue new opportunities. Ignis is in discussions on a number of fronts. With its new management structure and contacts within industry, the Company has the ability to engage the services of certain very highly regarded energy professionals to judge the merits of new projects. With the financial and business acumen of the Board, the Company is positive on the prospect of securing new and profitable projects that will create significant shareholder value. New projects will have to comply with strict criteria. There will be no wildcatting and projects with a high exploration risk will not be considered. Management prefers projects where proven reserves can be extended through targeted exploration or where new technologies can add significantly to the already established production flow. Furthermore, Management will assess the projects it currently holds a working interest in for production expansion. Geoff Evett, Chairman of the Board and CEO, stated, �We have done a lot of work these last twelve to eighteen months in restructuring the organization and have put Ignis on a new footing, enabling us to actively pursue new opportunities. We now have the capital structure, management, industry connections and links to financial partners that will enable us to do so. Furthermore, we are cash flow positive, which allows us time to analyze properly new prospects. We are confident we have been and are doing what is needed to put value into Ignis, and I look forward to informing our shareholders on a more regular basis.� About Ignis Petroleum Ignis Petroleum Group, Inc. is a Dallas-based oil and gas production company focused on exploration, acquisition and development of crude oil and natural gas reserve in the United States. The Company's management has closely aligned itself with strategic industry partnerships and is building a diversified energy portfolio. It focuses on prospects that result from new lease opportunities, new technology and new information. For further information, visit www.ignispetro.com. Safe Harbor for Forward-Looking Statements This release contains certain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995, including, without limitation, expectations, beliefs, plans and objectives regarding the potential transactions and ventures discussed in this release. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the risks inherent in oil and gas exploration, the need to obtain additional financing, the availability of needed personnel and equipment for the future exploration and development, fluctuations in gas prices, and general economic conditions.