GFCI Grifco International Inc (CE)

Grifco International, Inc. (Pink Sheets: GFCI) announced toady that it has agreed to spin off its Precision Drilling & Exploration, Inc. (�PDEI�) subsidiary to Universal Energy Resources, Inc. (�UERI�) in consideration of receiving a warrant stake in the Net Royalty Interest or N.R.I. on gas leases located in Crockett County, Texas. UERI is an independent private company formed in August 2006 by Jim Dial to act as the operating manager and general partner of gas leases under option in Crockett County, Texas, and elsewhere. UERI will operate at arm's length from GFCI in order to protect GFCI�s shareholders and assets from the liabilities inherent in the drilling and exploration industry. As compensation to its shareholders for the asset separation of PDEI, all GFCI shareholders of record as of close of business 5 p.m. (PST) on December 25, 2006, will be issued callable warrants entitling each warrant holder the right, but not the obligation, to convert into a series of preference drilling participation shares of PDEI, as follows: Series A Preference Drilling Participation Shares: All GFCI shareholders as of the Record Date will be issued a total of 20,000,000 two-year warrants converting on a 1:1 basis into Series A Preference Drilling Participation Shares of PDEI at a price of $.20 per warrant. Series A Preference Drilling Participation Shares entitle the owner to a mandatory dividend of 33 1/3% on the Net Royalty Income from gas production realized on a total of 10 certain gas leases in Crockett County, Texas. Warrant Holders must convert in minimum traunches of $400,000 per gas well to be spudded. Series B Preference Drilling Participation Shares: All GFCI shareholders as of the Record Date will be issued a total of 20,000,000 three-year warrants converting on a 1:1 basis into Series B Preference Participating Drilling Shares of PDEI at a price of $.25 per warrant. Series B Preference Participating Drilling Shares entitle the owner to a mandatory dividend of 33 1/3% on the Net Royalty Income from gas production realized on a total of 10 certain gas leases in Crockett County, Texas. Warrant Holders must convert in minimum traunches of $500,000 per gas well to be spudded. Series C Preference Drilling Participation Shares: All GFCI shareholders as of the Record Date will be issued a total of 20,000,000 four-year warrants converting on a 1:1 basis into Series C Preference Participating Drilling Shares of PDEI at a price of $.30 per warrant. Series C Preference Participating Drilling Shares entitle the owner to a mandatory dividend of 33 1/3% on the Net Royalty Income from gas production realized on a total of 10 certain gas leases in Crockett County, Texas. Warrant Holders must convert in minimum traunches of $600,000 per gas well to be spudded. The warrants will be issued pursuant to Rule 144 but they along with the Series A, B and C Preference Participating Shares upon conversion will be subject to a registration rights agreement. Upon registration, the warrants will become �callable� upon 45-day advance written notice. Any warrants that are not registered become �free trading� in two years pursuant to Rule 144K. The Series A, B and C Preference Participating Shares upon registration will be qualified for trading on a secondary market such as the Pink Sheets or OTCBB. GFCI shareholders as of the Record Date will be notified in writing as to the number of warrants they are entitled to along with contact information regarding the warrant agent. A warrant agent will be designated at the time of issuance of the warrants. The warrant agent will be paid its customary fees and expenses at the time of exercise of the warrants or registration, whichever is earlier. Shareholders who have their GFCI shares in �street name� and have designated themselves with their broker on the OBO list will be notified by their broker as to their entitlement to the warrants. Jim Dial, President of GFCI, stated, �We believe that the warrant compensation package lets our shareholders participate within the commercialization of the gas leases under option in Crockett County, Texas, with significant upside potential." The Crockett County, Texas, gas leases are located in the Permian Basin, which is the sixth largest proven petroleum-producing region in the world ahead of the prolific North Slope Alaska reserves. Based upon our review of historic drilling logs, geologist reports, and other anecdotal information available, we believe that each well is capable of producing in excess of $3,000,000 in N.R.I. during its life. About Grifco International, Inc. Grifco International is a leading provider of oil and gas services equipment, specializing in the conception, architecture, and development of tools for the coil tubing, wire line, and snubbing industries throughout the United States, China, Mexico, South America, the Middle East and Africa. Grifco holds and owns design rights and manufacturing facilities for producing more than 6,000 products for the oil and gas industry with more than 150 clients, boasting the biggest names in the business, including Halliburton, Exxon Mobil Corp., and Schlumberger. For more information, please visit: www.grifco.org. Safe Harbor Act The statements contained in this news release include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those forward-looking statements as such statements involve risks and uncertainties that can impact the delivery of, meeting of, or exceeding of such expectations.