CALGARY, Nov. 26 /CNW/ - ("Sabretooth" or the "Company") (TSX: "SAB") is pleased to announce it has entered into a letter of intent (the "LOI") dated November 25, 2008 with HFG Holdings Inc. ("HFG"), a capital pool company (TSXV: HFG.P), that would create initial funding for the Company's Montney plays in Northeast British Columbia and Northwest Alberta.

Sabretooth has agreed to contribute 59 net sections of Montney petroleum and natural gas rights, a $1.0 million tie-in commitment, $1.0 million in cash as well as certain wells and seismic interpretation to HFG in exchange for 161,546,590 common shares of HFG at a deemed price of $0.20 per share. The assets contributed by Sabretooth include, inter alia, the Red Creek well at A15-01-86-22 W6M currently waiting on completion, an undrilled development well at Gordondale, undeveloped Montney petroleum and natural gas rights at Mica, Oak/Stoddart, Sinclair, Nig/Birley, Red Creek and Two Rivers as well as seismic interpretation and the Montney reserves applicable to two pre-existing vertical Montney wells at Oak. Sabretooth management has assigned a value to the assets being contributed of $32.3 million derived by among other things, an independent land evaluation effective November 17, 2008 completed by Independent Land Evaluations Inc. of $21.5 million. The recently drilled and completed horizontal well at Gordondale is not included in the transaction.

Contemporaneously with the closing of the transaction, it is intended that HFG will complete a private placement of 100,000,000 common shares issued at a price of $0.25 per share on a flow-through basis pursuant to the provisions of the Income Tax Act (Canada) for gross proceeds of $25.0 million. HFG has entered into a financing agreement with a syndicate of agents led by Dundee Securities Corporation and including Tristone Capital Inc. and Research Capital Corporation for the private placement.

Upon closing of the transaction, HFG will be a publicly traded pure Montney play company owned 61% by Sabretooth. The management team of HFG will be comprised of members of Sabretooth's current management team, thereby lending considerable Montney operational expertise to HFG, while at the same time allowing for the timely generation of multiple drillable prospects on the assets contributed and providing any requisite technical evaluation and analysis.

This transaction allows Sabretooth to effectively raise $25.0 million of capital in an extremely tight capital environment to fund the drilling and completion of its Montney assets, while at the same time allowing Sabretooth's existing shareholders the benefit of capturing the as yet unrealized value associated with Sabretooth's Montney assets through its share ownership of HFG.