Infinity Energy Resources, Inc’s wholly-owned Infinity Oil & Gas of Wyoming, Inc. subsidiary entered into a definitive Asset Purchase and Sale Agreement with Forest Oil Corporation ("Forest Oil") on December 27, 2007.

Under the terms of the Asset Purchase and Sale Agreement, Infinity-Wyoming has agreed to sell, and Forest Oil has agreed to purchase, essentially all of Infinity-Wyoming's producing oil and gas properties in Colorado and Wyoming, along with 80% of the working interest owned by Infinity-Wyoming in undeveloped leaseholds in Routt County, Colorado and Sweetwater County, Wyoming, for $17.4 million in cash, subject to ordinary and customary adjustments from the effective date of October 1, 2007 through the date of closing, which is anticipated to occur on or about January 7, 2008. The closing of the Asset Purchase and Sale Agreement is contingent upon the satisfaction of certain customary closing conditions.

Infinity currently expects the adjusted proceeds from the sale to be approximately $16 million. Sale proceeds will be utilized to (1) retire approximately $12 million in outstanding bank debt; (2) settle open oil and gas commodity derivative liabilities of less than $2 million; and (3) pay accrued interest and forbearance fees and prepay interest totaling approximately $0.8 million to Amegy Bank N.A. The remainder of the sale proceeds, along with amounts to be received from Forest Oil under the Farmout and Acquisition Agreement described below, are anticipated to be reserved for the payment of certain accounts payable and accrued liabilities.

"We are very pleased to announce this agreement to sell our Colorado and Wyoming producing properties to Forest Oil Corporation," stated Stanton E. Ross, Chairman and Chief Executive Officer of Infinity Energy Resources, Inc. "Not only will the transaction allow Infinity to significantly reduce its bank debt, but we will retain 100 percent ownership of the Piceance Basin and Labarge exploratory properties in the Rocky Mountains and have retained the right to a 20 percent working interest in any future wells that Forest may drill in the Sand Wash Basin on the exploratory acreage sold."

Also on December 27, 2007, Infinity Oil and Gas of Texas, Inc. ("Infinity-Texas"), a wholly-owned subsidiary of Infinity, entered into a Farmout and Acquisition Agreement for certain oil and gas leaseholds owned by Infinity-Texas in Erath County, Texas. The Farmout and Acquisition Agreement provides that Forest Oil will operate and earn a 75% interest in the spacing unit for each well in a ten-well drilling program. If Forest Oil completes the drilling program, Forest Oil will earn a 50% interest in the approximate 31,000 remaining undeveloped net acres and existing Erath County infrastructure owned by Infinity. The drilling obligation begins no later than March 15, 2008. Infinity Texas retains 100% of its interest in all currently completed wells and 100 acres surrounding each currently completed well.

"We are delighted that Forest Oil has agreed to joint venture with Infinity-Texas in the development of a significant portion of our acreage in the Barnett Shale play in Erath County," noted Ross. "The acreage involved in the joint venture is largely undeveloped, and Infinity will retain full ownership of the 24 wells we have drilled in the northern portion of Erath County, along with our acreage and wells in Comanche County, Texas. We are optimistic that our operating cash flows will be sufficient to service our remaining bank debt and future corporate overhead expenses."

"The sale of the Rocky Mountain properties and farmout of the Texas Erath acreage to an experienced and well-qualified operator completes the first part of a business plan designed to resolve Infinity's liquidity problems and bring the Company back to a growth mode," stated Dr. Renato Bertani, Infinity's Chief Operating Officer. "The transactions were structured not only to raise the proceeds necessary to substantially reduce the Company's debt but also to afford Infinity a participation in the upsides that we have identified in the undeveloped acreage of both areas."

Tags: Forest Oil Corporation, Infinity Energy Resources