Infinity Energy signs pact with Forest Oil

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.