Blugrass has acquired a significant oil and gas lease covering 4,807 acres located in the Permian Basin in Crockett County, Texas. The land position is geologically on trend with several giant natural gas fields currently under production by major oil and gas companies, and is also close to pipeline gathering and treating facilities.
Acquisition of the lease, representing an 87.5% working interest, includes full access to complete three-dimensional (3D) seismic imaging of the lands under lease. Using this seismic imaging, a team of geophysicists has identified a number of drilling locations in the Canyon Sands, Strawn and Ellenburger formations.
Acquisition of the lease also includes an option to participate as a working interest partner in drilling programs sponsored on an additional 9,850 acres. Located in close proximity to the Blugrass lease, this acreage has also benefited from complete 3D seismic imaging underwritten by Petro Grande, LLC, which holds the additional acreage.
The Board of Directors of Blugrass unanimously approved the acquisition. Upon closing, Blugrass issued to Dallas, Texas-based Petro Grande, LLC, shares of Blugrass common stock comprising approximately 77% of the outstanding shares, plus a promissory note in the amount of $3.5 million.
Blugrass company headquarters have moved to Dallas, Texas, with a new senior management team: Abram Janz as President and CEO, and Larry Maguire as Executive Vice President and CFO. Both executives will serve on the Board of Directors, and are seasoned finance and oil & gas industry veterans.
The company will soon be changing its name to Rio Grande Petroleum Inc., to reflect the new focus of the company's energies and resources.
Commenting on the acquisition, CEO Mr. Janz stated, "With the closing of this acquisition, Blugrass is poised to move forward with a scaled drilling and development program to explore the Canyon Sands, Strawn and Ellenburger formations. We view this drilling program to be a resource play, since the Canyon Sands and Strawn formations in particular, are highly productive in the area of the lease."
Mr. Janz continued, "I can speak for the entire management team: we have aggressive goals for building shareholder value and putting in place top notch corporate governance practices. And we welcome a continuing dialogue with the Blugrass shareholder base as we move forward with these aggressive plans."
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