Paxton Energy, Inc., an energy turnaround company engaged in the acquisition, exploration, development and drilling of oil and natural gas properties, announced that on April 29, 2011, it entered into an agreement to acquire Virgin Oil Company, Inc. of Louisiana.
Virgin was incorporated in March of 1996 for the purpose of oil and gas exploration, development and production. Since that time, Virgin has successfully acquired interest in and developed multiple oil and gas producing properties with significant proven and probable reserves.
Under the terms of the Agreement, the shareholders of Virgin will receive an aggregate of 70,000,000 shares of Paxton common stock in exchange for all of the issued and outstanding shares of Virgin common stock. The closing of the Agreement is subject to the satisfaction of a number of conditions precedent, including but not limited to the completion of an audit of Virgin, in accordance with PCAOB standards and SEC guidelines; receipt of an updated third party engineering of Virgin, completion of a financing by Paxton, and approval of the Virgin bankruptcy judge, as Virgin is currently a debtor in possession under a Chapter 11 proceeding. Upon closing, Virgin will be a wholly owned subsidiary of Paxton and Paxton anticipates changing its name to Virgin Oil Company, Inc.
The most recent third-party reserve report prepared for Virgin, dated May 13, 2010, by James F. Hubbard (whose work for Virgin goes back to the 1990s under S.A. Holditch & Associates, which became Schlumberger Technology Services), calculates Virgin's net proven reserves at 6.4 MM boe (million barrels of oil equivalent) in addition to net probable reserves at 1.8 MM boe.
Virgin currently owns interests in multiple active leases in the Gulf of Mexico, covering approximately 50,000 acres. All are less than 100 miles from the Louisiana shoreline in water depths of between 40 and 200 feet. Virgin also owns an interest in one active on-shore lease located in the Empire Field in Plaquemines Parish, Louisiana.
In September 2008, Hurricane Ike caused significant damage to Virgin's existing operations. While past hurricanes resulted in only a few days of shut-down time on the offshore properties, Ike's damage to these pipelines took several months to repair and in Virgin's case production was not re-established on its properties until June 2009. This ten month down-time resulted in Virgin's creditors filing an involuntary bankruptcy petition against Virgin under Chapter 7 of the Bankruptcy Code, which was subsequently converted into a Chapter 11 proceeding.
"We consider the merger with Virgin to be a great opportunity for Paxton's shareholders," said Charles F. Volk, Jr., Chairman and CEO of Paxton. R. Fulton (Tony) Smith, Jr., Director, President and CEO of Virgin stated, "This merger will allow Virgin to ramp up oil production from existing wells and move forward on plans for new well drilling while growing revenues and achieving profitability."
Paxton engages in the acquisition, exploration, development and drilling of oil and natural gas properties. Paxton is an energy turnaround company whose strategy is to acquire cash flow producing properties with proven reserves, develop the fields by reworking existing wells and drilling new wells. Paxton was founded in 2004 and is based in Stateline, Nevada.
Virgin is a Louisiana-based independent exploration and production company engaged in the acquisition of exploratory leases and producing properties, secondary enhanced oil recovery projects, exploratory drilling, and production of oil and natural gas in the United States.
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