A Houston, Texas independent petroleum engineering firm, H. J. Gruy & Associates, evaluated TDC Energy's net proved developed producing and proved non-producing oil and gas reserves, as of July 1, 2004, at $63,899,000 or, when future production is discounted to present date at 10% per annum, $52,127,000. Net proved undeveloped revenues were evaluated at $17,907,000 or $11,707,000 at a 10% per annum discount rate after subtracting approximately $15 million in drilling, development and production costs. The wells are currently producing natural gas to TDC Energy's net revenue interest at the rate of 14 million cubic feet a day.
The purchase price for the outstanding stock of TDC Energy is $8 million and 1 million shares of SIOR common stock.
Lloyd added that TDC Energy is burdened with approximately $16.7 million in bank debt that Superior proposes to pay off. Retiring the bank debt will eliminate principal and interest payments to the bank, which payments were $7.7 million during the last seven months of 2003 and $11.9 million during the first eight months of 2004.
Dave Gibbs, President of TDC Energy states: "We are excited about the opportunity to combine TDC's assets, opportunities, and successful business model in the Gulf Coast with the financial strength of Superior. We believe the combined company will be well positioned for rapid growth."
Closing of the transaction is subject to Superior's raising the funds needed to purchase the ownership interests in the LLC.
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