The first property is a 7.243% WI (NRI 5.381%) interest in the Barnes Creek field which current Gross Production is approximately 2.4 million cubic feet of gas and approximately 210 barrels of condensate per day from the L&H Partnership No. 1 well. The field covers 320 acres and is located in Allen Parish Louisiana.
The Edgerly Field is located Calcasieu Parish, LA and comprises approximately 800 acres with 5 producing completions from 4 wells. Current Gross production is about 930 barrels of oil and 1.2 million cubic feet of gas per day. The field has one development location for further production enhancement. The subsurface control is excellent as the field is covered by a 3D-seismic survey. The ownership working interest to be acquired is 11.76% with an 8.472% NRI.
The Company has agreed to pay US$4.75 million for the interests in the two oil and gas fields. The acquisition has an effective date of September 1, 2005 and completion of the acquisition is expected within 45 days and should result in an estimated cash flow of approximately $175,000 per month to the Company.
Texhoma is arranging for debt-financing, details of which will be announced when appropriate. The equity-part of the financing will be raised through private placements of shares.
An independent reserve report has been prepared by R.A. Lenser and Associates which has attributed a pre-tax, 15% discounted value of approximately US$9 million to the Proven Developed Producing (PDP) reserves of the two properties, using a $50-oil and a $8-gas price. PDP-reserves are estimated to be approximately 218,000 barrels and 570 million cubic feet of gas net to the Company. Further Proven Undeveloped reserves are available in the Edgerly field.
With this acquisition the Company has secured a significant income stream at minimum equity dilution to the shareholders.
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