The loan carries interest at 13% and requires principal payments of approximately $708,000 per month. The first installment will be due May 1, 2008.
Each of the four directors of the Company personally guaranteed the payment and performance of the Company under the loan agreement. In exchange for these guarantees, the Company agreed to provide each guarantor with an indemnification of liabilities incurred by each director under such guarantees.
In addition, on October 25th, the Company entered into a consulting agreement with Portland Worldwide Investments Limited ("PWI"), providing for total consideration to PWI of approximately $935,000 over an 18-month period and certain consulting services by PWI to the Company in connection with the further development of its energy assets.
CEO & President Mark Western commented: "The group of assets in Galveston Bay -- of which we own 75 % -- were financed by Goldman Sachs on the premise that we would raise additional funds to begin a work-over and drilling program to increase production from the fields. Based upon our ongoing reserve analysis and early results from our fully integrated field study, we believe there are significant additional reserves in these properties, both at current production depths, and at deeper levels down to 20,000 feet."
Mr. Western went on to say: "With the Tri Star agreement in place, we firmly believe that we can now significantly increase our current Galveston production average from approximately 1,100 barrels of crude oil equivalent per day, to a much greater number. We are also excited about our relationship with PWI and believe it will significantly contribute to our identification of strategic energy opportunities and relationships."
Houston-based Tekoil & Gas Corporation is a technology-driven company focused on the development, acquisition, stimulation, rehabilitation and asset improvement of small to medium-sized oil and gas fields. The combination of energy fuel reserves and advanced yield technologies are anticipated to generate value for Tekoil and its stakeholders, as the company targets above-average growth in the 21st century energy sector.
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