Buffalo Enters Drilling Joint Venture
Buffalo Resources Corp. has executed a non-binding Letter of Intent ("LOI") with Ionic Capital Corp. of Vancouver, British Columbia in connection with a proposed Canadian drilling joint venture between Buffalo and certain investment vehicles to be formed for the purposes of participating in the Joint Venture.
This Joint Venture will allow Buffalo to exploit its large asset base and inventory of existing drilling opportunities more efficiently. Buffalo and the Participants will commit up to $40 million for the purposes of completing a drilling program on certain of Buffalo's properties over the next 12 months, allowing the Company to significantly expand the level of activity previously forecast. The Participants will pay a pro rata share (based upon the relative dollar amounts committed to the Joint Venture by the Participants and Buffalo) of all capital expenditures to earn the same working interest in the properties prior to payout, subject to a 10% gross overriding royalty payable to Buffalo. The Participants will retain 60% of that working interest after payout.
The final terms and structure of the Joint Venture will be as agreed by the parties once all the tax, corporate and securities laws issues have been reviewed in detail. Completion of the Joint Venture will be conditional upon, among other things, the execution of a definitive Joint Venture and other related agreements between Buffalo and the Participants and the closing of Buffalo's $11 million private placement unit offering.