Blast Energy Services announced that its wholly-owned subsidiary Eagle Domestic Drilling Operations and Hallwood Energy, LP and Hallwood Petroleum, LLC have signed an agreement to settle the litigation between them for a total settlement amount to Eagle of approximately $6.4 million.
"This is one of two lawsuits we filed against land rig drilling customers for breach of contract. We believe this settlement with Hallwood will inject additional cash into the Company, reduce our debt obligations and allow us to focus our efforts on the remaining higher valued claim against Quicksilver Resources," said John O'Keefe, Blast's CEO.
Under the terms of this agreement, Hallwood will pay to Eagle $2.0 million in cash and issue $2.75 million in equity from a pending major financing and Hallwood has agreed to irrevocably forgive approximately $1.65 million in Eagle payment obligations effective immediately. In return, Eagle has agreed to suspend its legal actions against Hallwood for approximately six months.
Additionally, in the event Hallwood is able to secure an aggregate of $20 million in bridge financing prior to June 30, 2008, Hallwood will pay Eagle a $500,000 advance on their cash obligation. Should Hallwood be unable to complete their major financing by September 30, 2008, Eagle will immediately resume their legal actions against Hallwood and the $500,000 advance will not be credited against any future judgment or settlement amounts.
Should Hallwood successfully complete their major financing and satisfy their settlement obligations to Eagle, the parties and their affiliates will be fully and mutually released from all and any claims between them. This settlement agreement has been approved by both companies' board of directors but is subject to the approval of the Bankruptcy Court.
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