Doral Energy has executed a letter of intent for the sale of fifty percent (50%) of Doral's interests in its oil and gas assets located in Eddy County, New Mexico to Alamo Resources, LLC. Total consideration for this transaction could reach $8.875 million, with $5.875 million payable at closing and an additional $3.00 million in incentive payments to Doral over the first 36 months predicated on the achievement of certain project production goals.
Doral Energy will retain operatorship of the project. Doral expects to execute definitive binding agreements with Alamo Resources within the next few weeks, with closing anticipated to occur on or before March 1, 2010. Doral and Alamo Resources plan to jointly develop the Eddy County properties, including both the maximizing of production from existing wells and the drilling of infill proved undeveloped locations. Doral also announced that it is in negotiations with Macquarie Bank Limited to further extend the current forbearance, which was set to expire Friday, January 29, 2010, for an unspecified period of time to further accommodate the closing by and between Doral and Alamo Resources. Doral Management has been in constant communication with Macquarie Bank Limited and does not foresee any potential obstacles to receiving such an extension of the current forbearance.
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