Bonanza Oil & Gas entered into a Letter of Intent ("LOI") to purchase a 10% interest in a producing well on 160 acres with an option on an additional 800 acres, located in Garfield County, Oklahoma.
Under the terms of the LOI, the Company will purchase the interest in exchange for cash and 15 million shares of restricted stock of the Company. According to the operator of the property, there are an additional six locations, with each location having a possible two horizontal legs per well. The operator believes there are approximately 200,000 barrels of oil and four billion cubic feet of gas that are recoverable from each horizontal leg in this prospect.
"This is an exciting time for our company. We expect this acquisition, upon an acceptable closing, to increase our cash flow from operations. Bonanza expects to continue its strategy to buy currently producing wells that have potential for future growth," stated Bill Wiseman, CEO of the Company.
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