Doral Energy has executed a binding Purchase Sale Agreement for the sale of all (100%) of Doral's interests in the Hanson Property oil and gas assets located in Eddy County, New Mexico to Alamo Resources. Total consideration for this transaction could reach $11.5 million, with $10 million payable at closing and an additional $1.5 million in incentive payments to Doral upon certain production milestones being met over the first 24 months. As part of the Purchase Sale Agreement, a non-refundable escrow deposit of $250,000 has been made in accordance with the terms mutually accepted by both parties. Closing is anticipated to occur on or before June 15, 2010 with a clause to extend the closing date to July 15, 2010 with an additional non-refundable escrow deposit of $250,000.
Additionally, Doral Energy has received a Forbearance from Macquarie Bank until June 15, 2010 in order to provide adequate time to close the transaction. This transaction allows Doral to fully pay its existing debt facility while leaving the Company with a cash surplus allowing Doral Energy the potential of acquiring additional oil and gas assets within the Permian Basin. Doral Energy will remain an oil and gas operator within the State of New Mexico and seek to acquire under-valued assets within this region of the Permian Basin as well as within Texas. Doral will additionally seek strategic partnerships with other partners in order to diversify potential acquisition investments as well as diversify its risk propensity.
E. Will Gray II, Chairman & CEO of Doral, stated, "Management is pleased to have worked closely with Alamo Resources during these past weeks to come to an agreement with respect to the Purchase Sale Agreement. This divestiture will allow Doral Energy the financial freedom to begin the process of re-building Doral's reserves while taking advantage of Doral's proven ability to locate under-valued assets within the Permian Basin." Mr. Gray further states, "As mentioned in our previous press release to shareholders, management is actively reviewing several producing oil and gas acquisition targets, within the Permian Basin. These acquisition targets comply with Doral's strategic exploitation model consisting of acquiring low risk, under-producing oil and gas assets. This growth model has been utilized by multiple successful production companies for decades within the Permian Basin which Doral will seek to emulate once our current divestiture is complete."
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