Cano Terminates Merger Agreements with Resaca
Resaca has been informed by Cano Petroleum that Cano has terminated the previously disclosed merger agreement with Resaca.
In addition, the Company expects to release its third party June 30, 2010 reserve information prior to August 31, 2010.
Commenting on the termination of the merger agreement, J.P. Bryan, Chairman of Resaca, said, "We have received a notice from Cano that they have terminated the merger agreement with Resaca bringing an end to more than a year's effort to combine these two companies. This is a disappointment to those of us at Resaca who know this event would have been extremely beneficial to the shareholders of both companies. We developed an appreciation for Cano properties and respect for many of their personnel. Unfortunately, long delays with the SEC due to the need for two extremely detailed registration statements, difficult equity markets and a failed stock underwriting have ultimately led to the failure to conclude the transaction.
"However, just as we are disappointed by the result, we are more determined than ever to grow the assets of Resaca. We are not seeking any 'strategic alternatives', a euphemism for selling the business. We intend to grow this enterprise and the failure to conclude this combination is a setback for a moment in time and not for a lifetime.
"As of December 31, 2009, Resaca had 3P reserves of approximately 36 MMboe with a PV10 value of US $512 million and excellent defined opportunities to increase production significantly at the Cooper Jal Field and the Penwell complex. Also, we have a waterflood field study underway at one of our significant fields, which has produced some encouraging initial results that we expect to provide long-term growth opportunities for the Company.
"During this past year, we have evaluated numerous acquisition opportunities and will now pursue those we deem most advantageous for Resaca. To grow our business will require that we raise a modest sum of capital to pay the costs incurred in merger effort and give us the resources to grow Resaca's production. We shall engage in that effort immediately.
Please appreciate that whatever experience I have gained over these past 40 years in the oil business will be fully committed to growing the business of Resaca."