Eagleford has entered into an agreement to acquire Dyami at a transaction value of US $4.1 million. As consideration for the Transaction Eagleford Energy agreed to issue US $3,140,000 of units of the Company at US $0.90 per unit in exchange for 100% of the issued and outstanding membership interests of Dyami Energy and assume US $960,000 of Dyami Energy debt by way of a secured promissory note (the Note). Each unit is to be comprised of one common share and one-half a purchase warrant (the "Units"). Each full warrant is exercisable into one additional common share at US $1.00 per share for a period of four years from the date of issuance (the "Units"). The number of Units to be issued is subject to certain working capital adjustments at closing. The Note bears interest at 6% per annum, is secured by the leases (as defined below) and is payable on December 31, 2011 or upon the Company closing a financing or series of financings in excess of US $4,500,000.
The assets of Dyami Energy include a 75% working interest (56.25% net revenue interest after royalties) before payout which reduces to a 61.50% working interest (46.125% net revenue interest after royalties) after payout of $12,500,000 of production in a lease comprising approximately 2,629 gross acres of land in Zavala County, Texas (the "Matthews Lease") and working interests ranging from 90% to 97% (net revenue interests after royalties ranging from 67.5% to 72.75%) in a lease comprising approximately 2,637 gross acres of land in Zavala County, Texas (the "Murphy Lease") (collectively "the Leases"). Eagleford Energy previously announced the acquisition of a 10% working interest (7.5% net revenue interest after royalties) before pay out which reduces to a 7.5% working interest (5.625% net revenue interest after royalties) after payout of $15,000,000 of production in the Matthews Lease.
The Leases are located in Zavala County which is part of the Maverick Basin of Southwest Texas and downdip from the United States Geological Studies north boundary of the Smackover-Austin-Eagle Ford total petroleum system.
Eric Johnson, VP Operations at Dyami Energy stated, "We believe that both the Matthews Lease and the Murphy Lease are highly prospective for hydrocarbons in the Eagle Ford shale formation as well as other formations. The Matthews Lease is surrounded by Petrohawk's Red Hawk block where Petrohawk has recently announced initial production of 355 barrels a day of oil from a horizontal well drilled on its Mustang Ranch "C" #1H location. The Murphy lease is approximately 11 miles northeast of Chesapeake's recently announced initial production of 930 barrels a day from its Traylor North 1-H well."
Johnson further stated, "We have logs that show 380 feet of Upper and Lower Eagle Ford shale on our Matthews Lease of which approximately 160 feet is the organically richer lower Eagle Ford. Also, previous engineering reports indicate that the San Miguel formation contains 70 million barrels of heavy oil in the San Miguel D Sands and another 80 million barrels of heavy oil in the San Miguel A,B,C, Sands all within the bounds of our Matthews Lease."
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