Pioneer Gives Update on Going Private and POGO Option
Pioneer Oil and Gas (OTC Bulletin Board: PIOL) announced that it had mailed to all shareholders of record, as of August 4, 2005, proxy materials requesting approval of a 2000-1 reverse stock split and subsequent purchase of all fractional shares for $1.50 in order to allow the Company to deregister as a fully reporting company as of September 26, 2005 the date of the repurchase of fractional shares.
The Company is deregistering in order to reduce substantial compliance costs associated with the Sarbanes Oxley legislation. The Company had previously announced its intent to do so in a prior news release on May 5, 2005; and the Company filed a DEF 14A definitive proxy statement with the SEC on July 28, 2005.
The price of $1.50 per share is based on an independent valuation of the Company at $1.07 per share and the market value of the stock during the period leading up to the decision to go "private" under the SEC definition. A significant part of the valuation by Gate-Way Capital, Inc., the independent valuation company, was based on POGO Producing Company exercising its option to purchase 35,000 acres from Pioneer and its partners for $275 per acre. If the exercise of the option is completed Pioneer will receive $3,609,375.
POGO Producing Company has verbally informed Pioneer that there is a strong likelihood that the option may not be exercised but POGO has not waived any rights to exercise the option, which expires in early October 2005. Pioneer believes that it can still sell this acreage to other parties who are interested at a similar price even if POGO does not exercise the option. However, the Company felt it important to notify all shareholders that POGO may not exercise its option.
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