Galaxy Energy Provides Financing and Operational Update
Galaxy Energy Corporation reports that, pursuant to its business plan as submitted to the American Stock Exchange, it has closed a $2.5 million financing. The Company also provided an update on its activities in both the Piceance Basin in Colorado and the Glantal Project in Germany.
Completion of $2.5 million financing
The Company has closed a $2.5 million financing with institutional and other accredited investors for the private placement of Subordinated Convertible Debentures.
The Debentures are subordinated to the Company's previous senior financings, have a 30-month maturity, which will extend under the terms of the financing until all of the Company's senior debt has been retired, accrue interest at 15% per annum and are payable at maturity. In the event the Debentures are retired at maturity, the holders are entitled to an additional payment equal to the sum of 25% plus .75% for each month (or part thereof) in excess of 30 months that the Debentures have remained outstanding. The Debentures are convertible into 1,602,564 shares of common stock based on a conversion price of $1.56 per share. In addition purchasers of the Debentures received five-year warrants which allow the holders to purchase 480,769 shares of common stock at $1.60 per share.
The proceeds from the financing will be used to reduce debt as well as for other corporate purposes.
The Piceance Basin
The Company controls approximately 6,000 (1,500 net) undeveloped acres in the Piceance Basin through its wholly owned subsidiary, Dolphin Energy Corporation and in partnership with Exxel Energy Corp.
The Company currently has drilling or completion operations underway on four of its wells in the basin.
In the Biscuit Ranch 10-31D well, all completed zones within the overall interval from 7294' to 8462' have now been commingled, 2 3/8" production tubing has been installed, and fracture treatment fluids have been partially recovered while flaring gas coming from the well. Flow periods during the next two to three weeks will force the remaining treatment fluids from the completed zones and the measurement and announcement of producing gas rates from the well will be made after this occurs. The Company has a 25% working interest in this well.
Completion activities are underway in the Mulvihill 15-32D well, with the first interval having been perforated. The fracture treatment for this interval is being designed based on initial pump-in tests. The Company will have an 18.75 to 25% working interest in this well, depending upon a participation election by an unrelated working interest owner.
The Purkey Ranch 13-31B well is currently drilling near total depth after experiencing some rig mechanical problems for a few days last week. Finalization of the drilling, completion of open hole logs and the installation of production casing is expected this week. The Company has a 25% working interest in this well.
The Company is currently rigging up a drilling rig at the site of the BR 03-03B Biscuit Ranch well. Drilling of this well will commence as soon as rigging up is complete. The Company has a 25% working interest in this well.
In addition to the interests owned in these four operated wells, the Company through Dolphin has varying working interests in additional non-operated wells. These non-operated wells include one producing well operated by Williams Production RMT Company, two wells operated by Bill Barrett Corporation which are in the completion phase, as well as one well in the completion and evaluation phase, which is operated by Antero Resources Company.
Koller Workover and Drilling GmbH's completion rig is expected to arrive at the Glantal-1 well site today if no delays are experienced. This rig will be used to test for the presence of gas in four initial zones of the well, which is the first well drilled by Pannonian International Ltd, a wholly owned subsidiary of the Company and its partners in the Glantal Gas Project.
Galaxy Energy Corporation, a development stage oil and gas exploration and production company, is focusing on acquiring and developing coalbed methane in the Powder River Basin of Wyoming and Montana and other unconventional natural gas properties in the Piceance Basin of Colorado, in addition to exploration activities in Germany and Romania. The Company conducts its exploration activities through two wholly owned subsidiaries, Dolphin Energy Corporation and Pannonian International, Ltd.
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