Galaxy, PetroHunter Extend Closing Date on Powder River Asset Sale
Galaxy Energy Corporation and its wholly owned subsidiary, Dolphin Energy Corporation, have agreed to an amendment to the Purchase and Sale Agreement (PSA) with PetroHunter Energy Corporation, which extends the closing date to March 31, 2007, in connection with PetroHunter's efforts to obtain financing.
Marc A. Bruner, a 14.1% beneficial shareholder of Galaxy, is the 75% owner of MAB Resources, LLC which is PetroHunter's largest shareholder. In addition, Marc A. Bruner is the father of Marc E. Bruner, Galaxy's President and Chief Executive Officer and a director.
Under the terms of the PSA, which was originally signed on December 29, 2006, PetroHunter agrees to pay a total consideration of $45 million to acquire all of Galaxy/Dolphin's oil and gas working interests in Sheridan, Johnson, Converse and Campbell Counties in Wyoming, and Big Horn, Custer, Powder River and Rosebud Counties in Montana. The agreement calls for $20 million to be paid in cash and the remainder to be paid in PetroHunter common stock. Closing of the transaction will be subject to PetroHunter obtaining financing on terms acceptable to PetroHunter and approval of the extension by Galaxy's senior lenders.
As required under the PSA, PetroHunter made an initial earnest money deposit to Galaxy in the amount of $2 million. On closing of the transaction, PetroHunter will receive a credit against the purchase price for the deposit and expenses incurred by it as contract operator of Galaxy/Dolphin's properties. If the transaction does not close by March 31, 2007, the total amount of the deposit and operating expenses incurred by PetroHunter will convert to a subordinated, unsecured promissory note.
Either party may terminate the agreement if the closing has not occurred by March 31, 2007. Galaxy has filed a Form 8-K concerning the amendment to the PSA with the Securities and Exchange Commission.
Dolphin owns an average 86% working interest in 197 oil and gas wells in the Powder River Basin. Twenty-two wells are currently selling gas at an average rate of 600,000 cubic feet per day. The remaining wells are in various stages of dewatering, shut-in waiting on pipeline, or waiting to be completed.
Galaxy Energy Corporation, a development stage oil and gas exploration and production company, focuses its operations in the Powder River Basin of Wyoming and the Piceance Basin of Colorado, in addition to exploration activities in Germany and Romania. Galaxy conducts its exploration activities through two wholly owned subsidiaries, Dolphin Energy Corporation and Pannonian International, Ltd.
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