Resaca Acquires Workover Rigs, Other Operating Assets from PBWS

Resaca has reached agreement with Permian Basin Well Services, LLC ("PBWS") to acquire a number of workover rigs, reversing units and related assets for a consideration of $1,594,000, to be satisfied by the issue of 3,320,250 new shares of common stock in the Company. PBWS is a wholly-owned subsidiary of Torch Energy Advisers, Inc. ("TEAI"), a major shareholder in the Company and controlled by J.P. Bryan, the Company's Chairman. Accordingly, the transaction is a related party transaction under the AIM Rules.


As highlighted in the Company's AIM admission document of July 14, 2008, PBWS has, since Resaca's formation in 2006, provided approximately 40-60% of Resaca's workover and reversing unit services. The equipment has been provided to Resaca on a priority basis and the hourly rates charged have been in line with industry rates. Resaca has, however, concluded that there are economic and operational benefits to be gained from owning and operating the equipment, rather than renting from PBWS.

Assets to be acquired

Pursuant to the terms of the agreement between Resaca and PBWS, Resaca will acquire three mobile workover rigs, two reversing units and related power swivels, fishing tools, other ancillary tools and equipment, vehicles, trailers, construction equipment and spare parts together with an office building, a shop and a yard in Odessa, Texas. Resaca plans to vacate the premises it currently leases in Odessa when its lease expires at the end of the calendar year and occupy the property acquired from PBWS. The operating equipment and the property to be acquired have been independently valued and the purchase price reflects the independently appraised values.

Resaca will also hire some PBWS employees to operate the workover rigs.

Agreement terms

The aggregate purchase price for the equipment and property is $1,594,000, which will be satisfied by the issue of 3,320,250 new Common Shares, representing approximately 3.5 percent of the enlarged issued share capital of the Company. Immediately following issue, the new Common Shares will be transferred to Torch E&P Company, another subsidiary of TEAI.

The number of Common Shares was determined by dividing the Transfer Price by US $.48, which reflects the July 6, 2007 closing stock price on the AIM market of the London Stock Exchange of 29.5 pence per share, converted at an exchange rate of 1.627. This price reflects an approximate 12 percent premium over the trailing 30 day price of the Common Shares as of July 6, 2007.

The independent directors of Resaca, having consulted with Seymour Pierce, Resaca's nominated adviser, consider the terms of the agreement to be fair and reasonable insofar as shareholders in Resaca are concerned.

Following the issue of the new Common Shares, TEAI will control 15,867,063 Common Shares, representing approximately 16.6 percent of the enlarged issued share capital of the Company and J. P. Bryan will be interested in 1,591,084 Common Shares (1.7 percent.)

Application has been made for the 3,320,250 new Common Shares to be admitted to trading on AIM and admission is expected to occur on Monday, July 13, 2009.

The acquisition is also conditional upon it being ratified by stockholders, which will be sought at the Company's next Annual General Meeting.