Treaty Says No Company Stock Used to Close Kansas Acquisition
Treaty Energy has responded to inquiries related to its announcing on October 8, 2009 the signing of an agreement to acquire 54 oil and gas leases in Kansas.
Treaty Energy has received inquiries regarding the structure of the Kansas oil and gas asset acquisition, specifically as to whether any part of the acquisition transaction employed the use of stock.
Randall Newton, Treaty Energy's CEO, stated, "There will be no company stock used to close this acquisition. The acquisition is structured as 50% cash for which Treaty is using bank financing. The balance of the purchase will be paid as a percentage of gross oil sales, not to exceed 5%, similar to a royalty payment. The overall purchase price is in the upper 7 figures."
The company estimates that completion of the payoff to the second position will likely occur over 4 to 5 years, but could be sooner if secondary recovery efforts hit the numbers projected by the petroleum engineer hired by Treaty Energy.
Approximately one-third of the purchase price is hard assets, based on liquidated values.
Treaty has received the reserve report from the petroleum engineer. This report was imperative to completing the bank financing. All information received in the reserve report was equal to or superior to the numbers supplied by the seller prior to execution of the purchase agreement.
Mr. Newton stated further, "As a binder of the purchase agreement a $300,000 non-refundable earnest deposit has been made to an escrow agent."
Updates will be provided as necessary to keep shareholders and other interested parties informed on the progress of exciting new opportunities for Treaty Energy Corporation.