Doral to Acquire Acreage in Nm.
Doral has entered into a Letter of Intent to acquire 6,800 acres of operated producing oil and gas assets within Southeastern New Mexico for a total purchase price of $1,800,000. The acquisition consists of 15 leases currently producing approximately 54 BOPD (8/8ths) with Working Interests ranging from 37.9%-100% with associated Net Revenues ranging from 32.3%-87.5%. Current production is from the Permian Age, San Andres Formation, which produces at a depth of approximately 4,100 feet. This acreage sits adjacent to other San Andres production and offers Doral the ability to explore the possibility of both down-spacing, to exploit un-drained acreage, as well as to stimulate current producers in order to potentially increase production.
Management expects to enter into a definitive Purchase Sale Agreement on or before June 4, 2010 with an expected closing date of June 30, 2010. Doral intends to utilize a portion of its cash surplus from the closing of its Hanson Energy divestiture to fund this transaction.
E. Will Gray II, Chairman & CEO of Doral, stated, "Management is pleased to announce to shareholders the Company's intent to acquire new reserves within the Permian Basin. We will be able to make this transaction with cash on hand, once our current divestiture has closed, and remain initially unleveraged on this acquisition. The ability to have no bank debt with cash on hand will be a strong positive for moving Doral into the next phase of its life-cycle."
Mr. Gray further stated, "It has been a difficult year for Doral but while many of our competitors were either forced into bankruptcy or foreclosed upon, Management has been able to position Doral from a potentially negative situation into one that remains to be potentially rewarding. It is this optimism that drives Management in its efforts in building an organization that can deliver future positive earnings as well as continue to acquire under-valued producing oil and gas assets within the Permian Basin."