Doral Energy, an oil and gas exploitation and production company, has executed a binding purchase sale agreement for sale of all of its interests in the Hanson Property oil and gas assets located in Eddy County, New Mexico to Alamo Resources.
Total consideration for this transaction is expected to reach $11.5m, with $10m payable at closing and an additional $1.5m in incentive payments to Doral upon certain production milestones being met over the first 24 months.
As part of the agreement, a non-refundable escrow deposit of $250,000 has been made in accordance with the terms mutually accepted by both parties. Closing is anticipated to occur on or before June 15, 2010, with a clause to extend the closing date to July 15, 2010, with an additional non-refundable escrow deposit of $250,000.
Additionally, Doral Energy has received a forbearance from Macquarie Bank until June 15, 2010, in order to provide adequate time to close the transaction. This transaction allows Doral to fully pay its existing debt facility while leaving the company with a cash surplus allowing Doral the potential of acquiring additional oil and gas assets within the Permian Basin.
Doral will remain an oil and gas operator within the state of New Mexico and seek to acquire under-valued assets within this region of the Permian Basin as well as within Texas. The company will additionally seek strategic partnerships with other partners in order to diversify potential acquisition investments as well as diversify its risk propensity.