MIDLAND, Texas, April 20, 2010 (GLOBE NEWSWIRE) -- Doral Energy Corp. (OTCBB:DRLY) ("Doral" or "the Company") announced today that it has, with the approval of its Board of Directors, executed a letter of intent for the sale of all (100%) of Doral's interests in the Hanson Property oil and gas assets located in Eddy County, New Mexico to Alamo Resources, LLC ("Alamo Resources"), a private oil and gas company based in Houston, Texas. Total consideration for this transaction could reach $11.5 million, with $10 million payable at closing and an additional $1.5 million in incentive payments to Doral upon certain production milestones being met over the first 24 months. Doral will execute definitive binding agreements with Alamo Resources on or before April 30, 2010. Closing is anticipated to occur on or before June 15, 2010.
Upon execution of a mutually acceptable Purchase Sale Agreement, and a non-refundable escrow deposit of $250,000 by Alamo Resources, the Company expects to receive an additional forbearance from Macquarie Bank providing the necessary time to close the transaction. The letter of intent does allow Alamo Resources, LLC to extend the closing date to July 15, 2010 with an additional non-refundable escrow deposit of $250,000.
This transaction allows Doral to fully pay its existing debt facility while leaving the Company with a cash surplus allowing Doral Energy the potential of acquiring additional oil and gas assets within the Permian Basin. Doral Energy 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. Doral will additionally seek strategic partnerships with other partners in order to diversify potential acquisition investments as well as diversify its risk propensity.
Management Comments
E. Will Gray II, Chairman & CEO of Doral, states, "Management has worked tirelessly these past months to explore numerous financial options such as re-financing, divesting of certain oil and gas assets or even joint venturing with an industry partner in order to satisfy Doral's outstanding debt obligations to Macquarie. During this decision making process, Management met with numerous energy lenders and potential financial partners. In light of the proposed terms and conditions associated with these options, we chose this route believing it was in the best interest of our shareholders." Mr. Gray further said, "This divestiture allows Doral to satisfy all outstanding debt with Macquarie as well as all trade debt currently associated with these properties while providing the Company with a positive cash balance after the divestiture. We have been negotiating several potential producing property acquisitions and expect to use a portion of our cash surplus in order to facilitate one of these acquisitions thus potentially allowing the Company to participate in the recent increase in crude."
C. K. Cooper & Company served as financial advisor to Doral Energy in relation to this transaction.
About Doral Energy Corporation
Doral Energy Corp. (OTCBB:DRLY) is an oil and gas exploitation and production company headquartered in Midland, Texas. Doral Energy Corp.'s strategy is to grow a portfolio of under-developed production and exploitation assets with the potential for generating near-term increases in existing production through operational improvements, and longer-term development of proved undeveloped reserves by infill drilling. Doral focuses on identifying acquisitions that generate immediate cash flow from production, but which also have strong proved developed non-producing and proved undeveloped reserves that can be tapped for significant growth. The prolific Permian Basin of Texas and New Mexico is the geographic region of focus for the Company's future acquisition activity. Shareholders and investors are encouraged to visit Doral Energy's website at www.DoralEnergy.com for more information.
Forward Looking Statements
This news release contains forward-looking statements that are not historical facts and are subject to risks and uncertainties. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined, and assumptions of management. Forward looking statements are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "aims", "potential", "goal", "objective", "prospective", and similar expressions or that events or conditions "will", "would", "may", "can", "could" or "should" occur. Information concerning oil or natural gas reserve estimates may also be deemed to be forward looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed. In particular, there is no assurance that Doral will be able to re-finance its current credit facility or acquire any future properties.
Actual results may differ materially from those currently anticipated due to a number of factors beyond the reasonable control of the Company. It is important to note that actual outcomes and the Company's actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially include misinterpretation of data, inaccurate estimates of oil and natural gas reserves, the uncertainty of the requirements demanded by environmental agencies, the Company's ability to raise financing for operations, breach by parties with whom the Company has contracted, inability to maintain qualified employees or consultants because of compensation or other issues, competition for equipment, inability to obtain drilling permits, potential delays or obstacles in drilling operations and interpreting data, the likelihood that no commercial quantities of oil or gas are found or recoverable, and our ability to participate in the exploration of, and successful completion of development programs on all aforementioned prospects and leases. In addition, the Company has not yet entered into binding agreements with Alamo Resources LLC or Macquarie Bank Limited and there are no assurances that the Company will do so. Additional information on risks for the Company can be found in the Company's filings with the U.S. Securities and Exchange Commission.