Doral said that total consideration for this transaction will reach approximately $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.
The company will execute definitive binding agreements with Alamo 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, Doral expects to receive an additional forbearance from Macquarie Bank providing the necessary time to close the transaction. The LOI does allow Alamo 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 it 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.
