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Micro-Cap Oil & Gas Firm Acquires 6,800 Acres of Producing Oil & Gas Assets
By: AllPennyStocks.com News
June 15, 2010
It looks to be a busy summer in the oil patch, with drilling activities vying for attention with merger-and-acquisition activity, and companies trying to expand their holdings beyond their immediate reach.
In the middle of the month of June, a company based, appropriately in Midland, Texas made a bit more noise on the acquisition front. Doral Energy Corp. (OTCBB:DRLY) announced it had entered into a definitive purchase and sale agreement to acquire 6,800 acres of producing oil and gas assets within southeastern New Mexico for a purchase price of $1.7 million.
The acquisition consists of 15 leases producing approximately 54 barrels of oil per day with working interests ranging from 37.9%-100% with associated net revenues ranging from 32.3%-87.5%. The deal is set to close June 30.
DRLY's strategy is to build shareholder value by generating near-term cash flow as an oil and gas exploitation company. By identifying and leveraging established but under-exploited producing assets with strong proven developed reserves, the Company can increase the value of the assets and generate very attractive returns on capital investment, by buying up producing properties that are operating below their potential, either due to outdated technology, failure to keep up with maintenance required for optimal production, or lack of access to growth capital to conduct new drilling on proven undeveloped reserves.
Doral focuses on acquiring producing fields and exploration plays in the Permian Basin of Texas and New Mexico. The Permian Basin has generated a total of 30 billion barrels of oil (BOE) equivalent in over 80 years as a major force in U.S. oil and gas production. The basin contains 22% of remaining U.S. oil reserves, and continues to be an area of vibrant activity amongst major energy companies, independents, and even small “Mom and Pop” operators. The Permian Basin is expected to continue playing a very significant role in U.S. energy production for many years to come.
DRLY’s initial production project is the 7,800-acre Eddy County Properties in New Mexico on the western end of Permian. The Company has a 97.5% average working interest and a 76% average net revenue interest in 66 leases in Eddy County, with gross daily production of approximately 120 BOE per day.
The company’s stock is deep in the bottom half of a 52-week trading range, sitting around four cents a share on the day of the purchase in New Mexico. That alone should prove tantalizing to those who have not paid the stock much heed lately. Its gulch was 1.5 cents, plumbed last March, and has not seen high heights since last July, when the stock sat at 63 cents. But the buy in New Mexico is seen as an act of faith in the future, with petroleum prices still uncertain, and management of DRLY would like would-be investors to share in that faith.
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