Item 1.01 Entry into Material Definitive Agreements.
On August 1, 2013, the Company (“Surge”) concluded the purchase of a 32% working interest (27.20 net revenue interest) from Padgett Energy, LLC, as operator of the Padgett/Danco 2013-A Joint Venture. The purchase price of the acquisition was $211,300. The property consists of a 170.80 acre tract of land located in Muhlenberg County KY on which two producing oil wells are currently producing about 20 bbls of oil per day (gross) and about 5.4 bbls/day(net) to Surge’s net revenue interest. The purchase agreement provided that the purchase price of $211,300 paid by Surge includes the two producing wells, a third well to be drilled and completed within the next 30 days, and two additional wells to be drilled after well #3 is completed. Surge will be obligated for approximately $29,167 for the completion costs for wells #4 and #5 in the event that completion of one or both of these wells is warranted. Padgett Energy, LLC will be the operator of all five wells on the lease.
