XNRG >> Xun Energy to Acquire a 51% Gross Royalty Interest in up to 500 Producing Oil and Gas Wells in Kentucky
2010-12-14 08:45 ET - News Release
PORTLAND, OR -- (MARKET WIRE) -- 12/14/10
Xun Energy, Inc. ("XNRG") (OTCBB: XNRG) On December 9, 2010 XNRG executed a Letter of Intent with Global Energy Acquisitions, LLC ("GEA") which provides in part for XNRG to acquire from GEA a 51% gross royalty interest in up to 500 producing oil and gas wells in Kentucky. GEA is in the business of exploring, developing, operating, and investing in, acquiring, selling, managing and drilling oil and gas properties.
It is anticipated that GEA will form a new, wholly owned subsidiary (the "Subsidiary") and transfer the royalty interests in the oil wells to this entity. XNRG will then acquire 51% of the common stock of the Subsidiary and have a right of first refusal to purchase the remaining 49% in the Subsidiary.
"The asset acquisition, subject to closing, is the first step to move XNRG from a 'Shell' status to an operating company status," said XNRG president Peter Matousek, "This has been a very positive process and we are excited to have the ability to generate revenue with relatively low risk in the near future," he added.
GEA and affiliates have exclusive drilling rights to approximately 60,000 + acres of oil and gas bearing properties with landowners in central and south central Kentucky and Tennessee whereby GEA and affiliates will receive 100% of the net revenues after the landowner's royalty fee which will be between 12.5% and 28.125% and applicable transportation costs, per producing well. The Subsidiary will be responsible for the funding of the drilling and completion costs.
"We will immediately begin to develop an aggressive 15 well program with low fixed drilling and completion costs," stated Peter Matousek, XNRG's President. He further stated, "With our Gross Royalty position, we will not be subject to any monthly operating or maintenance costs."
The LOI will provide a framework for the Parties to enter into a Definitive Agreement which is anticipated to be approved by the respective Board of Directors on or before January 17, 2011 with a closing on or before January 31, 2011. The parties reserve the right to modify the structure of the transaction to facilitate any required regulatory approvals and to minimize the tax consequences of the transaction.
The Purchase Price for the acquisition of its equity position in the Subsidiary shall be paid in XNRG's common stock based upon the fair market value of the equity percentage of the Subsidiary's common stock. The LOI further contemplates that XNRG will redeem a percentage of the shares of common stock owned by XNRG's officers and directors in an amount equal to the proportionate share of the common stock issued to GEA. Additionally, Peter Matousek will tender 100 million shares of common stock for redemption by XNRG for nominal consideration.
Closing of the transaction is subject to further due diligence, execution of a definitive agreement, and satisfaction of conditions precedent including delivery of audited financial statements of the Subsidiary and a valuation prepared by an Independent Third Party. There can be no assurance that the parties will come to terms on a definitive agreement or that drill proposed transaction will in fact close.
Xun Energy, Inc. (XNRG) is a development stage company. We are a shell, which is a company that has very little assets, other than cash, and has no viable business plan at this moment. XNRG's mission is to purchase or develop a revenue producing asset.
For Further information on this news release or on XNRG, please visit http://www.xunenergy.com/ or contact XNRG's Investor Relations Department, telephone: 1-775-200-0505, e-mail address: investor@xunenergy.com.
Xun Energy, Inc. Investor Relations Department telephone: 1-775-200-0505 e-mail address: Email Contact http://www.xunenergy.com/
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