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The Exploration Company Completes $80 Million Asset
Divestiture; Retires Debt, Redeems Preferred Shares, Announces Change in
Board of Directors
SAN ANTONIO - Oct. 3, 2005 - The Exploration Company (Nasdaq: TXCO) today
announced it has closed its previously announced $80 million sale of
selected interests in TXCO's Maverick Basin block to EnCana Oil & Gas (USA)
Inc. The effective date of the transaction is Sept. 1, 2005, with a closing
date of Sept. 30, 2005. Raymond James & Associates served as advisers to
TXCO on the transaction.
Details of the asset divestiture are described in TXCO's news release dated
Sept. 27, 2005. TXCO used the approximately $80 million in proceeds from the
sale to:
-- Retire $32 million in debt drawn on its $50 million senior
secured revolving credit facility with Guaranty Bank, FSB.
-- Redeem its 16,000 shares of Redeemable Preferred Stock, Series
B, held by Kayne Anderson Energy Fund II LP and Gryphon Master
Fund LP TXCO used $16 million to fully redeem these shares,
effective Sept. 30, 2005.
-- Retire $6.8 million of remaining obligations to Arrow River
Energy LP and CMR Energy LP related to an asset exchange
agreement signed in February 2005.
At closing, TXCO realized net proceeds from the sale of approximately $24
million to be used for general corporate purposes.
Effective with redemption of the Series B Preferred, the board of directors
nominee for the preferred shareholders, Charles W. Yates III, resigned from
TXCO's board of directors. Separately, Thomas H. Gose resigned from the
Company's board to focus more time on other business interests.
Management Comment
TXCO President and CEO James E. Sigmon, said: "We are pleased to close the
most important transaction in TXCO's history. The proceeds were used to
greatly strengthen our balance sheet in anticipation of accelerating
development of our Maverick Basin leasehold. Specifically, we will deploy
capital to continue our successful Glen Rose formation drilling program,
which has yielded excellent oil production results in the past year. We have
a large inventory of yet-to-be drilled locations in the Glen Rose and will
augment this development drilling with exploratory wells drilled in part
with EnCana.
"I would like to thank Tom Gose, who has been a director since 1989, for his
years of service to the Company and its shareholders. His insight and wisdom
have helped grow the Company over the years and will be missed by the board.
"I would also like to sincerely thank Chuck Yates for his diligent service.
His oil and gas knowledge and financial insight were indeed valuable
contributions that benefited TXCO and its shareholders during the last two
years."
About The Exploration Company
The Exploration Company is an independent oil and gas enterprise with
interests primarily in the Maverick Basin of Southwest Texas. The Company
has a consistent record of long-term growth in its proved oil and gas
reserves, leasehold acreage position, production and cash flow through its
established exploration and development programs. Its business strategy is
to build shareholder value by acquiring undeveloped mineral interests and
internally develop a multi-year drilling inventory through the use of
advanced technologies, such as 3-D seismic and horizontal drilling. The
Company accounts for its oil and gas operations under the successful efforts
method of accounting and trades its common stock on the Nasdaq Stock Market
under the symbol "TXCO."
Forward-Looking Statements
Statements in this press release that are not historical,
including statements regarding TXCO's or management's intentions, hopes,
beliefs, expectations, representations, projections, estimations, plans or
predictions of the future, are forward-looking statements and are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements include those relating to successful
negotiations with third parties, amount of interests to be earned, timing of
closing transactions, capital availability, drilling plans, including the
timing, number and cost of wells to be drilled, projects and expected
response, and establishment of reserves. It is important to note that actual
results may differ materially from the results predicted in any such
forward-looking statements. Investors are cautioned that all forward-looking
statements involve risks and uncertainty, including without limitation, the
costs of exploring and developing new oil and natural gas reserves, the
price for which such reserves can be sold, environmental concerns affecting
the drilling of oil and natural gas wells, as well as general market
conditions, competition and pricing. More information about potential
factors that could affect the Company's operating and financial results is
included in TXCO's annual report on Form 10-K for the year ended Dec. 31,
2004, and its Form 10-Q for the quarter ended June 30, 2005. These and all
previously filed documents are on file at the Securities and Exchange
Commission and can be viewed on TXCO's Web site at
www.txco.com. Copies are
available without charge, upon request from the Company.
CONTACT: The Exploration Company, San Antonio
Investors:
Roberto R. Thomae, 210-496-5300, ext. 214
bthomae@txco.com
or
Media:
Paul Hart, 210-496-5300, ext. 264
pdhart@txco.com
SOURCE: The Exploration Company
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