Armada executes agreement for third tranche of funding with Gulfstar Resources

Armada Oil Inc.

Armada Oil Inc. (OTCBB: AOIL) has entered into an agreement with Gulfstar Resources LLC, a private energy investment group, for a third tranche of capital associated with its recent asset reallocation transaction.

The total committed net funding for this tranche is $2,040,000 and, upon full funding (scheduled to close on or before June 15), Gulfstar will have acquired an additional 12.6% of TNR Holdings LLC (TNRH). At that point, the company’s ownership interest in TNRH will be 27% and the company will have accomplished its stated goal of the reallocation of the bulk of its assets to the mid-continent region while maintaining significant net production in south Louisiana.

This tranche will provide capital availability for the drilling of the Bear Creek #1, the initial test well on the company’s Anadarko farmout acreage in Carbon County, Wyoming. The Anadarko agreement covers approximately 9,800 net mineral acres in Carbon County, Wyoming. The company has well logs from nearby wells showing the presence of all three Niobrara “benches” as well as extensive 3-D data confirming the Niobrara as well as the deeper conventional zones.

The drilling of the Bear Creek #1 will not only test deep conventional zones with significant potential, but will also provide valuable data on the quality and potential of the Niobrara shale play on the project acreage. Potential reserves per well from the Niobrara shale could be upwards of 300,000 to 500,000 barrels with liquids ratios of 60% to 80%.

 

 

 

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