May 25, 2010
Doxa Closes Qualifying Transaction
Development Activities To Commence On Initial Eagle Ford Shale Project,/h4>
VANCOUVER, BRITISH COLUMBIA - Doxa Energy Ltd. - TSX Venture Exchange DXA. - ("Doxa" or the "Company"), announced on May 20, 2010 closing of the transaction constituting its Qualifying Transaction (the "Transaction"), being the acquisition (by its wholly owned subsidiary Doxa Energy US, Inc.) of a 20% working interest and 15% net revenue interest in and to the oil and gas leases comprising the Peeler Eagle Ford Shale Prospect (the "Peeler Prospect") as previously announced. The common shares of the Company will resume trading on May 26, 2010 under the symbol DXA.V.
Acquisition of Initial Eagle Ford Shale Prospect
The Company acquired a 20% working interest and 15% net revenue interest in the Peeler Prospect from Doxa Director, John D. Harvison, the Company's President and CEO and Doxa Director, G. Arnold Armstrong, the Company's Chairman, ("Vendors") for aggregate consideration of US$520,000 representing the actual costs of the Vendors in acquiring and conducting certain exploration activities on the Peeler Prospect. A pilot well has successfully been drilled on the property through the Eagle Ford formation and drilling operations for the initial horizontal lateral is slated to begin in the third quarter, 2010.
In the (NI) 51-101 compliant resource report prepared for Doxa Energy by Graham & Associates of Austin, Texas (the "Graham Report"), which is dated February 2, 2010, gross prospective project recovery estimates for the planned 8 well program are between 1,029 to 1,986 MBls oil and 10,143 to 20,649 MMscf gas. Based on 15:1 revenue equivalency (gas to crude), this equates to a prospective project recovery estimate on an oil equivalency basis in the range of 160 to 315 Mboe per well (after deducting royalty burdens). Doxa notes than on April 7, 2010, EOG Resources, Inc. ("EOG") announced the results of several wells in close proximity to the Peeler Prospect, two of which are within one-half mile. For the two wells directly offsetting the Peeler Prospect, EOG estimates gross reserves of 258 Mboe and 356 Mboe respectively. In addition, EOG disclosed that their reserve estimates assume spacing of 125-140 acres per well. On this basis Doxa estimates that up to 14 wells could eventually be drilled on the Peeler Prospect rather than the 8 wells assumed in the Graham Report. In this case the actual value of the Peeler Prospect, net to the interest of the Company, may be significantly greater than the prospective value reflected in the Graham Report. According to the Graham Report, the prospective resource value, net to the interest of the Company based on a 10% discount basis for the Best, Low and High case evaluations are estimated at US $16, $8 and $25 million respectively. (Please see April 6, 2010 Doxa Energy news for additional information on the Graham Report, or visit www.sedar.com to view the report in its entirety.)
Doxa management believes the estimates disclosed by EOG clearly support the prospective recovery estimates set out in the Graham report for the Peeler Project and the project continues to be de-risked by the ongoing activity in the trend.
Additionally, the Company is in negotiations to acquire interests in additional Eagle Ford Shale projects as well as a variety of other promising Texas oil & gas opportunities and anticipates making additional announcements soon in this regard.
Concurrent Financing, Doxa's Chairman Increases Share Position
As previously announced on May 20, 2010, Doxa raised $2,602,500 (the "Financing") by way of a concurrent private placement of 5,205,000 units (each a "Unit") at $0.50 per Unit. Arnold Armstrong, Chairman of Doxa Energy, subscribed for 2,200,000 units of the private placement, representing an approximate 90% increase to his ownership of Doxa. Mr. Armstrong now controls 26.95% of Doxa's common shares. Each Unit of the concurrent financing comprised one common share and one half of one warrant (each whole warrant a "Warrant"). Each whole Warrant entitles the holder to purchase an additional common share at $0.75 for a period of 24 months from closing. Aggregate finder's fees of $52,125 were paid on a portion of the Financing, and finders were issued a total of 104,250 warrants having the same terms as the Warrants.
John D. Harvison, President and CEO of Doxa stated today that:
"Doxa is now in a position to immediately begin implementing the steps that we believe will bring successful financial and operating results to the Company and create exceptional value for all Doxa shareholders."
"In subsequent news releases I look forward to setting forth the vision and dedication my colleagues and I have in order to facilitate Doxa's growth, and I am sure additional participation within the Eagle Ford Shale trend will constitute a considerable aspect of our growth."
Please refer to the Information Circular of the Company dated March 24, 2010 for further information about the Company, the Transaction, the Financing and related transactions. A copy of the Information Circular is available under the Company's profile at www.sedar.com.
On behalf of the Board of Directors
John D. Harvison
President, Chief Executive Officer
For further information contact: Scott Parsons Director or Paul McKenzie Director 604.642.2625 or visit www.doxaenergy.com
Neither TSX Venture Exchange nor its Regulation Services providers (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statement: The energy equivalency conversion method used to derive BOEs in this presentation is based on converting gas to oil in the ratio of fifteen thousand cubic feet of gas to one barrel of oil (15 Mcf:1 bbl) BOEs may be misleading, particularly if used in isolation. Traditionally a BOE conversion ratio of 6 Mcf:1 bbl is used, which is based on an energy equivalency conversion method primarily applicable at the burner tip. In the current market environment, there is a significant disparity in oil and gas prices, and a 6:1 conversion ratio would not represent a fair value equivalency at the wellhead, and therefore was not used herein.