PetroHunter Energy Corporation has today announced it closed the transaction to sell and assign an undivided 50% working interest in four Exploration Permits comprising approximately seven million acres in the Beetaloo Basin in the Northern Territory, Australia.
As consideration for acquiring a 50% working interest in the Beetaloo Basin project, Falcon Oil & Gas Ltd issued PetroHunter securities convertible into common shares of Falcon stock having an agreed upon value of US$20 million (subject to adjustment), in addition to the US$5 million in cash paid by Falcon to PetroHunter on August 25, 2008.
PetroHunter retains an undivided 50% working interest and will remain operator of the Beetaloo Basin project.
PetroHunter also announced that Falcon loaned PetroHunter US$5 million. The temporary bridge loan matures in 120 days and bears interest at a rate of 10% per annum. The loan is secured by a first mortgage in favour of Falcon on five wellbores owned by PetroHunter and by a pledge of US$7.5 million worth of the convertible securities issued to PetroHunter in connection with the Beetaloo Basin transaction.
Under the terms of the loan, the Beetaloo Basin purchase agreement was amended to reduce the maximum amount due to PetroHunter from US$7 million to US$3.5 million in the event that Falcon's share price is less than CDN$0.63 per share at the time of receipt for a (final) prospectus covering the shares underlying the convertible securities.
PetroHunter and Falcon continue to work diligently toward closing the acquisition by Falcon of a 25% working interest in five wells located within PetroHunter's 20,000-acre Buckskin Mesa project located in the Piceance Basin, Colorado, and an option to acquire a 50% working interest in the entire Buckskin Mesa property.
Marc A. Bruner, the Chairman, CEO and President of Falcon, is the founder and largest shareholder of PetroHunter. Falcon advised PetroHunter and has announced that Mr. Bruner did not participate in the vote by the Falcon Board of Directors when the Falcon board voted to approve this transaction.
