Midland, Texas-based Doral Energy Corp. (OTCBB:DRLY) is an oil and gas exploitation and production company focused on identifying potential acquisitions that can generate immediate revenues through expanded development in both the near and long term.
The Company targets properties that have strong developed, but non-producing, reserves which are positioned to be tapped into significant growth in the near term through operational improvements. Additionally, Doral engages acquisition of properties that meet this short-term qualification, but also, through infill drilling, meets the Company’s guidelines to exploit reserves in the longer term as well.
With its portfolio primarily focused on the prolific Permian Basin of Texas and New Mexico, Doral announced a significant move to execute its business plan in this region by entering into a definitive merger agreement with Pure Gas Partners II, L.P. and its wholly-owned subsidiary, Pure Energy Group, Inc. Based in San Antonio, Texas, Pure is a privately-held exploration and production company with current assets consisting of approximately 865,000 non-operated gross acres located all within the state of New Mexico.
Of the net acres in Pure’s portfolio, it is estimated that approximately 10% of the land offers horizontal opportunities in the Permian Basin. Current Pure operators consist of Apache, Cimarex, Concho Resources, and Devon. Of its 79 gross wells, nearly all of the acreage is either owned mineral rights or Held by Production (HBP) with a production on 230 boepd.
Per the Agreement, Pure Gas Partners will transfer all of its assets into Pure Energy Group with Pure Energy assuming all of Pure Gas Partners’ liabilities. Pure Energy Group will then merge a Doral Energy Corporation subsidiary, called Doral Acquisition Corporation, which is being created solely for the purpose of completing the transaction. Upon the completion of the merger of Pure Energy Group and Doral Acquisition Group, all of the shares of Pure Energy Group will be converted into shares of Doral Energy Corporation.
With this merger agreement, Doral expects to lower its shares structure via a 1-for-55 reverse split of the DRLY common stock, which currently has approximately two billion shares authorized, but only 136 million issued and outstanding. The split will lower authorized shares to approximately 36 million and will leave approximately only 2.47 million issued and outstanding.
Adding to the issued and outstanding shares will be the issuance of nearly 10 million shares to Pure Gas Partners upon completion of the merger which will result in Pure Gas Partners owning approximately 80% of Doral Energy Corporation and current DRLY shareholders owning approximately 20%. Per the Company’s calculations, this will result in 12,453,047 shares of DRLY being issued and outstanding upon merger completion. The closing of the merger is slated to be completed by the end of the year.
Also, as part of the conditions of the merger, a name change will be effectuated and three new Pure Gas Partner-nominated directors will be added to the Doral board, with Everett Willard Gray, II still maintaining his position as Board Chairman and Chief Executive Officer. Wow, talk about complexity. Although an official date has not yet been released, a conference call to discuss all the details is forthcoming with all interested parties from all companies invited to participate.
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