Resaca Exploration has entered into an agreement to purchase Permian Basin oil and gas properties for $4.4 million in cash and 841,308 shares of newly issued Resaca common shares (Consideration Shares) for total consideration of approximately $5.7 million based on the closing price of the Company's shares on 4 August 2011.

The properties comprise the Langlie Jal Unit (LJU) in Lea County, New Mexico, near city of Jal and the Company's largest property - the Cooper Jal Unit. The properties included in this acquisition cover 3,748 gross acres and contain 112 wells (34 producing wells, 45 water injection wells and 33 inactive wells), all of which will be operated by Resaca. Resaca will acquire a 73 percent working interest and a 57 percent net revenue interest in the LJU. The properties are being acquired from Wind River Petroleum, LP, a private company owned by Richard Counts.

Resaca estimates net daily production from LJU of 51 barrels of oil and 42 Mcf of natural gas (58 barrel of oil equivalents or "boe"), as well as proved reserves of approximately 1.3 MMboe. The purchase price equates to $4.31 per boe of estimated proved reserves. Approximately 30 percent of the evaluated reserves from this pending acquisition are considered proved developed and 91 percent of the proved reserves are oil. The closing of this acquisition is expected to occur on 5 August 2011.

Application will be made for the admission of the Consideration Shares to be admitted to trading on AIM ("Admission"). It is expected that trading in the Consideration Shares will commence on 11 August 2011.

Subsequent to the issue of the Consideration Shares, the Company announces that the total number of common shares of $0.01 each of the Company in issue is 20,747,410 with each share carrying the right to one vote. There are no shares held in treasury. The total number of voting rights in the Company is therefore 20,747,410.

The above figure may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in, or a change to their interest in, the Company under the Disclosure and Transparency Rules.

Commenting on the acquisition, J.P. Bryan, chairman and CEO of Resaca, said: "We are excited to add this quality oil asset to our property portfolio at a favorable price. This asset is an ideal complement to our nearby Cooper Jal Unit, which generates over 50 percent of our current production and contains over 70 percent of our proved reserves. The Langlie Jal Unit has all the characteristics we look for in an acquisition - current production with a very low decline rate and significant exploitation potential through the implementation of proven engineering techniques. In addition to opportunities to immediately increase production by returning certain inactive wells to production, we believe this asset has significant production potential from many of the same opportunities we have identified at Copper Jal, including uphole recompletions, refracs of currently producing zones, waterflood enhancement and optimization, infill drilling and potential CO2 flooding. The acquisition of this property will enable us to leverage what we have learned at Cooper Jal and gain economies of scale by utilizing our personnel and service providers who are already working in the immediate area on our properties. We believe this acquisition is a very important step for Resaca to maximize shareholder value."

Tags: Resaca Exploitation