Resaca has reached agreement with Permian Basin Well Services, LLC (PBWS) to acquire a number of workover rigs, reversing units and related assets for a consideration of $1,594,000, to be satisfied by the issue of 3,320,250 new shares of common stock in the Company. PBWS is a wholly-owned subsidiary of Torch Energy Advisers, Inc. (TEAI), a major shareholder in the Company and controlled by J.P. Bryan, the Company's Chairman. Accordingly, the transaction is a related party transaction under the AIM Rules.

As highlighted in the Company's AIM admission document of July 14, 2008, PBWS has, since Resaca's formation in 2006, provided approximately 40-60% of Resaca's workover and reversing unit services. The equipment has been provided to Resaca on a priority basis and the hourly rates charged have been in line with industry rates. Resaca has, however, concluded that there are economic and operational benefits to be gained from owning and operating the equipment, rather than renting from PBWS.

Pursuant to the terms of the agreement between Resaca and PBWS, Resaca will acquire three mobile workover rigs, two reversing units and related power swivels, fishing tools, other ancillary tools and equipment, vehicles, trailers, construction equipment and spare parts together with an office building, a shop and a yard in Odessa, Texas. Resaca plans to vacate the premises it currently leases in Odessa when its lease expires at the end of the calendar year and occupy the property acquired from PBWS. The operating equipment and the property to be acquired have been independently valued and the purchase price reflects the independently appraised values.

Resaca will also hire some PBWS employees to operate the workover rigs.

Tags: Resaca Exploitation