November 27, 2009 (FinancialWire) Cubic Energy, Inc. (NYSE AMEX: QBC) has entered into transactions with Tauren Exploration, Inc. (Tauren) and an affiliate of Tauren, both of which are entities controlled by Calvin Wallen III, the chief executive officer of the company, under which Cubic has acquired $30,952,810 in pre-paid drilling credits (the Drilling Credits) applicable towards the development of its Haynesville Shale rights in Northwest Louisiana.
These Drilling Credits were previously acquired by Tauren in connection with the sale of a majority of its Haynesville Shale rights in Northwest Louisiana. Cubic will use the Drilling Credits to fund $30,952,810 of its share of the drilling and completion costs for those horizontal Haynesville Shale wells drilled in sections previously operated by an affiliate of the company which are now operated by a third party with significant Haynesville Shale operations experience.
As consideration for the Drilling Credits, the company, (I). has conveyed to Tauren a net overriding royalty interest of approximately 2% in its leasehold rights below the Taylor Sand formation of the Cotton Valley; and . has agreed to issue to an affiliate of Tauren 10,350,000 company common shares and preferred stock in the amount of $10,350,000, convertible into company common shares at $1.20 per common share, five year conversion term, with such issuance of the common shares and the preferred stock dependent upon the approval of the companys additional listing application with the NYSE AMEX.
As a result of the transactions between the company and Tauren, Wells Fargo Energy Capital (WFEC) has provided the company an additional extension until January 1, 2010 to allow for continued negotiations as to a potential Credit Facility amendment.
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