TransAmerican Announces Negotiation of $1.5M Convertible Debenture
(November 8, 2007) TransAmerican Energy Inc. (TSX-V: TAE) (FSE: YQJ) (the
“Company” or “TransAmerican”) is pleased to announce that it has signed a Term Sheet with Trafalgar Capital Specialized Investment Fund, FIS, to borrow CDN$1,500,000.
The Term Sheet is subject to regulatory approval and the following:
• The loan is secured by a Debenture for a term of 30 months, convertible, at the investor’s option, into common shares of the Company, at $0.15 per share, for the first 24 months, and at $0.165 per share, for the last six months of the loan. The investor may not convert the Debenture to the extent that it will own greater than 9.99% of the voting shares of the Company, following such conversion.
• The Debenture is to be secured by a charge against the shares of the Company. Interest will accrue at the rate of 10% per annum, payable monthly, together with a redemption premium of 12½%, which premium commences the fourth month of the loan. In addition, commencing four months from the closing, the Company shall commence, on a monthly basis, to redeem the Debenture, the interest and premium, and the Company shall have the right to pay the indebtedness (including any interest and premium) in shares on seven days’ notice to the investor on the basis of the then current market price of the Company’s shares, provided the Company may not redeem any portion of the Debenture if its shares are trading at 120% of the then applicable conversion price or the conversion would result in the lender owning greater than 9.99% of the voting shares of the Company following such conversion.
The Company may pay finders’ fees in connection with this Debenture financing in accordance with the rules and policies of the Exchange.
Proceeds from the Debenture financing will be used for general working capital and to drill and develop the Slack Heirs No. 1 well located in Yazoo county, Mississippi, located approximately four miles northwest of the established Pickens field which, according to Mississippi Oil and Gas Board records, has produced approximately 25,000,000 barrels of oil. In consideration therefore, the company has agreed to pay 100 per cent of the drilling and development cost for the completion of the Slack Heirs No. 1 well.
Upon completion, the company will earn 100 per cent of the net revenue after operating costs and royalties until payout and 50 per cent after payout.
A reserve and economical evaluation report was prepared by Fletcher Lewis
Engineering Inc., a qualified reserves evaluator in accordance with National Instrument 51-101 (NI 51-101) and the standards set out in the Canadian Oil and Gas Evaluation Handbook. The reserves estimates were functions of engineering judgment and interpretation, based on data available as of the effective date of the report, being Feb. 17, 2006. The reserves calculated by Fletcher Lewis for a 40-acre drainage area is 515,070 barrels of oil, which is classified as both proved undeveloped and probable.
The proposed Slack Heirs No. 1 well is to be drilled approximately 600 feet east of the abandoned O'Reilly No. 1-21. The O'Reilly No. 1-21 was drilled in December, 1981, to a depth of 10,002 feet, and encountered a series of seven Cretaceous sands at a depth of 6,412 to 7,500 feet. Two six-foot intervals were perforated in the O'Reilly No. 1-21 and a production rate of 22 barrels per hour was produced for two hours on a three-quarterinch choke. The high producing rate of this test caused a pressure drawdown that caused water coning into the perforation, and this well was abandoned. Even so, at today's oil prices this well would have been a successful producer from all Cretaceous pay sands. Analysis of the well logs and cores indicate the O'Reilly No. 1-21 has seven Cretaceous sands with 110 feet of net oil pay with an average porosity of 22.7 per cent and water saturation of 49 per cent. Analysis of a dip meter log run on the O'Reilly No. 1- 21 indicate that the Slack Heirs' location should be in a superior position, and at least 10 feet higher resulting in an expected 136 feet of net pay.
The Company has staked location for the new well and is filing for a permit to drill this week. Drilling will commence immediately upon contracting of a drilling rig to drill 7,500 feet. If successful, TransAmerican has enough acreage to drill three to four wells in the area.
ON BEHALF OF THE BOARD
Ron Hughes, President
TransAmerican Energy Inc.
Ron Hughes, President
Toll Free: 1-888-945-5056
The TSX Venture Exchange has in no way passed upon the merits of the proposed transactions and has neither approved nor disapproved the contents of this Press Release.