HOUSTON, Aug. 10, 2011 (GLOBE NEWSWIRE) -- Holloman Energy Corporation (OTCBB:HENC) announces the execution of a definitive Oil & Gas Farm-In Agreement with Brandenburg Energy Corporation. Holloman and Brandenburg, together with other current interest holders, finalized the Agreement July 29, 2011. Under its terms, Brandenburg may earn an undivided 44% working interest in Holloman's PEL 112 and PEL 444 licenses. Brandenburg's earn-in is to subject to meeting certain milestones which include the funding of earning obligations totaling approximately AUD$16,300,000 (USD$17,437,000). Brandenburg has already paid or advanced Holloman $261,000 and deposited CAD$600,000 in escrow in connection with the Agreement.
"We are happy to welcome Brandenburg as an exploration partner," stated Mark Stevenson, Holloman CEO. "We believe the magnitude of our joint exploration program provides a real opportunity to exploit PEL 112 and PEL 444 ... We look forward to a long and profitable working relationship."
Brandenburg's earning obligations include the funding of approximately AUD$8.2 million (USD$8.7 million) by September 20, 2011, with residual funding due in early 2012. As joint-operators, Holloman and Brandenburg plan to complete the acquisition of 250 km2 of 3D seismic data and the drilling of six wells, split evenly between PEL 112 and PEL 444.
Under the Agreement, Brandenburg can earn its Farm-In Interest on a license-by-license basis. Upon completion of the earning obligations on either PEL 112 or PEL 444, Holloman will contribute to Brandenburg an undivided 26.70% working interest in the relevant license. Likewise, Holloman's current working interest partners will each contribute to Brandenburg an undivided 8.65% working interest (a total of an undivided 17.3% undivided interest). Brandenburg may terminate the Agreement any time before it has earned the farm-in interest in a license. In that event, Brandenburg will not be entitled to any interest in either license unless it has satisfied its earning obligations in respect of such license, and shall not be entitled to any refund or reimbursement of amounts paid or other compensation given under the Agreement.
In the event any well drilled as part of the six (6) well program on PEL 112 and PEL 444 tests positively for commercially viable production of oil or gas, Brandenburg will also pay 50% of the total completion costs of such well(s). Other working interest holders, including Holloman, will pay their portion of the residual 50% of completion costs on a pro-rata basis.
The effective date of the Agreement is the date upon which Brandenburg receives written approval of the Agreement from the TSX Venture Exchange.
Holloman also provided an update on the progress of its recent Work Area Clearance ("WAC") efforts on PEL 112. Unfortunately, delays related to a neighboring license required Holloman's WAC team to demobilize before the PEL 112 clearance could be completed. A new round of WAC fieldwork is anticipated to begin in late August or early September 2011. It is not anticipated that the delay in the WAC will cause any delay in the seismic program.
About Holloman Energy
Holloman Energy Corporation is focused on exploring and producing oil in Australia's Cooper Basin. Holloman's Cooper Basin leases include interests in PEL 112 and PEL 444 which comprise 4,544 sq km (1.125 million acres) in the southwest and northwest sectors of Australia's prolific Cooper – Eromanga Basin.
Forward-Looking Statements: This press release includes forward-looking statements as determined by the U.S. Securities and Exchange Commission (the "SEC"). All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that Holloman Energy Corporation (the "Company") believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to acquire and develop specific projects, the ability to fund operations and changes in consumer and business consumption habits and other factors over which the Company has little or no control. The Company does not intend (and is not obligated) to publicly update any forward-looking statements. The contents of this press release should be considered in conjunction with the warnings and cautionary statements contained in the Company's recent filings with the SEC.
ON BEHALF OF THE BOARD OF DIRECTORS
Holloman Energy Corporation
http://www.hollomanenergy.com