Worthington Energy, Inc. (OTCQB: WGAS) ("Worthington" or the "Company"), an energy company engaged in the acquisition, exploration, development and drilling of oil and natural gas properties, today announces that the Company has reached a settlement agreement with Montecito Offshore, LLC ("Montecito") of Louisiana, on the VM179 lease. As originally announced on May 10, 2011, Paxton (Worthington) closed on the agreement with Montecito on May 6, 2011, whereby Paxton (Worthington) acquired a 70% working interest in 546.875 acres in the Vermilion 179 (VM 179) track for $1,500,000 cash, a $500,000 subordinated note and the issuance of 15 million shares of Paxton (Worthington) common stock.
Worthington Energy, Inc. Chairman and CEO, Mr. Charles F. Volk, stated, "For the last year and a half the company has been threatened with bankruptcy by the convertible debt holders, whereby they could eliminate the second lien position held by Montecito on the VM179 lease. The settlement reached by the company relieves Worthington of any interest in the VM 179 lease in exchange for release of claims and debts both from the Convertible debt holders and Montecito."
"During that time, in order to satisfy our public company filing requirements and remain a going concern, the company entered into convertible debentures which have depressed the price of the stock," Mr. Volk explained. "With the removal of the UCCs associated with the VM179 debt, the company can now enter into project financing loans on the recently acquired Kansas properties in order to initiate and subsequently increase production."
Mr. Volk continued, "The VM179 convertible debt holders' ratchet feature equated to a potential conversion into 70,000,000,000 common shares. This potential threat, which could have crippled the company, is now eliminated! The VM179 asset was being carried on our books at $5.7 million. As a result of this settlement the company eliminated $9.5 million in associated liabilities and debt, resulting in a $3.8 million improvement to the balance sheet."
"Once production has commenced, oil sales should allow the Company to avoid entering into new convertible debentures. In fact, based on anticipated production, we expect to be able to buy back existing convertible debentures and eventually initiate a common stock buyback program," concluded Mr. Volk.
Worthington Energy President and COO, Mr. Charlie Adams, said, "The current value of the company should be in the $10 to $20 million range, based on the valuation methodology of our technology, before reporting production. The valuation should increase to the $40 to $60 million range, again based on valuation methodology of the technology, after reporting production has begun."
Worthington engages in the acquisition, exploration, development and drilling of oil and natural gas properties. Worthington is an energy turnaround company whose strategy is to acquire cash flow producing properties with proved and probable reserves, develop the fields by reworking existing wells and drilling new wells. Worthington was founded in 2004 and is based in San Francisco, CA. More information about Worthington can be found on the company's website, www.Worthingtonnrg.com.
Certain statements in this press release regarding strategic plans, expectations and objectives for future operations or results are "forward-looking statements" as defined by the Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements, including the risks discussed in the Company's annual report on Form 10-K and the Company's other filings with the Securities and Exchange Commission. Factors that could cause differences include, but are not limited to, history of losses; speculative nature of oil and natural gas exploration, substantial capital requirements and ability to access additional capital; ability to meet the drilling schedule; changes in tax regulations applicable to the oil and natural gas industry; results of acquisitions; relationships with partners and service providers; ability to acquire additional leasehold interests or other oil and natural gas properties; defects in title to the Company's oil and natural gas interests; ability to manage growth in the Company's business; ability to control properties that the Company does not operate; lack of diversification; competition in the oil and natural gas industry; global financial conditions; oil and natural gas realized prices; ability to market and distribute oil and natural gas produced; seasonal weather conditions; government regulation of the oil and natural gas industry, including potential regulations affecting hydraulic fracturing and environmental regulations such as climate change regulations; uninsured or underinsured risks; and material weakness in internal accounting controls. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.
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SOURCE: Worthington Energy, Inc.