Dixie Energy Trust announces a new memorandum of understanding regarding a proposed increase to its working interests in its current mineral leases and decision to terminate the previously announced Maple Branch Land Acquisition
CALGARY, May 30, 2013 /CNW/ - Dixie Energy Trust ("Dixie") today announced that it has entered into a non-binding memorandum of understanding (the "Memorandum") with Fletcher Exploration, LLC ("Fletcher") setting forth the terms on which Dixie may acquire additional working interests in certain oil and gas leases (the "Acquisition of Additional Working Interests") for a purchase price of US$5,500,000. Dixie also announced today that it has terminated a previously announced purchase and sale agreement with a third party and related memorandum of understanding with Fletcher.
New MOU with Fletcher
Fletcher has agreed to sell Dixie: (i) an additional 20% working interest in certain oil and gas leases in the Monroe and Lowndes Counties, Mississippi (the "Maple Branch Prospect") with a gross acreage of approximately 14,100 acres, increasing Dixie's average working interest to approximately 30% in the Maple Branch Prospect; (ii) an additional 15% working interest in certain oil and gas leases in Monroe County, Mississippi (the "Strong Field Prospect") with a gross acreage of approximately 3,800 acres, increasing Dixie's overall working interest to approximately 60% in the Strong Field Prospect; and (iii) a 25% working interest in certain oil and gas leases with a gross acreage of approximately 4,100 acres in Conecuh and Escambia Counties, Alabama (the "Brooklyn Field Prospect").
Rick Fletcher is the Co-Managing Member, the controlling shareholder and a director of Fletcher. Mr. Fletcher is also a director of the administrator of Dixie (the "Administrator") and the Chief Executive Officer of Dixie Energy Holdings (US), Ltd. (a wholly-owned subsidiary of Dixie) ("Dixie U.S."). Dan Sloan is President of Dixie U.S. and also the Co-Managing Member and a director of Fletcher. Ed Hollingsworth is a director of Dixie U.S. and is also the Vice President Geology of Fletcher. Christen Burkett is the Secretary-Treasurer of Dixie U.S. and also the Vice President of Administration of Fletcher.
The Acquisition of Additional Working Interests is subject to the completion of due diligence, negotiation of a definitive agreement, receipt of board approvals (excluding Mr. Fletcher), receipt of unitholder approval (if required), receipt of a fairness opinion and other customary conditions of closing.
Termination of Purchase and Sale Agreement and Related MOU
Dixie has decided not to proceed with the purchase and sale agreement (the "Purchase Agreement"), announced on April 25, 2013, with a third party (the "Vendor") to acquire 100% of the Vendor's working interest in certain oil and gas leases and related assets located adjacent to Dixie's Maple Branch Prospect (the "Maple Branch Land Acquisition"). Dixie has forfeited its US$250,000 non-refundable deposit. Dixie's management does not believe that the number of wells Dixie is intending to drill over the next three years will be affected by the decision to not proceed with the Maple Branch Land Acquisition.
In addition, the previously announced memorandum of understanding (the "MOU") setting forth the terms on which Dixie, Fletcher and other third party working interest owners in the Maple Branch Prospect would combine and reallocate certain of their respective interests in the Maple Branch Prospect, including the lands proposed to be acquired by Dixie pursuant to the Maple Branch Land Acquisition (the "Maple Branch Pooling Proposal"), was subject to the closing of the Maple Branch Land Acquisition and will therefore not proceed.
Financing Update
Dixie's previously announced engagement agreement with Raymond James regarding a proposed private placement financing has expired. Dixie is currently negotiating the terms of a new financing to fund the purchase price of the Acquisition of Additional Working Interests from Fletcher, the details of which will be released when the terms are finalized.
About Dixie
Dixie is an energy trust created to provide investors with an oil and gas exploration focused investment. The strategy of Dixie is to acquire, exploit and develop, indirectly through its subsidiaries, long-life crude oil and gas prospects and reserves in the United States gulf coast states, primarily in Mississippi and Alabama.
Forward Looking Statement Disclaimer
Certain statements included in this news release constitute forward looking statements or forward looking information under applicable securities legislation. Such forward looking statements or information are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Forward looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward looking statements or information in this news release include, but are not limited to: the proposed terms of the Acquisition of Additional Working Interests from Fletcher, including the purchase price, the interests proposed to be acquired, the conditions to closing the acquisition and anticipated effect of such acquisitions on Dixie's ownership in the Maple Branch Prospect, Strong Field Prospect and Brooklyn Field Prospect; matters in relation to the financing and the anticipated use of proceeds thereof; and Dixie's management assessment that the number of wells Dixie intends to drill over the next three years will not be affected by the decision to not proceed with the Maple Branch Land Acquisition.
Forward looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although Dixie believes that the expectations reflected in such forward looking statements or information are reasonable, undue reliance should not be placed on forward looking statements because Dixie can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this news release, assumptions have been made regarding, among other things: the Acquisition of the Additional Working Interests are all completed in the manners and on the terms described herein and will be subject to the conditions set forth herein; the timely receipt of any required third party and regulatory approvals; the ability of Dixie to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of the operator of the projects which Dixie has an interest in to operate the field in a safe, efficient and effective manner; the ability of Dixie to obtain financing on acceptable terms (including to finance the acquisition described herein); the waiver of third party rights to exercise rights of first refusals (or similar rights) in relation to the properties subject to Dixie's proposed acquisition; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Dixie operates; and the ability of Dixie to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used.
Forward looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Dixie and described in the forward looking statements or information. These risks and uncertainties which may cause actual results to differ materially from the forward looking statements or information include, among other things: the ability of management to execute its business plan; the inability of Dixie to secure financing on adequate terms to complete the Acquisition of Additional Working Interests; the risk that the acquisition and other transactions described herein may be amended or terminated as a result of due diligence outcomes, or otherwise; the risk that management's assessment of the resource potential of its properties, including the Maple Branch Prospect, is incorrect; the risk that Dixie or other third parties may not be able to satisfy the conditions to close the transactions described herein; the risk that Dixie may not complete the financing; general economic and business conditions; the risk of instability affecting the jurisdictions in which Dixie operates; the risks of the oil and natural gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas and market demand; risks and uncertainties involving geology of oil and natural gas deposits; the ability of Dixie to add production and reserves through acquisition, development and exploration activities; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; fluctuations in oil and natural gas prices, foreign currency exchange rates and interest rates; risks inherent in Dixie's marketing operations, including credit risk; health, safety and environmental risks; risks associated with existing and potential future law suits and regulatory actions against Dixie; and uncertainties as to the availability and cost of financing. Readers are cautioned that the foregoing list is not exhaustive of all possible risks and uncertainties.
The forward looking statements or information contained in this news release are made as of the date hereof and Dixie undertakes no obligation to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise unless required by applicable securities laws. The forward looking statements or information contained in this news release are expressly qualified by this cautionary statement.
© 2013 Dixie Energy Trust
All rights reserved. All other trademarks are the property of their respective owners.
SOURCE: Dixie Energy Trust
![](http://rt.newswire.ca/rt.gif?NewsItemId=C3869&Transmission_Id=201305302240CANADANWCANADAPR_C3869&DateId=20130530)
David G. Anderson
T: 403 232 1010
Share this article