By a News Reporter-Staff News Editor at Energy Business Journal -- Armada Oil, Inc. (the "Company") (OTCBB:AOIL), an oil and gas exploration and production company, is pleased to announce the closing of an asset reallocation financing transaction with Gulfstar Resources, LLC ("Gulfstar"), a private energy investment group. This transaction provides significant new resource availability and represents a major step forward for the Company, allowing the Company to pursue additional producing property acquisitions as well as additional drilling and development on its current multiple acreage positions in an effort to increase production and reserves. The transaction has no debt component and is non-dilutive, with no stock or warrants being issued. The package includes a total potential funding commitment of $17,500,000 in three tranches, with a firm initial commitment of $12,950,000 . Tranche A, in the amount of $6,250,000 , which has been funded, is earmarked for the acceleration of development in the Company's south Louisiana operating area. Tranche B, in the amount of $6,700,000 , is expected to be funded on or prior to March 31, 2014 , and is planned to be used for the acquisition of a producing property and/or for additional drilling in Oklahoma . Tranche C, in the amount of $4,550,000 , is at Gulfstar's discretion and, if funded, is slated to be used to drill an initial horizontal Niobrara well in the Company's Anadarko farmout acreage position in Carbon County, Wyoming . As part of the transaction, the Company's wholly owned subsidiary, Mesa Energy, Inc. ("Mesa"), formed a new limited liability company, TNR Holdings, LLC ("TNR"), and contributed to TNR Mesa's 100% membership interest in each of Tchefuncte Natural Resources, LLC ("Tchefuncte") and Mesa Gulf Coast, LLC ("MGC"). Tchefuncte owns 100% working interest in the Lake Hermitage Field in Plaquemines Parish, Louisiana , along with various working interests in producing properties in four additional fields in Plaquemines and Lafourche Parishes, Louisiana . MGC is the operator of all Tchefuncte properties. Gulfstar has earned a 34.375% equity interest in TNR as a result of the closing of Tranche A (the $600,000 that was recently funded as a convertible note was converted as part of the closing of Tranche A). When Tranche B is funded, Gulfstar will earn an additional 25.925% interest in TNR, giving them a total at that time of 60.3%. Finally, if Tranche C is funded later next year, Gulfstar's interest in TNR will become 70%. Gulfstar also has certain rights to overriding royalty interests in the Company's Wyoming and Oklahoma properties if the drilling of those properties is funded by Gulfstar. The Company believes that it can maintain its net production in south Louisiana post asset reallocation, as Tranche A will be used exclusively for significant additional development in the Company's current south Louisiana operating area and the lower percentage of ownership is likely to be offset by higher production rates. The subsequent tranches should allow for rapid acceleration of acquisitions and additional drilling in the Company's unconventional operating areas. The Company believes this transaction represents a transformational event in the Company's history and provides a powerful catalyst for future growth. We believe the significant increase in capital availability resulting from this transaction will be highly beneficial, as it will give the Company the ability to develop its proved reserves in its south Louisiana fields at a much faster rate than financing the work solely out of cash flow. The Company's technical team is diligently planning for these accelerated activities in south Louisiana , and work is expected to begin in January of 2014. A search is underway for additional producing properties for acquisition in other areas, and additional drilling in the Company's unconventional project areas is expected to begin as soon as weather, final land title review, location selection and well planning allow. "We are extremely pleased to announce the closing of this transaction and look forward to an exciting 2014. We believe Gulfstar Resources, LLC , will be a great financial partner for the Company, not only for the projects included in this package but also for future potential acquisition and drilling activities," said Randy M. Griffin , CEO of Armada Oil, Inc. "We look forward to the tremendous opportunities that this transaction will bring." About Armada Oil, Inc. Armada Oil, Inc. (OTCBB: AOIL), headquartered in Dallas, Texas , is a growth-oriented oil and gas Exploration and Production (E&P) company with a focus on growing reserves and net asset value per share, primarily through the acquisition, development and enhancement of multiple onshore oil and natural gas producing properties as well as the development of highly diversified developmental drilling opportunities, both conventional and unconventional. The Company currently has producing oil properties in Plaquemines and Lafourche Parishes in Louisiana . In addition, the Company has developmental properties in Garfield and Major Counties, OK and Wyoming County, NY and controls a strategic acreage position in southern Wyoming in the liquids-rich Niobrara Play. Keywords for this news article include: Energy, Oil & Gas, Oil And Gas , Armada Oil Inc. . Our reports deliver fact-based news of research and discoveries from around the world. Copyright 2014, NewsRx LLC
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