PROPERTY ACQUISITIONS / Redeco - Letter of Intent Signed
ASE SYMBOL: RE
OCTOBER 14, 1998
CALGARY, ALBERTA--Redeco Energy Inc. today announced that it has
entered into a Letter of Intent with Costilla Energy Inc. of
Midland, Texas whereby Costilla will acquire the operating assets
of Redeco in exchange for cash and two non-cost bearing net
profits interests. Included in the sale to Costilla will be
Redeco Petroleum Company Limited, a wholly owned subsidiary of
Redeco, which is awaiting final government approval of three
concessions awarded to it in Romania. Also to be transferred by
Redeco is a 3.5 percent royalty interest in the revenues from the
concession in the Republic of Moldova held by a subsidiary of
Costilla. In addition to cash, Redeco will receive a 12.5 percent
net profits interest in the Romanian and Moldovan concessions
after Costilla recovers certain costs.
William C. Liedtke, Chief Executive Officer of Redeco said that
the Costilla transaction represented the best opportunity for the
Company to participate in the future potential of Romania and
Moldova. "The deterioration of the capital markets for high risk,
high reward exploration companies such as Redeco, made it
imperative that we exchange some of the upside in the Company's
current projects for a carried or non-cost position," said
Liedtke. "Although this transaction may decrease the short term
activity and asset base of the Company, management believes that,
given the current situation and the intense capital requirements
of these projects, over the long term this transaction gives us
the best potential to share in future success."
The final agreement contemplated by the Letter of Intent will be
subject to due diligence by Costilla and to Redeco shareholder
approval, since it deals with substantially all of the assets of
Redeco.
Redeco is listed on the Alberta Stock Exchange under the symbol
"RE". |
