Royale Energy Inc., San Diego, (Nasdaq: ROYL) has suspended its plans to acquire a 48% minimum (55% maximum) of the outstanding shares of Aspen Exploration Inc., Denver, (OTCBB: ASPN) in a deal valued at approximately $3.5 million to $4 million.
Royale planned to offer one Royale share, valued at approximately $2.75 each, per 2.75 shares of Aspen, valued at $1 per share. Aspen has 7.26 million shares outstanding.
Following Aspen’s quarterly financial filing, in which it disclosed a breach of covenant of its credit agreement with Wells Fargo, Royale will no longer offer to acquire the stake in Aspen.
Royale co-chief executive, co-president and chief financial officer Stephen Hosmer says, “We have suspended our effort in order to evaluate whether or at what rate to pursue an offer for Aspen. The significant deterioration in their financial condition, and their inability or unwillingness to use their ‘cash and cash equivalents’ to prevent a breach of their credit agreement significantly raises the risk Royale would assume in the transaction.”
Aspen has oil and gas properties in California and Montana, including working interests in 16 wells in West Grimes Field, Colusa County, California, and an interest in 33 producing gross oil wells in the East Poplar Unit and Northwest Poplar Field in Roosevelt County, Montana.
Proved reserves as of June 30, 2007, were 130,000 barrels of oil and 2.7 million cubic feet of gas.
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