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Energy Search Makes Production-Boosting Deal

Energy Search Makes Production-Boosting Deal

With prices looking up, Energy Search Inc. of Knoxville, TN, sought and will get a boost to help develop some of its oil and gas properties. The company made a deal to accelerate development with Southern Producer Services, a subsidiary of Atlanta-based Southern Energy Inc.

In return for a commitment of up to $30 million, Southern Producer Services will trade and market Energy Search production, attain a minority overriding royalty interest in wells developed by Energy Search using the Southern Producer Services funds, receive warrants to 100,000 shares of common stock at $6.50 per share, and collect with interest the $30 million advance.

The deal allows Energy Search to retire $8.8 million of bank debt and accelerate developmental drilling on properties in Ohio and West Virginia. Southern Producer Services, also will provide hedging and price management services to Energy Search.

Energy Search CEO Charles P. Torrey said he expects the company will drill 59 new wells during the next 13 months. "With energy prices rising, this appears to be the right time to accelerate the timely development of our properties. Our relationship with Southern Energy allows us to do that."

Energy Search Inc. is an independent oil and gas exploration and production company focused primarily on developmental drilling and production of gas reserves in the Appalachian Basin.

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