To eliminate more than $7.7 million in future obligations, junior independent Republic Resources Inc. said Friday it would sell the oil and gas assets it holds in Louisiana and Texas — all of its revenue-generating assets — to Harken Energy Corp. in a stock trade. Harken has agreed to exchange 2.6 million shares of its common stock for the assets and enter into a Contingent Payment Agreement to evaluate the unproved assets or exploratory prospects in the properties.

Although there are no firm commitments, Republic also has begun an informal search for an appropriate merger candidate, resulting in “preliminary conversations with two possible and potentially promising candidates.” Republic also plans to seek an appropriate acquisition or merger candidate in one or more businesses, “which have no material debt obligations or other liabilities, which have a prospect for immediate or near-term cash flow, and which offer a significant opportunity for future growth and return to our common stockholders.”

Republic, headquartered in Grand Junction, CO, said it intends to use the Harken shares, and about 4.4 million additional Republic shares, to pay off a balance of $2.645 million in convertible debentures, and to exchange all of its $5.1 million Series C Preferred Stock for common stock. The sale, expected to close by April 15, 2002, eliminates Republic’s generating assets, but it will retain its interest in two undeveloped prospect areas in Utah, and said it “intends to fully exploit these properties” this year. Republic expects the first exploratory well in its Utah acreage to be drilled in the second quarter of 2002.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.