Share prices for independent oil exploration company Terax Energy (OTCBB: TEXG) exploded today after the company announced it was being acquired by Beverly Hills-based oil and gas exploitation company Westar Oil, rising more than 80 percent immediately after market open.According to a recent press release, Westar Oil recently acquired the senior debt position held by third party creditors in the amount of $3 million and intends to convert that debt into stock of Terax energy at a value of $6.75 a share. The release also said that Westar intends to enter into a share exchange agreement with Terax in which Westar shares will be worth $24.50 a share. This exchange will take effect June 21, 2007.
In addition, Terax decided to extend its current leasehold interests and bring six of its wells in Erath County back online, which will result in a net cash flow of $750,000 a month.
The new company created by this acquisition will also be called Westar Oil, and is expected to have a net cash flow in excess of $12 million. Assets will consist of properties in Texas, Nevada, Arkansas, Mississippi and Oklahoma.
In response to the news, Terax stocks shot up 88.59 percent over the course of the day, an increase of 1.32 points, to a share price of $2.81 a share.