Doral Energy secures loan forbearance, agrees to buy royalty interest

By Caroline Salls

Pittsburgh, Sept. 2 - Doral Energy Corp. has reached a forbearance agreement with first-lien secured credit agreement lender Macquarie Bank Ltd., according to an 8-K filed with the Securities and Exchange Commission.

Under the agreement, Macquarie has agreed not to exercise any remedies under the $50 million credit agreement until Oct. 15.

In exchange, Doral has agreed to reacquire from Macquarie the net profit overriding royalty interest conveyed to the bank in connection with the credit agreement for $750,000 by Oct. 15.

The company said the royalty interest covers its oil and gas properties located in Eddy County, N.M., which were acquired from Hanson Energy in July 2008.

The royalty interest grants Macquarie 35% of all proceeds from the sale of hydrocarbons produced from the Eddy County properties net of production and capital costs until the total paid to Macquarie reaches $5 million. After that, the royalty interest decreases to 20% of proceeds net of production and capital costs.

Doral Energy is a Midland, Texas-based oil and gas exploration and production company.

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