DALLAS, Sept. 11 /PRNewswire-FirstCall/ -- National Energy Group, Inc.
(OTC Bulletin Board: NEGI) ("NEG" or the "Company") today announced that it
has been advised that on September 7, 2006, Riata Energy, Inc. ("Riata")
and American Real Estate Partners, L.P. (NYSE: ACP) ("AREP"), the owner of
50.01% of NEG's common stock, entered into an Exclusivity Agreement and
Letter of Intent (the "Letter of Intent") pursuant to which Riata would
obtain an option to acquire NEG Oil & Gas LLC ("NEG Oil & Gas"), a
wholly-owned subsidiary of AREP which holds all of AREP's oil and gas
investments. The Letter of Intent provides that the option and exclusivity
period would expire in 70 days, subject to extension in certain
circumstances. The transaction would include the acquisition by NEG Oil &
Gas or NEG Holding LLC ("NEG Holding") of NEG's unconsolidated
non-controlling 50% membership interest in NEG Holding through the
redemption option set forth in Section 5.4 of NEG Holding's Operating
Agreement dated as of May 1, 2001, or through another mechanism. The
transaction would not include the acquisition of any of NEG's common stock
by Riata. The transaction also contemplates that NEG's management
agreements pursuant to which it manages the operations of NEG Operating
LLC, National Onshore LP and National Offshore LP will be terminated. The
Letter of Intent is subject to a number of conditions. NEG is not a party
to the Letter of Intent.
Under NEG Holding's Operating Agreement, NEG Oil & Gas, or its
successor, at any time, in its sole discretion, is permitted to redeem
NEG's 50% membership interest in NEG Holding at a price equal to the fair
market value of such interest determined as if NEG Holding had sold all of
its assets for fair market value and liquidated. At this time, NEG has not
received any such redemption notice from NEG Oil & Gas.
If the transactions contemplated by the Letter of Intent are
consummated, NEG's 50% membership interest in NEG Holding is redeemed and
NEG's management agreements relating to NEG Operating LLC, National Onshore
LP and National Offshore LP are terminated, NEG's principal asset will
consist solely of its cash balances and NEG's principal indebtedness will
consist of its outstanding $148.6 million principal amount 10.75% Senior
Notes due October 31, 2007.
NEG is evaluating the impact of the Letter of Intent on NEG, including
on the pending Merger Agreement dated December 7, 2005 among NEG, NEG Oil &
Gas and AREP.
The Company
The Company is a Dallas, Texas based management company engaged in the
business of managing the exploration, development, production and
operations of oil and natural gas properties, primarily located in Texas,
Oklahoma, Arkansas and Louisiana (both onshore and in the Gulf of Mexico).
The Company manages the oil and natural gas operations of NEG Operating
LLC, National Onshore LP and National Offshore LP, all of which are
affiliated entities. The Company's principal assets are its unconsolidated
non-controlling 50% membership interest in NEG Holding LLC and its
management agreements with NEG Operating LLC, National Onshore LP and
National Offshore LP.
Forward Looking Statements
This press release may contain projections and other forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act
of 1934, as amended. Any such projections or statements reflect the
Company's current views with respect to future events and financial
performance. No assurances can be given, however, that these events will
occur or that such projections will be achieved and actual results could
differ materially from those projected. A discussion of important factors
that could cause actual results to differ materially from those projected
is included in the Company's periodic reports filed with the Securities and
Exchange Commission.
SOURCE National Energy Group, Inc.
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Related links:
http://www.negx.com
CONTACT:
Bob G. Alexander, or Randall D. Cooley, or
Philip D. Devlin, all of National Energy Group, Inc.,
+1-214-692-9211, or fax, +1-214-692-5055
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