Arkanova Energy Corporation, an exploration and junior production company engaged in the acquisition, exploration and development of oil and gas properties in the North American areas, made an announcement that its subsidiary entered into a Purchase and Sale Agreement with a British Virgin Islands-registered corporation Knightwall Invest, Inc. Pursuant to this agreement, dated April 9, 2010, Arkanova's subsidiary Provident Energy Associates of Montana, LLC, agreed to sell to Knightwall, and Knightwall agreed to purchase, 30 per cent of the leasehold interests comprising Provident's Two Medicine Cut Bank Sand Unit in Pondera and Glacier Counties, Montana, and the equipment, parts, machinery, fixtures and improvements located on, or used in connection with, the Unit, for a purchase price of $7,000,000. The closing of the transaction is planned on August 6, 2010.
Knightwall is a lender to the registrant, and it currently has an outstanding loan to the registrant of $330,000 in principal amount bearing interest at the rate of 10% per annum and due and payable by the registrant on May 29, 2010, plus interest of $33,000. The note of $363,000 will be renewed on May 29, 2010, and then the total amount will be paid in full from the portion of the Purchase Price to be paid by Knightwall on July 8, 2010.
