Mezzanine Deal to Drive More Drilling, More Oil and Gas Production

Five States Partners with Diversified Resources, Inc.; First Foray into Appalachian Basin in Five States’ History

DALLAS, TX (July 17, 2013) – Five States Energy Capital, LLC, a private-equity investment group, today announced two oil and gas transactions. The first deal, a $15.8 million mezzanine loan to Diversified Resources, Inc., will provide growth capital for the privately held oil and natural gas company. In the second deal, the two companies will acquire shallow, conventional assets for future development from Trans Energy, Inc. (OTCBB: TENG) for an undisclosed amount.

Five States’ financial commitment to Diversified Resources will allow the exploration-stage company to reduce its debt while continuing to build its presence and develop shallow, conventional producing assets in the Appalachian Basin. The two companies have also partnered to acquire approximately 250 wells in West Virginia from Trans Energy, Inc. (OTCBB: TENG), representing Five States’ first expansion into the basin in the company’s history.

“Conventional wells continue to play a key role in our country’s energy mix. While chasing the next homerun might be appealing, there are a lot of singles out there,” said Five States Energy President and CEO, Arthur Budge, Jr. “This partnership allows us to diversify our investors’ assets with a de-risked deal while giving Diversified Resources more liquidity to make additional acquisitions.”

With a long history of oil and gas exploration and production, the Appalachian Basin continues to offer long-life reserves and low drilling risk, making mezzanine financing an attractive option for Five States, its investors and Diversified Resources.

“Our partnership with Five States closely aligns with our long-term growth strategy. We’ll continue to acquire additional assets and increase production through operational improvements and drilling,” said Rusty Hutson, President and Co-owner of Diversified.

As Five States launches its 29th fund, the firm will continue to acquire conventional producing properties.

About Five States

Founded in 1985, Five States is a private equity investment group based in Dallas, Texas. With roots in the acquisition and financing of conventional oil and gas resources throughout the U.S., the company focuses on long-term, income-generating opportunities for its investors. Established in 2007, Five States Energy Capital, LLC provides customized capital solutions to independent producers located throughout Texas, New Mexico, the Mid-Continent and the Rockies. Combined with its affiliate, Five States Energy Company, LLC, Five States manages more than $250 million in oil and gas investments.

About Diversified Resources, Inc.

Founded in 2001, Diversified Resources, Inc. is a privately held oil and natural gas company based in Birmingham, Ala. With a focus on developing and operating conventional oil and natural gas assets in the Appalachian Basin, the company operates approximately 900 wells in Ohio and West Virginia with gross production of 5,000 Mcf/da and 100 barrels per day.


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