Petro River Oil Corp. (OTCBB: PTRC), previously Gravis Oil, acquired control of Petro River Oil LLC, an emerging oil and gas producer which controls a substantial acreage position in the Southeast Kansas region of the Mississippi Lime formation, and completed negotiations that set in motion a major recapitalization of the company's debt and outstanding warrants.

The Mississippi Lime Acquisition

As a result of the acquisition of Petro River Oil LLC, now a wholly owned subsidiary, the company has added 115,000 gross (85,000 net) acres to its oil and gas portfolio, establishing a significant presence in the promising Mississippi Lime play. This acreage is in addition to the company's present oil and gas portfolio which is comprised of 60,105 gross (40,591 net) acres located in Missouri, Kentucky and Montana. The company also acquired over 60 square miles of proprietary 3D seismic data over prospective Mississippi Lime acreage in the same area. As consideration for the acquisition, the company agreed to issue 600 million restricted shares of its common stock in exchange for all of the outstanding secured promissory notes previously issued by Petro LLC and all of the member interests of Petro LLC. Additionally, as part of this acquisition, working interests in leases in which the company already has a stake were acquired from Mega Partners I for 15.5 million shares.

Recapitalization of Petro River Oil Corp.

An integral part of the Mississippi Lime play acquisition was the simultaneous restructuring of the company's capitalization. In order to effectuate this recapitalization, the company entered into a series of agreements with holders of outstanding series A warrants, series B preferred stock, Ssries B warrants, subordinated secured debentures, secured promissory notes, series C, secured promissory notes and series D warrants. Through these agreements, all of the company's outstanding debt, preferred stock holdings and warrants are positioned to expire or to be converted to equity.

The holders of the convertible securities were previously granted certain rights, including a right of first refusal, price adjustment protection, prohibition on dilutive issuances and certain security rights in certain aspects of the company's assets. Pursuant to a waiver agreement, the holders of the convertible securities waived all protection rights and all existing events of default under the convertible securities; the exercise price of the series A warrants, series B warrants, series C warrants and series D warrants was increased to US $1 per share, and the expiration date was amended so that the warrants expire on May 7; the conversion price of the preferred stock, debentures, secured notes I and secured notes II has been temporarily lowered to US $0.1288 per share of common stock to encourage those long-term investors to convert their preferred and debt holdings into common stock. To the extent that any of those securities are not converted by May 7, the conversion prices of those instruments automatically adjust to US $10. The result of this aspect of the series of transactions described herein is a significant move to remove debt from the company's balance sheet and eliminate the overhang that the warrants represented.

The waiver agreement imposes a 90 day lock-up period during which time the former holders of the company's debt and preferred stock cannot sell, transfer or dispose of the common stock that they receive upon conversion of such convertible securities. After the initial lock-up period, the agreement also imposes a 90 day leak-out period, during which time, the former holders of the company's debt and preferred stock cannot sell, transfer or dispose of more than 10% the common stock that they receive upon conversion of the convertible securities, on a cumulative basis, during any 30 day period.

New Management and Direction

Additionally, the company appointed Scot Cohen to the position of executive chairman and John Wallace and Ryan Estis to the board of directors. Jeffrey Freedman has resigned as interim chief executive and chief financial officer, but will remain with the company in an IR and operational role.

Petro River Oil LLC engages in the production of oil with a focus on liquid rich assets in the Southeast Kansas region of the Mississippi Lime. The company is based in Houston.