the good news, page-17

Agreed Serendipity.

I'd never really considered the fact that SEA have the option of walking away for $1 million if results are bad. I'd always just looked at the $1 million break fee as an option if a counter-offer comes TXN's way.

Unlikely to happen however, as the potential of the area is known, and the chances of the wells being bad enough for SEA to walk away (I'm guessing they'd have to be pretty BAD!) are very, very slim.

It shows how desperate TXN became, not only were lease expirations/finance options so poorly managed that TXN had to accept a low-ball offer (purely talking about the location and quantity of acreage and ignoring the lease obligation situation), but the low-ball offer also showed unattractive transaction conditions which has led to that stupendously large short-term debt facility.