• Xstate to assign its Californian project interests to Australian Oil and Gas Co Limited
• Xstate to receive US$95,103 in consideration via debt forgiveness
• Xstate to focus on its Diona gas project in Queensland, Australia

Xstate Resources Limited (ASX:XST) has announced that it has agreed to dispose of its interests in its Californian projects by way of an assignment of its working interest and obligations to Australian Oil and Gas Co Limited (ASX Code: AOK). Under the terms of the Assignment Agreement, Xstate will assign its production (currently equivalent to approximately 14.63mcf per day) to AOK for the equivalent of US$95,103 in consideration. This will be effected via a debt forgiveness agreement between the respective USA subsidiaries of AOK and Xstate for accrued cash call balances totalling US$95,103. AOK has agreed to assume all of Xstate's commitments and obligations to the California project, and Xstate has agreed to transfer its various equity and working interests, clearing the decks for Xstate to focus on its Diona project in Queensland, Australia. Xstate's Managing Director, Andrew Bald, commented that the sale of California completes the company's transition from being a minority, non-operating working interest owner in other companies' projects and allows Xstate to focus fully on achieving full value from its Diona gas project for its shareholders. AOK has a vision for the California project, and Xstate wishes them well as they progress towards a renewal of what could be an exciting project.

Xstate's focus will now be on its Diona gas project in Queensland, Australia, where the company sees potential for a rapid path to market given the project's proximity to existing infrastructure.