Texhoma Energy Inc. (OTC: TXHE) signed a letter of intent with institutional investor Southridge Partners II LP for an equity purchase agreement of $5 million, the company said July 1.

The equity purchase agreement would “create significant growth capital” for the company, Texhoma said.

Under it, Texhoma will sell up to $5 million in common stock to Southridge at a price lower than the trading price, the company said.

Texhoma will file an S-1 with the Securities and Exchange Commission, the company said.

"We are pleased to be partnering with Southridge, an institutional investor with a long, reliable history of providing capital to the small-cap space. We believe that the terms of this agreement are favorable to our shareholders and provide Texhoma with the best opportunity to execute its business plan and deliver long-term shareholder value, and are thankful for the confidence Southridge has shown in Texhoma," said Gilbert Steedley, Texhoma's CEO.

"Texhoma Energy Inc., with its recent collaboration agreements and its progress in improving its debt-to-asset ratio, provided us with the confidence necessary to commit to provide growth capital. We are excited to partner with Texhoma and its seasoned management as they execute their strategy," said Stephen Hicks, principal and CEO of Southridge.

Spring, Texas-based Texhoma Energy Inc. acquires, explores and produces domestic oil and natural gas.

Southridge Partners II LP is based in Ridgefield, Conn.