Each one in plain English, with the numbers worked through for a shareholder.
3 Nov 2006material agreement▼ BadMajor
On October 30, 2006 the company issued a $600,000 convertible promissory note to Aviel Faliks at 12.5% interest, payable in cash or stock at the holder's choice. It is due on the earlier of closing a private financing of at least $10 million or December 31, 2007, and ranks behind the company's 2.5% convertible debentures. The holder can convert into a Series C preferred stock the company intends to offer, whose terms are not yet set. This is much more expensive debt than the earlier 2.5% debentures and adds possible future dilution.
Effective July 21, 2006 the company bought a 15% working interest (13.125% net revenue interest) in 15,049 gross acres in Routt County, Colorado from Infinity Oil & Gas of Wyoming for $35,966.79. The press release says the acreage is next to Slater Dome and that Clayton Williams, owner of the other 85% of the shallow rights, is drilling a test well. It is a small purchase whose value depends on that well's result.
On July 7, 2006 the company bought a license to 2D seismic data from LRS Group and R & R Exploration Fund covering over 150 drill site locations in the Denver Julesberg Basin, Colorado, for $650,000 ($325,000 at signing, $162,500 due Jan 7, 2007 and $162,000 due July 7, 2007). LRS also gets overriding royalty interests, and the company must drill one test well in year one and two more within three years to keep the agreement. This is a new area beyond Slater Dome and Nucla, and it brings drilling commitments.
17 May 2006capital raising announcement● NeutralMajor
Effective May 10, 2006 the company bought 12.16 more Class A interests in Slater Dome Gathering, LLLP from Natural Resource Group Gathering, LLC, paying with a $608,194 subordinated convertible debenture (2.5%, due January 1, 2008, convertible at $2.00). It now owns 82.76% of the Class A interests and gets 74.487% of distributions before limited partners recover their capital and 62.07% after. The filing notes CEO Laird is a manager of the general partner's entity, so this is a related-party deal. It adds debt and potential dilution.
Effective February 28, 2006 the company issued 4,429 shares (about $2.39 each, $10,596 of accrued geophysical fees) to a consultant. It also issued 200,000 warrants at $2.00 (expiring Feb 28, 2010) to a shareholder in settlement of a contractual dispute, and 100,000 warrants at $2.75 (expiring Feb 22, 2009) to a financial public relations firm. These add potential dilution; the filing gives no details of the dispute.
On October 7, 2005 the company issued 3,073 shares at $2.00 to a consultant for $6,147 of accrued fees, and 2,250 shares at $2.00 to a company controlled by a director for $4,500 of accrued fees. The amounts are small; it pays fees in stock rather than cash.
What it means for a shareholder
3,073 new shares at US$2.00 to raise about US$6,147. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
This amends the earlier September 1 filing: the July 5, 2005 consultant grant is now described as a 3-year warrant, not an option, for 75,000 shares at $1.50. It also reports a September 21, 2005 correction to the Series B preferred stock terms, adding a conversion limitation that had been left out by mistake, unless Series B holders waive it. The filing does not say how large the limitation is.
The company announced it set production casing in the second well of a three-well program at Slater Dome. It again says it is premature to call the well commercial. The release now says one additional well is expected in 2005, versus three in the August 30 release. This continues the drilling update with no financial terms.
On July 26, 2005 the company agreed to buy another $600,000 of Class A interests in Slater Dome Gathering, LLLP, bringing its total investment to $1,600,000 (after the earlier $1,000,000). It would own 82% of the Class A interests sold, or 53% if all 60 available interests are sold. The filing notes the company's President is an affiliate of the partnership. It also reports a 75,000-share option at $1.50 to a consultant and 3,750 shares at $1.20 to a company controlled by director Grant Gaeth for geologic consulting. It confirms the pipeline began carrying the company's gas in June 2005.
The company announced it set production casing in a new well at the Slater Dome Prospect, where it holds a 30% working interest. It says it is premature to predict whether the well is commercial, and that nothing is proven until gas has flowed into a pipeline for at least six months; it expects three more wells in 2005 plus a seismic program. This continues the Slater Dome development story and adds no financial terms.
26 July 2005capital raising announcement● NeutralMajor
On July 22, 2005 the company raised $2,760,000 (gross and net) selling 92 units of 2.5% two-year convertible debentures, each convertible at $1.20 per share, with a three-year $2.00 warrant on 12,500 shares per unit. Placement agent Westminster received 184,000 shares and warrants; the company must register resale of the underlying shares. The press release says it began producing gas from six coalbed methane wells and one conventional well in early June 2005, which updates the earlier 'not producing' statement. This adds debt and potential dilution.
The company signed amended employment agreements with CEO Paul Laird and CFO Les Bates, effective March 1, 2005: $85,000 base salary each, running to February 29, 2008 with annual renewals, and 2.99 times annual salary plus remaining pay if control changes. It also disclosed its 2003 stock option plan (up to 625,000 shares; 450,000 options granted as of Feb 28, 2005), 75,000 options each to Laird and Bates at $1.15 on May 13, 2005, and 100,000-share restricted stock awards each on May 19, 2005.
The company converted a $1,000,000 loan it had made into Class A limited partnership interests in Slater Dome Gathering, LLLP, the owner of an 18-mile gas pipeline, giving it at least a 30% partnership interest before payout and 25% after. It holds a 30% working interest in the Slater Dome/Coal Bank Draw Prospect (about 31,631 gross acres, third-party operated) with nine wells and one water disposal well, which are not yet producing; it expects to sell gas in the second calendar quarter of 2005.
The final closing of the Series B offering on February 28, 2005 sold 164 units for $2,132,000 gross ($1,891,361 net). The attached press release says the full private placement totalled 247.5 units and $3,217,500 gross, placed by Westminster Securities, with proceeds for oil and gas development, working capital and possible acquisitions. The release names the Slater Dome coalbed methane project as the company's primary focus, alongside Nucla Prospect leases.
29 Dec 2004capital raising announcement● NeutralMajor
The company closed the first sale of Series B Preferred units to accredited investors on December 23, 2004: 60 units at $13,000 for $780,000 gross ($683,070 net of placement agent costs). Each unit carries 12% preferred stock convertible at $0.65 per share and a three-year $1.50 warrant, so it adds cash but also a preferred dividend claim and potential dilution for common holders.
This finalises the terms left open in the McKey loan: her warrants (both the older Series A set and the new 75,000-share set) are now priced at $1.50 for three years, and the Series A Preferred conversion price drops from $2.68 to $0.65 per share. The company also created a new Series B 12% Cumulative Convertible Preferred (up to 36,036 shares, convertible at $0.65), ranked equally with Series A, and issued 60,000 common shares to two directors to cancel $45,000 of compensation accrued in the year ended February 28, 2003. Lower conversion and exercise prices mean more potential dilution for common holders.
The company borrowed $250,000 from Candace McKey (a 10%+ owner it disclosed in July) on August 30, 2004, at 18% interest, due on the earlier of receiving $2,000,000 in equity financing or August 31, 2005. The loan is secured by its subsidiary Skyline Resources' interest in the Robidoux oil and gas lease in Moffat County, Colorado, and McKey's warrants rise from 6,250 to 75,000 shares with terms still to be set; this is more dilution for shareholders.
