Delaware
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1311
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87-0267438
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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Kristin L. Lentz
Davis Graham & Stubbs
1550 17th Street, Suite 500
Denver, Colorado 80202
(303) 892-7334
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Amy R. Curtis
Thompson & Knight LLP
1722 Routh Street, Suite 1500
Dallas, Texas 75201
(214) 969-1763
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Beth di Santo, Esq.
di Santo Law PLLC
171 Christopher Street
New York, New York 10014
(212) 766-2466
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Large accelerated filer
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☐
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting Company
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☒
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Emerging growth company
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☐
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Michael J. Rugen
Chief Executive Officer
Tengasco, Inc.
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Bobby D. Riley
Chief Executive Officer
Riley Exploration – Permian, LLC
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1)
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Proposal to approve and adopt the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, and the transactions contemplated thereby, including the merger and the issuance of shares of TGC common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger (the “TGC share issuance proposal”).
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2)
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Proposal to approve and adopt an amendment to TGC’s amended and restated certificate of incorporation (which we refer to as the “TGC charter”) to increase the number of authorized shares of TGC common stock from 100 million to 240 million, which will be effective upon the closing of the merger (or shortly prior to such closing) (the “TGC share increase proposal”).
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3)
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Proposal to approve and adopt an amendment to the TGC charter to change the corporate name of TGC from “Tengasco, Inc.” to “Riley Exploration Permian, Inc.” (the “TGC name change proposal”).
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4)
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Proposal to approve and adopt an amendment to the TGC charter to effect a reverse stock split of TGC’s outstanding common stock in a ratio of between one-for-eight and one-for-twelve (the “reverse stock split”), in the sole discretion of the board of directors of TGC and to be mutually agreed to between TGC and REP, prior to the effectiveness of the merger (the “TGC reverse split proposal”).
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5)
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Proposal to approve and adopt an amendment to the TGC charter to effect a waiver of corporate opportunities that could be owed to TGC by investment funds sponsored or managed by Yorktown Partners LLC, Bluescape Riley Exploration Holdings LLC and Boomer Petroleum, LLC, which will be effective upon the closing of the merger (or shortly prior to such closing) (the “TGC corporate opportunities proposal”).
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6)
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Proposal to approve and adopt an amendment to the TGC charter to effect a requirement that the holders of at least 66 2/3% in voting power of the outstanding shares of stock of TGC entitled to vote thereon are required to approve amendments to the TGC charter after a certain date (the “TGC charter amendments provision proposal”).
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7)
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Proposal to approve an amendment to TGC’s amended and restated bylaws (which we refer to as the “TGC bylaws”) to effect a requirement that the holders of at least 66 2/3% in voting power of the outstanding shares of stock of TGC entitled to vote thereon are required to approve amendments to the TGC bylaws after a certain date (the “TGC bylaws amendments provision proposal”).
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8)
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Proposal to approve and adopt the Riley Exploration Permian, Inc. 2021 Long Term Incentive Plan (the “TGC equity plan proposal”).
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9)
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Proposal to approve, on a non-binding advisory basis, the compensation that may become payable to TGC’s named executive officers in connection with the completion of the merger (the “TGC compensation proposal”).
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10)
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Proposal to adjourn the TGC special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the TGC share issuance proposal, TGC share increase proposal, TGC name change proposal, TGC reverse split proposal, TGC corporate opportunities proposal, TGC charter amendments provision proposal, TGC bylaws amendments provision proposal, TGC equity plan proposal or to ensure that any supplement or amendment to the accompanying proxy statement/prospectus is timely provided to TGC stockholders (the “TGC adjournment proposal”).
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•
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“2021 Long Term Incentive Plan” means that certain Riley Exploration Permian, Inc. 2021 Long Term Incentive Plan in the form attached as Annex E to this proxy statement/prospectus.
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“Bluescape” refers to Bluescape Riley Exploration Holdings LLC together with Bluescape Riley Exploration Acquisition, LLC.
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“Boomer” refers to Boomer Petroleum, LLC.
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“Code” refers to the Internal Revenue Code of 1986, as amended.
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“effective time” refers to the effective time of the Merger.
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“Exchange Act” refers to the Securities Exchange Act of 1934, as amended.
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“Exchange Ratio” refers to the number of shares of TGC common stock issuable in the merger per REP common unit.
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“merger” refers to the merger of Merger Sub with and into REP, on the terms and subject to the conditions of the merger agreement, with REP continuing as the surviving company in the merger and as a wholly-owned subsidiary of TGC.
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“merger agreement” refers to the Agreement and Plan of Merger, dated as of October 21, 2020, by and among TGC, Merger Sub and REP, as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of January 20, 2021, by and among TGC, Merger Sub and REP, as it may be further amended from time to time in accordance with its terms.
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•
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“merger consideration” means the shares of TGC common stock and cash in lieu of fractional shares the REP members are entitled to receive pursuant to the merger agreement.
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“Merger Sub” means Antman Sub, LLC, a Delaware limited liability company and a newly formed wholly-owned subsidiary of TGC, which will merge with and into REP in the merger pursuant to the merger agreement.
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“NYSE American” refers to the NYSE American stock exchange.
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“REP” refers to Riley Exploration - Permian, LLC, a Delaware limited liability company.
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“REP 2018 LTIP” means that certain Riley Exploration – Permian, LLC Long Term Incentive Plan, dated as of December 31, 2018.
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“REP board of managers” refers to the board of managers of REP.
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“REP common units” refers to the common units of REP.
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“REP members” means the members of REP.
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“REP merger proposal” refers to the proposal that REP members approve the merger agreement and approve the merger.
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“REP preferred units” refers to the preferred units of REP.
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“REP written consent” refers to the written consent pursuant to which REP members will consider and vote upon the REP merger proposal and related matters.
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“REP’s credit agreement” means that certain Credit Agreement dated as of September 28, 2017, by and among REP, Truist Bank, as administrative agent, and the Lenders (as defined therein), as amended by that
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“REP’s credit facility” means REP’s revolving credit facility pursuant to REP’s credit agreement.
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“reverse stock split” means a reverse stock split of TGC’s outstanding common stock in a ratio of between one-for-eight and one-for-twelve, as mutually agreed to between TGC and REP, to be approved by the board of directors of TGC, in its sole discretion.
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“SEC” refers to the Securities and Exchange Commission.
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“Securities Act” refers to the Securities Act of 1933, as amended.
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“surviving company” or the “combined company” refers to TGC following the merger, including in its capacity as the parent company of REP.
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“TGC” refers to Tengasco, Inc., a Delaware corporation.
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“TGC 2018 LTIP” means that certain Tengasco, Inc. 2018 Stock Incentive Plan, dated August 24, 2018, as amended, supplemented or replaced from time to time.
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“TGC adjournment proposal” means the proposal to adjourn the TGC special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the TGC special meeting to approve the TGC share issuance proposal, TGC share increase proposal, TGC name change proposal, TGC reverse split proposal, TGC corporate opportunities proposal, TGC charter amendments provision proposal, TGC bylaws amendments provision proposal, TGC equity plan proposal or to ensure that any supplement or amendment to the accompanying proxy statement/prospectus is timely provided to TGC stockholders.
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“TGC board of directors” refers to the board of directors of TGC.
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“TGC bylaws” means the amended and restated bylaws of TGC as in effect as of the date of this proxy statement/prospectus.
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“TGC bylaws amendments” means the amendments to the TGC bylaws set forth in the TGC bylaws amendments provision proposal.
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“TGC bylaws amendments provision proposal” means the proposal for the TGC stockholders to approve and adopt an amendment to the TGC bylaws to effect a requirement that the holders of at least 66 2/3% in voting power of the outstanding shares of stock of TGC entitled to vote thereon are required to approve amendments to the TGC bylaws after a certain date.
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“TGC charter” means the amended and restated certificate of incorporation of TGC as in effect as of the date of this proxy statement/prospectus.
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“TGC charter amendments” means the amendments to the TGC charter set forth in the TGC share increase proposal, TGC name change proposal, TGC reverse stock split proposal, TGC corporate opportunities proposal, and TGC charter amendments provision proposal.
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“TGC charter amendments provision proposal” means the proposal for the TGC stockholders to approve and adopt an amendment to the TGC charter to effect a requirement that holders of at least 66 2/3% in voting power of the outstanding shares of stock of TGC entitled to vote thereon are required to approve amendments to the TGC charter after a certain date.
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“TGC common stock” refers to the common stock of TGC, par value $0.001 per share.
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“TGC compensation proposal” means the proposal for the TGC stockholders to approve, on a non-binding advisory basis, the compensation that may become payable to TGC’s named executive officers in connection with the completion of the merger.
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“TGC corporate opportunities proposal” refers to the proposal that the TGC stockholders approve and adopt an amendment to the TGC charter to effect a waiver of corporate opportunities that could be owed to TGC by investment funds sponsored or managed by Yorktown, Bluescape and Boomer, which will be effective upon the closing of the merger (or shortly prior to such closing).
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“TGC equity plan proposal” means the proposal for the TGC stockholders to approve and adopt the 2021 Long Term Incentive Plan.
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“TGC name change proposal” means the proposal for the TGC stockholders to approve and adopt an amendment to the TGC charter to the change of the corporate name of TGC from “Tengasco, Inc.” to “Riley Exploration Permian, Inc.”
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“TGC reverse split proposal” means the proposal for the TGC stockholders to approve and adopt an amendment to the TGC charter to effect the reverse stock split, in the sole discretion of the board of directors of TGC and to be mutually agreed to between TGC and REP, prior to the effectiveness of the merger.
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“TGC share increase proposal” refers to the proposal that TGC stockholders amend the TGC charter to increase the number of authorized shares of TGC common stock from 100 million to 240 million, which will be effective upon the closing of the merger (or shortly prior to such closing).
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“TGC share issuance proposal” refers to the proposal that TGC stockholders approve and adopt the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, and the transactions contemplated thereby, including the merger and the issuance of shares of TGC common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger.
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“TGC special meeting” refers to the special meeting of TGC stockholders to consider and vote upon the TGC share issuance proposal, TGC share increase proposal, TGC name change proposal, TGC reverse stock split proposal, TGC corporate opportunities proposal, TGC charter amendments provision proposal, TGC bylaws amendments provision proposal, TGC equity plan proposal, the TGC compensation proposal and the TGC adjournment proposal and related matters, including any adjournments or postponements thereof.
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“TGC stock option plan” means that certain Tengasco, Inc. Stock Option Plan, as amended, supplement or replaced from time to time.
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“TGC stockholder” refers to one or more holders of TGC common stock, as applicable.
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“Yorktown” refers to certain investment funds managed by Yorktown Partners LLC.
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“Yorktown Partners” refers to Yorktown Partners LLC, the investment manager of the Yorktown Partners group of funds.
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Q:
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What is the merger?
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A:
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TGC, Merger Sub and REP have entered into the merger agreement. The merger agreement contains the terms and conditions of the proposed business combination of TGC and REP. Under the merger agreement, Merger Sub will merge with and into REP, with REP continuing as a wholly owned subsidiary of TGC and the surviving company of the merger.
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Q:
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What will happen to TGC if, for any reason, the merger does not close?
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A:
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If, for any reason, the merger does not close, the TGC board of directors may elect to, among other things, attempt to complete another strategic transaction like the merger, attempt to sell or otherwise dispose of the various assets of TGC or continue to operate the business of TGC.
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Q:
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Why are the two companies proposing to merge?
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A:
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REP and TGC believe that the merger will result in a new breed of exploration and production companies that offers a mix of assets that provides for strong capital efficiency and optionality for our stakeholders. For a discussion of TGC’s and REP’s reasons for the merger, please see the section titled “The Merger-TGC Reasons for the Merger” and “The Merger-REP Reasons for the Merger” in this proxy statement/prospectus.
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Q:
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Why am I receiving this proxy statement/prospectus?
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A:
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You are receiving this proxy statement/prospectus because you have been identified as a TGC stockholder or an REP member as of the applicable record date, and you are entitled, as applicable, to (i) vote at the TGC special meeting to approve the merger agreement and the transactions contemplated thereby, including the merger and the issuance of shares of TGC common stock pursuant to the merger agreement, or (ii) sign and return the REP written consent to adopt the merger agreement and approve the transactions contemplated thereby, including the merger. This document serves as:
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a proxy statement of TGC used to solicit proxies for the TGC special meeting;
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a prospectus of TGC used to offer shares of TGC common stock in exchange for REP common units in the merger and issuable upon conversion of REP preferred units into REP common units; and
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an information statement of REP used to solicit the written consent of REP members for the adoption of the merger agreement and the approval of the merger and related transactions.
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Q:
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What will REP members receive in the merger?
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A:
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As of the date of the execution of the merger agreement, it was estimated that immediately after the consummation of the merger, based on the Exchange Ratio of 97.796467, REP members as of immediately prior to the merger will collectively own approximately 95% and TGC stockholders as of immediately prior to the merger will own approximately 5% of the outstanding shares of common stock of the combined company.
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Q:
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Who will be the directors of TGC following the merger?
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A:
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Following the consummation of the merger, the size of the TGC board of directors will be increased to a total of five directors.
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Name
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Current Principal Affiliation
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Michael J. Rugen
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Tengasco, Inc., Chief Financial Officer/Interim Chief Executive Officer
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Bobby D. Riley
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Riley Exploration – Permian, LLC, Chief Executive Officer
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Bryan H. Lawrence
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Yorktown Partners, LLC, Managing Member
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Brent Arriaga
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Helix Energy Solutions Group, Inc., Corporate Controller
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E. Wayne Nordberg
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Chairman and Chief Investment Officer of Hollow Brook Wealth Management, LLC
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Q:
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Who will be the executive officers of TGC immediately following the merger?
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A:
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Immediately following the consummation of the merger, the executive management team of TGC is expected to be composed as follows:
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Name
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Title
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Bobby D. Riley
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Chairman of the Board and Chief Executive Officer
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Kevin Riley
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President
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Michael J. Rugen
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Chief Financial Officer
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Corey Riley
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Executive Vice President Business Intelligence
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Michael Palmer
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Executive Vice President Corporate Land
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Q:
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What are the material U.S. federal income tax consequences of the reverse stock split?
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A:
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The reverse stock split is expected to constitute a “recapitalization” for U.S. federal income tax purposes. As a result, a TGC stockholder generally should not recognize gain or loss upon the reverse stock split, except with respect to cash received in lieu of a fractional share of TGC common stock. For more information, please see the section of this proxy statement/prospectus titled “Matters Being Submitted to a Vote of TGC Stockholders-Proposal No. 4: Approval of an Amendment to the Amended and Restated Certificate of Incorporation of TGC Effecting the Reverse Stock Split-Material U.S. Federal Income Tax Consequences of the Reverse Stock Split.”
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Q:
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What are the material U.S. federal income tax consequences of the merger to U.S. holders of TGC common stock?
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A:
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TGC and REP intend that the merger will qualify as an exchange under Section 351 of the Code. No gain or loss is expected to be recognized by the U.S. holders of TGC common stock as a result of the merger. For a more detailed summary of the material U.S. federal income tax consequences of the merger, see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 106.
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Q:
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What are the material U.S. federal income tax consequences of the merger to REP members?
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A:
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TGC and REP intend that the merger will qualify as an exchange under Section 351 of the Code. As a result, subject to the limitations and qualifications described in “Material U.S. Federal Income Tax Consequences of the Merger,” no gain or loss is expected to be recognized by the U.S. holders of REP common units as a result of the merger, except with respect to any cash received in lieu of any fractional shares of TGC common stock. However, an REP member will recognize taxable gain upon the exchange of REP common units in the merger if and to the extent that the aggregate amount of REP liabilities attributable to the REP common units exchanged by the REP member exceeds their aggregate tax basis in the REP common units exchanged by such REP member. For a more detailed summary of the material U.S. federal income tax consequences of the merger, see “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 106.
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Q:
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As a TGC stockholder, how does the TGC board of directors recommend that I vote?
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A:
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After careful consideration, the TGC board of directors recommends that TGC stockholders vote “FOR” all of the proposals.
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Q:
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What is the ownership interests of the current directors and officers in TGC?
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A:
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As a group, the current directors and officers of TGC beneficially own 5,500,411 shares of TGC’s common stock, which was approximately 51.5% of the shares outstanding as of January 15, 2021. Each of the directors of TGC, consisting of Messrs. Behrent, Salas, and Thon beneficially owned 64,400, 5,298,366, and 32,500 shares of TGC common stock, respectively, which represented less than 1%, approximately 49.6%, and less than 1%, respectively, of the shares outstanding as of January 15, 2021. Each of the officers of TGC, consisting of Messrs. Rugen and Sorensen, beneficially owned 81,522, and 23,623 shares of TGC common stock, respectively, which represented in each case less than 1% of the shares outstanding as of January 15, 2021.
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Q:
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As an REP member, how does the REP board of managers recommend that I vote?
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A:
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After careful consideration, the REP board of managers recommends that REP members execute the written consent to adopt the merger agreement and approve the merger and the transactions contemplated therein, substantially in accordance with the terms of the merger agreement and the other agreements contemplated by the merger agreement.
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Q:
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What risks should I consider in deciding whether to vote in favor of the merger or to execute and return the written consent, as applicable?
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A:
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You should carefully review the section of this proxy statement/prospectus titled “Risk Factors,” which sets forth certain risks and uncertainties related to the merger, risks and uncertainties to which the combined company’s business will be subject, and risks and uncertainties to which each of TGC and REP, as independent companies, are subject.
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Q:
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Who can vote at the Special Meeting?
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A:
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Only TGC stockholders of record at the close of business on [•], 2021 (the “Record Date”), will be entitled to vote at the TGC special meeting. As of the Record Date, there were [•] shares of TGC common stock outstanding and entitled to vote.
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Q:
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How many votes do I have?
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A:
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On each matter to be voted upon, you have one vote for each share of TGC common stock you own as of the Record Date.
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Q:
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What is the quorum requirement?
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A:
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A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority in voting power of the shares of TGC common stock issued and outstanding and entitled to
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Q:
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What are “broker non-votes”?
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A:
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If you hold shares beneficially in street name and do not provide your broker or other agent with voting instructions, your shares may constitute “broker non-votes.” Broker non-votes occur on a matter when banks, brokers and other nominees are not permitted to vote on certain non-discretionary matters without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters. All of the proposals to be acted on at the TGC special meeting, except for Proposal No. 4 regarding the reverse stock split and Proposal No. 10 regarding the adjournment of the TGC special meeting, are anticipated to be non-routine matters. Proposal Nos. 2, 3, 4, 5, 6 and 7 require the affirmative vote of a majority of the outstanding shares of TGC common stock entitled to vote on the proposal and accordingly broker non-votes with respect to these proposals will have the same effect as a vote “AGAINST” such proposals. Broker non-votes will not be considered votes cast by the holders of all of the shares of TGC common stock present in virtually or by proxy at the TGC special meeting and voting affirmatively or negatively and will therefore not have any effect with respect to Proposal Nos. 1, 8, 9 and 10.
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Q:
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What is required to consummate the merger?
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A:
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To consummate the merger, TGC stockholders must adopt and approve the merger agreement, thereby approving the merger and the issuance of TGC common stock pursuant to the merger agreement (Proposal No. 1), and REP members must adopt the merger agreement, thereby approving the merger and the other transactions contemplated by the merger agreement.
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Q:
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When do you expect the merger to be consummated?
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A:
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TGC and REP anticipate that the merger will occur sometime soon after the TGC special meeting to be held on [•], 2021, but the companies cannot predict the exact timing. For more information, please see the section titled “The Merger Agreement-Conditions to Completion of the Merger” in this proxy statement/prospectus.
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Q:
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What do I need to do now?
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A:
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TGC and REP urge you to read this proxy statement/prospectus carefully, including its annexes, and to consider how the merger affects you.
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Q:
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How do TGC stockholders vote and attend the special meeting?
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A:
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If you are the “record holder” of shares of TGC common stock, meaning that your shares are registered in your name in the records of TGC’s transfer agent, Continental Stock Transfer & Trust Company:
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You will receive a proxy card from Continental Stock Transfer. The proxy card will tell you how you may vote your shares before the special meeting. The proxy card also contains instructions on how to attend the virtual special meeting and provides the required URL address, along with your control number. You will need your control number for access. If you do not have your control number, contact Continental Stock Transfer at the following phone number or e-mail address: 917-262-2373, or email to proxy@continentalstock.com.
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You can (but are not required to) pre-register to attend the virtual special meeting. Pre-registration begins [•] at [•] a.m. Mountain Time. Enter the following URL address, [•], into your browser then enter your control number, name, and email address. Once you pre-register you can vote your shares. At the start of the special meeting you will need to re-log in using your control number and will also be prompted to enter your control number if you vote during the special meeting. If you have not pre-registered, you may still attend the special meeting by following the same procedure as for “pre-registering” set out in this paragraph. On the day of the special meeting you will log in to the special meeting by going to the following URL address, [•]. You should do this about 15 minutes before the special meeting to assure timely entrance to the virtual special meeting.
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Q:
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What happens if I do not return a proxy card or otherwise provide proxy instructions, as applicable?
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A:
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If you are a TGC stockholder, the failure to return your proxy card or otherwise provide proxy instructions will reduce the aggregate number of votes required to approve Proposal Nos. 1, 8, 9 and 10 and will have the same effect as a vote “AGAINST” Proposal Nos. 2, 3, 4, 5, 6, and 7.
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Q:
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How do I attend the Special Meeting of TGC stockholders?
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A:
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The TGC special meeting will be held virtually at the following URL address, [•], at [•] a.m., Mountain time, on [•], 2021. Due to the public health impact and related travel concerns our stockholders may have because of the coronavirus pandemic (COVID-19) and recommendations that public health officials have issued related thereto, the special meeting will be held virtually.
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Q:
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Why hold the TGC special meeting virtually?
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A:
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As part of our effort to maintain a safe and healthy environment for our directors, members of management and stockholders who wish to attend the TGC special meeting, in light of the COVID-19 pandemic, we believe that holding the TGC special meeting virtually is in the best interest of TGC and its stockholders. In addition, we are excited to use the latest technology to provide expanded access, improved communication and cost savings for our stockholders and TGC while providing stockholders the same rights and opportunities to participate as they would have at an in-person meeting. We believe the virtual meeting format enables increased stockholder attendance and participation because stockholders can participate from any location around the world.
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Q:
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How do I ask questions if I attend the TGC special meeting virtually?
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A:
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If you attend the TGC special meeting virtually, you may only submit questions in the question box provided at [•]. TGC will respond to as many inquiries at the TGC special meeting as time allows.
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Q:
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What if during the check-in time or during the TGC special meeting I have technical difficulties or trouble accessing the virtual meeting website?
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A:
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TGC will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the TGC special meeting virtually during the check-in or meeting time, please call the technical support number that will be posted on the TGC special meeting website log-in page.
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Q:
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May I change my vote after I have submitted a proxy or provided proxy instructions?
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A:
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If your shares are registered directly in your name, you may revoke your proxy and change your vote at any time before the vote is taken at the TGC special meeting. To do so, you must do one of the following:
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1.
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Vote over the Internet or by telephone as instructed above. Only your latest Internet or telephone vote is counted.
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2.
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Sign and return a new proxy card. Only your latest dated and timely received proxy card will be counted.
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3.
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Attend the TGC special meeting and vote virtually as instructed above. Simply attending the TGC special meeting will not, by itself, revoke your proxy or change your vote.
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4.
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Give TGC’s corporate secretary written notice before or at the meeting that you want to revoke your proxy.
|
Q:
|
Who is paying for this proxy solicitation?
|
A:
|
TGC will pay the cost of printing and filing this proxy statement/prospectus and the proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries who are record holders of TGC common stock for the forwarding of solicitation materials to the beneficial owners of TGC common stock. TGC will reimburse these brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket expenses they incur in connection with the forwarding of solicitation materials.
|
Q:
|
Who can help answer my questions?
|
A:
|
If you are a TGC stockholder and would like additional copies, without charge, of this proxy statement/prospectus or if you have questions about the merger, including the procedures for voting your shares, you should contact:
|
•
|
Growth. Following the merger, the combined company will be a capital efficient, independent oil and natural gas company focused on steadily growing its reserves, production and cash flow through the acquisition, exploration, development and production of oil, natural gas, and natural gas liquids, or NGLs, reserves in the Permian Basin.
|
•
|
Management Team. It is expected that the combined company will be led by the experienced senior management from REP and TGC and a board of directors with representation from each of TGC and REP.
|
•
|
Potential Access to Capital. Following the closing of the merger, it is expected that the combined company will be able to take advantage of the potential benefits resulting from the combination of the TGC public company structure with the REP business to raise additional capital necessary to fund the operation of the combined company and to implement its near-term business plans.
|
•
|
Free Cash Flow. Following the merger, the combined organization, driven by oil-weighted production, industry-leading cash margins and economic drilling program, will generate EBITDA growth and free cash flow.
|
•
|
Dividend Distributions. Following the closing of the merger, the combined company expects to pay a quarterly cash dividend. The declaration and payment of any dividends by the combined company will be at the sole discretion of its board of directors, which may change the combined company’s dividend policy at any time. The combined company will not have a legal obligation to pay dividends at any rate or at all, and there is no guarantee that it will declare or pay quarterly cash dividends to its common stockholders. For a more detailed summary of the combined company’s dividend policy, see “Market Price and Dividend Information—Dividends”.
|
•
|
TGC’s prospects if it remained a small public company in the capital-intensive oil and gas exploration business, including its available capital and sources of additional capital and the expected commodity price levels to be experienced in future periods;
|
•
|
Current and historical information about TGC’s operations, financial performance, and management;
|
•
|
That TGC, under the direction of the TGC board of directors, had conducted a publicly disclosed and active strategic alternatives process over a lengthy period of time and determined that the likelihood, if any, of any superior alternative strategic transaction being or becoming available in the near term in view of TGC’s available capital and sources of additional capital was remote;
|
•
|
The expectation that additional capital resources would be available to the combined company as a result of the merger;
|
•
|
The additional exploration opportunities available to the combined company, including drilling opportunities in an active and major productive area, the Permian Basin in Texas and New Mexico, and other properties;
|
•
|
The belief that the combined company will be able to benefit TGC’s existing stockholders by executing on REP’s business plan and taking advantage of TGC’s remaining assets and its public reporting platform;
|
•
|
The benefit to TGC’s existing stockholders resulting from their ability to participate in the growth of the combined company and continue to have liquidity as to their shares, potentially to a greater degree in the future as a result of the merger;
|
•
|
The expectation that the merger agreement provides the combined company with an experienced and qualified management team with a demonstrated record of success in the oil and gas exploration and production business in a major production area;
|
•
|
The expectation that a dividend to the holders of the combined company’s common stock will continue in future periods, that the payment of dividends provides a potential growth factor to the value of the combined company’s stock in the public markets, and the potential of a dividend is an element of value not currently available to TGC’s shareholders;
|
•
|
The expectation that TGC would continue to have representation on the board of directors of the combined company and its management team through the placement of TGC’s current CFO and interim CEO as a director of the combined company and as CFO of the combined company going forward;
|
•
|
The belief that the terms of the merger agreement appropriately recognized the inherent value of TGC’s status as a public company to entities such as REP that desired to enter the public markets via a merger process;
|
•
|
The financial presentation and opinion, dated October 20, 2020, of Roth to the TGC board of directors as to the fairness to the TGC stockholders, from a financial point of view and as of the date of such opinion, of the Exchange Ratio, which opinion was based upon and subject to the factors, assumptions, limitations and qualifications set forth in its opinion;
|
•
|
The terms and conditions of the merger agreement, including, without limitation, the following: the expected relative percentage ownership of TGC’s stockholders and REP members in the combined company initially at the closing and the implied valuation of REP and TGC;
|
•
|
The terms of the merger agreement that permit TGC to discuss and negotiate an unsolicited acquisition proposal should one be made, and permit TGC to terminate the merger agreement in order to accept a “superior proposal,” in each case in certain circumstances and subject to certain payment obligations; and
|
•
|
The fact that the merger agreement allows the TGC board of directors, under specified circumstances, to change or withdraw its recommendation to its stockholders with respect to the approval of the merger subject to certain payment obligations.
|
•
|
the possible alternatives to the merger, the range of possible benefits to the REP members of such alternatives and the timing and the likelihood of accomplishing the goal of any of such alternatives;
|
•
|
the financial condition, historical results of operations and business and strategic objectives of REP, as well as the risks involved in achieving those objectives;
|
•
|
the amount and form of consideration to be received by the REP members in the merger pursuant to the merger agreement taking into account the relative interests of the various classes of membership units of REP and the contractual rights afforded to holders of the such units (including as to whether any alternatives to the merger would reasonably likely be achievable and derive more value across such classes of units);
|
•
|
the expectation that the merger will be treated as an exchange under Section 351 of the Code for U.S. federal income tax purposes; and
|
•
|
the proposed timing of the interim period between the signing of the merger agreement and the expected closing and whether it is advisable to proceed given current economic, industry and market conditions.
|
•
|
mutual written consent of TGC and REP;
|
•
|
by either TGC or REP if the merger shall not have been consummated by March 21, 2021 (the “End Date”); provided, however, that the right to terminate the merger agreement for failure of the merger to be
|
•
|
by either TGC or REP if any governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any law or order making illegal, permanently enjoining, or otherwise permanently prohibiting the consummation of the merger, the TGC share issuance proposal, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal, the TGC equity plan proposal or the other transactions contemplated by the merger agreement, and such law or order shall have become final and nonappealable; provided, however, that the right to terminate the merger agreement because of the issuance, promulgation, enforcement, or entry of any such law or order shall not be available to any party whose breach of any representation, warranty, covenant, or agreement set forth in the merger agreement has been the cause of, or resulted in, the issuance, promulgation, enforcement, or entry of any such law or order;
|
•
|
by either TGC or REP if the proposal for the approval and adoption of the merger agreement and the merger, the TGC share issuance proposal, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal and the TGC equity plan proposal has been submitted to the stockholders of TGC for approval and the requisite vote of TGC stockholders shall not have been obtained;
|
•
|
by TGC, at any time prior to the effective time, if any of the following circumstances shall occur:
|
•
|
if (i) the REP board of managers fails to make the Company Board Recommendation (as defined in the merger agreement), (ii) a Company Adverse Recommendation Change (as defined in the merger agreement) shall have occurred, (iii) the Requisite Company Vote (as defined in the merger agreement) is not received;
|
•
|
REP materially breaches its non-solicitation obligations or its obligation to use reasonable best efforts to solicit from the holders of a majority of the REP common units (on an as-converted basis) consent in favor of approval of closing the merger within 10 days following effectiveness of this prospectus/proxy statement as set forth in the merger agreement;
|
•
|
if there shall have been a breach of any representation, warranty, covenant, or agreement on the part of REP set forth in the merger agreement such that the conditions to the closing of the merger set forth in the merger agreement would not be satisfied and, in either such case, such breach is incapable of being cured by the End Date; provided, that TGC shall have given REP at least 30 days written notice prior to such termination stating TGC’s intention to terminate the merger agreement; provided further, that TGC shall not have the right to terminate the merger agreement because of such breach if TGC or Merger Sub is then in material breach of any representation, warranty, covenant, or obligation arising under the merger agreement, which breach has not been cured; or
|
•
|
if, at any time prior to the Specified Time (as defined in the merger agreement), each of the following occur: (A) TGC shall have received a Superior Proposal (as defined in the merger agreement); (B) TGC shall have complied in all material respects with its non-solicitation obligations under the merger agreement, including with respect to making a Parent Adverse Recommendation Change (as defined in the merger agreement) with respect to such Superior Proposal (as defined in the merger agreement); (C) the TGC board of directors approves, and TGC concurrently with the termination of the merger agreement enters into, a definitive agreement with respect to such Superior Proposal (as defined in the merger agreement); and (D) prior to or concurrently with such termination, TGC reimburses REP’s expenses in an amount up to $475,000.
|
•
|
by REP, at any time prior to the effective time, if any of the following circumstances shall occur:
|
•
|
if (i) the TGC board of directors fails to make the Parent Board Recommendation (as defined in the merger agreement), (ii) a Parent Adverse Recommendation Change (as defined in the merger agreement) shall have occurred, or (iii) the Requisite Parent Vote (as defined in the merger agreement) is not received;
|
•
|
TGC materially breaches or materially fails to perform its non-solicitation obligations or its obligation to use reasonable best efforts to solicit from the TGC stockholders and take all other actions necessary or advisable to secure the vote or consent of the holders of TGC common stock required by applicable law to obtain approval of the merger and merger agreement, the TGC share issuance proposal, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal and the TGC equity plan proposal as set forth in the merger agreement; and
|
•
|
if there shall have been a breach of any representation, warranty, covenant, or agreement on the part of TGC or Merger Sub set forth in the merger agreement such that the conditions to the closing of the merger would not be satisfied and such breach is incapable of being cured by the End Date; provided, that REP shall have given TGC at least 30 days written notice prior to such termination stating REP’s intention to terminate the merger agreement; provided further, that REP shall not have the right to terminate the merger agreement because of such breach if REP is then in material breach of any representation, warranty, covenant, or obligation arising under the merger agreement, which breach has not been cured.
|
Name
|
| |
Title
|
Bobby D. Riley
|
| |
Chairman of the Board and Chief Executive Officer
|
Kevin Riley
|
| |
President
|
Michael J. Rugen
|
| |
Chief Financial Officer
|
Corey Riley
|
| |
Executive Vice President Business Intelligence
|
Michael Palmer
|
| |
Executive Vice President Corporate Land
|
•
|
The parties’ expectations that Mr. Rugen, who is currently interim chief executive officer and chief financial officer of TGC, will become the chief financial officer of the combined company. Other than Mr. Rugen, no other officer or director of TGC has an interest in the merger that may be different from, or in addition to, the interests of the TGC stockholders, except as provided immediately below.
|
•
|
The employees of TGC, including the officers, are expected to become parties to change in control and severance agreements that provide the employees with severance in the event they are terminated without cause or resign for good reason within 12 months following the merger. No director of TGC will become a party to any change in control and severance agreement.
|
•
|
the Exchange Ratio is not adjustable based on the market price of TGC common stock, so the merger consideration at closing may have a greater or lesser value than the value it had at the time the merger agreement was signed;
|
•
|
failure to complete the merger may result in TGC or REP paying expenses to the other company, which could harm the per share price of TGC common stock and future business and operations of each company;
|
•
|
the merger may be completed even though material adverse changes may result from the announcement of the merger, industry-wide changes and other causes;
|
•
|
some TGC and REP officers and directors have interests in the merger that are different from those considered by TGC stockholders and REP members, which may influence such officers and directors to support or approve the merger without regard to stockholder interests;
|
•
|
the market price of TGC common stock following the merger may decline as a result of the merger;
|
•
|
TGC stockholders and REP members may not realize a benefit from the merger commensurate with the ownership dilution they will experience in connection with the merger;
|
•
|
TGC stockholders and REP members will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the combined company following the completion of the merger as compared to their current ownership and voting interests in the respective companies;
|
•
|
during the pendency of the merger, TGC and REP may not be able to enter into a business combination with another party at a favorable price because of restrictions in the merger agreement, which could adversely affect their respective businesses;
|
•
|
certain provisions of the merger agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the merger agreement;
|
•
|
because the lack of a public market for REP common units makes it difficult to evaluate the value of REP common units, the REP members may receive shares of TGC common stock in the merger that have a value that is less than, or greater than, the fair market value of REP common units;
|
•
|
if the conditions to the merger are not met, the merger will not occur;
|
•
|
the merger may fail to qualify as an exchange under Section 351 of the Code for U.S. federal income tax purposes, resulting in recognition of taxable gain or loss by REP members in respect of their REP common units; and
|
•
|
the combined company may become involved in securities class action litigation that could divert management’s attention and harm the combined company’s business and insurance coverage may not be sufficient to cover all costs and damages.
|
Consolidated Statements of Operations
(in thousands, except per share data)
|
| |
Nine Months Ended
September 30,
(unaudited)
|
| |
Year Ended
December 31,
|
|||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Oil and natural gas sales, net
|
| |
2,292
|
| |
3,777
|
| |
4,911
|
| |
5,871
|
| |
4,683
|
| |
4,113
|
| |
5,631
|
Contract services – related parties
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total Revenues
|
| |
2,292
|
| |
3,777
|
| |
4,911
|
| |
5,871
|
| |
4,683
|
| |
4,113
|
| |
5,631
|
Costs and Expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Lease operating expenses
|
| |
2,379
|
| |
2,582
|
| |
3,368
|
| |
3,554
|
| |
3,414
|
| |
3,046
|
| |
3,678
|
Gathering, processing & transportation
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Delay rentals
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Production taxes
|
| |
20
|
| |
22
|
| |
30
|
| |
37
|
| |
30
|
| |
18
|
| |
53
|
Exploration costs
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Depletion, depreciation, amortization and accretion
|
| |
461
|
| |
566
|
| |
716
|
| |
795
|
| |
862
|
| |
1,077
|
| |
2,616
|
General and administrative:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Administrative costs
|
| |
1,313
|
| |
899
|
| |
1,285
|
| |
1,222
|
| |
1,157
|
| |
1,388
|
| |
2,057
|
Unit-based compensation expense
|
| |
11
|
| |
14
|
| |
17
|
| |
23
|
| |
14
|
| |
17
|
| |
12
|
Cost of contract services - related parties
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Restructuring costs
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Transaction costs
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Impairment costs
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,805
|
| |
14,526
|
Total Costs and Expenses
|
| |
4,184
|
| |
4,083
|
| |
5,416
|
| |
5,631
|
| |
5,477
|
| |
8,351
|
| |
22,942
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Income (Loss) From Operations
|
| |
(1,892)
|
| |
(306)
|
| |
(505)
|
| |
240
|
| |
(794)
|
| |
(4,238)
|
| |
(17,311)
|
Consolidated Statements of Operations
(in thousands, except per share data)
|
| |
Nine Months Ended
September 30,
(unaudited)
|
| |
Year Ended
December 31,
|
|||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
Other Income (Expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(6)
|
| |
(8)
|
| |
(10)
|
| |
(5)
|
| |
(53)
|
| |
(102)
|
| |
(80)
|
Gain on sale of assets
|
| |
4
|
| |
45
|
| |
45
|
| |
33
|
| |
2
|
| |
1
|
| |
41
|
Other income
|
| |
—
|
| |
—
|
| |
6
|
| |
157
|
| |
—
|
| |
—
|
| |
—
|
Total Other Income (Expense)
|
| |
(2)
|
| |
37
|
| |
41
|
| |
185
|
| |
(51)
|
| |
(101)
|
| |
(39)
|
Income (Loss) From Operations Before Income Taxes
|
| |
(1,894)
|
| |
(269)
|
| |
(464)
|
| |
425
|
| |
(845)
|
| |
(4,339)
|
| |
(17,350)
|
Income tax benefit (expense)
|
| |
—
|
| |
—
|
| |
28
|
| |
17
|
| |
242
|
| |
—
|
| |
(7,351)
|
Net Income (Loss) From Continuing Operations
|
| |
(1,894)
|
| |
(269)
|
| |
(436)
|
| |
442
|
| |
(603)
|
| |
(4,339)
|
| |
(24,701)
|
Net Income (Loss) From Discontinued Operations
|
| |
—
|
| |
—
|
| |
—
|
| |
1,127
|
| |
29
|
| |
140
|
| |
(20)
|
Net Income (Loss)
|
| |
(1,894)
|
| |
(269)
|
| |
(436)
|
| |
1,569
|
| |
(574)
|
| |
(4,199)
|
| |
(24,721)
|
Dividends on preferred units
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net Income (Loss) Attributable to Common Stockholders
|
| |
(1,894)
|
| |
(269)
|
| |
(436)
|
| |
1,569
|
| |
(574)
|
| |
(4,199)
|
| |
(24,721)
|
Net Income (Loss) per Share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic – Continuing Operations
|
| |
(0.18)
|
| |
(0.03)
|
| |
(0.04)
|
| |
0.04
|
| |
(0.06)
|
| |
(0.71)
|
| |
(4.06)
|
Basic – Discontinued Operations
|
| |
—
|
| |
—
|
| |
—
|
| |
0.11
|
| |
0.00
|
| |
0.02
|
| |
(0.00)
|
Diluted – Continuing Operations
|
| |
(0.18)
|
| |
(0.03)
|
| |
(0.04)
|
| |
0.04
|
| |
(0.06)
|
| |
(0.71)
|
| |
(4.06)
|
Diluted – Discontinued Operations
|
| |
—
|
| |
—
|
| |
—
|
| |
0.11
|
| |
0.00
|
| |
0.02
|
| |
(0.00)
|
Weighted Average Common Stock Outstanding (in thousands):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
10,673
|
| |
10,649
|
| |
10,651
|
| |
10,628
|
| |
10,081
|
| |
6,091
|
| |
6,084
|
Diluted
|
| |
10,673
|
| |
10,649
|
| |
10,651
|
| |
10,628
|
| |
10,081
|
| |
6,091
|
| |
6,084
|
Consolidated Balance Sheets
($ in thousands)
|
| |
September 30,
(unaudited)
|
| |
December 31,
|
|||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
Assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current Assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
2,545
|
| |
3,482
|
| |
3,055
|
| |
3,115
|
| |
185
|
| |
76
|
| |
40
|
Accounts receivable
|
| |
262
|
| |
511
|
| |
557
|
| |
533
|
| |
517
|
| |
441
|
| |
370
|
Accounts receivable – related parties
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Other accounts receivable
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Prepaid expenses and other current assets
|
| |
462
|
| |
517
|
| |
666
|
| |
699
|
| |
671
|
| |
1,018
|
| |
866
|
Current derivative assets
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
Discontinued operations included in current assets
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
121
|
| |
79
|
| |
106
|
Total Current Assets
|
| |
3,269
|
| |
4,510
|
| |
4,278
|
| |
4,347
|
| |
1,494
|
| |
1,614
|
| |
1,382
|
Non-Current Assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Oil and natural gas properties, net (full cost accounting method)
|
| |
3,914
|
| |
4,344
|
| |
4,385
|
| |
4,804
|
| |
4,720
|
| |
5,225
|
| |
8,838
|
Other property and equipment, net
|
| |
134
|
| |
134
|
| |
149
|
| |
190
|
| |
135
|
| |
140
|
| |
200
|
Operating lease ROU asset
|
| |
58
|
| |
55
|
| |
41
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Non-current derivative assets
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Other non-current assets
|
| |
2
|
| |
139
|
| |
69
|
| |
143
|
| |
259
|
| |
24
|
| |
—
|
Discontinued operations included in non-current assets
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,497
|
| |
1,559
|
| |
1,573
|
Total Non-Current Assets
|
| |
4,108
|
| |
4,672
|
| |
4,644
|
| |
5,137
|
| |
6,611
|
| |
6,948
|
| |
10,611
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total Assets
|
| |
7,377
|
| |
9,182
|
| |
8,922
|
| |
9,484
|
| |
8,105
|
| |
8,562
|
| |
11,993
|
Consolidated Balance Sheets
($ in thousands)
|
| |
September 30,
(unaudited)
|
| |
December 31,
|
|||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
| |
2015
|
Liabilities and Stockholders’ Equity
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current Liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accounts payable
|
| |
304
|
| |
127
|
| |
269
|
| |
132
|
| |
340
|
| |
418
|
| |
303
|
Accounts payable – related parties
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
634
|
Accrued liabilities
|
| |
255
|
| |
231
|
| |
164
|
| |
282
|
| |
187
|
| |
267
|
| |
267
|
Lease liabilities - finance leases - current
|
| |
58
|
| |
59
|
| |
41
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Lease liabilities – operating leases - current
|
| |
58
|
| |
56
|
| |
61
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Asset retirement obligations - current
|
| |
75
|
| |
83
|
| |
75
|
| |
83
|
| |
—
|
| |
—
|
| |
—
|
Revenue payable
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Advances from joint interest owners
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Notes payable – current
|
| |
101
|
| |
—
|
| |
—
|
| |
51
|
| |
41
|
| |
55
|
| |
65
|
Current derivative liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Discontinued operations included in current liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
43
|
| |
51
|
| |
96
|
Total Current Liabilities
|
| |
851
|
| |
556
|
| |
610
|
| |
548
|
| |
611
|
| |
791
|
| |
1,365
|
Non-Current Liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Notes payable – non-current
|
| |
65
|
| |
—
|
| |
—
|
| |
73
|
| |
49
|
| |
47
|
| |
87
|
Non-current derivative liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
Asset retirement obligations - noncurrent
|
| |
1,954
|
| |
2,085
|
| |
1,923
|
| |
2,096
|
| |
2,270
|
| |
2,046
|
| |
2,222
|
Revolving credit facility
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
2,400
|
| |
859
|
Deferred tax liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
|
Lease liabilities – finance leases - noncurrent
|
| |
42
|
| |
29
|
| |
41
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Lease liabilities – operating leases - noncurrent
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Other non-current liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total Non-Current Liabilities
|
| |
2,061
|
| |
2,114
|
| |
1,964
|
| |
2,169
|
| |
2,319
|
| |
4,493
|
| |
3,168
|
Total Liabilities
|
| |
2,912
|
| |
2,670
|
| |
2,574
|
| |
2,717
|
| |
2,930
|
| |
5,284
|
| |
4,533
|
Stockholders’ Equity
|
| |
4,465
|
| |
6,512
|
| |
6,348
|
| |
6,767
|
| |
5,175
|
| |
3,278
|
| |
7,460
|
Total Liabilities and Stockholders’ Equity
|
| |
7,377
|
| |
9,182
|
| |
8,922
|
| |
9,484
|
| |
8,105
|
| |
8,562
|
| |
11,993
|
Consolidated Statements of Operations Data
|
| |
For the Years Ended
September 30,
|
||||||||||||
($ in thousands)
|
| ||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Oil and natural gas sales, net
|
| |
$73,133
|
| |
$101,096
|
| |
$69,872
|
| |
$21,808
|
| |
$4,130
|
Contract services – related
|
| |
3,800
|
| |
1,900
|
| |
—
|
| |
—
|
| |
—
|
Total Revenues
|
| |
76,933
|
| |
102,996
|
| |
69,872
|
| |
21,808
|
| |
4,130
|
Costs and Expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Lease operating expenses
|
| |
20,997
|
| |
23,808
|
| |
11,044
|
| |
5,796
|
| |
2,779
|
Gathering, processing & transportation
|
| |
—
|
| |
—
|
| |
735
|
| |
—
|
| |
—
|
Production taxes
|
| |
3,526
|
| |
4,804
|
| |
3,207
|
| |
1,206
|
| |
194
|
Exploration costs
|
| |
9,923
|
| |
5,074
|
| |
5,992
|
| |
11,882
|
| |
45
|
Depletion, depreciation, amortization and accretion
|
| |
21,479
|
| |
20,182
|
| |
15,714
|
| |
5,876
|
| |
1,366
|
General and administrative:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Administrative Costs
|
| |
10,826
|
| |
12,168
|
| |
14,175
|
| |
5,806
|
| |
3,863
|
Unit-based compensation expense
|
| |
963
|
| |
898
|
| |
—
|
| |
—
|
| |
—
|
Cost of contract services – related parties
|
| |
503
|
| |
21
|
| |
—
|
| |
—
|
| |
—
|
Transaction Costs
|
| |
1,431
|
| |
4,553
|
| |
878
|
| |
1,766
|
| |
—
|
Total Costs and Expenses
|
| |
69,648
|
| |
71,508
|
| |
51,745
|
| |
32,332
|
| |
8,247
|
Income (Loss) From Operations
|
| |
$7,285
|
| |
$31,488
|
| |
$18,127
|
| |
$(10,524)
|
| |
$(4,117)
|
Other Income (Expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(5,299)
|
| |
(4,924)
|
| |
(1,707)
|
| |
—
|
| |
—
|
Gain (loss) on derivatives
|
| |
33,876
|
| |
26,712
|
| |
(17,143)
|
| |
(1,450)
|
| |
—
|
Total Other Income (Expense)
|
| |
28,577
|
| |
21,788
|
| |
(18,850)
|
| |
(1,450)
|
| |
—
|
Net Income (Loss) Before Income Taxes
|
| |
35,862
|
| |
53,276
|
| |
(723)
|
| |
(11,974)
|
| |
(4,117)
|
Income tax expense
|
| |
(718)
|
| |
(1,410)
|
| |
—
|
| |
—
|
| |
(9)
|
Net Income (Loss)
|
| |
35,144
|
| |
51,866
|
| |
(723)
|
| |
(11,974)
|
| |
(4,126)
|
Dividends on preferred units
|
| |
(3,535)
|
| |
(3,330)
|
| |
(3,129)
|
| |
(1,409)
|
| |
—
|
Net Income (Loss) Attributable to Common Unitholders
|
| |
$31,609
|
| |
$48,536
|
| |
$(3,852)
|
| |
$(13,383)
|
| |
$(4,126)
|
Net Income (Loss) per Unit:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$20.67
|
| |
$31.87
|
| |
$(2.57)
|
| |
$(11.63)
|
| |
—
|
Diluted
|
| |
$17.24
|
| |
$26.03
|
| |
$(2.57)
|
| |
$(11.63)
|
| |
—
|
Weighted Average Common Units Outstanding:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
1,529
|
| |
1,523
|
| |
1,500
|
| |
1,151
|
| |
—
|
Diluted(1)
|
| |
2,038
|
| |
1,992
|
| |
1,500
|
| |
1,151
|
| |
—
|
(1)
|
For the fiscal year ended September 30, 2018, and September 30, 2017, Preferred and Restricted Units were excluded from the calculation of diluted net income (loss) per unit due to their anti-dilutive effect.
|
Consolidated Balance Sheet Data
($ in thousands)
|
| |
As Of
September 30,
|
||||||||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
Cash and cash equivalents
|
| |
$1,660
|
| |
$3,726
|
| |
$3,339
|
| |
$3,683
|
| |
$—
|
Oil and natural gas properties, net (successful efforts)
|
| |
310,726
|
| |
289,301
|
| |
239,506
|
| |
166,596
|
| |
42,530
|
Total Assets
|
| |
$350,992
|
| |
$326,747
|
| |
$258,483
|
| |
177,989
|
| |
43,407
|
Revolving credit facility
|
| |
101,000
|
| |
97,000
|
| |
53,500
|
| |
—
|
| |
—
|
Total Liabilities
|
| |
124,083
|
| |
120,554
|
| |
97,555
|
| |
16,640
|
| |
6,087
|
Series A Preferred Units
|
| |
60,292
|
| |
56,810
|
| |
53,529
|
| |
49,823
|
| |
—
|
Total Liabilities and Members’ Equity
|
| |
$350,992
|
| |
326,747
|
| |
258,483
|
| |
177,989
|
| |
43,407
|
Statement of Cash Flow Data
($ in thousands)
|
| |
Year Ended
September 30,
|
||||||||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
| |
2017
|
| |
2016
|
Statement of Cash Flows Data:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net cash (used) in/provided by operating activities
|
| |
$62,550
|
| |
$52,007
|
| |
$38,619
|
| |
$3,289
|
| |
$(9,125)
|
Net cash used in investing activities
|
| |
$(51,521)
|
| |
$(83,398)
|
| |
$(88,389)
|
| |
$(54,781)
|
| |
$(24,087)
|
Net cash (used) in/provided by financing activities
|
| |
$(13,095)
|
| |
$31,778
|
| |
$49,426
|
| |
$55,175
|
| |
$33,212
|
|
| |
Pro Forma
|
|
| |
For the Year ended
September 30, 2020
|
|
| |
(in thousands, except share
and per unit amounts)
|
Combined Statement of Operations Data:
|
| |
|
Total revenues
|
| |
$80,359
|
Total costs and expenses
|
| |
(75,120)
|
Income (loss) from operations
|
| |
5,239
|
Other income (expense):
|
| |
|
Interest expense
|
| |
(5,307)
|
Gain on sale of assets and other income
|
| |
10
|
Gain on derivatives, net
|
| |
33,876
|
Total other income, net
|
| |
28,579
|
Income tax expense
|
| |
(7,626)
|
Net income attributable to common shares/units
|
| |
$26,192
|
Weighted average common shares/units outstanding—basic and diluted
|
| |
209,978,802
|
Net income per share attributable to common stockholders—basic and diluted
|
| |
$0.12
|
Weighted average common shares/units outstanding - After 1 for 8 reverse stock split
|
| |
26,247,350
|
Net income per share attributable to common stockholders—basic and diluted - after 1 for 8 reverse stock split
|
| |
$1.00
|
Weighted average common shares/units outstanding - After 1 for 12 reverse stock split
|
| |
17,498,233
|
Net income per share attributable to common stockholders—basic and diluted - after 1 for 12 reverse stock split
|
| |
$1.50
|
|
| |
Pro Forma
As of
September 30, 2020
|
|
| |
(Unaudited)
|
|
| |
(in thousands)
|
Combined Balance Sheet Data:
|
| |
|
Cash and cash equivalents
|
| |
$4,205
|
Oil and natural gas properties, net (successful efforts)
|
| |
313,123
|
Total assets
|
| |
365,214
|
Long term debt
|
| |
101,065
|
Total liabilities and stockholders' equity
|
| |
365,214
|
(1)
|
Presented only for pro forma purposes. Historical book value per share is calculated by taking total stockholders’ equity divided by total outstanding common shares.
|
(2)
|
Combined pro forma book value per share is calculated by taking pro forma combined total stockholders’ equity divided by pro forma combined total outstanding common shares.
|
|
| |
Year Ended
September 30, 2020
|
| |
|
|||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
Proved reserves:
|
| |
|
| |
|
| |
|
Oil (MBbls)
|
| |
37,158
|
| |
650
|
| |
37,808
|
NGLs (MBbls)
|
| |
10,681
|
| |
—
|
| |
10,681
|
Natural Gas (MMcf)
|
| |
53,683
|
| |
—
|
| |
53,683
|
Oil equivalents (MBoe)
|
| |
56,786
|
| |
650
|
| |
57,436
|
Proved developed reserves:
|
| |
|
| |
|
| |
|
Oil (MBbls)
|
| |
19,149
|
| |
650
|
| |
19,799
|
NGLs (MBbls)
|
| |
5,847
|
| |
—
|
| |
5,847
|
Natural Gas (MMcf)
|
| |
31,138
|
| |
—
|
| |
31,138
|
Oil equivalents (MBoe)
|
| |
30,186
|
| |
650
|
| |
30,836
|
|
| |
Year Ended
September 30, 2020
|
| |
|
|||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
Production:
|
| |
|
| |
|
| |
|
Oil (MBbls)
|
| |
2,060
|
| |
88
|
| |
2,148
|
NGLs (MBbls)
|
| |
260
|
| |
—
|
| |
260
|
Natural Gas (MMcf)
|
| |
1,628
|
| |
—
|
| |
1,628
|
Oil equivalents (MBoe)
|
| |
2,591
|
| |
88
|
| |
2,679
|
•
|
general economic and business conditions;
|
•
|
the combined company’s financial condition and operating results;
|
•
|
the combined company’s free cash flow and current and anticipated cash needs;
|
•
|
the combined company’s capital requirements;
|
•
|
legal, tax, regulatory and contractual (including under REP’s credit facility) restrictions and implications on the payment of dividends by the combined company to its stockholders or by the combined company’s subsidiaries to it; and
|
•
|
such other factors as the board of directors of the combined company may deem relevant.
|
•
|
if the merger agreement is terminated under certain circumstances, TGC may be required to reimburse REP’s expenses;
|
•
|
if the merger agreement is terminated under certain circumstances, REP may be required to reimburse TGC’s expenses;
|
•
|
the price of TGC common stock may decline; and
|
•
|
substantial costs related to the merger incurred by both parties, such as legal and accounting fees, must be paid even if the merger is not completed.
|
•
|
changes generally affecting the economy, financial or securities markets, or political conditions;
|
•
|
the execution and delivery, announcement, or pendency of the transactions contemplated by the merger agreement, including the impact thereof on relationships, contractual or otherwise, of the party and its subsidiaries with employees, suppliers, customers, governmental entities, or other third persons;
|
•
|
any changes in applicable laws or regulations or GAAP or other applicable accounting standards, including interpretations thereof;
|
•
|
acts of war, sabotage, terrorism, or military actions, or the escalation thereof;
|
•
|
natural disasters, weather conditions, epidemics, pandemics, or disease outbreaks (including the COVID-19 virus), or other force majeure events;
|
•
|
general conditions in the industry in which the party and its subsidiaries operate;
|
•
|
any failure, in and of itself, by the party to meet any internal or published projections, forecasts, estimates, or predictions in respect of revenues, earnings, or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a material adverse effect, to the extent permitted by the merger agreement);
|
•
|
any change, in and of itself, in the market price of TGC’s common stock or in its credit ratings (it being understood that the facts or occurrences giving rise to or contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a material adverse effect, to the extent permitted by the merger agreement);
|
•
|
any change, in and of itself, in REP’s credit ratings (it being understood that the facts or occurrences giving rise to or contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a material adverse effect, to the extent permitted by the merger agreement); or
|
•
|
actions taken as required or specifically permitted by the merger agreement or actions or omissions taken with the other party’s consent;
|
•
|
investors react negatively to the prospects of the combined company’s business or the merger;
|
•
|
the effect of the merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or
|
•
|
the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts.
|
•
|
the attention of TGC’s management may be directed toward the closing and related matters and may be diverted from the day-to-day business operations; and
|
•
|
third parties may seek to terminate or renegotiate their relationships with TGC as a result of the merger, whether pursuant to the terms of their existing agreements with TGC or otherwise.
|
•
|
TGC has incurred and expects to continue to incur significant expenses related to the merger even if the merger is not consummated;
|
•
|
TGC could be obligated to reimburse REP for its expenses under certain circumstances pursuant to the merger agreement;
|
•
|
the market price of TGC common stock may decline to the extent that the current market price reflects a market assumption that the merger will be completed; and
|
•
|
TGC may not be able to pursue an alternate merger or other strategic transaction if the merger with REP is not completed.
|
•
|
worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas, and NGLs;
|
•
|
the price and quantity of foreign imports, including foreign oil;
|
•
|
the actions by members of the Organization of the Petroleum Exporting Countries, or OPEC;
|
•
|
political, economic, and military conditions in or affecting other producing countries, including embargoes or conflicts in the Middle East, Africa, South America and Russia;
|
•
|
the level of global oil and natural gas exploration and production activity;
|
•
|
the level of global oil and natural gas inventories;
|
•
|
prevailing prices on local price indices in the areas in which REP operates;
|
•
|
the cost of producing and delivering oil and natural gas and conducting other operations;
|
•
|
the recovery rates of new oil, natural gas and NGL reserves;
|
•
|
lead times associated with acquiring equipment and products, and availability of qualified personnel;
|
•
|
late deliveries of supplies;
|
•
|
technical difficulties or failures;
|
•
|
the proximity, capacity, cost, and availability of gathering and transportation facilities;
|
•
|
localized and global supply and demand fundamentals and transportation availability;
|
•
|
localized and global weather conditions;
|
•
|
technological advances affecting energy consumption, including advances in exploration, development and production technologies;
|
•
|
shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil, natural gas, and NGLs;
|
•
|
uncertainty in capital and commodities markets and the ability of companies in REP’s industry to raise equity capital and debt financing;
|
•
|
the price and availability of alternative fuels; and
|
•
|
domestic, local, and foreign governmental regulation and taxes.
|
•
|
REP’s proved reserves;
|
•
|
the level of hydrocarbons REP is able to produce from existing wells and the timing of such production;
|
•
|
the prices at which REP’s production is sold;
|
•
|
operating costs and other expenses;
|
•
|
the availability of takeaway capacity;
|
•
|
REP’s ability to acquire, locate and produce new reserves; and
|
•
|
REP’s ability to borrow under its revolving credit facility.
|
•
|
delays imposed by or resulting from compliance with environmental and other regulatory requirements including limitations on or resulting from wastewater discharge and disposal, subsurface injections, greenhouse gas emissions, and hydraulic fracturing;
|
•
|
pressure or irregularities in geological formations;
|
•
|
increases in the cost of, or shortages or delays in availability of drilling rigs and qualified personnel for hydraulic fracturing activities;
|
•
|
shortages of or delays in obtaining water resources, suitable proppant, and chemicals in sufficient quantities for use in hydraulic fracturing activities;
|
•
|
equipment failures or accidents;
|
•
|
lack of available gathering facilities or delays in construction of gathering facilities;
|
•
|
lack of available capacity on interconnecting transmission pipelines;
|
•
|
adverse weather conditions, such as tornadoes, droughts, and ice storms;
|
•
|
lack of available treatment or disposal options for oil and gas waste, including produced water;
|
•
|
issues related to permitting under and compliance with environmental and other governmental regulations;
|
•
|
environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures, encountering naturally occurring radioactive materials, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the surface and subsurface environment;
|
•
|
declines or volatility in oil, natural gas, and NGL prices;
|
•
|
limited availability of financing at acceptable terms;
|
•
|
title problems or legal disputes regarding leasehold rights; and
|
•
|
limitations in the market for oil, natural gas, and NGLs.
|
•
|
a significant portion of REP’s cash flow could be used to service the indebtedness;
|
•
|
a high level of debt would increase REP’s vulnerability to general adverse economic and industry conditions;
|
•
|
the covenants contained in REP’s revolving credit facility limit REP’s ability to borrow additional funds, dispose of assets, pay dividends and make certain investments; and
|
•
|
a high level of debt could impair REP’s ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes, or other purposes.
|
•
|
incur additional indebtedness or issue certain types of preferred equity;
|
•
|
incur liens;
|
•
|
merge or consolidate with another entity or acquire subsidiaries;
|
•
|
make investments, loans or certain payments;
|
•
|
sell assets, or enter into or terminate hedging transactions;
|
•
|
enter into transactions with affiliates;
|
•
|
enter into sale and leaseback transactions;
|
•
|
amend REP’s material documents or make significant accounting changes; and
|
•
|
engage in certain other transactions without the prior consent of the lenders.
|
•
|
production is less than the volume covered by the derivative instruments;
|
•
|
the counterparty to the derivative instrument defaults on its contractual obligations;
|
•
|
there is an increase in the differential between the underlying price in the derivative instrument and actual prices received; or
|
•
|
there are issues with regard to legal enforceability of such instruments.
|
•
|
injury or loss of life;
|
•
|
employee/employer liabilities and risks, including wrongful termination, discrimination, labor organizing, retaliation claims, and general human resource related matters;
|
•
|
damage to and destruction of property, natural resources and equipment;
|
•
|
pollution and other environmental hazards or damage;
|
•
|
abnormally pressured formations, fires or explosions or natural disasters;
|
•
|
mechanical difficulties, such as stuck oil field drilling and service tools and casing collapse;
|
•
|
regulatory investigations and penalties;
|
•
|
landowner claims for property damage and restoration costs;
|
•
|
suspension of REP’s operations; and
|
•
|
repair and remediation costs.
|
•
|
unexpected drilling conditions;
|
•
|
title problems;
|
•
|
pressure or lost circulation in formations;
|
•
|
equipment failure or accidents;
|
•
|
adverse weather conditions;
|
•
|
compliance with environmental and other governmental or contractual requirements; and
|
•
|
increase in the cost of, shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services.
|
•
|
recoverable reserves;
|
•
|
future oil, natural gas and NGL prices and their applicable differentials;
|
•
|
estimates of operating costs;
|
•
|
estimates future development costs;
|
•
|
estimates of the costs and timing of plugging and abandonment; and
|
•
|
environmental and other liabilities.
|
•
|
permits for drilling operations;
|
•
|
drilling bonds;
|
•
|
reports concerning operations;
|
•
|
the spacing of wells;
|
•
|
the rates of production;
|
•
|
the plugging and abandoning of wells;
|
•
|
unitization and pooling of properties; and
|
•
|
taxation.
|
•
|
increased responsibilities for REP’s executive level personnel;
|
•
|
increased administrative burden;
|
•
|
increased capital requirements; and
|
•
|
increased organizational challenges common to large, expansive operations.
|
•
|
mistaken assumptions about volumes or the timing of those volumes, revenues or costs, including synergies;
|
•
|
an inability to successfully integrate the acquired assets or businesses;
|
•
|
the assumption of unknown liabilities;
|
•
|
exposure to potential lawsuits;
|
•
|
limitations on rights to indemnity from the seller;
|
•
|
the diversion of management’s and employees’ attention from other business concerns;
|
•
|
unforeseen difficulties operating in new geographic areas; and
|
•
|
customer or key employee losses at the acquired businesses.
|
•
|
incur indebtedness;
|
•
|
issue certain equity securities, including preferred equity securities;
|
•
|
incur certain liens or permit them to exist;
|
•
|
engage in certain fundamental changes, including mergers or consolidations;
|
•
|
make certain investments, loans, advances, guarantees and acquisitions;
|
•
|
sell or transfer assets;
|
•
|
enter into sale and leaseback transactions;
|
•
|
redeem or repurchase units from REP’s unitholders;
|
•
|
pay dividends to REP’s unitholders unless the net leverage ratio does not exceed 2.75 to 1.0, the total revolving credit exposures under REP’s credit facility are not greater than 80% of the total revolving commitments, and no default or event of default then exists or would exist upon the payment of the dividend;
|
•
|
make certain payments of junior indebtedness;
|
•
|
enter into certain types of transactions with REP’s affiliates;
|
•
|
enter into certain restrictive agreements; and
|
•
|
enter into swap agreements and hedging arrangements.
|
•
|
the combined company’s operating and financial performance and drilling locations, including reserve estimates;
|
•
|
actual or anticipated fluctuations in the combined company’s quarterly results of operations, and financial indicators, such as net income, cash flow and revenues;
|
•
|
the combined company’s failure to meet revenue, reserves or earnings estimates by research analysts or other investors;
|
•
|
sales of the combined company’s common stock by the combined company or other stockholders, or the perception that such sales may occur;
|
•
|
the public reaction to the combined company’s press releases, the combined company’s other public announcements and the combined company’s filings with the SEC;
|
•
|
strategic actions by our competitors or competition for, among other things, capital, acquisition of reserves, undeveloped land and skilled personnel;
|
•
|
publication of research reports about the combined company’s or the oil and natural gas exploration and production industry generally;
|
•
|
changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;
|
•
|
speculation in the press or investment community;
|
•
|
the failure of research analysts to cover the combined company’s common stock;
|
•
|
increases in market interest rates or funding rates, which may increase the combined company’s cost of capital;
|
•
|
changes in market valuations of similar companies to the combined company;
|
•
|
changes in accounting principles, policies, guidance, interpretations or standards;
|
•
|
additions or departures of key management personnel;
|
•
|
actions by the combined company’s stockholders;
|
•
|
commencement or involvement in litigation;
|
•
|
general market conditions, including fluctuations in commodity prices;
|
•
|
political conditions in oil and gas producing regions;
|
•
|
domestic and international economic, legal and regulatory factors unrelated to the combined company’s performance; and
|
•
|
the realization of any risks described under this “Risk Factors” section.
|
•
|
the volumes of crude oil, natural gas and NGLs that the combined company produces;
|
•
|
market prices of crude oil, natural gas and NGLs and their effect on the combined company’s drilling and development plan;
|
•
|
the levels of the combined company’s operating expenses, maintenance expenses and general and administrative expenses;
|
•
|
regulatory action affecting:
|
○
|
the supply of, or demand for, crude oil, natural gas and NGLs;
|
○
|
the combined company’s operating costs or our operating flexibility;
|
•
|
prevailing economic conditions; and
|
•
|
adverse weather conditions.
|
•
|
the combined company’s debt service requirements and other liabilities;
|
•
|
the combined company’s ability to borrow under its debt agreements to fund our capital expenditures and operating expenditures and to pay dividends;
|
•
|
fluctuations in the combined company’s working capital needs;
|
•
|
restrictions on dividends contained in any of the combined company’s debt agreements;
|
•
|
the cost of acquisitions, if any; and
|
•
|
other business risks affecting the combined company’s cash levels.
|
•
|
allow the authorized number of the combined company’s directors to be changed only by resolution of the board of directors;
|
•
|
after a certain date, limit the manner in which stockholders can remove directors from the board;
|
•
|
establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to the board of directors;
|
•
|
after a certain date, require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by TGC’s stockholders by written consent;
|
•
|
limit who may call stockholder meetings;
|
•
|
authorize the board of directors to issue preferred stock without stockholder approval, which could be used to institute a shareholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the board of directors; and
|
•
|
after a certain date, require the approval of the holders of at least 66 2/3% of the votes that all the combined company’s stockholders would be entitled to cast to amend or repeal certain provisions of its charter or by-laws.
|
•
|
permit Yorktown, Boomer and Bluescape and their affiliates to conduct business that competes with the combined company and to make investments in any kind of property in which the combined company may make investments; and
|
•
|
provide that if Yorktown, Boomer and Bluescape or their affiliates or any director or officer of one of the combined company’s affiliates, Yorktown, Boomer and Bluescape or their affiliates who is also one of the combined company’s directors, becomes aware of a potential business opportunity, transaction or other matter, they will have no duty to communicate or offer that opportunity to the combined company.
|
•
|
the merger consideration may have greater or lesser value at the closing than at the time the merger agreement is signed because the Exchange Ratios are not adjustable based on the market price of TGC common stock;
|
•
|
failure to complete the merger may result in either party paying expenses to the other party and could harm the future business and operations of each company;
|
•
|
if the conditions to the merger are not met, including failure to timely or at all obtain stockholder approval for the merger, the merger may not occur;
|
•
|
the timing of the consummation of the merger is uncertain as is the ability of each of TGC and REP to consummate the merger;
|
•
|
the merger may be completed even though material adverse changes may occur;
|
•
|
TGC may not be able to correctly estimate its operating expenses and its expenses associated with the merger;
|
•
|
some executive officers of each company have interests in the merger that are different from yours, which may cause them to support or approve the merger without regard to your interests;
|
•
|
the market price of TGC common stock may decline following the merger;
|
•
|
restrictions in the merger agreement may prevent TGC and REP from entering into a business combination with another party at a favorable price;
|
•
|
certain provisions of the merger agreement may discourage third parties from submitting alternative takeover proposals, including proposals that may be superior to the arrangements contemplated by the merger agreement;
|
•
|
the REP members may receive consideration in the merger that is greater or less than fair market value of the REP common units due to the lack of a public market for REP common units;
|
•
|
if the merger does not qualify as an exchange under Section 351 of the Code, the receipt of TGC common stock pursuant to the merger could be fully taxable to all REP members;
|
•
|
the combined company may never earn a profit;
|
•
|
the combined company may not be able to raise additional funds when necessary, and/or on acceptable terms;
|
•
|
the combined company’s small public float, low market capitalization, and limited operating history, may make it difficult and expensive for the combined company to raise additional funds;
|
•
|
the pro forma combined financial statements may not be an indication of the combined company’s financial condition or results of operations following the completion of the merger and the transactions contemplated thereby;
|
•
|
the merger will result in changes to the combined company’s board of directors that may affect the combined company’s business strategy and operations;
|
•
|
both companies expect the price of the combined company’s common stock may be volatile and may fluctuate substantially following the merger and the transactions contemplated thereby;
|
•
|
if the combined company were to be delisted from NYSE American stock exchange, it could reduce the visibility, liquidity and price of its common stock;
|
•
|
a significant portion of the combined company’s total outstanding shares of common stock may be sold into the public market at any point, which could cause the market price of the combined company’s common stock to drop significantly, even if the combined company is doing well;
|
•
|
the combined company will have broad discretion in the use of its cash reserves and may not use them effectively;
|
•
|
the combined company expects to continue to incur increased costs as a result of operating as a public company, and its management will be required to devote substantial time to compliance initiatives and corporate governance practices;
|
•
|
provisions in the combined company’s certificate of incorporation, its bylaws or Delaware law might discourage, delay or prevent a change in control of the company or change its management, which may depress the price of its common stock; and
|
•
|
securities analysts’ published reports could cause a decline in the price of the combined company’s stock.
|
1.
|
Proposal to approve and adopt the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, and the transactions contemplated thereby, including the merger and the issuance of shares of TGC common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger (the “TGC share issuance proposal”).
|
2.
|
Proposal to approve and adopt an amendment to TGC’s amended and restated certificate of incorporation (which we refer to as the “TGC charter”) to increase the number of authorized shares of TGC common stock from 100 million to 240 million, which will be effective upon the closing of the merger (or shortly prior to such closing) (the “TGC share increase proposal”).
|
3.
|
Proposal to approve and adopt an amendment to the TGC charter to change the corporate name of TGC from “Tengasco, Inc.” to “Riley Exploration Permian, Inc.” (the “TGC name change proposal”).
|
4.
|
Proposal to approve and adopt an amendment to the TGC charter to effect a reverse stock split of TGC’s outstanding common stock in a ratio of between one-for-eight and one-for-twelve (the “reverse stock split”), in the sole discretion of the board of directors of TGC and to be mutually agreed to between TGC and REP, prior to the effectiveness of the merger (the “TGC reverse split proposal”).
|
5.
|
Proposal to approve and adopt an amendment to the TGC charter to effect a waiver of corporate opportunities that could be owed to TGC by investment funds sponsored or managed by Yorktown Partners LLC, Bluescape Riley Exploration Holdings LLC and Boomer Petroleum, LLC, which will be effective upon the closing of the merger (or shortly prior to such closing) (the “TGC corporate opportunities proposal”).
|
6.
|
Proposal to approve and adopt an amendment to the TGC charter to effect a requirement that the holders of at least 66 2/3% in voting power of the outstanding shares of stock of TGC entitled to vote thereon are required to approve amendments to the TGC charter after a certain date (the “TGC charter amendments provision proposal”).
|
7.
|
Proposal to approve and adopt an amendment to the TGC bylaws to effect a requirement that the holders of at least 66 2/3% in voting power of the outstanding shares of stock of TGC entitled to vote thereon are required to approve amendments to the TGC bylaws after a certain date (the “TGC bylaws amendments provision proposal”).
|
8.
|
Proposal to approve and adopt the 2021 Long Term Incentive Plan (the “TGC equity plan proposal”).
|
9.
|
Proposal to approve, on a non-binding advisory basis, the compensation that may become payable to TGC’s named executive officers in connection with the completion of the merger (the “TGC compensation proposal”).
|
10.
|
Proposal to adjourn the TGC special meeting, if necessary or appropriate, to solicit additional proxies if, immediately prior to such adjournment, there are not sufficient votes to approve the TGC share issuance proposal, TGC share increase proposal, TGC name change proposal, TGC reverse split proposal, TGC corporate opportunities proposal, TGC charter amendments provision proposal, TGC bylaws amendments
|
•
|
The TGC board of directors has determined that the transactions contemplated by the merger agreement are fair to, advisable and in the best interests of TGC and TGC stockholders and has approved and declared advisable the merger agreement and such transactions, including the issuance of shares of TGC common stock to the REP members pursuant to the terms of the merger agreement. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 1 to approve and adopt the merger agreement and the transactions contemplated thereby, including the issuance of shares of TGC common stock pursuant to the terms of the merger agreement, in an amount necessary to complete the merger.
|
•
|
The TGC board of directors has determined that the TGC share increase proposal is fair to, advisable and in the best interests of TGC and TGC stockholders and has approved and declared advisable the TGC share increase proposal. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 2 to approve and adopt an amendment to the amended and restated certificate of incorporation of TGC to increase the number of authorized shares of TGC common stock from 100 million to 240 million, which will be effective upon the closing of the merger (or shortly prior to such closing).
|
•
|
The TGC board of directors has determined that the TGC name change proposal is fair to, advisable and in the best interests of TGC and TGC stockholders and has approved and declared advisable the TGC name change proposal. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 3 to approve and adopt an amendment to the amended and restated certificate of incorporation of TGC to change the corporate name of TGC from “Tengasco, Inc.” to “Riley Exploration Permian, Inc.”
|
•
|
The TGC board of directors has determined that the reverse stock split is fair to, advisable and in the best interests of TGC and TGC stockholders and has approved and declared advisable the reverse stock split. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 4 to approve and adopt an amendment to the amended and restated certificate of incorporation of TGC effecting the reverse stock split.
|
•
|
The TGC board of directors has determined that the TGC corporate opportunities proposal is fair to, advisable and in the best interests of TGC and TGC stockholders and has approved and declared advisable the TGC corporate opportunities proposal. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 5 to approve and adopt the TGC corporate opportunities proposal.
|
•
|
The TGC board of directors has determined that the TGC charter amendments provision proposal is fair to, advisable and in the best interests of TGC and TGC stockholders and has approved and declared advisable the TGC charter amendments provision proposal. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 6 to approve and adopt the TGC charter amendments provision proposal.
|
•
|
The TGC board of directors has determined that the TGC bylaws amendments provision proposal is fair to, advisable and in the best interests of TGC and TGC stockholders and has approved and declared advisable the TGC bylaws amendments provision proposal. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 7 to approve and adopt the TGC bylaws amendments provision proposal.
|
•
|
The TGC board of directors has determined that the 2021 Long Term Incentive Plan is fair to, advisable and in the best interests of TGC and TGC stockholders and has approved and declared advisable the 2021 Long Term Incentive Plan. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 8 to approve and adopt the 2021 Long Term Incentive Plan.
|
•
|
The TGC board of directors has determined that the compensation that may become payable to TGC’s named executive officers in connection with the completion of the merger is fair to, advisable and in the best interests of TGC and TGC stockholders and recommends that TGC stockholders vote “FOR” Proposal No. 9 to approve, on a non-binding advisory basis, the TGC compensation proposal.
|
•
|
The TGC board of directors has determined and believes that adjourning the TGC special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2, 3, 4, 5, 6, 7 or 8 or to ensure that any supplement or amendment to the accompanying proxy statement/prospectus is timely provided to TGC stockholders is advisable to, and in the best interests of, TGC and TGC stockholders. The TGC board of directors recommends that TGC stockholders vote “FOR” Proposal No. 10 to adjourn the TGC special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of Proposal Nos. 1, 2, 3, 4, 5, 6, 7 or 8 or to ensure that any supplement or amendment to the accompanying proxy statement/prospectus is timely provided to TGC stockholders.
|
•
|
You will receive a proxy card from Continental Stock Transfer. The proxy card will tell you how you may vote your shares before the special meeting. The proxy card also contains instructions on how to attend the virtual special meeting and provides the required URL address, along with your control number. You will need your control number for access. If you do not have your control number, contact Continental Stock Transfer at the following phone number or e-mail address: 917-262-2373, or email to proxy@continentalstock.com.
|
•
|
You can (but are not required to) pre-register to attend the virtual special meeting. Pre-registration begins [•] at [•] a.m. Mountain Time. Enter the following URL address, [•], into your browser then enter your control number, name, and email address. Once you pre-register you can vote your shares. At the start of the special meeting you will need to re-log in using your control number and will also be prompted to enter your control number if you vote during the special meeting. If you have not pre-registered, you may still attend the special meeting by following the same procedure as for “pre-registering” set out in this paragraph. On the day of the special meeting you will log in to the special meeting by going to the following URL address, [•]. You should do this about 15 minutes before the special meeting to assure timely entrance to the virtual special meeting.
|
•
|
Change your vote over the Internet or telephone;
|
•
|
Sign and return a new proxy card;
|
•
|
Attend the TGC special meeting and vote virtually. Simply attending the TGC special meeting will not, by itself, revoke your proxy or change your vote; or
|
•
|
Give the TGC corporate secretary written notice before or at the meeting that you want to revoke your proxy.
|
•
|
TGC’s prospects if it remained a small public company in the capital-intensive oil and gas exploration business, including its available capital and sources of additional capital and the expected commodity price levels to be experienced in future periods;
|
•
|
Current and historical information about TGC’s operations, financial performance, and management;
|
•
|
That TGC, under the direction of the TGC board of directors, had conducted a publicly disclosed and active strategic alternatives process over a lengthy period of time and determined that the likelihood, if any, of any superior alternative strategic transaction being or becoming available in the near term in view of TGC’s available capital and sources of additional capital was remote;
|
•
|
The expectation that additional capital resources would be available to the combined company as a result of the merger;
|
•
|
The additional exploration opportunities available to the combined company, including drilling opportunities in an active and major productive area, the Permian Basin in Texas and New Mexico, and other properties;
|
•
|
The belief that the combined company will be able to benefit TGC’s existing stockholders by executing on REP’s business plan and taking advantage of TGC’s remaining assets and its public reporting platform;
|
•
|
The benefit to TGC’s existing stockholders resulting from their ability to participate in the growth of the combined company and continue to have liquidity as to their shares, potentially to a greater degree in the future as a result of the merger;
|
•
|
The expectation that the merger agreement provides the combined company with an experienced and qualified management team with a demonstrated record of success in the oil and gas exploration and production business in a major production area;
|
•
|
The expectation that a dividend to the holders of the combined company’s common stock will continue in future periods, that the payment of dividends provides a potential growth factor to the value of the combined company’s stock in the public markets, and the potential of a dividend is an element of value not currently available to TGC’s shareholders;
|
•
|
The expectation that TGC would continue to have representation on the board of directors of the combined company and its management team through the placement of TGC’s current CFO and interim CEO as a director of the combined company and as CFO of the combined company going forward;
|
•
|
The belief that the terms of the merger agreement appropriately recognized the inherent value of TGC’s status as a public company to entities such as REP that desired to enter the public markets via a merger process;
|
•
|
The financial presentation and opinion, dated October 20, 2020, of Roth to the TGC board of directors as to the fairness to the TGC stockholders, from a financial point of view and as of the date of such opinion, of the Exchange Ratio, which opinion was based upon and subject to the factors, assumptions, limitations and qualifications set forth in its opinion;
|
•
|
The terms and conditions of the merger agreement, including, without limitation, the following: the expected relative percentage ownership of TGC’s stockholders and REP members in the combined company initially at the closing and the implied valuation of REP and TGC;
|
•
|
The terms of the merger agreement that permit TGC to discuss and negotiate an unsolicited acquisition proposal should one be made, and permit TGC to terminate the merger agreement in order to accept a “superior proposal,” in each case in certain circumstances and subject to certain payment obligations; and
|
•
|
The fact that the merger agreement allows the TGC board of directors, under specified circumstances, to change or withdraw its recommendation to its stockholders with respect to the approval of the merger subject to certain payment obligations.
|
•
|
The fact that existing TGC’s stockholders are expected to own approximately 5% of the outstanding capital stock of the combined company on a fully diluted basis, and will therefore experience a high degree of dilution in terms of their current ownership as a result of the merger;
|
•
|
The fact that REP’s business plan and the implementation of that plan is subject to numerous risks and uncertainties;
|
•
|
The risk that the potential benefits of the merger agreement may not be realized;
|
•
|
The fact that, while TGC expects the merger will be consummated, there can be no guarantee that all conditions to the parties’ obligations to consummate the merger will be satisfied, in particular because the REP members could elect to vote against approval of the merger;
|
•
|
The expenses to be incurred in connection with the merger and related administrative challenges associated with combining the organizations;
|
•
|
Reimbursement of REP’s expenses in an amount up to $475,000 by TGC upon the occurrence of certain events, and the potential effect of such expense reimbursement in deterring other potential acquirers from proposing a competing transaction that may be more advantageous to TGC’s stockholders;
|
•
|
The fact that, under certain circumstances, TGC may be required to reimburse REP for its expenses in an amount up to $475,000;
|
•
|
The fact that the analyses and projections on which the TGC board of directors made its determinations are uncertain; and
|
•
|
The fact that actual or potential conflicts of interest existed, including those discussed in “The Merger – Interests of the TGC Directors and Executive Officers in the Merger” and “The Merger – Opinion of Roth Capital Partners, LLC to the TGC Board of Directors”, although the TGC board of directors concluded that all such conflicts were either not material to the negotiating process and/or were appropriately addressed during the process.
|
•
|
Historical and current information concerning REP’s business, including its financial performance and condition, operations and management;
|
•
|
REP’s prospects if it were to remain an independent company;
|
•
|
The likelihood that alternative strategic transactions may be available to REP, if at all;
|
•
|
The cash resources of the combined company expected to be available at the closing and the anticipated burn rate of the combined company;
|
•
|
The potential to provide its current members with greater liquidity by owning stock in a public company;
|
•
|
The expectation that the merger with TGC would be a more time and cost efficient means to access capital than other options considered by REP, including private placements, debt financings and traditional methods of accessing the public markets through an initial public offering;
|
•
|
The broader range of investors available to a public company to potentially support REP’s growth than REP could otherwise obtain if it continued to operate as a privately held company;
|
•
|
The expectation that substantially all of REP’s employees, particularly its management, will serve in similar roles at the combined company; and
|
•
|
The terms and conditions of the merger agreement, including, without limitation, the following:
|
○
|
The expected relative percentage ownership of TGC’s stockholders and REP members in the combined company initially at the closing and the implied valuation of REP and TGC;
|
○
|
The parties’ representations, warranties and covenants and the conditions to their respective obligations; and
|
○
|
The limited number and nature of the conditions of the obligation of TGC to consummate the merger; and
|
•
|
The likelihood that the merger will be consummated on a timely basis.
|
•
|
The risk that the potential benefits of the merger agreement may not be realized;
|
•
|
The risk that future sales of common stock by existing TGC stockholders may cause the price of TGC common stock to fall, thus reducing the potential value of TGC common stock received by REP members following the merger;
|
•
|
Reimbursement of TGC’s expenses in an amount up to $475,000 by REP upon the occurrence of certain events;
|
•
|
The fact that REP may not be able to engage in a competing transaction that may be more advantageous to REP’s members than the merger;
|
•
|
The price volatility of TGC common stock, which may reduce the potential value of TGC common stock received by REP members following the merger;
|
•
|
The potential reduction of TGC’s net cash prior to closing;
|
•
|
The possibility that TGC could, under certain circumstances, consider unsolicited acquisition proposals if superior to the merger or that TGC’s board of directors could change its recommendation to approve the merger upon the occurrence of certain events;
|
•
|
The possibility that the merger might not be completed for a variety of reasons, such as the failure of TGC to obtain the required stockholder vote, and the potential adverse effect on the reputation of REP and the ability of REP to pursue other transactions in the future in the event the merger is not completed;
|
•
|
The risk that the merger might not be consummated in a timely manner or at all;
|
•
|
The risk that the combined company may be subject to potential liabilities that REP would not be subject to as a stand-alone company;
|
•
|
The expenses to be incurred in connection with the merger and related administrative challenges associated with combining the organizations;
|
•
|
The additional expenses that REP’s business will be subject to as a public company following the closing to which it has not previously been subject; and
|
•
|
Various other risks associated with the combined company and the merger, including the risks described in the section titled “Risk Factors”.
|
•
|
reviewed certain publicly available and other business and financial information that Roth believe to be relevant to its inquiry;
|
•
|
reviewed certain internal financial statements and other financial and operating data concerning TGC and REP, as provided by their respective representatives;
|
•
|
reviewed (a) a reserve engineering report, from REP, prepared by Netherland, Sewell & Associates, Inc., (b) a reserve engineering report, from TGC, prepared by LaRoche Petroleum Consultants Ltd., (c) a reserve engineering report prepared by REP’s management, and (d) a reserve engineering report prepared by TGC’s management;
|
•
|
reviewed the reported prices and trading activity for the TGC common stock;
|
•
|
compared selected market valuation metrics of certain publicly-traded companies Roth deemed relevant with those same metrics implied by the transaction;
|
•
|
compared the financial performance, prices and trading activity of TGC common stock with that of certain publicly traded companies that Roth deemed relevant, and other trading data for public companies, which Roth deemed comparable to TGC;
|
•
|
reviewed recent comparable oil and gas acquisition and divestures, which are comparable to the terms of the merger agreement;
|
•
|
compared the financial terms of the transaction to financial terms of certain other acquisition transactions Roth deemed relevant;
|
•
|
participated in certain discussions with management of TGC and REP, and with representatives of TGC’s board of directors and its legal and professional advisors; and
|
•
|
performed such other analyses, reviewed such other information and considered such other data, financial studies, analyses, and financial, economic and market criteria, and such other factors as Roth deemed appropriate.
|
•
|
Comparable Company Analysis;
|
•
|
Comparable Transaction Analysis;
|
•
|
Net Asset Value Analysis; and
|
•
|
Contribution Analysis.
|
•
|
Callon Petroleum Company;
|
•
|
Centennial Resources Development, Inc.;
|
•
|
Diamondback Energy, Inc.;
|
•
|
Earthstone Energy, Inc.;
|
•
|
Matador Resources Company;
|
•
|
Parsley Energy, Inc.; and
|
•
|
Ring Energy, Inc.
|
|
| |
Low
|
| |
Median
|
| |
High
|
Total enterprise value divided by:
|
| |
|
| |
|
| |
|
Net Daily Production ($/BOE/D)
|
| |
$35,957.1
|
| |
$40,032.1
|
| |
$47,217.3
|
Net Proved Reserves ($/BOE)
|
| |
$6.16
|
| |
$7.80
|
| |
$10.89
|
TTM Adjusted EBITDA
|
| |
4.1x
|
| |
4.7x
|
| |
5.1x
|
•
|
BNK Petroleum Inc.;
|
•
|
Evolution Petroleum Corporation;
|
•
|
Mid-Con Energy Partners, LP; and
|
•
|
Northern Oil & Gas, Inc.
|
|
| |
Low
|
| |
Median
|
| |
High
|
Total enterprise value divided by:
|
| |
|
| |
|
| |
|
Net Daily Production ($/BOE/D)
|
| |
$27,252.0
|
| |
$28,389.3
|
| |
$34,682.0
|
Net Proved Reserves ($/BOE)
|
| |
$3.26
|
| |
$3.94
|
| |
$5.90
|
TTM Adjusted EBITDA
|
| |
2.7x
|
| |
3.5x
|
| |
4.7x
|
|
| |
Net Daily Production ($/BOE/D)
|
| |
Net Proved Reserves (BOE)
|
| |
TTM Adjusted EBITDA
|
|||||||||
|
| |
Low
|
| |
High
|
| |
Low
|
| |
High
|
| |
Low
|
| |
High
|
|
| |
64.882276
|
| |
117.539848
|
| |
132.471782
|
| |
387.78766
|
| |
337.10792
|
| |
450.94386
|
Implied Exchange Ratio Ranges
|
| |
x
|
| |
x
|
| |
2x
|
| |
1x
|
| |
7x
|
| |
4x
|
•
|
Blackbeard Operating, LLC’s acquisition of assets from ConocoPhillips;
|
•
|
Sabinal Energy Operating, LLC’s acquisition of assets from Diamondback Energy, Inc.;
|
•
|
Ring Energy, Inc.’s acquisition of Wishbone Energy Partners, LLC;
|
•
|
Lime Rock Resources acquisition of assets from Greystone Petroleum, LLC;
|
•
|
Stronghold Energy Operating II, LLC’s acquisition of assets from Devon Energy Corporation;
|
•
|
Pacific Energy Development Corporation’s acquisition of assets from Hunter Oil Corporation; and
|
•
|
Steward Energy II, LLC’s acquisition of Manzano Energy Partners II, LLC.
|
|
| |
Low
|
| |
High
|
Total enterprise value divided by:
|
| |
|
| |
|
Net Daily Production ($/BOE/D)
|
| |
$36,660.0
|
| |
$40,864.9
|
Net Proved Reserves ($/BOE)
|
| |
$3.14
|
| |
$6.28
|
|
| |
Net Daily Production ($/BOE/D)
|
| |
Net Proved Reserves (BOE)
|
||||||
|
| |
Low
|
| |
High
|
| |
Low
|
| |
High
|
Implied Exchange Ratio Ranges
|
| |
94.963958x
|
| |
180.298458x
|
| |
49.679015x
|
| |
241.570483x
|
|
| |
Independent Reserve Report
|
| |
Management Reserve Report
|
||||||
|
| |
Low
|
| |
High
|
| |
Low
|
| |
High
|
Implied Exchange Ratio Ranges
|
| |
122.651781x
|
| |
241.108210x
|
| |
185.342565x
|
| |
391.225955x
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Debt Adjusted
Contribution
|
||||||
|
| |
Contribution
|
| |
Implied
Ownership
|
| |
|
|||||||||||||||
|
| |
TGC
($MM)
|
| |
TGC
(%)
|
| |
REP
($MM)
|
| |
REP
(%)
|
| |
Combined
|
| |
TGC
(%)
|
| |
REP
(%)
|
| |
Implied Exchange Ratio
|
2019 Adjusted EBITDA
|
| |
0.4
|
| |
0.6%
|
| |
70.5
|
| |
99.4%
|
| |
70.9
|
| |
1%
|
| |
99%
|
| |
567.320698x
|
TTM Adjusted EBITDA
|
| |
0.0
|
| |
0.0%
|
| |
74.0
|
| |
100.0%
|
| |
74.0
|
| |
0%
|
| |
100%
|
| |
NM
|
6/30/20 Daily Production (Boe/d)
|
| |
242.0
|
| |
3.4%
|
| |
6,831.8
|
| |
96.6%
|
| |
7,073.8
|
| |
9%
|
| |
91%
|
| |
52.484964x
|
Total Proved Reserves (MBoe)
|
| |
729.0
|
| |
0.6%
|
| |
115,512.6
|
| |
99.4%
|
| |
116,241.6
|
| |
1%
|
| |
99%
|
| |
521.829388x
|
Total Proved Developed Producing Reserves (MBoe)
|
| |
708.5
|
| |
2.7%
|
| |
25,527.2
|
| |
97.3%
|
| |
26,235.7
|
| |
6%
|
| |
94%
|
| |
80.592766x
|
Total Proved PV-10
|
| |
4.7
|
| |
0.7%
|
| |
682.2
|
| |
99.3%
|
| |
686.8
|
| |
1%
|
| |
99%
|
| |
479.445619x
|
Total Proved Developed Producing PV-10
|
| |
4.3
|
| |
1.7%
|
| |
250.7
|
| |
98.3%
|
| |
255.0
|
| |
3%
|
| |
97%
|
| |
162.667493x
|
•
|
The parties’ expectations that Mr. Rugen, who is currently interim chief executive officer and chief financial officer of TGC, will become the chief financial officer of the combined company and a director of the combined company. Other than Mr. Rugen, no other officer or director of TGC has an interest in the merger that may be different from, or in addition to, the interests of the TGC stockholders, except as provided immediately below.
|
•
|
The employees of TGC, including the officers, are expected to become parties to change in control and severance agreements that provide the employees with severance in the event they are terminated without cause or resign for good reason within 12 months following the merger. No director of TGC will become a party to any change in control and severance agreement.
|
|
| |
Option Awards
|
||||||||||||
Name
|
| |
Number of
Shares of TGC
Common Stock
Underlying
Unexercised
Options (#)
Exercisable
|
| |
Number of
Shares of TGC
Common Stock
Underlying
Unexercised
Options (#)
Unexercisable
|
| |
Option
Exercise
Price ($)
|
| |
Option
Expiration
Date
|
| ||
Current Executive Officers
|
| |
|
| |
|
| |
|
| |
|
| ||
Michael J. Rugen
|
| |
0
|
| |
0
|
| |
N/A
|
| |
N/A
|
| ||
Cary V. Sorensen
|
| |
0
|
| |
0
|
| |
N/A
|
| |
N/A
|
| ||
|
| |
|
| |
|
| |
|
| |
|
| ||
Current Directors
|
| |
|
| |
|
| |
|
| |
|
| ||
Peter Salas
|
| |
0
|
| |
0
|
| |
N/A
|
| |
N/A
|
| ||
Richard M. Thon
|
| |
0
|
| |
0
|
| |
N/A
|
| |
N/A
|
| ||
Matthew K. Behrent
|
| |
0
|
| |
0
|
| |
N/A
|
| |
N/A
|
|
Name
|
| |
Fees earned or
paid in cash
($)
|
| |
Stock awards
Compensation(1)
($)
|
| |
Total
($)
|
Matthew K. Behrent
|
| |
$15,000
|
| |
$1,145
|
| |
$16,145
|
Richard M. Thon
|
| |
$15,000
|
| |
$1,145
|
| |
$16,145
|
Peter E. Salas
|
| |
$15,000
|
| |
$1,145
|
| |
$16,145
|
(1)
|
The amounts represented in this column are equal to the aggregate grant date fair value of the award computed in accordance with FASB ASC Topic 718, Compensation-Stock Compensation, in connection with options granted under the Tengasco, Inc. Stock Incentive Plan.
|
Name and Principal Position
|
| |
Year
|
| |
Salary
($)
|
| |
Bonus
($)
|
| |
Stock Awards
($)
|
| |
All Other
Compensation(1)
($)
|
| |
Total
($)
|
Michael J. Rugen,
Chief Financial Officer
Chief Executive Officer (interim)(2)
|
| |
2020
|
| |
199,826
|
| |
23,944
|
| |
10,633
|
| |
8,132
|
| |
242,535
|
|
2019
|
| |
199,826
|
| |
23,507
|
| |
12,147
|
| |
8,128
|
| |
243,608
|
||
Cary V. Sorensen,
General Counsel
|
| |
2020
|
| |
91,000
|
| |
—
|
| |
—
|
| |
3,720
|
| |
94,720
|
|
2019
|
| |
91,000
|
| |
—
|
| |
—
|
| |
3,707
|
| |
94,707
|
(1)
|
The amounts in this column consist of the TGC’s matching contributions to its 401 (k) plan and the portion of company-wide group term life insurance premiums allocable to these named executive officers.
|
(2)
|
Mr. Rugen was appointed interim Chief Executive Officer on June 28, 2013. The bonus and stock award information for Mr. Rugen for 2020 and 2019 represents his compensation for his services as CEO.
|
|
| |
Golden Parachute Compensation
|
|||
Name
|
| |
Cash(1)
|
| |
Total
|
Michael J. Rugen
|
| |
$99,913.06
|
| |
$99,913.06
|
Cary V. Sorensen
|
| |
$45,500.00
|
| |
$45,500.00
|
(1)
|
The cash amount payable to the named executive officers pursuant to their CIC Severance Agreements upon a qualifying termination following the merger based on the employee’s base salary and years of service to TGC. The cash severance payable to Mr. Rugen and Mr. Sorensen is paid in a lump sum within ten (10) days of their execution and non-revocation of a release of claims and is equal to 26 weeks of such officer’s base salary. Cash severance is a “double-trigger” payment in that it is payable upon a termination of employment without cause or resignation for good reason within 12 months following the merger.
|
Directors and Executive Officers
|
| |
Number of REP
Common Units Held
Immediately Prior to
the Closing
|
Bobby D. Riley(1)
|
| |
27,331.34
|
Kevin Riley(2)
|
| |
15,203.08
|
Bryan H. Lawrence(3)
|
| |
—
|
Philip Riley(4)
|
| |
—
|
Alvin Libin(5)
|
| |
—
|
(1)
|
Includes 13,238.01 unvested restricted REP units.
|
(2)
|
Includes 7,643.67 unvested restricted REP units.
|
(3)
|
Yorktown XI Company LP is the sole general partner of Yorktown Energy Partners XI, L.P. Yorktown XI Associates LLC is the sole general partner of Yorktown XI Company LP. The managers of Yorktown XI Associates LLC, who act by majority approval, are Bryan H. Lawrence, one of REP’s directors, W. Howard Keenan, Jr., Peter A. Leidel, Tomás R. LaCosta, Robert A. Signorino, Bryan R. Lawrence and James C. Crain. As a result, Yorktown XI Associates LLC may be deemed to share the power to vote or direct the vote or to dispose or direct the disposition of the common stock owned by Yorktown Energy Partners XI, L.P. Yorktown XI Company LP and Yorktown XI Associates LLC disclaim beneficial ownership of the common stock held by Yorktown Energy Partners XI, L.P. in excess of their pecuniary interest therein. The managers of Yorktown XI Associates LLC disclaim beneficial ownership of the common stock held by Yorktown Energy Partners XI, L.P. The address of such funds is 410 Park Avenue, 19th Floor, New York, New York 10022. See “Principal Equityholders of REP” for additional information.
|
(4)
|
Bluescape Riley Exploration Acquisition LLC is a Delaware limited liability company and beneficially owns REP’s common units. Bluescape Riley Exploration Holdings LLC is a Delaware limited liability company and beneficially owns units of REP’s Series A Preferred Units in Riley Exploration—Permian, LLC. Bluescape Riley Exploration Acquisition LLC is a wholly owned subsidiary of Bluescape Riley Exploration Holdings LLC. Bluescape Energy Recapitalization and Restructuring Fund III LP has voting and dispositive power over REP’s shares held by Bluescape Riley Exploration Acquisition LLC and Bluescape Riley Exploration Holdings LLC and therefore may also be deemed to be the beneficial owner of these shares. Bluescape Energy Partners III GP LLC may be deemed to share voting and dispositive power over these shares and therefore may also be deemed to be the beneficial owner of these shares by virtue of Bluescape Energy Partners III GP LLC being the sole general partner of Bluescape Energy Recapitalization and Restructuring Fund III LP. Bluescape Resources GP Holdings LLC may be deemed to share voting and dispositive power over these shares and therefore may also be deemed to be the beneficial owner of these shares by virtue of Bluescape Resources GP Holdings LLC being the manager of Bluescape Energy Partners III GP LLC. Charles John Wilder, Jr. may be deemed to share voting and dispositive power over these shares and therefore may also be deemed to be the beneficial owner of these shares by virtue of Charles John Wilder, Jr. being the manager of Bluescape Resources GP Holdings LLC. Each of Bluescape Riley Exploration Acquisition LLC, Bluescape Riley Exploration Holdings LLC, Bluescape Energy Recapitalization and Restructuring Fund III LP, Bluescape Energy Partners III GP LLC, Bluescape Resources GP Holdings LLC, and Charles John Wilder, Jr. disclaims beneficial ownership of the shares reported as held by Bluescape Riley Exploration Holdings LLC in excess of its respective pecuniary interest in such shares. The address of Bluescape Riley Exploration Acquisition LLC and Bluescape Riley Exploration Holdings LLC and mailing address of each listed beneficial owner is 200 Crescent Court, Suite 1900, Dallas, Texas 75201. See “Principal Equityholders of REP” for additional information.
|
(5)
|
Boomer Petroleum, LLC is a Delaware limited liability company that is owned 50% by Texel Resources Inc., a Canadian corporation, and 50% by Balmon California, Inc., a California corporation. The President of Boomer Petroleum, LLC is Alvin Libin, one of REP’s directors. The address of Boomer Petroleum, LLC is 3200 255 5th Avenue SW, Calgary, Alberta, Canada T2P 3G6. See “Principal Equityholders of REP” for additional information.
|
Restricted Unitholder Name
|
| |
Grant Date
|
| |
Vesting
Dates
|
| |
Number of
REP Restricted
Units as of
January 15,
2021
|
Bobby D. Riley
|
| |
|
| |
2/1/2021
|
| |
|
|
4/25/2019
|
| |
2/1/2022
|
| |
2,726.67
|
||
|
|
| |
2/1/2021
|
| |
|
||
|
|
| |
2/1/2022
|
| |
|
||
|
2/1/2020
|
| |
2/1/2023
|
| |
4,077
|
||
|
|
| |
10/1/2021
|
| |
|
||
|
|
| |
10/1/2022
|
| |
|
||
|
10/1/2020
|
| |
10/1/2023
|
| |
4,166.67
|
||
|
|
| |
10/1/2021
|
| |
|
||
|
|
| |
10/1/2022
|
| |
|
||
|
10/1/2020
|
| |
10/1/2023
|
| |
2,267.67
|
||
Kevin Riley
|
| |
|
| |
2/1/2021
|
| |
|
|
4/25/2019
|
| |
2/1/2022
|
| |
1,894
|
||
|
|
| |
2/1/2021
|
| |
|
||
|
|
| |
2/1/2022
|
| |
|
||
|
2/1/2020
|
| |
2/1/2023
|
| |
2,833
|
||
|
|
| |
10/1/2021
|
| |
|
||
|
|
| |
10/1/2022
|
| ||||
|
10/1/2020
|
| |
10/1/2023
|
| |
2,916.67
|
||
Corey Riley
|
| |
|
| |
2/1/2021
|
| |
|
|
|
| |
2/1/2022
|
| |
|
||
|
2/1/2020
|
| |
2/1/2023
|
| |
1,250
|
||
|
|
| |
10/1/2021
|
| |
|
||
|
|
| |
10/1/2022
|
| |
|
||
|
10/1/2020
|
| |
10/1/2023
|
| |
2,708.33
|
||
Michael Palmer
|
| |
|
| |
2/1/2021
|
| |
|
|
|
| |
2/1/2022
|
| |
|
||
|
2/1/2020
|
| |
2/1/2023
|
| |
1,250
|
||
|
|
| |
10/1/2021
|
| |
|
||
|
|
| |
10/1/2022
|
| |
|
||
|
10/1/2020
|
| |
10/1/2023
|
| |
1,250
|
•
|
for any breach of the director’s duty of loyalty to TGC or its stockholders;
|
•
|
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
|
•
|
under Section 174 of the DGCL; or
|
•
|
for any transaction from which the director derived an improper personal benefit.
|
•
|
each REP common unit outstanding immediately prior to the effective time (excluding any REP common units held as treasury stock or held by any subsidiary of REP) will automatically be converted solely into the right to receive: (i) a number of shares of TGC common stock equal to the Exchange Ratio (together with any cash to be paid in lieu of fractional shares of TGC common stock payable pursuant to the merger agreement) and (ii) any dividends or other distributions to which the holder of a REP common unit becomes entitled to upon the surrender of such REP common units in accordance with the merger agreement; and
|
•
|
each REP restricted unit that is outstanding immediately prior to the effective time, will be converted into that number of restricted shares of TGC common stock equal to the product (rounded down to the nearest whole number) of: (i) the number of REP restricted units held by that holder as of immediately prior to the effective time; and (ii) the Exchange Ratio.
|
•
|
persons or entities that are not U.S. holders;
|
•
|
financial institutions;
|
•
|
insurance companies;
|
•
|
any entity which is subject to special tax rules described in Section 7874 of the Code (i.e. applicable to certain entities engaged in specified “inversion” transactions;
|
•
|
tax-exempt organizations;
|
•
|
dealers in securities or currencies;
|
•
|
certain expatriates or persons whose functional currency is not the U.S. dollar;
|
•
|
traders in securities that elect to use a mark to market method of accounting;
|
•
|
persons that own more than 5% of the outstanding TGC stock;
|
•
|
persons that hold TGC stock or REP common units as part of a straddle, hedge, constructive sale or conversion transactions; and
|
•
|
U.S. holders that acquired their shares of TGC stock or REP common units through the exercise of an option issued in connection with the performance of services or otherwise as compensation and/or in connection with the performance of services.
|
•
|
an individual who is a citizen or resident (as determined under special rules of the Code and Treasury regulations) of the United States;
|
•
|
an entity which is treated for U.S. federal tax purposes as a “corporation,” and which has been created or organized in or under the laws of the United States or any state or political subdivision thereof;
|
•
|
an estate that is subject to U.S. federal income tax on its income regardless of its source; or
|
•
|
a trust, the substantial decisions of which are controlled by one or more U.S. persons and which is subject to the primary supervision of a U.S. court, or a trust that validly has elected under applicable Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes.
|
•
|
corporate organization, power, authority and qualifications to do business and corporate standing of REP and REP’s subsidiaries;
|
•
|
capital structure;
|
•
|
corporate power and authority to enter into the merger agreement and to complete the merger, subject to obtaining various consents;
|
•
|
absence of any conflicts with organizational documents, required consents and waivers, violations or breaches of any obligations or applicable laws as a result of entering into the merger agreement and of completing the transactions proposed under the merger agreement;
|
•
|
except for certain items set forth in the merger agreement, absence of any consents or approvals with any governmental authority required by or with respect to the execution and delivery of the merger agreement and the consummation of the transactions proposed under the merger agreement;
|
•
|
financial statements and absence of off balance sheet arrangements;
|
•
|
absence of undisclosed liabilities;
|
•
|
no insolvency proceedings;
|
•
|
compliance with applicable laws, permits and regulatory matters;
|
•
|
no insider trading;
|
•
|
litigation;
|
•
|
brokers and fees and expenses;
|
•
|
absence of certain changes or events since June 30, 2020;
|
•
|
material contracts
|
•
|
owned and leased property;
|
•
|
condition of assets;
|
•
|
intellectual property;
|
•
|
insurance;
|
•
|
environmental matters;
|
•
|
employee benefit matters;
|
•
|
labor and employment matters;
|
•
|
taxes and tax returns;
|
•
|
books and records;
|
•
|
information supplied;
|
•
|
oil and gas matters;
|
•
|
derivative transactions;
|
•
|
regulation; and
|
•
|
no other representations and warranties.
|
•
|
corporate organization, power, authority and qualifications to do business and corporate standing of REP and REP’s subsidiaries;
|
•
|
capital structure;
|
•
|
corporate power and authority to enter into the merger agreement and to complete the merger, subject to obtaining various consents;
|
•
|
absence of any conflicts with organizational documents, required consents and waivers, violations or breaches of any obligations or applicable laws as a result of entering into the merger agreement and of completing the transactions proposed under the merger agreement;
|
•
|
except for certain items set forth in the merger agreement, absence of any consents or approvals with any governmental authority required by or with respect to the execution and delivery of the merger agreement and the consummation of the transactions proposed under the merger agreement;
|
•
|
financial statements and absence of off balance sheet arrangements;
|
•
|
SEC filings; internal controls, disclosure controls, compliance with certain laws;
|
•
|
absence of undisclosed liabilities;
|
•
|
no insolvency proceedings;
|
•
|
absence of being a “shell” company;
|
•
|
compliance with applicable laws, permits and regulatory matters;
|
•
|
no insider trading;
|
•
|
litigation;
|
•
|
brokers and fees and expenses;
|
•
|
absence of certain changes or events since June 30, 2020;
|
•
|
material contracts
|
•
|
owned and leased property;
|
•
|
condition of assets;
|
•
|
intellectual property;
|
•
|
insurance;
|
•
|
environmental matters;
|
•
|
employee benefit matters;
|
•
|
labor and employment matters;
|
•
|
taxes and tax returns;
|
•
|
books and records;
|
•
|
information supplied;
|
•
|
oil and gas matters;
|
•
|
derivative transactions;
|
•
|
regulatory;
|
•
|
fairness opinion;
|
•
|
related party transactions;
|
•
|
intended tax treatment;
|
•
|
Merger Sub; and
|
•
|
no other representations and warranties.
|
•
|
changes generally affecting the economy, financial or securities markets, or political conditions;
|
•
|
the execution and delivery, announcement, or pendency of the transactions contemplated by the merger agreement, including the impact thereof on relationships, contractual or otherwise, of TGC and its subsidiaries with employees, suppliers, customers, governmental entities, or other third persons (it being understood and agreed that this clause shall not apply with respect to any representation or warranty that is intended to address the consequences of the execution and delivery of the merger agreement or the announcement or the pendency of the merger agreement);
|
•
|
any changes in applicable law or Generally Accepted Accounting Principles or other applicable accounting standards, including interpretations thereof,
|
•
|
acts of war, sabotage, terrorism, or military actions, or the escalation thereof,
|
•
|
natural disasters, weather conditions, epidemics, pandemics, or disease outbreaks (including the COVID-19 virus), or other force majeure events;
|
•
|
general conditions in the industry in which TGC and its subsidiaries operate;
|
•
|
any failure, in and of itself, by TGC to meet any internal or published projections, forecasts, estimates, or predictions in respect of revenues, earnings, or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a TGC material adverse effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso);
|
•
|
any change, in and of itself, in the market price or trading volume of TGC’s securities or in its credit ratings (it being understood that the facts or occurrences giving rise to or contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a TGC material adverse effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso); or
|
•
|
actions taken as required or specifically permitted by the merger agreement or actions or omissions taken with REP’s consent.
|
•
|
changes generally affecting the economy, financial or securities markets, or political conditions;
|
•
|
the execution and delivery, announcement, or pendency of the transactions contemplated by the merger agreement, including the impact thereof on relationships, contractual or otherwise, of REP and its subsidiaries with employees, suppliers, customers, governmental entities, or other third persons (it being understood and agreed that this clause shall not apply with respect to any representation or warranty that is intended to address the consequences of the execution and delivery of the merger agreement or the announcement or the pendency of the merger agreement);
|
•
|
any changes in applicable law or Generally Accepted Accounting Principles or other applicable accounting standards, including interpretations thereof;
|
•
|
acts of war, sabotage, terrorism, or military actions, or the escalation thereof;
|
•
|
natural disasters, weather conditions, epidemics, pandemics, or disease outbreaks (including the COVID-19 virus), or other force majeure events;
|
•
|
general conditions in the industry in which REP and its subsidiaries operate;
|
•
|
any failure, in and of itself, by REP to meet any internal or published projections, forecasts, estimates, or predictions in respect of revenues, earnings, or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a REP material adverse effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso);
|
•
|
any change, in and of itself, in REP’s credit ratings (it being understood that the facts or occurrences giving rise to or contributing to such change may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to become, a REP material adverse effect, to the extent permitted by this definition and not otherwise excepted by another clause of this proviso); or
|
•
|
actions taken as required or specifically permitted by the merger agreement or actions or omissions taken with TGC’s consent.
|
•
|
amend its organizational documents;
|
•
|
(i) split, combine, or reclassify any of its securities or securities of its subsidiaries, (ii) repurchase, redeem, or otherwise acquire, or offer to repurchase, redeem, or otherwise acquire, any of its securities or securities of its subsidiaries, or (iii) declare, set aside, or pay any dividend or distribution (whether in cash, stock, property, or otherwise) in respect of, or enter into any contract with respect to the voting of, any shares of its capital stock (other than dividends disclosed in the disclosure schedules to the merger agreement);
|
•
|
issue, sell, pledge, dispose of, or encumber any of its securities or securities of its subsidiaries, other than (i) the issuance of securities in connection with, in the case of REP, REP’s conversion pursuant to the merger agreement, and (ii) any issuance of securities pursuant to its organizational documents;
|
•
|
in the case of TGC, delist its Common Stock from the NYSE American or take any action reasonably expected to result in the delisting of its Common Stock from the NYSE American;
|
•
|
except as required by applicable law or by any employee incentive plan, equity award, employment agreement or contract in effect as of the date of the merger agreement (i) increase the compensation payable or that could become payable by such company or any of its subsidiaries to directors, officers, or employees, other than increases in compensation made to non-officer employees in the ordinary course of business consistent with past practice, (ii) promote any officers or employees, except in connection with such company’s annual or quarterly compensation review cycle or as the result of the termination or resignation of any officer or employee, or (iii) establish, adopt, enter into, amend, terminate, exercise any discretion under, or take any action to accelerate rights under any employee incentive plan or any plan, agreement, program, policy, trust, fund, or other arrangement that would be an employee incentive plan if it were in existence as of the date of the merger agreement, or make any contribution to any employee incentive plan, other than contributions required by law, the terms of such employee incentive plan as in effect on the date hereof, or that are made in the ordinary course of business consistent with past practice;
|
•
|
acquire, by merger, consolidation, acquisition of stock or assets, or otherwise, any business or person or division thereof or make any loans, advances, or capital contributions to or investments in any person in excess of $50,000 in the aggregate;
|
•
|
transfer, license, sell, lease, or otherwise dispose of (whether by way of merger, consolidation, sale of stock or assets, or otherwise) or pledge, encumber, or otherwise subject to any lien (other than a Permitted Encumbrance as defined in the merger agreement), any assets, including the capital stock or other equity interests in any subsidiary of such company; provided, that the foregoing shall not prohibit such company and its subsidiaries from transferring, selling, leasing, or disposing of obsolete equipment or assets being replaced, granting non-exclusive licenses under its intellectual property, or selling hydrocarbons, in each case in the ordinary course of business consistent with past practice, or (ii) adopt or effect a plan of complete or partial liquidation, dissolution, restructuring, recapitalization, or other reorganization other than in anticipation of the merger;
|
•
|
in the case of TGC, engage in any transaction or series of transactions that results in TGC being deemed a shell company;
|
•
|
in the case of REP, except for drawdowns or repayments under REP’s credit facility or other financing of ordinary course trade payables consistent with past practice, and in the case of TGC, except for drawdowns, forgiveness and/or repayment of amounts under TGC’s credit facility and TGC’s Paycheck Protection Program loan or other financing of ordinary course trade payables consistent with past practice, repurchase, prepay, or incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or options, warrants, calls, or other rights to acquire any debt
|
•
|
except in the ordinary course of business consistent with past practice, enter into or amend or modify in any material respect, or consent to the termination of (other than at its stated expiry date), any material contract or any lease with respect to material real property or any other contract or lease that, if in effect as of the date of the merger agreement would constitute a material contract or lease with respect to material real property under the merger agreement;
|
•
|
institute, settle, or compromise any legal action involving the payment of monetary damages by such company or any of its subsidiaries of any amount exceeding $50,000 in the aggregate, other than (i) any legal action brought against the other party to the merger agreement arising out of a breach or alleged breach of the merger agreement by such other party, (ii) the settlement of claims, liabilities, or obligations reserved against on its balance sheet, or (iii) as disclosed in such company’s disclosure schedules; provided, that neither such company nor any of its subsidiaries shall settle or agree to settle any legal action which settlement involves a conduct remedy or injunctive or similar relief or has a restrictive impact on such company’s business;
|
•
|
make any material change in any method of financial accounting principles or practices, in each case except for any such change required by a change in Generally Accepted Accounting Principles or applicable law;
|
•
|
(i) settle or compromise any material tax claim, audit, or assessment for an amount materially in excess of the amount reserved or accrued on its balance sheet, (ii) make or change any material tax election, change any annual tax accounting period, or adopt or change any method of tax accounting, (iii) amend any material tax returns or file claims for material tax refunds, or (iv) enter into any material closing agreement, surrender in writing any right to claim a material tax refund, offset or other reduction in tax liability or consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment relating to such company or its subsidiaries;
|
•
|
enter into any material agreement, agreement in principle, letter of intent, memorandum of understanding, or similar contract with respect to any joint venture, strategic partnership, or alliance;
|
•
|
take any action to exempt any person from, or make any acquisition of securities of such company by any person not subject to, any state takeover statute or similar statute or regulation that applies to such company with respect to a Takeover Proposal (as defined in the merger agreement) or otherwise, except for the other party(ies) to the merger agreement, or any of their respective subsidiaries or affiliates, or the transactions contemplated by the merger agreement;
|
•
|
abandon, allow to lapse, sell, assign, transfer, grant any security interest in otherwise encumber or dispose of any material intellectual property, or grant any right or license to any material intellectual property other than pursuant to non-exclusive licenses entered into in the ordinary course of business consistent with past practice;
|
•
|
terminate or modify in any material respect, or fail to exercise renewal rights with respect to, any material insurance policy;
|
•
|
except to the extent expressly permitted by the merger agreement, take any action that is intended or that would reasonably be expected to, individually or in the aggregate, prevent, materially delay, or materially impede the consummation of the merger or the other transactions contemplated by the merger agreement;
|
•
|
in the case of TGC, become bound or obligated to participate in any operation, or consent to participate in any operation, with respect to any oil and gas properties that is estimated to result in an expenditure by TGC or its subsidiaries in excess of $50,000 unless the operation is necessary to extend, preserve or maintain an oil and gas property; or
|
•
|
agree or commit to do any of the foregoing.
|
•
|
take, or cause to be taken, all actions, and do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective and satisfy all conditions to the transactions contemplated the merger agreement as expeditiously as practicable;
|
•
|
as expeditiously as practicable, obtain all necessary permits, waivers, and actions or nonactions from governmental entities and the making of all necessary registrations and filings (including filings with governmental entities) and the taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any governmental entities;
|
•
|
as expeditiously as practicable, obtain all necessary consents or waivers from third parties; and
|
•
|
execute or deliver any additional instruments necessary to consummate the merger and to fully carry out the purposes of the merger agreement.
|
•
|
sell, license, assign, transfer, divest, hold separate, or otherwise dispose of any assets, business, or portion of business of REP, the surviving company, TGC, Merger Sub, or any of their respective subsidiaries;
|
•
|
conduct, restrict, operate, invest, or otherwise change the assets, business, or portion of business of REP, the surviving company, TGC, Merger Sub, or any of their respective subsidiaries in any manner; or
|
•
|
impose any restriction, requirement, or limitation on the operation of the business or portion of the business of REP, the surviving company, TGC, Merger Sub, or any of their respective subsidiaries;
|
•
|
provided, that if requested by REP, TGC will become subject to, consent to, or offer or agree to, or otherwise take any action with respect to, any such requirement, condition, limitation, understanding, agreement, or order so long as such requirement, condition, limitation, understanding, agreement, or order is only binding on TGC in the event the closing occurs.
|
•
|
the requisite vote of the stockholders of TGC at the TGC special meeting must have approved and adopted the merger agreement and the merger, and the other transactions proposed under the merger agreement including the TGC share issuance proposal, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal and the TGC equity plan proposal;
|
•
|
the requisite vote of the members of REP must have approved and adopted the merger agreement and the merger;
|
•
|
TGC shall have filed the second amended and restated certificate of incorporation of TGC with the Secretary of State of the State of Delaware;
|
•
|
the shares of TGC common stock to be issued in the merger and pursuant to the merger agreement must have been approved for listing (subject to official notice of issuance) on the NYSE American;
|
•
|
the Form S-4 shall have become effective under the Securities Act and shall not be the subject of any stop order and no proceeding for that purpose, and no similar proceeding with respect to this proxy statement/prospectus, shall have been initiated or threatened in writing by the SEC or its staff;
|
•
|
no governmental entity having jurisdiction over any party hereto shall have enacted, issued, promulgated, enforced, or entered any laws or orders, whether temporary, preliminary, or permanent, that make illegal, enjoin, or otherwise prohibit consummation of the merger, the TGC share issuance, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal, the TGC equity plan proposal or the other transactions contemplated by the merger agreement; and
|
•
|
all consents, approvals and other authorizations of any governmental entity required to consummate the merger, the TC share issuance, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal, the TGC equity plan proposal and the other transactions contemplated by the merger agreement (other than the filing of the Second Amended and Restated Certificate of Incorporation of TGC, the Second Amended and Restated Bylaws of TGC, the REP 2021 LTIP (as defined in the merger agreement) and the Certificate of Merger with the Secretary of State of the State of Delaware) shall have been obtained, free of any condition that would reasonably be expected to have a material adverse effect on TGC or REP.
|
•
|
representations and warranties regarding certain fundamental representations of REP must be true and correct (other than de minimis inaccuracies) as of the date of the merger agreement and as of immediately prior to the effective time of the merger with the same force and effect as if made as of such time or, if such representations and warranties address matters as of a particular date, then as of that particular date;
|
•
|
the remaining representations and warranties of REP in the merger agreement must be true and correct as of the date of the merger agreement and as of immediately prior to the effective time with the same force and effect as if made as of such time or, if such representations and warranties address matters as of a particular date, then as of that particular date, except in each case, or in the aggregate, where the failure to be so true and correct has not had and would not reasonably be expected to have a Company Material Adverse Effect (as defined in the merger agreement)(without giving effect to any references therein to any material adverse effect or other materiality qualifications);
|
•
|
REP must have performed in all material respects all of its obligations, and complied in all material respects with the agreements and covenants, required to be performed or complied with by it under the merger agreement at or prior to the closing;
|
•
|
there must not have occurred, since the date of the merger agreement, any Company Material Adverse Effect (as defined in the merger agreement) or any event, change, or effect that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect (as defined in the merger agreement); and
|
•
|
TGC must have received a certificate, signed by the chief executive officer or chief financial officer of REP, certifying as to the matters set forth above.
|
•
|
the representations and warranties regarding certain fundamental representations of TGC and the Merger Sub must be true and correct (other than de minimis inaccuracies) as of the date of the merger agreement and as of immediately prior to the effective time of the merger with the same force and effect as if made as of such time or, if such representations and warranties address matters as of a particular date, then as of that particular date;
|
•
|
the remaining representations and warranties of TGC and Merger Sub in the merger agreement must be true and correct as of the date of the merger agreement and as of immediately prior to the effective time with
|
•
|
TGC and Merger Sub must have performed in all material respects all of their obligations, and complied in all material respects with the agreements and covenants required to be performed or complied with by them under the merger agreement at or prior to the closing;
|
•
|
TGC shall at the closing of the merger take all necessary actions to cause the: (i) repayment of all principal, interest, prepayment expenses, or other amounts due under the TGC credit facility, (ii) termination of the loan agreements executed in connection with the TGC credit facility, (iii) release and termination of all liens on TGC and its subsidiaries or their respective assets securing the TGC credit facility, and (iv) delivery to REP of any applicable documents necessary to evidence the release and termination of such liens. TGC shall, at least three business days prior to the closing, take all necessary actions to cause the forgiveness and/or repayment of all principal, interest, prepayment expenses, or other amounts due under the Parent PPP Loan (as defined in the merger agreement), or requisite consent of the Parent PPP Loan lender, together with delivery to REP of any applicable documents necessary to evidence such forgiveness, termination or consent;
|
•
|
each of the deliverables referenced in the Seventh Amendment and Consent to Credit Agreement dated as of October 21, 2020 among REP, the lenders party thereto and Truist Bank, as administrative agent that are not in the control of REP shall have been executed and delivered by each of the signatories thereto on or prior to the closing date of the merger;
|
•
|
there must not have occurred, since the date of the merger agreement, any Parent Material Adverse Effect (as defined in the merger agreement) or any event, change, or effect that would, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect (as defined in the merger agreement);
|
•
|
to the extent requested in writing by REP, the CR insurance policy shall have been issued on or prior to the closing date of the merger and shall be in effect in accordance with its terms on the closing date of the merger;
|
•
|
the requisite vote of TGC, as the sole stockholder of Merger Sub shall have been received for the approval and adoption of the merger agreement and the merger; and
|
•
|
REP will have received a certificate, signed by an officer of TGC, certifying as to the matters set forth in the first, second, third, fifth, and seventh bullets above.
|
•
|
mutual written consent of TGC and REP;
|
•
|
by either TGC or REP if the merger shall not have been consummated by March 21, 2021 (the “End Date”); provided, however, that the right to terminate the merger agreement for failure of the merger to be consummated on or before the End Date shall not be available to any party whose breach of any representation, warranty, covenant, or agreement set forth in the merger agreement has been the cause of, or resulted in, the failure of the merger to be consummated on or before the End Date;
|
•
|
by either TGC or REP if any governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any law or order making illegal, permanently enjoining, or otherwise permanently prohibiting the consummation of the merger, the TGC share issuance, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal, the TGC equity plan proposal or the other transactions contemplated by the merger agreement, and such law or order shall have become final and nonappealable; provided, however, that the
|
•
|
by either TGC or REP if the proposal for the approval and adoption of the merger agreement and the merger, the TGC share issuance proposal, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal and the TGC equity plan proposal have been submitted to the stockholders of TGC for approval and the requisite vote of TGC stockholders shall not have been obtained;
|
•
|
by TGC, at any time prior to the effective time, if any of the following circumstances shall occur:
|
•
|
if (i) the REP board of managers fails to make the Company Board Recommendation (as defined in the merger agreement), (ii) a Company Adverse Recommendation Change (as defined in the merger agreement) shall have occurred, or (iii) the Requisite Company Vote (as defined in the merger agreement) is not received;
|
•
|
REP materially breaches or fails to perform its non-solicitation obligations or its obligation to use reasonable best efforts to solicit from the REP members consent in favor of closing the merger within 10 days following effectiveness of this prospectus/proxy statement as set forth in the merger agreement;
|
•
|
if there shall have been a breach of any representation, warranty, covenant, or agreement on the part of REP set forth in the merger agreement such that the conditions to the closing of the merger set forth in the merger agreement would not be satisfied and, in either such case, such breach is incapable of being cured by the End Date; provided, that TGC shall have given REP at least 30 days written notice prior to such termination stating TGC’s intention to terminate the merger agreement; provided further, that TGC shall not have the right to terminate the merger agreement pursuant to this provision if TGC or Merger Sub is then in material breach of any representation, warranty, covenant, or obligation under the merger agreement, which breach has not been cured; or
|
•
|
if, at any time prior to the Specified Time (as defined in the merger agreement), each of the following occur: (A) TGC shall have received a Superior Proposal (as defined in the merger agreement); (B) TGC shall have complied in all material respects with its non-solicitation obligations under the merger agreement, including with respect to making a Parent Adverse Recommendation Change (as defined in the merger agreement) with respect to such Superior Proposal (as defined in the merger agreement); (C) the TGC board of directors approves, and TGC concurrently with the termination of the merger agreement enters into, a definitive agreement with respect to such Superior Proposal (as defined in the merger agreement); and (D) prior to or concurrently with such termination, TGC reimburses REP’s expenses in an amount up to $475,000.
|
•
|
by REP, at any time prior to the effective time, if any of the following circumstances shall occur:
|
•
|
(i) the TGC board of directors fails to make the Parent Board Recommendation (as defined in the merger agreement), (ii) a Parent Adverse Recommendation Change (as defined in the merger agreement) shall have occurred, or (iii) the Requisite Parent Vote (as defined in the merger agreement) is not received;
|
•
|
TGC materially breaches or fails to perform its non-solicitation obligations or its obligation to use reasonable best efforts to solicit from the TGC stockholders and take all other action necessary to secure the vote required by law to obtain approval of the merger and merger agreement, the TGC share issuance, the TGC share increase proposal, the TGC name change proposal, the TGC reverse stock split proposal, the TGC corporate opportunities proposal, the TGC charter amendments provision proposal, the TGC bylaws amendments provision proposal and the TGC equity plan proposal as set forth in the merger agreement; and
|
•
|
if there shall have been a breach of any representation, warranty, covenant, or agreement on the part of TGC or Merger Sub set forth in the merger agreement such that the conditions to the closing of the
|
•
|
the number of shares of TGC common stock outstanding;
|
•
|
the then-prevailing trading price and trading volume of TGC common stock and the anticipated or actual impact of the reverse stock split on the trading price and trading volume for TGC common stock; and
|
•
|
prevailing market and economic conditions.
|
•
|
the market price per share of TGC common stock after the reverse stock split will rise in proportion to the reduction in the number of shares of TGC common stock outstanding before the reverse stock split or that the market price of TGC common stock will not decrease in the future;
|
•
|
the reverse stock split will result in a per share price that will attract brokers and investors who do not trade in lower priced stocks;
|
•
|
the reverse stock split will result in a per share price that will increase the ability of TGC to attract and retain employees; or
|
•
|
TGC will meet the requirements of NYSE American for inclusion for trading on the NYSE American, including the minimum bid price upon the closing.
|
•
|
persons or entities that are not U.S. holders;
|
•
|
financial institutions;
|
•
|
insurance companies;
|
•
|
any entity which is subject to special tax rules described in Section 7874 of the Code (i.e. applicable to certain entities engaged in specified “inversion” transactions;
|
•
|
tax-exempt organizations;
|
•
|
dealers in securities or currencies;
|
•
|
certain expatriates or persons whose functional currency is not the U.S. dollar;
|
•
|
traders in securities that elect to use a mark to market method of accounting;
|
•
|
persons that own more than 5% of the outstanding TGC common stock;
|
•
|
persons that hold TGC common stock as part of a straddle, hedge, constructive sale or conversion transactions; and
|
•
|
U.S. holders that acquired their shares of TGC common stock through the exercise of an option issued in connection with the performance of services or otherwise as compensation and/or in connection with the performance of services.
|
•
|
an individual who is a citizen or resident (as determined under special rules of the Code and Treasury regulations) of the United States;
|
•
|
an entity which is treated for U.S. federal tax purposes as a “corporation,” and which has been created or organized in or under the laws of the United States or any state or political subdivision thereof;
|
•
|
an estate that is subject to U.S. federal income tax on its income regardless of its source; or
|
•
|
a trust, the substantial decisions of which are controlled by one or more U.S. persons and which is subject to the primary supervision of a U.S. court, or a trust that validly has elected under applicable Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes.
|
Area
|
| |
Gross
Production
MBoe
|
| |
Average Net
Revenue
Interest
|
| |
Percentage
of Total Oil
Production
|
Rooks County, KS
|
| |
76.7
|
| |
0.830134
|
| |
69.1%
|
Trego County, KS
|
| |
12.8
|
| |
0.806984
|
| |
11.5%
|
Ellis County, KS
|
| |
5.8
|
| |
0.800628
|
| |
5.2%
|
Barton County, KS
|
| |
5.2
|
| |
0.814272
|
| |
4.7%
|
Russell County, KS
|
| |
2.9
|
| |
0.827102
|
| |
2.7%
|
Graham County, KS
|
| |
2.9
|
| |
0.873081
|
| |
2.6%
|
Rush County, KS
|
| |
2.1
|
| |
0.872476
|
| |
1.9%
|
Osborne County, KS
|
| |
1.2
|
| |
0.597838
|
| |
1.1%
|
Pawnee County, KS
|
| |
1.2
|
| |
0.833196
|
| |
1.1%
|
Stafford County, KS
|
| |
0.1
|
| |
0.716151
|
| |
0.1%
|
Total
|
| |
110.9
|
| |
|
| |
100.0%
|
Area
|
| |
Proved
Developed
|
| |
Proved
Undeveloped
|
| |
Proved
Reserves
|
| |
% of
Total
|
Rooks County, KS
|
| |
$5,885
|
| |
$—
|
| |
$5,885
|
| |
70.3%
|
Trego County, KS
|
| |
1,029
|
| |
—
|
| |
1,029
|
| |
12.3%
|
Barton County, KS
|
| |
525
|
| |
—
|
| |
525
|
| |
6.3%
|
Ellis County, KS
|
| |
314
|
| |
—
|
| |
314
|
| |
3.7%
|
Graham County, KS
|
| |
248
|
| |
—
|
| |
248
|
| |
3.0%
|
Rush County, KS
|
| |
232
|
| |
—
|
| |
232
|
| |
2.8%
|
Russell County, KS
|
| |
68
|
| |
—
|
| |
68
|
| |
0.8%
|
Pawnee County, KS
|
| |
64
|
| |
—
|
| |
64
|
| |
0.8%
|
Osborne County, KS
|
| |
—
|
| |
—
|
| |
—
|
| |
—%
|
Stafford County, KS
|
| |
—
|
| |
—
|
| |
—
|
| |
—%
|
Ness County, KS
|
| |
—
|
| |
—
|
| |
—
|
| |
—%
|
Logan County, KS
|
| |
—
|
| |
—
|
| |
—
|
| |
—%
|
Total
|
| |
$8,365
|
| |
$—
|
| |
$8,365
|
| |
100.0%
|
|
| |
Producing
|
| |
Non-Producing
|
| |
Undeveloped
|
| |
Total
|
Oil (MBbl)
|
| |
766
|
| |
37
|
| |
—
|
| |
803
|
Future net cash flows before income taxes discounted at 10% (in thousands)
|
| |
$7,592
|
| |
$773
|
| |
$—
|
| |
$8,365
|
|
| |
Producing
|
| |
Non-producing
|
| |
Undeveloped
|
| |
Total
|
Oil (MBbl)
|
| |
948
|
| |
28
|
| |
118
|
| |
1,094
|
Future net cash flows before income taxes discounted at 10% (in thousands)
|
| |
$12,534
|
| |
$739
|
| |
$703
|
| |
$13,976
|
Kansas
|
|||||||||||||||||||||
|
| |
Gross
Production
|
| |
Net
Production
|
| |
Cost of Net
Production
|
| |
Average Sales Price
|
|||||||||
Years Ended December 31,
|
| |
Oil
(MBbl)
|
| |
Gas
(MMcf)
|
| |
Oil
(MBbl)
|
| |
Gas
(MMcf)
|
| |
(Per BOE)
|
| |
Oil
(Bbl)
|
| |
Gas
(Per Mcf)
|
2019
|
| |
111
|
| |
—
|
| |
91
|
| |
—
|
| |
$34.55
|
| |
$52.12
|
| |
—
|
2018
|
| |
120
|
| |
—
|
| |
98
|
| |
—
|
| |
$32.52
|
| |
$59.48
|
| |
—
|
|
| |
For Years Ending December 31,
|
|||||||||
|
| |
2019
|
| |
2018
|
||||||
|
| |
Gross
|
| |
Net
|
| |
Gross
|
| |
Net
|
Kansas
|
| |
|
| |
|
| |
|
| |
|
Productive Wells
|
| |
2
|
| |
1.1
|
| |
1
|
| |
0.9
|
Dry Holes
|
| |
1
|
| |
0.9
|
| |
4
|
| |
1.5
|
|
| |
Developed
|
| |
Undeveloped
|
| |
Total
|
|||||||||
|
| |
Gross Acres
|
| |
Net Acres
|
| |
Gross Acres
|
| |
Net Acres
|
| |
Gross Acres
|
| |
Net Acres
|
Kansas
|
| |
14,320
|
| |
11,361
|
| |
2,232
|
| |
455
|
| |
16,552
|
| |
11,816
|
|
| |
2021
|
| |
Total
|
Gross Acres
|
| |
2,232
|
| |
2,232
|
Net Acres
|
| |
455
|
| |
455
|
Reserve Type
|
| |
Oil
(MBbls)(1)
|
| |
Natural Gas
(MMcf)(1)
|
| |
NGL
(MBbls)(1)
|
| |
Total
(MBoe)(1)
|
| |
%Oil
|
| |
% Liquids(2)
|
| |
% Developed(3)
|
Proved Reserves
|
| |
37,157.5
|
| |
53,683.4
|
| |
10,681.6
|
| |
56,786.3
|
| |
65%
|
| |
84%
|
| |
53%
|
Probable Reserves
|
| |
42,612.5
|
| |
53,601.8
|
| |
11,580.5
|
| |
63,126.6
|
| |
68%
|
| |
86%
|
| |
2%
|
Possible Reserves
|
| |
9,422.3
|
| |
9,376.3
|
| |
2,021.1
|
| |
13,006.3
|
| |
72%
|
| |
88%
|
| |
0%
|
(1)
|
Prices used in this proxy statement/prospectus are based on the 12-month unweighted arithmetic average of the first-day-of-the-month price for each month in the period October 2019 through September 2020. For oil and NGL volumes, the average West Texas Intermediate (WTI) spot price of $43.63 per barrel is adjusted for quality, transportation fees, and market differentials. The fees associated with the transportation contract are included as a deduction to oil revenue. For gas volumes, the average Henry Hub spot price of $1.967 per MMBTU is adjusted for energy content, transportation fees, and market differentials. As a reference, the average NYMEX WTI and NYMEX Henry Hub prices for the same period were $43.40 per barrel and $2.020 per MMBTU, respectively. For more information on the differences between the categories of proved, probable and possible reserves, see “—Oil and Natural Gas Data.”
|
(2)
|
Includes both oil and NGLs.
|
(3)
|
Includes both Proved Developed Producing and Proved Developed Non-Producing.
|
Reserve Type
|
| |
Gross Horizontal
Drilling Locations
|
| |
% by Reserve Type
|
| |
Net Horizontal
Drilling Locations
|
| |
% by Reserve Type
|
Proved
|
| |
69
|
| |
30%
|
| |
50
|
| |
29%
|
Probable
|
| |
117
|
| |
50%
|
| |
97
|
| |
56%
|
Possible
|
| |
47
|
| |
20%
|
| |
27
|
| |
15%
|
Total
|
| |
233
|
| |
100%
|
| |
174
|
| |
100%
|
•
|
Steadily grow production and generate sustainable free cash flow by developing its existing horizontal well inventory. REP considers its inventory of horizontal drilling locations to have relatively low development risk because of the information gained from REP’s operating experience on its acreage, industry activity by offset operators surrounding its acreage and historic activity on the San Andres Formation. REP intend to economically grow production, reserves and cash flow by utilizing its technical expertise to develop REP’s multi-year drilling inventory while efficiently allocating capital to maximize the value of REP’s resource base.
|
•
|
Leverage its experience operating in the Permian Basin to maximize returns. REP was an early entrant to the horizontal development of the San Andres Formation of the Permian Basin. Substantially all of REP’s current properties are positioned in what REP believes to be the core of the horizontal San Andres Formation play in Yoakum County, Texas and Lea, Roosevelt, and Chaves Counties, New Mexico, where horizontal production on the San Andres Formation has increased by more than 915% since January 2014. As of September 30, 2020, REP has operated or participated in 130 gross (71 net) wells, which affords it keen insight and expertise on the reservoir characteristics of the play. REP intends to leverage its management and technical teams’ experiences in applying unconventional drilling and completion techniques in the Permian Basin to maximize its returns.
|
•
|
Maintain a high degree of operational control to continuously drive its operating costs lower and capture efficiencies. REP intends to maintain operational control of a substantial majority of its drilling inventory, by owning in excess of 50% of the working interest in the associated locations. REP believes that maintaining operating control enables it to steadily increase REP’s reserves while lowering REP’s per unit development costs, and allows REP to drive to its goal of free cash flow. REP’s control over operations and its ownership and operation of associated infrastructure for salt water disposal systems and electricity distribution allows REP to utilize what it believes to be cost-effective operating practices. These cost-effective practices include the selection of drilling locations, timing of development and associated capital expenditures and continuous improvement of drilling, completion and stimulation techniques.
|
•
|
Maintain financial flexibility and apply a disciplined approach to capital allocation. REP seeks a capital structure with sufficient liquidity to execute its growth plans, while maintaining conservative leverage, and providing financial and operational flexibility through the various commodity price cycles. To achieve more predictable cash flow and reduce volatility during commodity price cycles, REP also enters into hedging arrangements for its crude oil production. REP expects to fund REP’s growth primarily through cash flow from operations. REP intends on taking advantage of its conservatively capitalized balance sheet to maintain its low-cost debt. Consistent with REP’s disciplined approach to financial management, REP has an active commodity hedging program that seeks to reduce REP’s exposure to downside commodity price fluctuations.
|
•
|
Identifying accretive opportunities with disciplined, value enhancing framework. REP’s capital disciplined approach allows it to return capital while also growing its reserves, production and cash flow
|
•
|
Large contiguous asset base in one of North America’s leading oil resource plays. REP’s acreage is primarily located on large, contiguous blocks in Yoakum County, Texas and Lea, Roosevelt, and Chaves Counties, New Mexico, producing from the San Andres Formation, which is one of the most active areas in the Northwest Shelf. This acreage is characterized by a multi-year, oil-weighted inventory of horizontal drilling locations that REP believes provides attractive growth and return opportunities. As of September 30, 2020, REP had approximately 45,178 net acres (Champions 26,347 net acres and New Mexico 18,831 net acres). REP believes that its Champions Assets are located in the core of the Northwest Shelf, which have been substantially de-risked and expect to generate positive free cash flow. Most recent well results demonstrate that many of the wells on REP’s acreage are capable of producing single-well rates of return that are competitive with many of the top performing basins in the United States. As a result, REP believes it is well-positioned to continue to grow its reserves, production and cash flows in the current commodity price environment.
|
•
|
Proven management team with substantial technical expertise. REP’s Chief Executive Officer, Bobby Riley, was one of the original designers of systems for down-hole data acquisition in gravel pack and frack pack operations and has more than 40 years of experience in the independent oil and gas sector. REP’s management and technical teams have a total of over 100 years of collective oil and gas experience, including significant experience in horizontal drilling in the Central Basin Platform and Northwest Shelf. This complements REP’s team’s prior experience in horizontal drilling in the Eagle Ford Shale play in South Texas, Wolfcamp play in the Permian Basin, Bakken Shale location in North Dakota and Barnett Shale location in North Texas, among other locations. REP believes its team’s technical capabilities and experience enhance REP’s horizontal drilling and production capabilities and ultimate well recoveries.
|
•
|
High degree of operational control with reduced development costs. REP believes that maintaining operating control enables REP to increase its reserves while lowering its development costs. REP’s control over operations also allows REP to determine the selection of drilling locations, timing of development and associated capital expenditures and continuous improvement of drilling, completion and stimulation techniques. For example, REP has made the strategic decision to own and operate the salt water disposal systems and electricity distribution infrastructure necessary to support operations. This has allowed REP to significantly reduce its operating costs and keep pace with its expected development program. In addition, all of the Champions Assets are dedicated to a third-party crude and natural gas gathering system with the contracts structured as acreage dedications, which allows REP to avoid fees or penalties associated with minimum volume commitments. REP believes these factors will contribute to its ability to grow production and maintain positive free cash flows even in lower commodity price environments.
|
•
|
Conservative balance sheet. REP expects to maintain financial flexibility that will allow REP to continue its development activities by funding capital expenditures with operating cash flow. REP also has an active commodity hedging program that seeks to reduce REP’s exposure to downside commodity price fluctuations as part of its maintenance of a conservative financial management program. After giving effect to this merger, REP expects to have approximately $100 million of outstanding debt. At current commodity prices, REP expects to generate positive free cash flow over the calendar year 2021 while also growing production. REP intends to utilize its positive free cash flow to pay down debt and return capital to shareholders.
|
•
|
review and verification of historical production data, which data is based on actual production as reported by REP;
|
•
|
preparation of reserve estimates; and
|
•
|
verification of property ownership by REP’s land department.
|
|
| |
As of September 30, 2020(1)
|
Proved Reserves:
|
| |
|
Oil (MBbls)
|
| |
37,157.5
|
Natural Gas (MMcf)
|
| |
53,683.4
|
Natural Gas Liquids (MBbls)
|
| |
10,681.6
|
Total Proved Reserves (MBoe)
|
| |
56,786.3
|
Proved Developed Producing Reserves:
|
| |
|
Oil (MBbls)
|
| |
19,149.0
|
Natural Gas (MMcf)
|
| |
31,137.5
|
Natural Gas Liquids (MBbls)
|
| |
5,847.1
|
Proved Developed Producing Reserves (MBoe)
|
| |
30,185.7
|
Proved Developed Producing Reserves as a % of Proved Reserves
|
| |
53%
|
Proved Developed Non-Producing Reserves:
|
| |
|
Oil (MBbls)
|
| |
—
|
Natural Gas (MMcf)
|
| |
—
|
Natural Gas Liquids (MBbls)
|
| |
—
|
Proved Developed Non-Producing Reserves (MBoe)
|
| |
—
|
Proved Developed Non-Producing Reserves as a % of Proved Reserves
|
| |
—
|
Proved Undeveloped Reserves:
|
| |
|
Oil (MBbls)
|
| |
18,008.6
|
Natural Gas (MMcf)
|
| |
22,545.9
|
Natural Gas Liquids (MBbls)
|
| |
4,834.5
|
Proved Undeveloped Reserves (MBoe)
|
| |
26,600.7
|
Proved Undeveloped Reserves as a % of Proved Reserves
|
| |
47%
|
Probable Reserves:(2)
|
| |
|
Oil (MBbls)
|
| |
42,612.5
|
Natural Gas (MMcf)
|
| |
53,601.8
|
Natural Gas Liquids (MBbls)
|
| |
11,580.5
|
Total Probable Reserves (MBoe)
|
| |
63,126.6
|
Probable Developed Non-Producing Reserves:(2)
|
| |
|
Oil (MBbls)
|
| |
704.3
|
Natural Gas (MMcf)
|
| |
967.6
|
Natural Gas Liquids (MBbls)
|
| |
210.4
|
Probable Developed Non-Producing Reserves (MBoe)
|
| |
1,076.0
|
Probable Undeveloped Reserves:(2)
|
| |
|
Oil (MBbls)
|
| |
41,908.2
|
Natural Gas (MMcf)
|
| |
52,634.2
|
Natural Gas Liquids (MBbls)
|
| |
11,370.1
|
Probable Undeveloped Reserves (MBoe)
|
| |
62,050.6
|
Possible Reserves:(3)
|
| |
|
Oil (MBbls)
|
| |
9,422.3
|
Natural Gas (MMcf)
|
| |
9,376.3
|
Natural Gas Liquids (MBbls)
|
| |
2,021.2
|
Possible Undeveloped Reserves (MBoe)
|
| |
13,006.3
|
(1)
|
Prices used in this proxy statement/prospectus are based on the 12-month unweighted arithmetic average of the first-day-of-the-month price for each month in the period October 2019 through September 2020. For oil and NGL volumes, the average West Texas Intermediate (WTI) spot price of $43.63 per barrel is adjusted for quality, transportation fees, and market differentials. The fees associated with the transportation contract are included as a deduction to oil revenue. For gas volumes, the average Henry Hub spot price of $1.967 per MMBTU is adjusted for energy content, transportation fees, and market differentials. As a reference, the average NYMEX WTI and NYMEX Henry Hub prices for the same period were $43.40 per barrel and $2.020 per MMBTU, respectively. For more information on the differences between the categories of proved, probable and possible reserves, see “Oil and Natural Gas Data.”
|
(2)
|
REP’s estimated probable reserves are classified as both developed non-producing and as undeveloped.
|
(3)
|
All of REP’s estimated possible reserves are classified as undeveloped.
|
Proved undeveloped reserves at September 30, 2019
|
| |
25,711.3
|
Conversions
|
| |
(1,310.8)
|
Extensions, discoveries and other additions
|
| |
2,008.1
|
Revisions
|
| |
192.1
|
Proved undeveloped reserves at September 30, 2020
|
| |
26,600.7
|
|
| |
For the Years Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Total Sales Volumes:
|
| |
|
| |
|
| |
|
Oil (MBbls)
|
| |
2,060
|
| |
1,975
|
| |
1,195
|
Natural Gas (MMcf)
|
| |
1,628
|
| |
886
|
| |
197
|
NGL (MBbls)
|
| |
260
|
| |
135
|
| |
41
|
Total (MBoe)(1)
|
| |
2,592
|
| |
2,258
|
| |
1,269
|
Daily Sales Volumes:
|
| |
|
| |
|
| |
|
Oil sales (Bbl/d)
|
| |
5,630
|
| |
5,411
|
| |
3,274
|
Natural gas sales (Mcf/d)
|
| |
4,448
|
| |
2,428
|
| |
541
|
Natural gas liquids sales (Bbl/d)
|
| |
710
|
| |
370
|
| |
113
|
Total (BOE/d)(1)
|
| |
7,081
|
| |
6,186
|
| |
3,477
|
Average sales price(1):
|
| |
|
| |
|
| |
|
Oil sales (per Bbl)
|
| |
$36.35
|
| |
$51.45
|
| |
$57.19
|
Oil sales with derivative settlements (per Bbl)(2)
|
| |
49.41
|
| |
51.71
|
| |
50.89
|
Natural gas sales (per Mcf)
|
| |
(0.78)
|
| |
(0.32)
|
| |
2.04
|
Natural gas sales with derivative settlements (per Mcf)(2)
|
| |
(0.78)
|
| |
(0.32)
|
| |
2.04
|
Natural gas liquids sales (per Bbl)
|
| |
(1.90)
|
| |
(1.74)
|
| |
27.45
|
Natural gas liquids with derivative settlements (per Bbl)(2)
|
| |
(1.90)
|
| |
(1.74)
|
| |
27.45
|
Average price per BOE excluding derivative settlements(1)(2)
|
| |
28.22
|
| |
44.78
|
| |
52.53
|
Average price per BOE including derivative settlements(1)(2)
|
| |
38.61
|
| |
45.00
|
| |
46.60
|
Expenses per BOE(1):
|
| |
|
| |
|
| |
|
Lease operating expenses
|
| |
$8.10
|
| |
$10.54
|
| |
$8.70
|
Production and ad valorem taxes
|
| |
1.36
|
| |
2.13
|
| |
2.53
|
Exploration expenses
|
| |
3.83
|
| |
2.25
|
| |
4.72
|
Depletion, depreciation, amortization, and accretion
|
| |
8.29
|
| |
8.94
|
| |
12.38
|
General and administrative expenses, inclusive of unit-based compensation expense(3)
|
| |
3.08
|
| |
4.95
|
| |
11.17
|
Transaction costs(4)
|
| |
0.55
|
| |
2.02
|
| |
0.69
|
(1)
|
One BOE is equal to six Mcf of natural gas or one Bbl of oil or NGL based on the approximate energy equivalency. This is an energy content correlation and does not reflect value or price relationship between the commodities.
|
(2)
|
Average prices shown in table reflect prices both before and after the effects of REP’s settlements of our commodity derivative contracts. REP’s calculation of such effects includes both gains or losses on cash settlements for commodity derivatives.
|
(3)
|
General and administrative expenses, inclusive of unit-based compensation expense shown after effect of revenue from contract services for management services agreement.
|
(4)
|
Transaction costs include non-cash cost related to our previously aborted IPO.
|
Proved Developed Producing
|
| |
Wells
|
| |
Avg. WI
|
Operated
|
| |
67
|
| |
95%
|
Non-Operated
|
| |
63
|
| |
11%
|
Total
|
| |
130
|
| |
54%
|
Developed Acreage(1)
|
| |
Undeveloped Acreage(2)
|
| |
Total Acreage(5)
|
|||||||||
Gross(3)
|
| |
Net(4)
|
| |
Gross(3)
|
| |
Net(4)
|
| |
Gross(3)
|
| |
Net(4)
|
18,529
|
| |
11,792
|
| |
48,142
|
| |
33,385
|
| |
66,671
|
| |
45,178
|
(1)
|
Developed acreage is acres spaced or assigned to productive wells and does not include undrilled acreage held by production under the terms of the lease.
|
(2)
|
Undeveloped acreage are acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether such acreage contains proved reserves.
|
(3)
|
A gross acre is an acre in which a working interest is owned. The number of gross acres is the total number of acres in which a working interest is owned.
|
(4)
|
A net acre is deemed to exist when the sum of the fractional ownership working interests in gross acres equals one. The number of net acres is the sum of the fractional working interests owned in gross acres expressed as whole numbers and fractions thereof.
|
Net Undeveloped Acreage(1)
|
||||||
2021
|
| |
2022
|
| |
2023+
|
23,466
|
| |
2,084
|
| |
26,208
|
(1)
|
All acreage represented is as of September 30, 2020.
|
|
| |
Year Ended
|
|||||||||||||||
|
| |
September 30,
|
|||||||||||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|||||||||
|
| |
Gross
|
| |
Net
|
| |
Gross
|
| |
Net
|
| |
Gross
|
| |
Net
|
Development Wells:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Productive(1)
|
| |
11
|
| |
3
|
| |
20
|
| |
13
|
| |
25
|
| |
13
|
Dry(2)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Exploratory Wells:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Productive(1)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Dry(2)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Total Wells:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Productive(1)
|
| |
11
|
| |
3
|
| |
20
|
| |
13
|
| |
25
|
| |
13
|
Dry(2)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
(1)
|
Although a well may be classified as productive upon completion, future changes in oil, natural gas and NGL prices, operating costs and production may result in the well becoming uneconomical, particularly exploratory wells where there is no production history.
|
(2)
|
Does not include a wellbore temporarily abandoned due to mechanical failure.
|
|
| |
Year Ended
December 31, 2019
|
| |
Year Ended
December 31,2018
|
Revenue (in thousands):
|
| |
|
| |
|
Crude oil
|
| |
$4,884
|
| |
$5,840
|
Saltwater disposal fees
|
| |
27
|
| |
31
|
Total
|
| |
$4,911
|
| |
$5,871
|
Contractual Obligations
|
| |
Total
|
| |
2020
|
| |
2021
|
| |
2022
|
Long-Term Debt Obligations(1)
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
Operating Lease Obligations
|
| |
42
|
| |
42
|
| |
—
|
| |
—
|
Finance Lease Obligations
|
| |
104
|
| |
65
|
| |
39
|
| |
—
|
Estimated Interest on Obligations
|
| |
7
|
| |
6
|
| |
1
|
| |
—
|
Total
|
| |
$153
|
| |
$113
|
| |
$40
|
| |
$—
|
(1)
|
The credit facility with Prosperity Bank had a zero balance at December 31, 2019.
|
•
|
Sources of revenue;
|
•
|
Sales volumes;
|
•
|
Realized prices on the sale of oil, natural gas and NGL, including the effect of REP’s commodity derivative contracts;
|
•
|
Lease operating expenses, or LOE;
|
•
|
Capital expenditures; and
|
•
|
Adjusted EBITDAX.
|
|
| |
For the Years Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Oil (MBbls)
|
| |
2,060
|
| |
1,975
|
| |
1,195
|
Natural gas (MMcf)
|
| |
1,628
|
| |
886
|
| |
197
|
NGL (MBbls)
|
| |
260
|
| |
135
|
| |
41
|
Total (MBoe)(1)
|
| |
2,592
|
| |
2,258
|
| |
1,269
|
Average net sales (BOE/d)(2)
|
| |
7,081
|
| |
6,186
|
| |
3,477
|
(1)
|
One BOE is equal to six Mcf of natural gas or one Bbl of oil or NGL based on the approximate energy equivalency. This is an energy content correlation and does not reflect value or price relationship between the commodities.
|
(2)
|
Average net sales (BOE/d) was derived by dividing the total MBoe by 366 days for the year ended 2020 and by 365 days for the years ended 2019 and 2018.
|
|
| |
For the Years Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Oil
|
| |
|
| |
|
| |
|
NYMEX WTI High ($/Bbl)
|
| |
$63.27
|
| |
$76.40
|
| |
$77.41
|
NYMEX WTI Low ($/Bbl)
|
| |
(36.98)
|
| |
44.48
|
| |
49.34
|
NYMEX WTI Average ($/Bbl)
|
| |
42.74
|
| |
57.76
|
| |
64.01
|
Average Realized Price ($/Bbl)
|
| |
36.35
|
| |
51.45
|
| |
57.19
|
Average Realized Price, with derivative settlements ($/Bbl)
|
| |
49.41
|
| |
51.71
|
| |
50.89
|
Averaged Realized Price as a % of Average NYMEX WTI(1)
|
| |
85%
|
| |
89%
|
| |
89%
|
Differential ($/Bbl) to Average NYMEX WTI
|
| |
(6.39)
|
| |
(6.30)
|
| |
(6.82)
|
Natural Gas(3)
|
| |
|
| |
|
| |
|
NYMEX Henry Hub High ($/MMBtu)
|
| |
$2.87
|
| |
$4.70
|
| |
$6.24
|
NYMEX Henry Hub Low ($/MMBtu)
|
| |
1.33
|
| |
2.02
|
| |
2.49
|
NYMEX Henry Hub Average ($/MMBtu)
|
| |
2.00
|
| |
2.90
|
| |
2.94
|
Average Realized Price ($/Mcf)
|
| |
(0.78)
|
| |
(0.33)
|
| |
2.04
|
Average Realized Price, with derivative settlements ($/Mcf)
|
| |
(0.78)
|
| |
(0.33)
|
| |
2.04
|
Averaged Realized Price as a % of Average NYMEX Henry Hub
|
| |
-39%
|
| |
-11%
|
| |
69%
|
Differential ($/Mcf) to Average NYMEX Henry Hub(1)
|
| |
(2.78)
|
| |
(3.23)
|
| |
(0.90)
|
Natural Gas Liquids(3)
|
| |
|
| |
|
| |
|
Average Realized Price ($/Bbl)
|
| |
$(1.90)
|
| |
$(1.75)
|
| |
$27.44
|
Averaged Realized Price as a % of Average NYMEX WTI
|
| |
-4%
|
| |
-3%
|
| |
43%
|
BOE (Barrel of Oil Equivalent)
|
| |
|
| |
|
| |
|
Average price per BOE(1)
|
| |
$28.22
|
| |
$44.78
|
| |
$55.05
|
Average price per BOE with derivative settlements(1)(2)
|
| |
38.61
|
| |
45.00
|
| |
49.12
|
(1)
|
One BOE is equal to six Mcf of natural gas or one Bbl of oil or NGL based on the approximate energy equivalency. This is an energy content correlation and does not reflect value or price relationship between the commodities.
|
(2)
|
Average prices shown in table reflect prices both before and after the effects of our settlements of REP’s commodity derivative contracts. REP’s calculation of such effects includes both gains or losses on cash settlements for commodity derivatives.
|
(3)
|
Realized prices are reflected at net of the deduction of gathering, processing and transportation costs.
|
|
| |
|
| |
Weighted Average Price
|
||||||
Calendar Quarter
|
| |
Notional Volume
|
| |
Fixed
|
| |
Put
|
| |
Call
|
|
| |
(Bbl)
|
| |
($ per Bbl)
|
||||||
Crude Oil Swaps(1)
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
339,000
|
| |
$57.15
|
| |
$—
|
| |
$—
|
Q1 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q2 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q3 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q4 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
2022
|
| |
360,000
|
| |
$45.25
|
| |
$—
|
| |
$—
|
Crude Oil Collars(1)
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
45,000
|
| |
$—
|
| |
$50.00
|
| |
$56.48
|
2022
|
| |
360,000
|
| |
$—
|
| |
$35.00
|
| |
$42.63
|
Crude Oil Basis(2)
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
384,000
|
| |
$0.39
|
| |
$—
|
| |
$—
|
Q1 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q2 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q3 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q4 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
(1)
|
Reference Price is NYMEX WTI Price, referring to the West Texas Intermediate crude oil price on the New York Mercantile Exchange.
|
(2)
|
Reference Price is NYMEX WTI vs. WTI Midland (Argus) Calendar Trade Month.
|
|
| |
Historical Derivative Positions and Settlement Amounts
|
||||||
|
| |
For the Years Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Fair value of net asset (liability) beginning of period
|
| |
$14,959
|
| |
$ (11,239)
|
| |
$(1,623)
|
Gain (loss) on derivatives
|
| |
33,876
|
| |
26,712
|
| |
(17,143)
|
Net cash (receipts) from payments on derivatives
|
| |
(26,914)
|
| |
(514)
|
| |
7,527
|
Fair value of net asset (liability) end of period
|
| |
$21,921
|
| |
$14,959
|
| |
$(11,239)
|
(1)
|
NYMEX WTI refers to West Texas Intermediate crude oil price on the New York Mercantile Exchange.
|
(2)
|
Reference Price is NYMEX WTI vs. WTI Midland (Argus) Calendar Trade Month.
|
|
| |
For the Years Ended
September 30,
|
||||||
|
| |
(in thousands)
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Reconciliation of Net Income (Loss) to Adjusted EBITDAX
|
| |
|
| |
|
| |
|
Net Income (Loss)
|
| |
$35,144
|
| |
$51,866
|
| |
$(723)
|
Exploration expense
|
| |
9,923
|
| |
5,074
|
| |
5,992
|
Depletion, depreciation, amortization and accretion
|
| |
21,479
|
| |
20,182
|
| |
15,714
|
Interest expense
|
| |
5,299
|
| |
4,924
|
| |
1,707
|
Unrealized (gain)/loss on derivatives
|
| |
(6,962)
|
| |
(26,198)
|
| |
9,616
|
Unit-based compensation expense
|
| |
963
|
| |
898
|
| |
4,000
|
Restructuring costs
|
| |
392
|
| |
—
|
| |
—
|
Transaction costs
|
| |
1,431
|
| |
4,553
|
| |
878
|
Income tax expense
|
| |
718
|
| |
1,410
|
| |
—
|
Adjusted EBITDAX
|
| |
$68,387
|
| |
$62,709
|
| |
$37,184
|
|
| |
For the Years Ended
September 30,
|
||||||
|
| |
($ and units in thousands, except per unit amounts)
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Statement of Operations Data:
|
| |
|
| |
|
| |
|
Revenues:
|
| |
|
| |
|
| |
|
Oil and natural gas sales, net
|
| |
$73,133
|
| |
$101,096
|
| |
$69,872
|
Contract services - related parties
|
| |
3,800
|
| |
1,900
|
| |
—
|
Total Revenues
|
| |
76,933
|
| |
102,996
|
| |
69,872
|
Operating Expenses:
|
| |
|
| |
|
| |
|
Lease operating expenses
|
| |
20,997
|
| |
23,808
|
| |
11,044
|
Gathering, processing & transportation
|
| |
—
|
| |
—
|
| |
735
|
Production taxes
|
| |
3,526
|
| |
4,804
|
| |
3,207
|
Exploration costs
|
| |
9,923
|
| |
5,074
|
| |
5,992
|
Depletion, depreciation, amortization, and accretion
|
| |
21,479
|
| |
20,182
|
| |
15,714
|
General and administrative costs
|
| |
|
| |
|
| |
|
Administrative Costs
|
| |
10,826
|
| |
12,168
|
| |
14,175
|
Unit-based compensation expense
|
| |
963
|
| |
898
|
| |
—
|
Cost of contract services - related party
|
| |
503
|
| |
21
|
| |
—
|
Transaction costs
|
| |
1,431
|
| |
4,553
|
| |
878
|
Total Operating Expenses
|
| |
69,648
|
| |
71,508
|
| |
51,745
|
|
| |
|
| |
|
| |
|
Income (Loss) From Operations
|
| |
7,285
|
| |
31,488
|
| |
18,127
|
Other Income (Expenses):
|
| |
|
| |
|
| |
|
Interest Expense
|
| |
(5,299)
|
| |
(4,924)
|
| |
(1,707)
|
Gain (loss) on derivatives
|
| |
33,876
|
| |
26,712
|
| |
(17,143)
|
Total Other Income (Expense)
|
| |
28,577
|
| |
21,788
|
| |
(18,850)
|
|
| |
|
| |
|
| |
|
Net Income (Loss) Before Income Taxes
|
| |
35,862
|
| |
53,276
|
| |
(723)
|
Income Tax Expense
|
| |
(718)
|
| |
(1,410)
|
| |
—
|
Net Income (Loss)
|
| |
35,144
|
| |
51,866
|
| |
(723)
|
Dividends on Preferred Units
|
| |
(3,535)
|
| |
(3,330)
|
| |
(3,129)
|
Net Income (Loss) Attributable to Common Unitholders
|
| |
$31,609
|
| |
$48,536
|
| |
$(3,852)
|
Net Income (loss) per unit:
|
| |
|
| |
|
| |
|
Basic
|
| |
$20.67
|
| |
$31.87
|
| |
$(2.57)
|
Diluted
|
| |
$17.24
|
| |
$26.03
|
| |
$(2.57)
|
Weighted Average Common Units Outstanding:
|
| |
|
| |
|
| |
|
Basic
|
| |
1,529
|
| |
1,523
|
| |
1,500
|
Diluted
|
| |
2,038
|
| |
1,992
|
| |
1,500
|
|
| |
For the Years Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Total Sales Volumes:
|
| |
|
| |
|
| |
|
Oil (MBbls)
|
| |
2,060
|
| |
1,975
|
| |
1,195
|
Natural Gas (MMcf)
|
| |
1,628
|
| |
886
|
| |
197
|
NGL (MBbls)
|
| |
260
|
| |
135
|
| |
41
|
Total (MBoe)(1)
|
| |
2,592
|
| |
2,258
|
| |
1,269
|
Daily Sales Volumes:
|
| |
|
| |
|
| |
|
Oil sales (Bbl/d)
|
| |
5,630
|
| |
5,411
|
| |
3,274
|
Natural gas sales (Mcf/d)
|
| |
4,448
|
| |
2,428
|
| |
541
|
Natural gas liquids sales (Bbl/d)
|
| |
710
|
| |
370
|
| |
113
|
Total (BOE/d)(1)
|
| |
7,081
|
| |
6,186
|
| |
3,477
|
Average sales price(1):
|
| |
|
| |
|
| |
|
Oil sales (per Bbl)
|
| |
$36.35
|
| |
$51.45
|
| |
$57.19
|
Oil sales with derivative settlements (per Bbl)(2)
|
| |
49.41
|
| |
51.71
|
| |
50.89
|
Natural gas sales (per Mcf)
|
| |
(0.78)
|
| |
(0.33)
|
| |
2.04
|
Natural gas sales with derivative settlements (per Mcf)(2)
|
| |
(0.78)
|
| |
(0.33)
|
| |
2.04
|
Natural gas liquids sales (per Bbl)
|
| |
(1.90)
|
| |
(1.75)
|
| |
27.44
|
Natural gas liquids with derivative settlements (per Bbl)(2)
|
| |
(1.90)
|
| |
(1.75)
|
| |
27.44
|
Average price per BOE excluding derivative settlements(1)(2)
|
| |
28.22
|
| |
44.78
|
| |
55.05
|
Average price per BOE including derivative settlements(1)(2)
|
| |
38.61
|
| |
45.00
|
| |
49.12
|
Expenses per BOE(1):
|
| |
|
| |
|
| |
|
Lease operating expenses
|
| |
$8.10
|
| |
$10.54
|
| |
$8.70
|
Production and ad valorem taxes
|
| |
1.36
|
| |
2.13
|
| |
2.53
|
Exploration expenses
|
| |
3.83
|
| |
2.25
|
| |
4.72
|
Depletion, depreciation, amortization, and accretion
|
| |
8.29
|
| |
8.94
|
| |
12.38
|
General and administrative expenses, inclusive of unit-based compensation expense(3)
|
| |
3.08
|
| |
4.95
|
| |
11.17
|
Transaction costs(4)
|
| |
0.55
|
| |
2.02
|
| |
0.69
|
(1)
|
One BOE is equal to six Mcf of natural gas or one Bbl of oil or NGL based on the approximate energy equivalency. This is an energy content correlation and does not reflect value or price relationship between the commodities.
|
(2)
|
Average prices shown in table reflect prices both before and after the effects of REP’s settlements of our commodity derivative contracts. REP’s calculation of such effects includes both gains or losses on cash settlements for commodity derivatives.
|
(3)
|
General and administrative expenses, inclusive of unit-based compensation expense shown after effect of revenue from contract services for management services agreement.
|
(4)
|
Transaction costs include non-cash cost related to REP’s previously aborted IPO.
|
|
| |
For the Years Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|
| |
($ in Thousands)
|
||||||
Statement of Cash Flows Data:
|
| |
|
| |
|
| |
|
Net cash provided by operating activities
|
| |
$62,550
|
| |
$52,007
|
| |
$38,619
|
Net cash used in investing activities
|
| |
$(51,521)
|
| |
$(83,398)
|
| |
$(88,389)
|
Net cash (used) in/provided by financing activities
|
| |
$(13,095)
|
| |
$31,778
|
| |
$49,426
|
•
|
incur additional indebtedness and certain types of preferred equity;
|
•
|
incur liens;
|
•
|
merge or consolidate with another entity or acquire subsidiaries;
|
•
|
make investments;
|
•
|
make loans to others;
|
•
|
make certain payments;
|
•
|
sell assets;
|
•
|
terminate hedging transactions;
|
•
|
enter into certain types of transactions with affiliates;
|
•
|
enter into restrictive agreements relating to subsidiaries or the incurrence of liens;
|
•
|
enter into sale and leaseback transactions;
|
•
|
amend REP’s material documents or make significant accounting changes; and
|
•
|
engage in certain other transactions without the prior consent of the lenders.
|
•
|
a current ratio, which is the ratio of REP’s consolidated current assets (including unused commitments under REP’s revolving credit facility and excluding derivatives) to REP’s consolidated current liabilities (excluding the current portion of long-term indebtedness required to be paid within one year and the aggregate principal balance of loans and letters of credit under REP’s credit agreement and derivatives), as of the last day of each fiscal quarter, of not less than 1.0 to 1.0; and
|
•
|
a leverage ratio, which is the ratio of REP’s consolidated total debt (as defined in REP’s credit agreement) as of the last day of each fiscal quarter, less cash and cash equivalents of up to the greater of $15.0 million and 10.0% of the borrowing base, subject to certain exclusions (as described in REP’s credit agreement) to consolidated EBITDAX (as defined in REP’s credit agreement) for the last four consecutive fiscal quarters ending on or immediately prior to the last day of that fiscal quarter, of not greater than 3.5 to 1.0.
|
|
| |
Payments due by Period
|
||||||||||||
|
| |
Total
|
| |
Less than
1 Year
|
| |
1-3
Years
|
| |
3-5
Years
|
| |
More than
5 Years
|
|
| |
(unaudited)
|
||||||||||||
Contractual Obligations
|
| |
|
| |
|
| |
|
| |
|
| |
|
Credit Facility(1)
|
| |
$101,000
|
| |
$—
|
| |
$101,000
|
| |
$—
|
| |
$—
|
Interest expenses related to Credit Facility(2)
|
| |
$16,524
|
| |
$4,131
|
| |
$12,393
|
| |
$—
|
| |
$—
|
Office lease(3)
|
| |
$740
|
| |
$419
|
| |
$321
|
| |
$—
|
| |
$—
|
Total
|
| |
$118,264
|
| |
$4,550
|
| |
$113,714
|
| |
$—
|
| |
$—
|
(1)
|
The REP credit facility matures on September 28, 2023.
|
(2)
|
Includes interest expense on our outstanding borrowings calculated using the weighted average interest rate of 4.09% at September 30, 2020.
|
(3)
|
REP leases office headquarters under a five-year operating lease agreement terminating in July 2022. Base rent is subject to a two percent (2%) escalation in each subsequent year.
|
|
| |
|
| |
Weighted Average Price
|
||||||
Calendar Quarter
|
| |
Notional Volume
|
| |
Fixed
|
| |
Put
|
| |
Call
|
|
| |
(Bbl)
|
| |
($ per Bbl)
|
||||||
Crude Oil Swaps(1)
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
339,000
|
| |
$57.15
|
| |
$—
|
| |
$—
|
Q1 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q2 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q3 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q4 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
2022
|
| |
360,000
|
| |
$45.25
|
| |
$—
|
| |
$—
|
Crude Oil Collars(1)
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
45,000
|
| |
$—
|
| |
$50.00
|
| |
$56.48
|
2022
|
| |
360,000
|
| |
$—
|
| |
$35.00
|
| |
$42.63
|
Crude Oil Basis(2)
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
384,000
|
| |
$0.39
|
| |
$—
|
| |
$—
|
Q1 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q2 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q3 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q4 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
(1)
|
Reference Price is NYMEX WTI Price, referring to the West Texas Intermediate crude oil price on the New York Mercantile Exchange.
|
(2)
|
Reference Price is NYMEX WTI vs. WTI Midland (Argus) Calendar Trade Month.
|
•
|
Unauthorized access to seismic data, reserves information, strategic information, or other sensitive or proprietary information could have a negative impact on REP’s ability to compete for oil and natural gas resources;
|
•
|
A cyber attack on a vendor or service provider could result in supply chain disruptions which could delay or halt REP’s major development projects;
|
•
|
A cyber attack on third-party gathering, pipeline, or rail transportation systems could delay or prevent REP’s outside operators from transporting and marketing production, resulting in a loss of revenues;
|
•
|
A cyber attack which halts activities at a power generation facility or refinery using natural gas as feed stock could have a significant impact on the natural gas market, resulting in reduced demand for REP’s production, lower natural gas prices, and reduced revenues; and
|
•
|
A deliberate corruption of REP’s financial or operating data could result in events of non-compliance which could then lead to regulatory fines or penalties.
|
Name
|
| |
Age
|
| |
Position
|
Executive Officers
|
| |
|
| |
|
Bobby D. Riley
|
| |
65
|
| |
Chairman of the Board and Chief Executive Officer
|
Kevin Riley
|
| |
39
|
| |
President
|
Michael J. Rugen
|
| |
60
|
| |
Chief Financial Officer and Director
|
Corey Riley
|
| |
42
|
| |
Executive Vice President Business Intelligence
|
Michael Palmer
|
| |
40
|
| |
Executive Vice President Corporate Land
|
Non-Employee Directors
|
| |
|
| |
|
Brent Arriaga
|
| |
46
|
| |
Director
|
E. Wayne Nordberg
|
| |
82
|
| |
Director
|
Bryan H. Lawrence
|
| |
78
|
| |
Director
|
Name
|
| |
Principal Position
|
Bobby D. Riley
|
| |
Chairman of the Board and CEO
|
Kevin Riley
|
| |
President and Interim Chief Financial Officer
|
Jeffrey M. Gutman(1)
|
| |
Former Executive Vice President, Chief Financial Officer and Treasurer
|
Corey Riley
|
| |
Executive Vice President Business Intelligence
|
Michael Palmer
|
| |
Executive Vice President Corporate Land
|
(1)
|
Mr. Gutman resigned from his position with REP on October 5, 2020.
|
|
| |
Year
|
| |
Salary ($)
|
| |
Non-Equity
Incentive Plan(1)
($)
|
| |
Unit
Awards(2)(3)
($)
|
| |
All Other
Compensation(4)
($)
|
| |
Total ($)
|
Bobby D. Riley
Chairman of the Board & CEO
|
| |
2020
|
| |
$500,870
|
| |
$125,982
|
| |
$410,513
|
| |
$43,874
|
| |
$1,081,239
|
|
2019
|
| |
$485,672
|
| |
$247,073
|
| |
$2,785,193
|
| |
$43,522
|
| |
$3,561,459
|
||
|
2018
|
| |
$388,863
|
| |
$475,000
|
| |
$—
|
| |
$31,036
|
| |
$894,899
|
||
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Kevin M. Riley
President and Interim Chief Financial Officer
|
| |
2020
|
| |
$347,973
|
| |
$87,524
|
| |
$285,255
|
| |
$38,341
|
| |
$759,093
|
|
2019
|
| |
$337,414
|
| |
$171,650
|
| |
$1,714,943
|
| |
$36,290
|
| |
$2,260,298
|
||
|
2018
|
| |
$323,109
|
| |
$330,000
|
| |
$—
|
| |
$28,781
|
| |
681,890
|
||
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Jeffrey M. Gutman(5)
Former Executive Vice President, Chief Financial Officer and Treasurer
|
| |
2020
|
| |
$332,156
|
| |
$83,546
|
| |
$272,266
|
| |
$32,224
|
| |
$720,191
|
|
2019
|
| |
$322,077
|
| |
$163,849
|
| |
$621,726
|
| |
$31,583
|
| |
$1,139,236
|
||
|
2018
|
| |
$118,125
|
| |
$315,000
|
| |
$—
|
| |
$9,086
|
| |
$442,211
|
||
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Corey Riley(6)
Executive Vice President Business Intelligence
|
| |
2020
|
| |
$360,062
|
| |
$54,075
|
| |
$125,863
|
| |
$36,997
|
| |
$576,997
|
|
2019
|
| |
$145,833
|
| |
$136,752
|
| |
$—
|
| |
$14,731
|
| |
$297,316
|
||
|
2018
|
| |
$—
|
| |
|
| |
$—
|
| |
$—
|
| |
$—
|
||
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Michael Palmer
Executive Vice President Corporate Land
|
| |
2020
|
| |
$243,928
|
| |
$36,634
|
| |
$125,863
|
| |
$33,086
|
| |
$439,510
|
|
2019
|
| |
$237,111
|
| |
$70,000
|
| |
$—
|
| |
$31,119
|
| |
$338,230
|
||
|
2018
|
| |
$225,176
|
| |
$124,937
|
| |
$—
|
| |
$25,272
|
| |
$375,384
|
(1)
|
For a description of annual bonuses for the applicable year, see “-Additional Narrative Disclosures-Cash Bonuses” section below.
|
(2)
|
Amounts in this column reflect the grant date fair value of stock awards.
|
(3)
|
For unit awards, the disclosed amount is the dollar amount recognized for such individual for the fiscal year of the actual grant date (as opposed to any prior periods of service for which the grant was received).
|
(4)
|
Amounts in this column reflect (a) matching contributions to the 401(k) Plan (as defined below) made on behalf of REP's named executive officers and (b) health and welfare premiums paid for the benefit of REP's named executives. See “-Additional Narrative Disclosures-Other Benefits and Pension Benefits” below for more information on health and welfare premiums and matching contributions to the 401(k) Plan.
|
(5)
|
Mr. Gutman served as REP's acting Chief Financial Officer since January 2018 and joined REP as Executive Vice President, Chief Financial Officer and Treasurer as of May 2018. Mr. Gutman resigned from his position with REP on October 5, 2020.
|
(6)
|
Mr. Corey Riley, Executive Vice President Business Intelligence became employed by the company on April 23, 2019. The compensation for that period reflects the partial year of service.
|
|
| |
Grant
Date
|
| |
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
|
| |
Grant Date
Fair Value of
Stock and
Option
Awards(2)
|
Bobby D. Riley
Chairman of the Board & CEO
|
| |
02/01/20
|
| |
4,077.00
|
| |
410,513.13
|
Kevin M. Riley
President
|
| |
02/01/20
|
| |
2,833.00
|
| |
285,254.77
|
Jeffrey M. Gutman(1)
Former Executive Vice President, Chief Financial Officer and Treasurer
|
| |
02/01/20
|
| |
2,704.00
|
| |
272,265.76
|
|
| |
Grant
Date
|
| |
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
|
| |
Grant Date
Fair Value of
Stock and
Option
Awards(2)
|
Corey Riley
Executive Vice President Business Intelligence
|
| |
02/01/20
|
| |
1,250.00
|
| |
125,862.50
|
Michael Palmer
Executive Vice President Corporate Land
|
| |
02/01/20
|
| |
1,250.00
|
| |
125,862.50
|
(1)
|
Mr. Gutman served as REP's acting Chief Financial Officer since January 2018 and joined REP as Executive Vice President, Chief Financial Officer and Treasurer as of May 2018. Mr. Gutman resigned from his position with REP on October 5, 2020.
|
(2)
|
Grant date fair value of Awards is $100.69 per unit for awards made on for 2/01/20 and 2/02/20.
|
|
| |
Stock Awards
|
||||||||||||
|
| |
Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
|
| |
Market Value
of Shares or
Units of Stock
That Have
Not Vested
(2) ($)
|
| |
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)
|
| |
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)
|
| ||
Bobby D. Riley
Chairman of the Board & CEO
|
| |
2,726.67(3)
|
| |
$274,548.40
|
| |
—
|
| |
—
|
| ||
|
4,077(4)
|
| |
$410,513.13
|
| |
|
| |
|
| ||||
|
| |
|
| |
|
| |
|
| |
|
| ||
Kevin M. Riley
President
|
| |
1,894(3)
|
| |
$190,706.86
|
| |
—
|
| |
—
|
| ||
|
2,833(4)
|
| |
$285,254.77
|
| |
|
| |
|
| ||||
|
| |
|
| |
|
| |
|
| |
|
| ||
Jeffrey M. Gutman(1)
Former Executive Vice President, Chief Financial Officer and Treasurer
|
| |
3,161.33(5)
|
| |
$318,314.32
|
| |
—
|
| |
—
|
| ||
|
| |
|
| |
|
| |
|
| |
|
| ||
Corey Riley
Executive Vice President Business Intelligence
|
| |
1,250.00(4)
|
| |
$125,862.50
|
| |
—
|
| |
—
|
| ||
|
| |
|
| |
|
| |
|
| |
|
| ||
Michael Palmer
Executive Vice President Corporate Land
|
| |
1,250.00(4)
|
| |
$125,862.50
|
| |
—
|
| |
—
|
|
(1)
|
Mr. Gutman served as REP's acting Chief Financial Officer since January 2018 and joined REP as Executive Vice President, Chief Financial Officer and Treasurer as of May 2018. Mr. Gutman resigned from his position with REP on October 5, 2020.
|
(2)
|
Market Value of Shares or Units of Stock That Have Not Vested based on the valuation of REP units on September 30, 2020 of $100.69.
|
(3)
|
These awards have vesting dates of February 1, 2021 and February 1, 2022.
|
(4)
|
These awards have vesting dates of February 1, 2021, February 1, 2022 and February 1, 2023.
|
(5)
|
This award has a vesting date of February 1, 2021.
|
|
| |
Stock Awards
|
|||
|
| |
Number of Shares
Acquired on Vesting (#)
|
| |
Value Realized on
Vesting(2) ($)
|
Bobby D. Riley
Chairman of the Board & CEO
|
| |
14,093.33
|
| |
1,419,057.40
|
|
| |
|
| |
|
Kevin M. Riley
President and Interim Chief Financial Officer
|
| |
7,559.41
|
| |
761,156.99
|
|
| |
|
| |
|
Jeffrey M. Gutman(1)
Former Executive Vice President, Chief Financial Officer and Treasurer
|
| |
1,397.36
|
| |
140,700.18
|
|
| |
|
| |
|
Corey Riley(5)
Executive Vice President Business Intelligence
|
| |
—
|
| |
—
|
|
| |
|
| |
|
Michael Palmer
Executive Vice President Corporate Land
|
| |
—
|
| |
—
|
(1)
|
Mr. Gutman served as REP's acting Chief Financial Officer since January 2018 and joined REP as Executive Vice President, Chief Financial Officer and Treasurer as of May 2018. Mr. Gutman resigned from his position with REP on October 5, 2020.
|
(2)
|
Value Realized on Shares or Units of Stock That Have Vested based on the valuation of REP units on September 30, 2020 of $100.69.
|
Plan Category
|
| |
Number of Securities to be issued
upon exercise of outstanding
options, warrants and rights
|
| |
Weighted-average exercise price
of outstanding options, warrants
and rights
|
| |
Number of securities remaining
available for future issuance
under equity compensation plans
(excluding securities reflected in
column a)
|
|
| |
(a)
|
| |
(b)
|
| |
(c)
|
Equity compensation plans approved by security holders
|
| |
0
|
| |
0
|
| |
135,680
|
Equity compensation plans not approved by security holders
|
| |
0
|
| |
0
|
| |
0
|
Total
|
| |
0
|
| |
0
|
| |
135,680
|
•
|
the amounts involved exceeded or will exceed $120,000; and
|
•
|
any Related Person had, has or will have a direct or indirect material interest.
|
1)
|
any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors;
|
2)
|
any person who is known by us to be the beneficial owner of more than 5% of our common stock;
|
3)
|
any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our common stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our common stock; and
|
4)
|
any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.
|
•
|
for any breach of their duty of loyalty to REP or its unitholders;
|
•
|
for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
|
•
|
for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 607 of the DLLCA; or
|
•
|
for any transaction from which the director derived an improper personal benefit.
|
•
|
adjustments to conform the classification of certain assets and liabilities in TGC's historical balance sheets to REP's classification of similar assets and liabilities;
|
•
|
adjustments to conform the equity in TGC’s and REP’s historical balance sheet to the equity structure of the merged entity according to the merger details outlined in this document; and
|
•
|
adjustments to conform the classification of revenues and expenses in TGC’s historical statements of operations to REP’s classification of similar revenues and expenses.
|
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Reclassification
Adjustments
|
| |
|
| |
Pro Forma
Adjustments
|
| |
|
| |
Pro Forma
Combined
|
Assets
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$1,660
|
| |
$ 2,545
|
| |
$—
|
| |
|
| |
$—
|
| |
|
| |
$4,205
|
Accounts receivable
|
| |
10,128
|
| |
262
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
10,390
|
Accounts receivable - related parties
|
| |
55
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
55
|
Inventory
|
| |
—
|
| |
302
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
302
|
Current derivative assets
|
| |
18,819
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
18,819
|
Prepaid expenses and other current assets
|
| |
1,752
|
| |
160
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
1,912
|
Total current assets
|
| |
32,414
|
| |
3,269
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
35,683
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Non-current assets:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Loan fees, net
|
| |
—
|
| |
2
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
2
|
Right of use asset
|
| |
700
|
| |
58
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
758
|
Oil and gas properties, net (full cost, accounting method)
|
| |
—
|
| |
3,914
|
| |
(3,914)
|
| |
(a)
|
| |
—
|
| |
|
| |
—
|
Oil and natural gas properties, net (successful efforts)
|
| |
310,726
|
| |
—
|
| |
3,914
|
| |
(a)
|
| |
(1,517)
|
| |
(b)
|
| |
313,123
|
Other property and equipment, net
|
| |
1,801
|
| |
134
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
1,935
|
Goodwill
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
8,362
|
| |
(h)
|
| |
8,362
|
Non-current derivative assets
|
| |
3,102
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
3,102
|
Other non-current assets
|
| |
2,249
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
2,249
|
Total non-current assets
|
| |
318,578
|
| |
4,108
|
| |
—
|
| |
|
| |
6,845
|
| |
|
| |
329,531
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total assets
|
| |
$ 350,992
|
| |
$ 7,377
|
| |
$—
|
| |
|
| |
$ 6,845
|
| |
|
| |
$ 365,214
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Liabilities and Stockholders’ Equity
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Current liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accounts payable
|
| |
4,739
|
| |
304
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
5,043
|
Accrued liabilities
|
| |
8,746
|
| |
255
|
| |
—
|
| |
|
| |
3,500
|
| |
(i)
|
| |
12,501
|
Revenue payable
|
| |
4,432
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
4,432
|
Current lease liability
|
| |
392
|
| |
116
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
508
|
Current maturities of long-term debt
|
| |
—
|
| |
101
|
| |
—
|
| |
|
| |
|
| |
|
| |
101
|
Asset retirement obligation - current
|
| |
—
|
| |
75
|
| |
—
|
| |
|
| |
(17)
|
| |
(c)
|
| |
58
|
Advances from joint interest owners
|
| |
254
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
254
|
Current derivative liabilities
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
—
|
Total current liabilities
|
| |
18,563
|
| |
851
|
| |
—
|
| |
|
| |
3,483
|
| |
|
| |
22,897
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Non-Current Liabilities:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Non-current lease liability
|
| |
314
|
| |
42
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
356
|
Asset retirement obligations
|
| |
2,268
|
| |
1,954
|
| |
—
|
| |
|
| |
(794)
|
| |
(c)
|
| |
3,428
|
Long-term debt, less current maturities
|
| |
—
|
| |
65
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
65
|
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Reclassification
Adjustments
|
| |
|
| |
Pro Forma
Adjustments
|
| |
|
| |
Pro Forma
Combined
|
Revolving credit facility
|
| |
101,000
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
101,000
|
Deferred tax liabilities - state
|
| |
1,834
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
1,834
|
Deferred tax liabilities - federal
|
| |
—
|
| |
—
|
| |
|
| |
|
| |
49,615
|
| |
(d)
|
| |
49,615
|
Other non-current liabilities
|
| |
104
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
104
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total Non-Current Liabilities
|
| |
105,520
|
| |
2,061
|
| |
—
|
| |
|
| |
48,821
|
| |
|
| |
156,402
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total liabilities
|
| |
124,083
|
| |
2,912
|
| |
—
|
| |
|
| |
52,304
|
| |
|
| |
179,299
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Series A preferred units
|
| |
60,292
|
| |
—
|
| |
—
|
| |
|
| |
(60,292)
|
| |
(e)
|
| |
—
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Members' equity:
|
| |
166,617
|
| |
—
|
| |
—
|
| |
|
| |
(166,617)
|
| |
(e)
|
| |
—
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Stockholders’ equity
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Preferred stock, 25,000,000 shares authorized:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Series A Preferred stock, $0.0001 par value, 10,000 shares designated; 0 shares issued and outstanding
|
| |
—
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
—
|
Common stock, $0.001 par value, authorized 100,000,000 shares; 10,680,050 and 10,658,775 shares issued and outstanding
|
| |
—
|
| |
11
|
| |
—
|
| |
|
| |
203
|
| |
(e)
|
| |
214
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Additional paid-in capital
|
| |
—
|
| |
58,304
|
| |
—
|
| |
|
| |
180,512
|
| |
(e)(f)(h)
|
| |
238,816
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Accumulated deficit
|
| |
—
|
| |
(53,850)
|
| |
—
|
| |
|
| |
735
|
| |
(d)(g)(i)
|
| |
(53,115)
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total stockholders' equity
|
| |
—
|
| |
4,465
|
| |
—
|
| |
|
| |
181,450
|
| |
|
| |
185,915
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Total liabilities and stockholders’ equity
|
| |
$350,992
|
| |
$7,377
|
| |
$—
|
| |
|
| |
$ 6,845
|
| |
|
| |
$365,214
|
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Reclassification
Adjustments
|
| |
|
| |
Pro Forma
Adjustments
|
| |
|
| |
Pro
Forma
Combined
|
Revenues:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Oil and natural gas sales, net
|
| |
$73,133
|
| |
$—
|
| |
$3,426
|
| |
(j)
|
| |
$—
|
| |
|
| |
$76,559
|
Oil and gas properties
|
| |
—
|
| |
3,426
|
| |
(3,426)
|
| |
(j)
|
| |
—
|
| |
|
| |
—
|
Contract services - related parties
|
| |
3,800
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
3,800
|
Total revenues
|
| |
76,933
|
| |
3,426
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
80,359
|
Costs and expenses:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Lease operating expenses
|
| |
20,997
|
| |
—
|
| |
3,165
|
| |
(k)
|
| |
—
|
| |
|
| |
24,162
|
Production costs and taxes
|
| |
3,526
|
| |
3,193
|
| |
(3,165)
|
| |
(k)
|
| |
—
|
| |
|
| |
3,554
|
Exploration costs
|
| |
9,923
|
| |
—
|
| |
—
|
| |
|
| |
10
|
| |
(m)
|
| |
9,933
|
Depletion, depreciation, amortization and accretion
|
| |
21,479
|
| |
611
|
| |
—
|
| |
|
| |
(55)
|
| |
(n)
|
| |
22,035
|
General and administrative
|
| |
10,826
|
| |
1,713
|
| |
(14)
|
| |
(l)
|
| |
—
|
| |
|
| |
12,525
|
Unit-based compensation expense
|
| |
963
|
| |
—
|
| |
14
|
| |
(l)
|
| |
—
|
| |
|
| |
977
|
Costs of contract services - related party
|
| |
503
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
503
|
Transaction costs
|
| |
1,431
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
1,431
|
Total costs and expenses
|
| |
69,648
|
| |
5,517
|
| |
—
|
| |
|
| |
(45)
|
| |
|
| |
75,120
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Income (loss) from operations
|
| |
7,285
|
| |
(2,091)
|
| |
—
|
| |
|
| |
45
|
| |
|
| |
5,239
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Other Income (Expense):
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(5,299)
|
| |
(8)
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
(5,307)
|
Gain on sale of assets and other income
|
| |
—
|
| |
10
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
10
|
Gain on derivatives, net
|
| |
33,876
|
| |
—
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
33,876
|
Total other income
|
| |
28,577
|
| |
2
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
28,579
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net Income (Loss) Before Income Taxes
|
| |
35,862
|
| |
(2,089)
|
| |
—
|
| |
|
| |
45
|
| |
|
| |
33,818
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Income tax benefit (expense)
|
| |
(718)
|
| |
28
|
| |
—
|
| |
|
| |
(6,936)
|
| |
(o)
|
| |
(7,626)
|
Net income (loss)
|
| |
35,144
|
| |
(2,061)
|
| |
—
|
| |
|
| |
(6,891)
|
| |
|
| |
26,192
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Dividends on preferred units
|
| |
(3,535)
|
| |
—
|
| |
—
|
| |
|
| |
3,535
|
| |
(p)
|
| |
—
|
Net income (loss) attributable to common units
|
| |
31,609
|
| |
(2,061)
|
| |
—
|
| |
|
| |
(3,356)
|
| |
|
| |
26,192
|
Earnings per unit/share:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$20.67
|
| |
$(0.19)
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
$0.12
|
Diluted
|
| |
$17.24
|
| |
$(0.19)
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
$0.12
|
Weighted average common shares/units outstanding:
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
1,528,555
|
| |
10,669,602
|
| |
—
|
| |
|
| |
—
|
| |
|
| |
209,978,802
|
Diluted
|
| |
2,037,952
|
| |
10,669,602
|
| |
—
|
| |
|
| |
199,309,200
|
| |
(q)
|
| |
209,978,802(1)
|
(1)
|
As discussed in the proxy statement/prospectus, management of the combined entity has contemplated a reverse stock split after closing of the transaction. Risks related to the merger and the proposed reverse stock split are included within the “Risk Factors” section of this proxy statement/prospectus. Depending on the factors present at the time, the reverse stock split will be effected using the minimum-maximum ratio of 1 for 8 and 1 for 12. The table below depicts the effects of the reverse stock split on the number of Pro forma shares outstanding and the Pro forma EPS calculation:
|
|
| |
For the year ended
September 30, 2020
|
Weighted average common shares/units outstanding
|
| |
209,978,802
|
Weighted average common shares/units outstanding - After 1 for 8 reverse stock split
|
| |
26,247,350
|
Weighted average common shares/units outstanding - After 1 for 12 reverse stock split
|
| |
17,498,233
|
Earnings per unit/share - After 1 for 8 reverse stock split
|
| |
$1.00
|
Earnings per unit/share - After 1 for 12 reverse stock split
|
| |
$1.50
|
(2)
|
TGC’s historical statements of operations were adjusted to only include the twelve months ended September 30, 2020. The data in the above table includes the financials for the period October 1, 2019 through September 30, 2020. The historical data in the above table will not be comparative to the financials included in other sections of this filling. The table below includes a reconciliation of TGC’s historical statement of operations for the nine month period ended September 30, 2020 to the twelve month period ended September 30, 2020.
|
|
| |
For the Nine Months
Ended
September 30
2020
(Unaudited)
|
| |
For the Three
Months Ended
December 31
2019
(Unaudited)
|
| |
For the Twelve
Month Period
October 1, 2019 -
September 30, 2020
(Unaudited)
|
|
| |
(In Thousands)
|
||||||
Revenues
|
| |
|
| |
|
| |
|
Oil and gas properties
|
| |
$2,292
|
| |
$1,134
|
| |
$3,426
|
Total revenues
|
| |
2,292
|
| |
1,134
|
| |
3,426
|
|
| |
|
| |
|
| |
|
Cost and expenses
|
| |
|
| |
|
| |
|
Production costs and taxes
|
| |
2,399
|
| |
794
|
| |
3,193
|
Depreciation, depletion, and amortization
|
| |
461
|
| |
150
|
| |
611
|
General and administrative
|
| |
1,324
|
| |
389
|
| |
1,713
|
Total cost and expenses
|
| |
4,184
|
| |
1,333
|
| |
5,517
|
|
| |
|
| |
|
| |
|
Net loss from operations
|
| |
(1,892)
|
| |
(199)
|
| |
(2,091)
|
|
| |
|
| |
|
| |
|
Other income (expense)
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(6)
|
| |
(2)
|
| |
(8)
|
Gain on sale of assets and other income
|
| |
4
|
| |
6
|
| |
10
|
Total other income (expense)
|
| |
(2)
|
| |
4
|
| |
2
|
|
| |
|
| |
|
| |
|
Net loss from operations before income tax
|
| |
(1,894)
|
| |
(195)
|
| |
(2,089)
|
|
| |
|
| |
|
| |
|
Deferred income tax benefit
|
| |
—
|
| |
28
|
| |
28
|
Net loss
|
| |
(1,894)
|
| |
(167)
|
| |
(2,061)
|
•
|
changes in the estimated fair value of TGC’s assets acquired and liabilities assumed as of the effective time of the merger, which could result from the finalization of valuation procedures and the related assumptions, including interest rates and other factors;
|
•
|
changes in the estimated fair value of the consideration transferred depending on its estimated fair value at the date of closing;
|
•
|
the tax bases of TGC’s assets and liabilities as of the closing date of the merger; and
|
•
|
the factors described in this proxy statement/prospectus, including those identified in the section entitled “Risk Factors”.
|
Share Price of TGC at December 24, 2020
|
| |
$1.15
|
Shares Outstanding as of December 24, 2020
|
| |
10,684
|
Total Consideration
|
| |
$12,287
|
|
| |
Preliminary
Purchase Price
Allocation
|
|
| |
(In thousands)
|
Consideration:
|
| |
|
Fair value of TGC common stock
|
| |
$12,287
|
Total consideration
|
| |
$12,287
|
Fair value of assets acquired:
|
| |
|
Cash and cash equivalents
|
| |
$2,545
|
Accounts receivable
|
| |
262
|
Inventory
|
| |
302
|
Prepaid expenses and other current assets
|
| |
160
|
Oil and Gas Properties
|
| |
2,397
|
Loan fees, net
|
| |
2
|
Other property and equipment, net of lease liabilities
|
| |
34
|
Amounts attributable to assets acquired
|
| |
$ 5,702
|
Fair value of liabilities assumed:
|
| |
|
Accounts payable - trade
|
| |
$304
|
Accrued liabilities
|
| |
255
|
Asset retirement obligations - current
|
| |
58
|
Asset retirement obligations - non-current
|
| |
1,160
|
Amounts attributable to liabilities assumed
|
| |
$1,777
|
Total tangible net assets
|
| |
$ 3,925
|
Goodwill
|
| |
$ 8,362
|
Total tangible net assets and goodwill
|
| |
$12,287
|
(unaudited, in thousands)
|
| |
Purchase
Price
|
| |
Estimated
Goodwill
|
As presented in the pro forma combined results
|
| |
$12,287
|
| |
$8,362
|
10% increase in total consideration
|
| |
13,516
|
| |
9,591
|
10% decrease in total consideration
|
| |
11,058
|
| |
7,133
|
(a)
|
Represents a reclassification of approximately $3.914 million from proved and unproved properties under the full cost method of accounting to oil and natural gas properties under the successful efforts method of accounting.
|
(b)
|
Adjustment to reflect a $1.517 million reduction in gross historical book basis of oil and natural gas properties of TGC to reflect the estimated fair value of the assets assumed as part of the merger. The estimated fair value of TGC proved oil and gas properties and unproved properties was determined using a combination of income and market approach. The income approach relied upon a discounted cash flow analysis. Any change to the fair value of consideration would likely have a material effect on the valuation and such adjustments.
|
(c)
|
Adjustment to reflect a decrease of $0.794 million in TGC asset retirement obligation – non-current to reflect it at fair value and a decrease of $0.017 million in TGC asset retirement obligation – current to reflect the expected costs to be incurred within twelve months.
|
(d)
|
Adjustment to reflect the pro forma net deferred tax liability of $49.615 million as of September 30, 2020 arising from temporary differences between the historical cost and tax basis of REP’s assets and liabilities as a result of becoming taxable. The pro forma deferred tax liabilities reflect the rates expected to be in effect when the temporary differences reverse in the future, which is 21%. A charge to establish such net deferred tax liabilities will be recognized in the period when the change in the status occurs but has not been reflected in the pro forma consolidated statement of operations.
|
(e)
|
Adjustment to reflect the recapitalization of REP upon closing of the Transaction. REP will be issued approximately 203 million shares of TGC Common Stock. REP existing Members’ Equity less the par value of TGC stock will be reclassified to Additional Paid-In Capital.
|
(f)
|
Adjustment to reflect a decrease of $1.517 million in the net effect of all changes from book value to fair value in connection with the adjustments to TGC assets and liabilities assumed as part of the merger.
|
(g)
|
Adjustment to reflect the elimination of TGC’s historical cumulative deficit in connection with the acquisition method of accounting.
|
(h)
|
Adjustment to reflect a $8.362 million increase in goodwill and additional paid-in capital in connection with the closing of this transaction. The goodwill may be significantly different than that used for this preliminary allocation.
|
(i)
|
Reflects the estimated transaction costs of $3.5 million related to the merger, including underwriting, banking, legal, accounting fees that are not capitalized as part of this transaction. These costs are not reflected in the historical September 30, 2020 condensed consolidated balance sheets of REP and TGC, but
|
(j)
|
Reclassification of $3.426 million of TGC’s oil and gas properties revenue to conform to REP’s presentation of oil and natural gas sales, net.
|
(k)
|
Reclassification to reflect the $3.165 million of lease operating expense incurred by TGC for the twelve months ended September 30, 2020 under the successful efforts method of accounting.
|
(l)
|
Reclassification to reflect the $0.014 million of general and administrative expense to conform to REP’s presenation of unit-based compensation expense.
|
(m)
|
Adjustment to reflect the $0.010 million of exploration expense incurred by TGC for the twelve months ended September 30, 2020 under the successful efforts method of accounting.
|
(n)
|
Adjustment to eliminate TGC’s historical depreciation, depletion and amortization (“DD&A”) of $0.055 million under the full costs basis of accounting to reflect the balance under successful efforts method of accounting.
|
(o)
|
Adjustment to reflect $6.936 million in estimated federal income tax expense associated with the pro forma combined results of operations assuming REP’s earnings had been subject to federal income tax using a federal tax rate of approximately 22.6% based on the estimated US federal income tax rate during the year ended September 30, 2020.
|
(p)
|
Adjustment to remove the dividend accrued related to the Series A Preferred Units which are assumed to have been converted on October 1, 2019.
|
(q)
|
Adjustment to reflect the Pro Forma number of common shares that would have been issued by taking REP’s weighted average diluted common units outstanding for their respective periods multiplied by the share consideration ratio of 97.796467. The diluted units assume a 1 to 1 conversion of the Series A preferred units into REP’s common units initially and then together all of REP’s common units outstanding are exchanged for TGC’s common shares using the consideration ratio. See Note 4 for further details below.
|
|
| |
Year Ended
September 30, 2020
|
(in thousands, except per share data)
|
| |
|
Net income from continuing operations
|
| |
$ 26,192
|
REP's weighted average units
|
| |
1,529
|
REP's convertible preferred units
|
| |
491
|
REP's restricted units
|
| |
19
|
Total REP's units converted
|
| |
2,038(1)
|
Weighted average REP shares outstanding - basic and diluted
|
| |
2,038
|
|
| |
Year Ended
September 30, 2020
|
(in thousands, except per share data)
|
| |
|
Share consideration ratio
|
| |
97.796467
|
Post-share consolidation shares
|
| |
199,309
|
Weighted average TGC shares outstanding - basic and diluted
|
| |
10,670
|
Adjusted weighted average shares outstanding - basic and diluted
|
| |
209,979
|
Net income from continuing operations per share:
|
| |
|
Basic and diluted
|
| |
$0.12
|
(1)
|
The total units converted represents the number of REP’s units considered outstanding on a fully diluted basis as of September 30, 2020 which were 2,038. As of December 15, 2020, 2,076 REP were outstanding on a fully diluted basis, which would result in 203 million shares of TGC common stock being issued to REP members.
|
|
| |
Oil (MBbls)
|
||||||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
Proved developed and undeveloped reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
37,159
|
| |
803
|
| |
37,962
|
Extensions, discoveries and other additions
|
| |
2,265
|
| |
—
|
| |
2,265
|
Revision of previous estimates
|
| |
(206)
|
| |
(86)
|
| |
(292)
|
Production
|
| |
(2,060)
|
| |
(67)
|
| |
(2,127)
|
As of September 30, 2020
|
| |
37,158
|
| |
650
|
| |
37,808
|
Proved developed reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
19,198
|
| |
803
|
| |
20,001
|
As of September 30, 2020
|
| |
19,149
|
| |
650
|
| |
19,799
|
Proved undeveloped reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
17,961
|
| |
—
|
| |
17,961
|
As of September 30, 2020
|
| |
18,009
|
| |
—
|
| |
18,009
|
|
| |
Natural Gas (MMcf)
|
||||||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
Proved developed and undeveloped reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
40,991
|
| |
—
|
| |
40,991
|
Extensions, discoveries and other additions
|
| |
3,030
|
| |
—
|
| |
3,030
|
Revision of previous estimates
|
| |
11,290
|
| |
—
|
| |
11,290
|
Production
|
| |
(1,628)
|
| |
—
|
| |
(1,628)
|
As of September 30, 2020
|
| |
53,683
|
| |
—
|
| |
53,683
|
Proved developed reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
23,096
|
| |
—
|
| |
23,096
|
As of September 30, 2020
|
| |
31,138
|
| |
—
|
| |
31,138
|
Proved undeveloped reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
17,895
|
| |
—
|
| |
17,895
|
As of September 30, 2020
|
| |
22,545
|
| |
—
|
| |
22,545
|
|
| |
NGLs (MBbls)
|
||||||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
Proved developed and undeveloped reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
10,812
|
| |
—
|
| |
10,812
|
Extensions, discoveries and other additions
|
| |
642
|
| |
—
|
| |
642
|
Revision of previous estimates
|
| |
(513)
|
| |
—
|
| |
(513)
|
Production
|
| |
(260)
|
| |
—
|
| |
(260)
|
As of September 30, 2020
|
| |
10,681
|
| |
—
|
| |
10,681
|
Proved developed reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
6,045
|
| |
—
|
| |
6,045
|
As of September 30, 2020
|
| |
5,847
|
| |
—
|
| |
5,847
|
Proved undeveloped reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
4,767
|
| |
—
|
| |
4,767
|
As of September 30, 2020
|
| |
4,834
|
| |
—
|
| |
4,834
|
|
| |
Total Reserves Equivalent (MBoe)
|
||||||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
Proved developed and undeveloped reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
54,803
|
| |
803
|
| |
55,606
|
Extensions, discoveries and other additions
|
| |
3,412
|
| |
—
|
| |
3,412
|
Revision of previous estimates
|
| |
1,163
|
| |
(86)
|
| |
1,077
|
Production
|
| |
(2,592)
|
| |
(67)
|
| |
(2,659)
|
As of September 30, 2020
|
| |
56,786
|
| |
650
|
| |
57,436
|
Proved developed reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
29,092
|
| |
803
|
| |
29,895
|
As of September 30, 2020
|
| |
30,186
|
| |
650
|
| |
30,836
|
Proved undeveloped reserves:
|
| |
|
| |
|
| |
|
As of September 30, 2019 and December 31, 2019
|
| |
25,711
|
| |
—
|
| |
25,711
|
As of September 30, 2020
|
| |
26,601
|
| |
—
|
| |
26,601
|
|
| |
Year Ended September 30, 2020
|
||||||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
|
| |
(In thousands)
|
||||||
Future cash inflows
|
| |
$1,533,286
|
| |
$25,100
|
| |
$1,558,386
|
Future production costs
|
| |
(550,427)
|
| |
(17,278)
|
| |
(567,705)
|
Future development costs
|
| |
(144,912)
|
| |
(539)
|
| |
(145,451)
|
|
| |
Year Ended September 30, 2020
|
||||||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
|
| |
(In thousands)
|
||||||
Future income tax expense
|
| |
(3,167)
|
| |
—
|
| |
(3,167)
|
Future net cash flows for estimated timing of cash flows
|
| |
834,780
|
| |
7,283
|
| |
842,063
|
10% annual discount for estiamted timing of cash flows
|
| |
(532,442)
|
| |
(3,058)
|
| |
(535,500)
|
Standardized measure of discounted future net cash flows
|
| |
$302,338
|
| |
$4,225
|
| |
$306,563
|
|
| |
Year Ended September 30, 2020
|
||||||
|
| |
REP
Historical
|
| |
TGC
Historical
|
| |
Pro Forma
Combined
|
|
| |
(In thousands)
|
||||||
As of September 30, 2019 and December 31, 2019
|
| |
$442,212
|
| |
$8,365
|
| |
$450,577
|
Sales of crude oil, natural gas and NGLs, net
|
| |
7,328
|
| |
(204)
|
| |
7,124
|
Net change in prices and production costs
|
| |
(162,571)
|
| |
(2,896)
|
| |
(165,467)
|
Net change in future development costs
|
| |
(12,348)
|
| |
(309)
|
| |
(12,657)
|
Extension, discoveries and other additions
|
| |
17,490
|
| |
—
|
| |
17,490
|
Revisions of previous quantities
|
| |
(48,611)
|
| |
(983)
|
| |
(49,594)
|
Previously estimated development costs incurred
|
| |
10,448
|
| |
—
|
| |
10,448
|
Net change in income taxes
|
| |
891
|
| |
—
|
| |
891
|
Accretion of discount
|
| |
44,627
|
| |
518
|
| |
45,145
|
Other
|
| |
2,872
|
| |
(266)
|
| |
2,606
|
As of September 30, 2020
|
| |
$302,338
|
| |
$4,225
|
| |
$306,563
|
Plan Category
|
| |
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (a)
|
| |
Weighted-average
exercise price of
outstanding, options,
warrants and rights (b)
|
| |
Number of securities remaining
available for future issuance under
equity compensation plans
(excluding securities
reflected in column (a)) (c)
|
Equity compensation plans approve by security holders(1)
|
| |
1,250
|
| |
$1.20
|
| |
253,425
|
Equity compensation plans not approved by security holders
|
| |
—
|
| |
—
|
| |
—
|
Total
|
| |
1,250
|
| |
$1.20
|
| |
253,425
|
(1)
|
Refers to Tengasco, Inc. 2018 Stock Incentive Plan (the “2018 Plan”) which was adopted to provide an incentive to key employees, officers, directors and consultants of the Company and its present and future subsidiary corporations, and to offer an additional inducement in obtaining the services of such individuals. The 2018 Plan contains the same substantive terms of the Company’s previous stock incentive plan adopted in October, 2000 and as thereafter amended until its expiration on January 10, 2018. The 2018 Plan provided an aggregate number of shares for which shares, options, and stock appreciation rights may be issued under the 2018 Plan equal to the number of shares that were available in the previous plan upon its expiration. The 2018 Plan was approved by a majority of the Company’s shareholders acting on written consent and the shares thereunder were subject to Registration Statement on Form S-8 filed August 27, 2018.
|
Provision
|
| |
REP (Pre-Merger)
|
| |
TGC (Pre-Merger)
|
|
| |
Incentive Plan, additional common units and series A preferred units may be authorized for issuance in the future by the board of managers in accordance with the terms of the REP LLC Agreement.
As of January 15, 2021, REP had 1,529,937 common units outstanding and 511,695 series A preferred units outstanding.
|
| |
|
|
||||||
Number of Directors or Managers
|
| |
The REP LLC Agreement provides that the REP board of managers shall consist of up to four (4) natural persons who need not be REP members or residents of the State of Delaware. REP currently has four managers.
|
| |
The TGC charter and the TGC bylaws currently provide that the number of directors that constitute the whole TGC board of directors is fixed by, or in the manner provided in, the TGC bylaws. The TGC bylaws currently state that the number of directors of TGC shall not be less than three (3) or more than ten (10). TGC currently has 3 directors.
|
|
| |
|
| |
|
Regular Meetings of Directors or Managers
|
| |
The REP LLC Agreement provides that the REP board of managers shall be held not less often than quarterly at such times and places as may be fixed from time to time by resolution adopted by the managers. Except as otherwise provided by statute or the REP certificate, any and all business that may be performed by the REP board of managers hereunder may be transacted at any regular meeting. REP shall provide to each manager not less than three (3) business days prior to each such regular meeting a briefing book containing the relevant information to be conducted at such regular meeting.
|
| |
The TGC bylaws provide that the TGC board of directors shall schedule regular meeting as they deem necessary by a vote of majority of the directors then serving, provided, however, the TGC board of directors shall have at least one annual regular meeting immediately after the annual meeting of TGC stockholders. Notice of regular meetings, unless waived, shall be given by mail, electronic transmission or fax transmission or in person to each director, at his or her address as the same may appear on the records of TGC, or in the absence of such address, at his or her residence or usual place of business, at least three (3) days before the day on which the meeting is to be held.
|
|
| |
|
| |
|
Special Meetings of Directors or Managers
|
| |
The REP LLC Agreement provides that special meetings of the REP board of managers may be called by any manager by giving written notice thereof to the other managers. Such notice of a special meeting shall state the time, date and purpose or purposes of the proposed meeting, and it shall be given to the other managers so that it is actually received no less than two (2) business days, and no more than 14 calendar days, prior to the date of the meeting.
|
| |
The TGC bylaws provide that special meetings of the TGC board of directors may be held any time on the call of the Chief Executive Officer of TGC, the Chairman of the TGC board of directors or at the request in writing of a majority of the members of the TGC board of directors then serving. Notice of the time and place of all special meetings of the TGC board of directors shall be orally or in writing, by telephone, facsimile, electronic mail, telegraph or telex, during normal business hours, at
|
Provision
|
| |
REP (Pre-Merger)
|
| |
TGC (Pre-Merger)
|
|
| |
|
| |
least twenty-four (24) hours before the date and time of the meeting, or sent in writing to each director by first class mail, charges prepaid, at least three (3) days before the date of the meeting. Notice of any special meeting of the TGC board of directors shall state the purpose thereof. If the Secretary of TGC shall fail or refuse to give such notice, then the notice may be given by the officer or any one of the directors making the call.
|
|
| |
|
| |
|
Stockholder or Member Nominations and Proposals
|
| |
The REP LLC Agreement provides that the REP members shall vote all of their REP common units and any other voting securities of REP over which they have voting control, at any regular or special meeting, in order to cause (i) the election to the REP board of managers of one (1) representative designated by Yorktown Energy Partners XI, L.P.; (ii) the election to the REP board of managers of one (1) representative designated by Riley Exploration Group, Inc.; (iii) the election to the REP board of managers of one (1) representatives designated by Boomer Petroleum, LLC; and (iv) the election to the Board of Managers of one (1) representative designated by Bluescape Riley Exploration Holdings LLC.
|
| |
The TGC bylaws provide that nominations of any person for election to the TGC board of directors at an annual meeting or at a special meeting may be made (i) by the TGC board of directors or (ii) by any TGC stockholder who timely complies with the notice procedures set forth below.
The TGC bylaws further provide that a stockholder’s notice must be received in writing by the secretary at TGC’s principal executive offices as follows: (i) in the case of an election of directors at an annual meeting of stockholders, not less than 120 days immediately preceding the date of the mailing of the notice of annual meeting and proxy statement and other materials for the preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be received not later than the close of business on the tenth day following the day on which the notice of the date of the meeting was mailed or public disclosure was made, which ever first occurs.
|
|
| |
|
| |
|
Classified Board of Directors or Managers
|
| |
The REP certificate and the REP LLC Agreement do not provide for the division of the REP board of managers into staggered classes.
|
| |
The TGC charter and TGC bylaws do not provide for the division of the TGC board of directors into staggered classes.
|
|
| |
|
| |
|
Director or Manager Action by Written Consent
|
| |
The REP LLC Agreement provides that unless otherwise restricted by the REP certificate, any action required or permitted to be taken at any meeting of
|
| |
The TGC bylaws provide that any action required or permitted to be taken at any meeting of the TGC board of directors or any committee thereof may be taken
|
Provision
|
| |
REP (Pre-Merger)
|
| |
TGC (Pre-Merger)
|
|
| |
the REP board of managers, or any committee designated by the REP board of managers, may be taken without a meeting if all members of the REP board of managers or committee thereof, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the REP board of managers or committee thereof.
|
| |
without a meeting, if a written consent to such action is signed by all members of the TGC board of directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the TGC board of directors or committee.
|
|
| |
|
| |
|
Removal of Directors or Managers
|
| |
Under the REP LLC Agreement, the REP members shall vote all of their REP common units and any other voting securities of REP over which they have voting control, at any regular or special meeting, in order to cause the removal from the REP board of managers (with or without cause) of any manager at the written request of the party entitled to designate such manager (but only upon such written request and under no other circumstances).
|
| |
Under the TGC bylaws, any or all of the TGC directors may be removed for cause by a majority vote of the TGC stockholders present, either in person or by proxy, at a meeting called for such purpose and notice of which was provided to the stockholders in accordance with the TGC bylaws.
|
|
| |
|
| |
|
Special Meeting of the Stockholders or Members
|
| |
Pursuant to the REP LLC Agreement, the REP members may hold meetings from time to time and such meetings shall be held at such times and places, as often and in such manner as shall be determined by holders of at least 85% of the then-outstanding REP common units, including for the purposes of such determination that number of REP common units as would be issuable upon conversion of all of the outstanding REP series A preferred units on the date of such determination (a “supermajority interest of the REP members”).
|
| |
The TGC bylaws provide that special meetings of TGC stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by a majority of the TGC board of directors then serving, the Chairman of the TGC board of directors, or the Chief Executive Officer of TGC.
|
|
| |
|
| |
|
Cumulative Voting
|
| |
Neither the REP certificate nor the REP LLC Agreement grant the REP members the right to engage in cumulative voting.
|
| |
The TGC charter specifically denies the ability of the TGC stockholders to engage in cumulative voting.
|
|
| |
|
| |
|
Vacancies
|
| |
The REP LLC Agreement provides that the REP members shall vote all of their REP common units and any other voting securities of REP over which they have voting control, at any regular or special meeting, in order to cause, in the event that any manager for any reason ceases to serve as a member of the REP board of managers during his or her term of office, or is temporarily incapable of participating in a meeting of the REP
|
| |
The TGC bylaws provide that if the office of any director becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, creation of a new directorship, or otherwise, a majority of the remaining members of the TGC board of directors, though less than a quorum, shall choose a successor or successors, or a director to fill the newly created directorship. In no event shall the TGC stockholders
|
Provision
|
| |
REP (Pre-Merger)
|
| |
TGC (Pre-Merger)
|
|
| |
board of managers for purposes of achieving a quorum and voting therein, the resulting vacancy on the REP board of managers be filled by the person entitled to appoint such REP manager as described in “Stockholder or Member Nominations and Proposals” above, provided that each so appointed manager is either: (A) an employee of REP, (B) an affiliate of the appointing person, or (C) an employee, advisor, or consultant of the appointing person or its affiliate.
|
| |
have the right to fill such vacancies, unless the TGC board of directors has determined by resolution that the TGC stockholders shall fill such vacancy at a meeting of the TGC stockholders.
|
|
| |
|
| |
|
Voting Equity
|
| |
Under the REP LLC Agreement, it is the intention that the involvement of the REP Members in REP (except as set forth in the paragraph below) is for the purpose of informing the REP members with respect to various REP matters, explaining any information furnished to the REP members in connection therewith, answering any questions the REP members may have with respect thereto and receiving any ideas or suggestions the REP members may have with respect thereto; it being the further intention that the REP board of managers shall have full and exclusive power and authority on behalf of REP to acquire, manage, control and administer the assets, business and affairs of REP, subject to the below.
Pursuant to the REP LLC Agreement, REP (and the officers and agents acting on its behalf) shall not take action in connection with the following matters without the approval of supermajority interest of the REP members: (i) the issuance or repurchase of any debt or equity securities of REP, other than (A) REP units issued as outlined in the REP LLC Agreement; (B) REP units convertible, exchangeable or exercisable in connection with any debt or equity securities approved by each of the REP board of managers and a supermajority interest of the REP members; (C) REP units issued pursuant to an employee stock option plans, employee incentive plans, employee benefit plans, or employment agreements approved by the REP board of managers (D) REP units convertible, exchangeable or exercisable in connection
|
| |
Under the TGC charter, subject to the rights of any other class or series of stock and the provisions of the laws of the State of Delaware governing business corporations, voting rights of TGC shall be vested in the holders of TGC common stock. Each holder of TGC common stock shall have one vote in respect of each share of such TGC common stock held.
Under the TGC bylaws, when a quorum is present at any meeting of the TGC stockholders, and subject to the provisions of the DGCL, the TGC charter or the TGC bylaws in respect of the vote that shall be required for a specific action, the vote of the holders of a majority of the TGC stock having voting power, present in person or represented by proxy duly authorized by the stockholder and filed with the Secretary of TGC, shall decide any question brought before the meeting, unless the question is one upon which, by express provision of the statutes or of the TGC charter or of the TGC bylaws, a different vote is required, in which case the express provision shall govern and control the decision of such question. Each TGC stockholder shall have one (1) vote for each share of stock having voting power registered in his or her name on the books of TGC, except as otherwise provided in the TGC charter.
|
Provision
|
| |
REP (Pre-Merger)
|
| |
TGC (Pre-Merger)
|
|
| |
with securities outstanding under employee stock option plans, employee incentive plans, employee benefit plans or employment agreements approved by the REP board of managers; (E) REP units (or other equity interests of REP) issued in connection with any stock split or stock dividend applicable to the REP units on a pro rata basis; and (F) REP units (or other equity interests in REP) offered by REP in an initial public offering or exchanged or transferred in connection with any transaction or series of transactions that result in (I) the listing of REP’s (or successor thereto) securities on a national securities exchange or (II) the REP members receiving in exchange for their equity in REP, securities listed on a national securities exchange or over the counter market (a “Listing Transaction”); (ii) the authorization or issuance of a new class or series of equity securities of REP; (iii) except in the case of an initial public offering or Listing Transaction, (A) the sale of all or substantially all of the assets of REP on a consolidated basis, (B) a merger, reorganization or consolidation of REP, (C) the sale of all or a majority of the outstanding equity interests in REP whether by share exchange or otherwise or (D) any other transaction or series of transactions in which, the owners of REP’s outstanding voting power prior to such transaction do not own at least a majority of the outstanding voting power of the successor entity immediately upon completion of the transaction; (iv) entering into any substantially dissimilar business from the business of REP; (v) entering into, terminating or replacing any credit agreement or REP’s credit facility or any of its subsidiaries; (vi) the commencement of a voluntary bankruptcy by REP or consent to the appointment of a receiver, custodian, liquidator or trustee for REP or for all or any substantial portion of its property; (vii) the declaration or payment of any distribution or dividend to the REP members; (viii) an initial public offering that reflects a pre-money valuation of less than $150,000,000; (ix) providing any compensation to the REP managers, other
|
| |
|
Provision
|
| |
REP (Pre-Merger)
|
| |
TGC (Pre-Merger)
|
|
| |
than as contemplated by the REP LLC Agreement or provided to the REP managers by such person’s sponsoring person, in compensation for such person’s role as an REP manager; or (x) any incurrence of indebtedness for money borrowed of any kind (or guarantees thereof) by REP or its subsidiaries except for first lien debt to consist only of a conforming revolving credit facility provided by a money center banking institution. No approval, vote, or consent of the REP members shall be required for any transactions undertaken by REP and its affiliates in connection with or related to an initial public offering or Listing Transaction.
The REP LLC Agreement further provides that the holders of REP series A preferred units will have such voting rights pursuant to the REP LLC Agreement as such holders of REP series A preferred units would have if such REP series A preferred units were converted into REP common units, at the Series A Conversion Price then in effect, and vote together with the REP common units as a single class. In addition to the rights granted above in “Voting Equity”, the affirmative vote or consent of the holders of a Supermajority Interest of the Members shall be necessary for effecting or validating the following actions relating to the REP series A preferred units: (i) any amendment, alteration or repeal of the REP certificate or the REP LLC Agreement (including by way of merger, consolidation or conversion) which materially and adversely affects the rights or preferences of the REP series A preferred units (it being understood that any issuance or creation of membership interests ranking junior to the REP series A preferred units shall not require any vote, consent or approval of the Members under this provision, (ii) issuance or reclassification of membership interests ranking pari passu or senior to the REP series A preferred units, (iii) any of the following events: (A) a merger, consolidation or transaction which, after giving effect to such merger, consolidation or transaction,
|
| |
|
Provision
|
| |
REP (Pre-Merger)
|
| |
TGC (Pre-Merger)
|
|
| |
will result in holders of REP’s existing units and their respective affiliates ceasing to continue to own at least 75% (by voting power) of the outstanding shares or other voting securities of REP (or surviving or acquiring corporation or entity, as applicable), (B) a merger or consolidation other than one in which holders of REP’s existing units and their respective affiliates own at least a majority (by voting power) of the outstanding shares or other voting securities of the surviving or acquiring corporation or entity, (C) a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of REP, or (D) any voluntary or involuntary liquidation, dissolution or winding up of REP (each, an “REP Event”) other than a Listing Transaction in which the holders of the REP series A preferred units do not receive, upon the consummation of such REP Event an amount in cash or other consideration equal to (1) $120 with respect to each outstanding REP series A preferred unit held by such holder, determined as of the date immediately prior to the date of the consummation of the REP Event plus (2) any accrued but unpaid dividends on the REP series A preferred units as of such date (such amount, the “series A preferred preference amount”); provided that, in the event an REP Event is not approved by a supermajority interest of the REP members, REP may elect to redeem the outstanding REP series A preferred units in cash in an amount equal to the series A preferred preference amount immediately prior to the consummation of such REP Event and consummate such REP Event (for the avoidance of doubt, after payment in full to the holders of REP series A preferred units of the series A preferred preference amount, such holders of REP series A preferred units as such shall have no right or claim to any of the remaining assets of REP in respect of their ownership of such REP series A preferred units; and (iv) other than pursuant to the REP unit purchase agreements, a call for capital contributions from holders of REP series A preferred units.
|
| |
|
Provision
|
| |
REP (Pre-Merger)
|
| |
TGC (Pre-Merger)
|
Drag Along Rights
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Pursuant to the REP LLC Agreement, at any time an REP member proposes a transaction where (i) any consolidation, conversion, merger or other business combination involving REP in which all of REP’s outstanding equity securities are exchanged for or converted into cash, securities of a corporation or other business organization or other property, (ii) a sale or other disposition of all or substantially all of the assets of REP to be followed promptly by a liquidation of REP or a distribution to the REP members of all or substantially all of the net proceeds of such disposition after payment or other satisfaction of liabilities and other obligations of REP, or (iii) the sale by all the REP members of all their equity securities; provided that, except as set forth below, each of the material terms and provisions of any such transaction described in clauses (i), (ii) and (iii) provides for equal and/or proportionate treatment of each of the REP members (each, a “drag-along transaction”) and if such proposed drag-along transaction has been approved by a supermajority interest of the REP members (any such approved drag-along transaction, an “approved sale”), then all REP members shall consent to and raise no objections against the approved sale, and if the approved sale is structured as (A) a merger, share exchange or consolidation of REP, or a sale of all or substantially all of the assets of REP, each REP member shall vote in favor of the approved sale and shall waive any dissenters rights, appraisal rights or similar rights in connection with such merger, consolidation or asset sale, or (B) a sale of REP units, the REP members shall agree to sell all their respective REP units which are the subject of the approved sale, on the terms and conditions of such approved sale. The REP members shall promptly take all necessary and desirable actions in connection with the consummation of the approved sale, including the execution of such agreements and such instruments and other actions reasonably necessary to (I) provide customary representations,
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TGC does not have any drag along rights in place.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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warranties, indemnities, and escrow arrangements relating to such approved sale and (II) effectuate the allocation and distribution of the aggregate consideration upon the approved sale; provided, however, that (x) no holder of REP units who is not an officer of REP shall be obligated to be subject to any non-competition, non-solicitation, or similar restrictive covenants in connection with any Approved Sale, (y) any liability relating to representations, warranties, covenants, indemnities and agreements, other indemnification obligations regarding the business of REP shall be shared by the REP members pro rata on a several (but not joint) basis in proportion to the consideration to be received in the approved sale by each REP member and (z) in no event shall a REP member be responsible for any liabilities or indemnities in connection with such approved sale in excess of the proceeds received by such REP member in the approved sale. The REP members shall be permitted to sell their respective REP units pursuant to an approved sale without complying with any other provisions of the REP LLC Agreement. The REP LLC Agreement also provides that in furtherance of, but only to the extent that an REP member breaches its obligations under, these provisions, each of the REP members hereby (i) irrevocably appoints the officer duly authorized by the REP board of managers as its agent and attorney-in-fact (with full power of substitution) to execute all agreements, instruments and certificates and take all actions necessary or desirable to effectuate any approved sale hereunder; and (ii) grants to the agent or attorney-in-fact a proxy (which shall be deemed to be coupled with an interest and irrevocable) to vote the REP units held by such REP member in favor of any approved sale.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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Stockholder or Member Rights Plan
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REP does not have any REP member rights plans in place.
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TGC has a stockholder rights plan. TGC has confirmed it has taken all necessary action so that the rights under such plan will expire, and will no longer be exercisable, immediately prior to the effective time without any payment being made in respect thereof.
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Stockholder or Member Action by Written Consent
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Under the REP LLC Agreement, any action required or permitted to be taken at a meeting of the REP members (voting as a class or otherwise) may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by REP members having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all of the REP members entitled to vote were present and voting. Prompt notice of the taking of the action without a meeting by less than unanimous consent shall be given in writing to those REP members who did not consent in writing.
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Pursuant to the TGC bylaws, in the event of the delivery to TGC of a written consent or consents in accordance with Section 228 of the DGCL purporting to authorize or take corporate action and/or related revocations, the Secretary of TGC shall provide for the safekeeping of such consents and shall, as soon as practicable thereafter, conduct such reasonable investigation as he or she deems necessary or appropriate for the purpose of ascertaining the validity of such consents and all matters incident thereto, including, without limitation, whether the holders of shares having the requisite voting power to authorize or take the action specified in the consents have given consent; provided, however, that if the corporate action to which the consents relate is the removal or election of one or more members of the TGC board of directors, the Secretary of TGC shall designate an independent, qualified inspector with respect to such consents and such inspector shall discharge the functions of the Secretary of TGC under these provisions. If, after such investigation, the Secretary of TGC or the inspector, as the case may be, shall determine that any action purportedly taken by such consents has been validly taken, that fact shall be certified on the records of TGC kept for the purpose of recording the proceedings of meetings of the TGC stockholders and the consents shall be filed with such records.
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Notice of Stockholder or Member Meeting
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Pursuant to the REP LLC Agreement, all notices, elections, demands, or other communications required or permitted to be made or given pursuant to REP members shall be in writing and shall be considered as properly given or made on the date of actual delivery if given by (i) personal delivery, (ii) United States
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Pursuant to the TGC bylaws, written notice of each meeting of TGC stockholders, stating the date, time and place, and in the case of a special meeting the object thereof, shall be mailed, postage prepaid, not less than ten (10) nor more than sixty (60) days before the meeting, to each TGC
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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mail, (iii) expedited overnight delivery service with proof of delivery, or (iv) via facsimile or electronic mail with confirmation of delivery by the receiving equipment, addressed to the respective addressee(s), and their counsel, where indicated, as set forth in the REP LLC Agreement. Any REP member may change its address by giving notice in writing to the other REP members of its new address.
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stockholder entitled to vote thereat, at the address of the TGC stockholder which appears on the books of TGC. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the TGC stockholder at his address as it appears on the stock transfer books of TGC, with postage thereon prepaid.
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Conversion Rights and Protective Provisions
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The REP LLC Agreement does not provide that holders of REP common units have conversion rights.
The REP LLC Agreement provides that at any time prior to an initial public offering or Listing Transaction and at a holder of REP series A preferred units’ sole discretion, such holder may elect to convert such REP series A preferred units to a number of REP common units (rounded up to the nearest whole unit number) in an amount equal to the quotient of (i) the product of (A) the number of REP series A preferred units to be converted by (B) $120 plus the amount of any accrued but unpaid dividends on such REP series A preferred units as of any time of determination (the “series A preferred liquidation preference”), divided by (ii) $120 per REP series A preferred unit, as adjusted to reflect any subdivision, stock split, recapitalization, reclassification or consolidation of the REP common units following August 5, 2020; provided, however, that an automatic conversion of the REP series A preferred unit in accordance with the mechanism below shall not be subject to adjustment (the “series A conversion price”) then in effect by the delivery of written notice to REP. Immediately prior to any such conversion, all accrued or declared but unpaid dividends on the REP series A preferred units shall be paid in kind to such holder electing to convert its REP series A preferred units.
The REP LLC Agreement also provides that immediately following the execution of an underwriting agreement but prior to the closing of an initial public offering, all
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The TGC charter and TGC bylaws do not provide that holders of TGC common stock have conversion or other protective rights.
The TGC charter provides that any preferred stock that may be issued by TGC may have conversion or exchange privileges into or for, at the option of the holder or TGC or upon the happening of a specified event, shares of any other class or classes or of any other series of the same or other class or classes of stock of TGC and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such event as the TGC board of directors shall determine.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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outstanding REP series A preferred units shall automatically and without further action required by any REP member or person be converted into common stock of the initial public offering issuer or surviving entity that are listed on a national security exchange at a conversion rate equal to the quotient of (i) the product of (A) the number of REP series A preferred units to be converted multiplied by (B) the series A preferred liquidation preference, divided by (ii) the lesser of (A) the series A conversion price or (B) a 20.0% discount to the price to the public in an initial public offering as listed on the cover page of the final prospectus for such initial public offering. REP shall cause the initial public offering issuer to provide for such conversion mechanism in its organizational documents. Without limiting the foregoing, at the request of any holder of REP series A preferred units, the initial public offering shall involve the merger or consolidation of any blocker corporation into REP following such initial public offering in a transaction intended to qualify as a tax-free reorganization, the utilization of such blocker corporation as REP following such initial public offering or otherwise structuring the transaction so that the blocker corporation is not subject to a level of corporate tax on the initial public offering or subsequent dividend payments or sales of shares, provided that any such request and related structuring does not unreasonably delay or otherwise materially interfere with the timely closing of such initial public offering. At or prior to the closing of a Listing Transaction and/or an internal restructuring relating thereto, all outstanding REP series A preferred units shall automatically and without further action required by any REP member or person be converted into REP common units at a conversion rate equal to the series A conversion price. REP shall cause the definitive agreements relating to a Listing Transaction and/or internal restructure to provide for such conversion mechanism (or to provide for conversion of the REP series A preferred units directly into common stock of the
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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initial public offering issuer or surviving entity that are listed on a national security exchange on the same basis as if the REP series A preferred units had converted into REP common units in accordance with these provisions) in the organizational documents or other definitive agreements relating thereto.
The REP LLC Agreement provides that on the date that is one year following the expiration of REP’s revolving credit facility (as may be further amended, restated, supplemented, modified or replaced from time to time), REP shall be required to redeem all of the outstanding REP series A preferred units in cash in an amount equal to the series A preferred liquidation preference for such REP series A preferred units on the date of redemption. Subject to applicable law, REP shall effect any such redemption by paying cash for each REP series A preferred unit to be redeemed in an amount equal to the series A preferred liquidation preference to the holders of the REP series A preferred units to be redeemed on such date.
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Preemptive Rights
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Pursuant to the REP LLC Agreement, at any time prior to the consummation of an initial public offering or a Listing Transaction, each REP member of the then outstanding REP common units or the REP series A preferred units has the right to purchase such holder’s pro rata share (for the purposes of such determination that number of REP common units as would be issuable upon conversion of all of the outstanding REP series A preferred units on the date of such determination in accordance with “Conversion Rights and Protective Provisions”) of all or any part of any units (or other equity interests in REP) and rights, options or warrants to purchase units (or other equity interests in REP), and securities of any type whatsoever that are or may become, convertible into or exchange for units (or other equity interests in REP) (however, the following are excluded: (i) units issued simultaneously with the execution and delivery of the REP LLC Agreement,
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The TGC charter and TGC bylaws do not provide that holders of TGC common stock have preemptive rights.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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(ii) units (or other equity interests) issued or issuable to parties providing REP with equipment leases, real property leases, loans, credit lines, guaranties of indebtedness, cash price reductions or similar financing, under arrangements approved by the REP board of managers, (iii) units (or other equity interests) issued to persons pursuant to the acquisition of another corporation or entity by REP by consolidation, merger, purchase of all or substantially all of the assets, or other reorganization in which REP acquires, in a single transaction or series of related transactions, all or substantially all of the assets of such other corporation or entity or 50% or more of the voting power of such other corporation or entity or 50% or more of the equity ownership of such other entity, (iv) securities or units granted, issued or reserved for issuance under any employee stock option plans or other employee benefit plans, or securities or units granted, issued or reserved for issuance pursuant to any employment agreement between REP and an officer of REP which was duly approved by the REP board of managers, (v) units (or other equity interests) issued in connection with any stock split or stock dividend, (vi) units (or other equity interests in REP) offered by the issuer in an initial public offering or offered by an initial public offering issuer to the public pursuant to a registration statement filed under the Securities Act, (vii) units (or other equity interests) offered or issued in connection with a conversion or internal restructure in connection with a Listing Transaction, (viii) units (or other equity interests in REP) convertible, exchangeable or exercisable for REP series A preferred units or other preferred securities (or convertible debt securities in REP) duly approved, authorized and issued by the REP board of managers, and (ix) REP common units issued pursuant to and in accordance with a contribution agreement dated March 6, 2017) that REP may from time to time issue after August 5, 2020.
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Right of First Refusal
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Under the REP LLC Agreement, REP shall have a right of first refusal (the “ROFR”) to purchase all or any portion
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TGC does not have a right of first refusal in place.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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of the REP units proposed to be transferred, if REP gives written notice of the exercise of such right to the selling REP member within 30 days (the “ROFR period”) from the receipt of notice to REP from the selling REP member.
If REP does not intend to exercise the ROFR in full or if REP is not lawfully able to repurchase all of such units, REP will send written notice thereof to the selling REP member and to each other REP member at least 10 days before the expiration of the ROFR period. The purchase price for the units proposed to be transferred to be purchased by REP upon exercise of the ROFR will be the bona fide cash price (or the fair market value of any non-cash consideration as determined in good faith by the REP board of managers) per unit for which the selling REP member proposes to transfer such units to the proposed purchaser(s) (subject to any rights REP may have under any other agreement to purchase all or some of such units at a lower price), and will be payable within 30 days after the date of REP’s notice that it does not intend to exercise the ROFR. Payment of the purchase price will be made, at the option of REP, consisting of (i) the consideration offered by the proposed purchaser, (ii) in cash (by cashier’s check), (iii) by wire transfer of immediately available funds to the selling REP member, or (iv) by any combination of the foregoing. If REP determines that it does not intend to exercise the ROFR in full, each REP member shall have the right, but not the obligation, up to such REP member’s pro rata share of REP units, to purchase such portion of the units proposed to be transferred equal to such REP member’s pro rata share of REP multiplied by the amount of units proposed to be transferred not acquired by REP as set forth in REP’s notice. For purposes of calculating the pro rata share, the selling REP member’s proposed units to be transferred will disregarded. If some but not all of the non-selling REP members desire to acquire such units proposed to be transferred, the REP members interested in acquiring such
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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units may each acquire their proportionate share of 100% of such available units. Such REP member shall have 15 days from receipt of REP’s notice that it does not intend to exercise the ROFR in full to provide REP and each other REP member with written notice of such REP member’s exercise of such right. The purchase price for the units to be purchased by such REP member upon exercise of such right shall be calculated as set forth in the paragraph above and will be payable within 30 days after the date of the notice from REP determining that it does not intend to exercise the ROFR in full. Payment of the purchase price will be made, at the option of such purchasing REP member, consisting of (i) the consideration offered by the proposed purchaser, (ii) in cash (by cashier’s check), (iii) by wire transfer of immediately available funds to the selling REP member, or (iv) by any combination of the foregoing.
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Right of Co-Sale
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Under the REP LLC Agreement, if REP and other REP members do not exercise their rights to acquire units proposed to be transferred in full, the selling REP Member shall offer in writing (the “participation offer”) to the other REP members designated by the REP board of managers as having rights under these provisions (each recipient is referred to as a “tag-along REP member”) to include in the proposed disposition a number of such other REP member’s units equal to the product of (a) such Member’s pro rata share of REP multiplied by (b) the amount of units proposed to be transferred not acquired by REP or acquired by other REP members. If any REP member accepts the participation offer, the selling REP member shall, to the extent necessary, reduce the units it otherwise would have included in such proposed transfer so as to permit the REP members who want to participate to include in such transfer a number of units corresponding to the amount that they are entitled to include pursuant to these provisions. Any such purchase shall be made in accordance with the following: (i) each tag-along REP member shall have no more than 20 days from the receipt of the
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TGC does not have a right of co-sale in place.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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participation offer in which to accept such participation offer, in whole or in part and (ii) the closing of such purchase shall occur within 30 days after such acceptance or at such other time as the selling REP member, the tag-along REP members and the purchaser of such units proposed to be transferred may agree.
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Forum Selection
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The REP LLC Agreement provides that it and the rights and obligations of the parties thereunder shall be governed by and interpreted, construed and enforced in accordance with the internal laws of the State of Delaware, without regard to rules or principles of conflicts of law requiring the application of the law of another State. The REP LLC Agreement does not dictate a specific forum.
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The TGC bylaws provide that unless TGC consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of TGC (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of TGC to TGC or TGC stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Delaware, in all cases subject to the court having personal jurisdiction over the indispensable parties named as defendants.
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Tax Status
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REP is treated as a partnership for federal income tax purposes.
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TGC is taxable as a corporation for federal income tax purposes.
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Indemnification of Officers and Directors and Advancement of Expenses; Limitation on Personal Liability
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Indemnification
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The REP LLC Agreement provides that REP shall indemnity to the maximum extent permitted under the DLLCA and save harmless (i) the REP managers, their respective partners, members, officers, employees and agents and (ii) the REP members and their respective affiliates, partners, members, officers, employees and agents (the “REP indemnitees”) from all liabilities and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the REP indemnitees in connection with a proceeding; provided, however, that no REP indemnitee shall be indemnified by REP for any acts or omissions by such REP indemnitee that constitute fraud, gross negligence, willful misconduct or intentional violation of law. An REP indemnitee shall not be denied
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The TGC bylaws provide that TGC shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of TGC) by reason of the fact that he is or was a director, officer, employee or agent of TGC, or is or was serving at the request of TGC as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent provided by Delaware law against expenses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred by him in connection with such action, suit or proceeding if he
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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indemnification in whole or in part under these provisions because the REP indemnitee had an interest in the transaction in with respect to which the indemnification applies if the transaction was otherwise permitted and approved pursuant to the terms of the REP LLC Agreement and in the absence of any fraud on behalf of the REP indemnitee and its affiliates.
The REP LLC Agreement further provides that REP, by adoption of a resolution of the REP board of managers, may indemnify and advance expenses to an officer, employee or agent of REP to the same extent and subject to the same conditions under which it may indemnify and advance expenses to an REP indemnitee as described above.
The REP LLC Agreement states that to the extent required by law, any indemnification of or advance of expenses in accordance with these provisions shall be reported in writing to the REP members as soon as reasonably practicable and in any case, within the 12-month period immediately following the date of the indemnification or advance.
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acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of TGC, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of TGC, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
The TGC bylaws further provide that TGC shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of TGC) by reason of the fact that he is or was a director, officer, employee or agent of TGC, or is or was serving at the request of TGC as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent provided by Delaware law against expenses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of TGC, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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be in or not opposed to the best interests of TGC, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
The TGC bylaws further provide that to the extent that a director, officer, employee or agent of TGC has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in the paragraphs above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.
The TGC bylaws provide that any indemnification under the paragraphs above (unless ordered by a court) shall be made by TGC only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in the paragraphs above. Such determination shall be made (i) by the TGC board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the TGC stockholders. Notwithstanding the foregoing, a director, officer, employee or agent of TGC shall be able to contest any determination that the director, officer, employee or agent has not met the applicable standard of conduct set forth in the paragraphs above by petitioning a court of appropriate jurisdiction.
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Advancement of Expenses
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The REP LLC Agreement provides that the right to indemnification conferred therein shall include the right to be paid or reimbursed by REP the reasonable expenses incurred by an REP indemnitee who was in or is threatened to be made a named defendant or respondent in a proceeding in advance of the final disposition of the proceeding and without
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The TGC bylaws provide that the expenses (including attorneys' fees) incurred by a TGC officer or director in defending or settling any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by TGC in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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any determination as to the REP indemnitee’s ultimate entitlement to indemnification; provided, however, that the payment of such expenses incurred by any such REP indemnitee in advance of the final disposition of a proceeding, shall be made only upon delivery to REP of a written affirmation by such REP indemnitee of his or her good faith belief that he has met the standard of conduct necessary for indemnification under the REP LLC Agreement and a written undertaking, by or on behalf of such REP indemnitee, to repay all amounts so advanced if it shall ultimately be determined that such REP indemnitee is not entitled to be indemnified under the REP LLC Agreement or otherwise.
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director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by TGC as authorized in this provision. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the TGC board of directors deems appropriate.
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Limitation on Personal Liability
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The REP LLC Agreement states that no REP manager shall have any liability whatsoever to REP or to the REP members for loss caused by any act or by the failure to do any act if the loss suffered arises out of a good faith mistake in business judgment of the manager, or if the manager, in good faith, had determined that the action or lack of action giving rise to the loss was in the best interests of REP or if the action or lack of action giving rise to the loss was based on the written advice of legal counsel regularly employed by REP in connection with the affairs of REP; provided, however, that such exculpation from liability shall not apply to any liability for loss caused by any act or by the failure to do any act which arises out of the fraud, gross negligence, willful misconduct or intentional violation of law by any manager. The REP members and REP recognize that this limitation relieves a manager from any and all liabilities arising or to arise out of any ordinary negligence by any such manager.
The REP LLC Agreement also states that the REP members shall not be liable for the debts, liabilities, contracts or other obligations of REP except (i) for any unpaid capital contributions agreed to be made by such REP member, and (ii) as otherwise provided in the DLLCA.
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The TGC charter states that no director of TGC shall be held personally liable to TGC or the TGC stockholders for monetary damages of any kind for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to TGC or the TGC stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of TGC or the TGC stockholders law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of TGC shall be eliminated or limited to the fullest extent permitted by the DGCL as so amended from time to time. No amendment to, or repeal of, these provisions shall adversely affect any right or protection of any director of TGC existing at the time of such amendment or repeal for or with respect to acts or omissions of such director prior to such amendment or repeal.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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Dividends
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Dividends Declaration and Payment of Dividends
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The REP LLC Agreement provides that for REP common units REP may distribute to the REP members funds of REP that the REP board of managers reasonably determines are not needed for the payment of existing or foreseeable REP obligations and expenditures (“Distributable Funds”). Subject to the paragraph below, these distributions may be made at such times and in such amounts as the REP board of managers, in its sole discretion, determines to be appropriate. Subject to the paragraph below, all such distributions shall be made to the REP members holding REP common units according to their respective proportion, expressed as a percentage that such REP member’s REP common units bear to the total number of REP common units outstanding as of the date of such determination.
The REP LLC Agreement provides that during the period from and after the REP series A preferred unit was issued and ending on December 31, 2022 (the “dividend period”), distributions for the REP series A preferred stock at the rate per annum of 6.0% of $120, computed on the basis of a 360-day year comprised of 30-day months, shall accrue on each REP series A preferred units (the “series A preferred dividends”). Series A preferred dividends shall accrue from day to day, whether or not declared, and shall be cumulative. Series A preferred dividends shall be payable in kind by the issuance of additional REP series A preferred units and in arrears on each Series A preferred dividend payment date (the date that is 30 days after the end of each fiscal quarter of REP, unless the REP board of managers determines an earlier date) for the fiscal quarter ending immediately prior to such payment date (or with respect to the first applicable payment date, for the period commencing on the date that the REP series A preferred unit was issued and ending on the last day of the fiscal
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The TGC charter provides that the holders of shares of TGC common stock shall be entitled to receive, when and as declared by the TGC board of directors, out of the assets of TGC legally available therefor, such dividends as may be declared from time to time by the TGC board of directors.
The TGC charter further provides that the TGC board of directors may determine for any preferred stock issued whether the holders of shares of that series shall be entitled to receive dividends and, if so, the rates of such dividends, conditions under which and times such dividends may be declared or paid, any preferences of any such dividend to, and the relation to, the dividends payable on any other class or classes of stock or any other series of that same class and whether dividends shall be cumulative or noncumulative and, if cumulative, from which date or dates.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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the REP LLC Agreement, except in connection with any initial public offering or Listing Transaction without the approval of a majority of the REP board of managers.
Any provisions of the REP LLC Agreement relating to the preemptive rights may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), upon the approval of the REP board of managers and a Supermajority Interest of the REP members.
In addition to the right of the Board of Managers to amend the REP LLC Agreement, any change, modification, or amendment to the REP LLC Agreement shall be effective if made by an instrument in writing that has been duly approved by the REP board of managers and a Supermajority Interest of the members. Notwithstanding, with respect to any change, modification or amendment to the REP LLC Agreement that would adversely affect any of the REP members in any disproportionate and material respect as compared to the other REP members, such change, modification or amendment shall not be binding on such REP member unless contained in a written instrument duly executed by such REP member; provided, however, any amendment which is made to facilitate an internal restructure, to facilitate a merger or consolidation of REP with any corporation, partnership or other entity, to convert REP into another entity, or to cause REP to participate in an exchange of interests or some type of business combination with any corporation, partnership or other entity, shall require the approval only of the REP board of managers if each of the material terms and provisions of such merger, consolidation, conversion, exchange, or combination provides for equal and/or proportionate treatment of each of the REP members, provided that the REP board of managers notifies the REP members of such change, modification, or amendment. With respect
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therein are granted subject to that reservation.
The TGC bylaws provide that the TGC board of directors, by affirmative vote of a majority of the total number of directors fixed pursuant to the TGC bylaws, may adopt, amend, or repeal the TGC bylaws at any meeting, subject to the provisions in the TGC charter. Subject to the provisions in the TGC charter, the TGC bylaws may also be amended or repealed, and new bylaws adopted, by the TGC stockholders; provided, however, that any amendment or repeal of provisions relating to calling of special meetings of stockholders, stockholder proposals, director vacancies or bylaw amendments may be made only by the affirmative vote of the holders of a majority of the issued and outstanding TGC common stock entitled to vote thereon at any annual meeting or special meeting of TGC stockholders, and only if notice of the proposed amendment or repeal is contained in the notice of the meeting.
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Provision
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REP (Pre-Merger)
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TGC (Pre-Merger)
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to any change, modification, or amendment to the REP LLC Agreement that would change the name of REP, reflect the issuance of new securities or admit new or substituted REP members, or any other change, modification, or amendment which does not adversely affect any of the REP members in any disproportionate and material respect as compared to the other REP members, and any change, modification, or amendment which the REP board of managers determines is necessary or advisable to ensure that REP is not and will not be treated as an association taxable as a corporation for federal income tax purposes or to conform with changes in applicable tax law (provided such changes do not have a material adverse effect on the REP members), such change, modification, or amendment may be contained in a written instrument that has been duly approved by the REP board of managers, provided that the REP board of managers notifies the REP members of such change, modification, or amendment promptly thereafter.
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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thereto represented shares of original common stock shall be deemed for all purposes to evidence ownership of and to represent that number of shares of TGC common stock into which the shares previously represented by such certificates have been reclassified as herein provided. No fractional shares shall be issued in connection with the reverse split. TGC stockholders who otherwise would be entitled to receive fractional share interests of TGC common stock as a result of the reverse split shall be entitled to receive in lieu of such fractional share interests, upon the reverse split effective time, one whole share of TGC common stock in lieu of such fractional share interest. Until any such outstanding stock certificates have been surrendered for transfer or otherwise accounted for to TGC, the registered owner thereof on the books and records of TGC shall have and be entitled to exercise any voting and other rights with respect to, and receive any dividend and other distributions upon, the shares of TGC common stock issued in respect of the original TGC common stock formerly evidenced by such certificates.
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and after the reverse split effective time, outstanding certificates that prior thereto represented shares of original common stock shall be deemed for all purposes to evidence ownership of and to represent that number of shares of TGC common stock into which the shares previously represented by such certificates have been reclassified as herein provided. No fractional shares shall be issued in connection with the reverse split. TGC stockholders who otherwise would be entitled to receive fractional share interests of TGC common stock as a result of the reverse split shall be entitled to receive in lieu of such fractional share interests, upon the reverse split effective time, one whole share of TGC common stock in lieu of such fractional share interest. Until any such outstanding stock certificates have been surrendered for transfer or otherwise accounted for to TGC, the registered owner thereof on the books and records of TGC shall have and be entitled to exercise any voting and other rights with respect to, and receive any dividend and other distributions upon, the shares of TGC common stock issued in respect of the original TGC common stock formerly evidenced by such certificates.
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Corporate Opportunities
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The TGC charter do not contain any limitations on corporate opportunities.
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The TGC charter states that Yorktown, Bluescape and Boomer own and will own substantial equity interests in other entities (existing and future) that participate in the energy industry (“portfolio companies”) and may make investments and enter into advisory service agreements and other agreements from time to time with those portfolio companies. Certain members of the TGC board of directors may also serve as employees, partners, officers or directors of members of Yorktown, Bluescape or Boomer or portfolio companies and, at any given time, Yorktown, Bluescape or Boomer or portfolio companies may be in direct or indirect competition with TGC and/or its subsidiaries. TGC waives, to the maximum extent permitted by law, the application of the doctrine of corporate
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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opportunity (or any analogous doctrine) with respect to TGC, to Yorktown, Bluescape or Boomer or portfolio companies or any directors or officers of TGC who are also employees, partners, members, managers, officers or directors of any of Yorktown, Bluescape or Boomer or portfolio companies. As a result of such waiver, none of Yorktown, Bluescape or Boomer, nor any director or officer of TGC who is also an employee, partner, member, manager, officer or director of any of Yorktown, Bluescape or Boomer or portfolio companies, shall have any obligation to refrain from: (A) engaging in or managing the same or similar activities or lines of business as TGC or any of its subsidiaries or developing or marketing any products or services that compete (directly or indirectly) with those of TGC or any of its subsidiaries; (B) investing in or owning any (public or private) interest in any person engaged in the same or similar activities or lines of business as, or otherwise in competition with, TGC or any of its subsidiaries (including Yorktown, Bluescape or Boomer, a “competing person”); (C) developing a business relationship with any competing person; or (D) entering into any agreement to provide any service(s) to any competing person or acting as an officer, director, member, manager or advisor to, or other principal of, any competing person, regardless (in the case of each of (A) through (D)) of whether such activities are in direct or indirect competition with the business or activities of TGC or any of its subsidiaries (the activities described in (A) through (D) are referred to herein as “specified activities”). To the fullest extent permitted by law, TGC hereby renounces (for itself and on behalf of its subsidiaries) any interest or expectancy in, or in being offered an opportunity to participate in, any specified activity that may be presented to or become known to Yorktown, Bluescape or Boomer or portfolio company or any director or officer of TGC who is also an employee, partner, member, manager, officer or director of Yorktown, Bluescape or
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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Boomer or portfolio company (other than any directors or officers of TGC who are also employees, partners, members, managers, officers or directors of Yorktown, Bluescape or Boomer or portfolio company that are presented business opportunities in their capacity as TGC’s officers or directors).
For purposes of this section, the following terms have the following definitions: (a) “affiliate” means, with respect to a specified person, a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such specified person; with respect to Yorktown, Bluescape or Boomer, an “affiliate” shall include (1) any person who is the direct or indirect ultimate holder of “equity securities” (as such term is described in Rule 405 under the Securities Act of 1933, as amended) of such person, and (2) any investment fund, alternative investment vehicle, special purpose vehicle or holding company that is directly or indirectly managed, advised or controlled by Yorktown, Bluescape or Boomer, including any portfolio company, and (b) “person” means any individual, corporation, partnership, limited liability company, joint venture, firm, association, or other entity.
To the fullest extent permitted by applicable law, any person purchasing or otherwise acquiring any interest in any shares of capital stock of TGC shall be deemed to have notice of, and to have consented to, the provisions of this section. This section shall not limit any protections or defenses available to, or indemnification or advancement rights of, any director or officer of TGC under the TGC Second Amended and Restated Certificate of Incorporation, the TGC bylaws or any applicable law.
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Number of Directors
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The TGC charter and the TGC bylaws currently provide that the number of directors that constitute the whole TGC board of directors is fixed by, or in the manner provided in, the TGC bylaws. The
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Pursuant to the bylaws, subject to the rights of the holders of any series of TGC preferred stock to elect directors under specified circumstances, if any, the number of directors shall be fixed from
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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TGC bylaws currently state that the number of directors of TGC shall not be less than three (3) or more than ten (10). TGC currently has three directors.
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time to time exclusively pursuant to a resolution adopted by the affirmative vote of a majority of the whole TGC board of directors. The election and term of directors shall be as set forth in the TGC charter.
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Regular Meetings of
Directors
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The TGC bylaws provide that the TGC board of directors shall schedule regular meeting as they deem necessary by a vote of majority of the directors then serving, provided, however, the TGC board of directors shall have at least one annual regular meeting immediately after the annual meeting of TGC stockholders. Notice of regular meetings, unless waived, shall be given by mail, electronic transmission or fax transmission or in person to each director, at his or her address as the same may appear on the records of TGC, or in the absence of such address, at his or her residence or usual place of business, at least three (3) days before the day on which the meeting is to be held.
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Pursuant to the bylaws, subject to notice of meetings, regular meetings of the TGC board of directors shall be held on such dates, and at such times and places, as are determined from time to time by resolution of the TGC board of directors. Notice of any special meeting of directors shall be given to each director at his business or residence in writing by hand delivery, first-class or overnight mail, courier service or facsimile or electronic transmission or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered if deposited in the United States mails so addressed, with postage thereon prepaid, at least five days before such meeting. If by overnight mail or courier service, such notice shall be deemed adequately delivered if the notice is delivered to the overnight mail or courier service company at least 24 hours before such meeting. If by facsimile or electronic transmission, such notice shall be deemed adequately delivered if the notice is transmitted at least 24 hours before such meeting. If by telephone or by hand delivery, the notice shall be given at least 24 hours prior to the time set for the meeting and shall be confirmed by facsimile or electronic transmission that is sent promptly thereafter. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the TGC board of directors need be specified in the notice of such meeting, except for amendments to the TGC bylaws.
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Special Meetings of Directors
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The TGC bylaws provide that special meetings of the TGC board of directors may be held any time on the call of the Chief Executive Officer of TGC, the Chairman of the TGC board of directors or at the request in writing of a majority of the members of the TGC board of directors then serving. Notice of the time
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Pursuant to the bylaws, special meetings of the TGC board of directors shall be called at the request of the Chairman of the Board, the Executive Chairman, the President and Chief Executive Officer or a majority of the TGC board of directors then in office. The person or persons authorized to call special meetings of the
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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and place of all special meetings of the TGC board of directors shall be orally or in writing, by telephone, facsimile, electronic mail, telegraph or telex, during normal business hours, at least twenty-four (24) hours before the date and time of the meeting, or sent in writing to each director by first class mail, charges prepaid, at least three (3) days before the date of the meeting. Notice of any special meeting of the TGC board of directors shall state the purpose thereof. If the Secretary of TGC shall fail or refuse to give such notice, then the notice may be given by the officer or any one of the directors making the call.
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TGC board of directors may fix the place, if any, date and time of the meetings. Any business may be conducted at a special meeting of the TGC board of directors. Notice of any special meeting of directors shall be given to each director at his business or residence in writing by hand delivery, first-class or overnight mail, courier service or facsimile or electronic transmission or orally by telephone. If mailed by first-class mail, such notice shall be deemed adequately delivered if deposited in the United States mails so addressed, with postage thereon prepaid, at least five days before such meeting. If by overnight mail or courier service, such notice shall be deemed adequately delivered if the notice is delivered to the overnight mail or courier service company at least 24 hours before such meeting. If by facsimile or electronic transmission, such notice shall be deemed adequately delivered if the notice is transmitted at least 24 hours before such meeting. If by telephone or by hand delivery, the notice shall be given at least 24 hours prior to the time set for the meeting and shall be confirmed by facsimile or electronic transmission that is sent promptly thereafter. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the TGC board of directors need be specified in the notice of such meeting, except for amendments to the TGC bylaws.
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Stockholder Nominations and Proposals
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The TGC bylaws provide that nominations of any person for election to the TGC board of directors at an annual meeting or at a special meeting may be made (i) by the TGC board of directors or (ii) by any TGC stockholder who (x) timely complies with the notice procedures set forth below, (y) is a stockholder of record on the date of the giving of such notice and on the record date for the determination of stockholders entitled to vote at such meeting and (z) is entitled to vote at such meeting.
The TGC bylaws further provide that a stockholder’s notice must be received in writing by the secretary at TGC’s principal
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The TGC bylaws provide that at any meeting of TGC stockholders, no business shall be conducted which has not been properly brought before the meeting. To be properly brought before a meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the TGC board of directors, (ii) otherwise properly brought before the meeting by or at the direction of the TGC board of directors, or (iii) otherwise properly brought before the meeting by a stockholder.
For stockholder proposals to be properly brought before a meeting by a TGC stockholder, the TGC stockholder must
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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executive offices as follows: (i) in the case of an election of directors at an annual meeting of stockholders, not less than 120 days immediately preceding the date of the mailing of the notice of annual meeting and proxy statement and other materials for the preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be received not later than the close of business on the tenth day following the day on which the notice of the date of the meeting was mailed or public disclosure was made, which ever first occurs. In no event shall the adjournment or postponement of a meeting (or the public disclosure thereof) commence a new time period (or extend any time period) for the giving of a stockholder’s notice.
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have given timely notice thereof in writing to the Secretary of TGC. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of TGC not less than one hundred twenty (120) days immediately preceding the date of the mailing of the notice of annual meeting and proxy statement and other materials for the preceding annual meeting of TGC stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must so be received not later than the close of business on the tenth day following the day on which the notice of the date of the meeting was mailed or public disclosure was made, which ever first occurs.
In the case of TGC stockholder proposals, the notice shall set forth (i) a brief description of the proposal or business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name, age, business and residence address of the stockholder submitting the proposal, (iii) the principal occupation or employment of such stockholder, (iv) the number of shares of TGC which are beneficially owned by such stockholder and the date which shares were first acquired by the shareholder, and (v) any material interest of the stockholder in such proposal. The Chairman of the TGC board of directors shall, if the facts warrant, determine and declare to the meeting that a proposal was not properly brought before the meeting in accordance with the provisions of this section, and if he or she should so determine, and any proposal not properly brought before the meeting shall not be transacted. Notwithstanding anything in the TGC bylaws to the contrary, no business shall be conducted at any meeting except in accordance with these procedures.
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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Director Action by Written Consent
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The TGC bylaws provide that any action required or permitted to be taken at any meeting of the TGC board of directors or any committee thereof may be taken without a meeting, if a written consent to such action is signed by all members of the TGC board of directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the TGC board of directors or committee.
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The TGC bylaws provide that any action required or permitted to be taken at any meeting of the TGC board of directors or of any committee thereof may be taken without a meeting if all members of the TGC board of directors or committee, as the case may be, consent thereto in writing, including by electronic transmission, and the writing or writings or electronic transmissions are filed with the minutes of proceedings of the TGC board of directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Such consent shall have the same force and effect as a unanimous vote at a meeting, and may be stated as such in any document or instrument filed with the Secretary of State of the State of Delaware.
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Removal of Directors
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Under the TGC bylaws, any or all of the TGC directors may be removed for cause by a majority vote of the TGC stockholders present, either in person or by proxy, at a meeting called for such purpose and notice of which was provided to the stockholders in accordance with the TGC Bylaws.
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The TGC bylaws provide that until the trigger date, subject to the rights of the holders of shares of any class or series of TGC preferred stock, if any, to elect additional directors pursuant to the TGC charter (including any certificate of designation thereunder), any director may be removed at any time, either for or without cause, upon the affirmative vote of the holders of a majority of the voting power of the outstanding shares of stock of TGC entitled to vote generally for the election of directors, voting together as a single class and acting at a meeting of the stockholders or by written consent (if permitted) in accordance with the DGCL, the TGC charter and the TGC bylaws. On and after the trigger date, subject to the rights of the holders of shares of any class or series of TGC preferred stock, if any, to elect additional directors pursuant to the TGC charter (including any certificate of designation thereunder), any director may be removed only for cause, upon the affirmative vote of the holders of at least 66 2/3% of the voting power of the outstanding shares of stock of TGC
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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entitled to vote generally for the election of directors, voting together as a single class and acting at a meeting of the stockholders in accordance with the DGCL, the TGC charter and the TGC bylaws. Except as applicable law otherwise provides, cause for the removal of a director shall be deemed to exist only if the director whose removal is proposed: (1) has been convicted of a felony by a court of competent jurisdiction and that conviction is no longer subject to direct appeal; (2) has been found to have been grossly negligent in the performance of his duties to TGC in any matter of substantial importance to TGC by (a) the affirmative vote of at least 80% of the directors then in office at any meeting of the TGC board of directors called for that purpose or (b) a court of competent jurisdiction; or (3) has been adjudicated by a court of competent jurisdiction to be mentally incompetent, which mental incompetency directly affects his ability to serve as a director of TGC.
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Special Meeting of the Stockholders
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The TGC bylaws provide that special meetings of TGC stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by a majority of the TGC board of directors then serving, the Chairman of the TGC board of directors, or the Chief Executive Officer of TGC.
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The TGC bylaws provide that special meetings of stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by a majority of the directors then serving on the TGC board of directors, the Chairman of the Board, or the Chief Executive Officer.
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Vacancies
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The TGC bylaws provide that if the office of any director becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, creation of a new directorship, or otherwise, a majority of the remaining members of the TGC board of directors, though less than a quorum, shall choose a successor or successors, or a director to fill the newly created directorship. In no event shall the TGC stockholders have the right to fill such vacancies, unless the TGC board of directors has determined by resolution that the TGC stockholders shall fill such vacancy at a meeting of the TGC stockholders.
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The TGC bylaws provide that if the office of any director or directors becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, creation of a new directorship, or otherwise, a majority of the remaining directors, though less than a quorum, shall choose a successor or successors, or a director to fill the newly created directorship. In no event shall the shareholders have the right to fill such vacancies, unless the TGC board of directors has determined by resolution that TGC stockholders shall fill such vacancy at a meeting of stockholders. A director elected to fill a vacancy caused by resignation, death or removal shall be
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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elected to hold office for the unexpired term of his predecessor.
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Voting Equity
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Under the TGC charter, subject to the rights of any other class or series of stock and the provisions of the laws of the State of Delaware governing business corporations, voting rights of TGC shall be vested in the holders of TGC common stock. Each holder of TGC common stock shall have one vote in respect of each share of such TGC common stock held.
Under the TGC bylaws, when a quorum is present at any meeting of the TGC stockholders, and subject to the provisions of the DGCL, the TGC charter or the TGC bylaws in respect of the vote that shall be required for a specific action, the vote of the holders of a majority of the TGC stock having voting power, present in person or represented by proxy duly authorized by the stockholder and filed with the Secretary of TGC, shall decide any question brought before the meeting, unless the question is one upon which, by express provision of the statutes or of the TGC charter or of the TGC bylaws, a different vote is required, in which case the express provision shall govern and control the decision of such question. Each TGC stockholder shall have one (1) vote for each share of stock having voting power registered in his or her name on the books of TGC, except as otherwise provided in the TGC charter.
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Under the TGC bylaws, except as otherwise required by applicable law or by the TGC charter, the holders of a majority of the voting power of all of the outstanding shares of stock of TGC entitled to vote at the meeting, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the voting power of all of the outstanding shares of such class or series shall constitute a quorum of such class or series for the transaction of such business. The Chairman of the meeting may adjourn or recess the meeting from time to time for any reasonable reason, whether or not there is such a quorum. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment or recess, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
Any meeting of stockholders, annual or special, may adjourn or recess from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned or recessed meeting if the date, time and place thereof are announced at the meeting at which the adjournment or recess is taken; provided, however, that if the adjournment or recess is for more than 30 days, a notice of the adjourned or recessed meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned or recessed meeting, TGC may transact any business that might have been transacted at the original meeting.
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Stockholder Action by
Written Consent
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Pursuant to the TGC bylaws, in the event of the delivery to TGC of a written consent or consents in accordance with Section 228 of the DGCL purporting to authorize or take corporate action and/or
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Pursuant to the TGC bylaws, prior to the trigger date, any action required or permitted to be taken at any annual meeting or special meeting of the TGC stockholders may be taken without a
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Provision
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TGC (Pre-Merger)
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TGC (Post-Merger)
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related revocations, the Secretary of TGC shall provide for the safekeeping of such consents and shall, as soon as practicable thereafter, conduct such reasonable investigation as he or she deems necessary or appropriate for the purpose of ascertaining the validity of such consents and all matters incident thereto, including, without limitation, whether the holders of shares having the requisite voting power to authorize or take the action specified in the consents have given consent; provided, however, that if the corporate action to which the consents relate is the removal or election of one or more members of the TGC board of directors, the Secretary of TGC shall designate an independent, qualified inspector with respect to such consents and such inspector shall discharge the functions of the Secretary of TGC under these provisions. If, after such investigation, the Secretary of TGC or the inspector, as the case may be, shall determine that any action purportedly taken by such consents has been validly taken, that fact shall be certified on the records of TGC kept for the purpose of recording the proceedings of meetings of the TGC stockholders and the consents shall be filed with such records.
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meeting, without prior notice and without a vote of stockholders, if a consent or consents in writing, setting forth the action so taken, is or are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. On and after the trigger date, subject to the rights of holders of any class or series of any TGC preferred stock with respect to such class or series of preferred stock, any action required or permitted to be taken by the TGC stockholders must be taken at a duly held annual or special meeting of stockholders and may not be taken by any consent in writing of such stockholders.
|
|
| |
|
| |
|
Notice of Stockholder
Meeting
|
| |
Pursuant to the TGC bylaws, written notice of each meeting of TGC stockholders, stating the date, time and place, and in the case of a special meeting the object thereof, shall be mailed, postage prepaid, not less than ten (10) nor more than sixty (60) days before the meeting, to each TGC stockholder entitled to vote thereat, at the address of the TGC stockholder which appears on the books of TGC. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the TGC stockholder at his address as it appears on the stock transfer books of TGC, with postage thereon prepaid.
|
| |
Pursuant to the TGC bylaws, written notice, stating the place, if any, date and time of the meeting, shall be given, not less than ten days nor more than 60 days before the date of the meeting, to each TGC stockholder of record entitled to vote at such meeting. The notice shall specify (A) the record date for determining the TGC stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting), (B) the place, if any, date and time of such meeting, (C) the means of remote communications, if any, by which TGC stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and (D) in the case of a special meeting, the purpose or purposes for
|
Provision
|
| |
TGC (Pre-Merger)
|
| |
TGC (Post-Merger)
|
|
| |
|
| |
which such meeting is called. If the TGC stockholder list referred to in the TGC bylaws is made accessible on an electronic network, the notice of meeting must indicate how the stockholder list can be accessed. If the meeting of TGC stockholders is to be held solely by means of electronic communications, the notice of meeting must provide the information required to access such stockholder list during the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at his address as it appears on the stock transfer books of TGC. TGC may provide stockholders with notice of a meeting by electronic transmission provided such stockholders have consented to receiving electronic notice in accordance with the DGCL. Such further notice shall be given as may be required by applicable law. Only such business shall be conducted at a special meeting of TGC stockholders as shall have been brought before the meeting pursuant to the notice of meeting
|
|
| |
|
| |
|
Forum Selection
|
| |
The TGC bylaws provide that unless TGC consents in writing to the selection of an alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of TGC (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of TGC to TGC or TGC stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be a state or federal court located within the state of Delaware, in all cases subject to the court having personal jurisdiction over the indispensable parties named as defendants.
|
| |
The TGC bylaws provide that unless TGC consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by applicable law, be the sole and exclusive forum for any TGC stockholder (including a beneficial owner) to bring (A) any derivative action or proceeding brought on behalf of TGC, (B) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of TGC to TGC or TGC’s stockholders, (C) any action asserting a claim against TGC, or any directors, officers or employees or agents of the Corporation arising pursuant to any provision of the DGCL, the TGC charter or the TGC bylaws, or (D) any action asserting a claim against TGC, its directors, officers or employees or agents governed by the internal affairs doctrine, except as to each of (A) through (D) above, for any claim as to which the
|
Provision
|
| |
TGC (Pre-Merger)
|
| |
TGC (Post-Merger)
|
|
| |
|
| |
Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or over which the Court of Chancery does not have subject matter jurisdiction. Unless TGC consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for any TGC stockholder (including a beneficial owner) to bring a complaint asserting a cause of action arising under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. To the fullest extent permitted by law, any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of TGC shall be deemed to have notice of and consented to these provisions.
|
|
| |
|
| |
|
Dividends
|
| |
The TGC charter provides that the holders of shares of TGC common stock shall be entitled to receive, when and as declared by the TGC board of directors, out of the assets of TGC legally available therefor, such dividends as may be declared from time to time by the TGC board of directors.
The TGC charter further provides that the TGC board of directors may determine for any preferred stock issued whether the holders of shares of that series shall be entitled to receive dividends and, if so, the rates of such dividends, conditions under which and times such dividends may be declared or paid, any preferences of any such dividend to, and the relation to, the dividends payable on any other class or classes of stock or any other series of that same class and whether dividends shall be cumulative or noncumulative and, if cumulative, from which date or dates.
|
| |
The TGC bylaws provide that except as otherwise provided by law or the TGC charter, the TGC board of directors may from time to time declare, and TGC may pay, dividends on its outstanding shares of stock, which dividends may be paid in either cash, property or shares of stock of TGC. A member of the TGC board of directors, or a member of any committee designated by the TGC board of directors, shall be fully protected in relying in good faith upon the records of TGC and upon such information, opinions, reports or statements presented to TGC by any of its officers or employees, or committees of the TGC board of directors, or by any other person as to matters the director reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of TGC, as to the value and amount of the assets, liabilities or net profits of TGC, or any other facts pertinent to the existence and amount of surplus or other funds from
|
Provision
|
| |
TGC (Pre-Merger)
|
| |
TGC (Post-Merger)
|
|
| |
|
| |
which dividends might properly be declared and paid.
|
|
| |
|
| |
|
Indemnification of Officers and Directors and Advancement of Expenses; Limitation on Personal Liability
|
||||||
|
| |
|
| |
|
Indemnification
|
| |
The TGC bylaws provide that TGC shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of TGC) by reason of the fact that he is or was a director, officer, employee or agent of TGC, or is or was serving at the request of TGC as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent provided by Delaware law against expenses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of TGC, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of TGC, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
The TGC bylaws further provide that TGC shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of TGC) by reason of the fact that
|
| |
TGC shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “proceeding”) by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of TGC or, while a director or officer of TGC, is or was serving at the request of TGC as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust, other enterprise or nonprofit entity, including service with respect to an employee benefit plan (a “covered person”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent, or in any other capacity while serving as a director, officer, trustee, employee or agent, against all expenses, liability and loss (including, without limitation, attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid in settlement) reasonably incurred or suffered by such covered person in connection with such proceeding. The rights to indemnification and advancement of expenses under the bylaws shall be contract rights and such rights shall continue as to a covered person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of his heirs, executors and administrators. Notwithstanding the foregoing provisions of this section, except for proceedings to enforce rights to indemnification and advancement of expenses, TGC shall indemnify and advance expenses to a covered person in connection with a proceeding (or part thereof) initiated by such covered person only if such
|
Provision
|
| |
TGC (Pre-Merger)
|
| |
TGC (Post-Merger)
|
|
| |
he is or was a director, officer, employee or agent of TGC, or is or was serving at the request of TGC as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent provided by Delaware law against expenses (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties and amounts paid or to be paid in settlement) actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of TGC, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit, or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of TGC, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
The TGC bylaws further provide that to the extent that a director, officer, employee or agent of TGC has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in the paragraphs above, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.
The TGC bylaws provide that any indemnification under the paragraphs above (unless ordered by a court) shall be made by TGC only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in the paragraphs above. Such determination
|
| |
proceeding (or part thereof) was authorized by the TGC board of directors.
The TGC bylaws provide that if a claim for indemnification under this section (following the final disposition of such proceeding) is not paid in full within 60 days after TGC has received a claim therefor by the covered person, or if a claim for any advancement of expenses under this section is not paid in full within 30 days after TGC has received a statement or statements requesting such amounts to be advanced, the covered person shall thereupon (but not before) be entitled to file suit to recover the unpaid amount of such claim. If successful in whole or in part, the covered person shall be entitled to be paid the expense of prosecuting such claim, or a claim brought by TGC to recover an advancement of expenses prior to the terms of an undertaking, to the fullest extent permitted by applicable law. In any such action, TGC shall have the burden of proving that the covered person is not entitled to the requested indemnification or advancement of expenses under applicable law. In (1) any suit brought by a covered person to enforce a right to indemnification hereunder (but not in a suit brought by a covered person to enforce a right to an advancement of expenses) it shall be a defense that, and (2) in any suit brought by TGC to recover an advancement of expenses pursuant to the terms of an undertaking, TGC shall be entitled to recover such expenses upon a final adjudication that, the covered person has not met any applicable standard for indemnification set forth in the DGCL. Neither the failure of TGC (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the covered person is proper in the circumstances because the covered person has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by TGC (including its
|
Provision
|
| |
TGC (Pre-Merger)
|
| |
TGC (Post-Merger)
|
|
| |
shall be made (i) by the TGC board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the TGC stockholders. Notwithstanding the foregoing, a director, officer, employee or agent of TGC shall be able to contest any determination that the director, officer, employee or agent has not met the applicable standard of conduct set forth in the paragraphs above by petitioning a court of appropriate jurisdiction.
|
| |
directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) that the covered person has not met such applicable standard of conduct, shall create a presumption that the covered person has not met the applicable standard of conduct or, in the case of such a suit brought by the covered person, be a defense to such suit. In any suit brought by the covered person to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by TGC to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the covered person is not entitled to be indemnified, or to such advancement of expenses, under this section or otherwise shall be on TGC. The rights conferred on any covered person by this section shall not be exclusive of any other rights that such covered person may have or hereafter acquire under any statute, any provision of the TGC charter, the TGC bylaws, any agreement or vote of stockholders or disinterested directors or otherwise. This section shall not limit the right of TGC, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than covered persons when and as authorized by appropriate corporate action.
The TGC bylaws provide that any covered person entitled to indemnification and/or advancement of expenses, in each case pursuant to this section, may have certain rights to indemnification, advancement and/or insurance provided by one or more persons with whom or which such covered person may be associated (including, without limitation, any of the sponsors). TGC hereby acknowledges and agrees that (1) TGC shall be the indemnitor of first resort with respect to any proceeding, expense, liability or matter that is the subject of this section, (2) TGC shall be primarily liable for all such obligations and any indemnification afforded to a covered person in respect of a proceeding, expense, liability or matter
|
Provision
|
| |
TGC (Pre-Merger)
|
| |
TGC (Post-Merger)
|
|
| |
|
| |
that is the subject of this section, whether created by law, organizational or constituent documents, contract or otherwise, (3) any obligation of any persons with whom or which a covered person may be associated (including, without limitation, any of the sponsors) to indemnify such covered person and/or advance expenses or liabilities to such covered person in respect of any proceeding shall be secondary to the obligations of TGC hereunder, (4) TGC shall be required to indemnify each Covered Person and advance expenses to each covered person hereunder to the fullest extent provided herein without regard to any rights such covered person may have against any other person with whom or which such covered person may be associated (including, without limitation, any of the sponsors) or insurer of any such person, and (5) TGC irrevocably waives, relinquishes and releases any other person with whom or which a covered person may be associated (including, without limitation, any of the sponsors) from any claim of contribution, subrogation or any other recovery of any kind in respect of amounts paid by TGC hereunder. TGC shall maintain insurance, at its expense, to protect itself and any person who is or was serving as a director, officer, employee or agent of TGC or is or was serving at the request of TGC as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not TGC would have the power to indemnify such person against such expense, liability or loss under the DGCL.
|
|
| |
|
| |
|
Advancement of Expenses
|
| |
The TGC bylaws provide that the expenses (including attorneys' fees) incurred by a TGC officer or director in defending or settling any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by TGC in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is
|
| |
The TGC bylaws provide that TGC shall, to the fullest extent not prohibited by applicable law as it presently exists or may hereafter be amended, pay the expenses (including attorneys’ fees) incurred by a covered person in defending any proceeding in advance of its final disposition; provided, however, that to the extent required by applicable law, such payment of expenses in advance of the final disposition of the proceeding shall be
|
Provision
|
| |
TGC (Pre-Merger)
|
| |
TGC (Post-Merger)
|
|
| |
|
| |
however, that the amendment, alteration or repeal of this section shall only require the affirmative vote of the holders of a majority in voting power of the outstanding shares of stock of TGC entitled to vote thereon, voting together as a single class.
The TGC bylaws state that in furtherance of, and not in limitation of, the powers conferred by the laws of the state of Delaware, prior to the trigger date, the TGC board of directors is authorized to adopt, amend or repeal the TGC bylaws only with the approval of a majority of the whole TGC board of directors and the affirmative vote of holders of not less than 50% in voting power of the then-outstanding shares of stock entitled to vote thereon, voting together as a single class. On and after the trigger date, TGC board of directors shall be expressly authorized to adopt, amend or repeal by the TGC bylaws only with the approval of a majority of the whole TGC board of directors. TGC stockholders shall also have the power to adopt, amend or repeal the TGC bylaws without any requirement to obtain separate TGC board of directors approval; provided, however, that, in addition to any vote of the holders of any class or series of stock of TGC required by law or by the TGC charter, the TGC bylaws may be adopted, altered, amended or repealed by the TGC stockholders only (A) prior to the trigger date, by the affirmative vote of holders of not less than 50% in voting power of the then-outstanding shares of stock entitled to vote thereon, voting together as a single class, or (B) on and after the trigger date, by the affirmative vote of holders of not less than 66 2⁄3% in voting power of the then-outstanding shares of stock entitled to vote thereon, voting together as a single class. No TGC bylaws hereafter made or adopted, nor any repeal of or amendment thereto, shall invalidate any prior act of TGC board of directors that was valid at the time it was taken.
Notwithstanding the foregoing, no amendment, alteration or repeal of the amendments section shall adversely affect any right or protection existing under the
|
Provision
|
| |
TGC (Pre-Merger)
|
| |
TGC (Post-Merger)
|
|
| |
|
| |
TGC bylaws immediately prior to such amendment, alteration or repeal, including any right or protection of a present or former director, officer or employee thereunder in respect of any act or omission occurring prior to the time of such amendment.
|
|
Name and Address
|
| |
Title
|
| |
Number of Shares
Beneficially Owned
|
| |
Percent of Class
|
|
|
Dolphin Offshore Partners, L.P.
c/o Dolphin Mgmt. Services, Inc.
P.O. Box 16867
Fernandina Beach, FL 32035
|
| |
Stockholder
|
| |
5,288,241
|
| |
49.5%
|
|
(1)
|
Unless otherwise stated, all shares of Common Stock are directly held with sole voting and dispositive power. The shares set forth in the table are as of January 15, 2021.
|
|
Name and Address
|
| |
Title
|
| |
Number of Shares
Beneficially
Owned(1)
|
| |
Percent of
Class(2)
|
|
|
Matthew K. Behrent(3)
|
| |
Director
|
| |
64,400
|
| |
Less than 1%
|
|
|
Michael J. Rugen(4)
|
| |
Chief Executive Officer (interim); Chief Financial Officer
|
| |
81,522
|
| |
Less than 1%
|
|
|
Peter E. Salas(5)
|
| |
Director;
Chairman of the Board
|
| |
5,298,366
|
| |
49.6%
|
|
|
Cary V. Sorensen(6)
|
| |
Vice President;
General Counsel;
Secretary
|
| |
23,623
|
| |
Less than 1%
|
|
|
Richard M. Thon(7)
|
| |
Director
|
| |
32,500
|
| |
Less than 1%
|
|
|
All Officers and Directors as a group(8)
|
| |
|
| |
5,500,411
|
| |
51.5%
|
|
(1)
|
Unless otherwise stated, all shares of common stock are directly held with sole voting and dispositive power. The shares set forth in the table are as of January 15, 2021.
|
(2)
|
Calculated pursuant to Rule 13d-3(d) under the Securities Exchange Act of 1934 based upon 10,685,042 shares of common stock being outstanding as of November 9. Shares not outstanding that are subject to options or warrants exercisable by the holder thereof within 60 days of January 15, 2021 are deemed outstanding for the purposes of calculating the number and percentage owned by such stockholder, but not deemed outstanding for the purpose of calculating the percentage of any other person. Unless otherwise noted, all shares listed as beneficially owned by a stockholder are actually outstanding.
|
(3)
|
Consists of 64,400 shares held directly.
|
(4)
|
Consists of 81,522 shares held directly.
|
(5)
|
Consists of 10,125 shares held individually, and 5,288,241 shares held directly by Dolphin Offshore Partners, L.P. (“Dolphin”). Peter E. Salas is the sole shareholder of and controlling person of Dolphin Mgmt. Services, Inc. which is the general partner of Dolphin.
|
(6)
|
Consists of 23,623 shares held directly.
|
(7)
|
Consists of 32,500 shares held directly.
|
(8)
|
Consists of 212,170 shares held directly by directors and management, 5,288,241 shares held by Dolphin and vested.
|
1)
|
each person known to REP to beneficially own more than 5% of any class of REP’s units;
|
2)
|
each member of REP’s board of managers;
|
3)
|
each of REP’s named executive officers; and
|
4)
|
all of REP’s managers and executive officers as a group.
|
|
Owners(1)
|
| |
Number of Shares
Beneficially Owned
|
| |
Percent of
Class
|
|
|
5% Equityholders:
|
| |
|
| |
|
|
|
Riley Exploration Group, LLC(2)
|
| |
573,408
|
| |
27.6%
|
|
|
Yorktown Energy Partners XI, L.P.(3)
|
| |
218,918
|
| |
10.5%
|
|
|
Boomer Petroleum, LLC(4)
|
| |
433,721
|
| |
20.9%
|
|
|
Bluescape Riley Exploration Acquisition, LLC(5)
|
| |
470,092
|
| |
22.6%
|
|
|
Bluescape Riley Exploration Holdings LLC(5)
|
| |
248,056
|
| |
11.9%
|
|
|
Managers and Named Executive Officers:
|
| |
|
| |
|
|
|
Bobby D. Riley(6)
|
| |
27,331.34
|
| |
1.3%
|
|
|
Kevin M. Riley(7)
|
| |
15,203.08
|
| |
*
|
|
|
Jeffrey M. Gutman(8)
|
| |
4,558.69
|
| |
*
|
|
|
Corey Riley(9)
|
| |
4,389.33
|
| |
*
|
|
|
Michael Palmer(10)
|
| |
2,500
|
| |
*
|
|
|
Bryan H. Lawrence(3)
|
| |
—
|
| |
—
|
|
|
Alvin Libin(4)
|
| |
—
|
| |
—
|
|
|
Philip Riley(5)
|
| |
—
|
| |
—
|
|
|
All Managers and Executive Officers as a group
|
| |
53,982.44
|
| |
2.6%
|
|
*
|
Less than one percent
|
(1)
|
The amounts and percentages of common units beneficially owned are reported on the bases of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power to vote or direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Except as otherwise indicated in these footnotes, each of the beneficial owners has, to REP’s knowledge, sole voting and investment power with respect to the indicated number of common units, except to the extent this power may be shared with a spouse.
|
(2)
|
Yorktown Energy Partners IV, L.P., Yorktown Energy Partners V, L.P., Yorktown Energy Partners VI, L.P., Yorktown Energy Partners VII, L.P., Yorktown Energy Partners VIII, L.P., Yorktown Energy Partners IX, L.P. and Yorktown Energy Partners X, L.P. collectively own approximately 94% of REG. The address of REG is 2008 North Council Avenue, Blanchard, OK 73010. Yorktown IV Company LLC is the sole general partner of Yorktown Energy Partners IV, L.P. As a result, Yorktown IV Company LLC has the power to vote or direct the vote or to dispose or direct the disposition of the shares owned by Yorktown Energy Partners IV, L.P. Yorktown IV Company LLC disclaims beneficial ownership of the shares held by Yorktown Energy Partners IV, L.P. in excess of its pecuniary interest therein. The managing members of Yorktown IV Company LLC are Bryan H. Lawrence, Peter A. Leidel, Tomas R. LaCosta, W. Howard Keenan, Jr. and Robert A. Signorino. Yorktown V Company LLC is the sole general partner of Yorktown Energy Partners V, L.P. As a result, Yorktown V Company
|
(3)
|
Yorktown XI Company LP is the sole general partner of Yorktown Energy Partners XI, L.P. Yorktown XI Associates LLC is the sole general partner of Yorktown XI Company LP. The managers of Yorktown XI Associates LLC, who act by majority approval, are Bryan H. Lawrence, one of REP’s managers, W. Howard Keenan, Jr., Peter A. Leidel, Tomás R. LaCosta, Robert A. Signorino, Bryan R. Lawrence and James C. Crain. As a result, Yorktown XI Associates LLC may be deemed to share the power to vote or direct the vote or to dispose or direct the disposition of the common units owned by Yorktown Energy Partners XI, L.P. Yorktown XI Company LP and Yorktown XI Associates LLC disclaim beneficial ownership of the common units held by Yorktown Energy Partners XI, L.P. in excess of their pecuniary interest therein. The managers of Yorktown XI Associates LLC disclaim beneficial ownership of the common units held by Yorktown Energy Partners XI, L.P. The address of such funds is 410 Park Avenue, 19th Floor, New York, New York 10022.
|
(4)
|
Boomer Petroleum, LLC is a Delaware limited liability company that is owned 50% by Texel Resources Inc., a Canadian corporation, and 50% by Balmon California, Inc., a California corporation. The President of Boomer Petroleum, LLC is Alvin Libin, one of REP’s managers. The address of Boomer Petroleum, LLC is 3200 255 5th Avenue SW, Calgary, Alberta, Canada T2P 3G6.
|
(5)
|
Bluescape Riley Exploration Acquisition LLC is a Delaware limited liability company and beneficially owns REP’s common units. Bluescape Riley Exploration Holdings LLC is a Delaware limited liability company and beneficially owns REP’s common units, and prior to the conversion of REP’s Series A Preferred Units into common units immediately prior to the merger is a beneficial owner of shares of our Series A Preferred Units in Riley Exploration—Permian, LLC. Bluescape Riley Exploration Acquisition LLC is a wholly owned subsidiary of Bluescape Riley Exploration Holdings LLC. Bluescape Energy Recapitalization and Restructuring Fund III LP has voting and dispositive power over REP units held by Bluescape Riley Exploration Acquisition LLC and Bluescape Riley Exploration Holdings LLC and therefore may also be deemed to be the beneficial owner of these units. Bluescape Energy Partners III GP LLC may be deemed to share voting and dispositive power over these units and therefore may also be deemed to be the beneficial owner of these units by virtue of Bluescape Energy Partners III GP LLC being the sole general partner of Bluescape Energy Recapitalization and Restructuring Fund III LP. Bluescape Resources GP Holdings LLC may be deemed to share voting and dispositive power over these units and therefore may also be deemed to be the beneficial owner of these units by virtue of Bluescape Resources GP Holdings LLC being the manager of Bluescape Energy Partners III GP LLC. Charles John Wilder, Jr. may be deemed to share voting and dispositive power over these units and therefore may also be deemed to be the beneficial owner of these units by virtue of Charles John Wilder, Jr. being the manager of Bluescape Resources GP Holdings LLC. Each of Bluescape Riley Exploration Acquisition LLC, Bluescape Riley Exploration Holdings LLC, Bluescape Energy Recapitalization and Restructuring Fund III LP, Bluescape Energy Partners III GP LLC, Bluescape Resources GP Holdings LLC, and Charles John Wilder, Jr. disclaims beneficial ownership of the units reported as held by Bluescape Riley Exploration Holdings LLC in excess of its respective pecuniary interest in such units. The address of Bluescape Riley Exploration Acquisition LLC and Bluescape Riley Exploration Holdings LLC and mailing address of each listed beneficial owner is 200 Crescent Court, Suite 1900, Dallas, Texas 75201.
|
(6)
|
Includes 13,238.01 unvested restricted REP units.
|
(7)
|
Includes 7,643.67 unvested restricted REP units.
|
(8)
|
Includes 3,161.33 unvested restricted REP units.
|
(9)
|
Includes 3,958.33 unvested restricted REP units.
|
(10)
|
Includes 2,500 unvested restricted REP units.
|
•
|
each person, or group of affiliated persons, expected by TGC and REP to become the beneficial owner of more than 5% of the outstanding common stock of the combined company;
|
•
|
each named executive officer and director of the combined company; and
|
•
|
all of the combined company’s executive officers and directors as a group.
|
|
Owners(1)
|
| |
Number of Shares
Beneficially Owned
|
| |
Percent of
Class
|
|
|
5% Equityholders:
|
| |
|
| |
|
|
|
Riley Exploration Group, LLC(2)
|
| |
56,077,276
|
| |
26.2%
|
|
|
Yorktown Energy Partners XI, L.P.(3)
|
| |
21,409,402
|
| |
10.0%
|
|
|
Boomer Petroleum, LLC(4)
|
| |
42,416,372
|
| |
19.9%
|
|
|
Bluescape Riley Exploration Acquisition, LLC(5)
|
| |
45,973,327
|
| |
21.5%
|
|
|
Bluescape Riley Exploration Holdings LLC(5)
|
| |
24,258,995
|
| |
11.4%
|
|
|
Directors, Director Nominees and Named Executive Officers:
|
| |
|
| |
|
|
|
Bobby D. Riley
|
| |
2,672,972
|
| |
1.3%
|
|
|
Kevin M. Riley
|
| |
1,486,807
|
| |
*
|
|
|
Corey Riley
|
| |
429,261
|
| |
*
|
|
|
Michael Palmer
|
| |
244,491
|
| |
*
|
|
|
Bryan H. Lawrence(3)
|
| |
—
|
| |
—
|
|
|
Michael J. Rugen
|
| |
81,522
|
| |
*
|
|
|
Brent Arriaga
|
| |
—
|
| |
—
|
|
|
E. Wayne Nordberg
|
| |
—
|
| |
—
|
|
|
All Directors, Director Nominees and Executive Officers as a group
|
| |
6,384,447
|
| |
3.0%
|
|
*
|
Less than one percent
|
(1)
|
The amounts and percentages of common units beneficially owned are reported on the bases of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power to vote or direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under
|
(2)
|
Certain investment funds managed by Yorktown Partners own an aggregate of approximately 94% of REG. The address of REG is 2008 North Council Avenue, Blanchard, OK 73010.
|
(3)
|
Yorktown XI Company LP is the sole general partner of Yorktown Energy Partners XI, L.P. Yorktown XI Associates LLC is the sole general partner of Yorktown XI Company LP. The managers of Yorktown XI Associates LLC, who act by majority approval, are Bryan H. Lawrence, one of REP’s managers, W. Howard Keenan, Jr., Peter A. Leidel, Tomás R. LaCosta, Robert A. Signorino, Bryan R. Lawrence and James C. Crain. As a result, Yorktown XI Associates LLC may be deemed to share the power to vote or direct the vote or to dispose or direct the disposition of the TGC common stock to be owned by Yorktown Energy Partners XI, L.P. Yorktown XI Company LP and Yorktown XI Associates LLC disclaim beneficial ownership of the TGC common stock to be held by Yorktown Energy Partners XI, L.P. in excess of their pecuniary interest therein. The managers of Yorktown XI Associates LLC disclaim beneficial ownership of the TGC common stock to be held by Yorktown Energy Partners XI, L.P. The address of such funds is 410 Park Avenue, 19th Floor, New York, New York 10022.
|
(4)
|
Boomer Petroleum, LLC is a Delaware limited liability company that is owned 50% by Texel Resources Inc., a Canadian corporation, and 50% by Balmon California, Inc., a California corporation. The President of Boomer Petroleum, LLC is Alvin Libin, one of REP’s managers. The address of Boomer Petroleum, LLC is 3200 255 5th Avenue SW, Calgary, Alberta, Canada T2P 3G6.
|
(5)
|
Bluescape Riley Exploration Acquisition LLC is a Delaware limited liability company and will beneficially own TGC common stock. Bluescape Riley Exploration Holdings LLC is a Delaware limited liability company and will beneficially own TGC common stock. Bluescape Riley Exploration Acquisition LLC is a wholly owned subsidiary of Bluescape Riley Exploration Holdings LLC. Bluescape Energy Recapitalization and Restructuring Fund III LP has voting and dispositive power over TGC common stock to be held by Bluescape Riley Exploration Acquisition LLC and Bluescape Riley Exploration Holdings LLC and therefore may also be deemed to be the beneficial owner of these shares. Bluescape Energy Partners III GP LLC may be deemed to share voting and dispositive power over these shares and therefore may also be deemed to be the beneficial owner of these shares by virtue of Bluescape Energy Partners III GP LLC being the sole general partner of Bluescape Energy Recapitalization and Restructuring Fund III LP. Bluescape Resources GP Holdings LLC may be deemed to share voting and dispositive power over these shares and therefore may also be deemed to be the beneficial owner of these shares by virtue of Bluescape Resources GP Holdings LLC being the manager of Bluescape Energy Partners III GP LLC. Charles John Wilder, Jr. may be deemed to share voting and dispositive power over these shares and therefore may also be deemed to be the beneficial owner of these shares by virtue of Charles John Wilder, Jr. being the manager of Bluescape Resources GP Holdings LLC. Each of Bluescape Riley Exploration Acquisition LLC, Bluescape Riley Exploration Holdings LLC, Bluescape Energy Recapitalization and Restructuring Fund III LP, Bluescape Energy Partners III GP LLC, Bluescape Resources GP Holdings LLC, and Charles John Wilder, Jr. disclaims beneficial ownership of the shares reported as held by Bluescape Riley Exploration Holdings LLC in excess of its respective pecuniary interest in such shares. The address of Bluescape Riley Exploration Acquisition LLC and Bluescape Riley Exploration Holdings LLC and mailing address of each listed beneficial owner is 200 Crescent Court, Suite 1900, Dallas, Texas 75201.
|
Tengasco, Inc.
|
| |
Riley Exploration – Permian, LLC
|
8000 E. Maplewood Ave., Suite 130
Greenwood Village, Colorado 80111
|
| |
29 E. Reno Avenue, Suite 500
Oklahoma City, Oklahoma 73104
|
|
| |
|
Telephone: (720) 420-4460
|
| |
Telephone: (405) 415-8677
|
Attn: Investor Relations
|
| |
Attn: Chief Financial Officer
|
|
| |
Page
|
Tengasco, Inc.
|
| |
|
Audited Annual Financial Statements
|
| |
|
| | ||
| | ||
| | ||
| | ||
| | ||
| | ||
|
| |
|
Unaudited Interim Financial Statements
|
| |
|
| | ||
| | ||
| | ||
| | ||
| | ||
|
| |
|
Riley Exploration – Permian, LLC
|
| |
|
Audited Annual Financial Statements
|
| |
|
| | ||
| | ||
| | ||
| | ||
| | ||
| |
|
| |
December 31,
|
|||
|
| |
2019
|
| |
2018
|
Assets
|
| |
|
| |
|
Current
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$3,055
|
| |
$3,115
|
Accounts receivable
|
| |
557
|
| |
533
|
Inventory
|
| |
415
|
| |
464
|
Prepaid expenses
|
| |
247
|
| |
235
|
Other current assets
|
| |
4
|
| |
—
|
Total current assets
|
| |
4,278
|
| |
4,347
|
Loan fees, net
|
| |
4
|
| |
9
|
Right of use asset - operating leases
|
| |
41
|
| |
—
|
Oil and gas properties, net (full cost accounting method)
|
| |
4,385
|
| |
4,804
|
Other property and equipment, net
|
| |
149
|
| |
190
|
Accounts receivable - noncurrent
|
| |
65
|
| |
130
|
Other noncurrent assets
|
| |
—
|
| |
4
|
Total assets
|
| |
$8,922
|
| |
$9,484
|
|
| |
December 31,
|
|||
|
| |
2019
|
| |
2018
|
Liabilities and Stockholders’ Equity
|
| |
|
| |
|
Current liabilities
|
| |
|
| |
|
Accounts payable – trade
|
| |
$269
|
| |
$132
|
Accrued liabilities
|
| |
164
|
| |
282
|
Lease liabilities - operating leases - current
|
| |
41
|
| |
—
|
Lease liabilities - finance leases - current
|
| |
61
|
| |
—
|
Current maturities of long-term debt
|
| |
—
|
| |
51
|
Asset retirement obligation - current
|
| |
75
|
| |
83
|
Total current liabilities
|
| |
610
|
| |
548
|
Lease liabilities - finance leases - noncurrent
|
| |
41
|
| |
—
|
Long term debt, less current maturities
|
| |
—
|
| |
73
|
Asset retirement obligation - non current
|
| |
1,923
|
| |
2,096
|
Total liabilities
|
| |
2,574
|
| |
2,717
|
Commitments and contingencies (Note 9)
|
| |
|
| |
|
Stockholders’ equity
|
| |
|
| |
|
Preferred stock, 25,000,000 shares authorized:
|
| |
|
| |
|
Series A Preferred stock, $0.0001 par value, 10,000 shares designated; 0 shares issued and outstanding
|
| |
—
|
| |
—
|
Common stock, $.001 par value: authorized 100,000,000 Shares; 10,658,775 and 10,639,290 shares issued and outstanding
|
| |
11
|
| |
11
|
Additional paid in capital
|
| |
58,293
|
| |
58,276
|
Accumulated deficit
|
| |
(51,956)
|
| |
(51,520)
|
Total stockholders’ equity
|
| |
6,348
|
| |
6,767
|
Total liabilities and stockholders’ equity
|
| |
$8,922
|
| |
$9,484
|
|
| |
Year ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Revenues
|
| |
|
| |
|
Oil and gas properties
|
| |
$4,911
|
| |
$5,871
|
Total revenues
|
| |
4,911
|
| |
5,871
|
Cost and expenses
|
| |
|
| |
|
Production costs and taxes
|
| |
3,398
|
| |
3,591
|
Depreciation, depletion, and amortization
|
| |
716
|
| |
795
|
General and administrative
|
| |
1,302
|
| |
1,245
|
Total cost and expenses
|
| |
5,416
|
| |
5,631
|
Net income (loss) from operations
|
| |
(505)
|
| |
240
|
Other income (expense)
|
| |
|
| |
|
Net interest expense
|
| |
(10)
|
| |
(5)
|
Gain on sale of assets
|
| |
45
|
| |
33
|
Other income
|
| |
6
|
| |
157
|
Total other income (expense)
|
| |
41
|
| |
185
|
Income (loss) from operations before income tax
|
| |
(464)
|
| |
425
|
Deferred income tax benefit
|
| |
28
|
| |
17
|
Net income (loss) from continuing operations
|
| |
(436)
|
| |
442
|
Net income from discontinued operations
|
| |
—
|
| |
1,127
|
Net income (loss)
|
| |
$(436)
|
| |
$1,569
|
Net income (loss) per share - basic and fully diluted
|
| |
|
| |
|
Continuing operations
|
| |
$(0.04)
|
| |
$0.04
|
Discontinued operations
|
| |
$—
|
| |
$0.11
|
Shares used in computing earnings per share
|
| |
|
| |
|
Basic and fully diluted
|
| |
10,651,342
|
| |
10,628,170
|
|
| |
Common Stock
|
| |
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance, December 31, 2017
|
| |
10,619,924
|
| |
$11
|
| |
$58,253
|
| |
$(53,089)
|
| |
$5,175
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
1,569
|
| |
1,569
|
Compensation expense related to stock issued
|
| |
19,366
|
| |
—
|
| |
23
|
| |
—
|
| |
23
|
Balance, December 31, 2018
|
| |
10,639,290
|
| |
$11
|
| |
$58,276
|
| |
$(51,520)
|
| |
$6,767
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(436)
|
| |
(436)
|
Compensation expense related to stock issued
|
| |
19,485
|
| |
—
|
| |
17
|
| |
—
|
| |
17
|
Balance, December 31, 2019
|
| |
10,658,775
|
| |
$11
|
| |
$58,293
|
| |
$(51,956)
|
| |
$6,348
|
|
| |
Year ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Operating activities
|
| |
|
| |
|
Net income (loss) from continuing operations
|
| |
$(436)
|
| |
$442
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities
|
| |
|
| |
|
Depreciation, depletion, and amortization
|
| |
716
|
| |
795
|
Amortization of loan fees-interest expenses
|
| |
5
|
| |
4
|
Accretion of discount on asset retirement obligation
|
| |
132
|
| |
141
|
Gain on asset sales
|
| |
(45)
|
| |
(33)
|
Compensation and services paid in stock / stock options
|
| |
17
|
| |
23
|
Changes in assets and liabilities:
|
| |
|
| |
|
Accounts receivable
|
| |
41
|
| |
96
|
Inventory, prepaid expense, and other assets
|
| |
(68)
|
| |
(28)
|
Accounts payable
|
| |
63
|
| |
(58)
|
Accrued liabilities
|
| |
(123)
|
| |
(64)
|
Settlement on asset retirement obligations
|
| |
(76)
|
| |
(25)
|
Net cash provided by operating activities - continuing operations
|
| |
226
|
| |
1,293
|
Net cash provided by operating activities - discontinued operations
|
| |
—
|
| |
44
|
Net cash provided by operating activities
|
| |
226
|
| |
1,337
|
Investing activities
|
| |
|
| |
|
Additions to oil and gas properties
|
| |
(437)
|
| |
(1,011)
|
Proceeds from sale of oil and gas properties
|
| |
56
|
| |
7
|
Additions to other property & equipment
|
| |
(2)
|
| |
(27)
|
Proceeds from sale of other property & equipment
|
| |
150
|
| |
8
|
Net cash used in investing activities - continuing operations
|
| |
(233)
|
| |
(1,023)
|
Net cash provided by investing activities - discontinued operations
|
| |
—
|
| |
2,658
|
Net cash provided by (used in) investing activities
|
| |
(233)
|
| |
1,635
|
Financing activities
|
| |
|
| |
|
Proceeds from borrowings
|
| |
—
|
| |
100
|
Repayment of borrowings
|
| |
(53)
|
| |
(142)
|
Net cash used in financing activities - continuing operations
|
| |
(53)
|
| |
(42)
|
Net cash used in financing activities - discontinued operations
|
| |
—
|
| |
—
|
Net cash used in financing activities
|
| |
(53)
|
| |
(42)
|
Net change in cash and cash equivalents
|
| |
(60)
|
| |
2,930
|
Cash and cash equivalents, beginning of period
|
| |
3,115
|
| |
185
|
Cash and cash equivalents, end of period
|
| |
$3,055
|
| |
$3,115
|
Supplemental cash flow information:
|
| |
|
| |
|
Cash interest payments
|
| |
$5
|
| |
$—
|
Supplemental non-cash investing and financing activities:
|
| |
|
| |
|
Financed company vehicles
|
| |
$57
|
| |
$136
|
Asset retirement obligations incurred
|
| |
$12
|
| |
$7
|
Revisions to asset retirement obligations
|
| |
$(187)
|
| |
$(198)
|
Capital expenditures included in accounts payable and accrued liabilities
|
| |
$88
|
| |
$9
|
|
| |
Year ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Crude oil
|
| |
$4,884
|
| |
5,840
|
Saltwater disposal fees
|
| |
27
|
| |
31
|
Total
|
| |
$4,911
|
| |
$5,871
|
|
| |
December 31,
|
|||
|
| |
2019
|
| |
2018
|
Oil – carried at cost
|
| |
$415
|
| |
$359
|
Equipment and materials – carried at market
|
| |
—
|
| |
105
|
Total inventory
|
| |
$415
|
| |
$464
|
|
| |
December 31,
|
|||
|
| |
2019
|
| |
2018
|
Revenue
|
| |
$415
|
| |
$396
|
Tax
|
| |
65
|
| |
129
|
Joint interest
|
| |
77
|
| |
8
|
Accounts receivable - current
|
| |
$557
|
| |
$533
|
|
| |
|
| |
|
Tax - noncurrent
|
| |
$65
|
| |
$130
|
|
| |
For the years ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Income (numerator):
|
| |
|
| |
|
Net income (loss) from continuing operations
|
| |
$(436)
|
| |
$442
|
Net income from discontinued operations
|
| |
—
|
| |
1,127
|
Weighted average shares (denominator):
|
| |
|
| |
|
Weighted average shares - basic
|
| |
10,651,342
|
| |
10,628,170
|
Dilution effect of share-based compensation, treasury method
|
| |
—
|
| |
—
|
Weighted average shares - dilutive
|
| |
10,651,342
|
| |
10,628,170
|
Income (loss) per share – Basic and Dilutive:
|
| |
|
| |
|
Continuing operations
|
| |
$(0.04)
|
| |
$0.04
|
Discontinued operations
|
| |
$—
|
| |
$0.11
|
|
| |
December 31,
|
|||
|
| |
2019
|
| |
2018
|
Oil and gas properties
|
| |
$6,751
|
| |
$6,503
|
Unevaluated properties
|
| |
—
|
| |
23
|
Accumulated depreciation, depletion and amortization
|
| |
(2,366)
|
| |
(1,722)
|
Oil and gas properties, net
|
| |
$4,385
|
| |
$4,804
|
|
| |
For the years ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Revenues
|
| |
$—
|
| |
$6
|
Production costs and taxes
|
| |
—
|
| |
(40)
|
Depreciation, depletion, and amortization
|
| |
—
|
| |
(4)
|
Interest income
|
| |
—
|
| |
—
|
Gain on sale of assets
|
| |
—
|
| |
1,165
|
Deferred income tax benefit
|
| |
—
|
| |
—
|
Net income from discontinued operations
|
| |
$—
|
| |
$1,127
|
Type
|
| |
Depreciable
Life
|
| |
Gross Cost
|
| |
Accumulated
Depreciation
|
| |
Net Book
Value
|
Vehicles
|
| |
2-3 yrs
|
| |
295
|
| |
146
|
| |
149
|
Other
|
| |
5-7 yrs
|
| |
83
|
| |
83
|
| |
—
|
Total
|
| |
|
| |
$378
|
| |
$229
|
| |
$149
|
Type
|
| |
Depreciable
Life
|
| |
Gross Cost
|
| |
Accumulated
Depreciation
|
| |
Net Book
Value
|
Vehicles
|
| |
2-3 years
|
| |
293
|
| |
103
|
| |
190
|
Other
|
| |
5-7 years
|
| |
83
|
| |
83
|
| |
—
|
Total
|
| |
|
| |
$376
|
| |
$186
|
| |
$190
|
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
Total
|
Bank Credit Facility
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
Total
|
| |
$—
|
| |
$—
|
| |
$—
|
| |
$—
|
|
| |
|
| |
For the years ended December 31,
|
|||
|
| |
Income Statement Account
|
| |
2019
|
| |
2018
|
Operating lease cost:
|
| |
|
| |
|
| |
|
|
| |
Production costs and taxes
|
| |
$13
|
| |
$—
|
|
| |
General and administrative
|
| |
49
|
| |
—
|
Total operating lease cost
|
| |
|
| |
$62
|
| |
$—
|
Finance lease cost:
|
| |
|
| |
|
| |
|
Amortization of right of use assets
|
| |
Depreciation, depletion, and amortization
|
| |
$79
|
| |
$—
|
Interest on lease liabilities
|
| |
Net interest expense
|
| |
5
|
| |
—
|
Total finance lease cost
|
| |
|
| |
$84
|
| |
$—
|
|
| |
For the years ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Cash paid for amounts included in the measurement of lease liabilities:
|
| |
|
| |
|
Operating cash flows from operating leases
|
| |
$62
|
| |
$—
|
Operating cash flows from finance leases
|
| |
5
|
| |
—
|
Finance cash flows from finance leases
|
| |
$53
|
| |
$—
|
Right of use assets obtained in exchange for lease obligations:
|
| |
|
| |
|
Operating leases
|
| |
$98
|
| |
$—
|
|
| |
Balance Sheet as of December 31,
|
|||
|
| |
2019
|
| |
2018
|
Operating Leases:
|
| |
|
| |
|
Right of use asset - operating leases
|
| |
$41
|
| |
$—
|
Lease liabilities - current
|
| |
$41
|
| |
$—
|
Lease liabilities - noncurrent
|
| |
—
|
| |
—
|
Total operating lease liabilities
|
| |
$41
|
| |
$—
|
Finance Leases:
|
| |
|
| |
|
Other property and equipment, gross
|
| |
$295
|
| |
$—
|
Accumulated depreciation
|
| |
(146)
|
| |
—
|
Other property and equipment, net
|
| |
$149
|
| |
$—
|
Lease liabilities - current
|
| |
$61
|
| |
$—
|
Lease liabilities - noncurrent
|
| |
41
|
| |
—
|
Total finance lease liabilities
|
| |
$102
|
| |
$—
|
|
| |
Operating Leases
|
| |
Finance Leases
|
Weighted average remaining lease term
|
| |
0.7 years
|
| |
0.9 years
|
Weighted average discount rate
|
| |
6.0%
|
| |
5.6%
|
|
| |
Operating Leases
|
| |
Finance Leases
|
2020
|
| |
42
|
| |
65
|
2021
|
| |
—
|
| |
39
|
Total lease payments
|
| |
42
|
| |
104
|
Less imputed interest
|
| |
(1)
|
| |
(2)
|
Total
|
| |
$41
|
| |
$102
|
Balance December 31, 2017
|
| |
$2,270
|
|
| |
|
Accretion expense
|
| |
141
|
Liabilities incurred
|
| |
7
|
Liabilities settled
|
| |
(41)
|
Revisions in estimated liabilities
|
| |
(198)
|
Balance December 31, 2018
|
| |
$2,179
|
|
| |
|
Accretion expense
|
| |
132
|
Liabilities incurred
|
| |
12
|
Liabilities settled
|
| |
(83)
|
Liabilities sold properties
|
| |
(55)
|
Revisions in estimated liabilities
|
| |
(187)
|
Balance December 31, 2019
|
| |
$1,998
|
|
| |
2019
|
| |
2018
|
||||||
|
| |
Shares
|
| |
Weighted
Average
Exercise
Price
|
| |
Shares
|
| |
Weighted
Average
Exercise
Price
|
Outstanding, beginning of year
|
| |
16,875
|
| |
$3.18
|
| |
30,000
|
| |
$3.73
|
Granted
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
Exercised
|
| |
—
|
| |
$—
|
| |
—
|
| |
$—
|
Expired/cancelled
|
| |
(7,500)
|
| |
$4.43
|
| |
(13,125)
|
| |
$4.43
|
Outstanding, end of year
|
| |
9,375
|
| |
$2.18
|
| |
16,875
|
| |
$3.18
|
Exercisable, end of year
|
| |
9,375
|
| |
$2.18
|
| |
16,875
|
| |
$3.18
|
Weighted Average
Exercise Price
|
| |
Options Outstanding
(shares)
|
| |
Weighted Average
Remaining Contractual Life
(years)
|
| |
Options Exercisable
(shares)
|
$2.50
|
| |
1,875
|
| |
—
|
| |
1,875
|
$2.30
|
| |
1,875
|
| |
0.2
|
| |
1,875
|
$2.70
|
| |
1,875
|
| |
0.5
|
| |
1,875
|
$2.20
|
| |
1,875
|
| |
0.8
|
| |
1,875
|
$1.20
|
| |
1,875
|
| |
1.0
|
| |
1,875
|
|
| |
9,375
|
| |
|
| |
9,375
|
Year Ended December 31, 2019
|
| |
Total
|
Statutory rate
|
| |
21%
|
Tax (benefit) expense at statutory rate
|
| |
$(99)
|
State income tax (benefit) expense
|
| |
321
|
Permanent difference
|
| |
—
|
Return to provision
|
| |
(40)
|
Stock Compensation Tax Deficit - ASU 2016-09
|
| |
4
|
2019 NOL Expiration
|
| |
557
|
Net change in deferred tax asset valuation allowance
|
| |
(771)
|
Total income tax provision (benefit)
|
| |
$(28)
|
Year Ended December 31, 2018
|
| |
Total
|
Statutory rate
|
| |
21%
|
Tax (benefit) expense at statutory rate
|
| |
$326
|
State income tax (benefit) expense
|
| |
95
|
Permanent difference
|
| |
1
|
Return to provision
|
| |
152
|
Net change in deferred tax asset valuation allowance
|
| |
(591)
|
Total income tax provision (benefit)
|
| |
$(17)
|
|
| |
Year Ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Net deferred tax assets (liabilities):
|
| |
|
| |
|
Net operating loss carryforwards
|
| |
$9,119
|
| |
$9,675
|
Oil and gas properties
|
| |
1,054
|
| |
1,327
|
Property, Plant and Equipment
|
| |
(5)
|
| |
(163)
|
Asset retirement obligation
|
| |
500
|
| |
592
|
Tax credits
|
| |
65
|
| |
130
|
Miscellaneous
|
| |
36
|
| |
45
|
Valuation allowance
|
| |
(10,704)
|
| |
(11,476)
|
Net deferred tax asset
|
| |
$65
|
| |
$130
|
Fiscal Year Ended 2019
|
| |
1st Quarter
|
| |
2nd Quarter
|
| |
3rd Quarter
|
| |
4th Quarter
|
Revenues
|
| |
$1,171
|
| |
$1,390
|
| |
$1,215
|
| |
$1,135
|
Net income (loss) from continuing operations
|
| |
(96)
|
| |
9
|
| |
(182)
|
| |
(167)
|
Income (loss) per common share from continuing operations
|
| |
$(0.01)
|
| |
$0.00
|
| |
$(0.02)
|
| |
$(0.01)
|
Fiscal Year Ended 2018
|
| |
1st Quarter
|
| |
2nd Quarter
|
| |
3rd Quarter
|
| |
4th Quarter
|
Revenues
|
| |
$1,367
|
| |
$1,475
|
| |
$1,654
|
| |
$1,375
|
Net income (loss) from continuing operations
|
| |
133
|
| |
99
|
| |
298
|
| |
(88)
|
Income (loss) per common share from continuing operations
|
| |
$0.01
|
| |
$0.01
|
| |
$0.03
|
| |
$(0.01)
|
|
| |
Years Ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Proved oil and gas properties
|
| |
$6,751
|
| |
$6,503
|
Unproved properties
|
| |
—
|
| |
23
|
Total proved and unproved oil and gas properties
|
| |
$6,751
|
| |
$6,526
|
Less accumulated depreciation, depletion and amortization
|
| |
(2,366)
|
| |
(1,722)
|
Net oil and gas properties
|
| |
$4,385
|
| |
$4,804
|
|
| |
Years Ended December 31,
|
|||
|
| |
2019
|
| |
2018
|
Revenues
|
| |
$4,911
|
| |
$5,871
|
Production costs and taxes
|
| |
(3,398)
|
| |
(3,591)
|
Depreciation, depletion and amortization
|
| |
(637)
|
| |
(722)
|
Income from oil and gas producing activities
|
| |
$876
|
| |
$1,558
|
|
| |
Oil (MBbl)
|
| |
Gas (MMcf)
|
| |
MBoe
|
Proved reserves at December 31, 2017
|
| |
870
|
| |
—
|
| |
870
|
Revisions of previous estimates
|
| |
223
|
| |
—
|
| |
223
|
Improved recovery
|
| |
—
|
| |
—
|
| |
—
|
Purchase of reserves in place
|
| |
13
|
| |
—
|
| |
13
|
Extensions and discoveries
|
| |
86
|
| |
—
|
| |
86
|
Production
|
| |
(98)
|
| |
—
|
| |
(98)
|
Sales of reserves in place
|
| |
—
|
| |
—
|
| |
—
|
Proved reserves at December 31, 2018
|
| |
1,094
|
| |
—
|
| |
1,094
|
Revisions of previous estimates
|
| |
(203)
|
| |
—
|
| |
(203)
|
Improved recovery
|
| |
—
|
| |
—
|
| |
—
|
Purchase of reserves in place
|
| |
—
|
| |
—
|
| |
—
|
Extensions and discoveries
|
| |
8
|
| |
—
|
| |
8
|
Production
|
| |
(94)
|
| |
—
|
| |
(94)
|
Sales of reserves in place
|
| |
(2)
|
| |
—
|
| |
(2)
|
Proved reserves at December 31, 2019
|
| |
803
|
| |
—
|
| |
803
|
|
| |
Oil (MBbl)
|
| |
Gas (MMcf)
|
| |
MBoe
|
Proved developed reserves at:
|
| |
|
| |
|
| |
|
December 31, 2017
|
| |
832
|
| |
—
|
| |
832
|
December 31, 2018
|
| |
976
|
| |
—
|
| |
976
|
December 31, 2019
|
| |
803
|
| |
—
|
| |
803
|
Proved undeveloped reserves at:
|
| |
|
| |
|
| |
|
December 31, 2017
|
| |
38
|
| |
—
|
| |
38
|
December 31, 2018
|
| |
118
|
| |
—
|
| |
118
|
December 31, 2019
|
| |
—
|
| |
—
|
| |
—
|
|
| |
Year Ended 12/31/2019
|
| |
Year Ended 12/31/2018
|
| |
Year Ended 12/31/2017
|
||||||||||||||||||
|
| |
Oil
|
| |
Gas
|
| |
Total
|
| |
Oil
|
| |
Gas
|
| |
Total
|
| |
Oil
|
| |
Gas
|
| |
Total
|
Total proved reserves year-end reserve report
|
| |
$8,365
|
| |
—
|
| |
$8,365
|
| |
$13,976
|
| |
—
|
| |
$13,976
|
| |
$8,170
|
| |
—
|
| |
$8,170
|
Proved developed producing reserves (PDP)
|
| |
$7,592
|
| |
—
|
| |
$7,592
|
| |
$12,534
|
| |
—
|
| |
$12,534
|
| |
$7,065
|
| |
—
|
| |
$7,065
|
% of PDP reserves to total proved reserves
|
| |
91%
|
| |
—
|
| |
91%
|
| |
90%
|
| |
—
|
| |
90%
|
| |
87%
|
| |
—
|
| |
87%
|
Proved developed non-producing reserves
|
| |
$773
|
| |
—
|
| |
$773
|
| |
$739
|
| |
—
|
| |
$739
|
| |
$1,082
|
| |
—
|
| |
$1,082
|
% of PDNP reserves to total proved reserves
|
| |
9%
|
| |
—
|
| |
9%
|
| |
5%
|
| |
—
|
| |
5%
|
| |
13%
|
| |
—
|
| |
13%
|
Proved undeveloped reserves (PUD)
|
| |
$—
|
| |
—
|
| |
$—
|
| |
$703
|
| |
—
|
| |
$703
|
| |
$23
|
| |
—
|
| |
$23
|
% of PUD reserves to total proved reserves
|
| |
—
|
| |
—
|
| |
—
|
| |
5%
|
| |
—
|
| |
5%
|
| |
—
|
| |
—
|
| |
—
|
|
| |
Years Ended December 31,
|
||||||
|
| |
2019
|
| |
2018
|
| |
2017
|
Future cash inflows
|
| |
$40,655
|
| |
$65,871
|
| |
$39,889
|
Future production costs and taxes
|
| |
(24,829)
|
| |
(35,877)
|
| |
(23,343)
|
Future development costs
|
| |
(542)
|
| |
(2,833)
|
| |
(1,586)
|
Future income tax expenses
|
| |
—
|
| |
—
|
| |
—
|
Future net cash flows
|
| |
15,284
|
| |
27,161
|
| |
14,960
|
Discount at 10% for timing of cash flows
|
| |
(6,919)
|
| |
(13,185)
|
| |
(6,790)
|
Standardized measure of discounted future net cash flows
|
| |
$8,365
|
| |
$13,976
|
| |
$8,170
|
|
| |
Years Ended December 31,
|
||||||
|
| |
2019
|
| |
2018
|
| |
2017
|
Balance, beginning of year
|
| |
$13,976
|
| |
$8,170
|
| |
$5,815
|
Sales, net of production costs and taxes
|
| |
(1,646)
|
| |
(2,611)
|
| |
(1,239)
|
Discoveries and extensions, net of costs
|
| |
154
|
| |
798
|
| |
123
|
Purchase of reserves in place
|
| |
—
|
| |
143
|
| |
—
|
Sale of reserves in place
|
| |
(26)
|
| |
—
|
| |
—
|
Net changes in prices and production costs
|
| |
(3,348)
|
| |
4,304
|
| |
1,780
|
Revisions of quantity estimates
|
| |
(3,058)
|
| |
2,180
|
| |
1,611
|
Previously estimated development cost incurred during the year
|
| |
—
|
| |
210
|
| |
—
|
Changes in future development costs
|
| |
1,016
|
| |
78
|
| |
(228)
|
Changes in timing and other
|
| |
86
|
| |
(4)
|
| |
(164)
|
Accretion of discount
|
| |
1,211
|
| |
708
|
| |
472
|
Net change in income taxes
|
| |
—
|
| |
—
|
| |
—
|
Balance, end of year
|
| |
$8,365
|
| |
$13,976
|
| |
$8,170
|
|
| |
September 30,
2020
|
| |
December 31,
2019
|
Assets
|
| |
|
| |
|
Current
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$2,545
|
| |
$3,055
|
Accounts receivable
|
| |
262
|
| |
557
|
Inventory
|
| |
302
|
| |
415
|
Prepaid expenses
|
| |
156
|
| |
247
|
Other current assets
|
| |
4
|
| |
4
|
Total current assets
|
| |
3,269
|
| |
4,278
|
Loan fees, net
|
| |
2
|
| |
4
|
Right of use asset – operating leases
|
| |
58
|
| |
41
|
Oil and gas properties, net (full cost accounting method)
|
| |
3,914
|
| |
4,385
|
Other property and equipment, net
|
| |
134
|
| |
149
|
Accounts receivable – noncurrent
|
| |
—
|
| |
65
|
Total assets
|
| |
$7,377
|
| |
$8,922
|
|
| |
September 30,
2020
|
| |
December 31,
2019
|
Liabilities and Stockholders’ Equity
|
| |
|
| |
|
Current liabilities
|
| |
|
| |
|
Accounts payable – trade
|
| |
$304
|
| |
$269
|
Accrued liabilities
|
| |
255
|
| |
164
|
Lease liabilities – operating leases – current
|
| |
58
|
| |
41
|
Lease liabilities – finance leases – current
|
| |
58
|
| |
61
|
Current maturities long-term debt
|
| |
101
|
| |
—
|
Asset retirement obligation – current
|
| |
75
|
| |
75
|
Total current liabilities
|
| |
851
|
| |
610
|
Lease liabilities – finance leases – noncurrent
|
| |
42
|
| |
41
|
Long-term debt, less current maturities
|
| |
65
|
| |
—
|
Asset retirement obligation – noncurrent
|
| |
1,954
|
| |
1,923
|
Total liabilities
|
| |
2,912
|
| |
2,574
|
Commitments and contingencies (Note 10)
|
| |
|
| |
|
Stockholders’ equity
|
| |
|
| |
|
Preferred stock, 25,000,000 shares authorized:
|
| |
|
| |
|
Series A Preferred stock, $0.0001 par value, 10,000 shares designated; 0 shares issued and outstanding
|
| |
—
|
| |
—
|
Common stock, $0.001 par value, authorized 100,000,000 shares, 10,680,050 and 10,658,775 shares issued and outstanding
|
| |
11
|
| |
11
|
Additional paid–in capital
|
| |
58,304
|
| |
58,293
|
Accumulated deficit
|
| |
(53,850)
|
| |
(51,956)
|
Total stockholders’ equity
|
| |
4,465
|
| |
6,348
|
Total liabilities and stockholders’ equity
|
| |
$7,377
|
| |
$8,922
|
|
| |
For the Three Months Ended
September 30,
|
| |
For the Nine Months Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2020
|
| |
2019
|
Revenues
|
| |
|
| |
|
| |
|
| |
|
Oil and gas properties
|
| |
$765
|
| |
$1,215
|
| |
$2,292
|
| |
$3,777
|
Total revenues
|
| |
765
|
| |
1,215
|
| |
2,292
|
| |
3,777
|
Cost and expenses
|
| |
|
| |
|
| |
|
| |
|
Production costs and taxes
|
| |
746
|
| |
913
|
| |
2,399
|
| |
2,604
|
Depreciation, depletion, and amortization
|
| |
146
|
| |
186
|
| |
461
|
| |
566
|
General and administrative
|
| |
685
|
| |
297
|
| |
1,324
|
| |
913
|
Total cost and expenses
|
| |
1,577
|
| |
1,396
|
| |
4,184
|
| |
4,083
|
Net loss from operations
|
| |
(812)
|
| |
(181)
|
| |
(1,892)
|
| |
(306)
|
Other income (expense)
|
| |
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(2)
|
| |
(2)
|
| |
(6)
|
| |
(8)
|
Gain on sale of assets
|
| |
1
|
| |
1
|
| |
4
|
| |
45
|
Total other income (expense)
|
| |
(1)
|
| |
(1)
|
| |
(2)
|
| |
37
|
Net loss from operations before income tax
|
| |
(813)
|
| |
(182)
|
| |
(1,894)
|
| |
(269)
|
Deferred income tax benefit (expense)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Net loss
|
| |
$(813)
|
| |
$(182)
|
| |
$(1,894)
|
| |
$(269)
|
Net loss per share
|
| |
|
| |
|
| |
|
| |
|
Basic and fully diluted
|
| |
$(0.08)
|
| |
$(0.02)
|
| |
$(0.18)
|
| |
$(0.03)
|
Shares used in computing earnings per share
|
| |
|
| |
|
| |
|
| |
|
Basic and fully diluted
|
| |
10,680,050
|
| |
10,653,550
|
| |
10,673,238
|
| |
10,648,838
|
|
| |
For the Nine Months Ended September 30,
|
|||
|
| |
2020
|
| |
2019
|
Operating activities
|
| |
|
| |
|
Net loss
|
| |
$(1,894)
|
| |
$(269)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
| |
|
| |
|
Depreciation, depletion, and amortization
|
| |
461
|
| |
566
|
Amortization of loan fees-interest expense
|
| |
2
|
| |
4
|
Accretion on asset retirement obligation
|
| |
94
|
| |
100
|
Gain on asset sales
|
| |
(4)
|
| |
(45)
|
Stock based compensation
|
| |
11
|
| |
14
|
Changes in assets and liabilities:
|
| |
|
| |
|
Accounts receivable, current and noncurrent
|
| |
360
|
| |
22
|
Inventory, prepaid expenses and other assets
|
| |
204
|
| |
78
|
Accounts payable
|
| |
118
|
| |
4
|
Accrued and other current liabilities
|
| |
96
|
| |
(51)
|
Settlement on asset retirement obligation
|
| |
(13)
|
| |
(52)
|
Net cash (used in) provided by operating activities
|
| |
(565)
|
| |
371
|
Investing activities
|
| |
|
| |
|
Additions to oil and gas properties
|
| |
(103)
|
| |
(153)
|
Proceeds from sale of oil and gas properties
|
| |
36
|
| |
41
|
Additions to other property and equipment
|
| |
(10)
|
| |
(2)
|
Proceeds from sale of materials inventory
|
| |
—
|
| |
150
|
Net cash (used in) provided by investing activities
|
| |
(77)
|
| |
36
|
Financing activities
|
| |
|
| |
|
Repayments of financing leases
|
| |
(34)
|
| |
(40)
|
Proceeds from borrowings
|
| |
166
|
| |
—
|
Net cash provided by (used in) financing activities
|
| |
132
|
| |
(40)
|
Net change in cash and cash equivalents
|
| |
(510)
|
| |
367
|
Cash and cash equivalents, beginning of period
|
| |
3,055
|
| |
3,115
|
Cash and cash equivalents, end of period
|
| |
$2,545
|
| |
$3,482
|
Supplemental cash flow information:
|
| |
|
| |
|
Cash interest payments
|
| |
$4
|
| |
$4
|
Supplemental non-cash investing and financing activities:
|
| |
|
| |
|
Financed company vehicles
|
| |
$54
|
| |
$30
|
|
| |
Common Stock
|
| |
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance, December 31, 2019
|
| |
10,658,775
|
| |
$11
|
| |
$58,293
|
| |
$(51,956)
|
| |
$6,348
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(527)
|
| |
(527)
|
Compensation expense related to stock issued
|
| |
7,436
|
| |
—
|
| |
4
|
| |
—
|
| |
4
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance, March 31, 2020
|
| |
10,666,211
|
| |
$11
|
| |
$58,297
|
| |
$(52,483)
|
| |
$5,825
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(554)
|
| |
(554)
|
Compensation expense related to stock issued
|
| |
7,328
|
| |
—
|
| |
3
|
| |
—
|
| |
3
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance, June 30, 2020
|
| |
10,673,539
|
| |
$11
|
| |
$58,300
|
| |
$(53,037)
|
| |
$5,274
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(813)
|
| |
(813)
|
Compensation expense related to stock issued
|
| |
6,511
|
| |
—
|
| |
4
|
| |
—
|
| |
4
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance, September 30, 2020
|
| |
10,680,050
|
| |
$11
|
| |
$58,304
|
| |
$(53,850)
|
| |
$4,465
|
|
| |
Common Stock
|
| |
Paid-in
Capital
|
| |
Accumulated
Deficit
|
| |
Total
|
|||
|
| |
Shares
|
| |
Amount
|
| ||||||||
Balance, December 31, 2018
|
| |
10,639,290
|
| |
$11
|
| |
$58,276
|
| |
$(51,520)
|
| |
$6,767
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(96)
|
| |
(96)
|
Compensation expense related to stock issued
|
| |
4,962
|
| |
—
|
| |
4
|
| |
—
|
| |
4
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance, March 31, 2019
|
| |
10,644,252
|
| |
$11
|
| |
$58,280
|
| |
$(51,616)
|
| |
$6,675
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net income
|
| |
—
|
| |
—
|
| |
—
|
| |
9
|
| |
9
|
Compensation expense related to stock issued
|
| |
4,411
|
| |
—
|
| |
6
|
| |
—
|
| |
6
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance, June 30, 2019
|
| |
10,648,663
|
| |
$11
|
| |
$58,286
|
| |
$(51,607)
|
| |
$6,690
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Net loss
|
| |
—
|
| |
—
|
| |
—
|
| |
(182)
|
| |
(182)
|
Compensation expense related to stock issued
|
| |
4,887
|
| |
—
|
| |
4
|
| |
—
|
| |
4
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
Balance, September 30, 2019
|
| |
10,653,550
|
| |
$11
|
| |
$58,290
|
| |
$(51,789)
|
| |
$6,512
|
|
| |
For the Three Months Ended
September 30,
|
| |
For the Nine Months Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2020
|
| |
2019
|
Crude oil
|
| |
$757
|
| |
$1,208
|
| |
$2,275
|
| |
$3,757
|
Saltwater disposal fees
|
| |
8
|
| |
7
|
| |
17
|
| |
20
|
Total
|
| |
$765
|
| |
$1,215
|
| |
$2,292
|
| |
$3,777
|
|
| |
September 30,
2020
|
| |
December 31,
2019
|
Oil – carried at lower of cost or market
|
| |
$302
|
| |
$415
|
Total inventory
|
| |
$302
|
| |
$415
|
|
| |
September 30,
2020
|
| |
December 31,
2019
|
Revenue
|
| |
$259
|
| |
$415
|
Tax
|
| |
—
|
| |
65
|
Joint interest
|
| |
3
|
| |
77
|
Accounts receivable – current
|
| |
$262
|
| |
$557
|
Tax – noncurrent
|
| |
$—
|
| |
$65
|
|
| |
For the Three Months Ended
September 30,
|
| |
For the Nine Months Ended
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2020
|
| |
2019
|
Income (numerator):
|
| |
|
| |
|
| |
|
| |
|
Net loss
|
| |
$(813)
|
| |
$(182)
|
| |
$(1,894)
|
| |
$(269)
|
Weighted average shares (denominator):
|
| |
|
| |
|
| |
|
| |
|
Weighted average shares – basic
|
| |
10,680,050
|
| |
10,653,550
|
| |
10,673,238
|
| |
10,648,838
|
Dilution effect of share-based compensation, treasury method
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
Weighted average shares – dilutive
|
| |
10,680,050
|
| |
10,653,550
|
| |
10,673,238
|
| |
10,648,838
|
Loss per share:
|
| |
|
| |
|
| |
|
| |
|
Basic and fully diluted
|
| |
$(0.08)
|
| |
$(0.02)
|
| |
$(0.18)
|
| |
$(0.03)
|
|
| |
September 30,
2020
|
| |
December 31,
2019
|
Oil and gas properties
|
| |
$6,685
|
| |
$6,751
|
Unevaluated properties
|
| |
—
|
| |
—
|
Accumulated depreciation, depletion, and amortization
|
| |
(2,771)
|
| |
(2,366)
|
Oil and gas properties, net
|
| |
$3,914
|
| |
$4,385
|
Balance December 31, 2019
|
| |
$1,998
|
Accretion expense
|
| |
94
|
Liabilities incurred
|
| |
—
|
Liabilities settled
|
| |
—
|
Liabilities relieved – sold properties
|
| |
(63)
|
Balance September 30, 2020
|
| |
$2,029
|
|
| |
|
| |
Period Ended
|
|||||||||
|
| |
|
| |
For the Three Months Ended
|
| |
For the Nine Months Ended
|
||||||
|
| |
Statement of
Operations Account
|
| |
September 30,
2020
|
| |
September 30,
2019
|
| |
September 30,
2020
|
| |
September 30,
2019
|
Operating lease cost:
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
| |
Production costs and taxes
|
| |
$3
|
| |
$3
|
| |
$10
|
| |
$10
|
|
| |
General and administrative
|
| |
13
|
| |
12
|
| |
37
|
| |
37
|
Total operating lease cost
|
| |
|
| |
$16
|
| |
$15
|
| |
$47
|
| |
$47
|
Finance lease cost:
|
| |
|
| |
|
| |
|
| |
|
| |
|
Amortization of right of use assets
|
| |
Depreciation, depletion, and amortization
|
| |
$20
|
| |
$21
|
| |
$56
|
| |
$62
|
Interest on lease liabilities
|
| |
Net interest expense
|
| |
1
|
| |
1
|
| |
4
|
| |
4
|
Total finance lease cost
|
| |
|
| |
$21
|
| |
$22
|
| |
$60
|
| |
$66
|
|
| |
Period Ended
|
|||||||||
|
| |
For the Three Months Ended
|
| |
For the Nine Months Ended
|
||||||
|
| |
September 30,
2020
|
| |
September 30,
2019
|
| |
September 30,
2020
|
| |
September 30,
2019
|
Cash paid for amounts included in lease liabilities:
|
| |
|
| |
|
| |
|
| |
|
Operating cash flows from operating leases
|
| |
$16
|
| |
$15
|
| |
$47
|
| |
$45
|
Operating cash flows from finance leases
|
| |
1
|
| |
1
|
| |
4
|
| |
4
|
Finance cash flows from finance leases
|
| |
15
|
| |
9
|
| |
34
|
| |
40
|
Right of use assets obtained in exchange for lease obligations:
|
| |
|
| |
|
| |
|
| |
|
Operating leases
|
| |
—
|
| |
—
|
| |
63
|
| |
98
|
|
| |
Balance Sheet as of
|
|||
|
| |
September 30,
2020
|
| |
December 31,
2019
|
Operating Leases:
|
| |
|
| |
|
Right of use asset – operating leases
|
| |
$58
|
| |
$41
|
Lease liabilities – current
|
| |
$58
|
| |
$41
|
Lease liabilities – noncurrent
|
| |
—
|
| |
—
|
Total operating lease liabilities
|
| |
$58
|
| |
$41
|
Finance Leases:
|
| |
|
| |
|
Other property and equipment, gross
|
| |
$293
|
| |
$295
|
Accumulated depreciation
|
| |
(159)
|
| |
(146)
|
Other property and equipment, net
|
| |
$134
|
| |
$149
|
Lease liabilities – current
|
| |
$58
|
| |
$61
|
Lease liabilities – noncurrent
|
| |
42
|
| |
41
|
Total finance lease liabilities
|
| |
$100
|
| |
$102
|
|
| |
Operating Leases
|
| |
Finance Leases
|
Weighted average remaining lease term
|
| |
0.9 years
|
| |
1.1 years
|
Weighted average discount rate
|
| |
3.75%
|
| |
5.35%
|
|
| |
Operating Leases
|
| |
Finance Leases
|
2020
|
| |
$16
|
| |
$21
|
2021
|
| |
43
|
| |
67
|
2022
|
| |
—
|
| |
15
|
Total lease payments
|
| |
59
|
| |
103
|
Less imputed interest
|
| |
(1)
|
| |
(3)
|
Total
|
| |
$58
|
| |
$100
|
|
| |
September 30,
2020
|
| |
September 30,
2019
|
Assets
|
| |
|
| |
|
Current Assets:
|
| |
|
| |
|
Cash and cash equivalents
|
| |
$1,660
|
| |
$3,726
|
Accounts receivable
|
| |
10,128
|
| |
11,643
|
Accounts receivable – related parties
|
| |
55
|
| |
504
|
Prepaid expenses and other current assets
|
| |
1,752
|
| |
1,410
|
Current derivative assets
|
| |
18,819
|
| |
7,503
|
Total Current Assets
|
| |
32,414
|
| |
24,786
|
|
| |
|
| |
|
Non-Current Assets:
|
| |
|
| |
|
Oil and natural gas properties, net (successful efforts)
|
| |
310,726
|
| |
289,301
|
Other property and equipment, net
|
| |
1,801
|
| |
2,000
|
Right of use assets
|
| |
700
|
| |
—
|
Non-current derivative assets
|
| |
3,102
|
| |
7,936
|
Other non-current assets
|
| |
2,249
|
| |
2,724
|
Total Non-Current Assets
|
| |
318,578
|
| |
301,961
|
Total Assets
|
| |
$350,992
|
| |
$326,747
|
|
| |
|
| |
|
Liabilities, Series A Preferred Units, and Members' Equity
|
| |
|
| |
|
Current Liabilities:
|
| |
|
| |
|
Accounts payable
|
| |
$4,739
|
| |
$2,422
|
Accrued liabilities
|
| |
8,746
|
| |
13,177
|
Current lease liability
|
| |
392
|
| |
—
|
Revenue payable
|
| |
4,432
|
| |
4,516
|
Advances from joint interest owners
|
| |
254
|
| |
362
|
Current derivative liabilities
|
| |
—
|
| |
328
|
Total Current Liabilities
|
| |
18,563
|
| |
20,805
|
|
| |
|
| |
|
Non-Current Liabilities:
|
| |
|
| |
|
Non-current derivative liabilities
|
| |
—
|
| |
152
|
Asset retirement obligations
|
| |
2,268
|
| |
1,203
|
Revolving credit facility
|
| |
101,000
|
| |
97,000
|
Deferred tax liabilities
|
| |
1,834
|
| |
1,333
|
Non-current lease liability
|
| |
314
|
| |
—
|
Other non-current liabilities
|
| |
104
|
| |
61
|
Total Non-Current Liabilities
|
| |
105,520
|
| |
99,749
|
Total Liabilities
|
| |
124,083
|
| |
120,554
|
|
| |
|
| |
|
Series A Preferred Units
|
| |
60,292
|
| |
56,810
|
Members' Equity
|
| |
166,617
|
| |
149,383
|
Total Liabilities, Series A Preferred Units, and Members' Equity
|
| |
$350,992
|
| |
$326,747
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Revenues:
|
| |
|
| |
|
| |
|
Oil and natural gas sales, net
|
| |
$73,133
|
| |
$101,096
|
| |
$69,872
|
Contract services – related parties
|
| |
3,800
|
| |
1,900
|
| |
—
|
Total Revenues
|
| |
76,933
|
| |
102,996
|
| |
69,872
|
|
| |
|
| |
|
| |
|
Costs and Expenses:
|
| |
|
| |
|
| |
|
Lease operating expenses
|
| |
20,997
|
| |
23,808
|
| |
11,044
|
Gathering, processing & transportation
|
| |
—
|
| |
—
|
| |
735
|
Production taxes
|
| |
3,526
|
| |
4,804
|
| |
3,207
|
Exploration costs
|
| |
9,923
|
| |
5,074
|
| |
5,992
|
Depletion, depreciation, amortization and accretion
|
| |
21,479
|
| |
20,182
|
| |
15,714
|
General and administrative:
|
| |
|
| |
|
| |
|
Administrative costs
|
| |
10,826
|
| |
12,168
|
| |
14,175
|
Unit-based compensation expense
|
| |
963
|
| |
898
|
| |
—
|
Cost of contract services – related parties
|
| |
503
|
| |
21
|
| |
—
|
Transaction costs
|
| |
1,431
|
| |
4,553
|
| |
878
|
Total Costs and Expenses
|
| |
69,648
|
| |
71,508
|
| |
51,745
|
|
| |
|
| |
|
| |
|
Income From Operations
|
| |
7,285
|
| |
31,488
|
| |
18,127
|
|
| |
|
| |
|
| |
|
Other Income (Expense):
|
| |
|
| |
|
| |
|
Interest expense
|
| |
(5,299)
|
| |
(4,924)
|
| |
(1,707)
|
Gain (loss) on derivatives
|
| |
33,876
|
| |
26,712
|
| |
(17,143)
|
Total Other Income (Expense)
|
| |
28,577
|
| |
21,788
|
| |
(18,850)
|
|
| |
|
| |
|
| |
|
Net Income (Loss) Before Income Taxes
|
| |
35,862
|
| |
53,276
|
| |
(723)
|
|
| |
|
| |
|
| |
|
Income tax expense
|
| |
(718)
|
| |
(1,410)
|
| |
—
|
Net Income (Loss)
|
| |
35,144
|
| |
51,866
|
| |
(723)
|
|
| |
|
| |
|
| |
|
Dividends on preferred units
|
| |
(3,535)
|
| |
(3,330)
|
| |
(3,129)
|
Net Income (Loss) Attributable to Common Unitholders
|
| |
$31,609
|
| |
$48,536
|
| |
$(3,852)
|
|
| |
|
| |
|
| |
|
Net Income (Loss) per Unit:
|
| |
|
| |
|
| |
|
Basic
|
| |
$20.67
|
| |
$31.87
|
| |
$(2.57)
|
Diluted
|
| |
$17.24
|
| |
$26.03
|
| |
$(2.57)
|
|
| |
|
| |
|
| |
|
Weighted Average Common Units Outstanding:
|
| |
|
| |
|
| |
|
Basic
|
| |
1,529
|
| |
1,523
|
| |
1,500
|
Diluted
|
| |
2,038
|
| |
1,992
|
| |
1,500
|
|
| |
Units
Outstanding
|
| |
Amount
|
Balance, September 30, 2017
|
| |
1,500
|
| |
$111,526
|
Distributions to Riley Exploration Group, Inc.
|
| |
—
|
| |
(275)
|
Dividends on preferred units
|
| |
—
|
| |
(3,129)
|
Net loss
|
| |
—
|
| |
(723)
|
Balance, September 30, 2018
|
| |
1,500
|
| |
$107,399
|
Issuance of common units under long-term incentive plan
|
| |
40
|
| |
4,000
|
Purchase of common units under long-term incentive plan
|
| |
(13)
|
| |
(1,456)
|
Dividends on preferred units
|
| |
—
|
| |
(3,330)
|
Dividends on common units
|
| |
—
|
| |
(9,994)
|
Unit-based compensation expense
|
| |
—
|
| |
898
|
Net income
|
| |
—
|
| |
51,866
|
Balance, September 30, 2019
|
| |
1,527
|
| |
$149,383
|
Issuance of common units under long-term incentive plan
|
| |
31
|
| |
—
|
Purchase of common units under long-term incentive plan
|
| |
(3)
|
| |
(322)
|
Dividends on preferred units
|
| |
—
|
| |
(3,535)
|
Dividends on common units
|
| |
—
|
| |
(15,016)
|
Unit-based compensation expense
|
| |
—
|
| |
963
|
Net income
|
| |
—
|
| |
35,144
|
Balance, September 30, 2020
|
| |
1,555
|
| |
$166,617
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Cash Flows from Operating Activities:
|
| |
|
| |
|
| |
|
Net income (loss)
|
| |
$35,144
|
| |
$51,866
|
| |
$(723)
|
|
| |
|
| |
|
| |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
| |
|
| |
|
| |
|
Oil and gas lease abandonments
|
| |
7,902
|
| |
4,839
|
| |
5,837
|
Depletion, depreciation, amortization and accretion
|
| |
21,341
|
| |
20,182
|
| |
15,714
|
Loss on plugging liabilities
|
| |
138
|
| |
—
|
| |
—
|
(Gain) loss on derivatives
|
| |
(33,876)
|
| |
(26,712)
|
| |
17,143
|
Settlements on derivative contracts
|
| |
26,914
|
| |
514
|
| |
(7,527)
|
Amortization of debt issuance costs
|
| |
648
|
| |
502
|
| |
306
|
Write-off of previously deferred IPO costs
|
| |
—
|
| |
2,658
|
| |
—
|
Unit-based compensation expense
|
| |
963
|
| |
898
|
| |
—
|
Deferred income tax expense
|
| |
665
|
| |
1,333
|
| |
—
|
|
| |
|
| |
|
| |
|
Changes in operating assets and liabilities:
|
| |
|
| |
|
| |
|
Accounts receivable
|
| |
1,515
|
| |
(2,713)
|
| |
(3,967)
|
Accounts receivable – related parties
|
| |
449
|
| |
(504)
|
| |
—
|
Prepaid expenses and other current assets
|
| |
839
|
| |
(1,088)
|
| |
(138)
|
Other non-current assets
|
| |
84
|
| |
(107)
|
| |
(6)
|
Accounts payable and accrued liabilities
|
| |
16
|
| |
1,435
|
| |
8,392
|
Revenue payable
|
| |
(84)
|
| |
(858)
|
| |
3,036
|
Advances from joint interest owners
|
| |
(108)
|
| |
(238)
|
| |
552
|
Net Cash Provided By Operating Activities
|
| |
62,550
|
| |
52,007
|
| |
38,619
|
|
| |
|
| |
|
| |
|
Cash Flows From Investing Activities:
|
| |
|
| |
|
| |
|
Additions to oil and natural gas properties
|
| |
(47,183)
|
| |
(77,557)
|
| |
(68,581)
|
Acquisitions of oil and natural gas properties
|
| |
(4,110)
|
| |
(5,356)
|
| |
(19,507)
|
Additions to other property and equipment
|
| |
(228)
|
| |
(485)
|
| |
(301)
|
Net Cash Used In Investing Activities
|
| |
(51,521)
|
| |
(83,398)
|
| |
(88,389)
|
Cash Flows From Financing Activities:
|
| |
|
| |
|
| |
|
Additional issuance costs of Series A Preferred Units
|
| |
—
|
| |
—
|
| |
(30)
|
Debt issuance costs
|
| |
(1,476)
|
| |
—
|
| |
—
|
Equity offering costs
|
| |
—
|
| |
—
|
| |
(2,658)
|
Distribution to Riley Exploration Group, Inc.
|
| |
—
|
| |
—
|
| |
(275)
|
Net proceeds from revolving credit facility
|
| |
4,000
|
| |
43,228
|
| |
52,607
|
Payments of notes payable
|
| |
—
|
| |
—
|
| |
(218)
|
Payment of common unit dividends
|
| |
(15,297)
|
| |
(9,994)
|
| |
—
|
Purchase of common units under long-term incentive plan
|
| |
(322)
|
| |
(1,456)
|
| |
—
|
Net Cash Provided By (Used In) Financing Activities
|
| |
(13,095)
|
| |
31,778
|
| |
49,426
|
|
| |
|
| |
|
| |
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
| |
(2,066)
|
| |
387
|
| |
(344)
|
Cash and Cash Equivalents, Beginning of Period
|
| |
3,726
|
| |
3,339
|
| |
3,683
|
Cash and Cash Equivalents, End of Period
|
| |
$1,660
|
| |
$3,726
|
| |
$3,339
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Supplemental Disclosure of Cash Flow Information
Cash Paid For:
|
| |
|
| |
|
| |
|
Interest
|
| |
$4,206
|
| |
$4,212
|
| |
$1,229
|
|
| |
|
| |
|
| |
|
Non-Cash Investing and Financing Activities:
|
| |
|
| |
|
| |
|
Changes in capital expenditures in accounts payable and accrued liabilities
|
| |
$(2,301)
|
| |
$(7,825)
|
| |
$5,877
|
Common unit dividends incurred but not paid
|
| |
$173
|
| |
$—
|
| |
$—
|
Asset retirement obligations
|
| |
$1,184
|
| |
$318
|
| |
$754
|
Issuance of common units under long-term incentive plan
|
| |
$—
|
| |
$4,000
|
| |
$—
|
Preferred unit dividends paid in kind
|
| |
$3,482
|
| |
$3,281
|
| |
$3,736
|
Preferred unit dividends
|
| |
$3,535
|
| |
$3,330
|
| |
$3,129
|
Nature of Business
|
2.
|
Basis of Presentation
|
3.
|
Summary of Significant Accounting Policies
|
|
| |
September 30,
|
|||
|
| |
2020
|
| |
2019
|
|
| |
($ in thousands)
|
|||
Oil, natural gas and NGL sales
|
| |
$6,919
|
| |
$10,366
|
Joint interest accounts receivable
|
| |
1,022
|
| |
788
|
Realized derivative receivable
|
| |
2,187
|
| |
288
|
Other accounts receivable
|
| |
—
|
| |
201
|
Total accounts receivable
|
| |
$10,128
|
| |
$11,643
|
|
| |
September 30,
|
|||
|
| |
2020
|
| |
2019
|
|
| |
($ in thousands)
|
|||
Accrued capital expenditures
|
| |
$2,964
|
| |
$4,786
|
Accrued lease operating expenses
|
| |
1,617
|
| |
3,503
|
Accrued ad valorem tax
|
| |
680
|
| |
793
|
Accrued general and administrative costs
|
| |
2,125
|
| |
2,570
|
Accrued interest expense
|
| |
63
|
| |
177
|
Accrued dividends on preferred units
|
| |
903
|
| |
851
|
Accrued dividends on common units
|
| |
95
|
| |
419
|
Other accrued expenditures
|
| |
299
|
| |
78
|
Total accrued liabilities
|
| |
$8,746
|
| |
$13,177
|
|
| |
September 30,
|
|||
|
| |
2020
|
| |
2019
|
|
| |
($ in thousands)
|
|||
ARO, beginning balance
|
| |
$1,203
|
| |
$843
|
Liabilities incurred
|
| |
68
|
| |
140
|
Liabilities acquired
|
| |
1,161
|
| |
215
|
Revision of estimated obligations
|
| |
(45)
|
| |
57
|
Liability settlements and disposals
|
| |
(131)
|
| |
(94)
|
Accretion
|
| |
70
|
| |
42
|
ARO, ending balance
|
| |
2,326
|
| |
1,203
|
Less current ARO
|
| |
(58)
|
| |
—
|
ARO, long-term
|
| |
$2,268
|
| |
$1,203
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|
| |
($ in thousands)
|
||||||
Operating revenues:
|
| |
|
| |
|
| |
|
Oil
|
| |
$74,895
|
| |
$101,619
|
| |
$68,336
|
Natural gas
|
| |
(1,267)
|
| |
(288)
|
| |
402
|
Natural gas liquids
|
| |
(495)
|
| |
(235)
|
| |
1,134
|
Total operating revenues
|
| |
$73,133
|
| |
$101,096
|
| |
$69,872
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|
| |
($ in thousands)
|
||||||
Business combination acquisition costs
|
| |
$1,431
|
| |
$—
|
| |
$—
|
Deferred IPO costs
|
| |
—
|
| |
4,553
|
| |
—
|
Other
|
| |
—
|
| |
—
|
| |
878
|
Total transaction costs
|
| |
$1,431
|
| |
$4,553
|
| |
$878
|
4.
|
Oil and Natural Gas Properties
|
|
| |
September 30,
|
|||
|
| |
2020
|
| |
2019
|
|
| |
($ in thousands)
|
|||
Proved
|
| |
$326,420
|
| |
$291,226
|
Unproved
|
| |
32,084
|
| |
36,658
|
Work-in-progress
|
| |
15,398
|
| |
3,750
|
|
| |
373,902
|
| |
331,634
|
Accumulated depletion and amortization
|
| |
(63,176)
|
| |
(42,333)
|
Total oil and natural gas properties, net
|
| |
$310,726
|
| |
$289,301
|
5.
|
Other Non-Current Assets
|
|
| |
September 30,
|
|||
|
| |
2020
|
| |
2019
|
|
| |
($ in thousands)
|
|||
Debt issuance costs, net
|
| |
$1,867
|
| |
$1,039
|
Prepayments to outside operators
|
| |
284
|
| |
1,560
|
Other deposits
|
| |
98
|
| |
125
|
Total other non-current assets
|
| |
$2,249
|
| |
$2,724
|
6.
|
Derivative Instruments
|
•
|
Fixed Price Swaps – the Company receives a fixed price for the contract and pays a floating market price to the counterparty over a specified period for a contracted volume.
|
•
|
Costless collars – the combination of a put option (fixed floor) and call option (fixed ceiling), with the options structured so that the premium paid to purchase the put option is offset by the premium received from the sale of the call option. If the market price exceeds the call strike price or falls below the put strike price, we receive the fixed price and pay the market price. If the market price is between the put and the call strike price, no payments are due from either party.
|
•
|
Basis Protection Swaps – Basis swaps are settled based on differences between a fixed price differential and the differential between the settlement prices of two referenced indexes. We receive the fixed price differential and pay the differential between the referenced indexes.
|
|
| |
|
| |
Weighted Average Price
|
||||||
Calendar Quarter
|
| |
Notional Volume
|
| |
Fixed
|
| |
Put
|
| |
Call
|
|
| |
(Bbl)
|
| |
($ per Bbl)
|
||||||
Crude Oil Swaps
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
339,000
|
| |
$57.15
|
| |
$—
|
| |
$—
|
Q1 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q2 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q3 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
Q4 2021
|
| |
405,000
|
| |
$53.01
|
| |
$—
|
| |
$—
|
2022
|
| |
360,000
|
| |
$45.25
|
| |
$—
|
| |
$—
|
Crude Oil Collars
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
45,000
|
| |
$—
|
| |
$50.00
|
| |
$56.48
|
2022
|
| |
360,000
|
| |
$—
|
| |
$35.00
|
| |
$42.63
|
Crude Oil Basis
|
| |
|
| |
|
| |
|
| |
|
Q4 2020
|
| |
384,000
|
| |
$0.39
|
| |
$—
|
| |
$—
|
Q1 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q2 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q3 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
Q4 2021
|
| |
435,000
|
| |
$0.40
|
| |
$—
|
| |
$—
|
|
| |
September 30, 2020
|
||||||
Balance Sheet Classification
|
| |
Gross Fair Value
|
| |
Amounts Netted
|
| |
Net Fair Value
|
|
| |
($ in thousands)
|
||||||
Current derivative assets
|
| |
$19,690
|
| |
$(871)
|
| |
$18,819
|
Non-current derivative assets
|
| |
4,651
|
| |
(1,549)
|
| |
3,102
|
Current derivative liabilities
|
| |
(871)
|
| |
871
|
| |
—
|
Non-current derivative liabilities
|
| |
(1,549)
|
| |
1,549
|
| |
—
|
Total
|
| |
$21,921
|
| |
$—
|
| |
$21,921
|
|
| |
September 30, 2019
|
||||||
Balance Sheet Classification
|
| |
Gross Fair Value
|
| |
Amounts Netted
|
| |
Net Fair Value
|
|
| |
($ in thousands)
|
||||||
Current derivative assets
|
| |
$7,982
|
| |
$(479)
|
| |
$7,503
|
Non-current derivative assets
|
| |
8,135
|
| |
(199)
|
| |
7,936
|
Current derivative liabilities
|
| |
(807)
|
| |
479
|
| |
(328)
|
Non-current derivative liabilities
|
| |
(351)
|
| |
199
|
| |
(152)
|
Total
|
| |
$14,959
|
| |
$—
|
| |
$14,959
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|
| |
($ in thousands)
|
||||||
Fair value of net asset (liability), beginning of period
|
| |
$14,959
|
| |
$(11,239)
|
| |
$(1,623)
|
Gain (loss) on derivatives
|
| |
33,876
|
| |
26,712
|
| |
(17,143)
|
Settlements on derivatives
|
| |
(26,914)
|
| |
(514)
|
| |
7,527
|
Fair value of net asset (liability), end of period
|
| |
$21,921
|
| |
$14,959
|
| |
$(11,239)
|
7.
|
Fair Value Measurements
|
|
| |
September 30, 2020
|
|||||||||
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
|
| |
($ in thousands)
|
|||||||||
Financial assets:
|
| |
|
| |
|
| |
|
| |
|
Commodity derivative assets
|
| |
$ —
|
| |
$ 24,341
|
| |
$ —
|
| |
$ 24,341
|
Financial liabilities:
|
| |
|
| |
|
| |
|
| |
|
Commodity derivative liabilities
|
| |
$ —
|
| |
$(1,672)
|
| |
$ —
|
| |
$(1,672)
|
Interest rate liabilities
|
| |
$ —
|
| |
$(748)
|
| |
$ —
|
| |
$(748)
|
|
| |
September 30, 2019
|
|||||||||
|
| |
Level 1
|
| |
Level 2
|
| |
Level 3
|
| |
Total
|
|
| |
($ in thousands)
|
|||||||||
Financial assets:
|
| |
|
| |
|
| |
|
| |
|
Commodity derivative assets
|
| |
$ —
|
| |
$ 16,117
|
| |
$ —
|
| |
$ 16,117
|
Financial liabilities:
|
| |
|
| |
|
| |
|
| |
|
Commodity derivative liabilities
|
| |
$ —
|
| |
$(922)
|
| |
$ —
|
| |
$(922)
|
Interest rate liabilities
|
| |
$ —
|
| |
$(236
|
| |
$ —
|
| |
$(236)
|
8.
|
Transactions with Related Parties
|
9.
|
Leases
|
|
| |
September 30, 2020
|
|
| |
($ in thousands)
|
Cash paid for amounts included in the measurement of lease liabilities
|
| |
$410
|
ROU assets added in exchange for lease obligations (since adoption)
|
| |
40
|
|
| |
September 30, 2020
|
Weighted Average Remaining Lease Term
|
| |
1.8 Years
|
Weighted Average Discount Rate
|
| |
5.17%
|
|
| |
Operating Leases
|
|
| |
($ in thousands)
|
2021
|
| |
$419
|
2022
|
| |
320
|
2023
|
| |
1
|
Thereafter
|
| |
—
|
Total future minimum lease payments
|
| |
740
|
Less imputed interest
|
| |
(34)
|
Present value of future minimum lease payments
|
| |
$706
|
|
| |
Operating Leases
|
|
| |
($ in thousands)
|
Fiscal Year 2020
|
| |
$389
|
Fiscal Year 2021
|
| |
378
|
Fiscal Year 2022
|
| |
288
|
Thereafter
|
| |
—
|
Total future minimum lease payments
|
| |
$1,055
|
10.
|
Revolving Credit Facility
|
11.
|
Members’ Equity
|
12.
|
Preferred Units
|
|
| |
Units
|
| |
Amount
|
|
| |
($ in thousands)
|
|||
Balance, September 30, 2017
|
| |
416,667
|
| |
$49,793
|
Dividends paid in kind
|
| |
31,142
|
| |
3,736
|
Balance, September 30, 2018
|
| |
447,809
|
| |
53,529
|
Dividends paid in kind
|
| |
27,343
|
| |
3,281
|
Balance, September 30, 2019
|
| |
475,152
|
| |
56,810
|
Dividends paid in kind
|
| |
29,016
|
| |
3,482
|
Balance, September 30, 2020
|
| |
504,168
|
| |
$60,292
|
13.
|
Unit-Based Compensation
|
14.
|
Net Income (Loss) Per Unit
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
Net income (loss) attributable to common unitholders (in thousands) − Basic
|
| |
$31,609
|
| |
$48,536
|
| |
$(3,852)
|
Plus: Dividends on preferred units
|
| |
3,535
|
| |
3,330
|
| |
3,129
|
Net income (loss) (in thousands) − Diluted
|
| |
$35,144
|
| |
$51,866
|
| |
$(723)
|
|
| |
|
| |
|
| |
|
Basic weighted-average common units outstanding
|
| |
1,528,555
|
| |
1,522,883
|
| |
1,500,000
|
Effecting of dilutive securities:
|
| |
|
| |
|
| |
|
Series A preferred units
|
| |
490,735
|
| |
462,493
|
| |
—
|
Restricted units
|
| |
18,663
|
| |
6,822
|
| |
—
|
Diluted weighted-average common units outstanding
|
| |
2,037,953
|
| |
1,992,198
|
| |
1,500,000
|
Net income (loss per unit):
|
| |
|
| |
|
| |
|
Basic
|
| |
$20.67
|
| |
$31.87
|
| |
$(2.57)
|
Diluted
|
| |
$17.24
|
| |
$26.03
|
| |
$(2.57)
|
15.
|
Commitments and Contingencies
|
16.
|
Subsequent Events
|
17.
|
Supplemental Oil and Gas Information (Unaudited)
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|
| |
($ in thousands)
|
||||||
Acquisition of properties
|
| |
|
| |
|
| |
|
Proved
|
| |
$1,187
|
| |
$1,962
|
| |
$5,887
|
Unproved
|
| |
5,331
|
| |
8,604
|
| |
14,002
|
Exploration costs
|
| |
8,039
|
| |
5,074
|
| |
5,992
|
Development costs
|
| |
43,684
|
| |
64,127
|
| |
68,765
|
Total costs incurred
|
| |
$58,241
|
| |
$79,767
|
| |
$94,646
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|
| |
($ in thousands)
|
||||||
Oil, natural gas and NGL sales
|
| |
$73,133
|
| |
$101,096
|
| |
$69,872
|
Lease operating expenses
|
| |
20,997
|
| |
23,808
|
| |
11,044
|
Gathering, processing & transportation
|
| |
—
|
| |
—
|
| |
735
|
Production taxes
|
| |
3,526
|
| |
4,804
|
| |
3,207
|
Exploration costs
|
| |
9,923
|
| |
5,074
|
| |
5,992
|
Depreciation, depletion, amortization, impairment and accretion
|
| |
21,479
|
| |
20,182
|
| |
15,714
|
Results of operations
|
| |
$17,208
|
| |
$47,228
|
| |
$33,180
|
|
| |
Crude Oil
|
| |
Natural Gas
|
| |
NGLs
|
| |
Total
|
|
| |
(Mbbl)
|
| |
(MMcf)
|
| |
(Mbbl)
|
| |
(Mboe)
|
September 30, 2017
|
| |
12,025.9
|
| |
4,820.5
|
| |
1,179.3
|
| |
14,008.6
|
Extensions, discoveries and other additions
|
| |
9,829.0
|
| |
4,721.0
|
| |
990.6
|
| |
11,606.4
|
Acquisitions
|
| |
1,361.1
|
| |
379.6
|
| |
81.3
|
| |
1,505.7
|
Revisions
|
| |
1,613.9
|
| |
2,355.4
|
| |
235.0
|
| |
2,241.5
|
Production
|
| |
(1,187.5)
|
| |
(198.1)
|
| |
(40.5)
|
| |
(1,261.0)
|
September 30, 2018
|
| |
23,642.4
|
| |
12,078.4
|
| |
2,445.7
|
| |
28,101.2
|
Extensions, discoveries and other additions
|
| |
13,669.5
|
| |
13,658.2
|
| |
3,633.5
|
| |
19,579.4
|
Acquisitions
|
| |
258.5
|
| |
127.6
|
| |
34.2
|
| |
314.0
|
Revisions
|
| |
1,563.5
|
| |
16,013.4
|
| |
4,833.8
|
| |
9,066.2
|
Production
|
| |
(1,975.0)
|
| |
(886.2)
|
| |
(135.0)
|
| |
(2,257.7)
|
September 30, 2019
|
| |
37,158.9
|
| |
40,991.4
|
| |
10,812.2
|
| |
54,803.1
|
Extensions, discoveries and other additions
|
| |
2,265.1
|
| |
3,029.8
|
| |
642.4
|
| |
3,412.5
|
Revisions
|
| |
(205.9)
|
| |
11,290.2
|
| |
(513.3)
|
| |
1,162.5
|
Production
|
| |
(2,060.4)
|
| |
(1,627.9)
|
| |
(259.8)
|
| |
(2,591.5)
|
September 30, 2020
|
| |
37,157.7
|
| |
53,683.5
|
| |
10,681.5
|
| |
56,786.6
|
|
| |
|
| |
|
| |
|
| |
|
Proved Developed Reserves, Included Above
|
| |
|
| |
|
| |
|
| |
|
September 30, 2017
|
| |
7,064.4
|
| |
2,814.3
|
| |
692.1
|
| |
8,225.5
|
September 30, 2018
|
| |
13,764.0
|
| |
7,481.0
|
| |
1,485.8
|
| |
16,496.6
|
September 30, 2019
|
| |
19,197.6
|
| |
23,096.0
|
| |
6,044.9
|
| |
29,091.8
|
September 30, 2020
|
| |
19,149.0
|
| |
31,137.6
|
| |
5,847.1
|
| |
30,185.7
|
Proved Undeveloped Reserves, Included Above
|
| |
|
| |
|
| |
|
| |
|
September 30, 2017
|
| |
4,961.5
|
| |
2,006.2
|
| |
487.2
|
| |
5,783.1
|
September 30, 2018
|
| |
9,878.4
|
| |
4,597.4
|
| |
959.9
|
| |
11,604.6
|
September 30, 2019
|
| |
17,961.3
|
| |
17,895.4
|
| |
4,767.3
|
| |
25,711.3
|
September 30, 2020
|
| |
18,008.7
|
| |
22,545.9
|
| |
4,834.4
|
| |
26,600.9
|
|
| |
September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|
| |
($ in thousands)
|
||||||
Future crude oil, natural gas and NGLs sales(1)(2)(3)
|
| |
$1,533,286
|
| |
$1,951,657
|
| |
$1,413,978
|
Future production costs
|
| |
(550,427)
|
| |
(555,124)
|
| |
(342,782)
|
Future development costs
|
| |
(144,912)
|
| |
(164,036)
|
| |
(90,357)
|
Future income tax expense(4)
|
| |
(3,167)
|
| |
(4,059)
|
| |
(7,423)
|
Future net cash flows
|
| |
834,780
|
| |
1,228,438
|
| |
973,416
|
10% annual discount
|
| |
(532,442)
|
| |
(786,226)
|
| |
(591,393)
|
|
| |
|
| |
|
| |
|
Standardized measure of discounted future net cash flows
|
| |
$302,338
|
| |
$442,212
|
| |
$382,023
|
(1)
|
2020 proved reserves were derived based on prices of $41.91 per Bbl of crude oil, $(0.06) per Mcf of natural gas and $(1.96) per Bbl of NGL.
|
(2)
|
2019 proved reserves were derived based on prices of $54.38 per Bbl of crude oil, $(0.32) per Mcf of natural gas and $(5.19) per Bbl of NGL.
|
(3)
|
2018 proved reserves were derived based on prices of $57.92 per Bbl of crude oil, $1.62 per Mcf of natural gas and $10.25 per Bbl of NGL.
|
(4)
|
The Company's calculations of the standardized measure of discounted future net cash flows as of September 30, 2020, 2019 and 2018, includes the Company’s obligation for Texas Margin Tax but excludes the effect of estimated future income tax expenses as the Company is a limited liability company and not subject to income taxes.
|
|
| |
Years Ended September 30,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2018
|
|
| |
($ in thousands)
|
||||||
Balance, beginning of period
|
| |
$442,212
|
| |
$382,023
|
| |
$143,187
|
Sales of crude oil, natural gas and NGLs, net
|
| |
7,328
|
| |
(85,921)
|
| |
(58,093)
|
Net change in prices and production costs
|
| |
(162,571)
|
| |
(133,615)
|
| |
64,892
|
Net changes in future development costs
|
| |
(12,348)
|
| |
(1,226)
|
| |
(137)
|
Extensions, discoveries and other additions
|
| |
17,490
|
| |
135,350
|
| |
143,389
|
Acquisition of reserves
|
| |
—
|
| |
1,294
|
| |
16,505
|
Revisions of previous quantity estimates
|
| |
(48,611)
|
| |
85,381
|
| |
36,093
|
Previously estimated development costs incurred
|
| |
10,448
|
| |
20,769
|
| |
20,621
|
Net change in income taxes
|
| |
891
|
| |
(987)
|
| |
(1,863)
|
Accretion of discount
|
| |
44,627
|
| |
38,509
|
| |
14,439
|
Other
|
| |
2,872
|
| |
635
|
| |
2,990
|
Balance, end of period
|
| |
$302,338
|
| |
$442,212
|
| |
$382,023
|
18.
|
Quarterly Financial Data – Unaudited
|
|
| |
2020
First Quarter
|
| |
2020
Second Quarter
|
| |
2020
Third Quarter
|
| |
2020
Fourth Quarter
|
|
| |
($ in thousands except per share data)
|
|||||||||
Total revenues
|
| |
$29,549
|
| |
$25,406
|
| |
$6,019
|
| |
$15,959
|
Income from operations
|
| |
$12,560
|
| |
$7,232
|
| |
$(12,158)
|
| |
$(349)
|
Net income (loss)
|
| |
$(6,841)
|
| |
$75,053
|
| |
$(27,984)
|
| |
$(5,084)
|
Net income (loss) attributable to common unitholders
|
| |
$(7,705)
|
| |
$74,176
|
| |
$(28,874)
|
| |
$(5,988)
|
Net income (loss) per common unit:
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$(5.04)
|
| |
$48.51
|
| |
$(18.87)
|
| |
$(3.92)
|
Diluted
|
| |
$(5.04)
|
| |
$36.94
|
| |
$(18.87)
|
| |
$(3.92)
|
|
| |
2019
First Quarter
|
| |
2019
Second Quarter
|
| |
2019
Third Quarter
|
| |
2019
Fourth Quarter
|
|
| |
($ in thousands except per share data)
|
|||||||||
Total revenues
|
| |
$21,979
|
| |
$23,527
|
| |
$26,207
|
| |
$29,383
|
Income from operations
|
| |
$3,941
|
| |
$9,016
|
| |
$9,223
|
| |
$9,308
|
Net income (loss)
|
| |
$21,735
|
| |
$(4,990)
|
| |
$13,587
|
| |
$21,534
|
Net income (loss) attributable to common unitholders
|
| |
$20,921
|
| |
$(5,816)
|
| |
$12,748
|
| |
$20,683
|
Net income (loss) per common unit:
|
| |
|
| |
|
| |
|
| |
|
Basic
|
| |
$13.86
|
| |
$(3.81)
|
| |
$8.35
|
| |
$13.54
|
Diluted
|
| |
$11.07
|
| |
$(3.81)
|
| |
$6.80
|
| |
$10.74
|
|
| |
|
| |
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| | | |
Exhibit A
|
| |
Second Amended and Restated Certificate of Incorporation of Tengasco, Inc.
|
|
| |
|
Exhibit B
|
| |
Second Amended and Restated Bylaws of Riley Exploration Permian, Inc.
|
|
| |
|
Exhibit C
|
| |
Amended and Restated Certificate of Formation of Surviving Company
|
|
| |
|
Exhibit D
|
| |
Substitute Award Agreement
|
|
| |
|
Exhibit E
|
| |
Riley Exploration Permian, Inc. 2021 Long Term Incentive Plan
|
|
| |
|
Exhibit F
|
| |
Form of Change of Control and Severance Agreement
|
|
| |
|
Exhibit G
|
| |
CR Insurance Policy Requirements
|
RILEY EXPLORATION – PERMIAN, LLC
|
||||||
|
| |
|
| |
|
By:
|
| |
/s/ Kevin Riley
|
| |
|
Printed Name: Kevin Riley
|
| |
|
|||
Title: President & Interim CFO
|
| |
|
|||
|
| |
|
| |
|
TENGASCO, INC.
|
||||||
|
| |
|
| |
|
By:
|
| |
/s/ Michael J. Rugen
|
| |
|
Printed Name: Michael J. Rugen
|
| |
|
|||
Title: CFO and Interim CEO
|
| |
|
|||
|
| |
|
| |
|
ANTMAN SUB, LLC
|
||||||
|
| |
|
| |
|
By:
|
| |
/s/ Michael J. Rugen
|
| |
|
Printed Name: Michael J. Rugen
|
| |
|
|||
Title: President
|
| |
|
|
| |
RILEY EXPLORATION – PERMIAN, LLC
|
|||
|
| |
|
| ||
|
| |
By:
|
| |
/s/ Kevin Riley
|
|
| |
Kevin Riley
|
|||
|
| |
President & Interim CFO
|
|||
|
| |
|
| |
|
|
| |
TENGASCO, INC.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michael J. Rugen
|
|
| |
Michael J. Rugen
|
|||
|
| |
Chief Financial Officer and Interim Chief Executive Officer
|
|||
|
| |
|
| |
|
|
| |
ANTMAN SUB, LLC
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
/s/ Michael J. Rugen
|
|
| |
Michael J. Rugen
|
|||
|
| |
President
|
(i)
|
reviewed certain publicly available and other business and financial information that we believe to be relevant to our inquiry;
|
(ii)
|
reviewed certain internal financial statements and other financial and operating data concerning Tengasco and Riley, as provided by their respective representatives;
|
(iii)
|
reviewed (a) a reserve engineering report, from Riley, prepared by Netherland Sewell and Associates (the “Riley Reserve Report”), (b) a reserve engineering report, from Tengasco, prepared by LaRoche Petroleum Consultants (the “Tengasco Reserve Report”), (c) a reserve engineering report prepared by Riley’s management (the “Riley Internal Report”), and (d) a reserve engineering report prepared by Tengasco’s management (the “Tengasco Internal Report” and, together with the Riley Reserve Report, the Tengasco Reserve Report and the Riley Internal Report, the “Reserve Reports”);
|
(iv)
|
reviewed the reported prices and trading activity for the Tengasco Common Stock;
|
(v)
|
compared selected market valuation metrics of certain publicly-traded companies we deemed relevant with those same metrics implied by the Transaction;
|
(vi)
|
compared the financial performance, prices and trading activity of Tengasco Common Stock with that of certain publicly traded companies that we deemed relevant, and other trading data for public companies, which we deemed comparable to Tengasco;
|
(vii)
|
reviewed recent comparable oil and gas acquisition and divestures, which are comparable to the terms of the Agreement;
|
(viii)
|
compared the financial terms of the Transaction to financial terms of certain other acquisition transactions we deemed relevant;
|
(ix)
|
participated in certain discussions with management of Tengasco and Riley, and with representatives of Tengasco’s Board of Directors and its legal and professional advisors; and
|
(x)
|
performed such other analyses, reviewed such other information and considered such other data, financial studies, analyses, and financial, economic and market criteria, and such other factors as we have deemed appropriate.
|
|
| |
Very truly yours,
|
|
| |
|
|
| |
ROTH CAPITAL PARTNERS, LLC
|
|
| |
Tengasco, Inc.
|
|||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
Name:
|
| |
|
|
| |
Title:
|
| |
|
Item 20.
|
Indemnification of Directors and Officers
|
•
|
Subsection (a) of Section 145 empowers a corporation to indemnify any person who was or is a party or who is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful.
|
•
|
Subsection (b) of Section 145 empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person acted in any of the capacities set forth above, against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
|
•
|
Section 145 further provides that to the extent a director or officer of a corporation has been successful on the merits or otherwise in the defense of any action, suit or proceeding referred to in subsections (a) and (b) of Section 145, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and the indemnification provided for by Section 145 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of such person’s heirs, executors and administrators. Section 145 also empowers the corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify such person against such liabilities under Section 145.
|
Item 21.
|
Exhibits and Financial Statement Schedules
|
Exhibit
Number
|
| |
Description
|
| |
Agreement and Plan of Merger, by and among Tengasco, Inc., Antman Sub, LLC, and Riley Exploration – Permian, LLC, dated as of October 21, 2020 (attached as Annex A to this proxy statement/prospectus which forms part of this Registration Statement).
|
|
|
| |
|
| |
Amendment No. 1 to Agreement and Plan of Merger, by and among Tengasco, Inc., Antman Sub, LLC, and Riley Exploration – Permian, LLC, dated as of January 20, 2021 (attached as Annex A to this proxy statement/prospectus which forms part of this Registration Statement).
|
|
|
| |
|
| |
Amended and Restated Certificate of Incorporation as of March 23, 2016.
|
|
|
| |
|
| |
Amended and Restated Bylaws as of November 13, 2014.
|
|
|
| |
|
| |
Agreement and Plan of Merger of Tengasco, Inc. (a Tennessee corporation with and into Tengasco, Inc., a Delaware corporation dated as of April 15, 2011).
|
|
|
| |
|
Exhibit
Number
|
| |
Description
|
| |
Second Amended and Restated Registration Rights Agreement dated October 7, 2020 by and among Riley Exploration – Permian, LLC, Riley Exploration Group, Inc., Yorktown Energy Partners XI, L.P., Boomer Petroleum, LLC, Bluescape Riley Exploration Holdings LLC, Bluescape Riley Acquisition Company LLC, Bobby D. Riley, Kevin Riley and Corey Riley.
|
|
|
| |
|
| |
Opinion of Davis Graham & Stubbs LLP as to the validity of Tengasco, Inc.’s common stock being registered.
|
|
|
| |
|
| |
Opinion of Davis Graham & Stubbs LLP regarding certain federal income tax matters.
|
|
|
| |
|
| |
Opinion of Thompson & Knight LLP regarding certain federal income tax matters.
|
|
|
| |
|
| |
Credit Agreement dated as of September 28, 2017, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.
|
|
|
| |
|
| |
First Amendment to Credit Agreement dated as of February 27, 2018, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.
|
|
|
| |
|
| |
Second Amendment to Credit Agreement dated as of November 9, 2018, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.
|
|
|
| |
|
| |
Third Amendment to Credit Agreement dated as of April 3, 2019, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.
|
|
|
| |
|
| |
Fourth Amendment to Credit Agreement dated as of October 15, 2019, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.
|
|
|
| |
|
| |
Fifth Amendment to Credit Agreement dated as of May 7, 2020, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.
|
|
|
| |
|
| |
Sixth Amendment to Credit Agreement dated as of August 31, 2020, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.
|
|
|
| |
|
| |
Seventh Amendment and Consent to Credit Agreement dated as of October 21, 2020, by and among Riley Exploration – Permian, LLC, as borrower, Truist Bank, as administrative agent, and the lenders party thereto.
|
|
|
| |
|
| |
Employment Agreement dated April 1, 2019 by and between Riley Exploration – Permian, LLC and Bobby D. Riley and assigned by Riley Exploration – Permian, LLC to Riley Permian Operating Company, LLC on June 8, 2019.
|
|
|
| |
|
| |
Amendment No. 1 to Employment Agreement dated October 1, 2020 by and between Riley Permian Operating Company, LLC and Bobby D. Riley.
|
|
|
| |
|
| |
Employment Agreement dated April 1, 2019 by and between Riley Exploration – Permian, LLC and Kevin Riley and assigned by Riley Exploration – Permian, LLC to Riley Permian Operating Company, LLC on June 8, 2019.
|
|
|
| |
|
| |
Compensation Agreement between Tengasco, Inc. and Michael J. Rugen dated September 18, 2013.
|
|
|
| |
|
Exhibit
Number
|
| |
Description
|
| |
Form of Independent Director Agreement.
|
|
|
| |
|
| |
Form of Indemnification Agreement.
|
|
|
| |
|
23.1*
|
| |
Consent of Davis Graham & Stubbs LLP (included in Exhibit 5.1 and Exhibit 8.1).
|
|
| |
|
| |
Consent of Moss Adams LLP, independent registered public accounting firm for Tengasco, Inc.
|
|
|
| |
|
| |
Consent of BDO USA LLP, independent registered public accounting firm for Riley Exploration – Permian, LLC.
|
|
|
| |
|
| |
Consent of LaRoche Petroleum Consultants, Ltd., Petroleum Consultants, with respect to the Tengasco, Inc. reserve report.
|
|
|
| |
|
| |
Consent of Netherland, Sewell & Associates, Inc., Petroleum Consultants., with respect to the Riley Exploration – Permian, LLC. reserve report.
|
|
|
| |
|
| |
Consent of Thompson & Knight LLP (included in Exhibit 8.2).
|
|
|
| |
|
| |
Power of Attorney (included on the signature pages of this Registration Statement).
|
|
|
| |
|
| |
Report of LaRoche Petroleum Consultants, Ltd., with respect to the reserves of Tengasco, Inc. as of December 31, 2019.
|
|
|
| |
|
| |
Report of Netherland, Sewell & Associates, Inc., Petroleum Consultants., with respect to the reserves of Riley Exploration – Permian, LLC as of September 30, 2020.
|
|
|
| |
|
| |
Consent of Roth Capital Partners, LLC.
|
|
|
| |
|
| |
Form of Tengasco, Inc. proxy card for the Tengasco special meeting.
|
|
|
| |
|
| |
Consent of Director Nominee (Michael J. Rugen).
|
|
|
| |
|
| |
Consent of Director Nominee (Bobby D. Riley).
|
|
|
| |
|
| |
Consent of Director Nominee (Bryan H. Lawrence).
|
|
|
| |
|
| |
Consent of Director Nominee (Brent Arriaga).
|
|
|
| |
|
| |
Consent of Director Nominee (E. Wayne Nordberg).
|
|
|
| |
|
101**
|
| |
Interactive Data Files of Financial Statement and Notes.
|
*
|
Filed herewith.
|
**
|
Previously filed.
|
±
|
Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
|
Item 22.
|
Undertakings
|
(1)
|
to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
(i)
|
to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);
|
(ii)
|
to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
|
(iii)
|
to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
|
(2)
|
that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
(3)
|
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
|
(4)
|
that, for the purpose of determining any liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
|
(5)
|
that, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
(i)
|
any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
|
(ii)
|
any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
|
(iii)
|
the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
|
(iv)
|
any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
|
(6)
|
that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act, that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
|
(7)
|
that, prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) under the Securities Act, the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
|
(8)
|
that every prospectus (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act, and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(9)
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insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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(10)
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to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
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(11)
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to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
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TENGASCO, INC.
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By:
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/s/ Michael J. Rugen
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Michael J. Rugen
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Chief Executive Officer and Chief Financial Officer
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Principal Financial and Accounting Officer
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Signature
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Title
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Date
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/s/ Michael J. Rugen
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Michael J. Rugen
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Chief Executive Officer and Chief Financial Officer (Principal Executive Financial and Accounting Officer)
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January 21, 2021
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/s/ *
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Peter E. Salas
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Chairman of the Board
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January 21, 2021
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/s/ *
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Matthew K. Behrent
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Director
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January 21, 2021
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/s/ *
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Richard M. Thon
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Director
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January 21, 2021
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* By:
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/s/ Michael J. Rugen
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Michael J. Rugen
As Attorney-in-Fact
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Name
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Mailing Address
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Cary Sorensen
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11121 Kingston Pike Ste E, Knoxville, TN 37934
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BY:
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/s/Michael J. Rugen
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Michael J. Rugen
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Chief Executive Officer
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(a) | executing a writing to that effect, which execution may be accomplished by the stockholder or his or her authorized officer, director, employee or agent signing the writing or causing his or her signature to be affixed to the writing by any reasonable means including, but not limited to, by facsimile signature; or |
(b) | transmitting or authorizing the transmission of a telegram, cablegram, or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that any telegram, cablegram or other electronic transmission submitted pursuant to clause (b) is valid, the inspectors shall specify the information upon which they relied. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to the preceding sentence may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. |
(a) | At any meeting of stockholders, no business shall be conducted which has not been properly brought before the meeting. To be properly brought before a meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a stockholder. |
(b) | For stockholder proposals to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than one hundred twenty (120) days immediately preceding the date of the mailing of the notice of annual meeting and proxy statement and other materials for the preceding annual meeting of stockholders; provided , however , that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must so be received not later than the close of business on the tenth day following the day on which the notice of the date of the meeting was mailed or public disclosure was made, which ever first occurs. |
(c) | In the case of stockholder proposals, the notice shall set forth (i) a brief description of the proposal or business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name, age, business and residence address of the stockholder submitting the proposal, (iii) the principal occupation or employment of such stockholder, (iv) the number of shares of the Corporation which are beneficially owned by such stockholder and the date which shares were first acquired by the shareholder, and (v) any material interest of the stockholder in such proposal. The Chairman of the Board of Directors shall, if the facts warrant, determine and declare to the meeting that a proposal was not properly brought before the meeting in accordance with the provisions of this Section 2.9, and if he or she should so determine, and any proposal not properly brought before the meeting shall not be transacted. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any meeting except in accordance with the procedures set forth in this Section 2.9. |
(a) | The Corporation, by action of the Secretary, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. |
(b) | The inspectors shall (i) ascertain the number of shares outstanding and the voting power of each, (ii) determine the shares represented at a meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors. |
(c) | The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery upon application by a stockholder shall determine otherwise. |
(d) | In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in accordance with clause (b) of Section 2.5 of these Bylaws, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification pursuant to subsection (b)(v) of this Section shall specify the specific information considered by them including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that the information is accurate and reliable. |
(a) | Majority Voting. Except as provided in subsection (b) of this Section 3.2, at any meeting for the election of Directors at which a quorum is present, each nominee shall be elected a Director by a majority of the votes cast at the meeting and entitled to vote on the election of Directors. For purposes of this bylaw, a majority of the votes cast means that the number of votes “for” a Director must exceed the number of votes "against" a Director. For the avoidance of doubt, neither abstentions nor broker non-votes will count as a vote cast with respect to that Director. |
(b) | Contested Elections. If, as of a date that is seven (7) days in advance of the date the Corporation files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission, the number of nominees for any election of Directors nominated (i) by the Board of Directors, or (ii) any stockholder, or (iii) a combination of nominees by the Board of Directors and one or more stockholders, exceeds the number of Directors to be elected, the nominees receiving a plurality of the votes cast by the shares present in person or represented by proxy at the meeting and entitled to vote on the election of Directors at a meeting at which a quorum is present shall be elected. |
(c) | Vacancies. If the office of any Director or Directors becomes vacant by reason of death, resignation, retirement, disqualification, removal from office, creation of a new directorship, or otherwise, a majority of the remaining Directors, though less than a quorum, shall choose a successor or successors, or a Director to fill the newly created directorship. In no event shall the shareholders have the right to fill such vacancies, unless the Board of Directors has determined by resolution that stockholders shall fill such vacancy at a meeting of stockholders. A Director elected to fill a vacancy caused by resignation, death or removal shall be elected to hold office for the unexpired term of his predecessor. |
(a) | have the custody of the corporate funds and securities and shall keep or cause to be kept full and accurate accounts of the financial affairs of the Corporation; |
(b) | deposit or cause to be deposited all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors; |
(c)
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disburse or cause to be disbursed the funds of the Corporation as may be ordered by the Board of Directors;
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(d) | render to the Chief Executive Officer and Directors, at the regular meetings of the Board or whenever they may require it, an account of all his or her transactions as Treasurer and of the financial condition of the Corporation; |
(e) | give the Corporation a bond, if required by the Board of Directors, in a sum and with one or more sureties satisfactory to the Board, for the faithful performance of the duties of his or her office; and |
(f) | perform all the duties incident to the office of Treasurer and such other duties as from time to time may be prescribed by the Board of Directors or by the Chief Executive Officer of the Corporation. |
(a) | If no record date is fixed pursuant to Section 5.6 of these Bylaws, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board of Directors may fix a new record date for the adjourned meeting. |
(b) | In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date thereafter on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of stockholders meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action. |
Tengasco, Inc.,
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a Tennessee Corporation
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By:
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s/Jeffrey R. Bailey
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Jeffrey R. Bailey
|
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Chief Executive Officer
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Tengasco, Inc.,
|
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a Delaware Corporation
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By:
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s/Jeffrey R. Bailey
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Jeffrey R. Bailey,
|
||
Chief Executive Officer
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Very truly yours, |
/s/ Davis Graham & Stubbs LLP
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Davis Graham & Stubbs LLP |
Thompson & Knight llp
|
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ATTORNEYS AND COUNSELORS
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AUSTIN
DALLAS
FORT WORTH
HOUSTON
NEW YORK
-----------------------------------------------
ALGIERS
LONDON
MÉXICO CITY
MONTERREY
|
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ONE ARTS PLAZA
1722 ROUTH STREET ● SUITE 1500
DALLAS, TEXAS 75201
214.969.1700
FAX 214.969.1751
www.tklaw.com
|
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Riley Exploration – Permian, LLC
29 E. Reno, Suite 500
Oklahoma City, Oklahoma 73104
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Very truly yours,
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/s/ Thompson & Knight LLP
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Thompson & Knight LLP
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1. | Your salary as Chief Financial Officer is set at $170,000 per year, said salary to be paid in equal payments consistent with the Company’s existing payroll procedures. |
2. | You will receive six months’ salary (at the rate in effect at the time) as severance if you are terminated without Cause. “Cause” shall have the same meaning as defined in Amended Stock Option Agreement between you and the Company dated and effective on or about August 30, 2010 and included by this express reference as if set out herein. |
3. | In recognition of your performance of expanded duties as the Company’s interim Chief Executive Officer, you will receive a bonus of $7,500 for each quarter (including any part thereof) of each year that you serve as the interim Chief Executive Officer. Each bonus earned shall be paid in the third month of every quarter. |
4. | You will receive a cost of living adjustment (COLA) to your salary upon relocation of the Company’s primary office from Knoxville, Tennessee. COLA determinations shall be made using the calculator found at www.bankrate.com. |
5. | Except as specifically noted herein, all standard Company benefits you currently receive shall remain unchanged. |
By the Board of Directors
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BY:
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/s/ Hughree F. Brooks
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Hughree F. Brooks,
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Chairman of the Compensation Committee
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AGREED AND ACCEPTED:
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/s/ Michael J. Rugen
|
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MICHAEL J. RUGEN
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DATE: |
September 18, 2018
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(a) |
Annual Cash Compensation. Director shall be eligible to receive an annual cash retainer of $65,000 for service on the Board, prorated as of the Effective Date. The annual
retainers shall be paid by the Company in quarterly installments or more frequently as deemed advisable by the officers of the Company for administrative or other reasons.
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(b) |
Committee Chairperson. As compensation for Director’s service as chairperson of the ___________ Committee, Director shall be eligible to receive an additional annual cash
retainer of $15,000, prorated as of the Effective Date. Such payment shall be paid by the Company in quarterly installments or more frequently as deemed advisable by the officers of the Company for administrative or other reasons.
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(c) |
Meeting Attendance. In addition to the annual retainers described in Section 3(a) and Section (b) above, Director shall be eligible to receive a cash payment of (i) $1,500 for
each Board meeting attended and (ii) $10,000 for each committee meeting of which Director is a member attended. Meeting attendance payments shall be payable with the subsequent installment of the annual cash retainer following the relevant
meeting.
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(d) |
Equity Compensation. As soon as practicable following the Effective Date, and on each anniversary thereafter during the Directorship Term (as defined below), as applicable,
Director shall be eligible to receive an annual restricted stock award in an amount with a value equal to $50,000 based on the closing price of the Company’s Common Stock on the Effective Date or anniversary, as applicable. Any and all
equity awards shall be granted under and shall be subject to the terms and provisions of a long term incentive plan (an “LTIP”) duly approved and adopted by the Board and shall be
granted subject to the execution and delivery of stock award agreements in substantially the same form as may, from time to time, be approved by the Board, setting forth such terms and conditions as may be required by the Board or by the
applicable LTIP.
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i. |
Vesting. Equity awards granted to Director shall vest on the one (1) year anniversary of the grant date. In the event Director’s membership on the Board is terminated for any
reason (including without limitation, resignation, withdrawal, death, or disability), any unvested stock awards shall be automatically forfeited.
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ii. |
Lock Up Agreements. Any and all shares granted to Director pursuant to this policy shall be subject to any “lock up” agreement required to be signed by the Company’s officers in
connection with any financing or other transaction
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Riley Exploration Permian, Inc.
|
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By:
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Name:
|
||
Title:
|
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DIRECTOR
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1. |
SERVICES TO THE COMPANY. In consideration of the Company’s covenants and obligations hereunder, Indemnitee will serve or continue to serve as an officer, director, advisor, key employee or any other
capacity of the Company, as applicable, for so long as Indemnitee is duly elected or appointed or retained or until Indemnitee tenders Indemnitee’s resignation or until Indemnitee is removed. The foregoing notwithstanding, this Agreement
shall continue in full force and effect after Indemnitee has ceased to serve as a director, officer, advisor, key employee or in any other capacity of the Company, as provided in Section 17. This Agreement, however, shall not impose any
obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.
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2. |
DEFINITIONS. As used in this Agreement:
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(a) |
References to “agent” shall mean any person who is or was a director, officer or employee of the Company or a subsidiary of the Company or other person authorized by the Company
to act for the Company, to include such person serving in such capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at
the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company.
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(b) |
The terms “Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated
under the Exchange Act (as defined below) as in effect on the date hereof.
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(c) |
A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:
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(i) |
Acquisition of Stock by Third Party. Any Person (as defined below), other than Yorktown Partners, LLC, Yorktown Energy Partners XI, L.P., Riley Exploration Group, Inc., Bluescape Riley Exploration Acquisition, LLC, Bluescape Riley
Exploration Holdings, LLC, or Boomer Petroleum, LLC, is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing fifteen percent (15%) or more of the combined voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company’s securities by any Person (as defined below) results solely from a reduction in the
aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors (as defined below) and such acquisition would not
constitute a Change in Control under part (iii) of this definition;
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(ii) |
Change in Board of Directors. Individuals who, as of the date hereof, constitute the Board, and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least
two thirds of the directors then still in office who were directors on the date hereof or whose election for nomination for election was previously so approved (collectively, the “Continuing
Directors”), cease for any reason to constitute at least a majority of the members of the Board;
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(iii) |
Corporate Transactions. The effective date of a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses (a “Business Combination”), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of
securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the
Company entitled to vote generally in the election of directors resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more Subsidiaries (as defined below)) in substantially the same proportions as their ownership immediately prior to such Business Combination, of the securities entitled to vote generally in
the election of directors; (2) no Person (excluding any corporation resulting from such Business Combination), other than Yorktown Partners, LLC, Yorktown Energy Partners XI, L.P., Riley Exploration Group, Inc., Bluescape Riley Exploration
Acquisition, LLC, Bluescape Riley Exploration Holdings, LLC, or Boomer Petroleum, LLC, is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally
in the election of directors of the surviving corporation except to the extent such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such Business
Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination;
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(iv) |
Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s
assets, other than factoring the Company’s current receivables or escrows due (or, if such stockholder approval is not required, the decision by the Board to proceed with such a liquidation, sale, or disposition in one transaction or a series
of related transactions); or
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(v) |
Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or any successor rule) (or a response to any similar item on any similar
schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.
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(d) |
“Corporate Status” describes the status of a person who is or was a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of the
Company or of any other Enterprise (as defined below) which such person is or was serving at the request of the Company.
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(e) |
“Delaware Court” shall mean the Court of Chancery of the State of Delaware.
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(f) |
“Disinterested Director” shall mean a director of the Company who is not and was not a party to the Proceeding (as defined below) in respect of which indemnification is sought by
Indemnitee.
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(g) |
“Enterprise” shall mean the Company and any other corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which
the Company (or any of its wholly owned subsidiaries) is a party, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a
director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent.
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(h) |
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
|
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(i) |
“Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including, without limitation, all reasonable attorneys’ fees and
costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery
service fees, fax transmission charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness
in, settlement or appeal of, or otherwise participating in, a Proceeding (as defined below), including reasonable compensation for time spent by Indemnitee for which he or she is not otherwise compensated by the Company or any third party.
“Expenses” also shall include expenses incurred in connection with any appeal resulting from any Proceeding (as defined below), including without limitation the principal, premium, security for, and other costs relating to any cost bond,
supersedeas bond, or other appeal bond or its equivalent. “Expenses,” however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
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(j) |
References to “fines” shall include any excise tax assessed on Indemnitee with respect to any employee benefit plan; references to “serving at the
request of the Company” shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.
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(k) |
“Independent Counsel” shall mean a law firm or a member of a law firm with significant experience in matters of corporation law and neither presently is, nor in the past five
years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar
indemnification agreements); or (ii) any other party to the Proceeding (as defined below) giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
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(l) |
The term “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, “Person” shall exclude:
(i) the Company; (ii) any Subsidiaries (as defined below) of the Company; (iii) any employment benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their ownership of stock of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary (as
defined below) of the Company or of a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.
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(m) |
The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or
investigative or related nature, in which Indemnitee was, is, will or might be involved as a party or otherwise by reason of the fact Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken
by Indemnitee or of any action (or failure to act) on Indemnitee’s part while acting as a director or officer of the Company, or by reason of the fact Indemnitee is or was serving at the request of the Company as a director, officer, trustee,
general partner, managing member, fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or
advancement of expenses can be provided under this Agreement.
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(n) |
The term “Subsidiary,” with respect to any Person, shall mean any corporation, limited liability company, partnership, joint venture, trust or other entity of which a majority of
the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.
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3. |
INDEMNITY IN THIRD-PARTY PROCEEDINGS. To the fullest extent permitted by applicable law, the Company shall indemnify, hold harmless and exonerate Indemnitee in accordance with the provisions of this
Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor by
reason of Indemnitee’s Corporate Status. Pursuant to this Section 3, Indemnitee shall be indemnified, held harmless and exonerated against all Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and,
in the case of a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.
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4. |
INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. To the fullest extent permitted by applicable law, the Company shall indemnify, hold harmless and exonerate Indemnitee in accordance with
the provisions of this Section 4 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in its favor by
reason of Indemnitee’s Corporate Status. Pursuant to this Section 4, Indemnitee shall be indemnified, held harmless and exonerated against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection
with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. No indemnification, hold harmless or
exoneration for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent any court in
which the Proceeding was brought or the Delaware Court shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to
indemnification, to be held harmless or to exoneration.
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5. |
INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee was or is, by reason of Indemnitee’s
Corporate Status, a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall, to the fullest extent permitted
by applicable law, indemnify, hold harmless and exonerate Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on
the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee against all
Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. If Indemnitee is not wholly successful in such Proceeding, the Company also shall, to the
fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which Indemnitee was
successful. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or
matter.
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6. |
INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any other provision of this Agreement, to the extent Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness or deponent in any
Proceeding to which Indemnitee was or is not a party or threatened to be made a party, Indemnitee shall, to the fullest extent permitted by applicable law, be indemnified, held harmless and exonerated against all Expenses actually and
reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.
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7. |
ADDITIONAL INDEMNIFICATION, HOLD HARMLESS AND EXONERATION RIGHTS.
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(a) |
Notwithstanding any limitation in Sections 3, 4, or 5, the Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party to or threatened to be made a party to
any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement (including all interest, assessments
and other charges paid or payable in connection with or in respect of such Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding. No
indemnification, hold harmless or exoneration rights shall be available under this Section 7(a) on account of Indemnitee’s conduct which constitutes a breach of Indemnitee’s duty of loyalty to the Company or its stockholders or is an act or
omission not in good faith or which involves intentional misconduct or a knowing violation of the law.
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(b) |
Notwithstanding any limitation in Sections 3, 4, 5 or 7(a), the Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party to or threatened to be made a
party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the
Proceeding.
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8. |
CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.
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(a) |
To the fullest extent permissible under applicable law, if the indemnification, hold harmless and/or exoneration rights provided for in this Agreement are unavailable to Indemnitee in whole or in part for any reason whatsoever, the
Company, in lieu of indemnifying, holding harmless or exonerating Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for judgments, liabilities, fines, penalties, amounts paid or to be paid in
settlement and/or for Expenses, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.
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(b) |
The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims
asserted against Indemnitee.
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(c) |
The Company hereby agrees to fully indemnify, hold harmless and exonerate Indemnitee from any claims for contribution which may be brought by officers, directors or employees of the Company other than Indemnitee who may be jointly liable
with Indemnitee.
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9. |
EXCLUSIONS. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification, advance of expenses, hold harmless or exoneration
payment in connection with any claim made against Indemnitee:
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(a) |
for which payment has actually been received by or on behalf of Indemnitee under any insurance policy, contract, agreement or other indemnity or advancement provision or otherwise, except with respect to any excess beyond the amount
actually received under any insurance policy, contract, agreement, other indemnity or advancement provision or otherwise;
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(b) |
for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (or any successor rule) or similar provisions of state
statutory law or common law; or
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(c) |
except as otherwise provided in Sections 14(f)-(g) hereof, prior to a Change in Control, in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding)
initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the
indemnification, advance of expenses, hold harmless or exoneration payment, in its sole discretion, pursuant to the powers vested in the Company under applicable law. Indemnitee shall seek payments or advances from the Company only to the
extent such payments or advances are unavailable from any insurance policy of the Company covering Indemnitee.
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10. |
ADVANCES OF EXPENSES; DEFENSE OF CLAIM.
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(a) |
Notwithstanding any provision of this Agreement to the contrary, and to the fullest extent not prohibited by applicable law, the Company shall pay the Expenses incurred by Indemnitee (or reasonably expected by Indemnitee to be incurred by
Indemnitee within three months) in connection with any Proceeding within ten (10) days after the receipt by the Company of a statement or statements requesting such advances from time to time, prior to the final disposition of any Proceeding.
Advances shall, to the fullest extent permitted by law, be unsecured and interest free. Advances shall, to the fullest extent permitted by law, be made without regard to Indemnitee’s ability to repay the Expenses and without regard to
Indemnitee’s ultimate entitlement to be indemnified, held harmless or exonerated under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of
advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. To the fullest extent required by applicable law, such payments of Expenses in advance of the final disposition of
the Proceeding shall be made only upon the Company’s receipt of an undertaking, by or on behalf of Indemnitee, to repay the advanced amounts to the extent it is ultimately determined Indemnitee is not entitled to be indemnified, held harmless
or exonerated by the Company under the provisions of this Agreement, the Charter, the Bylaws, applicable law or otherwise. This Section 10(a) shall not apply to any claim made by Indemnitee for which an indemnification, advance of expenses,
hold harmless or exoneration payment is excluded pursuant to Section 9.
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(b) |
The Company will be entitled to participate in the Proceeding at its own expense.
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(c) |
The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, liability, fine, penalty or limitation on Indemnitee without Indemnitee’s prior written consent.
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11. |
PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.
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(a) |
Indemnitee agrees to notify promptly the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding, claim, issue or matter therein which may
be subject to indemnification, hold harmless or exoneration rights, or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to
Indemnitee under this Agreement, or otherwise.
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(b) |
Indemnitee may deliver to the Company a written application to indemnify, hold harmless or exonerate Indemnitee in accordance with this Agreement. Such application(s) may be delivered from time to time and at such time(s) as Indemnitee
deems appropriate in his sole discretion. Following such a written application for indemnification by Indemnitee, Indemnitee’s entitlement to indemnification shall be determined according to Section 12(a) of this Agreement.
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12. |
PROCEDURE UPON APPLICATION FOR INDEMNIFICATION.
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(a) |
A determination, if required by applicable law, with respect to Indemnitee’s entitlement to indemnification shall be made in the specific case by one of the following methods, which shall be at the election of Indemnitee: (i) by a majority
vote of the Disinterested Directors, even though less than a quorum of the Board, (ii) by a committee of such directors designated by majority vote of such directors, (iii) if there are no Disinterested Directors or if such directors so
direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee, or (iv) by vote of the stockholders. The Company promptly will advise Indemnitee in writing with respect to any determination
Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall
be made within ten (10) days after such determination. Indemnitee shall reasonably cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such
determination. Any costs or Expenses (including reasonable attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of
the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby agrees to indemnify and to hold Indemnitee harmless therefrom.
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(b) |
In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 12(a) hereof, the Independent Counsel shall be selected as provided in this Section 12(b). The Independent Counsel
shall be selected by Indemnitee (unless Indemnitee shall request such selection be made by the Board), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected and certifying
the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. If the Independent Counsel is selected by the Board, the Company shall give written notice to Indemnitee advising
Indemnitee of the identity of the Independent Counsel so selected and certifying the Independent Counsel so selected meets the requirements of “Independent Counsel” as defined in Section 2 of this Agreement. In either event, Indemnitee or the
Company, as the case may be, may, within ten (10) days after such written notice of selection shall have been received, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however,
such objection may be asserted only on the ground the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the
factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as
Independent Counsel unless and until such objection is withdrawn or a court of competent jurisdiction has determined such objection is without merit. If, within twenty (20) days after submission by Indemnitee of a written request for
indemnification pursuant to Section 11(b) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Delaware Court for resolution of any objection which shall have been made
by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Delaware Court, and the person with respect to whom all objections are so resolved or
the person so appointed shall act as Independent Counsel under Section 12(a) hereof. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel shall be discharged and
relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
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(c) |
The Company agrees to pay the reasonable fees and expenses of Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to
this Agreement or its engagement pursuant hereto.
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13. |
PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
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(a) |
In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume Indemnitee is entitled to indemnification under this Agreement if Indemnitee has
submitted a request for indemnification in accordance with Section 11(b) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any
determination contrary to that presumption. Neither the failure of the Company (including by the Disinterested Directors or Independent Counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement
that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by the Disinterested Directors or Independent Counsel) that Indemnitee
has not met such applicable standard of conduct, shall be a defense to the action or create a presumption Indemnitee has not met the applicable standard of conduct.
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(b) |
If the person, persons or entity empowered or selected under Section 12 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the
Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent permitted by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a final judicial determination
any or all such indemnification is expressly prohibited under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity
making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto.
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(c) |
The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests
of the Company or, with respect to any criminal Proceeding, Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
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(d) |
For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information
supplied to Indemnitee by the directors, manager, or officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise, its Board, any committee of the Board or any director, trustee, general
partner, manager or managing member, or on information or records given or reports made to the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member, by an independent
certified public accountant or by an appraiser or other expert selected by the Enterprise, its Board, any committee of the Board or any director, trustee, general partner, manager or managing member. The provisions of this Section 13(d) shall
not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.
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(e) |
The knowledge and/or actions, or failure to act, of any other director, officer, trustee, partner, manager, managing member, fiduciary, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the
right to indemnification under this Agreement.
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14. |
REMEDIES OF INDEMNITEE.
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(a) |
In the event (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses, to the fullest extent permitted by applicable law, is
not timely made pursuant to Section 10 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 12(a) of this Agreement within thirty (30) days after receipt by the Company of the
request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5, 6, 7 or the last sentence of Section 12(a) of this Agreement within ten (10) days after receipt by the Company of a written request therefor, (v)
a contribution payment is not made in a timely manner pursuant to Section 8 of this Agreement, (vi) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within ten (10) days after a determination has been made
that Indemnitee is entitled to indemnification, or (vii) payment to Indemnitee pursuant to any hold harmless or exoneration rights under this Agreement or otherwise is not made in accordance with this Agreement, Indemnitee shall be entitled
to an adjudication by the Delaware Court to such indemnification, hold harmless, exoneration, contribution or advancement rights. Alternatively, Indemnitee, at Indemnitee’s option, may seek an award in arbitration to be conducted by a single
arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Except as set forth herein, the provisions of Delaware law (without regard to its conflict of laws rules) shall apply to any such arbitration.
The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.
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(b) |
In the event a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 shall be
conducted in all respects as a de novo trial, or arbitration, on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination.
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(c) |
In any judicial proceeding or arbitration commenced pursuant to this Section 14, Indemnitee shall be presumed to be entitled to be indemnified, held harmless, exonerated and to receive advancement of Expenses under this Agreement and the
Company shall have the burden of proving Indemnitee is not entitled to be indemnified, held harmless, exonerated and to receive advancement of Expenses, as the case may be, and the Company may not refer to or introduce into evidence any
determination pursuant to Section 12(a) of this Agreement adverse to Indemnitee for any purpose. If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 14, Indemnitee shall not be required to reimburse the
Company for any advances pursuant to Section 10 until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).
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(d) |
If a determination shall have been made pursuant to Section 12(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced
pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification,
or (ii) a prohibition of such indemnification under applicable law.
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(e) |
The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in
any such court or before any such arbitrator the Company is bound by all the provisions of this Agreement.
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(f) |
The Company shall indemnify and hold harmless Indemnitee to the fullest extent permitted by law against all Expenses and, if requested by Indemnitee, shall (within ten (10) days after the Company’s receipt of such written request) pay to
Indemnitee, to the fullest extent permitted by applicable law, such Expenses which are incurred by Indemnitee in connection with any judicial proceeding or arbitration brought by Indemnitee: (i) to enforce his rights under, or to recover
damages for breach of, this Agreement or any other indemnification, hold harmless, exoneration, advancement or contribution agreement or provision of the Charter or the Bylaws now or hereafter in effect; or (ii) for recovery or advances under
any insurance policy maintained by any person for the benefit of Indemnitee, regardless of the outcome and whether Indemnitee ultimately is determined to be entitled to such indemnification, hold harmless or exoneration right, advancement,
contribution or insurance recovery, as the case may be (unless such judicial proceeding or arbitration was not brought by Indemnitee in good faith).
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(g) |
Interest shall be paid by the Company to Indemnitee at the legal rate under Delaware law for amounts which the Company indemnifies, holds harmless or exonerates, or advances, or is obliged to indemnify, hold harmless or exonerate or
advance for the period commencing with the date on which Indemnitee requests indemnification, to be held harmless, exonerated, contribution, reimbursement or advancement of any Expenses and ending with the date on which such payment is made
to Indemnitee by the Company.
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15. |
SECURITY. Notwithstanding anything herein to the contrary, to the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to
Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent
of Indemnitee.
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16. |
NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.
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(a) |
The rights of Indemnitee as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter, the Bylaws, any agreement, a vote of stockholders
or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any Proceeding (regardless of when
such Proceeding is first threatened, commenced or completed) or claim, issue or matter therein arising out of, or related to, any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration
or repeal. To the extent a change in applicable law, whether by statute or judicial decision, permits greater indemnification, hold harmless or exoneration rights or advancement of Expenses than would be afforded currently under the Charter,
the Bylaws or this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other
right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.
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(b) |
The DGCL and the Bylaws permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond (“Indemnification Arrangements”) on behalf of Indemnitee against any liability asserted against Indemnitee or incurred by or on behalf of Indemnitee or in such capacity as a director,
officer, employee or agent of the Company, or arising out of Indemnitee’s status as such, whether or not the Company would have the power to indemnify Indemnitee against such liability under the provisions of this Agreement or under the DGCL,
as it may then be in effect. The purchase, establishment, and maintenance of any such Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company or of Indemnitee under this Agreement except as
expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any such
Indemnification Arrangement.
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(c) |
To the extent the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managers, managing members, fiduciaries, employees, or agents of the Company or of any other
Enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer,
trustee, partner, managers, managing member, fiduciary, employee or agent under such policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a
witness, deponent or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective
policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.
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(d) |
In the event of any payment under this Agreement, the Company, to the fullest extent permitted by law, shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required
and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
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(e) |
The Company’s obligation to indemnify, hold harmless, exonerate or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, manager, managing member, fiduciary,
employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification, hold harmless or exoneration payments or advancement of expenses from such Enterprise. Notwithstanding any other
provision of this Agreement to the contrary, (i) Indemnitee shall have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, exoneration, advancement, contribution or insurance coverage among
multiple parties possessing such duties to Indemnitee prior to the Company’s satisfaction and performance of all its obligations under this Agreement, and (ii) the Company shall perform fully its obligations under this Agreement without
regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, exoneration, contribution or insurance coverage rights against any person or entity other than the Company.
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17. |
DURATION OF AGREEMENT. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves as a director or officer of the Company or as a director,
officer, trustee, partner, manager, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee serves at the request of the Company and
shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement) by reason of Indemnitee’s
Corporate Status, whether or not Indemnitee is acting in any such capacity at the time any liability or expense is incurred for which indemnification or advancement can be provided under this Agreement.
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|
18. |
SEVERABILITY. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to
conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or
sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
|
|
19. |
ENFORCEMENT AND BINDING EFFECT.
|
|
(a) |
The Company expressly confirms and agrees it has entered into this Agreement and assumed the obligations imposed on it hereby to induce Indemnitee to serve as a director, officer or key employee of the Company, and the Company acknowledges
Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.
|
|
(b) |
Without limiting any of the rights of Indemnitee under the Charter or Bylaws as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.
|
|
(c) |
The indemnification, hold harmless, exoneration and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns
(including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director,
officer, employee or agent of the Company or a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of any other Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee
and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
|
|
(d) |
The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written
agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
|
|
(e) |
The Company and Indemnitee agree herein a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree such breach may cause Indemnitee irreparable harm.
Accordingly, the parties hereto agree Indemnitee may, to the fullest extent permitted by law, enforce this Agreement by seeking, among other things, injunctive relief and/or specific performance hereof, without any necessity of showing actual
damage or irreparable harm and by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. The Company and Indemnitee further
agree Indemnitee shall, to the fullest extent permitted by law, be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity
of posting bonds or other undertaking in connection therewith. The Company acknowledges in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court of competent jurisdiction. The Company hereby waives any such
requirement of such a bond or undertaking to the fullest extent permitted by law.
|
|
20. |
MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the Company and Indemnitee. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.
|
|
21. |
NOTICES. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) if delivered by hand and receipted for by the
party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed:
|
|
(a) |
If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide in writing to the Company.
|
(b) |
If to the Company, to:
Riley Exploration Permian, Inc.
29 E. Reno Avenue, Suite 500
Oklahoma City, Oklahoma 73104
Attention: Chief Financial Officer
|
|
With a copy, which shall not constitute notice, to:
di Santo Law PLLC
170 Christopher Street
New York, New York 10014
Attn: Beth A. di Santo, Esq.
|
|
Thompson & Knight LLP
One Arts Plaza
1722 Routh Street, Suite 1500
Dallas, Texas 75201
Attn: Amy R. Curtis, Esq
|
|
22. |
APPLICABLE LAW AND CONSENT TO JURISDICTION. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of
Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, to the fullest extent permitted by law, the Company and Indemnitee hereby
irrevocably and unconditionally:
|
|
(a) |
agree any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court and not in any other state or federal court in the United States of America or any court in any other country;
|
|
(b) |
consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement;
|
|
(c) |
waive any objection to the laying of venue of any such action or proceeding in the Delaware Court; and
|
|
(d) |
waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum, or is subject (in whole or in part) to a jury trial. To the fullest
extent permitted by law, the parties hereby agree the mailing of process and other papers in connection with any such action or proceeding in the manner provided by Section 21 or in such other manner as may be permitted by law, shall be valid
and sufficient service thereof.
|
|
23. |
IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and
the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
|
|
24. |
MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
|
|
25. |
PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors or
personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely
filing of a legal action within such two- year period; provided, however, if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern.
|
|
26. |
ADDITIONAL ACTS. If for the validation of any of the provisions in this Agreement any act, resolution, approval or other procedure is required to the fullest extent permitted by law, the Company
undertakes to cause such act, resolution, approval or other procedure to be affected or adopted in a manner that will enable the Company to fulfill its obligations under this Agreement.
|
RILEY EXPLORATION PERMIAN, INC.
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
Name: Bobby D. Riley
|
|
Title: Chief Executive Officer
|
INDEMNITEE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Address:
|
|
|
LAROCHE PETROLEUM CONSULTANTS, LTD.
|
|||
By LPC, Inc. General Partner
|
|||
By:
|
/s/ William M. Kazmann
|
||
Name:
|
William M. Kazmann
|
||
Title:
|
President
|
|
NETHERLAND, SEWELL & ASSOCIATES, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ C.H. (Scott) Rees III, P.E.
|
|
|
C.H. (Scott) Rees III, P.E.
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
Dallas, Texas
|
|
|
January 21, 2021
|
|
|
Net Reserves
|
Future Net Cash Flow ($)
|
|||||||||||||||
Category
|
Oil
(barrels)
|
Gas
(Mcf)
|
Total
|
Present Worth
at 10%
|
||||||||||||
Proved Developed
|
||||||||||||||||
Producing
|
766,173
|
0
|
$
|
14,028,548
|
$
|
7,591,574
|
||||||||||
Non-Producing
|
36,485
|
0
|
1,255,069
|
773,175
|
||||||||||||
Proved Undeveloped
|
0
|
0
|
0
|
0
|
||||||||||||
Total Proved(1)
|
802,658
|
0
|
$
|
15,283,617
|
$
|
8,364,749
|
(1) |
The total proved values above may or may not match those values on the total proved summary page that follows this letter due to rounding by the economics program.
|
Very truly yours,
|
|
LaRoche Petroleum Consultants, Ltd.
|
|
State of Texas Registration Number F-1360
|
|
By LPC, Inc. General Partner
|
|
/s/ Stephen W. Daniel
|
|
Stephen W. Daniel
|
|
Senior Engineer
|
|
/s/ William M. Kazmann
|
|
William M. Kazmann, President
|
|
Licensed Professional Engineer
|
|
State of Texas No. 45012
|
|
|
|
SWD:ss
19-908
|
|
Very truly yours,
|
|
ROTH CAPITAL PARTNERS, LLC
|
|
/s/ Alexander G. Montano
|
|
Name: Alexander G. Montano
|
|
Its: Managing Director
|
/s/ Michael J. Rugen
|
|
Name: Michael J. Rugen
|
|
Date: January 21, 2021
|
/s/ Bobby D. Riley
|
|
Name: Bobby D. Riley
|
|
Date: January 21, 2021
|
/s/ Bryan H. Lawrence
|
|
Name: Bryan H. Lawrence
|
|
Date: January 21, 2021
|
/s/ Brent Arriaga
|
||
Name
|
Brent Arriaga
|
|
Date
|
January 21, 2021
|
/s/ E. Wayne Nordberg
|
||
Name:
|
E. Wayne Nordberg
|
|
Date:
|
January 21, 2021
|