UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: February 16, 2017

Petrolia Energy Corporation
(Exact name of registrant as specified in its charter)

Texas
000-52690
86-1061005
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)

710 N. Post Oak Rd., Ste. 512, Houston, Texas
77024
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: 832-941-0011

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐
Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)
 
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

Item 2.01 Completion of Acquisition or Disposition of Assets.

Twin Lakes San Andres Unit Interest Acquisition  
 
On the effective date of February 12, 2017, Petrolia Energy Corporation (“Petrolia”) acquired an additional 60% net working interest in the “Twin Lakes San Andres Unit” or “TLSAU” field located in Chavez County, New Mexico (the “Net Working Interest”) resulting from the execution of a Settlement Agreement on February 12, 2016.  The agreement assigned Dead Aim Investments’ (“Dead Aim”) 60% ownership interests to Petrolia.  As a result of this transaction, Petrolia now owns 100% ownership interest in TLSAU.  Consideration of $639,675 was given in exchange for Dead Aim’s working interest.  The consideration includes the forgiveness of the Orbit Petroleum Inc Bankruptcy Estate (“OPBE”) note of $316,800 (with a $1.3M face value) and the write off of $322,875 of Dead Aim’s outstanding accounts receivable to Petrolia.  As referenced in the November 9, 2015 8K, Dead Aim assumed liability for the OPBE note that Petrolia purchased.

TLSAU is 35 miles northeast of Roswell, New Mexico and consists of 4,864 acres of which Petrolia already owned 40% working interest in the property. The net reserves, based on internal estimates, are approximately 2.6 million barrels of oil equivalent (MMBoe) and are part of the northwestern shelf of the Permian Basin. The San Andres formation holds 100% of the TLSAU production base.
 
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

The Board of Directors approved the increase of board membership from its current five-member board to a seven-member board.

Item 9.01 Financial Statements And Exhibits.
 
Exhibit No.
Description
 
 
10.1*
10.2*
 
* Filed herewith. 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Petrolia Energy Corporation
 
/s/ Paul Deputy
Paul Deputy
CFO
 
Date: February 16, 2017
 


 
 

 

EXHIBIT INDEX
 
Exhibit No.
Description
 
 
10.1*
10.2*

* Filed herewith.

 
 

Exhibit 10.1
 

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE (this "Agreement'') is made by and between Petrolia Energy Corporation ('Petrolia") and all of its officers, board members, representatives, successors, affiliates, agents, heirs and assigns, and Dead Aim Investments, LLC and all of its members, officers, board members, representatives, successors, affiliates, agents, heirs and assigns (collectively "Dead Aim''), as follows:

l.            In consideration for the payment to Petrolia by Dead Aim in the amount of U.S.$ 10.00, and other good and sufficient consideration, Petrolia, acting for themselves and in behalf of their officers, agents, employees, affiliates, heirs, successors and assigns and all others in privity, do hereby RELEASE, ACQUIT, and FOREVER DISCHARGE Dead Aim, and all of its members, officers, board members, representatives, successors, affiliates, agents, heirs and assigns from any and all claims, losses, demands, costs, damages and causes of action, whether in contract or in tort, known or unknown, arising out of or in any way related to the Twin Lakes San Andres Unit located in Chavez County, New Mexico. This settlement is intended to cover and does cover not only all now known injuries, losses and damages, but any future injuries, losses, and damages not now known or anticipated but which may later develop or be discovered, including all the effects and consequences thereof as they relate to the Twin Lakes San Andres Unit located in Chavez County, New Mexico. Additionally, Petrolia agrees to and shall indemnify and hold harmless Dead Aim and its officers, directors, employees, agents, representatives, successors and assigns from any claims regarding the Twin Lakes San Andres Unit, including but not limited  to claims related to royalties, bonding, plugging, and operating expenses and costs related thereto. This Release includes and releases all claims of those claiming by, through or under Petrolia related to JOA expenses or costs. This release and indemnity herein all includes any claims by the State of New Mexico or any boding companies related to the Twin Lakes San Andres Unit located in Chavez County, New Mexico.
 
2.            In consideration of the agreements and covenants made herein, Dead Aim, acting for itself and all of its officers, board members, representatives, successors, affiliates, agents, heirs and assigns do hereby RELEASE, ACQUIT, and FOREVER DISCHARGE Petrolia, together with their agents, employees, affiliates, attorneys, heirs, successors and assigns of and from any and all claims, losses, demands, costs, damages and causes of action, whether in contract or in tort, known or unknown, arising out of or in any way related to the Twin Lakes San Andres Unit located in Chavez County, New Mexico, EXCEPT TO THE EXTENT THAT ALL INDEMNITY OBLIGATIONS CREATED AS A RESULT OF THIS AGREEMENT ARE SPECIFICALLY RESERVED.
 
3.           It is understood and agreed by all parties that this agreement constitutes the settlement of disputed claims and allegations, and that by making this agreement neither party confesses any fault, guilt or blame whatsoever. Each of the parties represents and warrants that (a) this release and settlement agreement is the legal and binding obligation of such party, enforceable against him or it in accordance with its terms; (b) no authorization, consent or approval is required for the execution, delivery and performance of this Release by any such party; (c) no party has assigned or otherwise transferred any of his or its right or interest in of the claims settled and dismissed herein; (d) no party in relying .upon any statement or representation of any agent of the parties being released hereby; and (e) each of the parties has read and understood this release, has been advised of its effect by counsel of their choice, and executes the release as their free act and deed.
Authority.
 
4.         Petrolia specifically warrants and represents that it has the full right and authority to enter into this Agreement and to grant and to consummate or cause to be consummated the transaction

contemplated by this Agreement The person signing this Agreement on behalf of Petrolia is authorized to do so. This Agreement and all of the documents to be delivered by Petrolia at Closing will be authorized and properly executed and will constitute the valid and binding obligations of Petrolia, enforceable in accordance with their terms.
 
5.           The statements and representations contained herein are to be considered contractual in nature and not mere recitations of fact and this Agreement shall be binding upon our assigns, administrators, executors, and lega1 representatives forever. This Agreement and release represents the final agreement among the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements among the parties. This Settlement Agreement may be amended only by an instrument in writing executed by the party to be bound thereby.
 
6.           It is intended that the execution of this Agreement will be accomplished in multiple original parts and each shall be deemed for all purposes an original. Execution of a facsimile or electronic version of this Agreement with an electronic or scanned signature shall be binding as if executed in the original form.
 
EXECUTED in multiple counterparts, each of which shall constitute an original, this   12th   day of February 2017.
 
 
Dead Aim Investments, LLC
 
Petrolia Energy Corporation
 
 
 
 
 
 
   /s/ Craig Cavalier   /s/ Zel Khan  
 
Craig Cavalier
 
Zel Khan
 
 
Manager
 
Chief Executive Officer
 

 
 
Exhibit 10.2
 
 
Prepared by:
§
Joseph Tung
§
Tung Law Firm, PLLC
§
2800 Post Oak Blvd., Suite 4100
§
Houston, Texas 77056
§
   
After recording return to:
§
Zel Khan
§
Petrolia Energy Corporation
§
710 N Post Oak #512
§
Houston, TX 77024
§
 

 
Quitclaim Deed

KNOW ALL MEN BY THESE PRESENTS THAT:
For valuable consideration of $ 10.00, and other good and valuable consideration, the receipt of which is hereby acknowledged, Craig Cavalier, of Dead Aim Investments, LLC, a limited liability company whose tax mailing address is 7001 Academy Street, Houston, Texas 77025, (the "Grantor"),  does  hereby quitclaim unto  Petrolia Energy Corporation,  a Texas corporation, whose tax mailing address is 710 N Post Oak #512, Houston, TX 77024, (the "Grantee"), the following lands and property, any right, title or interest of any kind in minerals, including oil and gas, of any type, mineral rights, mineral leases, assignments or interests on, in, and under the described property, together with all improvements attached to the property, lying in the County of Chavez County, New Mexico, State of New Mexico:

TWIN LAKES FIELD IN CHAVEZ COUNTY, NEW MEXICO, COVERING ALL OF THE FOLLOWING:
THE SE/4 AND THE E/2 SW/4 AND THE SW/4 SW/4 AND THE W/2 SE/4 AND THE SW/4, W/2 SE/4 AND SE/4 SW/4 AND THE SW/4 SE/4 AND THE NW/4 SW/4 AND THE NE/4 SW/4 AND THE NW/4 SE/4 OF SECTION /8;

THE E/2 SW/4 AND THE W/2 SE/4 AND W/2 SW/4 AND THE SE/4 SE/4 AND THE SW/4 W/2 SE/4, SE/4 SE/4 ABD TGE SE/4 SW/4 AND THE SW/4 SE/4 AND THE SW/4 SW/4 AND THE NW/4 SW/4 AND THE NE/4 SW/4 AND THE SW/4 SE/4 AND THE NE/4 SE/4 OF SECTION J 9;
THE NW/4 NW/4 SW/4 NW/4 NE/4 SE/4 NW/4 AND THE SW/4 NE/4 AND THE SW/4 SE/4 OF SECTION 30;


 
Page 1 of 3
Page 2 of 3
Quitclaim Deed 
 
TRACT I ALL OF SECTION 4, TRACT I N/2 AND THE S/2 OF SECTION 5 AND THE S/2 & NE/4 OF SECTION 6;

THE 2 E/2 OF SECTION /3 AND THE E/2 SECTION 24 AND THE NE/4
SECTION 25;
THE SW/4 AND THE SE/4 AND THE NE/4 OF SECTION 12: THE NW/4 AND THE N/2 S/2 AND THE NE/4 OF SECTION 11; THE E/2 SE/4 OF SECTION J 3;
THE NE/4 AND THE SE/4 NW/4 AND THE S/2 SE/4 AND THE NE/4 SE/4 OF SECTION 25;

THE SE/4 NW/4 AND THE NW/4 NW/4 AND THE NW/4 SE/4 AND THE SE/4 SE/4 AND THE SW/4 NE/4 AND THE NE/4 NE/4 AND THE SE/4 NE/4 AND THE NE/4 SW/4 AND THE NE/4 NW/4 AND TGE W/2 SW/4 AND THE SW/4 SE/4 AND THE NW/4 NE/4 AND THE SW/4 NW/4 OF SECTION 36;
THE SE/4 SE/4 OF SECTION 26;
THE E/2 NE/4 AND THE SE/4 NE/4 AND THE SE/4 SE/4 AND THE E/2 SE/4 OF SECTION 35;

THE E/2 OF SECTION 31;
THE W/2 SW/4 OF SECTION 32; THE W/2 OF SECTION 5;
All OF SECTION 6;

SE/4 NE/4 AND THE NE/4 SE/4 OF SEC/TON 7; AND N/2 NW/4 AND THE SW/4 NW/4 OF SECTION 8.

Prior instrument reference: Book CREC 00673 page 00023 , document No. 20110000282 ,  the recorder of Chaves County, New Mexico.
Subject to all easements, rights-of-way, protective covenants and mineral reservations of record, if any.
 
TO HAVE AND TO HOLD same unto the Grantee and the Grantee's heirs and assigns forever, with all appurtenances attached to the property.


Page 3 of 3
Quitclaim Deed 

 
Taxes will be paid by the Grantee.


Send tax statements to:
Petrolia Energy
Corporation
710 N Post Oak #512, Houston, TX 77024

IN WITNESS WHEREOF this quitclaim deed was executed by the Grantor on this    12th   day of February, 2017.
 
 
Dead Aim Investments, LLC
 
/s/ Craig Cavalier                               
Craig Cavalier
Manager

 
STATE OF TEXAS                       §
                                                         §
COUNTY OF HARRIS                 §

SUBSCRIBED AND SWORN TO BEFORE ME on this 12 th day of February, 2017, by Craig Cavalier on behalf of and with the authority of Dead Aim Corporation, a Texas corporation.

 
Notary Public, State of Texas
 
 
 
My commission expires: 01/19/2020