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 (Date of earliest event reported): October 5, 2021
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Viking Energy Group, Inc. |
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(Exact name of registrant as specified in its charter) |
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Nevada |
000-29219 |
98-0199508 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) |
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15915 Katy Freeway Suite 450, Houston, Texas |
77094 |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (281) 404-4387
Not applicable.
(Former name or former address, if changed since last report)
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 (see General Instructions A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: None.
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Title of each class |
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Trading Symbols(s) |
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Name of each exchange on which registered |
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N/A |
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N/A |
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N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
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Item 2.01 Completion of Acquisition or Disposition of Assets.
On October 5, 2021, Viking Energy Group, Inc. (“Viking”) entered into an Assignment of Membership Interests (the “Assignment Agreement”) with TO Ichor 2021, L.L.C. (“Assignee”), pursuant to which Viking assigned all of its membership interests in Ichor Energy Holdings, L.L.C. (“Holdings”) to the Assignee, effective October 5, 2021.
Holdings is the owner of all of the membership interests in Ichor Energy, LLC (“Ichor Energy”), which owns all of the membership interests of Ichor Energy LA, LLC (“Ichor LA”) and Ichor Energy TX, LLC (“Ichor TX” and, together with Holdings, Ichor Energy and Ichor LA, the “Ichor Entities”), which collectively owned approximately 58 producing wells, 31 salt water disposal wells, 46 shut in wells and 4 inactive wells as of June 30, 2021. The assets held by the Ichor Entities were acquired by the Ichor Entities in December 2018 from an affiliate of the Assignee (the “Original Acquisition”).
In connection with the Original Acquisition, Holdings and Ichor Energy entered into that certain Term Loan Credit Agreement, dated as of December 28, 2018, by and among Holdings, Ichor Energy, ABC Funding, LLC, as administrative agent, and the lenders party thereto (the “Term Loan”). The obligations under the Term Loan are secured by mortgages on the oil and gas leases of the Ichor Entities, a security agreement covering all assets of Ichor Energy, and a pledge by Ichor Holdings of all if the membership interests in Ichor Energy. Viking is not a party to the Term Loan. Concurrent with the closing of the Original Acquisition and entrance into the Term Loan in December 2018, Ichor Energy also entered into one or more hedge contracts with respect to a certain percentage of the estimated oil and gas production from Ichor Energy’s oil and gas assets, expiring on or about December 28, 2022.
The consideration for the conveyance of the Ichor Entities by Viking was the assumption by Assignee of all of the obligations associated with the Ichor Entities. Please see the pro forma financial statements provided herewith as Exhibit 99.1 for more detailed information on treatment of the transactions under the Assignment Agreement.
The Assignment Agreement contains a right of first refusal, and provides that if the Assignee receives an arms-length bona fide offer from any third party to purchase any of the membership interests in Holdings, such interests shall first be offered to Viking, and Viking shall have the right, exercisable within thirty (30) calendar days, to elect to purchase such membership interests upon substantially the same terms and conditions as are contained in the offer.
The foregoing description of the Assignment Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified by, the full text of the Assignment Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Pro Forma Financial Information
The unaudited pro forma financial statements of Viking as of and for the six months ended June 30, 2021 and year ended December 31, 2020, in each case giving effect to the transactions under the Assignment Agreement, are set forth in Exhibit 99.1 hereto and incorporated herein by reference.
(d) Exhibits.
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Exhibit No. |
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Description |
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Unaudited Pro Forma Financial Statements of Viking Energy Group, Inc. |
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104 |
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Cover Page Interactive Data File (embedded within Inline XBRL document). |
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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.
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VIKING ENERGY GROUP, INC. |
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Date: October 12, 2021 |
By: |
/s/ James A. Doris |
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Name: |
James A. Doris |
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Title: |
Chief Executive Officer |
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EXHIBIT 2.1
ASSIGNMENT OF MEMBERSHIP INTERESTS
This Assignment of Membership Interests (this “Assignment”) dated effective as of October 5, 2021 (the “Effective Date”) is entered into by and between Viking Energy Group, (“Assignor”) and TO Ichor 2021, L.L.C. (“Assignee”).
RECITALS:
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A. |
Viking Energy Group, Inc. (“Viking”) owns all of the membership interests of Ichor Energy Holdings, LLC (“Holdings”); |
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B. |
Holdings owns all of the membership interests of Ichor Energy, LLC (“Ichor Energy”), subject to certain warrants in favor of certain holders; |
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C. |
Ichor Energy owns all of the membership interests of Ichor Energy LA, LLC (“Ichor LA”) and Ichor Energy TX, LLC (“Ichor TX”); |
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D. |
Ichor LA owns interests in certain oil and gas properties located in Louisiana and Ichor TX owns interests in certain oil and gas properties located in Texas; |
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E. |
Holdings, as guarantor, and Ichor Energy, Ichor LA and Ichor TX, as borrowers, are parties to a Term Loan Credit Agreement, a copy of which has been provided to the Assignee along with copies of production reports, lease operating statements, mark-to-market value of applicable hedge arrangements and other information relating to Holdings, Ichor Energy, Ichor LA and/or Ichor TX; |
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F. |
Assignor has agreed to transfer to Assignee all of the issued and outstanding membership interests owned by Assignor of Holdings (the “Assigned Interests”); and |
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G. |
Assignor desires to transfer all of the Assigned Interests to Assignee, and Assignee desires to accept the Assigned Interests from the Assignee. |
NOW, THEREFORE, the parties to this Assignment hereby agree as follows:
1. Assignment of Assigned Interests. In exchange for good and valuable consideration, the receipt of which is hereby acknowledged, and effective as of the Effective Date, the Assignor hereby sells, assigns, transfers, conveys and delivers to Assignee, and Assignee hereby purchases and accepts, all of the Assigned Interests on an as-is, where-is basis.
2. Future Cooperation. Assignor and Assignee mutually agree to execute any further deeds, bills of sale, assignments, or other documents as may be reasonably requested by the other party for the purpose of giving effect to, evidencing or giving notice of the transaction evidenced by this Assignment.
Assignment of Membership Interest – Holdings
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3. Amendment and Modification; Waiver. This Assignment may be amended, modified and supplemented only by written instrument duly authorized and executed by Assignor and Assignee. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and executed by the party so waiving. The waiver by either party hereto of a breach of any provision of this Assignment shall not operate or be construed as a waiver of any other provision or breach
4. Governing Law. This Assignment shall be governed by, and construed in accordance with, the internal laws of the State of Texas, without regard to conflict of law principles.
5. Counterparts. This Assignment may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.
6. Severability. If any provision of this Assignment is determined to be invalid or unenforceable, in whole or in part, it is the parties’ intention that such determination will not be held to affect the validity or enforceability of any other provision of this Assignment, which provisions will otherwise remain in full force and effect.
7. Successors and Assigns. This Assignment will inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.
8. Right of First Refusal. If the Assignee receives from any third party or third parties with which it is dealing at arm's length, a bona fide offer (the "Offer") to purchase any of the Assigned Interests he shall forthwith notify the Assignor (the "Offeree") of the receipt of the Offer and its desire to accept same and shall contemporaneously with the giving of such notice deliver to the Assignor full particulars of the Offer. The Offeree shall then have the right, option and privilege, exercisable within thirty (30) calendar days from the receipt of the aforesaid notice to elect to purchase subject Assigned Interests upon substantially the same terms and conditions as are contained in the Offer.
Assignment of Membership Interest – Holdings
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.
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Assignor:
VIKING ENERGY GROUP, INC. |
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| By: | /s/ James A. Doris | |
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Name: |
James A. Doris | |
| Title: | President & CEO | |
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Assignee:
TO Ichor 2021, L.L.C. |
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By: |
/s/ April Hammel |
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Name: |
April Hammel |
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Title: |
Secretary |
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Assignment of Membership Interest – Holdings
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EXHIBIT 99.1
Viking Energy Group, Inc.
Unaudited Pro Forma Condensed Combined Financial Statements
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VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
The following sets forth unaudited pro forma condensed consolidated financial information of Viking Energy Group, Inc. (the “Company”) prepared in accordance with Article 8-05 of Regulation S-X. You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Risk Factors” and the Company’s consolidated financial statements and related notes and other financial information included in its most recent Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q. The unaudited pro forma condensed consolidated financial information is based on and has been derived from the Company’s historical consolidated financial statements.
On October 5, 2021, the Company entered into an Assignment of Membership Interests (the “Assignment Agreement”) with TO Ichor 2021, L.L.C. (“Assignee”), pursuant to which the Company assigned all of its membership interests in Ichor Energy Holdings, L.L.C. (“Holdings”) to the Assignee, effective October 5, 2021 (the “Assignment”).
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2021 and statements of operations for the year ended December 31, 2020 and the six months ended June 30, 2021 give pro forma effect to the elimination of certain assets and liabilities associated with the Assignment as if it occurred on June 30, 2021 (in the case of the balance sheet) or January 1, 2020 (in the case of the statement of operations).
The unaudited pro forma condensed consolidated financial information includes unaudited pro forma adjustments that are factually supportable and directly attributable to the respective transactions. In addition, the unaudited pro forma adjustments are expected to have a continuing impact on the Company’s results. The Company has prepared the unaudited pro forma condensed consolidated financial information for illustrative purposes only and it does not purport to represent what the results of operations or financial condition would have been had the respective transactions actually occurred on the dates indicated, nor does the Company purport to project the results of operations or financial condition for any future period or as of any future date. The actual results of operations may direr significantly from the pro forma amounts reflected herein due to a variety of factors
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VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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VIKING ENERGY GROUP, INC. |
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET |
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AS OF JUNE 30, 2021 |
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Historical, June 30, 2021 |
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Pro Forma Adjustments |
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Pro Forma June 30, 2021 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ | 7,471,030 |
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(3,525,933 | )(a) |
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$ | 3,945,097 |
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Accounts receivable |
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5,836,331 |
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(2,449,384 | )(a) |
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3,386,947 |
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Total current assets |
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13,307,361 |
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7,332,045 |
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Oil and gas properties, net |
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97,656,287 |
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(56,955,136 | )(a) |
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40,701,151 |
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Fixed assets, net |
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357,770 |
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357,770 |
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Deposits |
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57,896 |
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57,896 |
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TOTAL ASSETS |
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$ | 111,379,314 |
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$ | 48,448,862 |
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LIABILITIES AND MEMBERS' EQUITY |
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Current liabilities |
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Accounts payable and accrued expenses |
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$ | 5,328,304 |
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(1,622,859 | )(a) |
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3,705,445 |
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Derivative liability |
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12,649,422 |
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(8,844,538 | )(a) |
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3,804,884 |
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Undistributed revenue and royalties |
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5,833,882 |
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(2,192,997 | )(a) |
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3,640,885 |
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Current portion of long term debt |
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44,325,164 |
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(2,301,067 | )(a) |
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42,024,097 |
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Total current liabilities |
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68,136,772 |
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53,175,311 |
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Long term debt - net of current portion |
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51,636,447 |
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(48,740,242 | )(a) |
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2,896,205 |
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Operating lease liability |
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204,714 |
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204,714 |
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Asset retirement obligations |
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6,455,705 |
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(2,000,485 | )(a) |
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4,455,220 |
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Total Liabilities |
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126,433,638 |
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60,731,450 |
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Stockholders' Equity |
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Equity and accumulated income (loss) |
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(15,054,324 | ) |
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2,771,736 | (a) |
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(12,282,588 | ) |
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Total Stockholders' Equity (Deficit) |
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(15,054,324 | ) |
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(12,282,588 | ) |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
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$ | 111,379,314 |
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$ | 48,448,862 |
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VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
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VIKING ENERGY GROUP, INC. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS |
VIKING ENERGY GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
Ichor Energy Assignment Adjustments to the Unaudited Pro Forma Condensed Consolidated Balance Sheet
The following adjustments have been made to the accompanying unaudited pro forma condensed consolidated balance sheet as of June 30, 2021
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(a) |
Represents the elimination of assets and liabilities and resulting gain on membership interest assignment of the properties sold. |
Ichor Energy Assignment Adjustments to the Unaudited Pro Forma Condensed Consolidated Statements of Operations
The following adjustments have been made to the accompanying unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2021, and the year ended December 31, 2020.
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(b) |
Represents the elimination of gas and oil production revenue and expenses for the properties sold. |
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