DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization)
|
1311
(Primary Standard Industrial
Classification Code Number)
|
81-2235304
(I.R.S. Employer Identification Number)
|
1177 West Loop South, Suite 1825
Houston, Texas 77027
(713) 968-7000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
|
Sam L. Banks
President and Chief Executive Officer
Yuma Delaware Merger Subsidiary, Inc.
1177 West Loop South, Suite 1825
Houston, Texas 77027
(713) 968-7000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
|
Copies To:
|
Reid A. Godbolt, Esq.
Jones & Keller, P.C.
1999 Broadway
Suite 3150
Denver, Colorado 80202
(303) 573-1600
|
Robert J. Viguet, Jr.,
Esq.
Porter Hedges LLP
1000 Main Street
36th Floor
Houston, Texas 77002
(713) 226-6600
|
Gregory
P. Schneider
President
Davis Petroleum Acquisition Corp.
1330 Post Oak Blvd., Suite 600
Houston, Texas 77056
(713) 439-6757
|
TITLE OF EACH CLASS OF
SECURITIES TO BE REGISTERED
|
AMOUNT TO BE
REGISTERED
|
PROPOSED MAXIMUM
OFFERING PRICE
PER SHARE
|
PROPOSED MAXIMUM
AGGREGATE OFFERING
PRICE
|
AMOUNT OF
REGISTRATION FEE
(6)
|
||||
Common Stock, par value $0.001
|
9,195,491
(1)
|
$3.00
(4)
|
$27,586,474
(4)
|
$2,778
|
||||
Common Stock, par value $0.001
|
14,357,039
(2)
|
N/A
|
$14,956,604
(5)
|
$1,507
|
||||
Series D Preferred Stock, par value $0.001
|
3,302,215
(3)
|
$3.00
(4)
|
$9,906,646
(4)
|
$998
|
||||
Common Stock, par value $0.001 | 3,302,215 | N/A | (7) | (7) | ||||
TOTAL
|
$5,283
(8)
|
|||||||
(1)
|
Represents the estimated maximum number of shares of the Registrant’s common stock to be issued in connection with the reincorporation
(which excludes 445,511 shares of restricted stock, stock options and stock appreciation rights granted under Yuma Energy, Inc.’s stock plans, which will be assumed by the Registrant) and assumes a 1-for-10 reverse split described herein.
|
(2)
|
Represents the estimated maximum number of shares of the Registrant’s common stock to be issued in connection with the merger described herein.
|
(3)
|
Represents the estimated maximum number of shares of Registrant’s common stock to be issued upon conversion of the Registrant’s Series D Preferred Stock to be issued in connection with the merger.
|
(4)
|
Estimated solely for purposes of calculating the registration fee pursuant to Rules 457(f)(1) and 457(c) of the Securities Act of 1933, as amended (the “Securities Act”), based on the average of the high and low prices of Yuma Energy, Inc. common stock on the NYSE MKT on June 15, 2016 and accounts for the 1-for-10 reverse stock split.
|
(5)
|
Estimated solely for the purpose of calculating the registration fee and, pursuant to Rule 457(f)(2) under the Securities Act, based on the book value of the common stock of Davis Petroleum Acquisition Corp. (“Davis”) to be exchanged in the merger computed as of the latest practicable date prior to the date of filing this registration statement.
|
(6)
|
Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $100.70 per $1,000,000 of the proposed maximum aggregate offering price.
|
(7)
|
Pursuant to Rule 457(i) of the Securities Act, no separate registration fee is required for the shares of Registrant’s common stock underlying the Class D Preferred Stock because the shares of common stock are being registered on the same registration statement as the Class D Preferred Stock.
|
(8)
|
Registration fee of $5,272 previously paid on June 17, 2016 with the filing of the registration statement on Form S-4 (Registration No.: 333-212103).
|
|
|
The information in this proxy statement/prospectus is not complete and may be changed. Yuma Delaware Merger Subsidiary, Inc. may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities nor should it be considered a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
|
For Yuma shareholders:
[●]
[●] a.m. local time
[
●
], 2016
|
For Davis stockholders:
[●]
[●] a.m. local time
[
●
], 2016
|
●
|
the provision in the restated articles of incorporation of Yuma Delaware that decreases the authorized shares of Yuma Delaware common stock from 300,000,000 shares to 100,000,000 shares and increases the authorized shares of Yuma Delaware preferred stock from 10,000,000 to 20,000,000 shares;
|
●
|
the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides the Yuma Delaware board of directors with the authority to set the number of directors on the board pursuant to the bylaws of Yuma Delaware;
|
●
|
the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides for the classification of the board of directors of Yuma Delaware into three classes with staggered terms;
|
●
|
the provision in the amended and restated certificate of incorporation of Yuma Delaware that restricts the ability of stockholders to remove directors without cause;
|
●
|
the provision in the amended and restated certificate of incorporation concerning classification of directors which provides that, if at any time the former stockholders of Davis beneficially own than 50% of the aggregate voting power of all outstanding shares of stock entitled to vote in the election of Yuma Delaware’s directors, at each annual meeting of stockholders following such date, each of the successor directors elected at such annual meeting shall serve for a one-year term; and
|
●
|
the provision in the amended and restated certificate of incorporation of Yuma Delaware that requires certain actions and proceedings with respect to Yuma Delaware be brought in the federal or state courts located within the state of Delaware.
|
Yuma Delaware Merger Subsidiary, Inc.
c/o Yuma Energy, Inc.
1177 West Loop South, Suite 1825
Houston, Texas 77027
(713) 968-7000
Attention: Corporate Secretary
|
Yuma Energy, Inc.
1177 West Loop South
Suite 1825
Houston, Texas 77027
(713) 968-7000
Attention: Corporate Secretary
|
Davis Petroleum Acquisition Corp.
1330 Post Oak Blvd.
Suite 600
Houston, Texas 77056
(713) 439-6757
Attention: Corporate Secretary
|
QUESTIONS AND ANSWERS ABOUT THE REINCORPORATION AND THE MERGER
|
12 |
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
|
21 |
SUMMARY
|
23 |
The Companies
|
23 |
The Reincorporation
|
23 |
The Merger
|
24 |
The Special Meetings and Voting
|
29 |
Matters to be Considered in Deciding How to Vote
|
30 |
Selected Consolidated Historical Financial Data of Yuma
|
34 |
Selected Consolidated Historical Financial Data of Davis
|
35 |
Selected Unaudited Pro Forma Condensed Consolidated Combined Financial Information
|
36 |
Summary Pro Forma Combined Oil, Natural Gas and Natural Gas Liquids Reserve and Production Data
|
38 |
Pro Forma Adjusted EBITDA of the Combined Company
|
40 |
Comparative Per Share Information
|
41 |
Comparative Per Share Market Price and Dividend Information
|
42 |
RISK FACTORS
|
43 |
Risks Relating to the Reincorporation
|
43 |
Risks Relating to the Merger
|
43 |
Risks Relating to Yuma’s Business
|
45 |
Risks Relating to Davis’ Business
|
57 |
Risks Relating to the Combined Company’s Operations After Consummation of the Merger
|
61 |
Risks Relating to Yuma Delaware Common Stock Following the Merger
|
65 |
THE COMPANIES
|
67 |
Yuma Energy, Inc.
|
67 |
Yuma Delaware Merger Subsidiary, Inc. and Yuma Merger Subsidiary, Inc..
|
67 |
Davis Petroleum Acquisition Corp.
|
67 |
YUMA SPECIAL MEETING
|
69 |
General
|
69 |
Purpose of the Yuma Special Meeting
|
69 |
Recommendation of the Yuma Board of Directors
|
70 |
Record Date and Voting
|
70 |
Quorum
|
71 |
Vote Required
|
71 |
Revocability of Proxies
|
72 |
Voting Methods
|
72 |
Solicitation of Proxies
|
72 |
DAVIS SPECIAL MEETING
|
73 |
General
|
73 |
Purpose of the Davis Special Meeting
|
73 |
Recommendation of the Davis Board of Directors
|
73 |
Record Date and Voting
|
73 |
Quorum
|
74 |
Vote Required
|
74 |
Revocability of Proxies
|
75 |
Voting by Mail
|
75 |
Solicitation of Proxies
|
75 |
THE REINCORPORATION
|
76 |
Recommendation of Yuma’s Board of Directors
|
76 |
Principal Reasons for the Reincorporation
|
76 |
Reasons for the Reverse Stock Split
|
78 |
No Changes to the Business of Yuma as a Result of the Reincorporation
|
78 |
Significant Differences Between the Corporation Laws of California and Delaware
|
79 |
THE MERGER
|
85 |
General
|
85 |
Background of the Merger
|
85 |
Recommendation of Yuma’s Board of Directors and Reasons for the Merger
|
91 |
Recommendation of Davis’ Board of Directors and Reasons for the Merger
|
93 |
Opinions of ROTH Capital Partners, LLC to the Yuma Board of Directors
|
95 |
Interests of Yuma’s Directors and Executive Officers in the Merger
|
104 |
Interests of Davis’ Directors and Executive Officers in the Merger
|
104 |
Combined Company’s Board of Directors and Management Following the Merger
|
104 |
Regulatory Filings and Approvals Required For Completion of the Merger
|
104 |
Treatment of Yuma Equity Awards
|
104 |
Treatment of Davis Equity Awards
|
104 |
Dividends
|
105 |
Listing of Shares of Yuma Delaware Common Stock
|
105 |
Significant Differences in the Rights of Davis Stockholders and the Rights of Yuma Delaware Stockholders
|
105 |
THE MERGER AGREEMENT
|
111 |
The Reincorporation
|
111 |
The Merger
|
113 |
Conditions to the Completion of the Merger
|
115 |
Representations and Warranties
|
117 |
Conduct of Business by Davis Pending the Merger
|
118 |
Conduct of Business by Yuma and Yuma Delaware Pending the Merger
|
119 |
No Solicitation
|
119 |
Termination of the Merger Agreement
|
120 |
Amendment of the Merger Agreement
|
122 |
VOTING AGREEMENTS
|
123 |
Yuma Significant Shareholder
|
123 |
Davis Significant Stockholders
|
123 |
LOCK-UP AGREEMENTS
|
124 |
REGISTRATION RIGHTS AGREEMENT
|
125 |
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
|
126 |
DISSENTERS’ RIGHTS OF APPRAISAL
|
132 |
ACCOUNTING TREATMENT
|
135 |
INFORMATION ABOUT YUMA
|
136 |
General
|
136 |
Recent Developments
|
137 |
Competition
|
137 |
Regulations
|
137 |
Employees and Principal Office
|
141 |
Oil and Natural Gas Reserves
|
141 |
Legal Proceedings
|
146 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF YUMA
|
147 |
Discussion of Restatement of Non-Cash Errors in the Computation of Income Tax Provision and Recording of Deferred Taxes
|
147 |
Overview
|
148 |
Critical Accounting Policies
|
148 |
Results of Operations For the Three Months Ended March 31, 2016 and 2015
|
149 |
Results of Operations For the Years Ended December 31, 2015, 2014 and 2013
|
153 |
Liquidity and Capital Resources
|
152 |
Hedging Activities
|
159 |
Commitments and Contingencies
|
160 |
Off Balance Sheet Arrangements
|
160 |
Annex A Agreement and Plan of Merger and Reorganization dated as of February 10, 2016, by and among Yuma Energy, Inc., Yuma Delaware Merger Subsidiary, Inc., Yuma Merger Subsidiary, Inc., and Davis Petroleum Acquisition Corp.
|
|
Annex B Voting Agreement – Sam L. Banks
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|
Annex C Voting Agreement – Davis Stockholders
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|
Annex D Form of Lock-up Agreement
|
|
Annex E Form of Registration Rights Agreement
|
|
Annex F Opinion of ROTH Capital Partners, LLC
|
|
Annex G Section 262 of the Delaware General Corporation Law
|
|
Annex H Form of Amended and Restated Certificate of Incorporation of Yuma Delaware Merger Subsidiary, Inc.
|
|
Annex I Form of Amended and Restated Bylaws of Yuma Delaware Merger Subsidiary, Inc.
|
|
Annex J Form of Certificate of Amendment to the Certificate of Incorporation of Yuma Delaware Merger Subsidiary, Inc. to change its name to “Yuma Energy, Inc.”
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|
Annex K Certificate of Designation of the Series D Convertible Preferred Stock of Yuma Delaware Merger Subsidiary, Inc.
|
|
Annex L Form of Amendment to the Certificate of Determination of Yuma Energy, Inc.
|
|
Annex M Amendment to the Yuma Energy, Inc. 2014 Long-Term Incentive Plan
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Q:
|
What is the reincorporation and who votes on it?
|
A:
|
For the reasons set forth below in detail under “The Reincorporation” beginning on page [●], Yuma’s board of directors believes that it is in the best interests of Yuma and its shareholders to change the state of incorporation of Yuma from California to Delaware, which we refer to in this proxy statement/prospectus as the “reincorporation.” Shareholders are urged to read carefully that section of this proxy statement/prospectus, including the related annexes attached hereto, before voting. Throughout this proxy statement/prospectus, we refer to Yuma, the existing California corporation, as “Yuma” and the term “Yuma Delaware” refers to Yuma but as redomesticated in Delaware.
|
|
As discussed below, the principal reasons for the reincorporation are the greater flexibility of Delaware corporate law and the substantial body of case law interpreting that law. Yuma believes that its shareholders will benefit from the well-established principles of corporate governance that Delaware law affords. Also, Davis is a Delaware corporation and strongly supports the reincorporation for these reasons and based on its favorable experience with Delaware corporate law. The amended and restated certificate of incorporation and the amended and restated bylaws of Yuma Delaware are attached hereto as Annexes H and I, respectively.
|
|
Please read the section “The Reincorporation—Significant Differences Between the Corporation Laws of California and Delaware,” for a description of the material differences between Yuma’s articles of incorporation and bylaws and Yuma Delaware’s amended and restated certificate of incorporation and amended and restated bylaws, and differences as between California and Delaware corporate law. Also, please read the section “Amended and Restated Certificate of Incorporation of Yuma Delaware Proposals” beginning on page [●], for a description of the material differences between Yuma’s articles of incorporation and Yuma Delaware’s amended and restated certificate of incorporation.
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|
To effect the reincorporation, Yuma will merge into and its business will be continued by Yuma Delaware and its name will continue to be “Yuma Energy, Inc.”
|
|
If the merger, the reincorporation, the proposals related to the amended and restated certificate of incorporation of Yuma Delaware, and the amendments to the Yuma certificate of determination are approved by the Yuma shareholders, it is anticipated that the reincorporation will become effective as soon as practicable following the Yuma special meeting and immediately prior to the effectiveness of the merger. However, under the merger agreement, the reincorporation may be abandoned or the merger agreement may be amended by the board of directors of Yuma (except that the principal terms may not be amended without shareholder approval), either before or after shareholder approvals have been obtained and prior to the effective date of the reincorporation if, in the opinion of the board of directors of Yuma, circumstances arise which make it inadvisable to proceed with the reincorporation or the merger. Shareholders of Yuma will have no appraisal rights with respect to the reincorporation.
|
|
Davis stockholders are not entitled or required to vote on the reincorporation.
|
Q:
|
How will holders of Yuma common stock be impacted by the reincorporation?
|
A:
|
Pursuant to the merger agreement, Yuma agreed to effect a 1-for-10 reverse stock split as part of the reincorporation. Therefore, each share of Yuma common stock will be converted into one-tenth of one share of Yuma Delaware common stock as part of the reincorporation.
|
Q:
|
How will holders of Yuma preferred stock be impacted by the reincorporation?
|
A:
|
Pursuant to the merger agreement, Yuma agreed to convert its preferred stock into shares of Yuma Delaware common stock as part of the reincorporation. In order to account for the 1-for-10 reverse stock split as part of the reincorporation, each share of Yuma preferred stock will be converted into 3.5 shares of Yuma Delaware common stock, which includes accrued and unpaid dividends on the shares of Yuma preferred stock. Also, please read the section “Amendment to the Yuma Certificate of Determination Proposal” beginning on page [●].
|
Q:
|
What is the proposed merger transaction?
|
A:
|
Yuma and Davis have entered into a merger agreement pursuant to which Yuma Merger Subsidiary, Inc., a wholly owned subsidiary of Yuma Delaware, which we refer to as “Merger Subsidiary,” will merge with and into Davis with Davis surviving the merger as a wholly owned subsidiary of Yuma Delaware, which is Yuma as redomesticated in Delaware, which we refer to this as the “merger.” As part of the merger, Yuma Delaware’s name will be changed to “Yuma Energy, Inc.” At the effective time of the merger, each issued and outstanding share of Davis’ common stock (other than dissenting shares) will be converted automatically into the right to receive approximately 0.0956 shares of Yuma Delaware common stock and each outstanding share of Davis’ preferred stock (other than dissenting shares) will be converted automatically into the right to receive approximately 0.0956 shares of Yuma Delaware preferred stock, subject to adjustment pursuant to the terms of the merger agreement and as described under “The Merger Agreement—The Merger” beginning on page [●]. After the merger, it is expected that former holders of Davis common stock will own approximately 61.1% of Yuma Delaware’s common stock then outstanding and former holders of Yuma’s common stock and preferred stock will own approximately 38.9% of Yuma Delaware’s common stock then outstanding.
|
|
Current holders of Davis’ preferred stock will be issued and will own approximately 3.3 million shares of Yuma Delaware preferred stock after the merger.
|
Q:
|
Why are Yuma and Davis proposing the merger?
|
A:
|
The boards of directors of Yuma and Davis have each concluded that the merger is in the best interests of their stockholders.
|
|
As set forth in greater detail elsewhere in this proxy statement/prospectus, Yuma’s board of directors considered many factors in making its recommendations to Yuma’s shareholders. Among the factors considered by Yuma’s board of directors were:
|
●
|
the combination will greatly improve production and cash flows, and reduce general and administrative expenses on a per barrel basis;
|
●
|
the combination will greatly diversify and increase estimated proved reserves;
|
●
|
the combination will significantly improve Yuma’s liquidity and financial strength and is anticipated to put Yuma in compliance with the covenants under its credit facility;
|
●
|
the combined entity’s market capitalization and its expected enhanced access to debt and equity capital markets, which the Yuma board of directors believes will enhance the ability to finance development and production of the combined entity’s increased scale of operations;
|
●
|
the combination will provide Yuma with a larger portfolio of exploitation and exploration opportunities in resource plays within areas already targeted by Yuma; and
|
●
|
the presentation and opinion of ROTH Capital Partners, LLC, referred to herein as “ROTH,” Yuma’s financial advisor, to the effect that, as of the date of the opinion and based upon the assumptions, limitations, qualifications and conditions stated in the opinion letter, the exchange ratio of the merger as between Yuma and Davis stockholders is fair to Yuma and its shareholders, from a financial point of view, as more fully described below under the caption “The Merger – Opinions of ROTH Capital Partners, LLC to the Yuma Board of Directors.”
|
|
For more detailed information regarding the factors considered by Yuma’s board of directors, see “The Merger—Recommendation of Yuma’s Board of Directors and Reasons for the Merger” beginning on page [●].
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|
As set forth in greater detail elsewhere in this proxy statement/prospectus, Davis’ board of directors considered many factors in making its recommendations to Davis’ stockholders. Among the factors considered by Davis’ board of directors were:
|
●
|
the combination will provide a long-term strategic benefit to Davis stockholders by creating an oil and natural gas company with more diversified reserves and increased scope and scale;
|
●
|
given Yuma’s current significantly constrained liquidity and the fact that liquidity will be essential to the combined company’s business, the requirement as a condition to closing the merger that Yuma or Yuma Delaware enter into a reserve-based revolving credit facility effective immediately following the merger which provides an initial borrowing base and minimum aggregate loan commitments of not less than $44.0 million and other terms acceptable to each of Davis and Yuma in their reasonable discretion;
|
●
|
the potential synergies resulting from elimination of duplicative general and administrative costs, operational synergies resulting from combining operations in the same geographical area and other potential benefits to the cash flow of the combined company;
|
●
|
the fact that there is no public trading market for Davis common stock or preferred stock and that shares of the combined company’s common stock will be registered with the SEC and listed for trading on the NYSE MKT;
|
●
|
the public nature of the combined company’s common stock may facilitate future capital raising, and acquisitions of assets or companies for shares of common stock;
|
●
|
the combined entity’s market capitalization should enhance access to debt and equity capital markets and enhance the ability to finance development and production of the combined company’s properties and increased scale of operations;
|
●
|
current industry, economic and market conditions, and the present and anticipated environment in the independent exploration and production sector of the energy industry suggest that potential acquisition and development opportunities will develop within the sector for companies that achieve superior operating efficiencies and are sufficiently capitalized to survive the current commodity price environment;
|
●
|
through their receipt of Yuma Delaware common stock or Yuma Delaware preferred stock as part of the merger consideration, Davis stockholders have the opportunity to participate in the combined company’s growth and share appreciation in the future (including share appreciation resulting from further exploitation and development of Davis’ and Yuma’s assets) should they determine to retain their Yuma Delaware common stock or Yuma Delaware preferred stock after the merger; and
|
●
|
the form of the merger consideration would be desirable to Davis stockholders in that the Yuma Delaware common stock or preferred stock issuable in the merger (other than the shares issued with respect to accrued and unpaid dividends) would not result in a taxable transaction for Davis stockholders.
|
Q:
|
Why am I receiving this proxy statement/prospectus?
|
A:
|
Yuma’s and Davis’ boards of directors are using this proxy statement/prospectus to solicit proxies of Yuma and Davis stockholders in connection with the merger agreement and the merger. In addition, Yuma Delaware is using this proxy statement/prospectus as a prospectus for Yuma shareholders because Yuma Delaware is offering shares of its common stock to be issued in exchange for shares of Yuma common stock and Yuma preferred stock in the reincorporation and for Davis stockholders because Yuma Delaware is offering shares of its common stock to be issued upon conversion of shares of Davis common stock in the merger. Also, Yuma Delaware is using this proxy statement/prospectus as a prospectus for holders of Yuma Delaware preferred stock upon conversion to Yuma Delaware common stock.
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|
In order to complete the merger, Yuma shareholders must vote to (i) approve and adopt the merger agreement; (ii) approve the reincorporation; (iii) approve the amendments to the Yuma certificate of determination; and (iv) approve all of the proposals related to the amended and restated certificate of incorporation of Yuma Delaware; and Davis stockholders must vote to approve and adopt the merger agreement.
|
|
Yuma and Davis will hold separate special meetings of their respective stockholders to obtain these approvals. This proxy statement/prospectus contains important information about the reincorporation, the merger, the proposals related to the amended and restated certificate of incorporation of Yuma Delaware, the amendments to the Yuma certificate of determination and the special meetings of the stockholders of Yuma and Davis, and you should read it carefully. The enclosed voting materials allow you to vote your shares of Yuma common stock preferred stock and/or Davis common stock and preferred stock without attending the applicable special meetings.
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Q:
|
Why is Yuma seeking shareholder approval for the amendment to the Yuma certificate of determination?
|
A:
|
Because Yuma’s common stock is listed on the NYSE MKT, it is subject to NYSE MKT rules and regulations. Section 713 of the NYSE MKT Company Guide requires common shareholder approval prior to the issuance of common stock, or securities convertible into or exercisable for common stock, equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book value or market value of the stock. The proposed amendment to the Yuma certificate of determination providing for the conversion of Yuma preferred stock into Yuma common stock falls under this rule because the Yuma common stock issuable upon conversion of the Yuma preferred stock will exceed 20% of both the voting power and number of shares of Yuma common stock outstanding before the issuance.
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|
In addition, because Yuma is incorporated in California, it is subject to the corporate laws of California. Under the California Corporation Code, when a series of preferred stock provides for conversion into common stock, unless other steps are taken not applicable to the amendment to the Yuma certificate of determination, the conversion of the preferred stock must be approved by the affirmative vote of at least a majority of the outstanding shares of the class or series of preferred stock affected, unless when the certificate of determination requires a greater vote, as is required in Yuma’s present certificate of determination which requires the affirmative vote of 66⅔% of the outstanding shares of Yuma preferred stock. The proposed conversion of the involved Yuma preferred stock into shares of Yuma common stock falls under these requirements.
|
Q:
|
Who can vote at the special meeting?
|
A:
|
All Yuma shareholders of record as of the close of business on [●], 2016, the record date for determining shareholders entitled to notice of and to vote at Yuma’s special meeting, are entitled to receive notice of and to vote at Yuma’s special meeting. As of the record date, there were [●] shares of Yuma common stock outstanding and entitled to vote at the Yuma special meeting, held by approximately [●] holders of record, and there were [●] shares of Yuma preferred stock outstanding and entitled to vote at the Yuma special meeting, held by approximately [●] holders of record. Each share of Yuma common stock is entitled to one vote on each proposal presented at Yuma’s special meeting. Each share of Yuma preferred stock is entitled to one vote on each proposal presented at Yuma’s special meeting (except for the proposal related to the amendment to the 2014 Plan which is only voted on by holders of Yuma common stock), voting as a separate class.
|
|
All Davis stockholders of record as of the close of business on [●], 2016, the record date for determining stockholders entitled to notice of and to vote at Davis’ special meeting, are entitled to receive notice of and to vote at Davis’ special meeting. As of the record date, there were [●] shares of Davis’ common stock outstanding and [●] shares of its preferred stock outstanding and entitled to vote at the Davis special meeting, held by approximately [●] holders of record. Each share of Davis common stock is entitled to one vote on each proposal presented at Davis’ special meeting. When voted with the Davis common stock, the Davis preferred stock will vote on an as-converted basis. The Davis common stock and Davis preferred stock, voting on an as-converted basis with the Davis common stock will vote on the proposals (including the proposed merger), and the Davis preferred stock will also vote as a separate class on the proposals (including the proposed merger).
|
Q:
|
What constitutes a quorum?
|
A:
|
The Yuma bylaws provide that a majority of the outstanding shares of Yuma common stock and preferred stock entitled to vote at the meeting, represented in person or by proxy, constitutes a quorum at a meeting of its shareholders.
|
|
The Davis bylaws provide that a majority of the outstanding shares of Davis common stock and preferred stock entitled to vote, represented in person or by proxy, constitutes a quorum at a meeting of its stockholders.
|
|
Shares that are voted and shares abstaining from voting are treated as being present at each of the Yuma special meeting and the Davis special meeting, as applicable, for purposes of determining whether a quorum is present.
|
Q:
|
What vote is required to approve the proposals at Yuma’s special meeting and Davis’ special meeting?
|
A:
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Approval of the proposal to approve and adopt the merger agreement, the proposal to approve the reincorporation, the proposals related to the Yuma Delaware amended and restated certificate of incorporation, and the proposal to approve and adopt the amendments to the Yuma certificate of determination each requires the affirmative vote of the holders of at least a majority of the issued and outstanding shares of Yuma common stock and the holders of at least 66⅔% of the issued and outstanding shares of Yuma preferred stock. Approval of the proposal to approve and adopt the amendment to the 2014 Plan requires the affirmative vote of the holders of at least a majority of the shares of Yuma common stock represented in person or by proxy at the special meeting and voting on such proposal, provided that such shares voting affirmatively must also constitute a majority of the required quorum for the meeting. Approval of the proposal to authorize Yuma’s board of directors, in its discretion, to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposals listed above requires the affirmative vote of the holders of at least a majority of the shares of Yuma common stock and preferred stock represented in person or by proxy at the special meeting and voting on such proposal, provided that such shares voting affirmatively must also constitute a majority of the required quorum for the meeting.
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Approval of the proposal by Davis to approve and adopt the merger agreement requires the affirmative vote of the holders of at least a majority of the outstanding shares of Davis common stock and Davis preferred stock voting on an as-converted basis with the Davis common stock, and a majority of the Davis preferred stock voting as a separate class. The proposal to authorize Davis’ board of directors, in its discretion, to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement at the time of the special meeting each requires the affirmative vote of at least a majority of the votes cast by the holders of the shares of Davis common stock and preferred stock voting on an as-converted basis with the Davis common stock represented in person or by proxy at the special meeting and entitled to vote on such proposal.
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A.
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Davis has entered into a voting agreement with Sam L. Banks, Chairman, President and Chief Executive Officer of Yuma, who currently owns 41,809,419 shares of Yuma common stock or approximately 57.6% of the outstanding Yuma common stock. The voting agreement provides that Mr. Banks will vote his shares of Yuma common stock in favor of the proposal to approve and adopt the merger agreement, the proposal to approve the reincorporation, the proposals related to the Yuma Delaware amended and restated certificate of incorporation, and the proposal to approve and adopt the amendments to the Yuma certificate of determination.
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Q.
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How will Davis’ current and former officers and directors and certain significant stockholders vote their shares owned by them?
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A.
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Yuma has entered into a voting agreement with certain current and former directors and officers and certain significant stockholders of Davis who currently own an aggregate of 144,670,488 shares of Davis common stock, or approximately 96.3% of the outstanding Davis common stock, and an aggregate of 33,807,430 shares of Davis preferred stock, or approximately 99.6% of the outstanding Davis preferred stock. The voting agreement provides that these current and former directors and officers and certain significant stockholders of Davis will vote their shares of Davis preferred stock and common stock in favor of the proposal to approve and adopt the merger agreement.
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Q:
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If my shares of Yuma common stock and/or preferred stock are held in “street name” by my broker or other nominee, will my broker or other nominee vote my shares of Yuma common stock and/or preferred stock for me? What happens if I do not vote for a proposal?
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A:
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Unless you instruct your broker or other nominee how to vote your shares of Yuma common stock and/or preferred stock held in street name, your shares will NOT be voted. This is referred to as a “broker non-vote.” If you hold your shares in a stock brokerage account or if your shares are held by a bank or other nominee (that is, in street name), you must provide your broker or other nominee with instructions on how to vote your shares. Please follow the voting instructions provided by your broker or other nominee on the enclosed voting instruction card. You should also be aware that you may not vote shares of Yuma common stock and/or preferred stock held in street name by returning a proxy card directly to Yuma or Davis or by voting in person at the Yuma or Davis special meetings unless you provide a “legal proxy,” which you must obtain from your broker or other nominee.
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If you are a Yuma shareholder, abstentions will be counted in determining the presence of a quorum and broker non-votes will be counted in determining the presence of a quorum. Broker non-votes will not be counted as votes cast with regard to the proposal to approve and adopt the merger agreement, the proposal to approve the reincorporation, the proposals related to the Yuma Delaware amended and restated certificate of incorporation, and the proposal to approve and adopt the amendments to the Yuma certificate of determination, and as such, broker non-votes could result in there not being sufficient votes cast for such proposals. With respect to the proposal to approve and adopt the amendment to the 2014 Plan, broker non-votes could result in there not being sufficient votes cast for such proposal. With respect to the proposal to approve and adopt the proposal to authorize Yuma’s board of directors, in its discretion, to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposals listed above, broker non-votes and abstentions could prevent the proposals from receiving the required affirmative vote of (i) a majority of the shares represented in person or by proxy and voting on the proposals and (ii) a majority of the shares required to constitute the quorum.
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If you are a Davis stockholder, abstentions will be counted in determining the presence of a quorum. Abstentions will have the same effect as votes cast AGAINST (i) the proposal to approve and adopt the merger agreement, and (ii) the proposal to authorize Davis’ board of directors, in its discretion, to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement at the time of the special meeting.
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Q:
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If I am a Davis stockholder, should I send in my stock certificates with my proxy card?
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A:
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NO. Please DO NOT send your Davis stock certificates with your proxy card. If the merger is approved and adopted, you will be sent written instructions for exchanging your stock certificates.
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Q:
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If I am a Yuma shareholder, should I send in my stock certificates with my proxy card?
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A:
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NO. Please DO NOT send your Yuma stock certificates with your proxy card. If the reincorporation is approved and adopted, holders of Yuma preferred stock will be sent written instructions for exchanging their stock certificates. Holders of Yuma common stock will not need to exchange their certificates if the reincorporation is approved and adopted.
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Q:
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What are the tax consequences of the reincorporation for holders of Yuma common stock and preferred stock?
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A:
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The reincorporation is intended to qualify as a reorganization pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code.” Subject to the discussion set forth in “Material U.S. Federal Income Tax Consequences” beginning on page [●], a U.S. holder of Yuma common stock or preferred stock should not recognize (i.e., take into account for tax purposes) gain or loss as a result of the reincorporation. Generally, the Yuma Delaware common stock received in exchange for the Yuma common stock or preferred stock pursuant to the reincorporation should have the same basis in and holding period as the U.S. holder has in the shares of Yuma common stock or preferred stock held by him or her immediately prior to the time the reincorporation is consummated. For a more complete discussion of the material U.S. federal income tax consequences of the reincorporation, see “Material U.S. Federal Income Tax Consequences” beginning on page [●].
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Q:
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Are there special tax consequences of the reincorporation for holders of Yuma preferred stock?
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A
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Any Yuma Delaware common stock received by a U.S. holder in exchange for accrued but unpaid dividends on the Yuma preferred stock could be treated as the receipt of a dividend distribution to such U.S. holder. This will be the case where the fair market value of the Yuma Delaware common stock received (determined immediately following the reincorporation) exceeds the issue price of the Yuma preferred stock surrendered. The amount of the dividend distribution would be the lesser of (i) the amount by which the fair market value of the Yuma Delaware common stock exceeds the issue price of the Yuma preferred stock or (ii) the amount of the dividends in arrears. The portion of the Yuma Delaware common stock treated as a dividend distribution may be subject to U.S. federal income tax, and will have a tax basis equal to its fair market value with a holding period commencing upon its receipt.
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Q:
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What are the tax consequences of the merger?
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A:
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The merger is intended to qualify as a reorganization pursuant to Section 368(a) of the Code. Subject to the discussion set forth in “Material U.S. Federal Income Tax Consequences” beginning on page [●], a U.S. holder of Davis common stock and/or preferred stock should not recognize (i.e., take into account for tax purposes) gain or loss as a result of the merger. Generally, the Yuma Delaware common stock and/or preferred stock received in exchange for the Davis common stock or preferred stock pursuant to the merger should have the same basis in and holding period as the U.S. holder has in the shares of Davis common stock or preferred stock held by him or her immediately prior to the time the merger is consummated.
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Tax matters are very complicated, and the tax consequences of the merger to a particular shareholder will depend on such shareholder’s circumstances. Accordingly, Yuma and Davis urge you to consult your tax advisor for a full understanding of the tax consequences of the merger to you, including the applicability and effect of U.S. federal, state, local and foreign income and other tax laws. For a more complete discussion of the material U.S. federal income tax consequences of the merger, see “Material U.S. Federal Income Tax Consequences” beginning on page [●].
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Q:
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Are there special tax consequences of the reincorporation and merger for non-U.S. holders of Yuma common stock or preferred stock and Davis common stock or preferred stock?
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A:
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If you are a non-U.S. holder of Yuma common stock or preferred stock or Davis common stock or preferred stock, your tax treatment under the Code and whether you are taxable as a result of the reincorporation and the merger may differ from what is described above. Please see “Material U.S. Federal Income Tax Consequences – Non-U.S. Holders” beginning on page [●].
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Q:
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Are Davis stockholders entitled to appraisal rights?
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A:
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Yes. Common and preferred stockholders of Davis who do not vote in favor of the proposal of Davis to approve and adopt the merger agreement will be entitled to dissent to the merger pursuant to Section 262 of the Delaware General Corporation Law, which we refer to as the “DGCL,” and obtain the fair value of their shares if such rights are properly demanded and perfected and not withdrawn or lost and the merger is completed. Please see “Dissenters’ Rights of Appraisal” beginning on page [●]. See Annex G to this proxy statement/prospectus for a copy of Section 262 of the DGCL.
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Q:
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Are Yuma shareholders entitled to appraisal rights?
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A:
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No.
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Q:
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How does Yuma’s board of directors recommend that Yuma shareholders vote?
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A:
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Yuma’s board of directors has unanimously (i) determined that the reincorporation, the merger agreement, the merger, the other transactions contemplated thereby, the amended and restated certificate of incorporation of Yuma Delaware, and the amendments to the Yuma certificate of determination are advisable, fair to, and in the best interests of Yuma and its shareholders, (ii) approved the reincorporation, merger agreement, the merger, the other transactions contemplated thereby, the amended and restated certificate of incorporation of Yuma Delaware, and the amendments to the Yuma certificate of determination, (iii) approved the proposal to amend the 2014 Plan, and (iii) approved the proposal to authorize Yuma’s board of directors, in its discretion, to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.
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Yuma’s board of directors unanimously recommends that Yuma shareholders vote “FOR” the proposal to approve and adopt the merger agreement, “FOR” the proposal to approve the reincorporation, “FOR” all of the proposals related to the amended and restated certificate of incorporation of Yuma Delaware, “FOR” the proposal to approve and adopt the amendments to the Yuma certificate of determination, “FOR” the proposal to amend the 2014 Plan, and “FOR” any proposal to authorize Yuma’s board of directors to adjourn the special meeting. For a more complete description of the recommendation of Yuma’s board of directors, see “The Merger — Recommendation of Yuma’s Board of Directors and Reasons for the Merger” beginning on page [●].
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Q:
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How does Davis’ board of directors recommend that Davis’ stockholders vote?
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A:
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Davis’ board of directors has unanimously (i) determined that the merger agreement, the merger and the other transactions contemplated thereby are advisable, fair to, and in the best interests of Davis and its stockholders, (ii) approved the merger agreement, the merger and the other transactions contemplated by the merger agreement, and (iii) approved the proposal to authorize Davis’ board of directors, in its discretion, to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.
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Davis’ board of directors unanimously recommends that Davis stockholders vote “FOR” the proposal to approve and adopt the merger agreement, and “FOR” any proposal to authorize Davis’ board of directors, in its discretion, to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement at the time of the special meeting. For a more complete description of the recommendation of Davis’ board of directors, see “The Merger — Recommendation of Davis’ Board of Directors and Reasons for the Merger” beginning on page [●].
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A:
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After the reincorporation, each holder of Yuma common stock will own one-tenth of the number of shares of Yuma Delaware common stock that the holder of Yuma common stock held immediately prior to the reincorporation and each holder of Yuma preferred stock will own 3.5 shares of Yuma Delaware common stock for each share of Yuma preferred stock that such holder of Yuma preferred stock held immediately prior to the reincorporation.
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A:
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After the merger, each Yuma Delaware stockholder will continue to own the same number of shares of Yuma Delaware common stock that such stockholder held immediately after the reincorporation and prior to the merger. However, because Yuma Delaware will be issuing new shares of common stock to Davis stockholders in the merger, each outstanding share of Yuma Delaware common stock immediately prior to the merger will represent a smaller percentage of the aggregate number of shares of Yuma Delaware common stock outstanding after the merger. As a result of the merger, each Yuma shareholder will own a smaller percentage of shares in a larger company with more assets.
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A:
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After you have carefully read this proxy statement/prospectus, please respond by completing, signing and dating your proxy card or voting instruction card and returning it in the enclosed preaddressed postage-paid envelope or, if available, by submitting your proxy by one of the other methods specified in your proxy card or voting instruction card as promptly as possible so that your shares of Yuma common stock and/or preferred stock or Davis common stock and/or preferred stock will be represented and voted at Yuma’s special meeting or Davis’ special meeting, as applicable.
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Please refer to your proxy card or voting instruction card forwarded by your broker or other nominee to see which voting options are available to you.
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The method by which you submit a proxy will in no way limit your right to vote at Yuma’s special meeting or Davis’ special meeting if you later decide to attend the meeting in person. However, if your shares of Yuma common stock and/or preferred stock are held in the name of a broker or other nominee, you must obtain a legal proxy, executed in your favor, from your broker or other nominee, to be able to vote in person at Yuma’s special meeting.
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A:
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All shares of Yuma common stock and preferred stock entitled to vote and represented by properly completed proxies received prior to Yuma’s special meeting, and not revoked, will be voted at Yuma’s special meeting as instructed on the proxies. If you properly sign, date and return a proxy card, but do not indicate how your shares of Yuma common stock and preferred stock should be voted on a matter, the shares of Yuma common stock and preferred stock represented by your proxy will be voted as Yuma’s board of directors recommends and therefore “FOR” the proposal to approve and adopt the merger agreement, “FOR” the proposal to approve the reincorporation, “FOR” all of the proposals related to the amended and restated certificate of incorporation of Yuma Delaware, “FOR” the proposal to approve and adopt the amendments to the certificate of determination of Yuma, “FOR” the proposal to amend the 2014 Plan, and “FOR” any proposal to authorize Yuma’s board of directors to adjourn the special meeting. If you do not provide voting instructions to your broker or other nominee, your shares of Yuma common stock will NOT be voted at the meeting and will be considered broker non-votes.
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All shares of Davis common stock and preferred stock entitled to vote and represented by properly completed proxies received prior to Davis’ special meeting, and not revoked, will be voted at Davis’ special meeting as instructed on the proxies. If you properly sign, date and return a proxy card to Davis, but do not indicate how your shares of Davis common stock and/or preferred stock should be voted on a matter, the shares of Davis common stock and/or preferred stock represented by your proxy will be voted as Davis’ board of directors recommends and therefore “FOR” the proposal to approve and adopt the merger agreement and “FOR” any proposal to authorize Davis’ board of directors to adjourn the special meeting. If you do not provide voting instructions to Davis, your shares of Davis common stock and preferred stock will be voted “FOR” both proposals described above.
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A:
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Yes. You may revoke your proxy or change your vote at any time before your proxy is voted at Yuma’s special meeting or Davis’ special meeting, as applicable. If you are a holder of record, you can do this in any of the three following ways:
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●
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by sending a written notice to the Corporate Secretary of Yuma or the Corporate Secretary of Davis, as applicable, at the address set forth below, in time to be received before Yuma’s special meeting or Davis’ special meeting, as applicable, stating that you would like to revoke your proxy;
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●
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by completing, signing and dating another proxy card and returning it by mail in time to be received before Yuma’s special meeting or Davis’ special meeting, as applicable, or by submitting a later dated proxy by the Internet or telephone (in the case of Yuma shareholders) in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or
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●
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by attending the Yuma special meeting or the Davis special meeting, as applicable, and voting in person. However, simply attending Yuma’s special meeting or Davis’ special meeting without voting will not revoke your proxy or change your vote.
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Q:
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What should I do if I receive more than one set of voting materials for Yuma’s special meeting?
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A:
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You may receive more than one set of voting materials for Yuma’s special meeting, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares of Yuma common stock and/or preferred stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of Yuma common stock and/or preferred stock. If you are a holder of record and your shares of Yuma common stock and/or preferred stock are registered in more than one name, you may receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or if available, please submit your proxy by telephone or over the Internet.
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Q:
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What happens if I am a stockholder of both Yuma and Davis?
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A:
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You will receive separate proxy cards for each company and must complete, sign and date each proxy card and return each proxy card in the appropriate preaddressed postage-paid envelope or, if available, by submitting a proxy by one of the other methods specified in your proxy card or voting instruction card for each company.
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Q:
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Who can I call with questions about the Yuma special meeting, the Davis special meeting, the reincorporation, the merger and the other matters to be voted upon?
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A:
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If you have any questions about these matters or how to submit your proxy or voting instruction card, or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card or voting instruction card, you should contact:
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●
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“Questions and Answers About the Reincorporation and the Merger;”
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“Summary—Selected Historical Financial Data of Yuma;” “—Selected Historical Financial Data of Davis;” “—Selected Unaudited Pro Forma Condensed Consolidated Combined Financial Information;” “—Summary Pro Forma Combined Oil, Natural Gas and Natural Gas Liquids Reserve and Production Data;” “—Pro Forma Adjusted EBITDA of the Combined Company;” “—Comparative Per Share Information;” and “—Comparative Per Share Market Price and Dividend Information;”
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●
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“Risk Factors;”
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“The Merger—Background of the Merger;” “—Recommendation of Yuma’s Board of Directors and Reasons for the Merger;” and “—Recommendation of Davis’ Board of Directors and Reasons for the Merger;”
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●
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“The Merger—Opinions of ROTH Capital Partners, LLC to the Yuma Board of Directors;”
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●
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“Unaudited Pro Forma Condensed Consolidated Combined Financial Information;” and
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●
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Statements contained elsewhere in this proxy statement/prospectus concerning Yuma’s and Davis’ plans for the combined company’s growth and future operations or financial position.
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●
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the possibility that the companies may be unable to obtain stockholder approvals required for the merger;
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●
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the possibility that problems may arise in successfully integrating the businesses of the two companies;
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the possibility that the merger may involve unexpected costs;
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●
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the possibility that the businesses may suffer as a result of uncertainty surrounding the merger;
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●
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the possibility that the industry may be subject to future regulatory or legislative actions (including any additional taxes);
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●
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the volatility in commodity prices for oil, natural gas and natural gas liquids, and in the supply of and demand for oil and natural gas;
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the presence or recoverability of estimated oil, natural gas and natural gas liquids reserves and the actual future production rates and associated costs;
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the ability of the combined company to replace oil, natural gas and natural gas liquids reserves;
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environmental risks;
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drilling and operating risks;
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exploration and development risks;
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competition;
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the ability of the combined company’s management to execute its plans to meet its goals;
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the ability of the combined company to retain key members of its senior management and key employees;
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the combined company’s ability to generate sufficient cash flow from operations, borrowings or other sources to fully execute its business plan;
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general economic conditions, whether internationally, nationally or in the regional and local market areas in which Yuma and Davis conduct their businesses, may be less favorable than expected, including the possibility that economic conditions in the United States will worsen and that capital markets are disrupted, which could adversely affect demand for oil and natural gas and make it difficult to access financial markets;
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●
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social unrest, political instability, armed conflict, or acts of terrorism or sabotage in oil and natural gas producing regions, such as northern Africa, the Middle East or our markets; and
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other economic, competitive, governmental, legislative, regulatory, geopolitical and technological factors that may negatively impact our business, operations or pricing.
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●
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the reincorporation shall have occurred;
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●
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the approval by the Yuma shareholders of the amended and restated certificate of incorporation of Yuma Delaware proposals;
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the approval and adoption by Yuma Delaware of the Certificate of Designation of the Series D Preferred Stock;
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the approval and adoption by Yuma shareholders of the merger agreement;
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●
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the approval and adoption by the Yuma shareholders of the amendments to the Yuma certificate of determination;
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●
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the approval and adoption of the merger agreement by Davis stockholders holding at least a majority of all votes entitled to be cast, with the holders of Davis common stock and Davis preferred stock voting together as a single class, and holding at least a majority of all outstanding Davis preferred stock, voting as a separate class;
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●
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the effectiveness of the Form S-4 registration statement, of which this proxy statement/prospectus is a part, and the absence of a stop order suspending the effectiveness of the Form S-4 registration statement or proceedings for such purpose pending before or threatened by the SEC;
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●
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the issuance of shares of Yuma Delaware common stock and preferred stock shall be exempt from registration, or shall have been registered or qualified, under state securities laws;
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●
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the approval for listing on the NYSE MKT of the shares of Yuma Delaware common stock (including the Yuma Delaware common stock to be issued upon conversion of the Yuma Delaware preferred stock) to be issued pursuant to the merger agreement, subject to official notice of issuance;
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●
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Yuma or Yuma Delaware must enter into a reserve based revolving credit facility to be effective immediately upon the merger that provides for an initial borrowing base and minimum aggregate loan commitments of not less than $44.0 million and that is on terms and conditions acceptable to each of Yuma and Davis in their reasonable discretion;
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●
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the boards of directors of Yuma and Davis shall have received an opinion from Jones & Keller, P.C. and Porter Hedges LLP, respectively, dated as of the effective date of the merger, to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code;
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●
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no governmental entity having jurisdiction over any party shall have enacted, issued, promulgated, enforced or entered any order, whether temporary, preliminary or permanent, that makes illegal, enjoins or otherwise prohibits consummation of the merger or the other transactions contemplated by the merger agreement;
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●
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the board of directors of Yuma shall have received an opinion from ROTH to the effect that, as of the date of the merger agreement and based upon and subject to the qualifications and assumptions set forth therein, the exchange ratio of the merger is fair, from a financial point of view, to Yuma and its shareholders;
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●
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the accuracy of the representations and warranties of Yuma and Davis in the merger agreement, subject to certain materiality thresholds;
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●
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the performance in all material respects by each of Yuma and Davis of its respective covenants required to be performed by it under the merger agreement at or prior to the closing date;
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●
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receipt of certificates by executive officers of each of Yuma and Davis to the effect that the conditions described in the preceding two bullet points have been satisfied;
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Yuma and Davis shall each have obtained any consents, approvals and waivers to the merger required of any third party;
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●
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there not having occurred a material adverse effect on Yuma or Davis since the date of the merger agreement, the effects of which are continuing; and
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●
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dissenting shares, if any, shall constitute less than 5% of the issued and outstanding common stock of Davis and less than 5% of the issued and outstanding shares of its preferred stock.
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●
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by mutual written agreement of Yuma and Davis;
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by either Yuma or Davis:
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●
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if the merger is not completed on or before September 30, 2016, unless the failure of the closing to occur by such date is due to the failure of the party seeking to terminate the merger agreement to fulfill any material obligation under the merger agreement or a material breach of the merger agreement by such party or if the failure of the reincorporation to occur on or before such date is due solely to the failure of Yuma to obtain effectiveness of the registration statement;
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●
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if any court or other governmental entity shall have issued a statute, rule, order, decree or regulation or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the merger or making the merger illegal;
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●
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if the Yuma shareholders fail to approve and adopt the merger agreement by the requisite vote;
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●
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if there has been a material breach of any of the representations, warranties or covenants set forth in the merger agreement on the part of any of the other parties, which breach has not been cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party or September 30, 2016 (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement); or
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if the Davis stockholders fail to approve and adopt the merger agreement.
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if the board of directors of Yuma shall have failed to recommend, or shall have withdrawn, modified or amended in a manner adverse to Davis in any material respect its previous board recommendation, or shall have resolved to do any of the foregoing, or shall have recommended another acquisition proposal (as defined below) or if the board of directors of Yuma shall have resolved to accept a superior offer
(as defined below);
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●
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if the board of directors of Davis shall have failed to recommend, or shall have withdrawn, modified or amended in a manner adverse to Yuma in any material respect its previous Davis board recommendation, or shall have resolved to do any of the foregoing, or shall have recommended another acquisition proposal or if the board of directors of Davis shall have resolved to accept a superior offer;
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●
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by Davis if, notwithstanding the existence of the voting agreement with the members of the board of directors of Davis, prior to receipt of the Davis stockholders’ approval, Davis receives a superior offer, resolves to accept such superior offer, complies with the termination fee payment obligations and gives Yuma at least four business days’ prior written notice of its intention to terminate;
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●
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by Yuma, if, notwithstanding the existence of the voting agreement with Sam L. Banks, Chairman, President and Chief Executive Officer of Yuma, prior to receipt of the Yuma shareholders’ approval, Yuma receives a superior offer, resolves to accept such superior offer, complies with the termination fee payment obligations and gives Davis at least four business days’ prior written notice of its intention to terminate;
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by Yuma, if the shareholders of Yuma fail to approve the merger; or
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by Davis, if the shareholders of Yuma fail to approve and adopt the merger agreement or the reincorporation at the Yuma shareholder’s meeting (including any adjournment or postponement thereof).
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extend the time for the performance of any of the obligations or other acts of the other parties under the merger agreement;
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waive any inaccuracies in the other parties’ representations and warranties; and
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waive the other parties’ compliance with any of its agreements or conditions contained in the merger agreement.
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1.
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To consider and vote upon a proposal to approve and adopt the merger agreement, as it may be amended from time to time.
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2.
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To consider and vote upon a proposal to approve the reincorporation.
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3.
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To consider and vote upon the proposals related to the amended and restated certificate of incorporation of Yuma Delaware.
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4.
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To consider and vote upon a proposal to approve the amendment to the Yuma certificate of determination.
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5.
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To consider and vote upon a proposal to adopt and approve an amendment to the Yuma 2014 Long-Term Incentive Plan.
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6.
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To consider and vote on any proposal to authorize Yuma’s board of directors, in its discretion, to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in favor of the proposals listed above.
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●
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the reincorporation, that is, the merger of Yuma into Yuma Delaware, will qualify as a reorganization within the meaning of Section 368(a) of the Code;
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●
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no gain or loss should be recognized by a U.S. holder of Yuma common stock or preferred stock on receipt of Yuma Delaware common stock pursuant to the reincorporation;
|
●
|
the
aggregate tax basis of the Yuma Delaware common stock received by each U.S. holder of Yuma common stock and preferred stock should equal the aggregate tax basis of the Yuma common stock and preferred stock surrendered by such holder in exchange for Yuma Delaware common stock;
|
●
|
the holding period of the Yuma Delaware common stock received by each U.S. holder should include the period during which such holder held the Yuma common stock and preferred stock surrendered in exchange for Yuma Delaware common stock;
|
●
|
U.S. holders of Yuma common stock and/or preferred stock with differing bases or holding periods are urged to consult their tax advisors with respect to identifying the bases or holding periods of the particular shares of Yuma Delaware common stock received in the reincorporation;
|
●
|
no gain or loss will be recognized by Yuma or Yuma Delaware by reason of the reincorporation; and
|
●
|
any Yuma Delaware common stock received in exchange for accrued but unpaid dividends on the Yuma preferred stock could be treated as the receipt of a dividend distribution to such U.S. holder. This will be the case where the fair market value of the Yuma Delaware common stock received (determined immediately following the reincorporation) exceeds the issue price of the Yuma preferred stock surrendered. The amount of the dividend distribution would be the lesser of (i) the amount by which the fair market value of the Yuma Delaware common stock exceeds the issue price of the Yuma preferred stock or (ii) the amount of the dividends in arrears. The portion of the Yuma Delaware common stock treated as a dividend distribution may be subject to U.S. federal income tax and should have a tax basis equal to its fair market value with a holding period commencing upon its receipt.
|
●
|
the merger of Merger Subsidiary with and into Davis, will qualify as a reorganization within the meaning of Section 368(a) of the Code;
|
●
|
no gain or loss should be recognized by a U.S. holder of Yuma Delaware common stock or Davis common stock and/or preferred stock on receipt of Yuma Delaware common stock or preferred stock pursuant to the merger;
|
●
|
the aggregate tax basis of the Yuma Delaware common stock and preferred stock received by each U.S. holder of Davis common stock and/or preferred stock should equal the aggregate tax basis of the Davis common stock and/or preferred stock surrendered by such holder in exchange for Yuma Delaware common stock and preferred stock;
|
●
|
the holding period of the Yuma Delaware common stock and preferred stock received by each U.S. holder should include the period during which such holder held the Davis common stock and/or preferred stock surrendered in exchange for Yuma Delaware common stock and preferred stock;
|
●
|
U.S. holders of Davis common stock and/or preferred stock with differing bases or holding periods are urged to consult their tax advisors with respect to identifying the bases or holding periods of the particular shares of Yuma Delaware common stock and/or preferred stock received in the merger;
|
●
|
any Yuma Delaware preferred stock received in exchange for accrued but unpaid declared dividends on Davis preferred stock could be treated as the receipt of a dividend distribution to such U.S. holder for U.S. federal income tax purposes. The portion of the Yuma Delaware preferred stock treated as a dividend distribution, if any, should have a tax basis equal to its fair market value with a holding period commencing upon its receipt; and
|
●
|
no gain or loss should be recognized by Yuma Delaware or Davis by reason of the merger.
|
Three Months Ended March 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||||||
2016
|
2015
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||||||||
(unaudited)
|
(As Restated) | (As Restated) | (As Restated) | (As Restated) | (As Restated) | |||||||||||||||||||||||
(In thousands, except outstanding shares and per share data) | ||||||||||||||||||||||||||||
Revenues and other operating income:
|
||||||||||||||||||||||||||||
Sales of natural gas and crude
|
$ | 2,932 | $ | 4,573 | $ | 18,681 | $ | 38,659 | $ | 28,235 | $ | 19,684 | $ | 18,083 | ||||||||||||||
Net gains (losses) from commodity derivatives
|
371 | 1,071 | 5,039 | 3,399 | (159 | ) | 1,598 | 871 | ||||||||||||||||||||
Total revenues
|
3,303 | 5,644 | 23,719 | 42,058 | 28,076 | 21,282 | 18,954 | |||||||||||||||||||||
Expenses:
|
||||||||||||||||||||||||||||
Marketing cost of sales
|
- | 102 | 533 | 1,045 | 1,234 | 891 | 4,153 | |||||||||||||||||||||
Lease operating
|
2,013 | 3,223 | 11,401 | 12,817 | 9,316 | 5,099 | 4,792 | |||||||||||||||||||||
Re-engineering and workovers
|
- | 494 | 556 | 3,085 | 2,522 | 434 | 1,340 | |||||||||||||||||||||
General and administrative – stock based compensation
|
418 | 1,738 | 2,289 | 3,388 | 452 | - | - | |||||||||||||||||||||
General and administrative – other
|
2,157 | 1,672 | 7,434 | 8,156 | 4,536 | 3,738 | 3,008 | |||||||||||||||||||||
Depreciation, depletion and amortization
|
2,446 | 4,141 | 13,651 | 19,665 | 12,077 | 5,074 | 2,866 | |||||||||||||||||||||
Asset retirement obligation accretion expense
|
105 | 163 | 605 | 605 | 668 | 265 | 240 | |||||||||||||||||||||
Goodwill impairment
|
- | - | 4,927 | - | - | - | - | |||||||||||||||||||||
Other
|
(25 | ) | 11 | 468 | 98 | 172 | 151 | 376 | ||||||||||||||||||||
Total expenses
|
7,114 | 11,544 | 41,864 | 48,859 | 30,979 | 15,652 | 16,775 | |||||||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||||||
Change in fair value of preferred stock derivative liability - Series A in 2011-2013, Series B in 2013 and 2012
|
- | - | - | (15,677 | ) | (26,259 | ) | (17,099 | ) | (5,604 | ) | |||||||||||||||||
Interest expense
|
(403 | ) | (92 | ) | (456 | ) | (326 | ) | (568 | ) | (210 | ) | (597 | ) | ||||||||||||||
Bank mandated derivative instruments novation cost
|
- | - | - | - | (175 | ) | - | - | ||||||||||||||||||||
Other, net
|
9 | 16 | 36 | 25 | (65 | ) | 8 | 180 | ||||||||||||||||||||
Total other income (expense)
|
(394 | ) | (76 | ) | (420 | ) | (15,978 | ) | (27,067 | ) | (17,301 | ) | (6,021 | ) | ||||||||||||||
Net loss from continuing operations before taxes
|
(4,206 | ) | (5,976 | ) | (18,566 | ) | (22,779 | ) | (29,970 | ) | (11,671 | ) | (3,841 | ) | ||||||||||||||
Income tax expense (benefit)
|
(533 | ) | (2,295 | ) | (3,726 | ) | (1,936 | ) | (1,381 | ) | 3,098 | 854 | ||||||||||||||||
Net loss
|
(3,673 | ) | (3,681 | ) | (14,840 | ) | (20,843 | ) | (28,589 | ) | (14,769 | ) | (4,695 | ) | ||||||||||||||
Discontinued operations – pipeline segment
|
- | - | - | - | - | - | (18 | ) | ||||||||||||||||||||
Net income (loss)
|
(3,673 | ) | (3,681 | ) | (14,840 | ) | (20,843 | ) | (28,589 | ) | (14,769 | ) | (4,713 | ) | ||||||||||||||
Less net income attributable to non-controlling interest
|
- | - | - | - | - | - | 2 | |||||||||||||||||||||
Net loss attributable to Yuma Energy, Inc.
|
(3,673 | ) | (3,681 | ) | (14,840 | ) | (20,843 | ) | (28,589 | ) | (14,769 | ) | (4,715 | ) | ||||||||||||||
Dividends paid in cash, perpetual preferred Series A
|
- | 301 | 1,047 | 224 | - | - | - | |||||||||||||||||||||
Dividends in arrears, perpetual preferred Series A
|
321 | - | 214 | - | - | - | - | |||||||||||||||||||||
Preferred stock accretion, Series A and Series B
|
- | - | - | 787 | 1,102 | 964 | - | |||||||||||||||||||||
Dividends paid in cash, Series A and Series B
|
- | - | - | 445 | 146 | 1,363 | 438 | |||||||||||||||||||||
Dividends paid in kind, Series A and Series B
|
- | - | - | 4,133 | 5,412 | - | - | |||||||||||||||||||||
Net loss attributable to common stockholders
|
$ | (3,994 | ) | $ | (3,982 | ) | $ | (16,101 | ) | $ | (26,432 | ) | $ | (35,249 | ) | $ | (17,096 | ) | $ | (5,153 | ) |
As of and for the three months ended March 31,
|
As of and for the Year Ended December 31,
|
|||||||||||||||||||||||||||
2016
|
2015
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
(As Restated)
|
|||||||||||||||||||||||||
(In thousands, except outstanding shares and per share data)
|
||||||||||||||||||||||||||||
Earnings (loss) per common share:
|
||||||||||||||||||||||||||||
Basic
|
$ | (0.06 | ) | $ | (0.06 | ) | $ | (0.23 | ) | $ | (0.53 | ) | $ | (0.86 | ) | $ | (0.42 | ) | $ | (0.25 | ) | |||||||
Diluted
|
$ | (0.06 | ) | $ | (0.06 | ) | $ | (0.23 | ) | $ | (0.53 | ) | $ | (0.86 | ) | $ | (0.42 | ) | $ | (0.25 | ) | |||||||
Weighted average shares outstanding:
|
||||||||||||||||||||||||||||
Basic
|
71,911,361 | 69,253,681 | 71,013,717 | 49,678,444 | 41,074,953 | 40,896,222 | 20,932,643 | |||||||||||||||||||||
Diluted
|
71,911,361 | 69,253,681 | 71,013,717 | 49,678,444 | 41,074,953 | 40,896,222 | 20,932,643 | |||||||||||||||||||||
Statement of Cash Flow Data
|
||||||||||||||||||||||||||||
Cash provided by (used in)
|
||||||||||||||||||||||||||||
Operating activities
|
$ | (737 | ) | $ | (2,658 | ) | $ | (1,370 | ) | $ | 24,466 | $ | 14,913 | $ | 3,247 | $ | 2,735 | |||||||||||
Investing activities
|
(1,320 | ) | (5,943 | ) | (12,311 | ) | (18,088 | ) | (27,253 | ) | (28,762 | ) | (10,677 | ) | ||||||||||||||
Financing activities
|
(223 | ) | 5,809 | 7,478 | 986 | 11,250 | 29,880 | (43 | ) | |||||||||||||||||||
Balance Sheet Data
|
||||||||||||||||||||||||||||
Total assets
|
$ | 114,173 | $ | 137,514 | $ | 119,621 | $ | 147,596 | $ | 111,632 | $ | 87,015 | $ | 57,118 | ||||||||||||||
Current debt
|
29,862 | 62 | 30,064 | 283 | 178 | 184 | 236 | |||||||||||||||||||||
Long-term debt
|
- | 28,450 | - | 22,900 | 31,215 | 17,875 | 2,975 | |||||||||||||||||||||
Stockholders’ equity
|
66,360 | 79,653 | 69,605 | 80,271 | (47,888 | ) | (8,434 | ) | 8,566 |
Three Months Ended March 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||||||
2016
|
2015
|
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||||||||||
(In thousands, except per share data)
|
||||||||||||||||||||||||||||
Operating Results Data
|
||||||||||||||||||||||||||||
Revenues and other operating income:
|
||||||||||||||||||||||||||||
Sales of natural gas and crude
|
$ | 2,186 | $ | 5,565 | $ | 18,774 | $ | 58,694 | $ | 64,545 | $ | 66,311 | $ | 76,158 | ||||||||||||||
Total revenues
|
2,186 | 5,565 | 18,774 | 58,694 | 64,545 | 66,311 | 76,158 | |||||||||||||||||||||
Expenses:
|
||||||||||||||||||||||||||||
Lease operating and production cost
|
827 | 2,057 | 6,510 | 12,611 | 11,606 | 13,613 | 15,318 | |||||||||||||||||||||
Production and Ad Valorem Taxes
|
140 | 318 | 1,106 | 2,468 | 2,478 | 2,807 | 3,096 | |||||||||||||||||||||
Depreciation, depletion and amortization
|
1,711 | 5,513 | 17,413 | 32,880 | 33,938 | 32,512 | 28,390 | |||||||||||||||||||||
Impairment of oil and gas properties (ceiling test writedown)
(1)
|
10,702 | - | 42,947 | - | - | - | - | |||||||||||||||||||||
General and administrative – stock based compensation
|
197 | 257 | 933 | 1,712 | 1,275 | 628 | 912 | |||||||||||||||||||||
General and administrative – other
|
2,174 | 2,429 | 6,874 | 8,226 | 9,049 | 7,806 | 8,500 | |||||||||||||||||||||
(Gain) loss on derivative instruments
|
(456 | ) | (1,696 | ) | (3,319 | ) | (9,290 | ) | 3,063 | (1,521 | ) | (5,710 | ) | |||||||||||||||
Accretion expense
|
52 | 47 | 176 | 852 | 1,534 | 1,263 | 1,131 | |||||||||||||||||||||
Other operating expenses
|
20 | (40 | ) | 174 | 1,006 | 217 | 68 | 1,116 | ||||||||||||||||||||
Gain on sale of other fixed assets
|
- | - | - | - | - | - | (931 | ) | ||||||||||||||||||||
Total expenses
|
15,366 | 8,885 | 72,814 | 50,465 | 63,160 | 57,176 | 51,822 | |||||||||||||||||||||
Income (Loss) From Operations
|
(13,180 | ) | (3,320 | ) | (54,040 | ) | 8,229 | 1,385 | 9,135 | 24,336 | ||||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||||||
Interest and other income
|
- | - | (21 | ) | (159 | ) | (400 | ) | (47 | ) | (130 | ) | ||||||||||||||||
Interest expense
|
43 | 79 | 578 | 1,226 | 567 | 747 | 2,206 | |||||||||||||||||||||
Net income (loss) before taxes
|
(13,223 | ) | (3,339 | ) | (54,597 | ) | 7,162 | 1,218 | 8,435 | 22,260 | ||||||||||||||||||
Income tax expense (benefit) - current
|
- | - | 6 | (192 | ) | 92 | 56 | - | ||||||||||||||||||||
Income tax expense (benefit) - deferred
|
3 | (1,183 | ) | 10,455 | 2,676 | 270 | (14,563 | ) | - | |||||||||||||||||||
Net income (loss) available to common stockholders
|
$ | (13,226 | ) | $ | (2,216 | ) | $ | (65,058 | ) | $ | 4,678 | $ | 856 | $ | 22,942 | $ | 22,260 | |||||||||||
Earnings (loss) per common share:
|
||||||||||||||||||||||||||||
Basic
|
$ | (0.09 | ) | $ | (0.02 | ) | $ | (0.44 | ) | $ | 0.03 | $ | 0.01 | $ | 0.22 | $ | 0.21 | |||||||||||
Diluted
|
$ | (0.09 | ) | $ | (0.02 | ) | $ | (0.44 | ) | $ | 0.03 | $ | 0.00 | $ | 0.22 | $ | 0.21 | |||||||||||
Weighted average shares outstanding:
|
||||||||||||||||||||||||||||
Basic
|
150,086 | 148,189 | 149,182 | 147,350 | 156,630 | 210,143 | 208,732 | |||||||||||||||||||||
Diluted
|
150,086 | 148,189 | 149,182 | 177,178 | 179,573 | 210,143 | 208,732 | |||||||||||||||||||||
Statement of Cash Flow Data
|
||||||||||||||||||||||||||||
Cash provided by (used in)
|
||||||||||||||||||||||||||||
Operating activities
|
$ | (879 | ) | $ | (5,945 | ) | $ | 11,076 | $ | 32,646 | $ | 49,742 | $ | 42,007 | $ | 35,698 | ||||||||||||
Investing activities
|
(4,141 | ) | (7,750 | ) | (12,279 | ) | 6,980 | (56,431 | ) | (44,933 | ) | (12,850 | ) | |||||||||||||||
Financing activities
|
4,000 | 10,000 | (5,210 | ) | (35,699 | ) | 8,374 | (5,540 | ) | (15,376 | ) | |||||||||||||||||
Balance Sheet Data
|
||||||||||||||||||||||||||||
Total assets
|
$ | 48,111 | $ | 139,623 | $ | 57,443 | $ | 144,451 | $ | 188,102 | $ | 171,303 | $ | 145,032 | ||||||||||||||
Long-term debt
|
- | 15,000 | - | 5,000 | 40,000 | 10,000 | 15,000 | |||||||||||||||||||||
Asset Retirement Obligations
|
5,384 | 7,274 | 5,332 | 7,226 | 27,447 | 29,329 | 18,456 | |||||||||||||||||||||
Stockholders’ equity
|
33,356 | 108,671 | 46,386 | 110,720 | 104,366 | 123,285 | 99,195 |
|
(1)
|
As a result of substantially lower average commodity prices during 2015 and their negative impact on Davis’ estimated proved reserves and estimated future net cash flows, Davis recognized a ceiling test write-down of approximately $42.9 million in 2015 and $10.7 million in the three months ended March 31, 2016. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Davis.”
|
As of and for the Three Months Ended March 31, 2016
|
For the Twelve Months Ended December 31, 2015
|
|||||||
(In thousands, except per share data)
|
||||||||
Pro Forma Statement of Operations Data
|
||||||||
Revenues:
|
||||||||
Sales of gas and oil
|
$ | 5,118 | $ | 37,455 | ||||
Net gains from commodity derivatives
|
$ | 827 | $ | 8,358 | ||||
Total revenues
|
$ | 5,945 | $ | 45,813 | ||||
Expenses:
|
||||||||
Marketing cost of sales
|
- | $ | 533 | |||||
Lease operating expenses
|
$ | 2,980 | $ | 19,017 | ||||
Re-engineering and workovers
|
- | $ | 556 | |||||
General and administrative – stock-based compensation
|
$ | 615 | $ | 3,222 | ||||
General and administrative – other
|
$ | 3,287 | $ | 10,131 | ||||
Depreciation, depletion and amortization
|
$ | 3,356 | $ | 21,165 | ||||
Asset retirement obligation accretion expenses
|
$ | 157 | $ | 781 | ||||
Goodwill impairment
|
- | $ | 4,928 | |||||
Impairment of oil and gas properties
|
$ | 10,702 | $ | 42,947 | ||||
(Gain) on derivative instruments
|
- | - | ||||||
Other
|
$ | (5 | ) | $ | 642 |
Total expenses
|
$ | 21,092 | $ | 103,922 | ||||
Income (loss) from operations
|
$ | (15,147 | ) | $ | (58,109 | ) | ||
Other income (expense):
|
||||||||
Other income, net
|
$ | 9 | $ | 57 | ||||
Interest expense
|
$ | (484 | ) | $ | (1,184 | ) | ||
Net income (loss) before income taxes
|
$ | (15,622 | ) | $ | (59,236 | ) | ||
Income tax (expense) benefit
|
$ | (3 | ) | $ | (12,136 | ) | ||
Net income (loss)
|
$ | (15,625 | ) | $ | (71,222 | ) | ||
Dividends paid in kind, cumulative preferred series D
|
$ | 327 | $ | 1,285 | ||||
Net income (loss) attributable to common stockholders
(a)
|
$ | (15,914 | ) | $ | (72,657 | ) | ||
Net income (loss) per common share:
(a) (b)
|
||||||||
Basic
|
$ | (0.67 | ) | $ | (3.06 | ) | ||
Diluted
|
$ | (0.67 | ) | $ | (3.06 | ) | ||
Pro Forma Balance Sheet Data
|
||||||||
Cash and cash equivalents
|
$ | 2,548 | ||||||
Total current assets
|
$ | 14,462 | ||||||
Total assets
|
$ | 111,029 | ||||||
Total current liabilities
|
$ | 18,921 | ||||||
Long-term debt
|
33,800 | |||||||
Total equity
|
$ | 45,343 | ||||||
|
(a)
|
Includes a pre-tax ceiling test write-down of $42.9 million attributable to Davis for the year ended December 31, 2015, and a pre-tax ceiling test write-down of $10.7 million attributable to Davis for the three months ended March 31, 2016.
|
|
(b)
|
Includes 23.7 million common shares basic and diluted.
|
Estimated Quantities of Reserves as of December 31, 2015
|
||||||||||||
Yuma
Historical
|
Davis
Historical
|
Merger
Pro Forma Combined
|
||||||||||
Estimated Proved Reserves:
|
||||||||||||
Oil (MBbls)
|
6,916 | 1,168 | 8,084 | |||||||||
Natural Gas Liquids (MBbls)
|
2,051 | 1,028 | 3,079 | |||||||||
Natural Gas (MMcf)
|
25,770 | 15,518 | 41,288 | |||||||||
Total (Mboe)
(1)
|
13,261 | 4,782 | 18,043 | |||||||||
Estimated Proved Developed Reserves:
|
||||||||||||
Oil (MBbls)
|
1,802 | 703 | 2,505 | |||||||||
Natural Gas Liquids (MBbls)
|
316 | 605 | 921 | |||||||||
Natural Gas (MMcf)
|
8,552 | 10,464 | 19,016 | |||||||||
Total (Mboe)
(1)
|
3,543 | 3,052 | 6,595 | |||||||||
Estimated Proved Undeveloped Reserves:
|
||||||||||||
Oil (MBbls)
|
5,114 | 464 | 5,578 | |||||||||
Natural Gas Liquids (MBbls)
|
1,735 | 424 | 2,159 | |||||||||
Natural Gas (MMcf)
|
17,217 | 5,054 | 22,271 | |||||||||
Total (Mboe)
(1)
|
9,718 | 1,730 | 11,448 |
Estimated as of December 31, 2015
|
||||||||||||
Yuma
Historical
|
Davis
Historical
|
Merger
Pro Forma Combined
|
||||||||||
PV-10 value ($ in thousands):
(1) (2)
|
||||||||||||
Total estimated proved developed reserves
|
$ | 44,072 | $ | 32,944 | $ | 77,016 | ||||||
Total estimated proved undeveloped reserves
|
$ | 78,836 | $ | 8,036 | $ | 86,872 | ||||||
Total estimated proved reserves
|
$ | 122,908 | $ | 40,980 | $ | 163,888 | ||||||
Standardized measure of discounted future net cash flows ($ in thousands)
(1)
|
$ | 106,545 | (3) | $ | 40,980 | $ | 147,525 |
|
(1)
|
Yuma’s estimated proved reserves were calculated using prices equal to the twelve-month unweighted arithmetic average of the first-day-of-the-month prices for each of the preceding twelve months, which were $50.28 per Bbl (WTI) and $2.59 per MMBtu (HH), for the year ended December 31, 2015. Adjustments were made for location and grade. Davis’ proved reserves were calculated using prices equal to the twelve-month unweighted arithmetic average of the first-day-of-the-month prices for each of the preceding twelve months, which were $50.28 per Bbl, the average Henry Hub spot price of $2.587 per MMBTU was used for the Louisiana and Gulf of Mexico properties and the average Houston Ship Channel spot price of $2.548 per MMBTU was used for the Texas properties for the year ended December 31, 2015. Adjustments were made for location and grade.
|
|
(2)
|
PV-10 is a non-GAAP measure that differs from the GAAP measure “standardized measure of discounted future net cash flows” in that PV-10 is calculated without regard to future income taxes. See “Information About Yuma—Oil and Natural Gas Reserves” and “Information About Davis—Oil, Gas and Natural Gas Liquids Reserve Information” for further explanation of PV-10 and a reconciliation of PV-10 to the standardized measure of discounted future net cash flows for each of Yuma and Davis. Yuma and Davis management believe that the presentation of the PV-10 value is relevant and useful to investors because it presents the estimated discounted future net cash flows attributable to Yuma’s and Davis’ estimated proved reserves independent of its income tax attributes, thereby isolating the intrinsic value of the estimated future cash flows attributable to each company’s reserves. Because many factors that are unique to each individual company impact the amount of future income taxes to be paid, Yuma and Davis believe the use of a pre-tax measure provides greater comparability of assets when evaluating companies. For these reasons, Yuma and Davis management use, and believe the industry generally uses, the PV-10 measure in evaluating and comparing acquisition candidates and assessing the potential return on investment related to investments in oil and natural gas properties. PV-10 includes estimated abandonment costs less salvage. PV-10 does not necessarily represent the fair market value of oil and natural gas properties.
|
Estimated as of December 31, 2015
|
||||||||||||
Yuma
Historical
|
Davis
Historical
|
Merger
Pro Forma Combined
|
||||||||||
Present value of estimated future net revenues (PV-10)
|
$ | 122,908 | $ | 40,980 | $ | 163,888 | ||||||
Future income taxes discounted at 10%
|
(16,363 | ) | - | (16,363 | ) | |||||||
Standardized measure of discounted future net cash flows
|
$ | 106,545 | * | $ | 40,980 | $ | 147,525 |
|
* Reflects the standardized measure of discounted future net cash flows of Yuma as restated in Yuma’s Annual Report on Form 10-K/A. See Note 25 – Supplementary Information on Oil and Natural Gas Exploration, Development and Production Activities (Unaudited) (As Restated) in the Notes to the Consolidated Financial Statements of Yuma included in this proxy
|
|
(3)
|
Reflects the
standardized measure of discounted future net cash flows of Yuma as restated in Yuma’s Annual Report on Form 10-K/A. See Note 25 – Supplementary Information on Oil and Natural Gas Exploration, Development and Production Activities (Unaudited) (As Restated) in the Notes to the Consolidated Financial Statements of Yuma included in this proxy statement/prospectus.
|
Three Months Ended March 31, 2016
|
Twelve Months Ended December 31, 2015
|
|||||||||||||||||||||||
Yuma Historical
|
Davis Historical
|
Merger Pro Forma Combined
|
Yuma
Historical
|
Davis Historical
|
Merger
Pro Forma Combined
|
|||||||||||||||||||
Oil (Bbls)
|
58,449 | 34,718 | 93,167 | 247,177 |
209,500
|
456,677
|
||||||||||||||||||
Natural Gas Liquids (Bbls)
|
16,179 | 30,262 | 46,441 | 74,551 |
129,700
|
204,251
|
||||||||||||||||||
Natural Gas (Mcf)
|
462,179 | 400,365 | 862,544 | 1,993,842 |
2,547,300
|
4,541,142
|
||||||||||||||||||
Total (Boe)
(1)
|
151,658 | 131,708 | 283,366 | 653,995 |
763,800
|
1,417,795
|
|
|
|
(a)
|
Computed by dividing stockholders’ equity by the weighted average number of shares of common stock at the end of such period plus the dilutive effect of interests in securities (such as outstanding equity awards).
|
|
(b)
|
For Davis, the year ended December 31, 2015, includes a pre-tax ceiling test write-down of $42.9 million, and the three months ended March 31, 2016 includes a pre-tax ceiling test write-down of $10.7 million.
|
|
(c)
|
Based on the pro forma net income which gives effect to the merger under the reverse acquisition method of accounting.
|
|
(d)
|
Computed by dividing stockholders’ equity by the number of weighted average outstanding shares of Yuma common stock at the end of such period, adjusted to include the estimated number of shares of Yuma Delaware common stock and preferred stock to be issued in the merger plus the dilutive effect of interests in securities (such as outstanding equity awards) at the end of such period.
|
|
(e)
|
Gives effect to the reincorporation and the merger, including a 1-for-10 reverse split of Yuma common stock into shares of Yuma Delaware common stock, conversion of each share of Yuma preferred stock into 3.5 shares of Yuma Delaware common stock effective upon closing of the reincorporation and conversion of Davis common stock into Yuma Delaware common stock as a result of the merger.
|
Common Stock Price
|
||||||||
High
|
Low
|
|||||||
Quarter Ended
|
||||||||
2014
|
||||||||
March 31
|
$ | 7.15 | $ | 4.86 | ||||
June 30
|
$ | 6.30 | $ | 5.03 | ||||
September 30
|
$ | 5.92 | $ | 3.81 | ||||
December 31
|
$ | 4.28 | $ | 1.71 |
2015
|
||||||||
March 31
|
$ | 2.11 | $ | 1.01 | ||||
June 30
|
$ | 1.17 | $ | 0.49 | ||||
September 30
|
$ | 0.83 | $ | 0.30 | ||||
December 31
|
$ | 0.60 | $ | 0.13 |
2016
|
||||||||
March 31 | $ | 0.33 | $ | 0.15 | ||||
June 30
|
$ | 0.37 | $ | 0.19 | ||||
September 30 (through August 3, 2016)
|
$ | 0.31 | $ | 0.23 |
|
Yuma
Common Stock
|
Implied Value Per Share of Davis Common Stock
|
||||||
February 11, 2016
|
$ | 0.19 | $ | 0.0183 | ||||
[●], 2016
|
[●]
|
[●]
|
●
|
Yuma will not realize the benefits expected from the merger, including a potentially enhanced competitive and financial position, and instead will be subject to all the risks it currently faces as an independent company;
|
●
|
Yuma may experience negative reactions from the financial markets and Yuma’s customers and employees;
|
●
|
under the merger agreement, Yuma may be required to pay to Davis a termination fee of approximately $1.5 million if the merger agreement is terminated under certain circumstances. If such termination fee is payable, the payment of this fee could have material and adverse consequences to the financial condition and operations of Yuma. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page [●];
|
●
|
the merger agreement places certain restrictions on the conduct of Yuma’s business prior to the completion of the merger or the termination of the merger agreement. Such restrictions, the waiver of which is subject to the consent of Davis, may prevent Yuma from making certain acquisitions, taking certain other specified actions or otherwise pursuing business opportunities during the pendency of the merger. See “The Merger Agreement — Conduct of Business of Yuma and Yuma Delaware Pending the Merger” for a description of the restrictive covenants applicable to Yuma beginning on page [●];
|
●
|
matters relating to the merger (including integration planning) may require substantial commitments of time and resources by Yuma management, which would otherwise have been devoted to other opportunities that may have been beneficial to Yuma as an independent company; and
|
●
|
Yuma will continue to be out of compliance with its senior credit facility and will be subject to the terms and provisions under its senior credit facility including the possible acceleration of the outstanding principal and interest.
|
●
|
the domestic and foreign supply of, and demand for, oil and natural gas;
|
●
|
volatility and trading patterns in the commodity-futures markets;
|
●
|
the ability of members of OPEC and other producing countries to agree upon and determine oil prices and production levels;
|
●
|
social unrest and political instability, particularly in major oil and natural gas producing regions outside the United States, such as Africa and the Middle East, and armed conflict or terrorist attacks, whether or not in oil or natural gas producing regions;
|
●
|
the level of consumer product demand;
|
●
|
the growth of consumer product demand in emerging markets, such as China;
|
●
|
labor unrest in oil and natural gas producing regions;
|
●
|
weather conditions, including hurricanes and other natural occurrences that affect the supply and/or demand of oil and natural gas;
|
●
|
the price and availability of alternative fuels;
|
●
|
the price of foreign imports;
|
●
|
worldwide economic conditions; and
|
●
|
the availability of liquid natural gas imports.
|
●
|
adversely affecting Yuma’s financial condition, liquidity, ability to finance planned capital expenditures, and results of operations;
|
●
|
reducing the amount of oil and, natural gas that Yuma can produce economically;
|
●
|
causing Yuma to delay or postpone a significant portion of its capital projects;
|
●
|
materially reducing Yuma’s revenues, operating income, or cash flows;
|
●
|
reducing the amounts of Yuma’s estimated proved oil and natural gas reserves;
|
●
|
reducing the carrying value of Yuma’s oil and natural gas properties due to recognizing additional impairments of proved properties, unproved properties and exploration assets;
|
●
|
reducing the standardized measure of discounted future net cash flows relating to oil and natural gas reserves; and
|
●
|
limiting Yuma’s access to, or increasing the cost of, sources of capital such as equity and long-term debt.
|
·
|
unexpected drilling conditions;
|
·
|
downhole and well completion difficulties;
|
·
|
pressure or irregularities in formations;
|
·
|
equipment failures or breakdowns, or accidents and shortages or delays in the availability of drilling and completion equipment and services;
|
·
|
fires, explosions, blowouts and surface cratering;
|
·
|
adverse weather conditions, including hurricanes; and
|
·
|
compliance with governmental requirements.
|
●
|
actual prices Yuma receives for its oil and natural gas;
|
●
|
actual cost of development and production expenditures;
|
●
|
the amount and timing of actual production; and
|
●
|
changes in governmental regulations or taxation.
|
●
|
human error, accidents, labor force and other factors beyond its control that may cause personal injuries or death to persons and destruction or damage to equipment and facilities;
|
●
|
blowouts, fires, hurricanes, pollution and equipment failures that may result in damage to or destruction of wells, producing formations, production facilities and equipment and increased drilling and production costs;
|
●
|
unavailability of materials and equipment;
|
●
|
engineering and construction delays;
|
●
|
unanticipated transportation costs and delays;
|
●
|
unfavorable weather conditions;
|
●
|
hazards resulting from unusual or unexpected geological or environmental conditions;
|
●
|
environmental regulations and requirements;
|
●
|
accidental leakage of toxic or hazardous materials, such as petroleum liquids, drilling fluids or salt water, into the environment;
|
●
|
hazards resulting from the presence of hydrogen sulfide or other contaminants in natural gas Yuma produces;
|
●
|
changes in laws and regulations, including laws and regulations applicable to oil and natural gas activities or markets for the oil and natural gas produced;
|
●
|
fluctuations in supply and demand for oil and natural gas causing variations of the prices it receives for its oil and natural gas production; and
|
●
|
the availability of alternative fuels and the price at which they become available.
|
●
|
water discharge and disposal permits for drilling operations;
|
●
|
drilling bonds;
|
●
|
drilling permits;
|
●
|
reports concerning operations;
|
●
|
air quality, air emissions, noise levels and related permits;
|
●
|
spacing of wells;
|
●
|
rights-of-way and easements;
|
●
|
unitization and pooling of properties;
|
●
|
pipeline construction;
|
●
|
gathering, transportation and marketing of oil and natural gas;
|
●
|
taxation; and
|
●
|
waste transport and disposal permits and requirements.
|
●
|
personal injury;
|
●
|
bodily injury;
|
●
|
third party property damage;
|
●
|
medical expenses;
|
●
|
legal defense costs;
|
●
|
pollution in some cases;
|
●
|
well blowouts in some cases; and
|
●
|
workers compensation.
|
●
|
its production is less than expected;
|
●
|
there is a widening of price differentials between delivery points for its production; or
|
●
|
the counterparties to its hedging agreements fail to perform under the contracts.
|
●
|
Oil and natural gas prices are volatile. A substantial or extended decline in commodity prices will likely adversely affect Yuma’s (and Davis’ and the post-merger combined company’s) business, financial condition and results of operations and its ability to meet its debt commitments, or capital expenditure obligations and other financial commitments.
|
●
|
Yuma’s (and Davis’ and the post-merger combined company’s) ability to sell its production and/or receive market prices for its production may be adversely affect by transportation capacity constraints and interruptions.
|
●
|
Yuma’s (and Davis’ and the post-merger combined company’s) oil and natural gas activities are subject to various risks which are beyond its control.
|
●
|
Yuma (and each of Davis and the post-merger combined company) is subject to complex federal, state, local and other laws and regulations that from time to time are amended to impose more stringent requirements that could adversely affect the cost, manner or feasibility of doing business.
|
●
|
Federal, state and local legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays.
|
●
|
Regulation related to global warming and climate change could have an adverse effect on Yuma’s (and Davis’ and the post-merger combined company’s) operations and demand for oil and natural gas.
|
●
|
The ongoing implementation of federal legislation enacted in 2010 could have an adverse impact on Yuma’s (and Davis’ and the post-merger combined company’s) ability to use derivative instruments to reduce the effects of commodity prices, interest rates and other risks associated with its business.
|
●
|
Certain federal income tax deductions currently available with respect to crude oil and natural gas and exploration and development may be eliminated as a result of future legislation.
|
●
|
The unavailability or high cost of drilling rigs, pressure pumping equipment and crews, other equipment, supplies, water, personnel and oil field services could adversely affect Yuma’s (and Davis’ and the post-merger combined company’s) ability to execute its exploration and development plans on a timely basis and within its budget.
|
●
|
Yuma (and Davis’ and the post-merger combined company’s) depends on the skill, ability and decisions of third-party operators of the oil and natural gas properties in which it has a non-operated working interest.
|
●
|
Loss of Yuma’s (and Davis’ and the post-merger combined company’s) information and computer systems could adversely affect its business.
|
●
|
A terrorist attack or armed conflict could harm Yuma’s (and Davis’ and the post-merger combined company’s) business.
|
●
|
historical production from the area compared with production from other similar producing wells;
|
●
|
the assumed effects of regulations by governmental agencies;
|
●
|
assumptions concerning future oil and natural gas prices; and
|
●
|
assumptions concerning future operating costs, severance and excise taxes, development costs and work-over and remedial costs.
|
●
|
the quantities of oil and natural gas that are ultimately recovered;
|
●
|
the production and operating costs incurred;
|
●
|
the amount and timing of future development expenditures; and
|
●
|
future oil and natural gas sales prices.
|
●
|
the availability of funds and information relating to a property;
|
●
|
the standards established by Davis for the minimum projected return on investment; and
|
●
|
the transportation of natural gas.
|
●
|
unexpected drilling conditions including blowouts, cratering and explosions;
|
●
|
uncontrollable flows of oil, natural gas or well fluids;
|
●
|
equipment failures, fires or accidents;
|
●
|
pollution and other environmental risks; and
|
●
|
shortages in experienced labor or shortages or delays in the delivery of equipment.
|
●
|
it may be more difficult for Yuma Delaware to satisfy its obligations with respect to its outstanding indebtedness and any failure to comply with the obligations of any of its debt agreements, including financial and other restrictive covenants, could result in an event of default under the agreements governing such indebtedness;
|
●
|
as debt increases, Yuma Delaware will need to use an increasing portion of its cash flows to pay interest on its debt, which will reduce the portion of future cash flows available for operations, capital expenditures, expansion, acquisitions or general corporate or other business activities;
|
●
|
Yuma Delaware may be more vulnerable to economic downturns and adverse developments in its industry or the economy in general, especially extended or further declines in oil and natural gas prices;
|
●
|
with a higher level of debt than some of its competitors, Yuma Delaware may be at a competitive disadvantage for the acquisition of properties and participation in development opportunities; and
|
●
|
high future debt levels of Yuma Delaware could limit its flexibility in planning for, or reacting to, changes in its business and the industry in which it operates.
|
●
|
borrowings from banks or other lenders;
|
●
|
the sale of certain assets;
|
●
|
the issuance of common stock, preferred stock or other equity securities;
|
●
|
joint venture financing; and
|
●
|
production payments.
|
●
|
pay dividends or distributions on its capital stock or issue preferred stock;
|
●
|
repurchase, redeem or retire its capital stock or subordinated debt;
|
●
|
make certain loans and investments;
|
●
|
place restrictions on the ability of subsidiaries to make distributions;
|
●
|
sell assets, including the capital stock of subsidiaries;
|
●
|
enter into certain transactions with affiliates;
|
●
|
create or assume certain liens on Yuma Delaware’s assets;
|
●
|
enter into sale and leaseback transactions;
|
●
|
merge or to enter into other business combination transactions;
|
●
|
enter into transactions that would result in a change of control; or
|
●
|
engage in other corporate activities.
|
●
|
Number of Directors, Board Vacancies, Term of Office
. Yuma Delaware’s amended and restated certificate of incorporation and amended and restated bylaws provide that only the board of directors may set the number of directors. Pursuant to the bylaws of Yuma Delaware the board of directors has the exclusive right, by the affirmative vote of a majority of the remaining directors, to fill vacancies on the board even if the remaining directors do not constitute a quorum. These provisions of the bylaws also provide that any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, rather than the next annual meeting of stockholders as would otherwise be the case, and until his or her successor is elected and qualifies.
|
●
|
Advance Notice Provisions for Stockholder Nominations and Proposals
. Yuma Delaware’s amended and restated bylaws require advance written notice for stockholders to nominate persons for election as directors at, or to bring other business before, any meeting of stockholders. This bylaw provision limits the ability of stockholders to make nominations of persons for election as directors or to introduce other proposals unless Yuma Delaware is notified in a timely manner prior to the meeting.
|
●
|
Amending the Bylaws
. Yuma Delaware’s amended and restated certificate of incorporation permits its board of directors to adopt, alter or repeal any provision of the bylaws or to make new bylaws. Yuma Delaware’s amended and restated bylaws also may be amended by the affirmative vote of its stockholders.
|
●
|
Authorized but Unissued Shares
. Under Yuma Delaware’s amended and restated certificate of incorporation, its board of directors has authority to cause the issuance of preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any such series of preferred stock, all without approval of its stockholders. Nothing in its amended and restated certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of Yuma Delaware common stock.
|
Proposal 1:
|
the proposal to approve and adopt the merger agreement and the transactions contemplated thereby (as further described in the sections of this proxy statement/prospectus entitled “The Merger” and “The Merger Agreement”);
|
|||
Proposal 2:
|
the proposal to approve the reincorporation (as further described herein under the section of this proxy statement/prospectus entitled “The Reincorporation”);
|
|||
Proposal 3:
|
the proposals to approve six provisions in the amended and restated certificate of incorporation of Yuma Delaware that will be in effect after completion of the merger and that are not in the current restated articles of incorporation of Yuma (as further described herein under the section of this proxy statement/prospectus entitled “Amended and Restated Certificate of Incorporation of Yuma Delaware Proposals”):
|
|||
Proposal 3A:
|
a provision in the amended and restated certificate of incorporation of Yuma Delaware that decreases the authorized shares of Yuma Delaware common stock from 300,000,000 shares to 100,000,000 shares and increases the authorized shares of Yuma Delaware preferred stock from 10,000,000 to 20,000,000 shares;
|
|||
Proposal 3B:
|
a provision in the amended and restated certificate of incorporation of Yuma Delaware that provides the Yuma Delaware board of directors with the authority to set the number of directors on the board pursuant to the bylaws of Yuma Delaware;
|
|||
Proposal 3C:
|
the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides for the classification of the board of directors of Yuma Delaware into three classes with staggered terms;
|
|||
Proposal 3D:
|
a provision in the amended and restated certificate of incorporation of Yuma Delaware that restricts the ability of stockholders to remove directors without cause;
|
|||
Proposal 3E:
|
the provision in the amended and restated certificate of incorporation concerning classification of directors which provides that, if at any time the former stockholders of Davis beneficially own less than 50% of the aggregate voting power of all outstanding shares of stock entitled to vote in the election of Yuma Delaware’s directors, at each annual meeting of stockholders following such date, each of the successor directors elected at such annual meeting shall serve for a one-year term; and
|
|||
Proposal 3F:
|
a provision in the amended and restated certificate of incorporation of Yuma Delaware that requires certain actions and proceedings with respect to Yuma Delaware be brought in the federal or state courts located within the state of Delaware; and
|
|||
Proposal 4:
|
the proposal to approve and adopt the amendments to the Yuma certificate of determination (as further described herein under the section of this proxy statement/prospectus entitled “Amendment to the Yuma Certificate of Determination Proposal”);
|
|||
Proposal 5: |
the proposal to approve and adopt the amendment to the Yuma Energy, Inc. 2014 Long-Term Incentive Plan to increase the number of shares available by 4.1 million (as further described herein under the section of this proxy statement/prospectus entitled “Amendment to the Yuma Energy, Inc. 2014 Long-Term Incentive Plan Proposal”); and
|
|||
Proposal 6:
|
the proposal to adjourn the Yuma special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve and adopt the proposals listed above.
|
●
|
“FOR” the proposal to approve and adopt the merger agreement;
|
●
|
“FOR” the proposal to approve the reincorporation;
|
●
|
“FOR” the proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that authorizes 100,000,000 shares of common stock, $0.001 par value per share, of Yuma Delaware, and 20,000,000 shares of preferred stock, $0.001 par value per share, of Yuma Delaware;
|
●
|
“FOR” the proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides the Yuma Delaware board of directors with the authority to set the number of directors on the board pursuant to the bylaws of Yuma Delaware;
|
●
|
“FOR”
proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides for the classification of the board of directors of Yuma Delaware into three classes with staggered terms;
|
●
|
“FOR” the proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that restricts the ability of stockholders to remove directors without cause;
|
●
|
“FOR” the proposal to approve the provision in the amended and restated certificate of incorporation concerning classification of directors which provides that, if at any time the former stockholders of Davis beneficially own less than 50% of the aggregate voting power of all outstanding shares of stock entitled to vote in the election of Yuma Delaware’s directors, at each annual meeting of stockholders following such date, each of the successor directors elected at such annual meeting shall serve for a one-year term;
|
●
|
“FOR” the proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that requires certain actions and proceedings with respect to Yuma Delaware be brought in the federal or state courts located within the state of Delaware;
|
●
|
“FOR” the proposal to approve and adopt the amendments to the Yuma certificate of determination;
|
●
|
“FOR” the proposal to approve and adopt the amendment to the Yuma 2014 Long-Term Incentive Plan; and
|
●
|
“FOR” any adjournment proposal.
|
●
|
Yuma directors and executive officers and their affiliates owned and were entitled to vote [●] shares of Yuma common stock, representing approximately [●]% of the outstanding shares of Yuma common stock;
|
●
|
Yuma directors and executive officers and their affiliates did not own any shares of Davis common stock or Davis preferred stock; and
|
●
|
Sam L. Banks, Yuma’s Chairman of the Board of Directors, President and Chief Executive Officer, has entered into a voting agreement with Davis pursuant to which he has agreed, among other things, to vote all shares of Yuma common stock owned by him in favor of the proposal to approve and adopt the merger agreement, the proposal to approve the reincorporation, and the proposals related to the Yuma Delaware amended and restated certificate of incorporation and to grant an irrevocable proxy to Gregory P. Schneider, or any other person designated by Davis, empowering him to vote all such shares of Yuma common stock at any meeting of Yuma shareholders called for the purpose of voting on the merger agreement, the reincorporation and the provisions of the amended and restated certificate of incorporation of Yuma Delaware. As of [●], 2016, Mr. Banks owned approximately [●]% of the issued and outstanding common stock of Yuma.
|
●
|
submitting a written revocation prior to the special meeting to the Corporate Secretary, Yuma Energy, Inc., 1177 West Loop South, Suite 1825, Houston, Texas 77090;
|
●
|
submitting another signed and later dated proxy card and returning it by mail in time to be received before Yuma’s special meeting or by submitting a later dated proxy by the Internet or telephone prior to the special meeting; or
|
●
|
attending the Yuma special meeting and voting in person.
|
|
Proposal 1:
|
the proposal to approve the merger, the merger agreement and the transactions contemplated by the merger agreement, which are further described in the sections entitled “The Merger” and “The Merger Agreement”; and
|
|
Proposal 2:
|
the proposal to adjourn the Davis special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the foregoing proposal regarding the merger.
|
|
●
|
Davis directors and executive officers and their affiliates owned and were entitled to vote approximately [●] shares of Davis common stock, representing approximately [●]% of the outstanding shares of Davis common stock and approximately [●] shares of Davis preferred stock, representing approximately [●]% of the outstanding shares of Davis preferred stock;
|
|
|
●
|
Yuma directors and executive officers and their affiliates did not own any shares of Davis common stock or Davis preferred stock;
|
|
|
●
|
Davis Petroleum Investments, LLC (“Evercore”), RMCP PIV DPC, LP and RMCP PIV DPC II, LP (collectively, “Red Mountain”), Sankaty Davis, LLC (“Sankaty” and together with Evercore and Red Mountain, the “Significant Stockholders”), Paul-ECP2 Holdings, LP, HarbourVest Partners VIII – Buyout Fund L.P., Dover Street VII L.P., Michael S. Reddin, Thomas E. Hardisty, Gregory P. Schneider, Susan J. Davis and Steven Enger have entered into a voting agreement with Yuma pursuant to which these individuals and entities have agreed, among other things, to vote all shares of Davis common stock and preferred stock owned by each of them in favor of the transactions contemplated in the Merger Agreement and to grant an irrevocable proxy to Sam L. Banks or any other designee of Yuma empowering him to vote all such shares of Davis common stock and preferred stock at any meeting of Davis stockholders called for the purpose of voting on the merger. As of [●], 2016, these stockholders owned approximately [●]% of the issued and outstanding common stock of Davis and [●]% of the issued and outstanding Davis preferred stock; and
|
|
●
|
The Significant Stockholders and certain other stockholders of Davis are parties to an amended and restated stockholders’ agreement dated as of March 8, 2013 (the “Davis Stockholder Agreement”) pursuant to which the stockholders of Davis other than the Significant Stockholders have agreed, among other things, not to vote any of their shares in favor of the entry into a letter of intent or agreement with respect to any change in control, merger or consolidation of Davis, without the prior written approval of a majority of the Significant Stockholders (voting on an as-converted basis). The required approval of the Significant Stockholders has already been obtained, however, with regard to the Merger and the Merger Agreement. As of [●], 2016, the Significant Stockholders owned approximately [●]% of the issued and outstanding common stock of Davis on an as-converted basis.
|
|
●
|
submitting a written revocation prior to the special meeting to Susan J. Davis, Vice President Finance, Davis Petroleum Acquisition Corp., at 1330 Post Oak Blvd., Suite 600, Houston, Texas 77056;
|
●
|
submitting another proxy prior to the special meeting by mail that is dated later than the original proxy; or
|
●
|
attending the Davis special meeting and voting in person.
|
●
|
highly developed and predictable corporate law in Delaware;
|
●
|
enhanced ability of the majority of stockholders to exercise control; and
|
●
|
enhanced ability to attract and retain directors and officers.
|
●
|
meet certain continued listing requirements of the NYSE MKT;
|
●
|
appeal to a broader range of investors to generate greater investor interest in Yuma (Yuma Delaware after the reincorporation); and
|
●
|
improve the perception of Yuma Delaware common stock as an investment security.
|
Provision
|
Yuma
|
Yuma Delaware
|
||
Authorized Shares
|
The authorized capital stock of Yuma consists of 300,000,000 shares of common stock, no par value, and 10,000,000 shares of preferred stock, no par value.
|
The authorized capital stock of Yuma Delaware consists of 100,000,000 shares of common stock, $0.001 par value per share, and 20,000,000 shares of preferred stock, $0.001 par value per share.
|
||
Restrictions on Transactions with Interested Stockholders
|
California law provides that, except in certain circumstances, when a tender offer or a proposal for a reorganization or sale of assets is made by an interested party (generally, a person who controls the corporation), the interested party must provide the other shareholders with an affirmative written opinion as to the fairness of the consideration to be paid to the shareholders. This fairness opinion requirement does not apply to corporations that have fewer than 100 shareholders of record or to a transaction that has been qualified under California state securities laws. Furthermore, if a tender of shares or a vote is sought pursuant to an interested party’s proposal and a later tender offer or proposal for a reorganization or sale of asset is made by another party, the shareholders must be informed of the later offer and be afforded a reasonable opportunity to withdraw their vote, consent or proxy, and to withdraw any tendered shares.
Also, the so-called California 50/90 rule described below may also limit a corporation’s ability to engage in certain business combinations.
|
Section 203 prohibits, subject to certain exceptions, a Delaware corporation from engaging in a business combination with an interested stockholder (i.e., a stockholder acquiring 15% or more of the outstanding voting stock) for three years following the date that such stockholder becomes an interested stockholder without approval from the board of directors. Section 203 may make it more difficult for an acquirer to consummate certain types of unfriendly or hostile corporate takeovers or other transactions involving the corporation that have not been approved by the board of directors. Yuma Delaware does not intend to opt out of Section 203 in connection with the reincorporation.
|
Vote Required to Approve Merger or Sale of Company
|
California law requires the affirmative vote of not less than a majority of the outstanding shares to approve a merger of the company or a sale of substantially all the assets of the company.
|
Delaware law requires the affirmative vote of not less than a majority of the outstanding shares to approve a merger of the company or a sale of substantially all the assets of the company.
|
||
50/90 Rule Restriction on Cash Mergers
|
Under California law, a merger may not be consummated for cash if the purchaser owns more than 50% but less than 90% of the then-outstanding shares of the target corporation unless either (i) all the shareholders of the target corporation consent, which is not practical for a public corporation, or (ii) the California Commissioner of Corporations approves the merger.
The 50/90 rule may make it more difficult for an acquiror to make an all cash acquisition of the company which is opposed by the board of Yuma. Specifically, the 50/90 rule encourages such an acquiror making an unsolicited tender offer to either tender for less than 50% of the outstanding shares or more than 90% of the outstanding shares. A purchase by such acquiror of less than 50% of the outstanding shares does not allow the acquiror to gain ownership of the majority of the outstanding shares needed to approve a second step merger (which merger would be used to enable the acquiror to acquire 100% of the company’s equity) and, therefore, creates risk for such an acquiror that such a favorable vote will not be obtained. Yet, a tender offer conditioned upon receipt of tenders from at least 90% of the outstanding shares also creates risk for such an acquiror since it may be very difficult to receive tenders from holders of at least 90% of the outstanding shares. Consequently, it is possible that these risks would discourage some potential acquirors from pursuing an all cash acquisition of the company opposed by the board of directors of Yuma.
|
Delaware law does not have a provision similar to the 50/90 rule in California.
|
||
Bylaw Amendments
|
The California Bylaws may be amended by shareholders owning a majority of the outstanding shares, or by the board; provided, however, that a change in the authorized number of directors requires approval by both the board and the shareholders.
|
The Delaware Bylaws may be amended by the affirmative vote of the holders of at least a majority of the total voting power of the issued and outstanding shares of Yuma Delaware, voting together as a single class, or by the board.
|
||
Stockholder Action by Written Consent
|
The California Bylaws provide that any action that may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, is signed by holders of outstanding shares 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.
Under California law, directors may not be elected by written consent except by unanimous written consent of all outstanding shares entitled to vote for the election of directors.
|
The Delaware Certificate and the Delaware Bylaws provide that any action that may be taken at any annual or special meeting of stockholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the actions so taken, is signed by holders of outstanding shares 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. Any stockholder of record seeking to have the stockholders take corporate action by written consent shall request the board to fix a record date. The board shall promptly, but in all events within ten days after the date, on which such a request is received, adopt a resolution fixing the record date.
|
Shareholder Ability to Call Special Shareholder Meetings
|
Under California law, a special meeting of shareholders may be called by the board of directors, the chairman of the board, the president, the holders of shares entitled to cast not less than 10% of the votes at the meeting or any additional persons as may be authorized by the company’s articles of incorporation or bylaws.
|
The Delaware Bylaws provide that a special meeting of stockholders may be called by the board of directors, the chairperson of the board of directors, the chief executive officer, the president (in the absence of a chief executive officer), or by the secretary whenever requested in writing to do so by holders of at least ten percent (10%) of the voting power of the issued and outstanding shares.
|
||
Number of Directors
|
The California Articles provide that the authorized number of directors of Yuma shall be not less than five nor more than nine, with the exact number of directors within those limits to be determined from time to time by the board of directors.
|
The Delaware bylaws provide that the Yuma Delaware board of directors shall initially consist of two to seven, with the exact number to be determined from time to time by the board of directors. The Yuma Delaware board of directors will have seven directors after closing of the merger.
|
||
Classified board
|
The Yuma Articles provide that the Yuma board of directors is classified into two classes: Class I and Class II, each class having a two-year term.
|
The Delaware Certificate provides that the Yuma Delaware board of directors is classified into three classes: Class I, Class II and Class III, each class having a three-year term of office, except that the initial Class I directors shall serve a term of one year and the initial Class II directors shall serve a term of two years.
|
||
Filling Vacancies on the board
|
Under the California Bylaws, vacancies on the Yuma board of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, at any regular or special meeting of the Yuma board of directors, except that a vacancy created by the removal of a director by a vote or written consent of the stockholders may be filled only by a vote or written consent of the shareholders.
|
Under the Delaware Bylaws, vacancies on the Yuma Delaware board of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, at any regular or special meeting of the Yuma Delaware board of directors.
|
||
Cumulative Voting
|
Cumulative voting is eliminated in the California Articles.
|
No cumulative voting is permitted under the Delaware Certificate.
|
Vote Required to Elect Directors
|
California laws provide that directors are elected by the holders of a plurality of the votes cast by the holders of shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
|
The Delaware Bylaws provide that a nominee for director shall be elected to the board of directors if a majority of the votes cast are in favor of such nominee's election; provided, that, if the number of nominees for director exceeds the number of directors to be elected, directors shall be elected by a plurality of the votes cast by the holders of shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
|
||
Indemnification
|
California law requires indemnification when the indemnitee has defended the action successfully on the merits. Expenses incurred by an officer or director in defending an action may be paid in advance, if the director or officer undertakes to repay such amounts if it is ultimately determined that he or she is not entitled to indemnification. California law authorizes a corporation to purchase indemnity insurance for the benefit of its officers, directors, employees and agents whether or not the corporation would have the power to indemnify against the liability covered by the policy.
California law permits a corporation to provide rights to indemnification beyond those provided therein to the extent such additional indemnification is authorized in the corporation’s articles of incorporation. Thus, if so authorized, rights to indemnification may be provided pursuant to agreements or bylaw provisions which make mandatory the permissive indemnification provided by California law.
The California Articles authorize indemnification to the fullest extent permissible under California law, and such indemnification for the company’s directors and officers is provided for in the California Bylaws.
|
Delaware law generally permits indemnification of losses and expenses, including attorneys’ fees, actually and reasonably incurred in the defense or settlement of a derivative or third party action, provided there is a determination by a majority vote of a disinterested quorum of the directors, by independent legal counsel or by the stockholders that the person seeking indemnification acted in good faith and in a manner reasonably believed to be in the best interests of the corporation. Without court approval, however, no indemnification may be made in respect of any derivative action in which such person is adjudged liable for negligence or misconduct in the performance of his or her duty to the corporation. Expenses incurred by an officer or director in defending an action may be paid in advance, if the director or officer undertakes to repay such amounts if it is ultimately determined that he or she is not entitled to indemnification. Delaware law authorizes a corporation to purchase indemnity insurance for the benefit of its directors, officers, employees and agents whether or not the corporation would have the power to indemnify against the liability covered by the policy.
Delaware law permits a Delaware corporation to provide indemnification in excess of that provided by statute.
The Delaware Certificate authorizes indemnification to the fullest extent permissible under Delaware law.
|
||
Elimination of Director Personal Liability for Monetary Damages
|
California law permits a corporation to eliminate the personal liability of a director for monetary damages in an action brought by or in the right of the corporation for breach of the director’s duties to the corporation and its shareholders, except where such liability is based on:
·
Intentional misconduct or knowing and culpable violation of law;
·
Acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director;
·
Receipt of an improper personal benefit;
·
Acts or omissions that show reckless disregard for the director’s duty to the corporation or its shareholders, where the director in the ordinary course of performing a director’s duties should be aware of a risk of serious injury to the corporation or its shareholders;
·
Acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director’s duty to the corporation and its shareholders;
·
Transactions between the corporation and a director who has a material financial interest in such transaction; or
·
Liability for improper distributions loans or guarantees.
The California Articles eliminate the liability of directors for monetary damages to the fullest extent permissible under California law.
|
The DGCL permits a corporation to eliminate the personal liability of directors for monetary damages, except where such liability is based on:
·
Breaches of the director’s duty of loyalty to the corporation or its stockholders;
·
Acts or omissions not in good faith or involving intentional misconduct or knowing violations of law;
·
The payment of unlawful dividends or unlawful stock repurchases or redemption; or
·
Transactions in which the director received an improper personal benefit.
Such a limitation of liability provision also may not limit a director’s liability for violation of, or otherwise relieve the company or directors from the necessity of complying with, federal or state securities laws, or affect the availability of non-monetary remedies such as injunctive relief or rescission.
The Delaware Certificate eliminates the liability of directors to the company for monetary damages to the fullest extent permissible under the DGCL. As a result, following the reincorporation, directors of Yuma Delaware may not be held liable for monetary damages even for gross negligence or lack of due care in carrying out their fiduciary duties as directors, so long as that gross negligence or lack of due care does not involve bad faith or a breach of their duty of loyalty to the company.
|
Dividends
|
Under the California Bylaws, the Yuma board of directors may declare dividends upon shares of its capital stock, subject to the satisfaction by Yuma of financial requirements under California law.
|
Under the Delaware Bylaws, the Yuma Delaware board of directors may declare dividends upon shares of its capital stock, subject to the satisfaction by Yuma Delaware of financial requirements under Delaware law.
|
||
Forum Selection
|
Not addressed.
|
Delaware courts have upheld the right of Delaware corporations to include forum selection provisions in their bylaws. Such provisions normally provide that stockholders bringing derivative claims or claims alleging breaches of fiduciary duties arising from the DGCL or otherwise implicating the internal affairs of the corporation be brought exclusively in Delaware state or federal courts.
Under the Delaware Certificate, unless we consent in writing to the selection of an alternative forum, the Delaware Court of Chancery will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of Yuma Delaware, any action asserting a claim of breach of a fiduciary duty owed by any director, officer, other employee or stockholder of Yuma Delaware to it or its stockholders, any action asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction upon the Delaware Court of Chancery, any action asserting a claim arising pursuant to any provision of our Delaware Certificate or Delaware Bylaws, or any action asserting a claim governed by the internal affairs doctrine.
|
●
|
the combination will greatly increase production and cash flows and reduce general and administrative expenses on a per barrel basis;
|
●
|
the combination will increase estimated proved reserves;
|
●
|
the combination will significantly improve Yuma’s liquidity and financial strength and is anticipated to put Yuma in compliance with the covenants under its credit facility;
|
●
|
the combined entity’s market capitalization and its expected enhanced access to debt and equity capital markets, which the Yuma board of directors believes will enhance the ability to finance development and production of the combined entity’s increased scale of operations;
|
●
|
the combination will provide Yuma with participation in a larger portfolio of exploitation and exploration opportunities in resource plays within areas already targeted by Yuma; and
|
●
|
the merger will create a larger company that is expected to have more liquidity in its common stock and better access to capital markets, which should provide greater financial flexibility.
|
●
|
information concerning the financial condition, results of operations, prospects and businesses of Yuma and Davis, including the respective companies’ reserves, production volumes, cash flows from operations, performance of Yuma’s common stock price over various periods, as well as current industry, economic and market conditions;
|
●
|
the results of business, legal and financial due diligence investigations of Davis conducted by Yuma’s management and its legal and financial advisors;
|
●
|
the presentation and opinions of ROTH to the effect that, as of the date of the opinion and based on the assumptions, limitations, qualifications and conditions stated in the opinion letter, from a financial point of view, the merger exchange ratio is fair to Yuma and its shareholders, from a financial point of view;
|
●
|
the provisions that allow Yuma to engage in negotiations with, and provide information to, third parties in response to unsolicited, bona fide, written acquisition proposals from such third parties that may be superior to the Davis proposed merger; and
|
●
|
unless an alternative superior merger proposal received from a third party is matched by Davis, the merger agreement allows Yuma to terminate the merger agreement prior to the receipt of Yuma’s shareholder approval of the merger and to enter into a written agreement with a third party to effectuate a superior proposal.
|
●
|
because Yuma Delaware will be issuing a large number of new shares of common stock to Davis’ stockholders in the merger, each outstanding share of Yuma Delaware common stock immediately prior to the merger will represent a much smaller percentage of Yuma Delaware’s total shares of common stock after the merger;
|
●
|
if oil or gas prices decrease, the combined assets will be less desirable from a financial point of view;
|
●
|
there are significant risks inherent in combining and integrating two companies, including that the companies may not be integrated successfully and that successful integration of the companies will require the dedication of management resources, which will temporarily detract attention from the day-to-day businesses of the combined company;
|
●
|
the capital requirements necessary to achieve the expected growth of the combined company’s businesses will be significant, and there can be no assurance that the combined company will be able to fund all of its capital requirements from operating cash flows;
|
●
|
the merger agreement generally prohibits Yuma, its management employees, directors and advisors from taking any action to seek or solicit an alternative transaction or takeover proposal and from recommending, participating in discussions regarding or furnishing information with respect to an alternative takeover proposal, except in each case in limited circumstances, which permit the members of the Yuma board to comply with their fiduciary duties;
|
●
|
in the event that the merger is not consummated, the failed transaction costs, including costs of potential litigation and a potential termination fee of $1.5 million, arising from the failed merger, will be significant to a company the size of Yuma;
|
●
|
the merger might not be completed as a result of a failure to satisfy the conditions contained in the merger agreement. Neither Yuma nor Davis is obligated to consummate the merger unless the conditions in the merger agreement are satisfied or, in some cases, waived; and
|
●
|
other matters described under the caption “Risk Factors” beginning on page [●].
|
●
|
the combination will provide a long-term strategic benefit to Davis stockholders by creating an oil and natural gas company with more diversified reserves and increased scope and scale;
|
●
|
given Yuma’s current significantly constrained liquidity and the fact that liquidity will be essential to the combined company’s business, the requirement as a condition to closing the merger that Yuma or Yuma Delaware enter into a reserve based revolving credit facility effective immediately following the merger which provides an initial borrowing base and minimum aggregate loan commitments of not less than $44.0 million and other terms acceptable to each of Davis and Yuma in their reasonable discretion;
|
●
|
the potential synergies resulting from elimination of duplicative general and administrative costs, operational synergies resulting from combining operations in the same geographical area and other potential benefits to the cash flow of the combined company;
|
●
|
the fact that there is no public trading market for Davis common stock or preferred stock and that shares of the combined company’s common stock will be registered and listed for trading on the NYSE MKT;
|
●
|
the public nature of the combined company’s common stock may facilitate future capital raising, and acquisitions of assets or companies for shares of common stock;
|
●
|
the combined entity’s market capitalization should enhance access to debt and equity capital markets and enhance the ability to finance development and production of the combined company’s properties and increased scale of operations;
|
●
|
current industry, economic and market conditions, and the present and anticipated environment in the independent exploration and production sector of the energy industry suggest that potential acquisition and development opportunities will develop within the sector for companies that achieve superior operating efficiencies and are sufficiently capitalized to survive the current commodity price environment;
|
●
|
through their receipt of Yuma Delaware common stock or preferred stock as part of the merger consideration, Davis stockholders have the opportunity to participate in the combined company’s growth and share appreciation in the future (including share appreciation resulting from further exploitation and development of Davis’ and Yuma’s assets) should they determine to retain their Yuma Delaware common stock or Yuma Delaware preferred stock after the merger; and
|
●
|
the form of the merger consideration would be desirable to Davis stockholders in that the Yuma Delaware common stock or preferred stock issuable in the merger (other than the shares issued with respect to accrued and unpaid dividends) would not result in a taxable transaction for Davis stockholders.
|
●
|
the nature of the closing conditions included in the merger agreement, including the definition of the circumstances that would constitute a material adverse effect on Davis and Yuma for purposes of the agreement and the requirement that Yuma or Yuma Delaware must enter into a reserve based revolving credit facility effective immediately following the merger which provides an initial borrowing base and minimum aggregate loan commitments of not less than $44.0 million and other terms acceptable to each of Davis and Yuma in their reasonable discretion;
|
●
|
the provisions that allow Davis to engage in negotiations with, and provide information to, third parties in response to unsolicited, bona fide, written acquisition proposals from such third parties that may be superior to the Yuma merger consideration; and
|
|
●
|
unless an alternative superior merger proposal received from a third party is matched by Yuma, the merger agreement allows Davis to terminate the merger agreement prior to the receipt of Davis’ stockholder approval of the merger and to enter into a written agreement with a third party to effectuate a superior proposal.
|
●
|
that the merger might not be completed as a result of a failure to satisfy one or more conditions to the merger;
|
●
|
that the operations of the two companies may not be integrated successfully;
|
●
|
that any anticipated synergies may not be fully realized;
|
●
|
the exchange ratio for the shares of Yuma Delaware common stock shares to be received in the merger is fixed so that the Davis stockholders will not have the continued opportunity to benefit from any appreciation in the share price of Davis common stock between the announcement of the merger agreement and completion of the merger;
|
●
|
that the trading value of the shares of Yuma common stock on the date the merger agreement was signed might be less at the time the merger is consummated as a result of market fluctuations in the price of Yuma common stock due to the fixed exchange ratio of the Yuma Delaware common stock to be issued for the Davis common stock and the fixed exchange ratio of shares of Yuma Delaware preferred stock, which will be convertible into Yuma Delaware common stock, for the Davis preferred stock;
|
●
|
that the merger agreement generally prohibits Davis, its management employees, directors and advisors from taking any action to seek or solicit an alternative transaction or takeover proposal and from recommending, participating in discussions regarding or furnishing information with respect to an alternative takeover proposal, except in each case in limited circumstances, which permit the members of the Davis board to comply with their fiduciary duties;
|
●
|
that in the event of the termination of the merger agreement in certain instances Davis could be responsible for payment to Yuma of a termination fee of $1.5 million;
|
●
|
the fact that the merger agreement contains restrictions on the conduct of Davis’ business prior to completion of the proposed merger, including requiring Davis to conduct its business only in the ordinary course of business, subject to specific limitations, which could delay or prevent Davis from undertaking business opportunities that may arise pending completion of the merger;
|
●
|
in the event that the merger is not consummated, the failed transaction costs, including costs of potential litigation, arising from the failed merger agreement, will be significant to Davis; and
|
●
|
other matters described under the caption “Risk Factors” beginning on page [
—
].
|
● |
with respect to the total consideration opinion, reviewed and analyzed the financial terms of the unsigned execution draft of the merger agreement, dated as of February 8, 2016, and with respect to the exchange ratio opinion, reviewed and analyzed the financial terms of the executed merger agreement, dated as of February 10, 2016, as amended to date, or the merger agreement;
|
●
|
reviewed certain publicly available and other business and financial information provided by Yuma that ROTH believed to be relevant to its inquiry;
|
●
|
reviewed certain internal financial statements and other financial and operating data concerning Yuma and Davis, respectively;
|
●
|
reviewed a reserve engineering report, from Davis, prepared by Netherland Sewell & Associates, Inc., or NSAI, dated as of January 6, 2016, or the Davis reserve report;
|
●
|
reviewed a reserve engineering report, from Yuma, prepared by NSAI, dated as of January 22, 2016, or the Yuma reserve report;
|
●
|
discussed the past and current operations, financial condition and prospects of each of Davis and Yuma with management of Yuma, including the assessments of the management of Yuma as to the liquidity needs of, and financing alternatives and other capital resources available to, Yuma;
|
●
|
participated in certain discussions with management of Yuma regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction;
|
●
|
reviewed the reported prices and trading activity for Yuma common stock and for Yuma preferred 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 of Yuma and Davis, respectively, the prices and trading activity of Yuma common stock with that of certain publicly traded companies ROTH deemed relevant, and other trading data for public companies which ROTH deemed comparable to Davis and Yuma;
|
●
|
compared the financial terms of the transaction to financial terms, to the extent publicly available, of certain other acquisition transactions ROTH deemed relevant;
|
●
|
participated in certain discussions with management of Yuma, and with representatives of Yuma’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.
|
Mean Value/ Average Price Paid
(1)
|
Mean Value/ Average Price Paid as Risk Adjusted
(2)
|
|||||||
Transaction Value ($MM)
|
$ | 403.7 | $ | 403.7 | ||||
Proved Reserves Value
|
$ | 17.26 | $ | 10.11 | ||||
Production Value
|
$ | 51,496 | $ | 30,149 | ||||
Average Price per Acre
|
$ | 6,192 | $ | 6,192 |
(1)
|
Transactions were realized verse an average WTI Oil Price of $51.24 per barrel.
|
(2)
|
Transactions were realized verse a base WTI Oil Price of $30.00 per barrel.
|
Company Name
|
Ticker
|
Evolution Petroleum Corporation
|
EPM
|
PetroQuest Energy, Inc.
|
PQ
|
Comstock Resources, Inc.
|
CRK
|
Contango Oil & Gas Company
|
MCF
|
Stone Energy Corporation
|
SGY
|
Jones Energy, Inc.
|
JONE
|
Energy XXI Ltd.
|
EXXI
|
Halcón Resources Corporation
|
HK
|
EV/ BOE (Proved)
|
EV/ (BOE/d)
|
EV/EBITDA FY2015(E)
|
|
Mean
|
$11.12
|
$46,379
|
5.5x
|
Median
|
$11.34
|
$38,877
|
4.3x
|
Market Valuation Metrics
|
||||
Production Value
|
$ | 52,904,058 | ||
Proved Reserves Value
|
$ | 36,114,771 | ||
2015 Estimated EBITDA
|
$ | 65,136,048 |
Inferred Equity Valuation ($MMs)
|
||||
Production Value
|
28.41 | |||
Proved Reserves Value
|
31.26 | |||
NAV
|
23.90 | |||
Average
|
27.86 |
Inferred Equity Valuation ($MMs)
|
||||
Production Value
|
52.90 | |||
Proved Reserves Value
|
36.11 | |||
2015 Estimated EBITDA
|
65.14 | |||
Average
|
51.38 |
Inferred Equity Valuation Per Share($)
|
||||
Comparable Transactions | Production Value
|
0.19 | |||
NAV
|
0.16 | |||
Comparable Company | Production Value
|
0.35 | |||
Comparable Company | 2015 Estimated EBITDA
|
0.43 |
Inferred Share Consideration
|
||||
Comparable Transactions | Production Value
|
14,954,394 | |||
NAV
|
12,578,566 | |||
Comparable Company | Production Value
|
27,844,241 | |||
Comparable Company | 2015 Estimated EBITDA
|
34,282,131 |
Inferred Exchange Ratio
|
||||
Comparable Transactions | Production Value
|
0.0996 | x | ||
Comparable Transactions | Proved Reserves Value
|
0.1095 | x | ||
NAV
|
0.0838 | x | ||
Comparable Company | Production Value
|
0.1854 | x | ||
Comparable Company | Proved Reserves Value
|
0.1266 | x | ||
Comparable Company | 2015 Estimated EBITDA
|
0.2283 | x |
Yuma
|
Davis
|
|||||||
Financial & Operating Metrics
|
36.3 | % | 63.7 | % | ||||
Value Contribution Metrics
|
23.8 | % | 76.2 | % | ||||
Proposed Deal
|
38.9 | % | 61.1 | % |
●
|
Yuma and its subsidiaries may not declare, set aside or pay any dividend or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock, except that Yuma may permit any direct or wholly-owned subsidiary of Yuma to pay dividends and distributions to its parent and Yuma may pay certain dividends payable to holders of Yuma preferred stock; and
|
●
|
Davis or any of its subsidiaries may not declare, set aside or pay any dividend or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock, except (i) certain dividends with respect to the Davis preferred stock and (ii) for dividends paid by any direct or wholly-owned subsidiary of Davis to its parent.
|
In the event that the number of directors to be elected to the Yuma Delaware board of directors is increased, and there has been no public announcement naming all of the nominees for director or indicating the increase in the size of the board of directors made by the corporation at least ten days before the last day a record stockholder may deliver a notice of nomination in accordance with the preceding sentence, a record stockholder's notice shall also be considered timely, with respect to nominees for any new positions created by such increase, if it is received by the secretary of the corporation not later than the close of business on the 10th day following the day on which such public announcement was first made by the corporation. An adjournment, rescheduling or postponement of an annual meeting for which notice has been given, does not commence a new time period for the giving of a record stockholder's notice.
|
||
Indemnification
|
||
Davis’ certificate of incorporation provides for mandatory indemnification to the fullest extent permitted by Delaware law of all persons serving as members of the Davis board of directors against all expense, liability and loss reasonably incurred or suffered in connection with such service. Davis’ bylaws provide for mandatory indemnification of officers and directors of Davis against all expense, liability and loss reasonably incurred or suffered in connection with the service of such position.
In addition, under its bylaws Davis has the power to indemnify to the same extent any employee or agent of the corporation who is or was made a party to any action because the person is or was an employee or agent of Davis or served at the request of Davis as an employee or agent of another corporation or of a partnership, joint venture, employee benefit plan, trust or other enterprise.
|
Yuma Delaware’s certificate of incorporation provides for mandatory indemnification to the fullest extent permitted by Delaware law of any officer or director of Yuma Delaware who is or was made 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, because the person is or was an officer, director, employee or agent of Yuma Delaware or served at the request of Yuma Delaware as a director, officer, employee or agent of another corporation or of a partnership, joint venture, employee benefit plan, trust or other enterprise.
In addition, Yuma Delaware has the power to indemnify to the same extent any employee or agent of the corporation who is or was made a party to any action for any of the reasons described in the preceding sentence.
|
|
Amendments to Certificates of Incorporation
|
||
Amendment of the restated certificate of incorporation requires the approval of (1) the Davis board of directors and (2) the holders of a majority of the voting power of the outstanding shares entitled to vote.
|
Generally, amendment of the restated certificate of incorporation requires the approval of (1) the Yuma Delaware board of directors and (2) the holders of a majority of the voting power of the outstanding shares entitled to vote.
|
|
Amendments to Bylaws
|
||
Davis’ bylaws may be altered, amended or repealed by the affirmative vote of a majority of the votes cast on the matter.
The board of directors shall also have the power to adopt, amend or repeal the bylaws.
|
Yuma Delaware’s amended and restated bylaws may be altered, amended or repealed by the affirmative vote of a majority of the total voting power of the issued and outstanding shares of the corporation.
The board of directors shall also have the power to adopt, amend or repeal the bylaws; provided that a bylaw amendment adopted by stockholders which specifies the terms of any provision of the bylaws shall not be further amended or repealed by the board of directors.
|
|
Action by Written Consent
|
||
Any action required to be taken, or that may be taken, at any annual or special meeting of the stockholders may be taken by written consent 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.
Any action required to be taken or permitted to be taken at any meeting of the board of directors, or any committee thereof, may be taken by written consent signed by all members of the board of directors or any committee thereof.
|
Any action required to be taken, or that may be taken, at any annual or special meeting of the stockholders may be taken by written consent 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.
Any action required to be taken or permitted to be taken at any meeting of the board of directors, or any committee thereof, may be taken by written consent signed by all members of the board of directors or any committee thereof.
|
Davis
|
Yuma Delaware
|
|
Capital Stock
|
||
Davis is authorized to issue 50,000,000 shares of preferred stock, of which 50,000,000 have been designated Series A Convertible Preferred Stock (“Davis preferred stock”), par value $0.01 per share.
|
Yuma Delaware is authorized to issue 20,000,000 shares of preferred stock, of which [●] will be designated as Series D Convertible Preferred Stock (the “Yuma Delaware preferred stock”), par value $0.001 per share.
|
|
Voting Rights
|
||
Each holder of Davis preferred stock will be entitled to vote equally with the holders of the common stock on an as-converted basis. As such, all of the corporate governance provisions discussed above are also applicable to the preferred stock, except as explicitly set forth below.
As of the date of this filing, each share of Davis preferred stock can be converted into one share of common stock so each holder of Davis preferred stock will have one vote for each share of Davis preferred stock held by such holder on all matters voted upon by the stockholders of Davis.
Additionally, the holders of the Davis preferred stock will be entitled to vote as a separate class on all matters specifically affecting the Davis preferred stock. For example, Davis shall not do any of the following without obtaining first the approval of the holders of at least a majority of the outstanding shares of the Davis preferred stock:
(i) amend or repeal any provision of the certificate of incorporation or certificate of designation if such action would adversely affect or change the rights, preferences, privileges or powers of the Davis preferred stock;
(ii) authorize or issue any security having a preference over or being on a parity with the Davis preferred stock with respect to voting (other than the pari passu voting rights of the common stock);
(iii) redeem any share of common stock or other security convertible into common stock, except for the repurchase of shares of common stock at fair market value from employees, officers or directors or any subsidiary pursuant to agreements under which Davis has the option to redeem such shares; or
(iv) declare, pay or set aside dividends on any class of Davis’ capital stock (other than the Davis preferred stock).
|
Each holder of Yuma Delaware preferred stock will be entitled to vote equally with the holders of the common stock on an as-converted basis. As such, all of the corporate governance provisions discussed above are also applicable to the preferred stock, except as explicitly set forth below.
Yuma Delaware expects that as of the date of the merger, each share of Yuma Delaware preferred stock can be converted into one share of common stock so each holder of Yuma Delaware preferred stock will have one vote for each share of Yuma Delaware preferred stock held by such holder on all matters voted upon by the stockholders of Yuma Delaware.
Additionally, the holders of the Yuma Delaware preferred stock will be entitled to vote as a separate class on all matters specifically affecting the Series D Preferred Stock. For example, Yuma Delaware shall not do any of the following without obtaining first the approval of the holders of at least a majority of the outstanding shares of the Yuma Delaware preferred stock:
(i) amend or repeal any provision of the certificate of incorporation or certificate of designation if such action would adversely affect or change the rights, preferences, privileges or powers of the Yuma Delaware preferred stock;
(ii) authorize or issue any security having a preference over or being on a parity with the Yuma Delaware preferred stock with respect to voting (other than the pari passu voting rights of the common stock);
(iii) redeem any share of common stock or other security convertible into common stock, except for the repurchase of shares of common stock at fair market value from employees, officers or directors or any subsidiary pursuant to agreements under which Yuma Delaware has the option to redeem such shares; or
(iv) declare, pay or set aside dividends on any class of Yuma Delaware’s capital stock (other than the Yuma Delaware preferred stock).
|
|
Conversion Rights
|
||
Each share of Davis preferred stock is convertible, at the option of the holder, into such number of fully paid and nonassessable shares of common stock as is determined by dividing $0.55 by the conversion price applicable to such share. The conversion price as of the date hereof is $0.55.
Each share of Davis preferred stock will be automatically converted into common stock immediately upon Davis’ sale of its common stock in a public offering or the date specified by vote of the holders of a majority of the outstanding shares of Davis preferred stock.
|
Each share of Yuma Delaware preferred stock is convertible, at the option of the holder, into such number of fully paid and nonassessable shares of common stock as is determined by dividing the original issue price (giving effect to the one for ten conversion pursuant to the merger) (approximately $5.75) by the conversion price applicable to such share. Yuma Delaware expects that the conversion price as of the date of the merger will be approximately $5.75.
Each share of Yuma Delaware preferred stock will be automatically converted into common stock immediately upon (i) the date specified by vote of the holders of a majority of the outstanding shares of Yuma Delaware preferred stock, (ii) with respect to any holder, any time that less than 10% of the original number of shares of Yuma Delaware preferred stock issued to such holder are held by such holder together with its affiliates on a combined basis, or (iii) with respect to any holder, when such holder, together with its affiliates on a combined basis, is no longer a holder of Yuma Delaware’s common stock.
|
Dividends
|
||
The holders of Davis preferred stock will be entitled to receive, in preference to all common stock, a 7% per annum dividend that is cumulative and payable in kind per share in such number of shares of Davis preferred stock determined using a price equal to $0.55 per share. In lieu of receiving a fractional share of Davis preferred stock as a dividend, such holder will receive a whole share of Davis preferred stock rounded to the nearest whole share.
In addition, if any dividends are declared with respect to the common stock, the holders of Davis preferred stock will receive the same dividend on each share of the Davis preferred stock then outstanding on an as-converted basis.
|
The holders of Yuma Delaware preferred stock will be entitled to receive, in preference to all common stock, a 7% per annum dividend that is cumulative and payable in kind per share in such number of shares of Yuma Delaware preferred stock determined using the original issue price of each share (giving effect to the one for ten conversion pursuant to the merger) (approximately $5.75). In lieu of receiving a fractional share of Yuma Delaware preferred stock as a dividend, such holder will receive a whole share of Yuma Delaware preferred stock rounded to the nearest whole share.
In addition, if any dividends are declared with respect to the common stock, the holders of Yuma Delaware preferred stock will receive the same dividend on each share of the Yuma Delaware preferred stock then outstanding on an as-converted basis.
|
|
Liquidation Preference
|
||
In the event of a Triggering Event (defined below), the holders of Davis preferred stock will receive, prior and in preference to any distribution of the assets of Davis to the holders of common stock, the Preference Amount (defined below) payable with respect to each outstanding share of Davis preferred stock held by them.
|
In the event of a Triggering Event (defined below), the holders of Yuma Delaware preferred stock will receive, prior and in preference to any distribution of the assets of Yuma Delaware to the holders of common stock, the Preference Amount (defined below) payable with respect to each outstanding share of Yuma Delaware preferred stock held by them.
|
|
“Triggering Event” means:
(i) the sale, conveyance or transfer of all or substantially all of the assets of Davis;
(ii) the merger of Davis with or into any other entity;
(iii) a third party acquiring 50% or more of the outstanding voting power of Davis (other than in connection with a public offering); or
(iv) the liquidation, dissolution or winding up of Davis.
Notwithstanding the foregoing, neither (A) a merger effected exclusively to change the domicile of Davis or (B) a transaction in which the Davis stockholders immediately prior to the transaction continue to own 50% or more of the voting power of the surviving company following the transaction shall be deemed Triggering Events.
“Preference Amount” means, with respect to each outstanding share of Davis preferred stock, the greater of (i) $0.55 per share plus accrued but unpaid dividends and (ii) the amount distributable or the consideration payable with respect to the common stock such share of Davis preferred stock is convertible into.
The amounts owed to the stockholders due to a Triggering Event shall be limited to the proceeds of such Triggering Event in the event of a merger or consolidation of Davis.
|
“Triggering Event” means:
(i) the sale, conveyance or transfer of all or substantially all of the assets of Yuma Delaware;
(ii) the merger of Yuma Delaware with or into any other entity;
(iii) a third party acquiring 50% or more of the outstanding voting power of Yuma Delaware (other than in connection with a public offering); or
(iv) the liquidation, dissolution or winding up of Yuma Delaware.
Notwithstanding the foregoing, neither (A) a merger effected exclusively to change the domicile of Yuma Delaware or (B) a transaction in which the Yuma Delaware stockholders immediately prior to the transaction continue to own 50% or more of the voting power of the surviving company following the transaction shall be deemed Triggering Events.
“Preference Amount” means, with respect to each outstanding share of Yuma Delaware preferred stock, the greater of (i) the original issue price (giving effect to the one for ten conversion pursuant to the merger) of approximately $5.75 per share plus accrued but unpaid dividends and (ii) the amount distributable or the consideration payable with respect to the common stock such share of Yuma Delaware preferred stock is convertible into.
The amounts owed to the stockholders due to a Triggering Event shall be limited to the proceeds of such Triggering Event in the event of a merger or consolidation of Yuma Delaware.
|
Shares of Yuma
Delaware Common Stock
|
||||
Holders of Davis common stock
|
14,479,559 | |||
Holders of Yuma common stock and preferred stock
|
9,218,573 | |||
Total:
|
23,698,132 |
●
|
corporate existence, good standing and qualification to conduct business;
|
●
|
capitalization, including ownership of subsidiary capital stock and the absence of restrictions or encumbrances with respect to capital stock of any subsidiary;
|
●
|
corporate power and authorization to enter into and carry out the obligations of the merger agreement and the enforceability of the merger agreement;
|
●
|
absence of any conflict or violation of organizational documents, third party agreements or law or regulation as a result of entering into and carrying out the obligations of the merger agreement;
|
●
|
filings and reports with the SEC, and financial information;
|
●
|
accuracy of the information supplied by such party for inclusion in this proxy statement/prospectus;
|
●
|
compliance with laws;
|
●
|
material contracts compliance;
|
●
|
fees payable to brokers in connection with the merger;
|
●
|
prior activities of certain subsidiaries;
|
●
|
litigation, government orders, judgments and decrees;
|
●
|
taxes and tax matters;
|
●
|
employee benefit plans;
|
●
|
absence of undisclosed liabilities;
|
●
|
absence of certain changes, events or circumstances;
|
●
|
Yuma has made representations and warranties regarding SOX and NYSE MKT compliance;
|
●
|
environmental matters;
|
●
|
insurance;
|
●
|
Yuma has made representations and warranties regarding transactions with affiliates;
|
●
|
absence of certain payments that may violate anti-bribery statutes;
|
●
|
real property title;
|
●
|
intellectual property;
|
●
|
oil and gas reserves, assets and operations;
|
●
|
derivative and hedging transactions; and
|
●
|
preferential rights, royalties, imbalances, commitments, deliveries, payouts, drilling obligations and processing.
|
●
|
U.S. expatriates and certain former citizens or long-term residents of the U.S.;
|
●
|
holders who hold Yuma or Davis common stock or preferred stock as part of a straddle, hedging transaction, synthetic security, conversion transaction or other integrated investment or risk reduction transaction;
|
●
|
holders whose functional currency is not the U.S. dollar;
|
●
|
holders who acquired Yuma or Davis common stock or preferred stock through the exercise of employee stock options, through qualified retirement plans or otherwise as compensation or are a holder of options or awards granted under Yuma or Yuma Delaware equity award plans or Davis equity award plans;
|
●
|
holders who hold warrants exercisable for Yuma or Davis common stock or preferred stock;
|
●
|
holders subject to the U.S. alternative minimum tax;
|
●
|
mutual funds;
|
●
|
tax-deferred or other retirement accounts;
|
●
|
banks, insurance companies and other financial institutions;
|
●
|
regulated investment companies and real estate investment trusts;
|
●
|
tax-exempt organizations;
|
●
|
foreign holders;
|
●
|
dealers and brokers in securities or foreign currencies; and
|
●
|
traders in securities that elect to apply a mark-to-market method of accounting.
|
●
|
an individual citizen or tax resident of the U.S.;
|
●
|
a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in, or under the laws of the U.S. or any of its political subdivisions;
|
●
|
a trust if (1) a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under the applicable Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes; or
|
●
|
an estate, the income of which is subject to U.S. federal income taxation regardless of its source.
|
●
|
the reincorporation will qualify as a reorganization within the meaning of Section 368(a) of the Code;
|
●
|
no gain or loss should be recognized by a U.S. Holder of Yuma common stock and/or preferred stock on receipt of Yuma Delaware common stock pursuant to the reincorporation;
|
●
|
the aggregate tax basis of the Yuma Delaware common stock received by each U.S. Holder of Yuma common stock and/or preferred stock should equal the aggregate tax basis of the Yuma common stock and/or preferred stock surrendered by such holder in exchange for Yuma Delaware common stock;
|
●
|
the holding period of the Yuma Delaware common stock received by each U.S. Holder of Yuma common stock and/or preferred stock should include the period during which such holder held the Yuma common stock and/or preferred stock surrendered in exchange for Yuma Delaware common stock;
|
●
|
U.S. Holders of Yuma common stock and/or preferred stock with differing bases or holding periods are urged to consult their tax advisors with respect to identifying the bases or holding periods of the particular shares of Yuma Delaware common stock received in the reincorporation; and
|
●
|
any Yuma Delaware common stock received in exchange for accrued but unpaid dividends on Yuma preferred stock could be treated as the receipt of a dividend distribution to such U.S. Holder as described below to the extent the fair market value of the Yuma Delaware common stock received (determined immediately following the reincorporation) exceeds the issue price of the Yuma preferred stock surrendered. The amount of the dividend distribution would be the lesser of (i) the amount by which the fair market value of the Yuma Delaware common stock exceeds the issue price of the Yuma preferred stock or (ii) the amount of the dividends in arrears.
|
●
|
the merger will qualify as a reorganization within the meaning of Section 368(a) of the Code;
|
●
|
no gain or loss should be recognized by a U.S. Holder of Yuma Delaware common stock pursuant to the merger;
|
●
|
no gain or loss should be recognized by a U.S. Holder of Davis common stock and/or preferred stock on receipt of Yuma Delaware common stock and/or preferred stock pursuant to the merger;
|
●
|
the aggregate tax basis of the Yuma Delaware common stock and/or preferred stock received by each U.S. Holder of Davis common stock and/or preferred stock should equal the aggregate tax basis of the Davis stock surrendered by such holder in exchange for Yuma Delaware common stock and/or preferred stock;
|
●
|
the holding period of the Yuma Delaware common stock and/or preferred stock received by each U.S. Holder should include the period during which such holder held the Davis common stock and/or preferred stock surrendered in exchange for Yuma Delaware common stock and/or preferred stock;
|
● |
U.S. Holders of Davis common stock and/or preferred stock with differing bases or holding periods are urged to consult their tax advisors with respect to identifying the bases or holding periods of the particular shares of Yuma Delaware common stock and/or preferred stock received in the merger; and
|
●
|
any Yuma Delaware preferred stock received in exchange for accrued but unpaid declared dividends on Davis preferred stock could be treated as the receipt of a dividend distribution to such U.S. Holder. The amount of the dividend distribution would be the amount of the declared dividends.
|
●
|
as more fully described below, the holder must deliver to Davis a written demand for appraisal of the holder’s shares before the vote on the merger agreement at the Davis special meeting, which demand will be sufficient if it reasonably informs Davis of the identity of the holder and that the holder intends to demand the appraisal of the holder’s shares;
|
●
|
the holder must not vote the holder’s shares of Davis’ common stock or preferred stock in favor of the merger agreement; a proxy which does not contain voting instructions will, unless revoked, be voted in favor of the merger agreement and, therefore, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the merger agreement or abstain from voting on the merger agreement; and
|
●
|
the holder must continuously hold the shares from the date of making the demand through the effective date of the merger; a stockholder who is the record holder of shares of Davis’ common stock or preferred stock on the date the written demand for appraisal is made but who thereafter transfers those shares before the effective date of the merger will lose any right to appraisal in respect of those shares.
|
»
|
seek merger and acquisition opportunities to increase its liquidity, as well as reduce G&A on a per Boe basis;
|
»
|
transition existing inventory of reserves into oil and natural gas production;
|
»
|
add selectively to project inventory through ongoing prospect generation, exploration and strategic acquisitions; and
|
»
|
retain a greater percentage working interest in, and operatorship of, Yuma’s projects going forward.
|
» |
unconventional oil resource plays;
|
»
|
onshore liquids-rich prospects through the use of 3-D seismic surveys; and
|
»
|
identification of high impact deep onshore prospects located beneath known producing trends through the use of 3-D seismic surveys.
|
»
|
Extensive technical knowledge and history of operations in the Gulf Coast region
. Since 1983 Yuma Co. or its predecessor has operated in the Gulf Coast region, which is an area that extends through Texas, Louisiana and Mississippi. Yuma believes its extensive understanding of the geology and experience in interpreting well control, core and 3-D seismic data in this area provides Yuma with a competitive advantage in exploring and developing projects in the Gulf Coast region. Yuma has cultivated amicable and mutually beneficial relationships with acreage owners in this region and adjacent oil and natural gas operators, which generally provides for effective leasing and development activities.
|
»
|
In-house technical expertise in 3-D seismic programs
. Yuma designs and generates in-house 3-D seismic survey programs on many of its projects. By controlling the 3-D seismic program from field acquisition through seismic processing and interpretation, it gains a competitive advantage through proprietary knowledge of the project.
|
»
|
Liquids-rich, quality assets with attractive economics
. Yuma’s assets and potential future drilling locations are primarily in oil plays with associated liquids-rich natural gas.
|
»
|
Diversified portfolio of producing and non-producing assets
. Yuma’s current portfolio of producing and non-producing assets covers a large area within the Gulf Coast, the Bakken/Three Forks shale in North Dakota, and the Monterey Shale, along with shallow oil fields in central and southern California.
|
»
|
Significant inventory of oil and natural gas assets
. Yuma has an inventory of both proved reserves and significant growth assets that it believes can be developed over the near to medium term. In addition, it has the ability to organically generate new oil and natural gas prospects and projects through techniques utilized by its experienced management team, which include analyzing subsurface data, negotiating mineral rights with landowners in prospective areas, and shooting and reprocessing 3-D seismic surveys.
|
»
|
Company operated assets
. In order to maintain better control over its assets, Yuma has established a leasehold position comprised primarily of assets where it is the operator. By controlling operations, it is able to dictate the pace of development and better manage the cost, type, and timing of exploration and development activities.
|
»
|
Experienced management team
. Yuma has a highly qualified management team with many years of industry experience, including extensive experience in the Gulf Coast region. Its team has substantial expertise in the design, acquisition, processing and interpretation of 3-D seismic surveys, and its experienced operations staff allows for efficient turnaround from project identification, to drilling, to production.
|
»
|
Experienced board of directors
. Yuma’s directors have substantial experience managing successful public companies and realizing value for investors through the development, acquisition and monetization of both conventional and unconventional oil and natural gas assets in the Gulf Coast region.
|
Oil
(MBbls)
|
Natural Gas Liquids
(MBbls)
|
Natural Gas
(MMcf)
|
Total
(MBoe)
(1)
|
Present Value Discounted at 10%
($ in thousands)
(2)
|
||||||||||||||||
Proved developed
(3)
|
||||||||||||||||||||
Greater Masters Creek Field
(4)
|
204 | 26 | 269 | 275 | $ | (792 | ) | |||||||||||||
La Posada (Bayou Hebert) Field
(4)
|
129 | 221 | 5,735 | 1,305 | $ | 17,589 | ||||||||||||||
Other
|
1,469 | 69 | 2,549 | 1,963 | $ | 27,275 | ||||||||||||||
Total proved developed
|
1,802 | 316 | 8,553 | 3,543 | $ | 44,072 | ||||||||||||||
Proved undeveloped
(3)
|
||||||||||||||||||||
Greater Masters Creek Field
(4)
|
4,398 | 1,585 | 13,164 | 8,177 | $ | 65,967 | ||||||||||||||
La Posada (Bayou Hebert) Field
(4)
|
76 | 150 | 3,898 | 876 | $ | 6,881 | ||||||||||||||
Other
|
640 | 0 | 155 | 665 | $ | 5,988 | ||||||||||||||
Total proved undeveloped
|
5,114 | 1,735 | 17,217 | 9,718 | $ | 78,836 | ||||||||||||||
Total proved
(3)
|
6,916 | 2,051 | 25,770 | 13,261 | $ | 122,908 |
|
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
|
(2)
|
Present Value Discounted at 10% (“PV-10”) is a Non-GAAP measure that differs from the GAAP measure “standardized measure of discounted future net cash flows” in that PV-10 is calculated without regard to future income taxes. Yuma management believes that the presentation of the PV-10 value is relevant and useful to investors because it presents the estimated discounted future net cash flows attributable to Yuma’s estimated proved reserves independent of its income tax attributes, thereby isolating the intrinsic value of the estimated future cash flows attributable to its reserves. Because many factors that are unique to each individual company impact the amount of future income taxes to be paid, Yuma believes the use of a pre-tax measure provides greater comparability of assets when evaluating companies. For these reasons, management uses, and believes the industry generally uses, the PV-10 measure in evaluating and comparing acquisition candidates and assessing the potential return on investment related to investments in oil and natural gas properties. PV-10 includes estimated abandonment costs less salvage. PV-10 does not necessarily represent the fair market value of oil and natural gas properties.
|
Present value of estimated future net revenues (PV-10)
|
$ | 122,908 | ||
Future income taxes discounted at 10%
|
(16,363 | ) | ||
Standardized measure of discounted future net cash flows*
|
$ | 106,545 |
|
* Reflects the standardized measure of discounted future net cash flows of Yuma as restated in Yuma’s Annual Report on Form 10-K/A. See Note 25 – Supplementary Information on Oil and Natural Gas Exploration, Development and Production Activities (Unaudited) (As Restated) in the Notes to the Consolidated Financial Statements of Yuma included in this proxy statement/prospectus.
|
|
(3)
|
Proved reserves were calculated using prices equal to the twelve-month unweighted arithmetic average of the first-day-of-the-month prices for each of the preceding twelve months, which were $50.28 per Bbl (WTI) and $2.59 per MMBtu (HH), for the year ended December 31, 2015. Adjustments were made for location and grade.
|
|
(4)
|
Yuma’s Greater Masters Creek Field and La Posada (Bayou Hebert) field were Yuma’s only fields that each contained 15% or more of its estimated proved reserves as of December 31, 2015.
|
Pricing Scenario
|
||||||||||||||||
Crude Oil (per Bbl)
(1)
|
Natural Gas (per MMBtu)
(1)
|
Proved Reserves (MBoe)
|
% Change from December 31, 2015 Estimated Reserves
|
|||||||||||||
2015 Reserve Report
(2)
|
$ | 50.28 | $ | 2.59 | 13,261 | - | ||||||||||
Scenario A
|
$ | 40.00 | $ | 2.25 | 12,876 | (3 | %) | |||||||||
Scenario B
|
$ | 30.00 | $ | 2.00 | 9,358 | (29 | %) |
(1)
|
These prices are indices and do not include basin differentials for crude oil and natural gas. The above scenarios were calculated using the indicated index prices, less any basin differentials, transport fees, contractual adjustments and any Btu adjustments Yuma experienced for the respective commodity.
|
(2)
|
The NYMEX prices used for Yuma’s 2015 year-end independent engineering reserve report are based on SEC price parameters using the twelve-month unweighted arithmetic average of the first-day-of-the-month prices for each of the preceding twelve months for the year ended December 31, 2015.
|
Beginning proved undeveloped reserves at January 1, 2015
|
16,243 | |||
Undeveloped reserves transferred to developed
|
(100 | ) | ||
Purchases of minerals-in-place
|
43 | |||
Extensions and discoveries
|
459 | |||
Production
|
0 | |||
Revisions
|
(6,927 | ) | ||
Proved undeveloped reserves at December 31, 2015
|
9,718 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Production volumes:
|
||||||||||||
Crude oil and condensate (Bbls)
|
247,177 | 231,816 | 184,349 | |||||||||
Natural gas (Mcf)
|
1,993,842 | 2,714,586 | 1,580,468 | |||||||||
Natural gas liquids (Bbls)
|
74,511 | 97,783 | 51,875 | |||||||||
Total (Boe)
(1)
|
653,995 | 782,030 | 499,635 | |||||||||
Average prices realized:
|
||||||||||||
Excluding commodity derivatives:
|
||||||||||||
Crude oil and condensate (per Bbl)
|
$ | 48.07 | $ | 93.98 | $ | 104.26 | ||||||
Natural gas (per Mcf)
|
$ | 2.60 | $ | 4.62 | $ | 3.83 | ||||||
Natural gas liquids (per Bbl)
|
$ | 18.89 | $ | 38.44 | $ | 40.17 | ||||||
Including commodity derivatives:
|
||||||||||||
Crude oil and condensate (per Bbl)
|
$ | 65.20 | $ | 101.98 | $ | 104.39 | ||||||
Natural gas (per Mcf)
|
$ | 3.00 | $ | 5.19 | $ | 3.71 | ||||||
Natural gas liquids (per Bbl)
|
$ | 18.89 | $ | 38.44 | $ | 40.17 | ||||||
Production cost per Boe
(2)
|
$ | 13.22 | $ | 11.60 | $ | 12.40 |
|
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
|
(2)
|
Excludes ad valorem taxes (which are included in lease operating expenses on Yuma’s Consolidated Statements of Operations in the Consolidated Financial Statements in this proxy statement/prospectus) and severance taxes, totaling $2,758,207, $3,741,513, and $3,121,185 in fiscal years 2015, 2014 and 2013, respectively.
|
Years Ended December 31,
|
||||||||||||
Greater Masters Creek Field Area
|
2015
|
2014
|
2013
|
|||||||||
Production volumes:
|
||||||||||||
Crude oil and condensate (Bbls)
|
27,379 | 45,656 | 24,972 | |||||||||
Natural gas (Mcf)
|
102,309 | 170,916 | 85,866 | |||||||||
Natural gas liquids (Bbls)
|
8,192 | 16,558 | 8,702 | |||||||||
Total (Boe)
(1)
|
52,623 | 90,700 | 47,985 | |||||||||
Average prices realized:
(2)
|
||||||||||||
Crude oil and condensate (per Bbl)
|
$ | 47.29 | $ | 95.29 | $ | 100.87 | ||||||
Natural gas (per Mcf)
|
$ | 2.59 | $ | 4.68 | $ | 4.07 | ||||||
Natural gas liquids (per Bbl)
|
$ | 15.21 | $ | 33.67 | $ | 34.98 | ||||||
Production cost per Boe
(3)
|
$ | 48.39 | $ | 43.10 | $ | 55.89 |
|
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
|
(2)
|
Excludes commodity derivatives as they are not recorded by specific field.
|
|
(3)
|
Excludes ad valorem taxes (which are included in lease operating expenses on the Consolidated Statements of Operations in the Consolidated Financial Statements of Yuma in this proxy statement/prospectus) and severance taxes, totaling $934,131, $1,111,162, and $875,488 in fiscal years 2015, 2014 and 2013, respectively.
|
La Posada (Bayou Hebert) Field
|
Year Ended December 31, 2015
|
|||
Production volumes:
|
||||
Crude oil and condensate (Bbls)
|
32,950 | |||
Natural gas (Mcf)
|
1,645,202 | |||
Natural gas liquids (Bbls)
|
58,913 | |||
Total (Boe)
(1)
|
366,063 | |||
Average prices realized:
(2)
|
||||
Crude oil and condensate (per Bbl)
|
$ | 49.40 | ||
Natural gas (per Mcf)
|
$ | 2.62 | ||
Natural gas liquids (per Bbl)
|
$ | 19.99 | ||
Production cost per Boe
(3)
|
$ | 3.91 |
|
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
|
(2)
|
Excludes commodity derivatives as they are not recorded by specific field.
|
|
(3)
|
Excludes severance taxes but includes ad valorem taxes in lease operating expenses since this well is non-operated by Yuma and the operator does not break out the ad valorem taxes from lease operating expenses.
|
Oil
(1)
|
Natural Gas
(1)
|
Total
(1)
|
||||||||||||||||||||
Gross
Wells
|
Net
Wells
|
Gross
Wells
|
Net
Wells
|
Gross
Wells
|
Net
Wells
|
|||||||||||||||||
130 | 90 | 47 | 3 | 177 | 93 |
|
(1)
|
A gross well is a well in which a working interest is owned. The number of net wells represents the sum of fractions of working interests Yuma owns in gross wells. Productive wells are producing wells plus shut-in wells Yuma deems capable of production. Horizontal re-entries of existing wells do not increase a well total above one gross well. Yuma has working interests in 10 gross wells with completions into more than one productive zone; in the table above, these wells with multiple completions are only counted as one gross well.
|
Developed
|
Undeveloped
|
Total
|
||||||||||||||||||||||
State
|
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
||||||||||||||||||
Louisiana
|
77,589 | 33,962 | 32,459 | 31,899 | 110,048 | 65,861 | ||||||||||||||||||
North Dakota
|
18,553 | 674 | - | - | 18,553 | 674 | ||||||||||||||||||
Texas
|
1,036 | 72 | 80 | 68 | 1,116 | 140 | ||||||||||||||||||
Oklahoma
|
2,160 | 96 | - | - | 2,160 | 96 | ||||||||||||||||||
California
|
1,422 | 1,400 | - | - | 1,422 | 1,400 | ||||||||||||||||||
Wyoming
|
7,360 | 3 | - | - | 7,360 | 3 | ||||||||||||||||||
Total
|
108,120 | 36,207 | 32,539 | 31,967 | 140,659 | 68,174 |
Net Exploratory
Wells Drilled
|
Net Development
Wells Drilled
|
|||||||||||||||||||
Year
|
Productive
|
Dry
|
Productive
|
Dry
|
Total Net Productive
and Dry Wells
Drilled
|
|||||||||||||||
2015
|
- | - | .51 | - | .51 | |||||||||||||||
2014
|
.61 | - | .54 | - | 1.15 | |||||||||||||||
2013
|
.32 | - | .57 | .31 | 1.20 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Production volumes:
|
|
|||||||
Crude oil and condensate (Bbl)
|
58,449 | 63,636 | ||||||
Natural gas (Mcf)
|
462,179 | 490,136 | ||||||
Natural gas liquids (Bbl)
|
16,179 | 16,172 | ||||||
Total (Boe)
(1)
|
151,658 | 161,497 | ||||||
Average prices:
|
||||||||
Excluding commodity derivatives:
|
||||||||
Crude oil and condensate (per Bbl)
|
$ | 29.76 | $ | 46.49 | ||||
Natural gas (per Mcf)
|
$ | 2.05 | $ | 2.74 | ||||
Natural gas liquids (per Bbl)
|
$ | 14.99 | $ | 16.11 | ||||
Including commodity derivatives:
|
||||||||
Crude oil and condensate (per Bbl)
|
$ | 32.64 | $ | 94.34 | ||||
Natural gas (per Mcf)
|
$ | 2.49 | $ | 6.60 | ||||
Natural gas liquids (per Bbl)
|
$ | 14.99 | $ | 16.11 |
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
|
Three Months Ended March 31,
|
|||||||
2016
|
2015
|
|||||||
Sales of natural gas and crude oil:
|
||||||||
Crude oil and condensate
|
$ | 1,739,394 | $ | 2,958,270 | ||||
Natural gas
|
949,663 | 1,342,075 | ||||||
Natural gas liquids
|
242,529 | 260,566 | ||||||
Realized gains (losses) on commodity derivatives
|
1,159,114 | 4,936,833 | ||||||
Unrealized gains (losses) on commodity derivatives
|
(788,176 | ) | (3,866,266 | ) | ||||
Gas marketing sales
|
- | 11,769 | ||||||
Total revenues
|
$ | 3,302,524 | $ | 5,643,247 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Lease operating expenses
|
$ | 1,330,747 | $ | 2,261,528 | ||||
Severance, ad valorem taxes and marketing
|
682,402 | 961,588 | ||||||
Total LOE
|
$ | 2,013,149 | $ | 3,223,116 | ||||
LOE per Boe
|
$ | 13.27 | $ | 19.96 | ||||
LOE per Boe without severance, ad valorem taxes and marketing
|
$ | 8.77 | $ | 14.00 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
General and administrative
|
||||||||
Stock-based compensation
|
$ | 430,852 | $ | 2,412,743 | ||||
Capitalized
|
(12,562 | ) | (674,333 | ) | ||||
Net stock-based compensation
|
418,290 | 1,738,410 | ||||||
Other
|
2,605,700 | 2,313,916 | ||||||
Capitalized
|
(448,214 | ) | (641,704 | ) | ||||
Net other
|
2,157,486 | 1,672,212 | ||||||
Net general and administrative
|
$ | 2,575,776 | $ | 3,410,622 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
DD&A
|
$ | 2,446,401 | $ | 4,141,020 | ||||
DD&A per Boe
|
$ | 16.13 | $ | 25.64 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Interest expense
|
$ | 526,812 | $ | 324,829 | ||||
Interest capitalized
|
(124,164 | ) | (232,822 | ) | ||||
Net
|
$ | 402,648 | $ | 92,007 | ||||
Bank debt
|
$ | 29,800,000 | $ | 28,450,000 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Cash flows provided by (used in) operating activities
|
$ | (737,351 | ) | $ | (2,658,171 | ) | ||
Cash flows used in investing activities
|
(1,320,388 | ) | (5,943,270 | ) | ||||
Cash flows provided by (used in) financing activities
|
(223,166 | ) | 5,809,220 | |||||
Net increase (decrease) in cash
|
$ | (2,280,905 | ) | $ | (2,792,221 | ) |
Three Months Ended
|
Year Ended
|
|||||||
March 31,
2016
|
December 31,
2015
|
|||||||
Credit Facility:
|
||||||||
Balances outstanding, beginning of year
|
$ | 29,800,000 | $ | 22,900,000 | ||||
Activity
|
- | 6,900,000 | ||||||
Balances outstanding, end of period
|
$ | 29,800,000 | $ | 29,800,000 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Production volumes:
|
|
|
||||||||||
Crude oil and condensate (Bbl)
|
247,177 | 231,816 | 184,349 | |||||||||
Natural gas (Mcf)
|
1,993,842 | 2,714,586 | 1,580,468 | |||||||||
Natural gas liquids (Bbl)
|
74,511 | 97,783 | 51,875 | |||||||||
Total (Boe)
(1)
|
653,995 | 782,030 | 499,635 | |||||||||
Average prices realized:
|
||||||||||||
Excluding commodity derivatives:
|
||||||||||||
Crude oil and condensate (per Bbl)
|
$ | 48.07 | $ | 93.98 | $ | 104.26 | ||||||
Natural gas (per Mcf)
|
$ | 2.60 | $ | 4.62 | $ | 3.83 | ||||||
Natural gas liquids (per Bbl)
|
$ | 18.89 | $ | 38.44 | $ | 40.17 | ||||||
Including commodity derivatives:
|
||||||||||||
Crude oil and condensate (per Bbl)
|
$ | 65.20 | $ | 101.98 | $ | 104.39 | ||||||
Natural gas (per Mcf)
|
$ | 3.00 | $ | 5.19 | $ | 3.71 | ||||||
Natural gas liquids (per Bbl)
|
$ | 18.89 | $ | 38.44 | $ | 40.17 |
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Sales of natural gas and crude oil:
|
||||||||||||
Crude oil and condensate
|
$ | 11,881,626 | $ | 21,785,636 | $ | 19,220,185 | ||||||
Natural gas
|
5,181,715 | 12,542,671 | 6,049,500 | |||||||||
Natural gas liquids
|
1,407,512 | 3,758,875 | 2,083,905 | |||||||||
Gain/(loss) on commodity derivatives
|
5,038,826 | 3,398,518 | (159,810 | ) | ||||||||
Gas marketing
|
209,731 | 572,210 | 881,823 | |||||||||
Total revenues
|
$ | 23,719,410 | $ | 42,057,910 | $ | 28,075,603 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Lease operating expenses
|
$ | 7,531,846 | $ | 7,350,237 | $ | 5,265,794 | ||||||
Severance, ad valorem taxes and marketing
|
3,869,463 | 5,466,488 | 4,050,570 | |||||||||
Total LOE
|
$ | 11,401,309 | $ | 12,816,725 | $ | 9,316,364 | ||||||
LOE per Boe
|
$ | 17.43 | $ | 16.39 | $ | 18.65 | ||||||
LOE per Boe without severance, ad valorem taxes and marketing
|
$ | 11.52 | $ | 9.40 | $ | 10.54 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
General and administrative:
|
|
|||||||||||
Stock-based compensation
|
$ | 3,086,209 | $ | 4,293,855 | $ | 589,164 | ||||||
Capitalized
|
(796,898 | ) | (905,534 | ) | (137,106 | ) | ||||||
Net stock-based compensation
|
2,289,311 | 3,388,321 | 452,058 | |||||||||
Other
|
9,727,419 | 10,692,639 | 7,186,069 | |||||||||
Capitalized
|
(2,293,115 | ) | (2,536,562 | ) | (2,649,563 | ) | ||||||
Net other
|
7,434,304 | 8,156,077 | 4,536,506 | |||||||||
Net general and administrative expenses
|
$ | 9,723,615 | $ | 11,544,398 | $ | 4,988,564 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
DD&A
|
$ | 13,651,207 | $ | 19,664,991 | $ | 12,077,368 | ||||||
DD&A per Boe
|
$ | 20.87 | $ | 25.15 | $ | 24.17 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Interest expense
|
$ | 1,439,895 | $ | 1,385,550 | $ | 1,599,492 | ||||||
Interest capitalized
|
(983,472 | ) | (1,059,350 | ) | (1,031,816 | ) | ||||||
Net
|
$ | 456,423 | $ | 326,200 | $ | 567,676 | ||||||
Bank debt
|
$ | 29,800,000 | $ | 22,900,000 | $ | 31,215,000 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
Consolidated net income (loss) before income taxes
|
$ | (18,565,597 | ) | $ | (22,779,004 | ) | $ | (29,969,831 | ) | |||
Income tax expense (benefit)
|
(3,725,757 | ) | (2,553,854 | ) | (1,380,937 | ) | ||||||
Effective tax rate
|
20.07 | % | 8.50 | % | 4.61 | % |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Cash flows provided by (used in) operating activities
|
$ | (1,370,144 | ) | $ | 24,466,300 | $ | 14,912,903 | |||||
Cash flows used in investing activities
|
(12,311,157 | ) | (18,088,363 | ) | (27,253,041 | ) | ||||||
Cash flows provided by (used in) financing activities
|
7,478,170 | 985,874 | 11,249,627 | |||||||||
Net increase (decrease) in cash
|
$ | (6,203,131 | ) | $ | 7,363,811 | $ | (1,090,511 | ) |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Credit facility:
|
||||||||||||
Balances outstanding, beginning of year
|
$ | 22,900,000 | $ | 31,215,000 | $ | 17,875,000 | ||||||
Activity
|
6,900,000 | (8,315,000 | ) | 13,340,000 | ||||||||
Balances outstanding, end of period
|
$ | 29,800,000 | $ | 22,900,000 | $ | 31,215,000 |
March 31, 2016
|
December 31, 2015
|
|||||||||||||||
Oil
|
Gas
|
Oil
|
Gas
|
|||||||||||||
Assets
|
||||||||||||||||
Current
|
$ | 1,951,434 | $ | 188,728 | $ | 2,393,032 | $ | 265,015 | ||||||||
Noncurrent
|
783,653 | 16,597 | 1,049,661 | 20,880 |
● | effectively manage cash flow to minimize price volatility and generate internal funds available for operations, capital development projects and additional acquisitions; and | |
● | ensure Yuma’s ability to support its exploration activities as well as administrative and debt service obligations. |
Debt
(1)
|
Commodity
Derivatives
(2)
|
Operating
Leases
|
Asset
Retirement
Obligations
|
|||||||||||||
2016
|
$ | 29,862,186 | $ | 1,829,886 | $ | 434,986 | $ | 470,607 | ||||||||
2017
|
- | 1,110,526 | 564,326 | 291,384 | ||||||||||||
2018
|
- | - | 2,264 | 3,628,576 | ||||||||||||
2019
|
- | - | - | 2,116,829 | ||||||||||||
2020
|
- | - | - | 154,053 | ||||||||||||
Thereafter
|
- | - | - | 2,177,703 | ||||||||||||
Totals
|
$ | 29,862,186 | $ | 2,940,412 | $ | 1,001,576 | $ | 8,839,152 |
(1)
|
Does not include future commitment, modification or covenant waiver fees, interest expense or other expenses or costs because the credit agreement is a floating rate instrument, and Yuma cannot determine with accuracy the timing of future loans, advances, modifications, repayments or future interest rates to be charged.
|
(2)
|
Represents the estimated future receipts under Yuma’s oil and natural gas derivative contracts based on the future market prices as of March 31, 2016. These amounts will change as oil and natural gas commodity prices change.
|
Debt
(1)
|
Asset for
Commodity
Derivatives
(2)
|
Operating
Leases
|
Asset
Retirement
Obligations
|
|||||||||||||
2016
|
$ | 30,063,635 | $ | 2,658,047 | $ | 579,873 | $ | 70,000 | ||||||||
2017
|
- | 1,070,541 | 564,326 | 546,284 | ||||||||||||
2018
|
- | - | 2,264 | 3,691,016 | ||||||||||||
2019
|
- | - | - | 2,273,289 | ||||||||||||
2020
|
- | - | - | 60,330 | ||||||||||||
Thereafter
|
- | - | - | 2,149,579 | ||||||||||||
Totals
|
$ | 30,063,635 | $ | 3,728,588 | $ | 1,146,463 | $ | 8,790,498 |
(1) |
Does not include future commitment, modification or covenant waiver fees, interest expense or other expenses or costs because the credit agreement is a floating rate instrument, and Yuma cannot determine with accuracy the timing of future loans, advances, modifications, repayments or future interest rates to be charged.
|
|
(2) |
Represents the estimated future payments under Yuma’s oil and natural gas derivative contracts based on the future market prices as of December 31, 2015. These amounts will change as oil and natural gas commodity prices change.
|
Location
|
Approximate Size
|
Lease Expiration Date
|
Intended Use
|
|||
Houston, Texas
|
19,575 sq. ft.
|
July 31, 2016
|
Office
|
Crude Oil
(MBbls)
|
Natural Gas Liquids (MBbls)
|
Natural Gas
(MMcf)
|
Total
(MBoe)
(1)
|
Present Value Discounted at 10%
($ in thousands)
(2)
|
||||||||||||||||
Proved developed
(3)
|
||||||||||||||||||||
Lac Blanc
(4)
|
226.5 | 445.0 | 9,163.0 | 2,198.7 | 22,655.0 | |||||||||||||||
Chalktown
(4)
|
75.4 | 113.8 | 601.1 | 289.4 | 2,507.3 | |||||||||||||||
El Halcón
(4)
|
249.0 | 33.8 | 102.6 | 299.9 | 3,882.6 | |||||||||||||||
Other
|
152.4 | 11.6 | 597.5 | 263.6 | 3,899.2 | |||||||||||||||
Total proved developed
|
703.3 | 604.3 | 10,464.3 | 3,051.5 | 32,944.1 | |||||||||||||||
Proved undeveloped
(3)
|
||||||||||||||||||||
Cameron Canal
(4)
|
133.9 | - | 2,814.3 | 603.0 | 5,176.3 | |||||||||||||||
Chalktown
(4)
|
330.6 | 423.9 | 2,239.4 | 1,127.7 | 2,859.8 | |||||||||||||||
El Halcón
(4)
|
- | - | - | - | - | |||||||||||||||
Other
|
- | - | - | - | - | |||||||||||||||
Total proved undeveloped
|
464.5 | 423.9 | 5,053.7 | 1,730.7 | 8,036.1 | |||||||||||||||
Total proved
(3)
|
1,167.8 | 1,028.2 | 15,517.9 | 4,782.2 | 40,980.1 |
|
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
|
(2)
|
Present Value Discounted at 10% (“PV-10”) is a Non-GAAP measure that differs from the GAAP measure “standardized measure of discounted future net cash flows” in that PV-10 is calculated without regard to future income taxes. See below under “Non-GAAP Reconciliation.”
|
|
(3)
|
Proved reserves were calculated using prices equal to the twelve-month unweighted arithmetic average of the first-day-of-the-month prices for each of the preceding twelve months, which were $50.28 per Bbl, the average Henry Hub spot price of $2.587 per MMBTU was used for the Louisiana and Gulf of Mexico properties and the average Houston Ship Channel spot price of $2.548 per MMBTU was used for the Texas properties for the year ended December 31, 2015. Adjustments were made for location and grade.
|
|
(4)
|
Davis’ Lac Blanc field was Davis’ only field that contained 15% or more of Davis’ estimated proved reserves as of December 31, 2015.
|
(
$ in thousands
)
|
||||
Present value of estimated future net revenues (PV-10)
|
$ | 40,980 | ||
Future income taxes discounted at 10%
|
- | |||
Standardized measure of discounted future net cash flows
|
$ | 40,980 |
Beginning proved undeveloped reserves at January 1, 2015
|
1,174 | |||
Undeveloped reserves transferred to developed
|
(230 | ) | ||
Purchases of minerals-in-place
|
- | |||
Extensions and discoveries
|
1,371 | |||
Production
|
- | |||
Revisions
|
(584 | ) | ||
Proved undeveloped reserves at December 31, 2015
|
1,731 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Production volumes:
|
||||||||||||
Crude oil and condensate (Bbls)
|
209,500
|
410,200
|
391,800 | |||||||||
Natural gas liquids (Bbls)
|
129,700
|
439,700
|
179,300 | |||||||||
Natural gas (Mcf)
|
2,547,300
|
3,174,800
|
4,526,000 | |||||||||
Total (Boe)
(1)
|
763,800
|
1,379,000
|
1,325,400 | |||||||||
Average prices realized:
(2)
|
||||||||||||
Crude oil and condensate (per Bbl)
|
$ | 46.61 | $ | 94.29 | $ | 103.77 | ||||||
Natural gas liquids (per Bbl)
|
$ | 16.78 | $ | 13.21 | $ | 36.75 | ||||||
Natural gas (per Mcf)
|
$ | 2.63 | $ | 4.42 | $ | 3.74 | ||||||
Production cost per Boe
(3)
|
$ | 8.16 | $ | 10.67 | $ | 8.33 |
|
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
|
(2)
|
Excludes commodity derivatives.
|
|
(3)
|
Excludes ad valorem taxes (which are included in lease operating expenses on Davis’ Consolidated Statements of Operations in the Consolidated Financial Statements included in this proxy statement/prospectus) and severance taxes, totaling $1,452,738, $3,352,959, and $3,048,957 in fiscal years 2015, 2014 and 2013, respectively.
|
Years Ended December 31,
|
||||||||||||
Lac Blanc Field
|
2015
|
2014
|
2013
|
|||||||||
Production volumes:
|
||||||||||||
Crude oil and condensate (Bbls)
|
37,278 | 53,590 | 68,386 | |||||||||
Natural gas liquids (Bbls)
|
41,336 | 101,107 | 121,399 | |||||||||
Natural gas (Mcf)
|
1,703,825 | 2,137,635 | 2,522,676 | |||||||||
Total (Boe)
(1)
|
362,585 | 510,970 | 610,231 | |||||||||
Average prices realized:
(2)
|
||||||||||||
Crude oil and condensate (per Bbl)
|
$ | 50.27 | $ | 94.59 | $ | 108.31 | ||||||
Natural gas liquids (per Bbl)
|
$ | 28.14 | $ | 36.62 | $ | 35.83 | ||||||
Natural gas (per Mcf)
|
$ | 2.72 | $ | 4.38 | $ | 3.72 | ||||||
Production cost per Boe
(3)
|
$ | 4.53 | $ | 4.03 | $ | 3.65 |
|
(1)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent (Boe).
|
|
(2)
|
Excludes commodity derivatives as they are not recorded by specific field.
|
|
(3)
|
Excludes ad valorem taxes (which are included in lease operating expenses on the Consolidated Statements of Operations in the Consolidated Financial Statements of Davis included in this proxy statement/prospectus) and severance taxes, totaling $681,437, $1,099,186, and $1,484,112 in fiscal years 2015, 2014 and 2013, respectively.
|
Oil
(1)
|
Natural Gas
(1)
|
Total
(1)
|
||||||||
Gross
Wells
|
Net
Wells
|
Gross
Wells
|
Net
Wells
|
Gross
Wells
|
Net
Wells
|
|||||
72
|
7
|
6
|
4
|
78
|
11
|
|
(1)
|
A gross well is a well in which a working interest is owned. The number of net wells represents the sum of fractions of working interests Davis owns in gross wells. Productive wells are producing wells plus shut-in wells Davis deems capable of production. Horizontal re-entries of existing wells do not increase a well total above one gross well. In the table above, wells with multiple completions are only counted as one gross well.
|
Developed
|
Undeveloped
|
Total
|
||||||||||||||||||||||
State
|
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
||||||||||||||||||
Louisiana
|
2,517 | 1,863 | 0 | 0 | 2,517 | 1,863 | ||||||||||||||||||
Texas
|
21,619 | 2,906 | 9,008 | 2,081 | 30,627 | 4,987 | ||||||||||||||||||
Total
|
24,136 | 4,769 | 9,008 | 2,081 | 33,144 | 6,850 |
Net Exploratory
Wells Drilled
|
Net Development
Wells Drilled
|
Total Net Productive
and Dry Wells
|
||||||||||||||||||
Year |
Productive
|
Dry
|
Productive
|
Dry
|
Drilled
|
|||||||||||||||
2015
|
0.3 | 0.0 | 0.2 | 0.0 | 0.5 | |||||||||||||||
2014
|
0.0 | 0.0 | 2.8 | 0.0 | 2.8 | |||||||||||||||
2013
|
0.0 | 0.0 | 1.0 | 0.0 | 1.0 |
●
|
Sold all of its interests in Davis Offshore, L.P., which held Davis’ offshore assets in the Gulf of Mexico (the “offshore divestiture”) in 2014 for approximately $33.5 million;
|
●
|
Repaid all borrowings outstanding under Davis’ senior bank credit facility with a portion of the net proceeds from the offshore divestiture; and
|
●
|
Reduced capital expenditures during 2015 by 84% compared to 2014.
|
Three Months Ended March 31,
|
||||||||
(
$ in thousands, except average per sales prices
)
|
2016
|
2015
|
||||||
Production:
|
||||||||
Oil (Bbls)
|
34,718 | 60,566 | ||||||
Natural Gas (Mcf)
|
400,365 | 713,064 | ||||||
Natural Gas Liquids (Bbls)
|
30,262 | 26,120 | ||||||
Total Production (Boe)
|
131,708 | 205,537 | ||||||
Sales:
|
||||||||
Total oil sales
|
$ | 1,040 | $ | 2,848 | ||||
Total natural gas sales
|
786 | 2,088 | ||||||
Total natural gas liquids sales
|
356 | 616 | ||||||
Total oil, natural gas liquids and natural gas sales
|
$ | 2,180 | $ | 5,552 | ||||
Average sales prices:
|
||||||||
Oil (per Bbl)
|
$ | 29.96 | $ | 47.02 | ||||
Natural Gas (per Mcf)
|
$ | 1.96 | $ | 2.93 | ||||
Natural Gas Liquids (per Bbl)
|
$ | 11.76 | $ | 23.58 | ||||
Per Mcfe
(1)
|
$ | 2.76 | $ | 4.50 | ||||
Per Boe
(2)
|
$ | 16.55 | $ | 27.01 |
|
(1)
|
Thousand cubic feet equivalent on the basis of one barrel of oil or natural gas liquids equal to six thousand cubic feet (Mcf) of natural gas.
|
|
(2)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent.
|
Three Months Ended March 31,
|
||||||||
($ in thousands
)
|
2016
|
2015
|
||||||
Lease operating expenses
|
$ | 827 | $ | 2,057 | ||||
Production taxes
|
140 | 318 | ||||||
Total LOE
|
$ | 967 | $ | 2,375 | ||||
LOE per BOE
|
7.34 | 11.56 | ||||||
LOE per BOE without production taxes
|
6.28 | 10.01 |
Three Months Ended March 31,
|
||||||||
($ in thousands
)
|
2016
|
2015
|
||||||
General and administrative:
|
||||||||
Stock based compensation
|
$ | 197 | $ | 257 | ||||
Capitalized
|
- | - | ||||||
Net stock-based compensation
|
197 | 257 | ||||||
Other
|
2,549 | 2,815 | ||||||
Capitalized
|
(375 | ) | (386 | ) | ||||
Net other
|
2,174 | 2,429 | ||||||
Net general and administrative expenses
|
$ | 2,371 | $ | 2,686 |
Three Months Ended March 31,
|
||||||||
($ in thousands
)
|
2016
|
2015
|
||||||
Production - MBOE
|
131,708 | 205,537 | ||||||
Depreciation, depletion and amortization
|
$ | 1,711 | $ | 5,513 | ||||
DD&A per BOE
|
$ | 12.99 | $ | 26.82 |
Three Months Ended March 31,
|
||||||||
($ in thousands
)
|
2016
|
2015
|
||||||
Consolidated net income (loss) before income taxes
|
$ | (13,223 | ) | $ | (3,399 | ) | ||
Income tax expense (benefit)
|
3 | (1,183 | ) | |||||
Effective tax rate
|
-0.02 | % | 34.79 | % |
Three Months Ended March 31,
|
||||||||
($ in thousands
)
|
2016
|
2015
|
||||||
Net cash used in operating activities
|
$ | (879 | ) | $ | (5,945 | ) | ||
Net cash used in investing activities
|
$ | (4,141 | ) | $ | (7,750 | ) | ||
Net cash provided by financing activities
|
$ | 4,000 | $ | 10,000 |
Years Ended December 31,
|
||||||||
(
$ in thousands, except average per sales prices
)
|
2015
|
2014
|
||||||
Production:
|
||||||||
Oil (Bbls)
|
209,500
|
410,200
|
||||||
Natural Gas (Mcf)
|
2,547,300
|
3,174,800
|
||||||
Natural Gas Liquids (Bbls)
|
129,700
|
439,700
|
||||||
Total Production
(Boe)
(2
)
|
763,800
|
1,379,000
|
||||||
Sales:
|
||||||||
Total oil sales
|
$ | 9,764 | $ | 38,676 | ||||
Total natural gas sales
|
6,687 | 14,029 | ||||||
Total natural gas liquids sales
|
2,176 | 5,810 | ||||||
Total oil, natural gas liquids and natural gas sales
|
$ | 18,627 | $ | 58,515 | ||||
Average sales prices:
|
||||||||
Oil (per Bbl)
|
$ | 46.61 | $ | 94.29 | ||||
Natural Gas (per Mcf)
|
2.63 | 4.42 | ||||||
Natural Gas Liquids (per Bbl)
|
16.78 | 13.21 | ||||||
Per Mcfe
(1)
|
4.06 | 7.07 | ||||||
Per Boe
(2)
|
24.39 | 42.43 |
|
(1)
|
Thousand cubic feet equivalent on the basis of one barrel of oil or natural gas liquids equal to six thousand cubic feet (Mcf) of natural gas.
|
|
(2)
|
Barrels of oil equivalent have been calculated on the basis of six thousand cubic feet (Mcf) of natural gas equal to one barrel of oil equivalent.
|
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Lease operating expenses
|
$ | 6,510 | $ | 12,611 | ||||
Production taxes
|
1,106 | 2,468 | ||||||
Total LOE
|
$ | 7,616 | $ | 15,079 | ||||
LOE per BOE
|
9.97 | 10.93 | ||||||
LOE per BOE without production taxes
|
8.52 | 9.15 |
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
General and administrative:
|
||||||||
Stock based compensation
|
$ | 933 | $ | 2,378 | ||||
Capitalized
|
- | (1,712 | ) | |||||
Net stock-based compensation
|
933 | 666 | ||||||
Other
|
8,371 | 12,010 | ||||||
Capitalized
|
(1,502 | ) | (2,737 | ) | ||||
Net other
|
6,869 | 9,273 | ||||||
Net general and administrative expenses
|
$ | 7,802 | $ | 9,939 |
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Production - MBOE
|
763,800 | 1,379,000 | ||||||
Depreciation, depletion and amortization
|
$ | 17,413 | $ | 31,880 | ||||
DD&A per BOE
|
$ | 22.80 | $ | 23.12 |
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Consolidated net income (loss) before income taxes
|
$ | (54,597 | ) | $ | 7,162 | |||
Income tax expense (benefit)
|
10,461 | 2,484 | ||||||
Effective tax rate
|
-19.16 | % | 34.70 | % |
Years Ended December 31,
|
||||||||
($ in thousands
)
|
2015
|
2014
|
||||||
Net cash provided by operating activities
|
$ | 11,076 | $ | 32,646 | ||||
Net cash provided by (used in) investing activities
|
(12,279 | ) | 6,980 | |||||
Net cash used in financing activities
|
(5,210 | ) | (35,699 | ) |
Production Period
|
Instrument Type
|
Daily Volumes
|
Weighted Average Price
|
|||
Natural Gas:
|
||||||
2016
|
Natural Gas Swap
|
3,000 MMBtu
|
$4.05
|
|||
Crude Oil:
|
||||||
April 2016 - June 2016
|
Swap
|
400 Bbls
|
$42.05
|
|||
July 2016 – December 2016
|
Three-Way Collar
|
400 Bbls
|
$30.00 – 40.00 – 50.00
|
Name
|
Age
|
Position
|
||
Sam L. Banks
|
66
|
Director, President and Chief Executive Officer
|
||
Paul D. McKinney
|
57
|
Executive Vice President and Chief Operating Officer
|
||
James J. Jacobs
|
38
|
Chief Financial Officer, Treasurer and Corporate Secretary
|
||
James W. Christmas
|
68
|
Director
|
||
Stuart E. Davies
|
46
|
Director
|
||
Frank A. Lodzinski
|
66
|
Director
|
||
Neeraj Mital
|
50
|
Director
|
||
Richard K. Stoneburner
|
62
|
Non-Executive Chairman of the Board of Directors
|
||
J. Christopher Teets
|
43
|
Director
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus ($)
|
Stock Awards ($)
(1)
|
Option
Awards
($)
(2)
|
All Other Compensation
($)
(3)
|
Total
($)
|
|||||||||||||||||||
Sam L. Banks
|
2015
|
425,000 | 4,304 | 411,040 | 181,449 | 708,270 | 1,730,063 | |||||||||||||||||||
Principal Executive Officer
|
2014
|
141,667 | (4) | - | - | - | 368,182 | 509,849 | ||||||||||||||||||
James J. Jacobs
(5)
|
2015
|
251,042 | 101,601 | 193,279 | 85,321 | - | 631,243 | |||||||||||||||||||
Chief Financial Officer, Treasurer and Corporate Secretary
|
||||||||||||||||||||||||||
Paul D. McKinney
|
2015
|
350,000 | 50,000 | 676,304 | 149,312 | - | 1,225,616 | |||||||||||||||||||
Executive Vice President – Chief Operating Officer
|
(1)
|
Represents the grant date fair value of awards granted during the indicated year, as determined in accordance with ASC Topic 718. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Please see the discussion of the assumptions made in the valuation of these awards in the Financial Statements of Yuma included in this proxy statement/prospectus. Generally, the full grant date fair value is the amount that Yuma would expense in its financial statements over the award’s vesting schedule. These amounts reflect Yuma’s accounting expense, and do not correspond to the actual value that will be recognized by the named executive officers of Yuma.
|
(2)
|
The amounts for stock appreciation rights awards represent the estimated fair value of stock appreciation rights at the date of grant. Fair value of the stock appreciation rights is determined by the Black-Scholes option pricing model in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions used, see the Financial Statements of Yuma included in this proxy statement/prospectus. The terms of the stock appreciation rights grant are set forth below in the table “Outstanding Equity Awards at 2015 Fiscal Year-End.”
|
(3)
|
The amounts reported in this column include revenues received by Mr. Banks from overriding royalty interests pursuant to the royalty plan (as discussed below) from the date of the closing of the merger through December 31, 2014 and for the year ended December 31, 2015.
|
(4)
|
Information for Mr. Banks is included for the period after September 10, 2014, the date he became an employee of Yuma and through December 31, 2014.
|
(5)
|
Mr. Jacobs became an executive officer of Yuma on December 15, 2015; however, his full year compensation is included in the table.
|
●
|
help to attract and retain highly talented individuals to contribute to Yuma’s progress, growth and profitability by being competitive with compensation paid to persons having similar responsibilities and duties in other companies in the same industry;
|
●
|
align the interests of the individual with those of Yuma shareholders to encourage long-term value creation;
|
●
|
be directly tied to the attainment of Yuma’s annual performance targets and reflect individual contribution thereto; and
|
●
|
reflect the unique qualifications, skills, experience and responsibilities of each individual.
|
Option Awards
|
Stock awards
|
|||||||||||||||||||||||||||||||
Name
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
(1)
|
Option Exercise Price
($)
|
Option Expiration Date
|
Number of shares or units of stock that have not vested
(#)
(2)
|
Market value of shares of units of stock that have not vested
($)
(3)
|
Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#)
|
Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($)
|
||||||||||||||||||||||||
Sam L. Banks
|
||||||||||||||||||||||||||||||||
- | - | - | - | 772,534 | $ | 146,781 | - | - | ||||||||||||||||||||||||
- | 570,595 | $ | 0.605 |
08/18/2022
|
- | - | - | - | ||||||||||||||||||||||||
James J. Jacobs
|
||||||||||||||||||||||||||||||||
- | - | - | - | 385,711 | $ | 73,285 | - | - | ||||||||||||||||||||||||
- | 268,305 | $ | 0.605 |
08/18/2022
|
- | - | - | - | ||||||||||||||||||||||||
Paul D. McKinney
|
||||||||||||||||||||||||||||||||
- | - | - | - | 566,088 | $ | 107,557 | - | - | ||||||||||||||||||||||||
- | 469,534 | $ | 0.605 |
08/18/2022
|
- | - | - | - |
Name
|
Cash Compensation
($)
|
Unvested Stock Appreciation Rights Awards at 12/31/2015
(#)
|
Value
(Based on Closing Price of Stock at 12/31/2015)
($)
(1)
|
Unvested Restricted Stock Awards at 12/31/2015
(#)
|
Value
(Based on Closing Price of Stock at 12/31/2015)
($)
|
Total
($)
|
||||||||||||||||||
Sam L. Banks
|
$ | 850,000 | 570,595 | - | 772,534 | $ | 146,781 | $ | 996,781 | |||||||||||||||
James J. Jacobs
|
- | 268,305 | - | 385,711 | $ | 73,285 | $ | 73,285 | ||||||||||||||||
Paul D. McKinney
|
- | 469,534 | - | 566,088 | $ | 107,557 | $ | 107,557 |
(1)
|
The stock appreciation rights have an exercise price of $0.605 per share and were underwater as of December 31, 2015 and accordingly had no value.
|
Compensation Element
|
Compensation Program
|
|||
Annual Cash Retainer
|
$ | 40,000 | ||
Annual Equity Grant
|
$ | 50,000 | ||
Audit Committee Chair Fee
|
$ | 15,000 | ||
Compensation Committee Chair Fee
|
$ | 8,000 |
Name
|
Fees Earned or Paid In Cash
($)
|
Total
($)
|
||||||
James W. Christmas
|
40,000 | 40,000 | ||||||
Frank A. Lodzinski
|
40,000 | 40,000 | ||||||
Ben T. Morris
|
55,000 | 55,000 | ||||||
Richard K. Stoneburner
|
48,000 | 48,000 | ||||||
Richard W. Volk
(1)
|
17,692 | 17,692 |
(1)
|
Mr. Volk retired from the board effective at the 2015 annual meeting of shareholders.
|
Yuma Nominees:
|
Class
|
Term Expires
|
||||||
James W. Christmas
|
[●]
|
[●]
|
||||||
Richard K. Stoneburner
|
[●]
|
[●]
|
||||||
Sam L. Banks
|
[●]
|
[●]
|
||||||
Davis Nominees:
|
||||||||
Stuart E. Davies
|
[●]
|
[●]
|
||||||
Neeraj Mital
|
[●]
|
[●]
|
||||||
J. Christopher Teets
|
[●]
|
[●]
|
||||||
Frank A. Lodzinski
|
[●]
|
[●]
|
Name
|
Common Stock
(1)
|
Percent
(2
)
|
||||||
Named Executive Officers:
|
||||||||
Sam L. Banks
(3)
|
41,722,667 | 57.0 | % | |||||
James J. Jacobs
(3)
|
405,703 | * | ||||||
Paul D. McKinney
(3)
|
602,900 | * | ||||||
Non-Management Directors:
|
||||||||
James W. Christmas
(3)
|
950,480 | 1.3 | % | |||||
Frank A. Lodzinski
(4)
|
70,679 | * | ||||||
Ben T. Morris
|
169,124 | * | ||||||
Richard K. Stoneburner
(3)
|
8,331 | * | ||||||
Officers and Directors as a Group (seven persons):
(3)
|
43,929,884 | 59.2 | % | |||||
Beneficial Owners of More than Five Percent:
|
||||||||
Sanders Morris Harris Inc.
(5)
|
7,428,668 | 10.2 | % | |||||
*
|
Less than one percent.
|
(1)
|
This column lists beneficial ownership of voting securities as calculated under SEC rules. Otherwise, except to the extent noted below, each director, named executive officer or entity has sole voting and investment power over the shares reported. None of the shares are pledged as security by the named person.
|
(2)
|
The percentage is based upon
72,579,820 shares of common stock of the Company issued and outstanding on August 1, 2016.
|
(3)
|
Includes
unvested shares of restricted stock subject to forfeiture for Mr. Banks – 502,400; Mr. Jacobs – 232,568; Mr. McKinney – 409,889; Mr. Christmas – 2,777; Mr. Stoneburner – 2,777, and all directors and named executive officers as a group — 1,150,411, and stock appreciation rights that are exercisable within 60 days from the date hereof for Mr. Banks – 190,199; Mr. Jacobs – 89,435; and Mr. McKinney – 156,512, and all named executive officers as a group — 436,146.
|
(4)
|
Includes 62,348 shares held in the name of Azure Energy, LLC (“Azure”). Mr. Lodzinski disclaims beneficial ownership of the shares held by Azure, except to the extent of his pecuniary interests therein.
|
(5)
|
Based on the Schedule 13G/A dated November 6, 2015 (filed: December 11, 2015) which indicates that it was filed by Sanders Morris Harris LLC (“SMH”). According to such Schedule 13G, SMH, in its capacity as investment adviser and broker-dealer, may be deemed to beneficially own 7,428,668 shares, and has sole voting power over no shares, shared voting power over no shares, sole dispositive power over no shares, and shared dispositive power over 7,428,668 shares. The principal place of business for SMH is 600 Travis Street, Houston, Texas, 77002.
|
●
|
each person to be known by Davis management to be the beneficial owner of more than 5% of its outstanding shares of common stock and/or preferred stock;
|
●
|
each of Davis’ executive officers;
|
●
|
each of Davis’ directors; and
|
●
|
all of Davis’ current executive officers and directors as a group.
|
Name
|
Common
Stock
|
Percent of
Class
(1)
|
Series A
Preferred Stock
|
Percent of
Class
(2)
|
||||||||||||
5% Stockholders:
|
||||||||||||||||
Red Mountain Capital Partners LLC
(3)
|
50,841,316.275
|
33.9%
|
34,328,023
|
99.4%
|
||||||||||||
Davis Petroleum Investment, LLC
(4)
|
40,822,093.008
|
27.2%
|
-
|
-
|
||||||||||||
Sankaty Davis, LLC
(5)
|
32,362,613.275
|
21.6%
|
-
|
-
|
||||||||||||
HarbourVest Partners
(6)
|
11,357,715.000
|
7.6%
|
-
|
-
|
||||||||||||
Executive Officers:
|
||||||||||||||||
Gregory P. Schneider
(7)
|
592,420
|
*
|
-
|
-
|
||||||||||||
Susan J. Davis
|
114,723
|
*
|
-
|
-
|
||||||||||||
Directors:
|
||||||||||||||||
Willem Mesdag
|
-
|
-
|
-
|
-
|
||||||||||||
Neeraj Mital
|
-
|
-
|
-
|
-
|
||||||||||||
Stuart Davies
|
-
|
-
|
-
|
-
|
||||||||||||
Officers and Directors as a Group ( five persons):
|
707,143
|
*
|
-
|
-
|
*
|
Represents less than one percent.
|
(1)
|
The percentage is based upon 150,178,227 shares of Davis common stock issued and outstanding on August 1, 2016.
|
(2)
|
The percentage is based upon 33,955,912 shares of Davis preferred stock issued and outstanding on August 1, 2016.
|
(3)
|
Based on information provided to Davis by Red Mountain Capital Partners LLC, a Delaware limited liability company (“RMCP LLC”), (i) RMCP PIV DPC, LP, a Delaware limited partnership (“DPC PIV”), beneficially owns, in the aggregate, 50,841,316.275 shares of Davis common stock and has the sole power to vote or direct the vote, and the sole power to dispose or direct the disposition of, all such shares; (ii) RMCP PIV DPC II, LP, a Delaware limited partnership (“DPC PIV II” and, together with DPC PIV, the “DPC Funds”), beneficially owns, in the aggregate, 33,160,486 shares of Davis preferred stock and has the sole power to vote or direct the vote, and the sole power to dispose or direct the disposition of, all such shares; (iii) because RMP DPC LLC, a Delaware limited liability company, may be deemed to control DPC PIV, RMP DPC LLC may be deemed to beneficially own, and to have the power to vote or direct the vote, or dispose or direct the disposition of, all of the Davis common stock beneficially owned by DPC PIV; (iv) because RMP DPC II LLC, a Delaware limited liability company, may be deemed to control DPC PIV II, RMP DPC II LLC may be deemed to beneficially own, and to have the power to vote or direct the vote, or dispose or direct the disposition of, all of the Davis common stock beneficially owned by DPC PIV II; and (v) because each of RMCP GP LLC, a Delaware limited liability company (“RMCP GP”), RMCP LLC, Red Mountain Capital Management, Inc., a Delaware corporation (“RMCM”), and Willem Mesdag, a natural person and citizen of the United States of America, may be deemed to control each of RMP DPC LLC and RMP DPC II LLC, each of RMCP GP, RMCP LLC, RMCM and Mr. Mesdag may be deemed to beneficially own, and to have the power to vote or direct the vote, or dispose or direct the disposition of, all of the Davis common stock beneficially owned by the DPC Funds. Each of RMCM and Mr. Mesdag disclaims beneficial ownership of all shares of Davis common stock directly held by the DPC Funds.
|
(4)
|
Based on information provided to Davis by Evercore Partners, Evercore Partners II LP is the sole and managing member of Davis Petroleum Investment, LLC and, as such, has voting and dispositive power over all of the shares held of record by Davis Petroleum Investment, LLC. The address of these entities is 55 East 52nd Street, New York, New York 10055.
|
(5)
|
Based on information provided to Davis by Bain Capital Credit, LP, Sankaty Credit Member, LLC (“SCM”), a Delaware limited liability company, is the administrative member of Sankaty Davis, LLC (“Davis”), a Delaware limited liability company. SCM may be deemed to have voting and dispositive power with respect to the shares held by Davis. SCM disclaims beneficial ownership of such securities except to the extent of its pecuniary interest therein. The address of each of these entities is 200 Clarendon St., Boston, Massachusetts 02116.
|
(6)
|
Includes 5,678,857.50 shares of common stock held by HarbourVest Partners VIII – Buyout Fund L.P. and 5,678,857.50 shares of common stock held by Dover Street VII L.P. Based on information provided to Davis by HarbourVest Partners, HarbourVest Partners, LLC (“HarbourVest”) is the Managing Member of HarbourVest VIII-Buyout Associates LLC, which is the General Partner of HarbourVest VIII-Buyout Associates L.P., which is the General Partner of HarbourVest Partners VIII-Buyout Fund L.P. HarbourVest is also the Managing Member of Dover VII Associates LLC, which is the General Partner of Dover VII Associates L.P., which is the General Partner of Dover Street VII L.P. Voting and investment power over the securities owned by HarbourVest Partners VIII – Buyout Fund L.P. and Dover Street VII L.P. is held by Ms. Kathleen Bacon, Mr. Gregory Stento, Mr. John Toomey, and Mr. Robert Wadsworth in their capacities as members of the Investment Committee of HarbourVest. Each of HarbourVest, Ms. Bacon, and Messrs. Toomey, Stento and Wadsworth disclaims beneficial ownership of these shares. The address for these entities, Ms. Bacon, and Messrs. Toomey, Stento and Wadsworth is One Financial Center, Boston, MA 02111.
|
(7)
|
Includes (i) 392,420 shares of Davis common stock directly held by Mr. Schneider and (ii) 200,000 shares of Davis common stock issuable on the exercise of vested options.
|
·
|
each person or group who is known to the management of Yuma and Davis to become the beneficial owner of more than 5% of the combined company’s outstanding shares of common stock and preferred stock upon consummation of the merger;
|
·
|
each person expected to be a director or executive officer of the combined company; and
|
·
|
all directors and executive officers of the combined company as a group.
|
Name
|
Common Stock
(1)
|
Percent
(2)
|
Preferred Stock
(3)
|
Percent
(2)
|
||||||||||||
Executive Officers and Directors:
|
||||||||||||||||
Sam L. Banks
(4)
|
4,172,266
|
17.7 | % | - | - | |||||||||||
Paul D. McKinney
(4)
|
60,290
|
* | - | - | ||||||||||||
James J. Jacobs
(4)
|
40,570
|
* | - | - | ||||||||||||
James W. Christmas
(4)
|
95,048 | * | - | - | ||||||||||||
Stuart E. Davies
|
- | * | - | - | ||||||||||||
Frank A. Lodzinski
(5)
|
7,068 | * | - | - | ||||||||||||
Neeraj Mital
|
- | * | - | - | ||||||||||||
Richard K. Stoneburner
(4)
|
833 | * | - | - | ||||||||||||
J. Christopher Teets
|
- | * | - | - | ||||||||||||
Executive Officers and Directors as a Group (nine persons):
|
4,376,075
|
18.7 | % | - | - | |||||||||||
Beneficial Owners of More than Five Percent:
|
||||||||||||||||
Red Mountain Capital Partners LLC
(6)
|
4,844,023 | 20.4 | % | 3,281,759 | 99.4 | % | ||||||||||
Davis Petroleum Investment, LLC
(7)
|
3,889,418 | 16.4 | % | - | - | |||||||||||
Sankaty Davis, LLC
(8)
|
3,083,422 | 13.0 | % | - | - |
*
|
Represents less than one percent.
|
(1)
|
Assumes that each share of Davis common stock is exchanged for 0.0956 shares of Yuma Delaware common stock upon the closing of the merger, which is subject to adjustment.
|
(2)
|
The percent of common stock of Yuma Delaware is based on 23,698,132 shares of common stock and 3,264,356 shares of preferred stock of the Yuma Delaware outstanding after giving effect of the reincorporation, the reverse stock split, the merger, and assuming no dissenting shares of Davis common stock or Davis preferred stock.
|
(3)
|
Assumes that each share of Davis preferred stock is exchanged for 0.0956 shares of Yuma Delaware preferred stock upon the closing of the merger, which is subject to adjustment.
|
(4)
|
Includes
unvested shares of restricted stock subject to forfeiture for Mr. Banks – 50,240; Mr. Jacobs – 23,257; Mr. McKinney – 40,989; Mr. Christmas – 278; Mr. Stoneburner – 278, and all directors and named executive officers as a group — 115,042, and stock appreciation rights that are exercisable within 60 days from the date hereof for Mr. Banks – 19,020; Mr. Jacobs – 8,944; and Mr. McKinney – 15,652, and all named executive officers as a group — 43,616.
|
(5)
|
Includes 6,227 shares of Yuma Delaware common stock to be held by in the name of Azure Energy, LLC (“Azure”). Mr. Lodzinski disclaims beneficial ownership of the shares held by Azure, except to the extent of his pecuniary interests therein.
|
(6)
|
Based on information provided to Davis by Red Mountain Capital Partners LLC, a Delaware limited liability company (“RMCP LLC”), (i) RMCP PIV DPC, LP, a Delaware limited partnership (“DPC PIV”), beneficially owns, in the aggregate, 4,844,023 shares of Yuma Delaware common stock and has the sole power to vote or direct the vote, and the sole power to dispose or direct the disposition of, all such shares; (ii) RMCP PIV DPC II, LP, a Delaware limited partnership (“DPC PIV II” and, together with DPC PIV, the “DPC Funds”), beneficially owns, in the aggregate, 3,215,186 shares of Yuma Delaware preferred stock and has the sole power to vote or direct the vote, and the sole power to dispose or direct the disposition of, all such shares; (iii) because RMP DPC LLC, a Delaware limited liability company, may be deemed to control DPC PIV, RMP DPC LLC may be deemed to beneficially own, and to have the power to vote or direct the vote, or dispose or direct the disposition of, all of the Yuma Delaware common stock beneficially owned by DPC PIV; (iv) because RMP DPC II LLC, a Delaware limited liability company, may be deemed to control DPC PIV II, RMP DPC II LLC may be deemed to beneficially own, and to have the power to vote or direct the vote, or dispose or direct the disposition of, all of the Yuma Delaware common stock beneficially owned by DPC PIV II; and (v) because each of RMCP GP LLC, a Delaware limited liability company (“RMCP GP”), RMCP LLC, Red Mountain Capital Management, Inc., a Delaware corporation (“RMCM”), and Willem Mesdag, a natural person and citizen of the United States of America, may be deemed to control each of RMP DPC LLC and RMP DPC II LLC, each of RMCP GP, RMCP LLC, RMCM and Mr. Mesdag may be deemed to beneficially own, and to have the power to vote or direct the vote, or dispose or direct the disposition of, all of the Yuma Delaware common stock beneficially owned by the DPC Funds. Each of RMCM and Mr. Mesdag disclaims beneficial ownership of all shares of Yuma Delaware common stock directly held by the DPC Funds.
|
(7)
|
Based on information provided to Davis by Evercore Partners, Evercore Partners II LP is the sole and managing member of Davis Petroleum Investment, LLC and, as such, has voting and dispositive power over all of the shares held of record by Davis Petroleum Investment, LLC. The address of these entities is 55 East 52
nd
Street, New York, New York 10055.
|
(8)
|
Based on information provided to Davis by Bain Capital Credit, LP, Sankaty Credit Member, LLC (“SCM”), a Delaware limited liability company, is the administrative member of Sankaty Davis, LLC (“Davis”), a Delaware limited liability company. SCM may be deemed to have voting and dispositive power with respect to the shares held by Davis. SCM disclaims beneficial ownership of such securities except to the extent of its pecuniary interest therein. The address of each of these entities is 200 Clarendon St., Boston, Massachusetts 02116.
|
|
●
|
The preliminary purchase accounting adjustments are based on values assigned to the Yuma assets to be acquired and liabilities to be assumed;
|
|
●
|
The implementation of a 1-for-10 reverse stock split in which each share of Yuma common stock, no par value per share, be converted into Yuma Delaware common stock, $0.001 par value per share;
|
|
●
|
The conversion of each share of Yuma’s 9.25% Series A Cumulative Redeemable Preferred Stock, no par value per share, into 3.5 shares of Yuma Delaware common stock, which includes any accrued and unpaid dividends on the Yuma preferred stock as of the consummation of the merger;
|
|
●
|
The issuance of additional shares of Yuma Delaware common stock in the merger that results in approximately 61.1% of Yuma Delaware common stock being owned immediately thereafter by current common stockholders of Davis; and
|
|
●
|
The issuance of approximately 3.3 million shares of a Yuma Delaware preferred stock to existing Davis preferred stockholders, with an aggregate liquidation preference of approximately $18.7 million as of March 31, 2016 and an estimated conversion price of approximately $5.70 per share.
|
(a)
|
Adjustments to reflect the elimination of Yuma’s total equity, the estimated value of consideration to be paid by Yuma in the merger and to adjust, where required, the historical book values of Yuma’s assets and liabilities as of March 31, 2016 to the estimated fair value, in accordance with the acquisition method of accounting.
|
Purchase Consideration
|
||||
Common stock
(1)
|
$ | 18,962 | ||
Stock appreciation rights
(2)
|
181 | |||
Stock options
(3)
|
1 | |||
Restricted stock awards
(4)
|
397 | |||
Restricted stock units
(5)
|
16 | |||
Debt
(6)
|
29,862 | |||
Total preliminary estimated purchase price
|
$ | 49,419 | ||
Less debt assumed
|
(29,862 | ) | ||
Net purchase consideration to be allocated
|
$ | 19,557 | ||
Estimated Fair Value of Assets Acquired
(7)
|
||||
Cash
|
$ | 3,074 | ||
Other current assets
|
5,999 | |||
Proved natural gas and oil properties
(8)
|
46,461 | |||
Unproved natural gas and oil properties
(8)
|
1,150 | |||
Other non-current assets
|
5,885 | |||
Total assets acquired
|
$ | 62,569 | ||
Estimated Fair Value of Liabilities Assumed
|
||||
Current maturities of debt
|
29,862 | |||
Current asset retirement obligation
|
471 | |||
Other current liabilities
|
8,206 | |||
Long-term debt
|
- | |||
Noncurrent asset retirement obligation
|
8,369 | |||
Other
|
22 | |||
Total liabilities assumed
|
$ | 46,930 | ||
Goodwill
|
3,918 | |||
Total net assets acquired
|
$ | 19,557 |
(1)
|
92,050,000 shares of Yuma common stock will be effectively transferred to Davis in connection with the merger. Those shares were valued at $0.206 per share, which was the last sales price of Yuma’s common stock at March 31, 2016. Note that the share price used coincides with the March 31, 2016 NYMEX strip price applied in the most recent engineering reports.
|
(2)
|
Stock appreciation rights were valued using the binomial lattice model.
|
(3)
|
The 105,000 stock options were valued at approximately $0.01 per option using the Black-Scholes model.
|
(4)
|
The 938,596 restricted stock awards for 2016 and the 1,499,094 restricted stock awards for 2017 were valued using the Black-Scholes model.
|
(5)
|
The 80,278 restricted stock units were valued using the Black-Scholes model.
|
(6)
|
Debt fair value approximates the book value as of March 31, 2016, as shown in Yuma’s consolidated balance sheet as presented in the quarterly report on Form 10-Q of Yuma for the three month period ended March 31, 2016.
|
(7)
|
Includes a $3.8 million deferred tax liability and a $20.6 million deferred tax asset, with an offsetting $16.8 million valuation allowance.
|
(8)
|
Note that there was a step-down in basis of Yuma’s oil and natural gas properties, even though Yuma’s oil and natural gas properties were not impaired as of March 31, 2016. This is because of the differences in the methodology for an impairment test and the methodology for determining the fair value of net assets acquired. For example, the methodology for an impairment test uses a different discount rate than that used in determining fair value.
|
(b)
|
Adjustments to reflect approximately $7.57 million in severance costs and legal and advisory fees directly related to the merger that were not reflected in the historical financial statements.
|
(c)
|
Adjustments to reflect the reclassification of Yuma’s current maturities of debt to long-term debt. On a pro forma combined basis, Yuma Delaware is expected to be in compliance with all debt covenants subsequent to closing of the merger.
|
(d)
|
Adjustments to reflect that Davis’ existing current maturities of debt will be paid off and rolled into Yuma Delaware’s long-term debt as part of Yuma Delaware’s new credit facility. As a condition to closing the merger, Yuma Delaware must enter into a reserve-based revolving credit facility effective immediately following the merger which provides an initial borrowing base and minimum aggregate loan commitments of not less than $44.0 million.
|
(e)
|
Adjustment to reflect the issuance of approximately 3.3 million shares of a new Yuma Delaware preferred stock to existing Davis preferred stockholders. The fair value of the Yuma Delaware preferred stock is expected to approximate the carrying value of Davis’ preferred stock as of March 31, 2016.
|
(f)
|
Adjustments to reflect the capitalization of Yuma upon closing of the merger, after which, approximately 23.7 million shares of Yuma Delaware common stock with a par value of $0.001 per share will be outstanding. In accordance with the acquisition method of accounting, Davis’ existing common stock, treasury stock, accumulated deficit and additional paid-in capital, less the par value of the Yuma Delaware common stock received, will be reclassified to additional paid-in capital of Yuma Delaware. A reconciliation of shares of Yuma common stock outstanding as of March 31, 2016 to Yuma Delaware common stock outstanding following the merger is included below.
|
(g)
|
Reclassification to conform the historical financial statement presentation of net gains from commodity derivatives.
|
(h)
|
Adjustments to reflect the reduction in general and administrative expenses related to the termination of certain employees as if the merger had occurred on the first day of the period presented. The reduction related to the termination of certain employees includes only those employees that have been terminated or for which termination has been clearly communicated and whose termination is directly attributable to the transaction.
|
(i)
|
Adjustments in depreciation, depletion, and amortization, as if the merger had occurred on January 1, 2015. The calculation of Yuma Delaware depreciation, depletion and amortization expense for the three months ended March 31, 2016 and for the twelve months ended December 31, 2015 are included below (in thousands):
|
(j)
|
Adjustments to reflect the interest expense associated with the $4.0 million in debt assumed in (b), as if the merger had occurred on January 1, 2015. An interest rate of 3.75% was assumed on the debt. If the interest rate changed 1/8%, pro forma interest expense would change by $47,250 on an annual basis and $11,813 on a quarterly basis.
|
(k)
|
Adjustments to reflect the change in the income tax expense or benefit for the period presented, as if the merger had occurred on January 1, 2015.
|
(l)
|
Adjustments to reflect the conversion of Yuma preferred stock to shares of Yuma Delaware common stock, as if the merger had occurred on January 1, 2015.
|
(m)
|
Adjustment to reflect estimated dividends related to the new Yuma Delaware preferred stock that would have been paid in-kind to preferred shareholders, as if the merger had occurred on January 1, 2015.
|
Yuma Historical
December 31, 2015
|
||||||||||||||||
|
Oil (Bbl)
|
Natural Gas Liquids (Bbls)
|
Natural Gas (Mcf)
|
Total (Boe)
|
||||||||||||
Proved reserves:
|
|
|
||||||||||||||
Balance, beginning of year
|
11,532,185
|
2,479,158 |
35,259,522
|
19,887,930
|
||||||||||||
Revisions of previous estimates
|
(5,095,277 | ) | (501,101 | ) |
(11,436,325
|
) |
(7,502,432
|
) | ||||||||
Purchases of oil and gas properties and minerals in place
|
95,362 | 8,025 |
264,981
|
147,551
|
||||||||||||
Extensions and discoveries
|
630,573 | 139,088 |
3,675,358
|
1,382,221
|
||||||||||||
Sale of oil and gas properties and minerals in place
|
0 | 0 | 0 | 0 | ||||||||||||
Production
|
(247,177 | ) |
(74,511
|
) |
(1,993,842
|
) |
(653,995
|
) | ||||||||
|
||||||||||||||||
Balance, end of year
|
6,915,666 |
2,050,659
|
25,769,694
|
13,261,274
|
||||||||||||
|
||||||||||||||||
Proved developed reserves:
|
||||||||||||||||
Balance, beginning of year
|
2,034,950 |
312,532
|
7,786,537
|
3,645,238
|
||||||||||||
|
||||||||||||||||
Balance, end of year
|
1,801,624 |
315,935
|
8,552,249
|
3,542,934
|
||||||||||||
Proved undeveloped reserves:
|
||||||||||||||||
Balance, beginning of year
|
9,497,235 |
2,166,626
|
27,472,985
|
16,242,692
|
||||||||||||
Balance, end of year
|
5,114,042 |
1,734,724
|
17,217,445
|
9,718,340
|
Davis Historical
December 31, 2015
|
||||||||||||||||
Crude oil (Bbls)
|
Natural Gas Liquids (Bbls)
|
Natural Gas (Mcf)
|
Total (Boe)
|
|||||||||||||
Proved reserves:
|
||||||||||||||||
Balance, beginning of year
|
1,995,900 | 717,400 | 12,650,500 | 4,821,700 | ||||||||||||
Revisions of previous estimates
|
(871,200 | ) | 14,100 | 3,711,100 | (238,600 | ) | ||||||||||
Purchases of oil and gas properties and minerals in place
|
12,800 | 25,100 | 516,600 | 124,000 | ||||||||||||
Extensions and discoveries
|
261,200 | 403,600 | 2,132,100 | 1,020,200 | ||||||||||||
Sale of oil and gas properties and minerals in place
|
(21,300 | ) | (2,300 | ) | (945,100 | ) | (181,100 | ) | ||||||||
Production
|
(209,500 | ) | (129,700 | ) | (2,547,300 | ) | (763,800 | ) | ||||||||
Balance, end of year
|
1,167,900 | 1,028,200 | 15,517,900 | 4,782,400 | ||||||||||||
Proved developed reserves:
|
||||||||||||||||
Balance, beginning of year
|
1,084,900 | 579,400 | 11,901,600 | 3,647,900 | ||||||||||||
Balance, end of year
|
703,400 | 604,300 | 10,464,300 | 3,051,700 | ||||||||||||
Proved undeveloped reserves:
|
||||||||||||||||
Balance, beginning of year
|
911,000 | 138,000 | 748,900 | 1,173,800 | ||||||||||||
Balance, end of year
|
464,500 | 423,900 | 5,053,600 | 1,730,700 |
Pro Forma Adjusted
December 31, 2015
|
||||||||||||||||
Crude oil (Bbls)
|
Natural Gas Liquids (Bbls)
|
Natural Gas (Mcf)
|
Total (Boe)
|
|||||||||||||
Proved reserves:
|
||||||||||||||||
Balance, beginning of year
|
13,528,085
|
3,196,558
|
47,910,022
|
24,709,630
|
||||||||||||
Revisions of previous estimates
|
(5,966,477
|
) |
(487,001
|
) |
(7,725,225
|
) |
(7,741,032
|
) | ||||||||
Purchases of oil and gas properties and minerals in place
|
108,162
|
33,125
|
781,581
|
271,551
|
||||||||||||
Extensions and discoveries
|
891,773
|
542,688
|
5,807,458
|
2,402,421
|
||||||||||||
Sale of oil and gas properties and minerals in place
|
(21,300
|
) | (2,300 | ) | (945,100 | ) | (181,100 | ) | ||||||||
Production
|
(456,677
|
) |
(204,211
|
) |
(4,541,142
|
) |
(1,417,795
|
) | ||||||||
Balance, end of year
|
8,083,566
|
3,078,859
|
41,287,594
|
18,043,674
|
||||||||||||
Proved developed reserves:
|
||||||||||||||||
Balance, beginning of year
|
3,119,850
|
891,932
|
19,688,137
|
7,293,138
|
||||||||||||
Balance, end of year
|
2,505,024
|
920,235
|
19,016,549
|
6,594,634
|
||||||||||||
Proved undeveloped reserves:
|
||||||||||||||||
Balance, beginning of year
|
10,408,235
|
2,304,626
|
28,221,885
|
17,416,492
|
||||||||||||
Balance, end of year
|
5,578,542
|
2,158,624
|
22,271,045
|
11,449,040
|
Yuma Historical
|
Davis Historical
|
Pro Forma Adjusted
|
||||||||||
Future cash inflows
|
$ | 438,816,500 | $ | 112,449,000 | $ | 551,265,500 | ||||||
Future cash outflows:
|
- | |||||||||||
Production cost
|
(129,636,500 | ) | (38,404,000 | ) | (168,040,500 | ) | ||||||
Development cost
|
(126,463,700 | ) | (21,947,000 | ) | (148,410,700 | ) | ||||||
Future income taxes
|
(22,664,783 | ) | - | (22,664,783 | ) | |||||||
Future net cash flows
|
$ | 160,051,517 | $ | 52,098,000 | $ | 212,149,517 | ||||||
Adjustment to discount future annual net cash flows at 10%
|
(53,506,567 | ) | (11,118,000 | ) | (64,624,567 | ) | ||||||
Standardized measure of discounted future net cash flows
|
$ | 106,544,950 | $ | 40,980,000 | $ | 147,524,950 |
Yuma Historical
|
Davis Historical
|
Pro Forma Adjusted
|
||||||||||
Standardized measure, beginning of period
|
$ | 295,478,496 | $ | 101,671,000 | $ | 397,149,496 | ||||||
Sales of oil and gas, net of production cost
|
(7,069,544 | ) | (10,769,000 | ) | (17,838,544 | ) | ||||||
Extensions and discoveries
|
16,659,700 | 3,534,000 | 20,193,700 | |||||||||
Purchases of oil and gas properties and reserves in place
|
2,268,907 | 1,062,000 | 3,330,907 | |||||||||
Development costs incurred during the period that reduced future development costs
|
4,052,919 | - | 4,052,919 | |||||||||
Prices and operating expenses
|
(373,314,797 | ) | (66,321,000 | ) | (439,635,797 | ) | ||||||
Income taxes
|
64,883,059 | - | 64,883,059 | |||||||||
Estimated future development costs
|
245,056,050 | 15,322,000 | 260,378,050 | |||||||||
Quantity estimates
|
(98,817,149 | ) | (12,951,000 | ) | (111,768,149 | ) | ||||||
Sale of reserves in place
|
- | (2,784,000 | ) | (2,784,000 | ) | |||||||
Accretion of discount
|
37,672,481 | 10,167,000 | 47,839,481 | |||||||||
Production rates, timing and other
|
(80,325,172 | ) | 2,049,000 | (78,276,172 | ) | |||||||
Standardized measure, end of period
|
$ | 106,544,950 | $ | 40,980,000 | $ | 147,524,950 |
|
(i)
|
senior to all classes or series of Yuma’s common stock and to all other equity securities issued by Yuma other than equity securities referred to in clauses (ii) and (iii) below;
|
|
(ii)
|
junior to all equity securities Yuma issues which do not have dividend rights and which have terms specifically providing that those equity securities rank senior to the Yuma preferred stock with respect to rights to the distribution of Yuma’s assets upon liquidation, dissolution or winding up (please see the section entitled “— Voting Rights” below);
|
|
(iii)
|
on parity with all other equity securities issued by Yuma with terms specifically providing that those equity securities rank on parity with the Yuma preferred stock with respect to rights to the distribution of Yuma’s assets upon liquidation, dissolution or winding up; and
|
|
(iv)
|
effectively junior to all of Yuma’s existing and future indebtedness (including indebtedness convertible to its common stock or preferred stock) and to the indebtedness of its existing subsidiaries and any future subsidiaries.
|
●
|
a “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all shares of voting stock that such person or group has the right to acquire regardless of when such right is first exercisable), directly or indirectly, of Yuma’s voting stock representing more than 50% of the total voting power of Yuma’s voting stock;
|
●
|
Yuma sells, transfers, or otherwise disposes of all or substantially all of its assets; or
|
●
|
the consummation of a merger or share exchange with another entity when Yuma’s stockholders immediately prior to the merger or share exchange would not beneficially own, immediately after the merger or share exchange, shares representing 50% or more of the outstanding voting stock of the entity issuing cash or securities in the merger or share exchange (without consideration of the rights of any class of stock to elect directors by a separate group vote), or when members of Yuma’s board of directors immediately prior to the merger or share exchange would not, immediately after the merger or share exchange, constitute a majority of the board of directors of the entity issuing cash or securities in the merger or share exchange.
|
●
|
the redemption date;
|
●
|
the number of shares of Yuma preferred stock to be redeemed;
|
●
|
the redemption price;
|
●
|
the place or places where certificates (if any) for the Yuma preferred stock are to be surrendered for payment of the redemption price;
|
●
|
that dividends on the shares to be redeemed will cease to accumulate on the redemption date;
|
●
|
whether such redemption is being made pursuant to the provisions described above under “—Redemption—Optional Redemption” or “—Redemption—Special Optional Redemption”;
|
●
|
if applicable, that such redemption is being made in connection with a Change of Control and, in that case, a brief description of the transaction or transactions constituting such Change of Control; and
|
●
|
if such redemption is being made in connection with a Change of Control, that the holders of the shares of Yuma preferred stock being so called for redemption will not be able to tender such shares of Yuma preferred stock for conversion in connection with the Change of Control and that each share of Yuma preferred stock tendered for conversion that is called, prior to the Change of Control Conversion Date (as defined below), for redemption will be redeemed on the related date of redemption instead of converted on the Change of Control Conversion Date.
|
●
|
the quotient obtained by dividing (i) the sum of the $25.00 liquidation preference per share of Yuma preferred stock plus the amount of any accumulated and unpaid dividends thereon to, but not including, the Change of Control Conversion Date (unless the Change of Control Conversion Date is after a dividend record date and prior to the corresponding dividend payment date for the Yuma preferred stock, in which case no additional amount for accumulated and unpaid dividends will be included in this sum) by (ii) the Common Stock Price, as defined below (such quotient, the “Conversion Rate”); and
|
●
|
14.12 (the “Share Cap”), subject to certain adjustments as described below.
|
●
|
the events constituting the Change of Control;
|
●
|
the date of the Change of Control;
|
●
|
the last date on which the holders of Yuma preferred stock may exercise their Change of Control Conversion Right;
|
●
|
the method and period for calculating the Common Stock Price;
|
●
|
the Change of Control Conversion Date;
|
●
|
that if, prior to the Change of Control Conversion Date, Yuma has provided notice of Yuma’s election to redeem all or any shares of Yuma preferred stock, holders will not be able to convert the shares of Yuma preferred stock called for redemption and such shares will be redeemed on the related redemption date, even if such shares have already been tendered for conversion pursuant to the Change of Control Conversion Right;
|
●
|
if applicable, the type and amount of Alternative Conversion Consideration entitled to be received per share of Yuma preferred stock;
|
●
|
the name and address of the paying agent, transfer agent and conversion agent for the Yuma preferred stock;
|
●
|
the procedures that the holders of Yuma preferred stock must follow to exercise the Change of Control Conversion Right (including procedures for surrendering shares for conversion through the facilities of a depositary (as defined below)), including the form of conversion notice to be delivered by such holders as described below; and
|
●
|
the last date on which holders of Yuma preferred stock may withdraw shares surrendered for conversion and the procedures that such holders must follow to effect such a withdrawal.
|
●
|
the relevant Change of Control Conversion Date;
|
●
|
the number of shares of Yuma preferred stock to be converted; and
|
●
|
that the Yuma preferred stock is to be converted pursuant to the applicable provisions of the Yuma preferred stock.
|
●
|
the number of withdrawn shares of Yuma preferred stock;
|
●
|
if certificated Yuma preferred stock has been surrendered for conversion, the certificate numbers of the withdrawn shares of Yuma preferred stock; and
|
●
|
the number of shares of Yuma preferred stock, if any, which remain subject to the holder’s conversion notice.
|
●
|
100,000,000 shares are designated as common stock; and
|
●
|
20,000,000 shares are designated as preferred stock.
|
●
|
any breach of their duty of loyalty to Yuma Delaware or its stockholders;
|
●
|
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
●
|
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or
|
●
|
any transaction from which they derived an improper personal benefit.
|
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Natural gas and oil revenues
|
$ | 414,439 | $ | 819,300 | ||||
Lease operating expenditures
|
(499,750 | ) | (672,429 | ) | ||||
Net cash flow
|
(85,311 | ) | 146,871 | |||||
Capital expenditures
|
(84,813 | ) | (581,163 | ) | ||||
Net after capital expenditures and before income taxes
|
$ | (170,124 | ) | $ | (434,292 | ) |
●
|
Authorized Number of Shares Proposal
. The amended and restated certificate of incorporation of Yuma Delaware decreases the authorized shares of common stock from 300,000,000 to 100,000,000 shares of common stock, $0.001 par value per share, of Yuma Delaware, and increases the authorized shares of preferred stock from 10,000,000 to 20,000,000 shares of preferred stock, $0.001 par value per share, of Yuma Delaware (the “authorized shares proposal,” item 3A);
|
●
|
Number of Directors Proposal
. A provision in the amended and restated certificate of incorporation of Yuma Delaware that removes the restriction on the number of directors on the Yuma Delaware board of directors and allows the board to determine such number of directors pursuant to the bylaws of Yuma Delaware (the “number of directors proposal,” item 3B);
|
●
|
Classification of Board Proposal
. The provision in the amended and restated certificate of incorporation of Yuma Delaware that provides for the classification of the board of directors of Yuma Delaware into three classes with staggered terms(the “classification of board proposal,” item 3C);
|
●
|
Director Removal Proposal
. A provision in the amended and restated certificate of incorporation of Yuma Delaware that restricts the ability of stockholders to remove directors without cause (the “director removal proposal,” item 3D);
|
●
|
Future Annual Elections of Directors
. The provision in the amended and restated certificate of incorporation concerning classification of directors which provides that, if at any time the former stockholders of Davis beneficially own less than 50% of the aggregate voting power of all outstanding shares of stock entitled to vote in the election of Yuma Delaware’s directors, at each annual meeting of stockholders following such date, each of the successor directors elected at such annual meeting shall serve for a one-year term (the “future annual elections of directors proposal,” item 3E); and
|
●
|
Exclusive Forum Proposal
. A provision in the amended and restated certificate of incorporation of Yuma Delaware that requires that certain actions and proceedings with respect to Yuma Delaware be brought in the federal or state courts of the State of Delaware (the “exclusive forum proposal,” item 3F).
|
●
|
which of such persons should be granted awards;
|
●
|
the terms of proposed grants or awards to those selected by Yuma Delaware’s board of directors to participate;
|
●
|
the exercise price for options and stock appreciation rights; and
|
●
|
any limitations, restrictions and conditions upon any awards.
|
●
|
determine which employees and other persons will be granted awards under the 2014 Plan;
|
●
|
grant the awards to those selected to participate;
|
●
|
determine the exercise price for options and stock appreciation rights; and
|
●
|
prescribe any limitations, restrictions and conditions upon any awards.
|
●
|
interpret the 2014 Plan; and
|
●
|
make all other determinations and take all other actions that may be necessary or advisable to implement and administer the 2014 Plan.
|
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 approved by security holders:
(1)(2)
|
2,017,419 | $ | 0.8426 | 4,307,672 | ||||||||
Equity compensation plans not approved by security holders:
(3)
|
249,921 | (4) | - | - | ||||||||
Total
|
2,267,340 | $ | 0.8426 | 4,307,672 |
(1)
|
The 2014 Plan was adopted by Yuma shareholders in September 2014.
|
(2)
|
The 2006 Plan was adopted by Yuma shareholders in June 2006. After the closing of the merger, the Yuma board resolved to not issue any additional awards under the 2006 Plan.
|
(3)
|
Yuma assumed the Yuma Co. Plan and the outstanding stock awards under the Yuma Co. Plan in connection with the closing of its merger with Pyramid Oil Company in September 2014. After the closing of the merger, the Yuma board resolved to not issue any additional awards under the Yuma Co. Plan. Yuma assumed 2,359,361 restricted shares of common stock in connection with the closing of the merger under the Yuma Co. Plan. Also, Yuma assumed 95,424 restricted stock units in connection with the closing of the merger under the Yuma Co. Plan. Each restricted stock unit represents a contingent right to receive one share of Yuma common stock upon vesting.
|
(4)
|
Includes 169,643 shares of restricted stock not yet vested and 80,278 restricted stock units not yet vested.
|
Page
|
|
Yuma Energy, Inc. and Subsidiaries
|
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets as of December 31, 2015 and 2014 (as restated)
|
F-3
|
Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014 and 2013 (as restated)
|
F-5
|
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2015, 2014 and 2013 (as restated)
|
F-6
|
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2015, 2014 and 2013 (as restated)
|
F-7
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014 and 2013 (as restated)
|
F-8
|
Notes to Consolidated Financial Statements (restated)
|
F-10
|
Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 (Unaudited)
|
F-58
|
Consolidated Statements of Operations for the Three Months Ended March 31, 2016 and 2015 (Unaudited)
|
F-60
|
Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2016 and 2015 (Unaudited)
|
F-61
|
Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2016 (Unaudited)
|
F-62
|
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 (Unaudited)
|
F-63
|
Notes to Consolidated Financial Statements (Unaudited)
|
F-64
|
Davis Petroleum Acquisition Corp. and Subsidiaries
|
|
Report of Independent Auditor
|
F-66
|
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
F-67
|
Consolidated Income Statements for the Years Ended December 31, 2015 and 2014
|
F-68
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015 and 2014
|
F-69
|
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2015 and 2014
|
F-70
|
Notes to Consolidated Financial Statements
|
F-71
|
Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 (Unaudited)
|
F-91
|
Consolidated Income Statements for the Three Months Ended March 31, 2016 and 2015 (Unaudited)
|
F-92
|
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 (Unaudited)
|
F-93
|
Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2016 and 2015 (Unaudited)
|
F-94
|
Notes to Consolidated Financial Statements (Unaudited)
|
F-95
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
(As Restated)
|
(As Restated)
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 5,355,191 | $ | 11,558,322 | ||||
Short-term investments
|
- | 1,170,868 | ||||||
Accounts receivable, net of allowance for doubtful accounts:
|
||||||||
Trade
|
2,829,266 | 9,739,737 | ||||||
Officers and employees
|
75,404 | 316,077 | ||||||
Other
|
633,573 | 856,562 | ||||||
Commodity derivative instruments
|
2,658,047 | 3,338,537 | ||||||
Prepayments
|
704,523 | 782,234 | ||||||
Other deferred charges
|
415,740 | 342,798 | ||||||
Total current assets
|
12,671,744 | 28,105,135 | ||||||
OIL AND GAS PROPERTIES (full cost method):
|
||||||||
Not subject to amortization
|
14,288,716 | 25,707,052 | ||||||
Subject to amortization
|
204,512,038 | 186,530,863 | ||||||
218,800,754 | 212,237,915 | |||||||
Less: accumulated depreciation, depletion and amortization
|
(117,304,945 | ) | (103,929,493 | ) | ||||
Net oil and gas properties
|
101,495,809 | 108,308,422 | ||||||
OTHER PROPERTY AND EQUIPMENT:
|
||||||||
Land, buildings and improvements
|
2,795,000 | 2,795,000 | ||||||
Other property and equipment
|
3,460,507 | 3,439,688 | ||||||
6,255,507 | 6,234,688 | |||||||
Less: accumulated depreciation and amortization
|
(2,174,316 | ) | (1,909,352 | ) | ||||
Net other property and equipment
|
4,081,191 | 4,325,336 | ||||||
OTHER ASSETS AND DEFERRED CHARGES:
|
||||||||
Commodity derivative instruments
|
1,070,541 | 1,403,109 | ||||||
Deposits
|
264,064 | 264,064 | ||||||
Goodwill
|
- | 4,927,508 | ||||||
Other noncurrent assets
|
38,104 | 262,200 | ||||||
Total other assets and deferred charges
|
1,372,709 | 6,856,881 | ||||||
TOTAL ASSETS
|
$ | 119,621,453 | $ | 147,595,774 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
(As Restated)
|
(As Restated)
|
|||||||
LIABILITIES AND EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Current maturities of debt
|
$ | 30,063,635 | $ | 282,843 | ||||
Accounts payable, principally trade
|
7,933,664 | 25,004,364 | ||||||
Asset retirement obligations
|
70,000 | - | ||||||
Other accrued liabilities
|
1,781,484 | 1,419,565 | ||||||
Total current liabilities
|
39,848,783 | 26,706,772 | ||||||
LONG-TERM DEBT:
|
||||||||
Bank debt
|
- | 22,900,000 | ||||||
OTHER NONCURRENT LIABILITIES:
|
||||||||
Asset retirement obligations
|
8,720,498 | 12,487,770 | ||||||
Deferred taxes
|
1,417,364 | 5,136,222 | ||||||
Restricted stock units
|
- | 71,569 | ||||||
Other liabilities
|
30,090 | 22,451 | ||||||
Total other noncurrent liabilities
|
10,167,952 | 17,718,012 | ||||||
EQUITY:
|
||||||||
Preferred stock
|
10,828,603 | 9,958,217 | ||||||
Common stock, no par value (300 million shares authorized, 71,834,617 and 69,139,869 issued)
|
141,858,946 | 137,469,772 | ||||||
Accumulated other comprehensive income
|
- | 38,801 | ||||||
Accumulated earnings (deficit)
|
(83,082,831 | ) | (67,195,800 | ) | ||||
Total equity
|
69,604,718 | 80,270,990 | ||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 119,621,453 | $ | 147,595,774 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
REVENUES:
|
||||||||||||
Sales of natural gas and crude oil
|
$ | 18,680,584 | $ | 38,659,392 | $ | 28,235,413 | ||||||
Net gains (losses) from commodity derivatives
|
5,038,826 | 3,398,518 | (159,810 | ) | ||||||||
Total revenues
|
23,719,410 | 42,057,910 | 28,075,603 | |||||||||
EXPENSES:
|
||||||||||||
Marketing cost of sales
|
532,985 | 1,045,177 | 1,234,308 | |||||||||
Lease operating
|
11,401,309 | 12,816,725 | 9,316,364 | |||||||||
Re-engineering and workovers
|
555,539 | 3,084,972 | 2,521,707 | |||||||||
General and administrative – stock-based compensation
|
2,289,311 | 3,388,321 | 452,058 | |||||||||
General and administrative – other
|
7,434,304 | 8,156,077 | 4,536,506 | |||||||||
Depreciation, depletion and amortization
|
13,651,207 | 19,664,991 | 12,077,368 | |||||||||
Asset retirement obligation accretion expense
|
604,538 | 604,511 | 668,497 | |||||||||
Goodwill impairment
|
4,927,508 | - | - | |||||||||
Other
|
468,221 | 98,476 | 171,774 | |||||||||
Total expenses
|
41,864,922 | 48,859,250 | 30,978,582 | |||||||||
INCOME (LOSS) FROM OPERATIONS
|
(18,145,512 | ) | (6,801,340 | ) | (2,902,979 | ) | ||||||
OTHER INCOME (EXPENSE):
|
||||||||||||
Change in fair value of preferred stock derivative liability – Series A and Series B
|
- | (15,676,842 | ) | (26,258,559 | ) | |||||||
Interest expense
|
(456,423 | ) | (326,200 | ) | (567,676 | ) | ||||||
Other, net
|
36,338 | 25,378 | (240,617 | ) | ||||||||
Total other income (expense)
|
(420,085 | ) | (15,977,664 | ) | (27,066,852 | ) | ||||||
NET INCOME (LOSS) BEFORE INCOME TAXES
|
(18,565,597 | ) | (22,779,004 | ) | (29,969,831 | ) | ||||||
Income tax expense (benefit)
|
(3,725,757 | ) | (1,936,347 | ) | (1,380,937 | ) | ||||||
NET INCOME (LOSS)
|
(14,839,840 | ) | (20,842,657 | ) | (28,588,894 | ) | ||||||
PREFERRED STOCK:
|
||||||||||||
Dividends paid in cash, perpetual preferred Series A
|
1,047,191 | 224,098 | - | |||||||||
Dividends in arrears, perpetual preferred Series A
|
213,751 | - | - | |||||||||
Accretion, Series A and Series B
|
- | 786,536 | 1,101,972 | |||||||||
Dividends paid in cash, Series A and Series B
|
- | 445,152 | 145,900 | |||||||||
Dividends paid in kind, Series A and Series B
|
- | 4,133,380 | 5,412,281 | |||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (16,100,782 | ) | $ | (26,431,823 | ) | $ | (35,249,047 | ) | |||
EARNINGS (LOSS) PER COMMON SHARE:
|
||||||||||||
Basic
|
$ | (0.23 | ) | $ | (0.53 | ) | $ | (0.86 | ) | |||
Diluted
|
$ | (0.23 | ) | $ | (0.53 | ) | $ | (0.86 | ) | |||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
|
||||||||||||
Basic
|
71,013,717 | 49,678,444 | 41,074,953 | |||||||||
Diluted
|
71,013,717 | 49,678,444 | 41,074,953 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
NET INCOME (LOSS)
|
$ | (14,839,840 | ) | $ | (20,842,657 | ) | $ | (28,588,894 | ) | |||
OTHER COMPREHENSIVE INCOME (LOSS):
|
||||||||||||
Commodity derivatives sold
|
(119,917 | ) | - | - | ||||||||
Less income taxes
|
(46,168 | ) | - | - | ||||||||
Commodity derivatives sold, net of income taxes
|
(73,749 | ) | - | - | ||||||||
Reclassification of (gain) loss on settled commodity derivatives
|
56,826 | 50 | (374,099 | ) | ||||||||
Less income taxes
|
21,878 | 19 | (144,028 | ) | ||||||||
Reclassification of (gain) loss on settled commodity derivatives, net of income taxes
|
34,948 | 31 | (230,071 | ) | ||||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
(38,801 | ) | 31 | (230,071 | ) | |||||||
COMPREHENSIVE LOSS
|
$ | (14,878,641 | ) | $ | (20,842,626 | ) | $ | (28,818,965 | ) |
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
PERPETUAL PREFERRED STOCK - 9.25% CUMULATIVE AND REDEEMABLE, NO PAR VALUE:
|
||||||||||||
Balance at beginning of period: 507,739 shares for 2015 and 0 shares for 2014 and 2013
|
$ | 9,958,217 | $ | - | $ | - | ||||||
Sales of 46,857 shares for 2015 and 507,739 shares for 2014
|
870,386 | 9,958,217 | - | |||||||||
Balance at end of period: 554,596 shares for 2015, 507,739 shares for 2014, and 0 shares for 2013
|
10,828,603 | 9,958,217 | - | |||||||||
COMMON STOCK, NO PAR VALUE:
|
||||||||||||
Balance at beginning of period: 69,139,869 shares for 2015, 41,074,950 shares for 2014, and 40,896,221 shares for 2013
|
137,469,772 | 2,669,465 | 2,182,833 | |||||||||
Sales of 1,347,458 shares of common stock
|
1,363,160 | - | - | |||||||||
Employee restricted stock awards (178,729 shares, vested 4/1/13, issued 9/11/14)
|
- | - | 486,632 | |||||||||
Restricted stock awards, of which 1,676,113 for 2015 and 19,440 for 2014 are vested
|
3,171,477 | 3,272,638 | - | |||||||||
Buy back of 328,823 shares from vested stock awards
|
(300,732 | ) | - | - | ||||||||
Stock appreciation rights issued, not vested
|
155,269 | - | - | |||||||||
Restricted stock unit awards (273,907 shares)
|
- | 869,231 | - | |||||||||
Convert preferred stock to 22,883,487 shares of common stock on September 10, 2014
|
- | 107,552,938 | - | |||||||||
Pyramid Oil Company 4,788,085 shares outstanding last day of trading September 10, 2014
|
- | 22,504,000 | - | |||||||||
Fair value of Pyramid Oil Company stock options
|
- | 100,500 | - | |||||||||
Stock awards (100,000 shares) to employees, directors and consultants of Pyramid Oil Company vested upon the change in control and issued September 11, 2014
|
- | 501,000 | - | |||||||||
Balance at end of period: 71,834,617 shares for 2015, 69,139,869 shares for 2014, and 41,074,950 shares for 2013
|
141,858,946 | 137,469,772 | 2,669,465 | |||||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME:
|
||||||||||||
Balance at beginning of period
|
38,801 | 38,770 | 268,841 | |||||||||
Comprehensive income (loss) from commodity derivative instruments, net of income taxes
|
(38,801 | ) | 31 | (230,071 | ) | |||||||
Balance at end of period
|
- | 38,801 | 38,770 | |||||||||
ACCUMULATED EARNINGS (DEFICIT):
|
||||||||||||
Balance at beginning of period
|
(67,195,800 | ) | (40,763,977 | ) | (10,885,832 | ) | ||||||
Prior period adjustment to correct deferred income taxes
|
- | - | 5,370,902 | |||||||||
Balance at beginning of period as restated
|
(67,195,800 | ) | (40,763,977 | ) | (5,514,930 | ) | ||||||
Net loss attributable to Yuma Energy, Inc.
|
(14,839,840 | ) | (20,842,657 | ) | (28,588,894 | ) | ||||||
Series A perpetual preferred stock cash dividends
|
(1,047,191 | ) | (224,098 | ) | - | |||||||
Preferred stock accretion (Series A and B)
|
- | (786,536 | ) | (1,101,972 | ) | |||||||
Preferred stock cash dividends (Series A and B)
|
- | (445,152 | ) | (145,900 | ) | |||||||
Preferred stock dividends paid in kind (Series A and B)
|
- | (4,133,380 | ) | (5,412,281 | ) | |||||||
Balance at end of period
|
(83,082,831 | ) | (67,195,800 | ) | (40,763,977 | ) | ||||||
TOTAL EQUITY
|
$ | 69,604,718 | $ | 80,270,990 | $ | (38,055,742 | ) |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Reconciliation of net loss to net cash provided by (used in) operating activities
|
||||||||||||
Net loss
|
$ | (14,839,840 | ) | $ | (20,842,657 | ) | $ | (28,588,894 | ) | |||
Goodwill write-off
|
4,927,508 | - | - | |||||||||
Increase in fair value of preferred stock derivative liability
|
- | 15,676,842 | 26,258,559 | |||||||||
Depreciation, depletion and amortization of property and equipment
|
13,651,207 | 19,664,991 | 12,077,368 | |||||||||
Accretion of asset retirement obligation
|
604,538 | 604,511 | 668,497 | |||||||||
Stock-based compensation net of capitalized cost
|
2,289,311 | 3,388,321 | 452,058 | |||||||||
Amortization of other assets and liabilities
|
286,010 | 188,669 | 166,608 | |||||||||
Deferred tax expense (benefit)
|
(3,694,568 | ) | (1,936,347 | ) | (1,380,937 | ) | ||||||
Bad debt expense
|
839,171 | 97,068 | 193,601 | |||||||||
Write off deferred offering costs
|
- | 1,257,160 | - | |||||||||
Write off credit financing costs
|
- | - | 313,652 | |||||||||
Amortization of benefit from commodity derivatives (sold) and purchased, net
|
- | (93,750 | ) | (72,600 | ) | |||||||
Unrealized (gains) losses on commodity derivatives
|
949,967 | (4,724,985 | ) | 231,886 | ||||||||
Other
|
(342,835 | ) | 5,448 | (21,328 | ) | |||||||
Changes in current operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
6,877,906 | 976,093 | (5,589,741 | ) | ||||||||
Other current assets
|
77,711 | (267,386 | ) | 869,550 | ||||||||
Accounts payable
|
(13,688,145 | ) | 10,690,790 | 9,115,792 | ||||||||
Other current liabilities
|
691,915 | (218,468 | ) | 148,834 | ||||||||
Other non-current liability
|
- | - | 69,998 | |||||||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(1,370,144 | ) | 24,466,300 | 14,912,903 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Capital expenditures on property and equipment
|
$ | (13,540,582 | ) | $ | (25,526,887 | ) | $ | (28,152,714 | ) | |||
Proceeds from sale of property
|
58,557 | 667,267 | 902,166 | |||||||||
Cash received from merger
|
- | 4,550,082 | - | |||||||||
Decrease in short-term investments
|
1,170,868 | 2,125,541 | - | |||||||||
Decrease (increase) in noncurrent receivable from affiliate
|
- | 95,634 | (2,493 | ) | ||||||||
NET CASH USED IN INVESTING ACTIVITIES
|
(12,311,157 | ) | (18,088,363 | ) | (27,253,041 | ) |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Change in borrowing on line of credit
|
6,900,000 | (8,315,000 | ) | 13,340,000 | ||||||||
Proceeds from insurance note
|
813,562 | 901,257 | 872,754 | |||||||||
Payments on insurance note
|
(832,770 | ) | (796,441 | ) | (878,328 | ) | ||||||
Line of credit financing costs
|
(250,141 | ) | (92,909 | ) | (681,739 | ) | ||||||
Net proceeds from sale of common stock
|
1,363,160 | - | - | |||||||||
Net proceeds from sales of perpetual preferred stock
|
870,386 | 9,958,217 | - | |||||||||
Deferred offering costs
|
(38,104 | ) | - | (1,257,160 | ) | |||||||
Cash dividends to preferred stockholders
|
(1,047,191 | ) | (669,250 | ) | (145,900 | ) | ||||||
Common stock purchased from employees
|
(300,732 | ) | - | - | ||||||||
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
7,478,170 | 985,874 | 11,249,627 | |||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(6,203,131 | ) | 7,363,811 | (1,090,511 | ) | |||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
11,558,322 | 4,194,511 | 5,285,022 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 5,355,191 | $ | 11,558,322 | $ | 4,194,511 | ||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Interest payments (net of interest capitalized)
|
$ | 131,521 | $ | 175,009 | $ | 22,210 | ||||||
Interest capitalized
|
$ | 983,472 | $ | 1,059,350 | $ | 1,031,816 | ||||||
Supplemental disclosure of significant non-cash activity:
|
||||||||||||
Preferred dividends paid in kind (Series A and Series B)
|
$ | - | $ | 4,133,380 | $ | 5,412,281 | ||||||
Change in capital expenditures financed by accounts payable
|
$ | 3,382,555 | $ | 1,310,037 | $ | 1,904,581 |
Year of acquisition
|
||||||||||||||||||||
2015
|
2014
|
2013
|
Prior
|
Total
|
||||||||||||||||
Leasehold acquisition cost
|
$ | (9,039,268 | ) | $ | 154,194 | $ | 1,704,190 | $ | 19,247,036 | $ | 12,066,152 | |||||||||
Exploration and development cost
|
(1,739,341 | ) | 891,610 | 1,059,262 | 172,159 | 383,690 | ||||||||||||||
Capitalized interest
|
(639,726 | ) | 609,970 | 829,456 | 1,027,969 | 1,827,669 | ||||||||||||||
Total
|
$ | (11,418,335 | ) | $ | 1,655,774 | $ | 3,592,908 | $ | 20,447,164 | $ | 14,277,511 |
Estimated
|
||||||||||||
useful
|
December 31,
|
|||||||||||
life in years
|
2015
|
2014
|
||||||||||
Land
|
n/a | $ | 2,469,000 | $ | 2,469,000 | |||||||
Office business machines
|
3 - 5 | 1,381,968 | 1,361,149 | |||||||||
Drilling and operating equipment
|
14 | 982,010 | 982,010 | |||||||||
Furniture and fixtures
|
7 | 412,215 | 412,215 | |||||||||
Automotive
|
5 | 351,707 | 351,707 | |||||||||
Office leasehold improvements
|
5 | 332,607 | 332,607 | |||||||||
Buildings and improvements
|
3 - 25 | 326,000 | 326,000 | |||||||||
Total other property and equipment
|
6,255,507 | 6,234,688 | ||||||||||
Less: Accumulated depreciation and
|
||||||||||||
leasehold improvement amortization
|
(2,174,316 | ) | (1,909,352 | ) | ||||||||
Net book value
|
$ | 4,081,191 | $ | 4,325,336 |
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Production and severance tax
|
$ | 1,678,825 | $ | 2,693,396 | $ | 2,403,263 | ||||||
Ad valorem tax
|
1,103,913 | 1,046,134 | 732,302 | |||||||||
Sales tax
|
18,534 | 62,864 | 180,498 | |||||||||
State franchise taxes
|
68,248 | 40,740 | 41,072 | |||||||||
Total
|
$ | 2,869,520 | $ | 3,843,134 | $ | 3,357,135 |
State of
|
Date of
|
|||||
Company name
|
Reference
|
incorporation
|
incorporation
|
|||
The Yuma Companies, Inc.
|
“YCI”
|
Delaware
|
10/30/96
|
|||
Yuma Exploration and Production Company, Inc.
|
“Exploration”
|
Delaware
|
01/16/92
|
|||
Yuma Petroleum Company
|
“Petroleum”
|
Delaware
|
12/19/91
|
|||
Texas Southeastern Gas Marketing Company
|
“TSM”
|
Texas
|
09/12/96
|
|||
Pyramid Oil LLC
|
“POL”
|
California
|
08/08/14
|
|||
Pyramid Delaware Merger Subsidiary, Inc.
|
“PDMS”
|
Delaware
|
02/04/14
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Beginning of year balance
|
$ | 12,487,770 | $ | 10,697,679 | ||||
Pyramid liabilities assumed in the merger
|
- | 943,951 | ||||||
Liabilities incurred during year
|
24,588 | 416,162 | ||||||
Liabilities settled during year
|
(35,455 | ) | - | |||||
Accretion expense
|
604,538 | 604,511 | ||||||
Revisions in estimated cash flows
|
(4,290,943 | ) | (174,533 | ) | ||||
End of year balance
|
$ | 8,790,498 | $ | 12,487,770 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Receivables from affiliates, CEO and employees:
|
||||||||
Current:
|
||||||||
Yuma CEO
|
$ | 63,329 | $ | 174,720 | ||||
Employees
|
12,075 | 141,357 | ||||||
Total
|
$ | 75,404 | $ | 316,077 |
●
|
Working interests in prospects from the Company or from unaffiliated third parties up to 2.5% of the Company’s working interest; and
|
●
|
Working interests in production acquisitions that the Company undertakes in an amount up to 2.5% (previously 5%) of the aggregate cost of the interest to be acquired.
|
Working
|
Amount
|
|||||
Year
|
Well, prospect or project
|
interest
|
paid
|
|||
2014
|
Anaconda Prospect (Talbot 23-1)
|
1.95000%
|
$16,900
|
|||
2014
|
Gardner Island Well &
|
1.43600%
|
||||
Main Pass 4 Facility
|
1.85500%
|
$78,988
|
||||
2014
|
Austin Chalk (Additional W.I.)
|
1.00000%
|
$16,000
|
|||
2013
|
Bell City East Prospect
|
.71063%
|
$ 5,330
|
|||
2013
|
Austin Chalk
|
1.00000%
|
$ 9,412
|
|||
2013
|
Addison Acquisition
|
2.00000%
|
$150,000
|
Fair value measurements at December 31, 2015
|
||||||||||||||||
Significant
|
||||||||||||||||
Quoted prices
|
other
|
Significant
|
||||||||||||||
in active
|
observable
|
unobservable
|
||||||||||||||
markets
|
inputs
|
inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Commodity derivatives – oil
|
$ | - | $ | 3,442,693 | $ | - | $ | 3,442,693 | ||||||||
Commodity derivatives – gas
|
- | 285,895 | - | 285,895 | ||||||||||||
Total assets
|
$ | - | $ | 3,728,588 | $ | - | $ | 3,728,588 |
Fair value measurements at December 31, 2014
|
||||||||||||||||
Significant
|
||||||||||||||||
Quoted prices
|
other
|
Significant
|
||||||||||||||
in active
|
observable
|
unobservable
|
||||||||||||||
markets
|
inputs
|
inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Commodity derivatives – oil
|
$ | - | $ | 2,858,387 | $ | - | $ | 2,858,387 | ||||||||
Commodity derivatives – gas
|
- | 1,883,259 | - | 1,883,259 | ||||||||||||
Total assets
|
$ | - | $ | 4,741,646 | $ | - | $ | 4,741,646 |
2016
|
2017
|
|||||||
Settlement
|
Settlement
|
|||||||
NATURAL GAS (MMBtu):
|
||||||||
Swaps
|
||||||||
Volume
|
298,957 | - | ||||||
Price (NYMEX)
|
$ | 3.28 | - | |||||
3-way collars
|
||||||||
Volume
|
- | 67,361 | ||||||
Ceiling sold price (call) (NYMEX)
|
- | $ | 4.03 | |||||
Floor purchased price (put) (NYMEX)
|
- | $ | 3.50 | |||||
Floor sold price (short put) (NYMEX)
|
- | $ | 3.00 | |||||
CRUDE OIL (Bbls):
|
||||||||
Put spread
|
||||||||
Volume
|
138,286 | - | ||||||
Floor purchased price (put) (LLS)
|
$ | 62.27 | - | |||||
Floor sold price (short put) (LLS)
|
$ | 40.00 | - | |||||
3-way collars
|
||||||||
Volume
|
- | 113,029 | ||||||
Ceiling sold price (call) (WTI)
|
- | $ | 77.00 | |||||
Floor purchased price (put) (WTI)
|
- | $ | 60.00 | |||||
Floor sold price (short put) (WTI)
|
- | $ | 45.00 |
Fair value as of December 31,
|
||||||||
2015
|
2014
|
|||||||
Asset commodity derivatives:
|
||||||||
Current assets
|
$ | 3,069,115 | $ | 6,413,935 | ||||
Noncurrent assets
|
1,841,120 | 3,163,891 | ||||||
4,910,235 | 9,577,826 | |||||||
Liability commodity derivatives:
|
||||||||
Current liabilities
|
(411,068 | ) | (3,075,398 | ) | ||||
Noncurrent liabilities
|
(770,579 | ) | (1,760,782 | ) | ||||
(1,181,647 | ) | (4,836,180 | ) | |||||
Total commodity derivative instruments
|
$ | 3,728,588 | $ | 4,741,646 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Sales of natural gas and crude oil
|
$ | 18,680,584 | $ | 38,659,392 | $ | 28,235,413 | ||||||
Gains (losses) realized from sale of commodity derivatives
|
4,030,000 | - | - | |||||||||
Other gains (losses) realized on commodity derivatives
|
1,958,793 | (1,420,217 | ) | (524 | ) | |||||||
Unrealized gains (losses) on commodity derivatives
|
(949,967 | ) | 4,724,985 | (231,886 | ) | |||||||
Amortized gains from benefit of sold qualified gas options
|
- | 93,750 | 72,600 | |||||||||
Total revenue from natural gas and crude oil
|
$ | 23,719,410 | $ | 42,057,910 | $ | 28,075,603 |
Years Ended December 31,
|
||||||||||||||||||||||||
2015
|
2014
|
2013
|
||||||||||||||||||||||
Before tax
|
After
tax
|
Before tax
|
After
tax
|
Before tax
|
After
tax
|
|||||||||||||||||||
Balance, beginning of period
|
$ | 63,091 | $ | 38,801 | $ | 63,041 | $ | 38,770 | $ | 437,140 | $ | 268,841 | ||||||||||||
Sale of unexpired contracts
|
||||||||||||||||||||||||
previously subject to hedge
|
||||||||||||||||||||||||
accounting rules
|
(119,917 | ) | (73,749 | ) | - | - | - | - | ||||||||||||||||
Other reclassifications due to expired
|
||||||||||||||||||||||||
contracts previously subject to
|
||||||||||||||||||||||||
hedge accounting rules
|
56,826 | 34,948 | 50 | 31 | (374,099 | ) | (230,071 | ) | ||||||||||||||||
Balance, end of period
|
$ | - | $ | - | $ | 63,091 | $ | 38,801 | $ | 63,041 | $ | 38,770 |
June 30, 2013
|
December 31, 2013
|
June 30, 2014
|
||||||||||||||||||||||
Additional
|
Additional
|
Additional
|
||||||||||||||||||||||
preferred
|
Cash
|
preferred
|
Cash
|
preferred
|
Cash
|
|||||||||||||||||||
shares
|
payments
|
shares
|
payments
|
shares
|
payments
|
|||||||||||||||||||
Series A Preferred Stock
|
403 | $ | 35,150 | 630 | $ | 45,360 | 893 | $ | 45,280 | |||||||||||||||
Series B Preferred Stock
|
533 | $ | 24,700 | 533 | $ | 40,690 | 536 | $ | 53,680 |
Series A Preferred Stock Dividends
|
$ | 214,903 | ||
Series B Preferred Stock Dividends
|
131,289 | |||
Total Dividends
|
$ | 346,192 |
December 31, 2014
|
December 31, 2013
|
|||||||||||||||
Additional
|
Additional
|
|||||||||||||||
preferred
|
Dividends
|
preferred
|
Dividends
|
|||||||||||||
shares
|
in kind
|
shares
|
in kind
|
|||||||||||||
Series A Preferred Stock
|
893 | $ | 3,299,603 | 1,033 | $ | 3,779,521 | ||||||||||
Series B Preferred Stock
|
536 | $ | 833,777 | 1,066 | $ | 1,632,760 |
Shares
|
Shares
|
Shares
|
||||||||||||||||||||||
outstanding
|
2014 |
converted to
|
outstanding
|
|||||||||||||||||||||
Original
|
2013 stock
|
December 31,
|
stock
|
common stock
|
December 31,
|
|||||||||||||||||||
shares
|
dividends
|
2013
|
dividends
|
in 2014
|
2014
|
|||||||||||||||||||
Series A Preferred Stock
|
14,605 | 1,033 | 15,638 | 893 | (16,531 | ) | - | |||||||||||||||||
Series B Preferred Stock
|
18,590 | 1,066 | 19,656 | 536 | (20,192 | ) | - |
Number
|
Conversion
|
Conversion
|
||||||||||||||
of
|
ratio to
|
ratio to
|
Number
|
|||||||||||||
preferred
|
Yuma Co.
|
Company
|
of
|
|||||||||||||
shares
|
common stock
|
common stock
|
shares
|
|||||||||||||
Series A Preferred Stock
|
16,531 | 1.207101257 | 757.3374389993 | 15,112,295 | ||||||||||||
Series B Preferred Stock
|
20,192 | .508185000 | 757.3374389993 | 7,771,192 |
Number of
|
Weighted average
|
||||
unvested
|
grant-date
|
||||
RSA shares
|
fair value
|
||||
Unvested shares as of January 1, 2015
|
2,063,100 |
$3.40 per share
|
|||
Granted on March 12, 2015
|
73,194 |
$1.38 per share
|
|||
Granted on August 18, 2015
|
2,155,538 |
$0.61 per share
|
|||
Granted on September 30, 2015
|
75,000 |
$0.48 per share
|
|||
Granted on October 5, 2015
|
295,586 |
$0.50 per share
|
|||
Vested on January 25, 2015
|
(65,638 | ) |
$3.14 per share
|
||
Vested on April 1, 2015
|
(1,272,834 | ) |
$3.16 per share
|
||
Vested on May 1, 2015
|
(6,232 | ) |
$2.39 per share
|
||
Vested on May 20, 2015
|
(76,744 | ) |
$3.96 per share
|
||
Vested on July 14, 2015
|
(29,789 | ) |
$3.89 per share
|
||
Vested on October 15, 2015
|
(48,747 | ) |
$2.74 per share
|
||
Vested on November 1, 2015
|
(6,232 | ) |
$2.39 per share
|
||
Vested on November 30, 2015
|
(16,157 | ) |
$3.88 per share
|
||
Vested on December 31, 2015
|
(106,280 | ) |
$3.88 per share
|
||
Forfeited
|
(690,392 | ) |
$1.72 per share
|
||
Unvested shares as of December 31, 2015
|
2,343,373 |
$0.98 per share
|
Number of
|
|||||
unvested
|
Weighted average
|
||||
RSA shares
|
fair value
|
||||
Unvested shares as of January 1, 2015
|
- | ||||
Granted November 30, 2015
|
45,297 |
$0.19 per share
|
|||
Granted December 15, 2015
|
173,224 |
$0.19 per share
|
|||
Vested on December 31, 2015
|
(47,460 | ) |
$0.19 per share
|
||
Unvested shares as of December 31, 2015
|
171,061 |
$0.19 per share
|
Weighted
|
|||||
Number of
|
average
|
||||
unvested
|
grant-date
|
||||
SARs
|
fair value
|
||||
Unvested shares as of January 1, 2015
|
- | ||||
Granted on August 18, 2015
|
2,159,855 |
$0.318 per share
|
|||
Forfeited
|
(371,155 | ) |
$0.318 per share
|
||
Unvested shares as of December 31, 2015
|
1,788,700 |
$0.318 per share
|
Number of
|
Weighted
|
||||
unvested
|
average
|
||||
SARs
|
fair value
|
||||
Unvested shares as of January 1, 2015
|
- | ||||
Granted on November 30, 2015
|
19,080 |
$0.036 per share
|
|||
Granted on December 15, 2015
|
104,639 |
$0.036 per share
|
|||
Unvested shares as of December 31, 2015
|
123,719 |
$0.036 per share
|
Weighted-
|
||||||||||||||||
Weighted-
|
average
|
|||||||||||||||
average
|
remaining
|
Aggregate
|
||||||||||||||
exercise
|
contractual
|
intrinsic
|
||||||||||||||
Options
|
price
|
life (years)
|
value
|
|||||||||||||
Outstanding at December 31, 2014
|
105,000 | $ | 5.17 | 2.65 | $ | - | ||||||||||
Granted
|
- | - | - | - | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Forfeited
|
- | - | - | - | ||||||||||||
Outstanding at December 31, 2015
|
105,000 | $ | 5.17 | 2.65 | $ | - | ||||||||||
Vested at December 31, 2015
|
105,000 | $ | 5.17 | 2.65 | $ | - | ||||||||||
Exercisable at December 31, 2015
|
105,000 | $ | 5.17 | 2.65 | $ | - |
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||
Weighted-
|
Weighted
|
Weighted
|
||||||||||||||||||||
average
|
average
|
average
|
||||||||||||||||||||
Exercise
|
Number of
|
remaining
|
exercise
|
Number of
|
exercise
|
|||||||||||||||||
price
|
shares
|
life (years)
|
price
|
shares
|
price
|
|||||||||||||||||
$ | 5.40 | 5,000 | 0.10 | $ | 5.40 | 5,000 | $ | 5.40 | ||||||||||||||
$ | 5.16 | 100,000 | 2.77 | $ | 5.16 | 100,000 | $ | 5.16 | ||||||||||||||
105,000 | 105,000 |
Weighted
|
|||||
Number of
|
average
|
||||
unvested
|
grant-date
|
||||
RSUs
|
fair value
|
||||
Unvested shares as of January 1, 2015
|
95,424 |
$2.72 per share
|
|||
Forfeited
|
(15,146 | ) |
$2.72 per share
|
||
Unvested shares as of December 31, 2015
|
80,278 |
$2.72 per share
|
Years Ended December 31, 2014
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Restricted Stock Awards
|
1,786,812 | 2,280,137 | 1,334,452 | |||||||||
Stock Appreciation Rights
|
791,675 | - | - | |||||||||
Restricted Stock Units
|
93,733 | 105,643 | 91,762 | |||||||||
Series A Preferred Stock
|
- | 10,031,104 | 12,964,860 | |||||||||
Series B Preferred Stock
|
- | 5,263,585 | 7,259,079 | |||||||||
2,672,220 | 17,680,469 | 21,650,153 |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Variable rate revolving credit agreement payable to Société Générale,
|
||||||||
CIT Bank, NAC, and LegacyTexas Bank, maturing May 20, 2017,
|
||||||||
secured by the stock of Exploration and its interest in POL, and
|
||||||||
guaranteed by The Yuma Companies, Inc.
|
$ | 29,800,000 | $ | 22,900,000 | ||||
Installment loan due February 29, 2016, originating from the
|
||||||||
financing of insurance premiums at 3.74% interest rate.
|
108,894 | - | ||||||
Installment loan due June 11, 2016, originating from the
|
||||||||
financing of insurance premiums at 3.76% interest rate.
|
154,741 | - | ||||||
Installment loan due June 11, 2015, originating from the
|
||||||||
financing of insurance premiums at 3.76% interest rate.
|
- | 154,750 | ||||||
Installment loan due February 28, 2015, originating from the
|
||||||||
financing of insurance premiums at 3.65% interest rate.
|
- | 128,093 | ||||||
30,063,635 | 23,182,843 | |||||||
Less: current portion
|
(30,063,635 | ) | (282,843 | ) | ||||
Total long-term debt
|
$ | - | $ | 22,900,000 |
Borrowing base utilization
|
Prime margin
|
LIBOR margin
|
||||||
Utilization
≥
90%
|
2.25 | % | 3.25 | % | ||||
75%
≤
utilization < 90%
|
2.00 | % | 3.00 | % | ||||
50%
≤
utilization < 75%
|
1.75 | % | 2.75 | % | ||||
25%
≤
utilization < 50%
|
1.50 | % | 2.50 | % | ||||
Utilization < 25%
|
1.25 | % | 2.25 | % |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Credit facility
|
$ | 1,104,231 | $ | 1,109,153 | $ | 1,010,539 | ||||||
Credit facility commitment fees
|
34,512 | 70,813 | 56,092 | |||||||||
Amortization and write offs of credit facility loan costs
|
286,009 | 188,669 | 480,261 | |||||||||
Insurance installment loan
|
13,654 | 13,640 | 16,161 | |||||||||
Louisiana Mineral Board
|
- | - | 32,383 | |||||||||
Other interest charges
|
1,489 | 3,275 | 4,056 | |||||||||
Capitalized interest
|
(983,472 | ) | (1,059,350 | ) | (1,031,816 | ) | ||||||
Total interest expense
|
$ | 456,423 | $ | 326,200 | $ | 567,676 |
2016
|
$ | 30,063,635 | * | |
2017
|
- | |||
2018
|
- | |||
2019
|
- | |||
2020
|
- |
September 10,
2014
(as initially
reported)
|
(As Restated)
Measurement
period
adjustment
(i)
|
(As Restated)
September 10,
2014
(as adjusted)
|
||||||||||
Purchase Price(i):
|
||||||||||||
Shares of Pyramid common stock held by
|
||||||||||||
Pyramid shareholders
|
4,788,085 | - | 4,788,085 | |||||||||
Pyramid common stock price (September 10, 2014 closing price)
|
$ | 4.70 | $ | - | $ | 4.70 | ||||||
Fair value of Pyramid common stock issued
|
$ | 22,504,000 | $ | - | $ | 22,504,000 | ||||||
Consideration paid to Pyramid’s shareholders
|
- | - | - | |||||||||
Issuance of 100,000 shares to Pyramid affiliated persons
|
||||||||||||
at $5.01 per share (September 11, 2014 closing price)
|
501,000 | - | 501,000 | |||||||||
Fair value of Pyramid options assumed by the Company
(ii)
|
100,500 | - | 100,500 | |||||||||
Total purchase price
|
23,105,500 | - | 23,105,500 | |||||||||
Estimated Fair Value of Liabilities Assumed:
|
||||||||||||
Current liabilities
|
633,917 | - | 633,917 | |||||||||
Noncurrent deferred tax liability
(iii)
|
4,879,724 | (988,309 | ) | 3,891,415 | ||||||||
Other noncurrent liabilities (asset retirement obligation)
|
1,334,278 | (390,327 | ) | 943,951 | ||||||||
Amount attributable to liabilities assumed
|
6,847,919 | (1,378,636 | ) | 5,469,283 | ||||||||
Total purchase price plus liabilities assumed
|
29,953,419 | (1,378,636 | ) | 28,574,783 | ||||||||
Estimated Fair Value of Assets Acquired:
|
||||||||||||
Current assets
|
9,066,589 | (565,829 | ) | 8,500,760 | ||||||||
Oil and natural gas properties
(iv)
|
10,726,715 | - | 10,726,715 | |||||||||
Net other property and equipment
|
4,158,420 | - | 4,158,420 | |||||||||
Other noncurrent assets
|
261,380 | - | 261,380 | |||||||||
Amount attributable to assets acquired
|
24,213,104 | (565,829 | ) | 23,647,275 | ||||||||
Goodwill
(i)
|
$ | 5,740,315 | $ | (812,807 | ) | $ | 4,927,508 |
Years Ended December 31,
|
||||||||
2014
|
2013 |
|
||||||
(As Restated)
|
(As Restated) | |||||||
Revenues
|
$ | 46,238,208 | $ | 33,534,396 | ||||
Net income (loss)
|
$ | (4,005,601 | ) | $ | (3,373,698 | ) | ||
Net income (loss) per share:
|
||||||||
Basic
|
$ | (0.08 | ) | $ | (0.08 | ) | ||
Diluted
|
$ | (0.08 | ) | $ | (0.08 | ) |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
Current income taxes (benefit):
|
||||||||||||
Federal
|
$ | (29,226 | ) | $ | - | $ | - | |||||
State
|
(1,963 | ) | - | - | ||||||||
Total
|
(31,189 | ) | - | - | ||||||||
Deferred income taxes (benefit):
|
||||||||||||
Federal
|
(3,240,076 | ) | (1,835,257 | ) | (1,219,494 | ) | ||||||
State
|
(454,492 | ) | (101,090 | ) | (161,443 | ) | ||||||
Total
|
(3,694,568 | ) | (1,936,347 | ) | (1,380,937 | ) | ||||||
Total income tax expense (benefit)
|
$ | (3,725,757 | ) | $ | (1,936,347 | ) | $ | (1,380,937 | ) |
Years Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
(As Restated)
|
(As Restated)
|
|||||||
Deferred tax assets
|
||||||||
Stock-based compensation
|
$ | 421,875 | $ | 1,568,252 | ||||
Alternative minimum tax credit carryforwards
|
552,806 | 552,806 | ||||||
Net operating loss (“NOL”) carryforwards
|
22,728,184 | 16,676,385 | ||||||
ARO liability
|
3,395,957 | 4,818,895 | ||||||
Other deferred tax (asset)
|
158,566 | 100,283 | ||||||
Deferred tax assets
|
$ | 27,257,388 | $ | 23,716,621 | ||||
Deferred tax liabilities
|
||||||||
Commodity derivative instruments
|
$ | (1,435,507 | ) | $ | (1,825,530 | ) | ||
Oil and gas properties and other property and equipment
|
(27,239,245 | ) | (27,027,313 | ) | ||||
Deferred tax liabilities
|
(28,674,752 | ) | (28,852,843 | ) | ||||
Net deferred tax asset (liability)
|
$ | (1,417,364 | ) | $ | (5,136,222 | ) |
Year NOL
|
NOL
|
Year of
|
||||||
generated
|
remaining
|
expiration
|
||||||
(As Restated)
|
||||||||
2015
|
$ | 15,526,092 | 2035 | |||||
2014
|
12,349,792 | 2034 | ||||||
2013
|
9,420,212 | 2033 | ||||||
2012
|
8,082,427 | 2032 | ||||||
2011
|
5,511,938 | 2031 | ||||||
2009
|
4,844,318 | 2029 | ||||||
2007
|
1,294,805 | 2027 | ||||||
2002
|
1,984,435 | 2022 | ||||||
Total
|
$ | 59,014,019 |
Years Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
Tax computed using the statutory rate
|
$ | (6,312,303 | ) | $ | (7,744,861 | ) | $ | (10,189,743 | ) | |||
State taxes (net)
|
(455,788 | ) | (101,090 | ) | (161,443 | ) | ||||||
Goodwill impairment
|
1,675,353 | - | - | |||||||||
Stock compensation
|
1,356,789 | - | - | |||||||||
Nondeductible change in value of preferred stock derivative liability
|
- | 5,330,126 | 8,927,910 | |||||||||
Nondeductible transaction costs
|
- | 570,648 | - | |||||||||
Other
|
10,192 | 8,830 | 41,339 | |||||||||
Income tax expense (benefit)
|
$ | (3,725,757 | ) | $ | (1,936,347 | ) | $ | (1,381,937 | ) |
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Bad debt expense
|
$ | 839,171 | $ | 97,068 | $ | 193,601 | ||||||
Recovery of bad debts
|
(342,944 | ) | (1,984 | ) | (2,520 | ) | ||||||
Loss (gain) on disposal of property
|
(28,006 | ) | 3,392 | (19,307 | ) | |||||||
Total
|
$ | 468,221 | $ | 98,476 | $ | 171,774 |
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Interest income
|
$ | 19,587 | $ | 23,632 | $ | 7,336 | ||||||
Rental income
|
16,000 | - | - | |||||||||
Bank-mandated derivative instruments novation cost
|
- | - | (175,000 | ) | ||||||||
Louisiana sales tax settlement
|
- | - | (44,149 | ) | ||||||||
Louisiana Mineral Board audit
|
- | - | (23,686 | ) | ||||||||
Other
|
751 | 1,746 | (5,118 | ) | ||||||||
Total
|
$ | 36,338 | $ | 25,378 | $ | (240,617 | ) |
December 31,
|
||||||||
2015
|
2014
|
|||||||
December 2015 and December 2014 settled oil derivative instruments
|
$ | 257,286 | $ | 407,003 | ||||
Tax refund
|
177,157 | 158,571 | ||||||
Debit balances for trade payables
|
109,586 | 187,031 | ||||||
Refund from PPI for duplicate charges
|
89,544 | 89,544 | ||||||
D&O insurance premium adjustment
|
- | 16,356 | ||||||
Other
|
- | (1,943 | ) | |||||
Total
|
$ | 633,573 | $ | 856,562 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Insurance
|
$ | 570,379 | $ | 536,410 | ||||
Taxes and fees
|
39,687 | 21,882 | ||||||
Property taxes
|
41,583 | 56,992 | ||||||
Other subscriptions
|
16,508 | 6,355 | ||||||
Software maintenance agreements
|
14,572 | 19,105 | ||||||
Geological well database subscription
|
8,883 | 19,055 | ||||||
Software licenses
|
2,065 | 44,172 | ||||||
Exploration and drilling costs
|
- | 71,893 | ||||||
Services
|
- | 4,530 | ||||||
Other
|
10,846 | 1,840 | ||||||
Total
|
$ | 704,523 | $ | 782,234 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Loan fees
|
$ | 415,740 | $ | 189,409 | ||||
Deferred premium on 2015 oil derivative instruments
|
- | 153,389 | ||||||
Total
|
$ | 415,740 | $ | 342,798 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Deferred offering costs
|
$ | 38,104 | $ | - | ||||
Loan fees
|
- | 262,200 | ||||||
Total
|
$ | 38,104 | $ | 262,200 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Employee termination benefits
|
$ | 422,037 | $ | - | ||||
Salaries and bonuses
|
393,072 | 479,537 | ||||||
Accounting and audit
|
202,297 | 22,964 | ||||||
Severance taxes
|
157,941 | 164,374 | ||||||
Ad valorem taxes
|
143,957 | 172,444 | ||||||
Vacation
|
138,962 | 166,660 | ||||||
Sales and use tax
|
85,076 | 81,661 | ||||||
Insurance
|
67,532 | 119,121 | ||||||
Fees for commodity hedging advisor
|
64,953 | 48,590 | ||||||
Interest expense
|
39,471 | 9,327 | ||||||
Financing cost
|
35,000 | - | ||||||
Employee restricted stock unit awards
|
13,981 | - | ||||||
Commodity hedge settlement
|
- | 153,389 | ||||||
Other
|
17,205 | 1,498 | ||||||
Total
|
$ | 1,781,484 | $ | 1,419,565 |
2016
|
579,873 | |||
2017
|
564,326 | |||
2018
|
2,264 | |||
2019
|
- | |||
2020
|
- |
Shares
|
Net Proceeds
|
|||||||
Common Stock
|
1,347,458 | $ | 1,363,160 | |||||
Series A Preferred Stock
|
46,857 | 870,386 | ||||||
Total
|
$ | 2,233,546 |
December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Property acquisition costs - unproved
|
$ | (9,635,309 | ) | $ | 1,105,782 | $ | 3,865,932 | |||||
Property acquisition costs - proved
|
7,587,965 | 3,349,473 | 8,539,134 | |||||||||
Sales proceeds - unproved
|
(30,442 | ) | (359,667 | ) | (679,266 | ) | ||||||
Sales proceeds - proved
|
- | (307,600 | ) | (718,000 | ) | |||||||
Exploration costs
|
3,217,161 | 426,909 | 2,504,087 | |||||||||
Development costs
|
1,121,654 | 20,139,409 | 11,910,179 | |||||||||
Capitalized asset retirements costs
|
4,301,810 | 241,629 | 5,795,400 | |||||||||
Total costs incurred
|
$ | 6,562,839 | $ | 24,595,935 | $ | 31,217,466 |
December 31,
|
||||||||
2015
|
2014
|
|||||||
Oil and gas properties, full cost method:
|
||||||||
Not subject to amortization:
|
||||||||
Prospect inventory
|
$ | 7,719,857 | $ | 14,913,126 | ||||
Property acquisition costs - unproved
|
6,150,862 | 8,623,344 | ||||||
Well development costs - unproved
|
417,997 | 2,170,582 | ||||||
Subject to amortization:
|
||||||||
Property acquisition costs - proved
|
58,393,861 | 50,744,401 | ||||||
Well development costs - proved
|
81,063,335 | 74,440,227 | ||||||
Capitalized costs - unsuccessful
|
60,549,824 | 52,539,407 | ||||||
Capitalized asset retirement costs
|
4,505,018 | 8,806,828 | ||||||
Total capitalized costs
|
218,800,754 | 212,237,915 | ||||||
Less accumulated depreciation, depletion and amortization
|
(117,304,945 | ) | (103,929,493 | ) | ||||
Net capitalized costs
|
$ | 101,495,809 | $ | 108,308,422 |
2015
|
2014
|
2013
|
||||||||||
Barrels of oil:
|
||||||||||||
Proved developed and undeveloped reserves:
|
||||||||||||
Beginning of year
|
11,532,185 | 11,614,811 | 6,164,341 | |||||||||
Revisions of previous estimates
|
(5,095,277 | ) | (374,935 | ) | (939,149 | ) | ||||||
Purchases of oil and gas properties
|
95,362 | 472,132 | 6,481,816 | |||||||||
Extensions and discoveries
|
630,573 | 51,993 | 92,152 | |||||||||
Sale of oil and gas properties
|
0 | 0 | 0 | |||||||||
Production
|
(247,177 | ) | (231,816 | ) | (184,349 | ) | ||||||
End of year
|
6,915,666 | 11,532,185 | 11,614,811 | |||||||||
Proved developed reserves - January 1,
|
2,034,950 | 1,607,229 | 1,130,466 | |||||||||
Proved developed reserves - December 31,
|
1,801,624 | 2,034,950 | 1,607,229 | |||||||||
Proved undeveloped reserves - January 1,
|
9,497,235 | 10,007,582 | 5,033,875 | |||||||||
Proved undeveloped reserves - December 31,
|
5,114,042 | 9,497,235 | 10,007,582 | |||||||||
2015 | 2014 | 2013 | ||||||||||
Barrels of natural gas liquids:
|
||||||||||||
Proved developed and undeveloped reserves:
|
||||||||||||
Beginning of year
|
2,479,158 | 2,767,149 | 1,575,623 | |||||||||
Revisions of previous estimates
|
(501,101 | ) | (190,208 | ) | (234,383 | ) | ||||||
Purchases of oil and gas properties
|
8,025 | 0 | 1,477,784 | |||||||||
Extensions and discoveries
|
139,088 | 0 | 0 | |||||||||
Sale of oil and gas properties
|
0 | 0 | 0 | |||||||||
Production
|
(74,511 | ) | (97,783 | ) | (51,875 | ) | ||||||
End of year
|
2,050,659 | 2,479,158 | 2,767,149 | |||||||||
Proved developed reserves - January 1,
|
312,532 | 492,472 | 343,549 | |||||||||
Proved developed reserves - December 31,
|
315,935 | 312,532 | 492,472 | |||||||||
Proved undeveloped reserves - January 1,
|
2,166,626 | 2,274,677 | 1,232,074 | |||||||||
Proved undeveloped reserves - December 31,
|
1,734,724 | 2,166,626 | 2,274,677 | |||||||||
2015 | 2014 | 2013 | ||||||||||
Thousands of cubic feet of natural gas:
|
||||||||||||
Proved developed and undeveloped reserves:
|
||||||||||||
Beginning of year
|
35,259,522 | 38,372,369 | 31,071,137 | |||||||||
Revisions of previous estimates
|
(11,436,325 | ) | (479,438 | ) | (7,976,909 | ) | ||||||
Purchases of oil and gas properties
|
264,981 | 81,177 | 16,495,803 | |||||||||
Extensions and discoveries
|
3,675,358 | 0 | 362,806 | |||||||||
Sale of oil and gas properties
|
0 | 0 | 0 | |||||||||
Production
|
(1,993,842 | ) | (2,714,586 | ) | (1,580,468 | ) | ||||||
End of year
|
25,769,694 | 35,259,522 | 38,372,369 | |||||||||
Proved developed reserves - January 1,
|
7,786,537 | 10,316,516 | 10,156,754 | |||||||||
Proved developed reserves - December 31,
|
8,552,249 | 7,786,537 | 10,316,516 | |||||||||
Proved undeveloped reserves - January 1,
|
27,472,985 | 28,055,853 | 20,914,383 | |||||||||
Proved undeveloped reserves - December 31,
|
17,217,445 | 27,472,985 | 28,055,853 |
2015
|
2014
|
2013
|
||||||||||
Barrels of oil equivalent:
|
||||||||||||
Proved developed and undeveloped reserves:
|
||||||||||||
Beginning of year
|
19,887,930 | 20,777,355 | 12,918,487 | |||||||||
Revisions of previous estimates
|
(7,502,432 | ) | (645,049 | ) | (2,503,017 | ) | ||||||
Purchases of oil and gas properties
|
147,551 | 485,662 | 10,708,901 | |||||||||
Extensions and discoveries
|
1,382,221 | 51,993 | 152,620 | |||||||||
Sale of oil and gas properties
|
0 | 0 | 0 | |||||||||
Production
|
(653,995 | ) | (782,030 | ) | (499,635 | ) | ||||||
End of year
|
13,261,274 | 19,887,930 | 20,777,355 | |||||||||
Proved developed reserves - January 1,
|
3,645,238 | 3,819,120 | 3,166,807 | |||||||||
Proved developed reserves - December 31,
|
3,542,934 | 3,645,238 | 3,819,120 | |||||||||
Proved undeveloped reserves - January 1,
|
16,242,692 | 16,958,235 | 9,751,680 | |||||||||
Proved undeveloped reserves - December 31,
|
9,718,340 | 16,242,692 | 16,958,235 |
●
|
Future costs and oil and natural gas sales prices will probably differ from the average annual prices required to be used in these calculations;
|
●
|
Due to future market conditions and governmental regulations, actual rates of production in future years may vary significantly from the rate of production assumed in the calculations;
|
●
|
A 10 percent discount rate may not be reasonable as a measure of the relative risk inherent in realizing future net oil and gas revenues; and
|
●
|
Future net revenues may be subject to different rates of income taxation.
|
December 31,
|
||||||||||||
As Reported
|
2015
|
2014
|
2013
|
|||||||||
(As Reported)
|
(As Reported)
|
(As Reported)
|
||||||||||
Future cash inflows
|
$ | 438,816,500 | $ | 1,339,372,300 | $ | 1,450,469,000 | ||||||
Future oil and natural gas operating expenses
|
(129,636,500 | ) | (322,298,300 | ) | (334,883,800 | ) | ||||||
Future development costs
|
(126,463,700 | ) | (405,900,900 | ) | (424,256,900 | ) | ||||||
Future income tax expenses
|
(23,334,886 | ) | (133,467,940 | ) | (163,704,120 | ) | ||||||
Future net cash flows
|
159,381,414 | 477,705,160 | 527,624,180 | |||||||||
10% annual discount for estimating timing of cash flows
|
(53,318,652 | ) | (183,249,968 | ) | (202,270,201 | ) | ||||||
Standardized measure of discounted future net cash flows
|
$ | 106,062,762 | $ | 294,455,192 | $ | 325,353,979 |
December 31,
|
||||||||||||
As Restated
|
2015
|
2014
|
2013
|
|||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
Future cash inflows
|
$ | 438,816,500 | $ | 1,339,372,300 | $ | 1,450,469,000 | ||||||
Future oil and natural gas operating expenses
|
(129,636,500 | ) | (322,298,300 | ) | (334,883,800 | ) | ||||||
Future development costs
|
(126,463,700 | ) | (405,900,900 | ) | (424,256,900 | ) | ||||||
Future income tax expenses
|
(22,664,783 | ) | (132,061,578 | ) | (163,676,118 | ) | ||||||
Future net cash flows
|
160,051,517 | 479,111,522 | 527,652,182 | |||||||||
10% annual discount for estimating timing of cash flows
|
(53,506,567 | ) | (183,633,026 | ) | (202,228,985 | ) | ||||||
Standardized measure of discounted future net cash flows
|
$ | 106,544,950 | $ | 295,478,496 | $ | 325,423,197 |
As Reported
|
2015
|
2014
|
2013
|
|||||||||
(As Reported)
|
(As Reported)
|
(As Reported)
|
||||||||||
Changes due to current year operation:
|
||||||||||||
Sales of oil and natural gas, net of oil and natural gas operating expenses
|
$ | (7,069,544 | ) | $ | (25,270,455 | ) | $ | (17,255,824 | ) | |||
Extensions and discoveries
|
16,660 | 2,743,800 | 37,750,617 | |||||||||
Purchases of oil and gas properties
|
2,268,907 | 12,827,533 | 215,427,459 | |||||||||
Development costs incurred during the period that reduced future
development costs
|
4,052,919 | 9,178,400 | 100,500 | |||||||||
Changes due to revisions in standardized variables:
|
||||||||||||
Prices and operating expenses
|
(373,506,778 | ) | (42,125,763 | ) | (30,773,529 | ) | ||||||
Income taxes
|
65,424,175 | 19,303,313 | (38,340,467 | ) | ||||||||
Estimated future development costs
|
245,056,050 | 7,218,529 | 32,430,504 | |||||||||
Quantity estimates
|
(80,454,131 | ) | (21,028,476 | ) | (107,070,514 | ) | ||||||
Sale of reserves in place
|
- | - | - | |||||||||
Accretion of discount
|
37,672,481 | 43,124,820 | 27,910,664 | |||||||||
Production rates, timing and other
|
(81,853,169 | ) | (36,870,488 | ) | (6,378,317 | ) | ||||||
Net change
|
(188,392,430 | ) | (30,898,787 | ) | 113,801,093 | |||||||
Beginning of year
|
294,455,192 | 325,353,979 | 211,552,886 | |||||||||
End of year
|
$ | 106,062,762 | $ | 294,455,192 | $ | 325,353,979 |
As Restated
|
2015
|
2014
|
2013
|
|||||||||
(As Restated)
|
(As Restated)
|
(As Restated)
|
||||||||||
Changes due to current year operation:
|
||||||||||||
Sales of oil and natural gas, net of oil and natural gas operating expenses
|
$ | (7,069,544 | ) | $ | (25,270,455 | ) | $ | (17,255,824 | ) | |||
Extensions and discoveries
|
16,659,700 | 2,743,800 | 37,750,617 | |||||||||
Purchases of oil and gas properties
|
2,268,907 | 12,827,533 | 215,427,459 | |||||||||
Development costs incurred during the period that reduced future
development costs
|
4,052,919 | 9,178,400 | 100,500 | |||||||||
Changes due to revisions in standardized variables:
|
||||||||||||
Prices and operating expenses
|
(373,314,797 | ) | (42,125,763 | ) | (30,773,529 | ) | ||||||
Income taxes
|
64,883,059 | 20,257,399 | (38,271,249 | ) | ||||||||
Estimated future development costs
|
245,056,050 | 7,218,529 | 32,430,504 | |||||||||
Quantity estimates
|
(98,817,149 | ) | (21,028,476 | ) | (107,070,514 | ) | ||||||
Sale of reserves in place
|
- | - | - | |||||||||
Accretion of discount
|
37,672,481 | 43,124,820 | 27,910,664 | |||||||||
Production rates, timing and other
|
(80,325,172 | ) | (36,870,488 | ) | (6,378,317 | ) | ||||||
Net change
|
(188,933,546 | ) | (29,944,701 | ) | 113,870,311 | |||||||
Beginning of year
|
295,478,496 | 325,423,197 | 211,552,886 | |||||||||
End of year
|
$ | 106,544,950 | $ | 295,478,496 | $ | 325,423,197 |
As of
|
||||||||||||||||||||||||
March 31, 2015
|
June 30, 2015
|
|||||||||||||||||||||||
(unaudited) ($)
|
(unaudited) ($)
|
|||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Goodwill
|
5,349,988 | (422,480 | ) | 4,927,508 | - | - | - | |||||||||||||||||
Total Other Assets and Deferred Charges
|
6,253,400 | (422,480 | ) | 5,830,920 | 540,277 | - | 540,277 | |||||||||||||||||
Total Assets
|
137,936,465 | (422,480 | ) | 137,513,985 | 128,771,774 | - | 128,771,774 | |||||||||||||||||
Deferred taxes
1
|
12,777,161 | (9,972,666 | ) | 2,804,495 | 9,356,287 | (8,191,976 | ) | 1,164,311 | ||||||||||||||||
Total other noncurrent liabilities
|
25,545,174 | (9,972,666 | ) | 15,572,508 | 21,543,361 | (8,191,976 | ) | 13,351,385 | ||||||||||||||||
Accumulated earnings (deficit)
|
(80,729,793 | ) | 9,550,186 | (71,179,607 | ) | (89,240,131 | ) | 8,191,976 | (81,048,155 | ) | ||||||||||||||
Total equity
|
70,102,660 | 9,550,186 | 79,652,846 | 62,713,439 | 8,191,976 | 70,905,415 |
As of
|
||||||||||||||||||||||||
September 30, 2015
|
December 31, 2015 ($)
|
|||||||||||||||||||||||
(unaudited) ($)
|
||||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Deferred taxes
1
|
8,961,725 | (7,463,923 | ) | 1,497,802 | 6,797,166 | (5,379,802 | ) | 1,417,364 | ||||||||||||||||
Total other noncurrent liabilities
|
21,244,535 | (7,463,923 | ) | 13,780,612 | 15,547,754 | (5,379,802 | ) | 10,167,952 | ||||||||||||||||
Accumulated earnings (deficit)
|
(88,923,114 | ) | 7,463,923 | (81,459,191 | ) | (88,462,633 | ) | 5,379,802 | (83,082,831 | ) | ||||||||||||||
Total equity
|
63,603,581 | 7,463,923 | 71,067,504 | 64,224,916 | 5,379,802 | 69,604,718 |
As of
|
||||||||||||||||||||||||
March 31, 2014
|
June 30, 2014
|
|||||||||||||||||||||||
(unaudited) ($)
|
(unaudited) ($)
|
|||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Deferred taxes
1
|
12,141,462 | (9,445,143 | ) | 2,696,319 | 11,880,877 | (11,133,491 | ) | 747,386 | ||||||||||||||||
Total other noncurrent liabilities
|
71,235,500 | (9,445,143 | ) | 61,790,357 | 78,173,008 | (11,133,491 | ) | 67,039,517 | ||||||||||||||||
Accumulated earnings (deficit)
|
(51,173,015 | ) | 9,445,143 | (41,727,872 | ) | (63,240,632 | ) | 11,133,491 | (52,107,141 | ) | ||||||||||||||
Total equity
|
(48,501,167 | ) | 9,445,143 | (39,056,024 | ) | (60,529,783 | ) | 11,133,491 | (49,396,292 | ) |
As of
|
||||||||||||||||||||||||
September 30, 2014
|
December 31, 2014 ($)
|
|||||||||||||||||||||||
(unaudited) ($)
|
||||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Goodwill
|
5,740,315 | (422,480 | ) | 5,317,835 | 5,349,988 | (422,480 | ) | 4,927,508 | ||||||||||||||||
Total Other Assets and Deferred Charges
|
7,020,961 | (422,480 | ) | 6,598,481 | 7,279,361 | (422,480 | ) | 6,856,881 | ||||||||||||||||
Total Assets
|
139,474,110 | (422,480 | ) | 139,051,630 | 148,018,254 | (422,480 | ) | 147,595,774 | ||||||||||||||||
Deferred taxes
1
|
16,181,229 | (11,263,427 | ) | 4,917,802 | 14,773,306 | (9,637,084 | ) | 5,136,222 | ||||||||||||||||
Total other noncurrent liabilities
|
28,030,174 | (11,263,427 | ) | 16,766,747 | 27,355,096 | (9,637,084 | ) | 17,718,012 | ||||||||||||||||
Accumulated earnings (deficit)
|
(74,958,868 | ) | 10,840,947 | (64,117,921 | ) | (76,410,404 | ) | 9,214,604 | (67,195,800 | ) | ||||||||||||||
Total equity
|
58,943,570 | 10,840,947 | 69,784,517 | 71,056,386 | 9,214,604 | 80,270,990 |
Three Months Ended
|
||||||||||||||||||||||||
March 31, 2015
|
June 30, 2015
|
|||||||||||||||||||||||
(unaudited) ($)
|
(unaudited) ($)
|
|||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Goodwill impairment
|
- | - | - | 5,349,988 | (422,480 | ) | 4,927,508 | |||||||||||||||||
TOTAL EXPENSES
|
11,544,970 | - | 11,544,970 | 15,341,911 | (422,480 | ) | 14,919,431 | |||||||||||||||||
INCOME (LOSS) FROM OPERATIONS
|
(5,901,723 | ) | - | (5,901,723 | ) | (11,503,996 | ) | 422,480 | (11,081,516 | ) | ||||||||||||||
NET INCOME (LOSS) BEFORE INCOME TAXES
|
(5,977,574 | ) | - | (5,977,574 | ) | (11,613,064 | ) | 422,480 | (11,190,584 | ) | ||||||||||||||
Income tax expense (benefit)
|
(1,959,000 | ) | (335,582 | ) | (2,294,582 | ) | (3,421,600 | ) | 1,780,690 | (1,640,910 | ) | |||||||||||||
NET INCOME (LOSS)
|
(4,018,574 | ) | 335,582 | (3,682,992 | ) | (8,191,464 | ) | (1,358,210 | ) | (9,549,674 | ) | |||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
(4,319,389 | ) | 335,582 | (3,983,807 | ) | (8,510,338 | ) | (1,358,210 | ) | (9,868,548 | ) | |||||||||||||
EARNINGS (LOSS) PER COMMON SHARE:
|
||||||||||||||||||||||||
Basic
|
(0.06 | ) | - | (0.06 | ) | (0.12 | ) | (0.02 | ) | (0.14 | ) | |||||||||||||
Diluted
|
(0.06 | ) | - | (0.06 | ) | (0.12 | ) | (0.02 | ) | (0.14 | ) |
Three Months Ended
|
||||||||||||||||||||||||
September 30, 2015
|
December 31, 2015
|
|||||||||||||||||||||||
(unaudited) ($)
|
(unaudited) ($)
|
|||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Income tax expense (benefit)
|
(398,400 | ) | 728,053 | 329,653 | (2,204,039 | ) | 2,084,121 | (119,918 | ) | |||||||||||||||
NET INCOME (LOSS)
|
637,643 | (728,053 | ) | (90,410 | ) | 567,357 | (2,084,121 | ) | (1,516,764 | ) | ||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
317,017 | (728,053 | ) | (411,036 | ) | 246,730 | (2,084,121 | ) | (1,837,391 | ) | ||||||||||||||
EARNINGS (LOSS) PER COMMON SHARE:
|
||||||||||||||||||||||||
Basic
|
0.00 | (0.01 | ) | (0.01 | ) | 0.00 | (0.03 | ) | (0.03 | ) | ||||||||||||||
Diluted
|
0.00 | (0.01 | ) | (0.01 | ) | 0.00 | (0.03 | ) | (0.03 | ) |
Three Months Ended
|
||||||||||||||||||||||||
March 31, 2014
|
June 30, 2014
|
|||||||||||||||||||||||
(unaudited) ($)
|
(unaudited) ($)
|
|||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Income tax expense (benefit)
|
(849,000 | ) | 386,968 | (462,032 | ) | (285,000 | ) | (1,688,348 | ) | (1,973,348 | ) | |||||||||||||
NET INCOME (LOSS)
|
(294,978 | ) | (386,968 | ) | (681,946 | ) | (7,550,697 | ) | 1,688,348 | (5,862,349 | ) | |||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
(576,927 | ) | (386,968 | ) | (963,895 | ) | (12,067,617 | ) | 1,688,348 | (10,379,269 | ) | |||||||||||||
EARNINGS (LOSS) PER COMMON SHARE:
|
||||||||||||||||||||||||
Basic
|
(0.01 | ) | (0.01 | ) | (0.02 | ) | (0.29 | ) | 0.04 | (0.25 | ) | |||||||||||||
Diluted
|
(0.01 | ) | (0.01 | ) | (0.02 | ) | (0.29 | ) | 0.04 | (0.25 | ) |
Three Months Ended
|
||||||||||||||||||||||||
September 30, 2014
|
December 31, 2014
|
|||||||||||||||||||||||
(unaudited) ($)
|
(unaudited) ($)
|
|||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Income tax expense (benefit)
|
(576,632 | ) | 292,544 | (284,088 | ) | (843,222 | ) | 1,626,343 | 783,121 | |||||||||||||||
NET INCOME (LOSS)
|
(11,152,037 | ) | (292,544 | ) | (11,444,581 | ) | (1,227,438 | ) | (1,626,343 | ) | (2,853,781 | ) | ||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
(11,718,236 | ) | (292,544 | ) | (12,010,780 | ) | (1,451,536 | ) | (1,626,343 | ) | (3,077,879 | ) | ||||||||||||
EARNINGS (LOSS) PER COMMON SHARE:
|
||||||||||||||||||||||||
Basic
|
(0.25 | ) | - | (0.25 | ) | (0.03 | ) | (0.03 | ) | (0.06 | ) | |||||||||||||
Diluted
|
(0.25 | ) | - | (0.25 | ) | (0.03 | ) | (0.03 | ) | (0.06 | ) |
Nine Months Ended
|
||||||||||||||||||||||||
September 30, 2015
|
September 30, 2014
|
|||||||||||||||||||||||
(unaudited) ($)
|
(unaudited) ($)
|
|||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
|||||||||||||||||||
Goodwill impairment
|
5,349,988 | (422,480 | ) | 4,927,508 | - | - | - | |||||||||||||||||
TOTAL EXPENSES
|
35,073,238 | (422,480 | ) | 34,650,758 | 35,279,700 | - | 35,279,700 | |||||||||||||||||
INCOME (LOSS) FROM OPERATIONS
|
(17,049,417 | ) | 422,480 | (16,626,937 | ) | (4,715,456 | ) | - | (4,715,456 | ) | ||||||||||||||
NET INCOME (LOSS) BEFORE INCOME TAXES
|
(17,351,395 | ) | 422,480 | (16,928,915 | ) | (20,708,344 | ) | - | (20,708,344 | ) | ||||||||||||||
Income tax expense (benefit)
|
(5,779,000 | ) | 2,173,161 | (3,605,839 | ) | (1,710,632 | ) | (1,008,836 | ) | (2,719,468 | ) | |||||||||||||
NET INCOME (LOSS)
|
(11,572,395 | ) | (1,750,681 | ) | (13,323,076 | ) | (18,997,712 | ) | 1,008,836 | (17,988,876 | ) | |||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
(12,512,710 | ) | (1,750,681 | ) | (14,263,391 | ) | (24,362,780 | ) | 1,008,836 | (23,353,944 | ) | |||||||||||||
EARNINGS (LOSS) PER COMMON SHARE:
|
||||||||||||||||||||||||
Basic
|
(0.18 | ) | (0.02 | ) | (0.20 | ) | (0.56 | ) | 0.02 | (0.54 | ) | |||||||||||||
Diluted
|
(0.18 | ) | (0.02 | ) | (0.20 | ) | (0.56 | ) | 0.02 | (0.54 | ) |
Years Ended
|
||||||||||||||||||||||||||||||||||||
December 31, 2015 ($)
|
December 31, 2014 ($)
|
December 31, 2013 ($)
|
||||||||||||||||||||||||||||||||||
As Reported
|
Adjustment
|
As Restated
|
As Reported
|
Adjustment
|
As Restated
|
As Reported
|
Adjustment
|
As Restated
|
||||||||||||||||||||||||||||
Goodwill impairment
|
5,349,988 | (422,480 | ) | 4,927,508 | - | - | - | - | - | - | ||||||||||||||||||||||||||
TOTAL EXPENSES
|
42,287,402 | (422,480 | ) | 41,864,922 | 48,859,250 | - | 48,859,250 | (30,978,582 | ) | - | 30,978,582 | |||||||||||||||||||||||||
INCOME (LOSS) FROM OPERATIONS
|
(18,567,992 | ) | 422,480 | (18,145,512 | ) | (6,801,340 | ) | - | (6,801,340 | ) | (2,902,979 | ) | - | (2,902,979 | ) | |||||||||||||||||||||
NET INCOME (LOSS) BEFORE INCOME TAXES
|
(18,988,077 | ) | 422,480 | (18,565,597 | ) | (22,779,004 | ) | - | (22,779,004 | ) | (29,969,831 | ) | - | (29,969,831 | ) | |||||||||||||||||||||
Income tax expense (benefit)
|
(7,983,039 | ) | 4,257,282 | (3,725,757 | ) | (2,553,854 | ) | 617,507 | (1,936,347 | ) | 3,080,272 | (4,461,209 | ) | (1,380,937 | ) | |||||||||||||||||||||
NET INCOME (LOSS)
|
(11,005,038 | ) | (3,834,802 | ) | (14,839,840 | ) | (20,225,150 | ) | (617,507 | ) | (20,842,657 | ) | (33,050,103 | ) | 4,461,209 | (28,588,894 | ) | |||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
(12,265,980 | ) | (3,834,802 | ) | (16,100,782 | ) | (25,814,316 | ) | (617,507 | ) | (26,431,823 | ) | (39,710,256 | ) | 4,461,209 | (35,249,047 | ) | |||||||||||||||||||
EARNINGS (LOSS) PER COMMON SHARE:
|
||||||||||||||||||||||||||||||||||||
Basic
|
(0.17 | ) | (0.06 | ) | (0.23 | ) | (0.52 | ) | (0.01 | ) | (0.53 | ) | (0.97 | ) | 0.11 | (0.86 | ) | |||||||||||||||||||
Diluted
|
(0.17 | ) | (0.06 | ) | (0.23 | ) | (0.52 | ) | (0.01 | ) | (0.53 | ) | (0.97 | ) | 0.11 | (0.86 | ) |
Years Ended
|
||||||||||||||||||||||||||||||||||||
December 31, 2015 ($)
|
December 31, 2014 ($)
|
December 31, 2013 ($)
|
||||||||||||||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
||||||||||||||||||||||||||||
NET INCOME (LOSS)
|
(11,005,038 | ) | (3,834,802 | ) | (14,839,840 | ) | (20,225,150 | ) | (617,507 | ) | (20,842,657 | ) | (33,050,103 | ) | 4,461,209 | (28,588,894 | ) | |||||||||||||||||||
COMPREHENSIVE LOSS
|
(11,043,839 | ) | (3,834,802 | ) | (14,878,641 | ) | (20,225,119 | ) | (617,507 | ) | (20,842,626 | ) | (33,280,174 | ) | 4,461,209 | (28,818,965 | ) |
Years Ended
|
||||||||||||||||||||||||||||||||||||
December 31, 2015 ($)
|
December 31, 2014 ($)
|
December 31, 2013 ($)
|
||||||||||||||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
||||||||||||||||||||||||||||
Balance at beginning of period
|
(76,410,404 | ) | 9,214,604 | (67,195,800 | ) | (50,596,088 | ) | 9,832,111 | (40,763,977 | ) | (10,885,832 | ) | - | (10,885,832 | ) | |||||||||||||||||||||
Prior period adjustment to correct deferred income taxes
|
- | - | - | - | - | - | - | 5,370,902 | 5,370,902 | |||||||||||||||||||||||||||
Net loss attributable to Yuma Energy, Inc.
|
(11,005,038 | ) | (3,834,802 | ) | (14,839,840 | ) | (20,225,150 | ) | (617,507 | ) | (20,842,657 | ) | (33,050,103 | ) | 4,461,209 | (28,588,894 | ) | |||||||||||||||||||
Balance at end of period
|
(88,462,633 | ) | 5,379,802 | (83,082,831 | ) | (76,410,404 | ) | 9,214,604 | (67,195,800 | ) | (50,596,088 | ) | 9,832,111 | (40,763,977 | ) | |||||||||||||||||||||
TOTAL EQUITY
|
64,224,916 | 5,379,802 | 69,604,718 | 71,056,386 | 9,214,604 | 80,270,990 | (47,887,853 | ) | 9,832,111 | (38,055,742 | ) |
Years Ended
|
||||||||||||||||||||||||||||||||||||
December 31, 2015 ($)
|
December 31, 2014 ($)
|
December 31, 2013 ($)
|
||||||||||||||||||||||||||||||||||
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
As Reported
|
Adjustment
|
As
Restated
|
||||||||||||||||||||||||||||
Net loss
|
(11,005,038 | ) | (3,834,802 | ) | (14,839,840 | ) | (20,225,150 | ) | (617,507 | ) | (20,842,657 | ) | (33,050,103 | ) | 4,461,209 | (28,588,894 | ) | |||||||||||||||||||
Goodwill write-off
|
5,349,988 | (422,480 | ) | 4,927,508 | - | - | - | - | - | - | ||||||||||||||||||||||||||
Deferred tax expense (benefit)
|
(7,951,850 | ) | 4,257,282 | (3,694,568 | ) | (2,553,854 | ) | 617,507 | (1,936,347 | ) | 3,080,272 | (4,461,209 | ) | (1,380,937 | ) |
March 31,
|
||||||||
2016
|
December 31,
|
|||||||
(Unaudited)
|
2015
|
|||||||
ASSETS
|
(As Restated)
|
|||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 3,074,286 | $ | 5,355,191 | ||||
Accounts receivable, net of allowance for doubtful accounts:
|
||||||||
Trade
|
2,536,812 | 2,829,266 | ||||||
Officers and employees
|
21,562 | 75,404 | ||||||
Other
|
667,342 | 633,573 | ||||||
Commodity derivative instruments
|
2,140,162 | 2,658,047 | ||||||
Prepayments
|
457,945 | 704,523 | ||||||
Other deferred charges
|
174,983 | 415,740 | ||||||
Total current assets
|
9,073,092 | 12,671,744 | ||||||
OIL AND GAS PROPERTIES (full cost method):
|
||||||||
Not subject to amortization
|
14,606,401 | 14,288,716 | ||||||
Subject to amortization
|
204,949,817 | 204,512,038 | ||||||
219,556,218 | 218,800,754 | |||||||
Less: accumulated depreciation, depletion and amortization
|
(119,690,987 | ) | (117,304,945 | ) | ||||
Net oil and gas properties
|
99,865,231 | 101,495,809 | ||||||
OTHER PROPERTY AND EQUIPMENT:
|
||||||||
Land, buildings and improvements
|
2,795,000 | 2,795,000 | ||||||
Other property and equipment
|
3,460,507 | 3,460,507 | ||||||
6,255,507 | 6,255,507 | |||||||
Less: accumulated depreciation and amortization
|
(2,234,675 | ) | (2,174,316 | ) | ||||
Net other property and equipment
|
4,020,832 | 4,081,191 | ||||||
OTHER ASSETS AND DEFERRED CHARGES:
|
||||||||
Commodity derivative instruments
|
800,250 | 1,070,541 | ||||||
Deposits
|
414,064 | 264,064 | ||||||
Other noncurrent assets
|
- | 38,104 | ||||||
Total other assets and deferred charges
|
1,214,314 | 1,372,709 | ||||||
TOTAL ASSETS
|
$ | 114,173,469 | $ | 119,621,453 |
March 31,
|
||||||||
2016
|
December 31,
|
|||||||
(Unaudited)
|
2015
|
|||||||
LIABILITIES AND EQUITY
|
(As Restated)
|
|||||||
CURRENT LIABILITIES:
|
||||||||
Current maturities of debt
|
$ | 29,862,186 | $ | 30,063,635 | ||||
Accounts payable, principally trade
|
6,424,557 | 7,933,664 | ||||||
Asset retirement obligations
|
470,607 | 70,000 | ||||||
Other accrued liabilities
|
1,781,611 | 1,781,484 | ||||||
Total current liabilities
|
38,538,961 | 39,848,783 | ||||||
OTHER NONCURRENT LIABILITIES:
|
||||||||
Asset retirement obligations
|
8,368,545 | 8,720,498 | ||||||
Deferred taxes
|
884,431 | 1,417,364 | ||||||
Other liabilities
|
21,924 | 30,090 | ||||||
Total other noncurrent liabilities
|
9,274,900 | 10,167,952 | ||||||
EQUITY:
|
||||||||
Preferred stock
|
10,828,603 | 10,828,603 | ||||||
Common stock, no par value (300 million shares authorized, 71,911,361 and 71,834,617 issued)
|
142,286,922 | 141,858,946 | ||||||
Accumulated earnings (deficit)
|
(86,755,917 | ) | (83,082,831 | ) | ||||
Total equity
|
66,359,608 | 69,604,718 | ||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 114,173,469 | $ | 119,621,453 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
(As Restated)
|
||||||||
REVENUES:
|
||||||||
Sales of natural gas and crude oil
|
$ | 2,931,586 | $ | 4,572,679 | ||||
Net gains from commodity derivatives
|
370,938 | 1,070,568 | ||||||
Total revenues
|
3,302,524 | 5,643,247 | ||||||
EXPENSES:
|
||||||||
Lease operating
|
2,013,149 | 3,223,116 | ||||||
Re-engineering and workovers
|
- | 494,429 | ||||||
Marketing cost of sales
|
- | 101,688 | ||||||
General and administrative – stock-based compensation
|
418,290 | 1,738,410 | ||||||
General and administrative – other
|
2,157,486 | 1,672,212 | ||||||
Depreciation, depletion and amortization
|
2,446,401 | 4,141,020 | ||||||
Asset retirement obligation accretion expense
|
105,014 | 162,784 | ||||||
Other
|
(25,432 | ) | 11,311 | |||||
Total expenses
|
7,114,908 | 11,544,970 | ||||||
INCOME (LOSS) FROM OPERATIONS
|
(3,812,384 | ) | (5,901,723 | ) | ||||
OTHER INCOME (EXPENSE):
|
||||||||
Interest expense
|
(402,648 | ) | (92,007 | ) | ||||
Other, net
|
9,013 | 16,156 | ||||||
Total other income (expense)
|
(393,635 | ) | (75,851 | ) | ||||
NET INCOME (LOSS) BEFORE INCOME TAXES
|
(4,206,019 | ) | (5,977,574 | ) | ||||
Income tax benefit
|
(532,933 | ) | (2,294,582 | ) | ||||
NET INCOME (LOSS)
|
(3,673,086 | ) | (3,682,992 | ) | ||||
PREFERRED STOCK:
|
||||||||
Dividends paid in cash, perpetual preferred Series A
|
- | 300,815 | ||||||
Dividends in arrears, perpetual preferred Series A
|
320,626 | - | ||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$ | (3,993,712 | ) | $ | (3,983,807 | ) | ||
EARNINGS (LOSS) PER COMMON SHARE:
|
||||||||
Basic
|
$ | (0.06 | ) | $ | (0.06 | ) | ||
Diluted
|
$ | (0.06 | ) | $ | (0.06 | ) | ||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
||||||||
Basic
|
71,911,361 | 69,253,681 | ||||||
Diluted
|
71,911,361 | 69,253,681 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
(As Restated)
|
||||||||
NET INCOME (LOSS)
|
$ | (3,673,086 | ) | $ | (3,682,992 | ) | ||
OTHER COMPREHENSIVE INCOME (LOSS):
|
||||||||
Commodity derivatives sold
|
- | (119,917 | ) | |||||
Less income taxes
|
- | (46,168 | ) | |||||
Commodity derivatives sold, net of income taxes
|
- | (73,749 | ) | |||||
Reclassification of (gain) loss on settled commodity derivatives
|
- | 23,436 | ||||||
Less income taxes
|
- | 9,023 | ||||||
Reclassification of (gain) loss on settled commodity derivatives, net of income taxes
|
- | 14,413 | ||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
- | (59,336 | ) | |||||
COMPREHENSIVE INCOME (LOSS)
|
$ | (3,673,086 | ) | $ | (3,742,328 | ) | ||
March 31, 2016
|
December 31, 2015
|
|||||||
(Unaudited)
|
(As Restated)
|
|||||||
PERPETUAL PREFERRED STOCK - 9.25% CUMULATIVE AND REDEEMABLE, NO PAR VALUE:
|
||||||||
Balance at beginning of period: 554,596 for 2016 and 507,739 shares for 2015
|
$ | 10,828,603 | $ | 9,958,217 | ||||
Sales of 46,857 shares for 2015
|
- | 870,386 | ||||||
Balance at end of period: 554,596 shares for both 2016 and 2015
|
10,828,603 | 10,828,603 | ||||||
COMMON STOCK, NO PAR VALUE:
|
||||||||
Balance at beginning of period: 71,834,617 shares for 2016 and 69,139,869 shares for 2015
|
141,858,946 | 137,469,772 | ||||||
Restricted stock awards, of which 76,744 vested in 2016 and 1,676,113 vested in 2015
|
322,507 | 3,171,477 | ||||||
Sales of 1,347,458 shares of common stock for 2015
|
- | 1,363,160 | ||||||
Buy back of 328,823 shares from vested stock awards
|
- | (300,732 | ) | |||||
Stock appreciation rights issued, not vested
|
105,469 | 155,269 | ||||||
Balance at end of period: 71,911,361 shares for 2016 and 71,834,617 shares for 2015
|
142,286,922 | 141,858,946 | ||||||
ACCUMULATED OTHER COMPREHENSIVE INCOME:
|
||||||||
Balance at beginning of period
|
- | 38,801 | ||||||
Comprehensive income (loss) from commodity derivative instruments, net of income taxes
|
- | (38,801 | ) | |||||
Balance at end of period
|
- | - | ||||||
ACCUMULATED EARNINGS (DEFICIT):
|
||||||||
Balance at beginning of period
|
(83,082,831 | ) | (67,195,800 | ) | ||||
Net loss
|
(3,673,086 | ) | (14,839,840 | ) | ||||
Series A perpetual preferred stock cash dividends
|
- | (1,047,191 | ) | |||||
Balance at end of period
|
(86,755,917 | ) | (83,082,831 | ) | ||||
TOTAL EQUITY
|
$ | 66,359,608 | $ | 69,604,718 |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
(As Restated)
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Reconciliation of net loss to net cash provided by (used in) operating activities
|
||||||||
Net loss
|
$ | (3,673,086 | ) | $ | (3,682,992 | ) | ||
Depreciation, depletion and amortization of property and equipment
|
2,446,401 | 4,141,020 | ||||||
Accretion of asset retirement obligation
|
105,014 | 162,784 | ||||||
Stock-based compensation net of capitalized cost
|
418,290 | 1,738,410 | ||||||
Amortization of other assets and liabilities
|
262,474 | 65,145 | ||||||
Deferred tax expense (benefit)
|
(532,933 | ) | (2,294,582 | ) | ||||
Bad debt expense increase (decrease)
|
(25,432 | ) | 11,311 | |||||
Amortization of benefit from commodity derivatives (sold) and purchased, net
|
- | (119,917 | ) | |||||
Unrealized (gains) losses on commodity derivatives
|
788,176 | 3,866,266 | ||||||
Changes in current operating assets and liabilities:
|
||||||||
Accounts receivable
|
337,959 | 3,680,915 | ||||||
Other current assets
|
246,578 | 206,467 | ||||||
Accounts payable
|
(987,980 | ) | (10,800,637 | ) | ||||
Other current liabilities
|
(14,194 | ) | 367,639 | |||||
Other noncurrent assets and liabilities
|
(108,618 | ) | - | |||||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(737,351 | ) | (2,658,171 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures on property and equipment
|
(1,322,128 | ) | (5,963,281 | ) | ||||
Proceeds from sale of property
|
1,740 | 30,442 | ||||||
Decrease (increase) in short-term investments
|
- | (10,431 | ) | |||||
NET CASH USED IN INVESTING ACTIVITIES
|
(1,320,388 | ) | (5,943,270 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Change in borrowing on line of credit
|
- | 5,550,000 | ||||||
Payments on insurance note
|
(201,449 | ) | (220,658 | ) | ||||
Line of credit financing costs
|
(21,717 | ) | (221,373 | ) | ||||
Net proceeds from sale of common stock
|
- | 298,259 | ||||||
Net proceeds from sale of perpetual preferred stock
|
- | 708,590 | ||||||
Cash dividends to preferred shareholders
|
- | (300,815 | ) | |||||
Other
|
- | (4,783 | ) | |||||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
(223,166 | ) | 5,809,220 | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(2,280,905 | ) | (2,792,221 | ) | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
5,355,191 | 11,558,322 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$ | 3,074,286 | $ | 8,766,101 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Interest payments (net of interest capitalized)
|
$ | 174,706 | $ | 19,843 | ||||
Interest capitalized
|
$ | 124,164 | $ | 232,822 | ||||
Supplemental disclosure of significant non-cash activity:
|
||||||||
(Increase) decrease in capital expenditures financed by accounts payable
|
$ | 521,127 | $ | 2,067,297 |
Fair value measurements at March 31, 2016
|
||||||||||||||||
Significant
|
||||||||||||||||
Quoted prices
|
other
|
Significant
|
||||||||||||||
in active
|
observable
|
unobservable
|
||||||||||||||
markets
|
inputs
|
inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Commodity derivatives – oil
|
$ | - | $ | 2,735,087 | $ | - | $ | 2,735,087 | ||||||||
Commodity derivatives – gas
|
- | 205,325 | - | 205,325 | ||||||||||||
Total assets
|
$ | - | $ | 2,940,412 | $ | - | $ | 2,940,412 |
Fair value measurements at December 31, 2015
|
||||||||||||||||
Significant
|
||||||||||||||||
Quoted prices
|
other
|
Significant
|
||||||||||||||
in active
|
observable
|
unobservable
|
||||||||||||||
markets
|
inputs
|
inputs
|
||||||||||||||
(Level 1)
|
(Level 2)
|
(Level 3)
|
Total
|
|||||||||||||
Assets:
|
||||||||||||||||
Commodity derivatives – oil
|
$ | - | $ | 3,442,693 | $ | - | $ | 3,442,693 | ||||||||
Commodity derivatives – gas
|
- | 285,895 | - | 285,895 | ||||||||||||
Total assets
|
$ | - | $ | 3,728,588 | $ | - | $ | 3,728,588 |
2016
|
2017
|
|||||||
Settlement
|
Settlement
|
|||||||
NATURAL GAS (MMBtu):
|
||||||||
Swaps
|
||||||||
Volume
|
406,655 | - | ||||||
Price
|
$ | 2.657 | * | - | ||||
3-way collars
|
||||||||
Volume
|
- | 248,023 | ||||||
Ceiling sold price (call)
|
- | $ | 3.280 | * | ||||
Floor purchased price (put)
|
- | $ | 2.946 | * | ||||
Floor sold price (short put)
|
- | $ | 2.381 | * | ||||
CRUDE OIL (Bbls):
|
||||||||
Put spread
|
||||||||
Volume
|
98,902 | - | ||||||
Floor purchased price (put)
|
$ | 62.27 | - | |||||
Floor sold price (short put)
|
$ | 40.00 | - | |||||
3-way collars
|
||||||||
Volume
|
23,449 | 113,029 | ||||||
Ceiling sold price (call) (WTI)
|
$ | 47.15 | $ | 77.00 | ||||
Floor purchased price (put) (WTI)
|
$ | 40.00 | $ | 60.00 | ||||
Floor sold price (short put) (WTI)
|
$ | 30.00 | $ | 45.00 | ||||
Swaps
|
||||||||
Volume
|
11,533 | - | ||||||
Price
|
$ | 40.25 | - |
Fair value as of
|
||||||||
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Asset commodity derivatives:
|
||||||||
Current assets
|
$ | 2,765,219 | $ | 3,069,115 | ||||
Noncurrent assets
|
1,467,664 | 1,841,120 | ||||||
4,232,883 | 4,910,235 | |||||||
Liability commodity derivatives:
|
||||||||
Current liabilities
|
(625,057 | ) | (411,068 | ) | ||||
Noncurrent liabilities
|
(667,414 | ) | (770,579 | ) | ||||
(1,292,471 | ) | (1,181,647 | ) | |||||
Total commodity derivative instruments
|
$ | 2,940,412 | $ | 3,728,588 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2016
|
2015
|
|||||||
Sales of natural gas and crude oil
|
$ | 2,931,586 | $ | 4,572,679 | ||||
Gains (losses) realized from sale of commodity derivatives
|
- | 4,030,000 | ||||||
Other gains (losses) realized on commodity derivatives
|
1,159,114 | 906,834 | ||||||
Unrealized gains (losses) on commodity derivatives
|
(788,176 | ) | (3,866,266 | ) | ||||
Total revenue from natural gas and crude oil
|
$ | 3,302,524 | $ | 5,643,247 |
Three Months Ended
|
Year Ended
|
|||||||||||||||
March 31, 2016
|
December 31, 2015
|
|||||||||||||||
Before tax
|
After tax
|
Before tax
|
After tax
|
|||||||||||||
Balance, beginning of period
|
$ | - | $ | - | $ | 63,091 | $ | 38,801 | ||||||||
Sale of unexpired contracts previously subject
|
||||||||||||||||
to hedge accounting rules
|
- | - | (119,917 | ) | (73,749 | ) | ||||||||||
Other reclassifications due to expired contracts
|
||||||||||||||||
previously subject to hedge accounting rules
|
- | - | 56,826 | 34,948 | ||||||||||||
Balance, end of period
|
$ | - | $ | - | $ | - | $ | - |
Number of
|
Weighted average
|
||||
unvested
|
grant-date
|
||||
RSA shares
|
fair value
|
||||
Unvested shares as of January 1, 2016
|
2,514,434 |
$0.87 per share
|
|||
Vested on January 1, 2016
|
(76,744 | ) |
$3.02 per share
|
||
Unvested shares as of March 31, 2016
|
2,437,690 |
$0.80 per share
|
Weighted
|
|||||
Number of
|
average
|
||||
unvested
|
grant-date
|
||||
SARs
|
fair value
|
||||
Unvested shares as of January 1, 2016
|
1,912,419 |
$0.30 per share
|
|||
Vested, forfeited, or other changes
|
- | ||||
Unvested shares as of March 31, 2016
|
1,912,419 |
$0.30 per share
|
Weighted-
|
||||||||||||||||
Weighted-
|
average
|
|||||||||||||||
average
|
remaining
|
Aggregate
|
||||||||||||||
exercise
|
contractual
|
intrinsic
|
||||||||||||||
Options
|
price
|
life (years)
|
value
|
|||||||||||||
Outstanding at December 31, 2015
|
105,000 | $ | 5.17 | 2.65 | $ | - | ||||||||||
Granted
|
- | - | - | - | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Forfeited
|
- | - | - | - | ||||||||||||
Outstanding at March 31, 2016
|
105,000 | $ | 5.17 | 2.41 | $ | - | ||||||||||
Vested at March 31, 2016
|
105,000 | $ | 5.17 | 2.41 | $ | - | ||||||||||
Exercisable at March 31, 2016
|
105,000 | $ | 5.17 | 2.41 | $ | - |
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||
Weighted-
|
Weighted
|
Weighted
|
||||||||||||||||||||
average
|
average
|
average
|
||||||||||||||||||||
Exercise
|
Number of
|
remaining
|
exercise
|
Number of
|
exercise
|
|||||||||||||||||
price
|
shares
|
life (years)
|
price
|
shares
|
price
|
|||||||||||||||||
$ | 5.40 | 5,000 | .17 | $ | 5.40 | 5,000 | $ | 5.40 | ||||||||||||||
$ | 5.16 | 100,000 | 2.52 | $ | 5.16 | 100,000 | $ | 5.16 | ||||||||||||||
105,000 | 105,000 |
Weighted
|
|||||
Number of
|
average
|
||||
unvested
|
grant-date
|
||||
RSUs
|
fair value
|
||||
Unvested shares as of January 1, 2016
|
80,278 |
$2.72 per share
|
|||
Granted, forfeited, or other changes
|
- | ||||
Unvested shares as of March 31, 2016
|
80,278 |
$2.72 per share
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2016
|
2015
|
|||||||
Restricted Stock Awards
|
2,437,690 | 1,910,349 | ||||||
Restricted Stock Units
|
- | 95,424 | ||||||
2,437,690 | 2,005,773 |
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
Variable rate revolving credit agreement payable to Société Générale,
|
||||||||
CIT Bank, NAC, and LegacyTexas Bank, maturing May 20, 2017,
|
||||||||
secured by the stock of Exploration and its interest in POL, and
|
||||||||
guaranteed by The Yuma Companies, Inc.
|
$ | 29,800,000 | $ | 29,800,000 | ||||
Installment loan due February 29, 2016, originating from the
|
||||||||
financing of insurance premiums at 3.74% interest rate.
|
- | 108,894 | ||||||
Installment loan due June 11, 2016, originating from the
|
||||||||
financing of insurance premiums at 3.76% interest rate.
|
62,186 | 154,741 | ||||||
29,862,186 | 30,063,635 | |||||||
Less: current portion
|
(29,862,186 | ) | (30,063,635 | ) | ||||
Total long-term debt
|
$ | - | $ | - |
Three Months Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Credit agreement
|
$ | 257,728 | $ | 241,294 | ||||
Credit agreement commitment fees
|
- | 15,828 | ||||||
Amortization of credit agreement loan costs
|
262,474 | 65,144 | ||||||
Insurance installment loan
|
1,670 | 1,726 | ||||||
Other interest charges
|
4,940 | 837 | ||||||
Capitalized interest
|
(124,164 | ) | (232,822 | ) | ||||
Total interest expense
|
$ | 402,648 | $ | 92,007 |
Three Months Ended
|
||||||||
March 31,
|
||||||||
2016
|
2015
|
|||||||
(As Restated)
|
||||||||
Consolidated net income (loss) before income taxes
|
$ | (4,206,019 | ) | $ | (5,977,574 | ) | ||
Income tax expense (benefit)
|
(532,933 | ) | (2,294,582 | ) | ||||
Effective tax rate
|
12.7 | % | 38.4 | % |
Shares
|
Net Proceeds
|
|||||||
Common Stock
|
1,347,458 | $ | 1,363,160 | |||||
Series A Preferred Stock
|
46,857 | 870,386 | ||||||
Total
|
$ | 2,233,546 |
2015 |
2014
|
|||||||
($ in thousands)
|
||||||||
ASSETS
|
||||||||
Current:
|
||||||||
Cash
|
$ | 4,064 | $ | 10,477 | ||||
Accounts receivable
|
5,111 | 7,363 | ||||||
Joint interest advances paid
|
403 | 937 | ||||||
Derivative asset
|
1,711 | 8,098 | ||||||
Other current assets
|
877 | 7,457 | ||||||
Total current assets
|
12,166 | 34,332 | ||||||
Property, plant, and equipment:
|
||||||||
Oil and gas properties - full cost method
|
||||||||
Proved properties
|
426,320 | 408,799 | ||||||
Unevaluated properties
|
179 | 10,877 | ||||||
Other
|
9,034 | 9,034 | ||||||
Less: Accumulated depreciation, depletion, amortization and impairment
|
(392,086 | ) | (331,727 | ) | ||||
Total property, plant and equipment, net
|
43,447 | 96,983 | ||||||
Other assets
|
404 | 616 | ||||||
Long-term derivative asset
|
- | 639 | ||||||
Deferred income taxes
|
1,426 | 11,881 | ||||||
TOTAL ASSETS
|
$ | 57,443 | $ | 144,451 | ||||
LIABILITIES
|
||||||||
Current:
|
||||||||
Accounts payable and accrued expenses
|
$ | 4,716 | $ | 19,991 | ||||
Oil and gas revenues and royalties payable
|
439 | 821 | ||||||
Joint interest advances received
|
475 | 598 | ||||||
Current portion of asset retirement obligations
|
185 | 1,822 | ||||||
Total current liabilities
|
5,815 | 23,232 | ||||||
Long-term debt
|
- | 5,000 | ||||||
Asset retirement obligations
|
5,147 | 5,404 | ||||||
Other long-term liabilities
|
95 | 95 | ||||||
TOTAL LIABILITIES
|
11,057 | 33,731 | ||||||
Commitments and contingencies (Note 16)
|
||||||||
|
||||||||
STOCKHOLDERS' EQUITY
|
||||||||
Common stock, par value $0.01 per share (authorized 400,100,000 shares; issued 223,584,069 and 223,523,434 as of December 31, 2015 and 2014, respectively)
|
2,236 | 2,235 | ||||||
Preferred stock, par value $0.01 per share (authorized 50,000,000 shares; issued 33,367,187 and 31,130,201 as of December 31, 2015 and 2014,
|
334 | 311 | ||||||
Treasury Stock, at cost; 72,111,216 and 71,622,528 shares at
December 31, 2015 and 2014, respectively
|
(41,350 | ) | (41,140 | ) | ||||
Paid-in capital
|
207,284 | 205,144 | ||||||
Accumulated deficit
|
(122,118 | ) | (55,830 | ) | ||||
Total Stockholders' Equity
|
46,386 | 110,720 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 57,443 | $ | 144,451 |
2015
|
2014
|
|||||||
($ in thousands)
|
||||||||
REVENUES
|
$ | 18,774 | $ | 58,694 | ||||
EXPENSES
|
||||||||
Lease operating and production costs
|
6,510 | 12,611 | ||||||
Production taxes
|
1,106 | 2,468 | ||||||
Depreciation, depletion and amortization
|
17,413 | 32,880 | ||||||
Impairment of oil and gas properties
|
42,947 | - | ||||||
General and administrative
|
7,807 | 9,938 | ||||||
Accretion expense
|
176 | 852 | ||||||
Other operating expenses
|
174 | 1,006 | ||||||
(Gain) on derivative instruments
|
(3,319 | ) | (9,290 | ) | ||||
Total expenses
|
72,814 | 50,465 | ||||||
INCOME (LOSS) FROM OPERATIONS
|
(54,040 | ) | 8,229 | |||||
Other (income) and expense:
|
||||||||
Interest and other income
|
(21 | ) | (159 | ) | ||||
Interest expense
|
578 | 1,226 | ||||||
Income (loss) before income taxes
|
(54,597 | ) | 7,162 | |||||
Income tax expense (benefit) - current
|
6 | (192 | ) | |||||
Income tax expense - deferred
|
10,455 | 2,676 | ||||||
NET INCOME (LOSS)
|
$ | (65,058 | ) | $ | 4,678 | |||
Earnings Per Share
|
||||||||
Basic
|
$ | (0.44 | ) | $ | 0.03 | |||
Diluted
|
$ | (0.44 | ) | $ | 0.03 | |||
Weighted Average Shares Outstanding (in thousands)
|
||||||||
Basic
|
149,182 | 147,350 | ||||||
Diluted
|
181,145 | 177,178 |
2015
|
2014
|
|||||||
($ in thousands)
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$ | (65,058 | ) | $ | 4,678 | |||
Adjustments to reconcile net income to net cash provided
|
||||||||
operating activities:
|
||||||||
Depreciation, depletion and amortization
|
17,413 | 32,880 | ||||||
Amortization of debt issuance costs
|
210 | 122 | ||||||
Impairment of oil and gas properties
|
42,947 | - | ||||||
Net deferred income tax expense
|
10,455 | 2,676 | ||||||
Stock-based compensation expense
|
933 | 1,712 | ||||||
Accretion expense
|
176 | 852 | ||||||
Derivative instruments
|
(3,318 | ) | (9,290 | ) | ||||
Working capital changes:
|
||||||||
Decrease in accounts receivable
|
2,804 | 1,808 | ||||||
Decrease in other current and long-term assets
|
6,583 | 951 | ||||||
(Decrease) increase in accounts payable and other current and
|
||||||||
non-current liabilities
|
(5,307 | ) | 2,740 | |||||
Increase (decrease) in oil and gas revenues payable
|
(382 | ) | (3,280 | ) | ||||
Increase (decrease) in joint interest advances
|
3,620 | (3,203 | ) | |||||
Net cash provided by operating activities
|
11,076 | 32,646 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Acquisitions
|
(1,401 | ) | (1,541 | ) | ||||
Capital expenditures
|
(22,932 | ) | (27,420 | ) | ||||
Proceeds from the sale of properties
|
1,710 | 33,484 | ||||||
Divestments
|
- | 3,721 | ||||||
Derivative settlements
|
10,344 | (1,264 | ) | |||||
Net cash provided by (used in) investing activities
|
(12,279 | ) | 6,980 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayments on Senior Credit Facility
|
(15,000 | ) | (40,000 | ) | ||||
Borrowings on Senior Credit Facility
|
10,000 | 5,000 | ||||||
Treasury stock repurchases
|
(210 | ) | (699 | ) | ||||
Net cash used in financing activities
|
(5,210 | ) | (35,699 | ) | ||||
Net (decrease) increase in cash
|
(6,413 | ) | 3,927 | |||||
Cash - beginning of the period
|
10,477 | 6,550 | ||||||
Cash - end of the period
|
$ | 4,064 | $ | 10,477 |
Common Stock
|
Preferred Stock
|
Treasury
Stock
|
Paid-in Capital
|
Accumulated Deficit
|
Stockholders' Equity
|
|||||||||||||||||||||||
($ in thousands)
|
Shares
|
Value
|
||||||||||||||||||||||||||
December 31, 2013
|
222,976 | $ | 2,237 | $ | 290 | $ | (40,441 | ) | $ | 201,636 | $ | (59,356 | ) | $ | 104,366 | |||||||||||||
Net income
|
- | - | - | - | - | 4,678 | 4,678 | |||||||||||||||||||||
Payment of dividends in kind
|
- | - | 21 | - | 1,131 | (1,152 | ) | - | ||||||||||||||||||||
Restricted stock grants, net of cancelations
|
547 | (2 | ) | - | - | 2 | - | - | ||||||||||||||||||||
Treasury stock - employee tax payment
|
- | - | - | (699 | ) | - | - | (699 | ) | |||||||||||||||||||
Amortization of stock-based compensation
|
- | - | - | - | 2,375 | - | 2,375 | |||||||||||||||||||||
December 31, 2014
|
223,523 | $ | 2,235 | $ | 311 | $ | (41,140 | ) | $ | 205,144 | $ | (55,830 | ) | $ | 110,720 | |||||||||||||
Net income
|
- | - | - | - | - | (65,058 | ) | (65,058 | ) | |||||||||||||||||||
Payment of dividends in kind
|
- | - | 23 | - | 1,207 | (1,230 | ) | - | ||||||||||||||||||||
Restricted stock grants, net of cancelations
|
61 | 1 | - | - | - | - | 1 | |||||||||||||||||||||
Treasury stock - employee tax payment
|
- | - | - | (210 | ) | - | - | (210 | ) | |||||||||||||||||||
Amortization of stock-based compensation
|
- | - | - | - | 933 | - | 933 | |||||||||||||||||||||
December 31, 2015
|
223,584 | $ | 2,236 | $ | 334 | $ | (41,350 | ) | $ | 207,284 | $ | (122,118 | ) | $ | 46,386 |
2015
|
2014
|
|||||||
($ in thousands)
|
||||||||
Natural gas and crude oil sales
|
$ | 4,286 | $ | 6,527 | ||||
Joint interest billings
|
825 | 836 | ||||||
Less: allowance for doubtful accounts
|
- | - | ||||||
Accounts receivable
|
$ | 5,111 | $ | 7,363 |
2015
|
2014
|
|||||||
($ in thousands)
|
||||||||
Prepaid insurance
|
$ | 153 | $ | 261 | ||||
ARO receivable
|
- | 7,196 | ||||||
Other
|
724 | - | ||||||
Total other current assets
|
$ | 877 | $ | 7,457 |
●
|
Cat Spring - net proceeds of $74,640
|
●
|
Carter Estate #1 – net proceeds of $867,500
|
●
|
Overriding Royalty Interests (various) – net proceeds of $768,000
|
2015
|
2014
|
|||||||
($ in thousands)
|
||||||||
Proved properties
|
$ | 426,320 | $ | 408,799 | ||||
Less: accumulated depreciation, depletion, amortization and impairment
|
(384,729 | ) | (324,960 | ) | ||||
Proved properties, net
|
41,591 | 83,839 | ||||||
Unproved properties
|
||||||||
Leasehold acquisition costs
|
- | 4,596 | ||||||
Exploration and development
|
- | 116 | ||||||
Unevaluated properties
|
179 | 6,165 | ||||||
Total unproved properties
|
179 | 10,877 | ||||||
Oil and gas properties, net
|
$ | 41,770 | $ | 94,716 |
December 31, 2015
|
Year Incurred
|
|||||||||||||||
($ in thousands)
|
2015
|
2014
|
2013 & Prior
|
Total
|
||||||||||||
Leasehold acquisition costs
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Exploration and development
|
- | - | - | - | ||||||||||||
Unevaluated reserves
|
179 | - | - | - | ||||||||||||
Total unevaluated properties, at December 31, 2015
|
$ | 179 | $ | - | $ | - | $ | - |
Useful
|
December 31,
|
|||||||||||
life (years)
|
2015
|
2014
|
||||||||||
($ in thousands)
|
||||||||||||
Plants and pipeline systems
|
10 | $ | 4,599 | $ | 4,599 | |||||||
Buildings
|
10 | 179 | 179 | |||||||||
Furniture and fixtures
|
1-7 | 667 | 667 | |||||||||
Automobiles
|
3 | 158 | 158 | |||||||||
Software and IT equipment
|
3-5 | 2,006 | 2,006 | |||||||||
Leasehold improvements
|
5 | 1,425 | 1,425 | |||||||||
9,034 | 9,034 | |||||||||||
Less: accumulated depreciation and amortization
|
(7,357 | ) | (6,767 | ) | ||||||||
Other property and equipment, net
|
$ | 1,677 | $ | 2,267 |
Period
|
Instrument Type
|
Average Daily Volumes
|
Average Fixed Price
|
|||
2016
|
Natural Gas Swap
|
3,000 MMBtu
|
$ 4.05
|
Estimated Fair Value
|
|||||||||
Year Ended December 31,
|
|||||||||
Instrument Type
|
Balance Sheet Classification
|
2015
|
2014
|
||||||
Natural Gas/Crude Oil Swaps/Collars
|
Derivative asset - short-term
|
$ | 1,710 | $ | 8,098 | ||||
Natural Gas/Crude Oil Swaps/Collars
|
Derivative asset - long-term
|
- | 639 | ||||||
Total derivative instruments
|
$ | 1,710 | $ | 8,737 |
Recurring Fair Value Measures
|
||||||||||||
As of December 31, 2015
|
||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Natural Gas Swaps
|
$ | - | $ | 1,710 | $ | - | ||||||
Crude Oil Swaps
|
- | |||||||||||
Total
|
$ | - | $ | 1,710 | $ | - |
Recurring Fair Value Measures
|
||||||||||||
As of December 31, 2014
|
||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Natural Gas Swaps
|
$ | - | $ | 3,195 | $ | - | ||||||
Crude Oil Swaps
|
5,542 | |||||||||||
Total
|
$ | - | $ | 8,737 | $ | - |
2015
|
2014
|
|||||||
($ in thousands)
|
||||||||
Trade payables
|
$ | 669 | $ | 3,639 | ||||
Accrued expenses
|
4,047 | 16,352 | ||||||
Total accounts payable
|
$ | 4,716 | $ | 19,991 |
2015
|
2014
|
|||||||
($ in thousands)
|
||||||||
Current Expense (Benefit)
|
||||||||
Federal
|
$ | - | $ | 4 | ||||
State
|
6 | (196 | ) | |||||
Deferred Expense (Benefit)
|
||||||||
Federal
|
11,060 | 2,585 | ||||||
State
|
(605 | ) | 91 | |||||
Total provision
|
$ | 10,461 | $ | 2,484 |
2015
|
2014
|
|||||||
U.S. statutory rate
|
35.00 | % | 35.00 | % | ||||
Valuation allowance
|
-55.25 | % | 0.00 | % | ||||
State return to provision (net of federal benefit)
|
0.00 | % | -2.97 | % | ||||
State income taxes (net of federal benefit)
|
1.10 | % | 2.48 | % | ||||
Other
|
-0.01 | % | 0.19 | % | ||||
Effective rate
|
-19.16 | % | 34.70 | % |
($ in thousands)
|
2015
|
2014
|
||||||
Deferred income tax liabilities
|
||||||||
Property, plant and equipment
|
$ | - | $ | 7,014 | ||||
Financial accruals and other
|
566 | 3,020 | ||||||
566 | 10,034 | |||||||
Deferred income tax assets
|
||||||||
Net operating loss carryforward
|
(21,523 | ) | (20,237 | ) | ||||
Property, plant and equipment
|
(9,965 | ) | - | |||||
Stock based compensation
|
(1,802 | ) | (1,678 | ) | ||||
Valuation allowance
|
31,298 | - | ||||||
Deferred income taxes, net
|
$ | (1,426 | ) | $ | (11,881 | ) |
2015
|
2014
|
|||||||
($ in thousands)
|
||||||||
Senior Credit Facility
|
$ | - | $ | 5,000 | ||||
Total debt
|
- | 5,000 | ||||||
Less: current maturities
|
- | - | ||||||
Total long-term debt
|
$ | - | $ | 5,000 |
Options
|
Weighted average exercise price
|
|||||||
December 31, 2013
|
7,893,651 | $ | 0.85 | |||||
Canceled and forfeited
|
(257,737 | ) | 0.88 | |||||
December 31, 2014
|
7,635,914 | $ | 0.85 | |||||
Canceled and forfeited
|
(841,404 | ) | 1.28 | |||||
December 31, 2015
|
6,794,510 | $ | 0.80 |
Options Outstanding
|
Options Exercisable | |||||||||||||||||
Number of Options
|
Weighted Average Exercise Price
|
Weighted Average Remaining Contractual Life
|
Number of Options
|
Weighted Average Exercise Price
|
||||||||||||||
4,000,000 | $ | 0.68 | 7.4 | 2,666,667 | $ | 0.68 | ||||||||||||
1,450,000 | 0.73 | 3.7 | 1,450,000 | 0.73 | ||||||||||||||
200,000 | 0.76 | 4.6 | 200,000 | 0.76 | ||||||||||||||
200,000 | 0.78 | 4.3 | 200,000 | 0.78 | ||||||||||||||
200,000 | 0.96 | 6.7 | 150,000 | 0.96 | ||||||||||||||
496,001 | 1.00 | 0.4 | 496,001 | 1.00 | ||||||||||||||
248,509 | 2.50 | 0.5 | 248,509 | 2.50 | ||||||||||||||
6,794,510 | $ | 0.80 | 5.7 | 5,411,177 | $ | 0.82 |
2015
|
2014
|
|||||||
Net income (loss)
|
$ | (65,058 | ) | $ | 4,678 | |||
Weighted average common shares - Basic
|
149,182 | 147,350 | ||||||
Effect of exercise of stock options
(1)
|
- | - | ||||||
Effective of conversion of preferred stock
|
31,963 | 29,828 | ||||||
Weighted average common shares - Diluted
|
181,145 | 177,178 | ||||||
Earnings (loss) per common share
|
||||||||
Basic
|
$ | (0.44 | ) | $ | 0.03 | |||
Diluted
|
$ | (0.44 | ) | $ | 0.03 |
(In thousands)
|
||||
2016
|
194 | |||
2017
|
- | |||
2018
|
- | |||
2019
|
- | |||
Thereafter
|
- | |||
Total
|
$ | 194 |
Year ended December 31, 2015
|
Year ended December 31, 2014
|
|||||||
(In thousands)
|
||||||||
Cash paid for interest, net of amounts capitalized
|
$ | 362 | $ | 1,119 | ||||
Non-cash additions to asset retirement obligations
|
836 | (116 | ) | |||||
Change in accrued capital expenditures
|
13,730 | 11,444 |
Year ended December 31, 2015
|
Year ended December 31, 2014
|
|||||||
(In thousands)
|
||||||||
Costs incurred for the year:
|
||||||||
Exploration (including geological and geophysical costs)
|
$ | - | $ | 298 | ||||
Development
|
3,847 | 33,724 | ||||||
Acquisition of proved properties, net
|
1,401 | 3,918 | ||||||
Capitalized salaries
|
1,502 | 2,737 | ||||||
Lease acquisition costs, net of recoveries
|
899 | 951 | ||||||
Costs incurred before estimated asset retirement obligations
|
7,649 | 41,628 | ||||||
Estimated asset retirement obligations incurred, net of revisions
|
- | (339 | ) | |||||
Total costs incurred
|
$ | 7,649 | $ | 41,289 |
Year ended December 31, 2015
|
Year ended December 31, 2014
|
|||||||
(In thousands)
|
||||||||
Revenues
|
$ | 18,774 | $ | 58,663 | ||||
Operating costs:
|
||||||||
Depreciation, depletion, amortization and impairment
|
59,769 | 28,442 | ||||||
Lease operating expenses
|
6,510 | 12,678 | ||||||
Production taxes
|
1,112 | 2,467 | ||||||
Accretion expense
|
176 | 852 | ||||||
Income tax provision
|
- | 4,073 | ||||||
Results of operations
|
$ | (48,793 | ) | $ | 10,151 | |||
Amortization rate per mcfe
|
$ | 3.66 | $ | 4.20 |
Oil (bbls)
|
Ngl (bbls)
|
Gas (mcf)
|
Boe
|
|||||||||||||
Proved reserves at December 31, 2013
|
3,771,300 | 681,300 | 14,611,100 | 6,887,700 | ||||||||||||
Revisions of previous estimates
|
(712,200 | ) | 380,500 | 344,400 | (274,300 | ) | ||||||||||
Extension, discoveries and other additions
|
757,300 | 171,800 | 1,734,000 | 1,218,100 | ||||||||||||
Purchases of minerals in place
|
- | - | - | - | ||||||||||||
Sales of minerals in place
|
(1,410,300 | ) | (76,500 | ) | (864,200 | ) | (1,630,800 | ) | ||||||||
Production
|
(410,200 | ) | (439,700 | ) | (3,174,800 | ) | (1,379,000 | ) | ||||||||
Proved reserves at December 31, 2014
|
1,995,900 | 717,400 | 12,650,500 | 4,821,700 | ||||||||||||
Revisions of previous estimates
|
(871,200 | ) | 14,100 | 3,711,100 | (238,600 | ) | ||||||||||
Extension, discoveries and other additions
|
261,200 | 403,600 | 2,132,100 | 1,020,200 | ||||||||||||
Purchases of minerals in place
|
12,800 | 25,100 | 516,600 | 124,000 | ||||||||||||
Sales of minerals in place
|
(21,300 | ) | (2,300 | ) | (945,100 | ) | (181,100 | ) | ||||||||
Production
|
(209,500 | ) | (129,700 | ) | (2,547,300 | ) | (763,800 | ) | ||||||||
Proved reserves at December 31, 2015
|
1,167,900 | 1,028,200 | 15,517,900 | 4,782,400 | ||||||||||||
Proved developed reserves
|
||||||||||||||||
December 31, 2013
|
1,679,000 | 488,500 | 12,203,700 | 4,201,500 | ||||||||||||
December 31, 2014
|
1,084,900 | 579,400 | 11,901,600 | 3,647,900 | ||||||||||||
December 31, 2015
|
703,400 | 604,300 | 10,464,300 | 3,051,700 | ||||||||||||
Proved undeveloped reserves
|
||||||||||||||||
December 31, 2013
|
2,092,300 | 192,800 | 2,407,200 | 2,686,300 | ||||||||||||
December 31, 2014
|
911,000 | 138,000 | 748,900 | 1,173,800 | ||||||||||||
December 31, 2015
|
464,500 | 423,900 | 5,053,600 | 1,730,700 |
Standardized Measure - Year Ended
|
2015
|
2014
|
||||||
($ in thousands)
|
||||||||
Future cash inflows
|
$ | 112,449 | $ | 268,960 | ||||
Less related future:
|
||||||||
Production costs
|
38,404 | 80,726 | ||||||
Development costs
|
21,947 | 42,727 | ||||||
Income taxes
|
- | - | ||||||
Future net cash flows
|
52,098 | 145,507 | ||||||
10% annual discount for estimated timing of cash flows
|
(11,118 | ) | (43,836 | ) | ||||
Standardized measure of discounted future net cash flows
|
$ | 40,980 | $ | 101,671 |
Summary of Changes - Year Ended
|
2015
|
2014
|
||||||
($ in thousands)
|
||||||||
January 1
|
$ | 101,671 | $ | 174,699 | ||||
Net change in sales and transfer prices and in production (lifting)
|
||||||||
costs related to future production
|
(66,321 | ) | (25,805 | ) | ||||
Net change due to revisions in quantity estimates
|
(12,951 | ) | (13,702 | ) | ||||
Net change due to extensions, discoveries and improved recovery
|
3,534 | 29,291 | ||||||
Purchases of reserves in place
|
1,062 | - | ||||||
Sales of reserves in place
|
(2,784 | ) | (58,220 | ) | ||||
Accretion of discount
|
10,167 | 18,299 | ||||||
Sales and transfers of oil and gas produced during the period
|
(10,769 | ) | (43,567 | ) | ||||
Net change in income taxes
|
- | 8,289 | ||||||
Changes in estimated future development costs
|
15,322 | 8,669 | ||||||
Other
|
2,049 | 3,718 | ||||||
Net change
|
(60,691 | ) | (73,028 | ) | ||||
December 31
|
$ | 40,980 | $ | 101,671 |
2016
|
2015
|
|||||||
($ in thousands)
|
||||||||
REVENUES
|
$ | 2,186 | $ | 5,565 | ||||
EXPENSES
|
||||||||
Lease operating and production costs
|
827 | 2,057 | ||||||
Production taxes
|
140 | 318 | ||||||
Depreciation, depletion and amortization
|
1,710 | 5,513 | ||||||
Impairment of oil and gas properties
|
10,702 | - | ||||||
General and administrative
|
2,371 | 2,686 | ||||||
Accretion expense
|
52 | 47 | ||||||
Other operating expense (income)
|
20 | (40 | ) | |||||
Gain on derivative instruments
|
(456 | ) | (1,696 | ) | ||||
Total expenses
|
15,366 | 8,885 | ||||||
LOSS FROM OPERATIONS
|
(13,180 | ) | (3,320 | ) | ||||
Other (income) and expense:
|
||||||||
Interest expense
|
43 | 79 | ||||||
Loss before income taxes
|
(13,223 | ) | (3,399 | ) | ||||
Income tax expense (benefit) - deferred
|
3 | (1,183 | ) | |||||
NET LOSS
|
$ | (13,226 | ) | $ | (2,216 | ) | ||
Earnings Per Share
|
||||||||
Basic
|
$ | (0.09 | ) | $ | (0.02 | ) | ||
Diluted
|
$ | (0.09 | ) | $ | (0.02 | ) | ||
Weighted Average Shares Outstanding (in thousands)
|
||||||||
Basic
|
150,086 | 148,189 | ||||||
Diluted
|
150,086 | 148,189 |
2016
|
2015
|
|||||||
($ in thousands)
|
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$ | (13,226 | ) | $ | (2,216 | ) | ||
Adjustments to reconcile net income to net cash provided
|
||||||||
operating activities:
|
||||||||
Depreciation, depletion and amortization
|
1,710 | 5,513 | ||||||
Impairment of oil and gas properties
|
10,702 | - | ||||||
Net deferred income tax expense (benefit)
|
3 | (1,183 | ) | |||||
Stock-based compensation expense
|
196 | 257 | ||||||
Accretion expense
|
52 | 47 | ||||||
Derivative instruments
|
(456 | ) | (1,696 | ) | ||||
Working capital changes:
|
||||||||
Decrease in accounts receivable
|
1,629 | 1,800 | ||||||
(Increase) decrease in other current and long-term assets
|
(207 | ) | 16 | |||||
Decrease in accounts payable and other current and
|
||||||||
non-current liabilities
|
(997 | ) | (4,720 | ) | ||||
Decrease in oil and gas revenues payable
|
(107 | ) | (407 | ) | ||||
Decrease in joint interest advances
|
(178 | ) | (3,356 | ) | ||||
Net cash used in operating activities
|
(879 | ) | (5,945 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Capital expenditures
|
(4,676 | ) | (10,588 | ) | ||||
Derivative settlements
|
535 | 2,838 | ||||||
Net cash used in investing activities
|
(4,141 | ) | (7,750 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Borrowings on Senior Credit Facility
|
4,000 | 10,000 | ||||||
Net cash provided by financing activities
|
4,000 | 10,000 | ||||||
Net decrease in cash
|
(1,020 | ) | (3,695 | ) | ||||
Cash - beginning of the period
|
4,064 | 10,477 | ||||||
Cash - end of the period
|
$ | 3,044 | $ | 6,782 |
Common Stock
|
Preferred Stock
|
Treasury
Stock
|
Paid-in Capital
|
Accumulated Deficit
|
Stockholders' Equity
|
|||||||||||||||||||||||
($ in thousands)
|
Shares
|
Value
|
||||||||||||||||||||||||||
December 31, 2015
|
223,584 | $ | 2,236 | $ | 334 | $ | (41,350 | ) | $ | 207,284 | $ | (122,118 | ) | $ | 46,386 | |||||||||||||
Net loss
|
- | - | - | - | - | (13,226 | ) | (13,226 | ) | |||||||||||||||||||
Payment of dividends in kind
|
- | - | 5 | - | 315 | (320 | ) | - | ||||||||||||||||||||
Restricted stock grants, net of cancelations
|
500 | 5 | - | - | 93 | - | 98 | |||||||||||||||||||||
Amortization of stock-based compensation
|
- | - | - | - | 98 | - | 98 | |||||||||||||||||||||
March 31, 2016
|
224,084 | $ | 2,241 | $ | 339 | $ | (41,350 | ) | $ | 207,790 | $ | (135,664 | ) | $ | 33,356 |
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
($ in thousands)
|
||||||||
Natural gas and crude oil sales
|
$ | 2,421 | $ | 4,286 | ||||
Joint interest billings
|
524 | 825 | ||||||
Less: allowance for doubtful accounts
|
- | - | ||||||
Accounts receivable
|
$ | 2,945 | $ | 5,111 |
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
($ in thousands)
|
||||||||
Prepaid insurance
|
$ | 74 | $ | 153 | ||||
Other
|
1,011 | 724 | ||||||
Total other current assets
|
$ | 1,085 | $ | 877 |
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
($ in thousands)
|
||||||||
Proved properties
|
$ | 432,610 | $ | 426,320 | ||||
Less: accumulated depreciation, depletion, amortization and impairment
|
(396,997 | ) | (384,729 | ) | ||||
Proved properties, net
|
35,613 | 41,591 | ||||||
Unproved properties
|
||||||||
Unevaluated properties
|
179 | 179 | ||||||
Total unproved properties
|
179 | 179 | ||||||
Oil and gas properties, net
|
$ | 35,792 | $ | 41,770 |
Useful
|
March 31,
|
December 31,
|
||
life (years)
|
2016
|
2015
|
||
($ in thousands)
|
||||
Plants and pipeline systems
|
10
|
$ 4,599
|
$ 4,599
|
|
Buildings
|
10
|
179
|
179
|
|
Furniture and fixtures
|
1-7
|
667
|
667
|
|
Automobiles
|
3
|
158
|
158
|
|
Software and IT equipment
|
3-5
|
2,006
|
2,006
|
|
Leasehold improvements
|
5
|
1,425
|
1,425
|
|
9,034
|
9,034
|
|||
Less: accumulated depreciation and amortization
|
(7,501)
|
(7,357)
|
||
Other property and equipment, net
|
$ 1,533
|
$ 1,677
|
Period
|
Instrument Type
|
Average Daily Volumes
|
Average Fixed Price
|
|||
April 2016 - December 2016
|
Natural Gas Swap
|
3,000 MMBtu
|
$ 4.05
|
|||
April 2016 - June 2016
|
Crude Oil Swap
|
400 Bbl
|
$ 42.05
|
|||
July 2016 - December 2016
|
Crude Oil Three-Way-Collar
|
400 Bbl
|
$ 30 - 40 - 50
|
Estimated Fair Value
|
||||||
March 31,
|
December 31,
|
|||||
Instrument Type
|
Balance Sheet Classification
|
2016
|
2015
|
|||
Natural Gas/Crude Oil Swaps/Collars
|
Derivative asset - short-term
|
$ 1,632
|
$ 1,711
|
|||
Total derivative instruments
|
$ 1,632
|
$ 1,711
|
Recurring Fair Value Measures
|
||||||||||||
As of March 31, 2016
|
||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Natural Gas Swaps
|
$ | - | $ | 1,504 | $ | - | ||||||
Crude Oil Swaps
|
- | 78 | - | |||||||||
Crude Oil Three-Way Collars
|
- | 50 | - | |||||||||
Total
|
$ | - | $ | 1,632 | $ | - |
Recurring Fair Value Measures
|
||||||||||||
As of December 31, 2015
|
||||||||||||
($ in thousands)
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Natural Gas Swaps
|
$ | - | $ | 1,711 | $ | - | ||||||
Crude Oil Swaps
|
- | |||||||||||
Total
|
$ | - | $ | 1,711 | $ | - |
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
($ in thousands)
|
||||||||
Trade payables
|
$ | 293 | $ | 669 | ||||
Accrued expenses
|
4,506 | 4,047 | ||||||
Total accounts payable
|
$ | 4,799 | $ | 4,716 |
March 31,
|
March 31,
|
|||||||
2016
|
2015
|
|||||||
($ in thousands)
|
||||||||
Pre tax book income (loss)
|
$ | (13,223 | ) | $ | (3,399 | ) | ||
Income tax expense (benefit)
|
3 | (1,183 | ) | |||||
Effective tax rate
|
-0.08 | % | 34.79 | % | ||||
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
($ in thousands)
|
||||||||
Senior Credit Facility
|
$ | 4,000 | $ | - | ||||
Total debt
|
4,000 | - | ||||||
Less: current maturities
|
4,000 | - | ||||||
Total long-term debt
|
$ | - | $ | - |
March 31,
|
||||||||
2016
|
2015
|
|||||||
(In thousands)
|
||||||||
Cash paid for interest, net of amounts capitalized
|
$ | 43 | $ | 120 | ||||
Change in accrued capital expenditures
|
1,614 | (5,221 | ) |
ARTICLE I THE REINCORPORATION MERGER | A-2 | |
SECTION 1.01
|
The Reincorporation Merger
|
A-2
|
SECTION 1.02
|
Effect of the Reincorporation Merger
|
A-2
|
SECTION 1.03
|
Reincorporation Closing
|
A-2
|
SECTION 1.04
|
Effective Time of the Reincorporation Merger
|
A-2
|
SECTION 1.05
|
Certificate of Incorporation
|
A-2
|
SECTION 1.06
|
Bylaws
|
A-2
|
SECTION 1.07
|
Directors and Officers
|
A-2
|
SECTION 1.08
|
Conversion of Capital Stock
|
A-3
|
SECTION 1.09
|
Treatment of Outstanding Yuma Equity Awards
|
A-3
|
SECTION 1.10
|
Fractional Shares in Reincorporation Merger
|
A-4
|
ARTICLE II THE MERGER
|
A-4 | |
SECTION 2.01
|
Merger Subsidiary Merges into the Company
|
A-4
|
SECTION 2.02
|
The Closing; Effective Time of the Merger
|
A-4
|
SECTION 2.03
|
Effects of the Merger
|
A-5
|
SECTION 2.04
|
Governing Documents
|
A-5
|
SECTION 2.05
|
Directors and Officers
|
A-5
|
SECTION 2.06
|
Conversion of Shares
|
A-5
|
SECTION 2.07
|
Dissenting Shares
|
A-7
|
SECTION 2.08
|
Exchange of Certificates
|
A-7
|
SECTION 2.09
|
Tax Consequences
|
A-9
|
SECTION 2.10
|
Further Assurances
|
A-9
|
SECTION 2.11
|
Fractional Shares in Merger
|
A-9
|
SECTION 2.12
|
Lock-Up Agreement
|
A-10
|
ARTICLE III EQUITY AWARD PLANS
|
A-10 | |
SECTION 3.01
|
Yuma Delaware Equity Awards
|
A-10
|
SECTION 3.02
|
Company Equity Awards
|
A-10
|
SECTION 3.03
|
Company Stock Plan
|
A-11
|
SECTION 3.04
|
Fractional Amounts
|
A-11
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF YUMA, DELAWARE MERGER SUBSIDIARY AND MERGER SUBSIDIARY
|
A-11 | |
SECTION 4.01
|
Organization and Qualification
|
A-11
|
SECTION 4.02
|
Capitalization
|
A-12
|
SECTION 4.03
|
Authority; Non-Contravention; Approvals
|
A-13
|
SECTION 4.04
|
Reports and Financial Statements
|
A-14
|
SECTION 4.05
|
Proxy Statement/Prospectus
|
A-15
|
SECTION 4.06
|
No Violation of Law
|
A-15
|
SECTION 4.07
|
Material Contracts; Compliance with Contracts
|
A-15
|
SECTION 4.08
|
Brokers and Finders
|
A-17
|
SECTION 4.09
|
No Prior Activities of Delaware Merger Subsidiary and Merger Subsidiary
|
A-17
|
SECTION 4.10
|
Litigation; Government Investigations
|
A-17
|
SECTION 4.11
|
Taxes
|
A-17
|
SECTION 4.12
|
Employee Benefit Plans; ERISA; Employment Agreements
|
A-19
|
SECTION 4.13
|
Tax Matters
|
A-21
|
SECTION 4.14
|
Liabilities
|
A-23
|
SECTION 4.15
|
Absence of Certain Changes or Events
|
A-24
|
SECTION 4.16
|
Compliance
|
A-24
|
SECTION 4.17
|
Environmental Matters
|
A-24
|
SECTION 4.18
|
Insurance
|
A-24
|
SECTION 4.19
|
Affiliate Transactions
|
A-24
|
SECTION 4.20
|
Recommendation of Yuma Board of Directors; Opinion of Financial Advisor
|
A-25
|
SECTION 4.21
|
Certain Payments
|
A-25
|
SECTION 4.22
|
Title to Properties
|
A-25
|
SECTION 4.23
|
Intellectual Property
|
A-26
|
SECTION 4.24
|
Production and Reserves
|
A-26
|
SECTION 4.25
|
Hedging
|
A-26
|
SECTION 4.26
|
Preferential Purchase Rights
|
A-27
|
SECTION 4.27
|
Payment of Royalties
|
A-27
|
SECTION 4.28
|
Imbalances
|
A-27
|
SECTION 4.29
|
Current Commitments
|
A-27
|
SECTION 4.30
|
Delivery of Hydrocarbons
|
A-27
|
SECTION 4.31
|
Payout Status
|
A-27
|
SECTION 4.32
|
Mandatory Drilling Obligations or Pending Proposals
|
A-27
|
SECTION 4.33
|
Wells
|
A-27
|
SECTION 4.34
|
Suspense Accounts
|
A-28
|
SECTION 4.35
|
Gathering and Processing Contracts
|
A-28
|
SECTION 4.36
|
Extraordinary Lease Provisions
|
A-28
|
SECTION 4.37
|
No Other Representations or Warranties
|
A-28
|
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY
|
A-28 | |
SECTION 5.01
|
Organization and Qualification
|
A-28
|
SECTION 5.02
|
Capitalization
|
A-29
|
SECTION 5.03
|
Authority; Non-Contravention; Approvals
|
A-30
|
SECTION 5.04
|
Financial Statements
|
A-31
|
SECTION 5.05
|
Liabilities
|
A-32
|
SECTION 5.06
|
Absence of Certain Changes or Events
|
A-32
|
SECTION 5.07
|
Litigation; Government Investigations
|
A-32
|
SECTION 5.08
|
Proxy Statement/Prospectus
|
A-32
|
SECTION 5.09
|
No Violation of Law
|
A-32
|
SECTION 5.10
|
Material Contracts; Compliance with Contracts
|
A-33
|
SECTION 5.11
|
Taxes
|
A-34
|
SECTION 5.12
|
Employee Benefit Plans; ERISA; Employment Agreements
|
A-36
|
SECTION 5.13
|
Environmental Matters
|
A-38
|
SECTION 5.14
|
Title to Properties
|
A-38
|
SECTION 5.15
|
Intellectual Property
|
A-39
|
SECTION 5.16
|
Insurance
|
A-39
|
SECTION 5.17
|
Certain Payments
|
A-40
|
SECTION 5.18
|
Brokers and Finders
|
A-40
|
SECTION 5.19
|
Production and Reserves
|
A-40
|
SECTION 5.20
|
Tax Matters
|
A-40
|
SECTION 5.21
|
Hedging
|
A-42
|
SECTION 5.22
|
Preferential Purchase Rights
|
A-42
|
SECTION 5.23
|
Payment of Royalties
|
A-42
|
SECTION 5.24
|
Imbalances
|
A-43
|
SECTION 5.25
|
Current Commitments
|
A-43
|
SECTION 5.26
|
Delivery of Hydrocarbons
|
A-43
|
SECTION 5.27
|
Payout Status
|
A-43
|
SECTION 5.28
|
Mandatory Drilling Obligations or Pending Proposals
|
A-43
|
SECTION 5.29
|
Wells
|
A-43
|
SECTION 5.30
|
Suspense Accounts
|
A-43
|
SECTION 5.31
|
Gathering and Processing Contracts
|
A-43
|
SECTION 5.32
|
Extraordinary Lease Provisions
|
A-44
|
SECTION 5.33
|
No Other Representations or Warranties
|
A-44
|
ARTICLE VI COVENANTS
|
A-44 | |
SECTION 6.01
|
Conduct of Business by the Company Pending the Merger
|
A-44
|
SECTION 6.02
|
Conduct of Business by Yuma and Yuma Delaware Pending the Merger
|
A-46
|
SECTION 6.03
|
No Solicitation
|
A-48
|
SECTION 6.04
|
Access to Information; Confidentiality
|
A-48
|
SECTION 6.05
|
Notices of Certain Events
|
A-49
|
SECTION 6.06
|
Delaware Merger Subsidiary and Merger Subsidiary
|
A-49
|
SECTION 6.07
|
Company Stockholder Meeting or Written Consent
|
A-49
|
SECTION 6.08
|
Yuma Shareholders’ Meeting
|
A-50
|
SECTION 6.09
|
Proxy Statement/Prospectus; Registration Statement
|
A-51
|
SECTION 6.10
|
Public Announcements
|
A-51
|
SECTION 6.11
|
Expenses and Fees
|
A-51
|
SECTION 6.12
|
Agreement to Cooperate
|
A-51
|
SECTION 6.13
|
Exemption From Liability Under Section 16(b)
|
A-52
|
SECTION 6.14
|
Certain Tax Matters
|
A-52
|
SECTION 6.15
|
Company Financial Statements
|
A-53
|
SECTION 6.16
|
Yuma Consolidated Financial Statements
|
A-53
|
SECTION 6.17
|
Directors’ and Officers’ Indemnification and Insurance
|
A-53
|
SECTION 6.18
|
Assumption of Registration Statements
|
A-54
|
SECTION 6.19
|
Subsequent Filings
|
A-55
|
SECTION 6.20
|
Stockholder Litigation
|
A-55
|
SECTION 6.21
|
Company Employee Matters
|
A-55
|
SECTION 6.22
|
Yuma Companies Employee Matters
|
A-56
|
SECTION 6.23
|
Company Management Agreement
|
A-56
|
SECTION 6.24
|
Credit Facility
|
A-57
|
SECTION 6.25
|
Advisors and Consultants
|
A-57
|
SECTION 6.26
|
Registration Rights Agreement
|
A-57
|
SECTION 6.27
|
Certificate of Incorporation of Yuma Delaware
|
A-57
|
SECTION 6.28
|
Additional Voting Agreements
|
A-57
|
ARTICLE VII CONDITIONS TO THE REINCORPORATION MERGER
|
A-57 | |
SECTION 7.01
|
Conditions to the Reincorporation Merger
|
A-57
|
SECTION 7.02
|
Additional Conditions to Obligations of Yuma and Delaware Merger Subsidiary
|
A-58
|
ARTICLE VIII CONDITIONS TO THE MERGER
|
A-58 | |
SECTION 8.01
|
Conditions to the Obligations of Each Party
|
A-58
|
SECTION 8.02
|
Conditions to Obligation of the Company to Effect the Merger
|
A-59
|
SECTION 8.03
|
Conditions to Obligations of Yuma Delaware and Merger Subsidiary to Effect the Merger
|
A-60
|
ARTICLE IX TERMINATION
|
A-61 | |
SECTION 9.01
|
Termination
|
A-61
|
SECTION 9.02
|
Termination Fee
|
A-62
|
SECTION 9.03
|
Effect of Termination
|
A-63
|
ARTICLE X MISCELLANEOUS
|
A-63 | |
SECTION 10.01
|
Non-Survival of Representations and Warranties
|
A-63
|
SECTION 10.02
|
Notices
|
A-63
|
SECTION 10.03
|
Interpretation
|
A-64
|
SECTION 10.04
|
Assignments and Successors
|
A-64
|
SECTION 10.05
|
Governing Law
|
A-64
|
SECTION 10.06
|
Waiver of Jury Trial
|
A-65
|
SECTION 10.07
|
Exclusive Jurisdiction; Venue
|
A-65
|
SECTION 10.08
|
No Third-Party Rights
|
A-65
|
SECTION 10.09
|
Counterparts
|
A-65
|
SECTION 10.10
|
Amendments; No Waivers
|
A-65
|
SECTION 10.11
|
Entire Agreement
|
A-65
|
SECTION 10.12
|
Severability
|
A-65
|
SECTION 10.13
|
Specific Performance
|
A-66
|
SECTION 10.14
|
Definitions
|
A-66
|
Exhibit A | Form of Company Voting Agreement | |
Exhibit B | Form of Yuma Voting Agreement | |
Exhibit C | Form of Certificate of Designation | |
Exhibit D | Form of Reincorporation Certificate of Merger | |
Exhibit E | Form of Certificate of Merger | |
Exhibit F | Form of Lock-Up Agreement | |
Exhibit G | Directors of Yuma Delaware | |
Exhibit H | Form of Registration Rights Agreement | |
Exhibit I | Example Calculation of Per Share Consideration |
DAVIS PETROLEUM ACQUISITION CORP.
|
|
By: /s/ Michael Reddin
|
|
Name: Michael Reddin
|
|
Title: Chairman, President and Chief Executive Officer
|
|
YUMA ENERGY, INC.
|
|
By: /s/ Sam L. Banks
|
|
Name: Sam L. Banks
|
|
Title: Chairman, President and Chief Executive Officer
|
|
YUMA DELAWARE MERGER SUBSIDIARY, INC.
|
|
By: /s/ Sam L. Banks
|
|
Name: Sam L. Banks
|
|
Title: Chairman, President and Chief Executive Officer
|
|
YUMA MERGER SUBSIDIARY, INC.
|
|
By: /s/ Sam L. Banks
|
|
Name: Sam L. Banks
|
|
Title: Chairman, President and Chief Executive Officer
|
|
Name
|
Jurisdiction of Incorporation
|
Entity Type
|
||
Yuma Merger Subsidiary, Inc.
|
Delaware
|
Corporation
|
||
Davis Petroleum Acquisition Corp.
|
Delaware
|
Corporation
|
|
Yuma Delaware Common Stock issued or issuable to settle vested Yuma Delaware RSU awards at Closing = 8,028
3
|
|
TOTAL Yuma Delaware Vested Equity Awards = 89,733
|
|
Yuma Delaware Common Stock issued and outstanding in respect of Yuma Series A Preferred Stock = 1,941,086
|
Name and Address of Stockholder
|
Number of Shares of Yuma
Common Stock
Beneficially Owned
|
Number of Shares of Yuma Series A Preferred
Stock Beneficially
Owned
|
Number of shares or units of stock that have not vested
|
|||||||||
Sam L. Banks
1177 West Loop South, Suite 1825
Houston, Texas 77027
|
41,153,716 | -0- | 282,487 |
YUMA ENERGY, INC.,
a California corporation
|
|||||
By:
|
/s/ Sam L. Banks
|
||||
Name:
|
Sam L. Banks
|
||||
Title:
|
Chairman and Chief Executive Officer
|
||||
YUMA DELAWARE MERGER SUBSIDIARY, INC.
a Delaware corporation
|
||||
By:
|
/s/ Sam L. Banks
|
|||
Name:
|
Sam L. Banks
|
|||
Title:
|
Chairman and Chief Executive Officer
|
|
STOCKHOLDER:
|
||
RMCP PIV DPC, LP
|
|||
By: RMCP DPC LLC, its general partner
|
|||
By:Red Mountain Capital Partners, its managing member
|
|||
By:
|
/s/ Willem Mesdag
|
||
Name:
|
Willem Mesdag
|
||
Title:
|
Managing Partner
|
STOCKHOLDER:
|
|||
RMCP PIV DPC II, LP
|
|||
By: RMP DPC II LLC, its general partner
|
|||
By:Red Mountain Capital Partners, its managing member
|
|||
By:
|
/s/ Willem Mesdag
|
||
Name:
|
Willem Mesdag
|
||
Title:
|
Managing Partner
|
STOCKHOLDER:
|
|||
DAVIS PETROLEUM INVESTMENTS, LLC
|
|||
By:Evercore Capital Partners II, LP, its managing member
|
|||
By:Evercore Partners II L.L.C., its general partner
|
|||
By:
|
/s/ Neeraj Mital
|
||
Name:
|
Neeraj Mital
|
||
Title:
|
Authorized Person
|
STOCKHOLDER:
|
|||
SANKATY DAVIS, LLC
|
|||
By:
|
/s/ Stuart E. Davies
|
||
Name:
|
Stuart E. Davies
|
||
Title:
|
Managing Director
|
STOCKHOLDER:
|
|||
By:
|
/s/ Michael Reddin
|
||
Name:
|
Michael Reddin
|
STOCKHOLDER:
|
|||
By:
|
/s/ Thomas E. Hardisty
|
||
Name:
|
Thomas E. Hardisty
|
STOCKHOLDER:
|
|||
By:
|
/s/ Gregory Schneider
|
||
Name:
|
Gregory Schneider
|
STOCKHOLDER:
|
|||
By:
|
/s/ Susan Davis
|
||
Name:
|
Susan Davis
|
STOCKHOLDER:
|
|||
By:
|
/s/ Steven Enger
|
||
Name:
|
Steven Enger
|
Name and Address of
Stockholder
|
Number of Davis
Restricted Shares
Beneficially Owned
|
Number of Shares of Davis
Common Stock
Beneficially Owned
|
Number of Shares of Davis Series A Preferred
Stock Beneficially
Owned
|
|||||||||
RMCP PIV DPC, LP
|
50,841,316.275
|
|||||||||||
c/o Red Mountain Capital Partners LLC
|
||||||||||||
10100 Santa Monica Blvd., Suite 3300
|
||||||||||||
Los Angeles, California 90067
|
||||||||||||
Attention: Willem Mesdag
|
||||||||||||
RMCP PIV DPC II, LP
|
33,160,486
|
|||||||||||
c/o Red Mountain Capital Partners LLC
|
||||||||||||
10100 Santa Monica Blvd., Suite 3300
|
||||||||||||
Los Angeles, California 90067
|
||||||||||||
Attention: Willem Mesdag
|
||||||||||||
Davis Petroleum Investments, LLC
|
40,822,093.008
|
|||||||||||
c/o Evercore Partners
|
||||||||||||
55 East 52
nd
Street
|
||||||||||||
New York, New York 10055
|
||||||||||||
Attention: Neeraj Mital
|
||||||||||||
Sankaty Davis, LLC
|
32,362,613.275
|
|||||||||||
c/o Sankaty Advisors LLC
|
||||||||||||
200 Clarendon St.
|
||||||||||||
Boston, Massachusetts 02116
|
||||||||||||
Attention: Stuart Davies
|
||||||||||||
Michael Reddin
|
4,461,860
|
4,927,250.000(1)
|
||||||||||
1330 Post Oak Blvd.
|
||||||||||||
Suite 600
|
||||||||||||
Houston, Texas 77056
|
||||||||||||
Thomas E. Hardisty
|
1,448,744
|
300,000.000(2)
|
60,793
|
|||||||||
1330 Post Oak Blvd.
|
||||||||||||
Suite 600
|
||||||||||||
Houston, Texas 77056
|
||||||||||||
Gregory Schneider
|
434,166
|
440,702.000(3)
|
||||||||||
1330 Post Oak Blvd.
|
||||||||||||
Suite 600
|
||||||||||||
Houston, Texas 77056
|
||||||||||||
Susan Davis
|
200,000
|
|||||||||||
1330 Post Oak Blvd.
|
||||||||||||
Suite 600
|
||||||||||||
Houston, Texas 77056
|
||||||||||||
Steven Enger
|
200,000
|
|||||||||||
1330 Post Oak Blvd.
|
||||||||||||
Suite 600
|
||||||||||||
Houston, Texas 77056
|
(1)
|
Includes options to purchase 4,750,000 shares of Davis Common Stock, which options have not been exercised as of the date hereof.
|
(2)
|
Includes options to purchase 300,000 shares of Davis Common Stock, which options have not been exercised as of the date hereof.
|
(3)
|
Includes options to purchase 440,702 shares of Davis Common Stock, which options have not been exercised as of the date hereof.
|
Term
|
Section
|
|
Advice
|
2.5
|
|
Agreement
|
Introductory Paragraph
|
|
Common Stock
|
Recitals
|
|
Company
|
Introductory Paragraph
|
|
Company Notice
|
2.1(c)
|
|
Company Underwritten Offering
|
2.3
|
|
Demand Request
|
2.1(c)
|
|
First Reserve
|
2.1(d)
|
|
Lock-Up Period
|
2.3
|
|
Material Adverse Effect
|
2.2(b)
|
|
Merger Agreement
|
Recitals
|
|
Participating Majority
|
2.1(d)
|
|
Records
|
2.4(l)
|
|
Requesting Holder
|
2.1(c)
|
|
Seller Affiliates
|
2.7
|
|
Suspension Period
|
2.1(f)
|
|
Suspension Notice
|
2.5
|
|
Underwritten Shelf Takedown
|
2.1(b)
|
YUMA ENERGY, INC.
|
|||
By:
|
/s/ | ||
Name | |||
Title | |||
FOR ENTITY INVESTORS
:
|
FOR INDIVIDUAL INVESTORS
:
|
|||
Signature:
|
||||
[Name of Entity]
|
Name:
|
|||
By:
|
/s/
|
|||
Name:
|
||||
Title:
|
||||
Taxpayer ID #:
|
ADDRESS FOR NOTICE:
|
||
Attention:
|
||
Tel:
|
||
Fax:
|
||
E-mail:
|
With a copy to:
|
||
Attention:
|
||
Tel:
|
||
Fax:
|
||
E-mail:
|
(i)
|
reviewed certain publicly available and other business and financial information provided by Yuma that we believe to be relevant to our inquiry;
|
(ii)
|
reviewed certain internal financial statements and other financial and operating data concerning Yuma and Target Company, respectively;
|
(iii)
|
reviewed a reserve engineering report, from Target Company, prepared by Netherland Sewell & Associates, Inc., dated January 6, 2016 (the “Reserve Report”);
|
(iv)
|
discussed the past and current operations, financial condition and prospects of each of Target Company and Yuma with management of Yuma, including the assessments of the management of Yuma as to the liquidity needs of, and financing alternatives and other capital resources available to, Yuma;
|
(v)
|
participated in certain discussions with management of Yuma regarding their assessment of the strategic rationale for, and the potential benefits of, the Transaction;
|
(vi)
|
reviewed the reported prices and trading activity for the Yuma Common Stock and the Yuma Preferred Stock;
|
(vii)
|
compared selected market valuation metrics of certain publicly-traded companies we deemed relevant with those same metrics implied by the Transaction;
|
(viii)
|
compared the financial performance of Yuma and Target Company, respectively, the prices and trading activity of Yuma Common Stock with that of certain publicly traded companies we deemed relevant, and other trading data for public companies which we deemed comparable to Target Company;
|
(ix)
|
compared the financial terms of the Transaction to financial terms, to the extent publicly available, of certain other acquisition transactions we deemed relevant;
|
(x)
|
participated in certain discussions with management of Yuma, and with representatives of Yuma’s Board of Directors and its legal and professional advisors; and
|
(xi)
|
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.
|
(i)
|
reviewed certain publicly available and other business and financial information provided by Yuma that we believe to be relevant to our inquiry;
|
(ii)
|
reviewed certain internal financial statements and other financial and operating data concerning Yuma and Davis, respectively;
|
(iii)
|
reviewed a reserve engineering report, from Davis, prepared by Netherland Sewell & Associates, Inc., dated January 6, 2016 (the “Target Reserve Report”), and a reserve engineering report, from Yuma, prepared by Netherland Sewell & Associates, dated January 22, 2016 (together with the Target Reserve Report, the “Reserve Reports”);
|
(iv)
|
discussed the past and current operations, financial condition and prospects of each of Davis and Yuma with management of Yuma, including the assessments of the management of Yuma as to the liquidity needs of, and financing alternatives and other capital resources available to, Yuma;
|
(v)
|
participated in certain discussions with management of Yuma regarding their assessment of the strategic rationale for, and the potential benefits of, the Transaction;
|
(vi)
|
reviewed the reported prices and trading activity for the Yuma Common Stock and the Yuma Preferred Stock;
|
(vii)
|
compared selected market valuation metrics of certain publicly-traded companies we deemed relevant with those same metrics implied by the Transaction;
|
(viii)
|
compared the financial performance of Yuma and Davis, respectively, the prices and trading activity of Yuma Common Stock with that of certain publicly traded companies we deemed relevant, and other trading data for public companies which we deemed comparable to Davis and Yuma;
|
(ix)
|
compared the financial terms of the Transaction to financial terms, to the extent publicly available, of certain other acquisition transactions we deemed relevant;
|
(x)
|
participated in certain discussions with management of Yuma, and with representatives of Yuma’s Board of Directors and its legal and professional advisors; and
|
(xi)
|
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.
|
|
Page
|
|||||
ARTICLE I - CORPORATE OFFICES
|
|
I-1
|
|
|||
1.1
|
REGISTERED OFFICE
|
|
I-1
|
|
||
1.2
|
OTHER OFFICES
|
|
I-1
|
|
||
ARTICLE II - MEETINGS OF STOCKHOLDERS
|
|
I-1
|
|
|||
2.1
|
PLACE OF MEETINGS
|
|
I-1
|
|
||
2.2
|
ANNUAL MEETING
|
|
I-1
|
|
||
2.3
|
SPECIAL MEETING
|
|
I-1
|
|
||
2.4
|
ADVANCE NOTICE PROCEDURES
|
|
I-2
|
|
||
2.5
|
NOTICE OF STOCKHOLDERS’ MEETINGS
|
|
I-5
|
|
||
2.6
|
QUORUM
|
|
I-5
|
|
||
2.7
|
ADJOURNED MEETING; NOTICE
|
|
I-5
|
|
||
2.8
|
CONDUCT OF BUSINESS
|
|
I-6
|
|
||
2.9
|
VOTING
|
|
I-6
|
|
||
2.10
|
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
|
I-6
|
|
||
2.11
|
RECORD DATES
|
|
I-7
|
|
||
2.12
|
PROXIES
|
|
I-7
|
|
||
2.13
|
LIST OF STOCKHOLDERS ENTITLED TO VOTE
|
|
I-7
|
|
||
2.14
|
INSPECTORS OF ELECTION
|
|
I-8
|
|
||
ARTICLE III - DIRECTORS
|
|
I-8
|
|
|||
3.1
|
POWERS
|
|
I-8
|
|
||
3.2
|
NUMBER OF DIRECTORS
|
|
I-8
|
|
||
3.3
|
ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
|
|
I-9
|
|
||
3.4
|
RESIGNATION AND VACANCIES
|
|
I-9
|
|
||
3.5
|
PLACE OF MEETINGS; MEETINGS BY TELEPHONE
|
|
I-9
|
|
||
3.6
|
REGULAR MEETINGS
|
|
I-10
|
|
||
3.7
|
SPECIAL MEETINGS; NOTICE
|
|
I-10
|
|
||
3.8
|
QUORUM; VOTING
|
|
I-10
|
|
||
3.9
|
BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
|
I-11
|
|
||
3.10
|
FEES AND COMPENSATION OF DIRECTORS
|
|
I-11
|
|
||
3.11
|
REMOVAL OF DIRECTORS
|
|
I-11
|
|
||
ARTICLE IV - COMMITTEES
|
|
I-11
|
||||
4.1
|
COMMITTEES OF DIRECTORS
|
|
I-11
|
|
||
4.2
|
COMMITTEE MINUTES
|
|
I-11
|
|
||
4.3
|
MEETINGS AND ACTION OF COMMITTEES
|
|
I-11
|
|
||
4.4
|
SUBCOMMITTEES
|
|
I-12
|
|
||
ARTICLE V - OFFICERS
|
|
I-12
|
|
|||
5.1
|
OFFICERS
|
|
I-12
|
|
||
5.2
|
APPOINTMENT OF OFFICERS
|
|
I-12
|
|
||
5.3
|
SUBORDINATE OFFICERS
|
|
I-12
|
|
||
5.4
|
REMOVAL AND RESIGNATION OF OFFICERS
|
|
I-13
|
|
|
Page
|
|||||
5.5
|
VACANCIES IN OFFICES
|
|
I-13
|
|
||
5.6
|
CHAIRPERSON OF THE BOARD
|
I-13
|
||||
5.7
|
CHIEF EXECUTIVE OFFICER
|
I-13
|
||||
5.8
|
PRESIDENTS
|
I-13
|
||||
5.9
|
VICE PRESIDENTS
|
I-14
|
||||
5.10
|
SECRETARY
|
I-14
|
||||
5.11
|
CHIEF FINANCIAL OFFICER
|
I-14
|
||||
5.12
|
TREASURER
|
I-15
|
||||
5.13
|
ASSISTANT SECRETARY
|
I-15
|
||||
5.14
|
ASSISTANT TREASURER
|
I-15
|
||||
5.15
|
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
|
|
I-15
|
|
||
5.16
|
AUTHORITY AND DUTIES OF OFFICERS
|
|
I-15
|
|
||
ARTICLE VI - STOCK
|
|
I-15
|
|
|||
6.1
|
STOCK CERTIFICATES; PARTLY PAID SHARES
|
|
I-15
|
|
||
6.2
|
SPECIAL DESIGNATION ON CERTIFICATES
|
|
I-16
|
|
||
6.3
|
LOST CERTIFICATES
|
|
I-16
|
|
||
6.4
|
DIVIDENDS
|
|
I-16
|
|
||
6.5
|
TRANSFER OF STOCK
|
|
I-17
|
|
||
6.6
|
STOCK TRANSFER AGREEMENTS
|
|
I-17
|
|
||
6.7
|
REGISTERED STOCKHOLDERS
|
|
I-17
|
|
||
ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER
|
|
I-17
|
|
|||
7.1
|
NOTICE OF STOCKHOLDERS’ MEETINGS
|
|
I-17
|
|
||
7.2
|
NOTICE BY ELECTRONIC TRANSMISSION
|
|
I-17
|
|
||
7.3
|
NOTICE TO STOCKHOLDERS SHARING AN ADDRESS
|
|
I-18
|
|
||
7.4
|
NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
|
|
I-18
|
|
||
7.5
|
WAIVER OF NOTICE
|
|
I-18
|
|
||
ARTICLE VIII - FORUM FOR ADJUDICATION OF DISPUTES
|
|
I-19
|
|
|||
ARTICLE IX - INDEMNIFICATION
|
|
I-19
|
|
|||
9.1
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS
|
|
I-19
|
|
||
9.2
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
|
|
I-19
|
|
||
9.3
|
SUCCESSFUL DEFENSE
|
|
I-19
|
|
||
9.4
|
INDEMNIFICATION OF OTHERS
|
|
I-20
|
|
||
9.5
|
ADVANCE PAYMENT OF EXPENSES
|
|
I-20
|
|
||
9.6
|
LIMITATION ON INDEMNIFICATION
|
|
I-20
|
|
||
9.7
|
DETERMINATION; CLAIM
|
|
I-21
|
|
||
9.8
|
NON-EXCLUSIVITY OF RIGHTS
|
|
I-21
|
|
||
9.9
|
INSURANCE
|
|
I-21
|
|
||
9.10
|
SURVIVAL
|
|
I-22
|
|
||
9.11
|
EFFECT OF REPEAL OR MODIFICATION
|
|
I-22
|
|
||
9.12
|
CERTAIN DEFINITIONS
|
|
I-22
|
|
||
ARTICLE X - GENERAL MATTERS
|
|
I-22
|
|
|||
10.1
|
EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
|
|
I-22
|
|
||
10.2
|
FISCAL YEAR
|
|
I-22
|
|
||
10.3
|
SEAL
|
|
I-23
|
|
||
10.4
|
CONSTRUCTION; DEFINITIONS
|
|
I-23
|
|
||
ARTICLE XI - AMENDMENTS
|
|
I-23
|
|
9.2
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
|
Secretary
|
(ii)
|
The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as specified above in Section 3(c)(i) to reflect the approximate fair market value thereof, as determined in good faith by the Board of Directors.
|
1.
|
Section 2.10 of the Plan is hereby deleted in its entirety and replaced with the following:
|
2.
|
The first sentence of Section 3.1 of the Plan is hereby deleted in its entirety and replaced with the following:
|
3.
|
Section 4.1(a) of the Plan be deleted in their entirety and replaced with the following:
|
4.
|
Section 4.1(b) of the Plan be deleted in their entirety and replaced with the following:
|
|
●
|
any breach of their duty of loyalty to Yuma Delaware or its stockholders;
|
|
●
|
any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
|
|
●
|
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or
|
|
●
|
any transaction from which they derived an improper personal benefit.
|
Exhibit No
.
|
Description
|
|
2.1
|
Agreement and Plan of Merger and Reorganization dated as of February 10, 2016, by and among Yuma Energy, Inc., Yuma Delaware Merger Subsidiary, Inc., Yuma Merger Subsidiary, Inc., and Davis Petroleum Acquisition Corp. (included as Annex A to the proxy statement/prospectus in Part I of this Registration Statement and incorporated herein by reference).
|
|
3.1
|
Restated Articles of Incorporation of Yuma Energy, Inc. dated September 10, 2014 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on September 16, 2014).
|
|
3.1(a)
|
Certificate of Amendment to the Restated Articles of Incorporation of Yuma Energy, Inc. dated June 9, 2015 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on June 15, 2015).
|
|
3.2
|
Certificate of Determination of Rights, Preferences, Privileges and Restrictions of 9.25% Series A Cumulative Redeemable Preferred Stock of Yuma Energy, Inc. (incorporated by reference to Exhibit 3.2 to Form 8-A filed by Yuma Energy, Inc. with the SEC on October 20, 2014).
|
|
3.2(a)
|
Form of Certificate of Amendment to the Certificate of Determination of Rights, Preferences, Privileges and Restrictions of 9.25% Series A Cumulative Redeemable Preferred Stock of Yuma Energy, Inc. (included as Annex L to the proxy statement/prospectus forming part of this Registration Statement and incorporated herein by reference).
|
|
3.3
|
Amended and Restated Bylaws of Yuma Energy, Inc. (incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-3 filed by Yuma Energy, Inc. with the SEC on November 5, 2013).
|
|
3.3(a)
|
First Amendment to the Amended and Restated Bylaws of Yuma Energy, Inc. dated June 9, 2015 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on June 15, 2015).
|
|
3.4*
|
Certificate of Incorporation of Yuma Delaware Merger Subsidiary, Inc. dated February 10, 2016.
|
|
3.5*
|
Bylaws of Yuma Delaware Merger Subsidiary, Inc. dated February 10, 2016.
|
|
3.6
|
Form of Amended and Restated Certificate of Incorporation of Yuma Delaware Merger Subsidiary, Inc. (included as Annex H to the proxy statement/prospectus forming part of this Registration Statement and incorporated herein by reference).
|
|
3.7
|
Form of Amended and Restated Bylaws of Yuma Delaware Merger Subsidiary, Inc. (included as Annex I to the proxy statement/prospectus forming part of this Registration Statement and incorporated herein by reference).
|
|
3.8
|
Form of Certificate of Amendment to the Certificate of Incorporation of Yuma Delaware Merger Subsidiary, Inc. to change its name to “Yuma Energy, Inc.” (included as Annex J to the proxy statement/prospectus forming part of this Registration Statement and incorporated herein by reference).
|
|
5.1*
|
Opinion of Jones & Keller, P.C. regarding the legality of the shares of the Registrant’s common stock to be registered under this Registration Statement.
|
|
8.1*
|
Tax Opinion of Jones & Keller, P.C.
|
|
8.2*
|
Tax Opinion of Porter Hedges LLP.
|
|
10.1
|
Voting Agreement dated as of February 10, 2016, between Davis Petroleum Acquisition Corp. and Sam L. Banks (included as Annex B to the proxy statement/prospectus in Part I of this Registration Statement and incorporated herein by reference).
|
|
10.2
|
Voting Agreement dated as of February 10, 2016, among Yuma Energy, Inc. and the Persons listed on Schedule A thereto (included as Annex C to the proxy statement/prospectus in Part I of this Registration Statement and incorporated herein by reference).
|
|
10.3
|
Form of Lock-Up Agreement (included as Annex D to the proxy statement/prospectus in Part I of this Registration Statement and incorporated herein by reference).
|
|
10.4
|
Form of Registration Rights Agreement (included as Annex E to the proxy statement/prospectus in Part I of this Registration Statement and incorporated herein by reference).
|
|
10.5
|
Credit Agreement dated as of August 11, 2011, among Yuma Exploration and Production Company, Inc., as Borrower, Amegy Bank National Association, as Administrative Agent, and each of the lenders from time to time party thereto (incorporated by reference to Exhibit 10.3 to the Registration Statement on Form S-4 filed by Yuma Energy, Inc. with the SEC on August 4, 2014).
|
10.5(a)
|
First Amendment and Limited Waiver to Credit Agreement and Assignment effective as of September 21, 2012, among Yuma Exploration and Production Company, Inc., as Borrower, Amegy Bank National Association, as Administrative Agent and Assignor, Union Bank, N.A., as an Assignee and successor Administrative Agent and successor Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-4 filed by Yuma Energy, Inc. with the SEC on August 4, 2014).
|
|
10.5(b)
|
Second Amendment to Credit Agreement and Assignment effective as of February 13, 2013, among Yuma Exploration and Production Company, Inc., as Borrower, Union Bank, N.A., as Administrative Agent and Assignor, Société Générale, as an Assignee and successor Administrative Agent and successor Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-4 filed by Yuma Energy, Inc. with the SEC on August 4, 2014).
|
|
10.5(c)
|
Third Amendment to Credit Agreement and Assignment effective as of May 20, 2013, among Yuma Exploration and Production Company, Inc., as Borrower, Union Bank, N.A., as Assignor, Société Générale, as an Assignor and Administrative Agent and Issuing Bank, OneWest Bank, FSB, as Assignee, and each of the lenders party thereto (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-4 filed by Yuma Energy, Inc. with the SEC on August 4, 2014).
|
|
10.5(d)
|
Fourth Amendment to Credit Agreement effective as of April 22, 2014, among Yuma Exploration and Production Company, Inc., as Borrower, Société Générale, as Administrative Agent and Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.7 to the Registration Statement on Form S-4 filed by Yuma Energy, Inc. with the SEC on August 4, 2014).
|
|
10.5(e)
|
Fifth Amendment to Credit Agreement effective as of October 14, 2014, among Yuma Exploration and Production Company, Inc., as Borrower, Société Générale, as Administrative Agent and Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on October 14, 2014).
|
|
10.5(f)
|
Sixth Amendment to Credit Agreement effective as of January 23, 2015, among Yuma Exploration and Production Company, Inc., as Borrower, Société Générale, as Administrative Agent and Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on January 29, 2015).
|
|
10.5(g)
|
Seventh Amendment to Credit Agreement effective as of April 7, 2015, among Yuma Exploration and Production Company, Inc., as Borrower, Société Générale, as Administrative Agent and Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on April 22, 2015).
|
|
10.5(h)
|
Eighth Amendment to Credit Agreement effective as of July 27, 2015, among Yuma Exploration and Production Company, Inc., as Borrower, Société Générale, as Administrative Agent and Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on August 12, 2015).
|
|
10.5(i)
|
Waiver, Borrowing Base Redetermination and Ninth Amendment to Credit Agreement effective as of December 30, 2015, among Yuma Exploration and Production Company, Inc., as Borrower, Société Générale, as Administrative Agent and Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on January 5, 2016).
|
|
10.5(j)
|
Waiver and Tenth Amendment to Credit Agreement dated as of June 6, 2016 and effective as of May 31, 2016, among Yuma Exploration and Production Company, Inc., as Borrower, Société Générale, as Administrative Agent and Issuing Bank, and each of the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on June 6, 2016).
|
|
10.6
|
Employment Agreement dated October 1, 2012, between Yuma Energy, Inc. and Sam L. Banks (incorporated by reference to Exhibit 10.8 to the Registration Statement on Form S-4 filed by Yuma Energy, Inc. with the SEC on August 4, 2014).
|
|
10.7 **
|
Employment Agreement dated October 1, 2012, between Yuma Energy, Inc. and James J. Jacobs.
|
|
10.8
|
Employment Agreement dated June 15, 2014, between Yuma Energy, Inc. and Paul D. McKinney (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q filed by Yuma Energy, Inc. with the SEC on November 14, 2014).
|
10.9
|
Amendment No. 1 dated March 12, 2015 to the Employment Agreement between Yuma Energy, Inc. and Paul D. McKinney (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Yuma Energy, Inc. with the SEC on March 17, 2015).
|
|
23.1*
|
Consent of Grant Thornton LLP.
|
|
23.2*
|
Consent of PricewaterhouseCoopers LLP.
|
|
23.3*
|
Consent of Jones & Keller, P.C. (included in opinion filed as Exhibit 5.1 and Exhibit 8.1).
|
|
23.4*
|
Consent of Netherland, Sewell & Associates, Inc.
|
|
23.5*
|
Consent of Porter Hedges LLP (included in opinion filed as Exhibit 8.2).
|
|
24.1 **
|
Powers of Attorney (included on the signature page
of the Form S-4 filed on June 17, 2016
).
|
|
99.1*
|
Form of Proxy Card for Holders of Yuma Energy, Inc. Common Stock.
|
|
99.2*
|
Form of Proxy Card for Holders of Yuma Energy, Inc. Series A Preferred Stock.
|
|
99.3 **
|
Form of Proxy Card for Holders of Davis Petroleum Acquisition Corp. Common Stock and Preferred Stock.
|
|
99.4
|
Opinion of ROTH Capital Partners, LLC (included as Annex F to the proxy statement/prospectus forming part of this Registration Statement and incorporated herein by reference).
|
|
99.5*
|
Consent of ROTH Capital Partners, LLC.
|
|
99.6
|
Report of Netherland, Sewell & Associates, Inc. dated February 19, 2016 (filed as Exhibit 99.1 to the Annual Report on Form 10-K filed by Yuma Energy, Inc. with the SEC on March 30, 2016).
|
|
99.7*
|
Report of Netherland, Sewell & Associates, Inc. dated July 20, 2016.
|
|
99.8 **
|
Consent of Sam L. Banks, as Director Nominee.
|
|
99.9 **
|
Consent of James W. Christmas, as Director Nominee.
|
|
99.10 **
|
Consent of Stuart E. Davies, as Director Nominee.
|
|
99.11 **
|
Consent of Frank A. Lodzinski, as Director Nominee.
|
|
99.12 **
|
Consent of Neeraj Mital, as Director Nominee.
|
|
99.13 **
|
Consent of Richard K. Stoneburner, as Director Nominee.
|
|
99.14 **
|
Consent of J. Christopher Teets, as Director Nominee.
|
YUMA DELAWARE MERGER SUBSIDIARY, INC.
|
|||
Date
|
By:
|
/s/ Sam L. Banks | |
Sam L. Banks | |||
Chairman of the Board, President and
Chief Executive Officer
|
|||
Signature
|
Title
|
||
/s/ Sam L. Banks
|
Chairman of the Board, Director, President and Chief Executive Officer (Principal Executive Officer)
|
||
Sam L. Banks
|
|||
/s/ James J. Jacobs
|
Chief Financial Officer, Treasurer and Corporate Secretary (Principal Financial Officer and Principal Accounting Officer)
|
||
James J. Jacobs
|
|||
*
|
Director
|
||
James W. Christmas
|
|||
* |
Director
|
||
Frank A. Lodzinski | |||
* |
Director
|
||
Ben T. Morris | |||
* |
Director
|
||
Richard K. Stoneburner | |||
*By: |
/s/ Sam L. Banks
|
||
Sam L. Banks, Attorney-in-Fact
|
|||
/s/ Adam J. Fogoros | |||
Adam J. Fogoros, Sole Incorporator |
|
Page
|
|||||
ARTICLE I - CORPORATE OFFICES
|
|
1
|
|
|||
1.1
|
REGISTERED OFFICE
|
|
1
|
|
||
1.2
|
OTHER OFFICES
|
|
1
|
|
||
ARTICLE II - MEETINGS OF STOCKHOLDERS
|
|
1
|
|
|||
2.1
|
PLACE OF MEETINGS
|
|
1
|
|
||
2.2
|
ANNUAL MEETING
|
|
1
|
|
||
2.3
|
SPECIAL MEETING
|
|
1
|
|
||
2.4
|
ADVANCE NOTICE PROCEDURES
|
|
2
|
|
||
2.5
|
NOTICE OF STOCKHOLDERS’ MEETINGS
|
|
5
|
|
||
2.6
|
QUORUM
|
|
5
|
|
||
2.7
|
ADJOURNED MEETING; NOTICE
|
|
5
|
|
||
2.8
|
CONDUCT OF BUSINESS
|
|
6
|
|
||
2.9
|
VOTING
|
|
6
|
|
||
2.10
|
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
|
6
|
|
||
2.11
|
RECORD DATES
|
|
7
|
|
||
2.12
|
PROXIES
|
|
7
|
|
||
2.13
|
LIST OF STOCKHOLDERS ENTITLED TO VOTE
|
|
7
|
|
||
2.14
|
INSPECTORS OF ELECTION
|
|
8
|
|
||
ARTICLE III - DIRECTORS
|
|
8
|
|
|||
3.1
|
POWERS
|
|
8
|
|
||
3.2
|
NUMBER OF DIRECTORS
|
|
8
|
|
||
3.3
|
ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
|
|
9
|
|
||
3.4
|
RESIGNATION AND VACANCIES
|
|
9
|
|
||
3.5
|
PLACE OF MEETINGS; MEETINGS BY TELEPHONE
|
|
9
|
|
||
3.6
|
REGULAR MEETINGS
|
|
10
|
|
||
3.7
|
SPECIAL MEETINGS; NOTICE
|
|
10
|
|
||
3.8
|
QUORUM; VOTING
|
|
10
|
|
||
3.9
|
BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
|
|
10
|
|
||
3.10
|
FEES AND COMPENSATION OF DIRECTORS
|
|
11
|
|
||
3.11
|
REMOVAL OF DIRECTORS
|
|
11
|
|
||
ARTICLE IV - COMMITTEES
|
|
11
|
||||
4.1
|
COMMITTEES OF DIRECTORS
|
|
11
|
|
||
4.2
|
COMMITTEE MINUTES
|
|
11
|
|
||
4.3
|
MEETINGS AND ACTION OF COMMITTEES
|
|
11
|
|
||
4.4
|
SUBCOMMITTEES
|
|
12
|
|
||
ARTICLE V - OFFICERS
|
|
12
|
|
|||
5.1
|
OFFICERS
|
|
12
|
|
||
5.2
|
APPOINTMENT OF OFFICERS
|
|
12
|
|
||
5.3
|
SUBORDINATE OFFICERS
|
|
12
|
|
||
5.4
|
REMOVAL AND RESIGNATION OF OFFICERS
|
|
12
|
|
|
Page
|
|||||
5.5
|
VACANCIES IN OFFICES
|
|
13
|
|
||
5.6
|
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
|
|
13
|
|
||
5.7
|
AUTHORITY AND DUTIES OF OFFICERS
|
|
13
|
|
||
ARTICLE VI - STOCK
|
|
13
|
|
|||
6.1
|
STOCK CERTIFICATES; PARTLY PAID SHARES
|
|
13
|
|
||
6.2
|
SPECIAL DESIGNATION ON CERTIFICATES
|
|
14
|
|
||
6.3
|
LOST CERTIFICATES
|
|
14
|
|
||
6.4
|
DIVIDENDS
|
|
14
|
|
||
6.5
|
TRANSFER OF STOCK
|
|
14
|
|
||
6.6
|
STOCK TRANSFER AGREEMENTS
|
|
14
|
|
||
6.7
|
REGISTERED STOCKHOLDERS
|
|
15
|
|
||
ARTICLE VII - MANNER OF GIVING NOTICE AND WAIVER
|
|
15
|
|
|||
7.1
|
NOTICE OF STOCKHOLDERS’ MEETINGS
|
|
15
|
|
||
7.2
|
NOTICE BY ELECTRONIC TRANSMISSION
|
|
15
|
|
||
7.3
|
NOTICE TO STOCKHOLDERS SHARING AN ADDRESS
|
|
16
|
|
||
7.4
|
NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL
|
|
16
|
|
||
7.5
|
WAIVER OF NOTICE
|
|
16
|
|
||
ARTICLE VIII - FORUM FOR ADJUDICATION OF DISPUTES
|
|
17
|
|
|||
ARTICLE IX - INDEMNIFICATION
|
|
17
|
|
|||
9.1
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN THIRD PARTY PROCEEDINGS
|
|
16
|
|
||
9.2
|
INDEMNIFICATION OF DIRECTORS AND OFFICERS IN ACTIONS BY OR IN THE RIGHT OF THE CORPORATION
|
|
17
|
|
||
9.3
|
SUCCESSFUL DEFENSE
|
|
17
|
|
||
9.4
|
INDEMNIFICATION OF OTHERS
|
|
17
|
|
||
9.5
|
ADVANCE PAYMENT OF EXPENSES
|
|
17
|
|
||
9.6
|
LIMITATION ON INDEMNIFICATION
|
|
18
|
|
||
9.7
|
DETERMINATION; CLAIM
|
|
18
|
|
||
9.8
|
NON-EXCLUSIVITY OF RIGHTS
|
|
19
|
|
||
9.9
|
INSURANCE
|
|
19
|
|
||
9.10
|
SURVIVAL
|
|
19
|
|
||
9.11
|
EFFECT OF REPEAL OR MODIFICATION
|
|
19
|
|
||
9.12
|
CERTAIN DEFINITIONS
|
|
19
|
|
||
ARTICLE X - GENERAL MATTERS
|
|
20
|
|
|||
10.1
|
EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
|
|
20
|
|
||
10.2
|
FISCAL YEAR
|
|
20
|
|
||
10.3
|
SEAL
|
|
20
|
|
||
10.4
|
CONSTRUCTION; DEFINITIONS
|
|
20
|
|
||
ARTICLE XI - AMENDMENTS
|
|
20
|
|
|
Re:
|
Agreement and Plan of Merger and Reorganization by and among Davis Petroleum Acquisition Corp., Yuma Energy, Inc., Yuma Delaware Merger Subsidiary, Inc. and Yuma Merger Subsidiary, Inc.
|
|
Re:
|
Agreement and Plan of Merger and Reorganization by and among Davis Petroleum Acquisition Corp., Yuma Energy, Inc., Yuma Delaware Merger Subsidiary, Inc. and Yuma Merger Subsidiary, Inc.
|
NETHERLAND, SEWELL & ASSOCIATES, INC.
|
||
By:
|
/s/ G. Lance Binder
|
|
G. Lance Binder, P.E.
|
||
Executive Vice President
|
Please be advised that the digital document you are viewing is provided by Netherland, Sewell & Associates, Inc. (NSAI) as a convenience to our clients. The digital document is intended to be substantively the same as the original signed document maintained by NSAI. The digital document is subject to the parameters, limitations, and conditions stated in the original document. In the event of any differences between the digital document and the original document, the original document shall control and supersede the digital document.
|
YUMA
|
Computershare Trust Company, N.A.
|
||||||||||||||||||||||||||||||||||||
250 Royall Street
|
COMPANY # [●]
|
||||||||||||||||||||||||||||||||||||
Canton, Massachusetts 02021
|
Vote by Internet, Telephone or
Mail 24 Hours a Day, 7 Days a Week
|
|||||||||||||||||||||||||||||||||||||
Your Telephone or Internet vote authorizes the named Proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
|
|||||||||||||||||||||||||||||||||||||
:
|
INTERNET/MOBILE
– [●]
Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on [●].
|
||||||||||||||||||||||||||||||||||||
(
|
TELEPHONE
–
[●]
Use a touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on [●].
|
||||||||||||||||||||||||||||||||||||
*
|
MAIL
– Mark, sign and date your proxy card and return it in the postage-paid envelope provided.
|
||||||||||||||||||||||||||||||||||||
If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.
|
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
|
|||||||||||||||||||||||||||||||||||||
ò
Please detach here
ò
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE FOLLOWING PROPOSALS.
|
|||||||||
For
|
Against
|
Abstain
|
|||||||
1. | Proposal to approve and adopt the Agreement and Plan of Merger and Reorganization, dated as of February 6, 2014, as it may be amended from time to time, by and among Yuma Energy, Inc., Yuma Delaware Merger Subsidiary, Inc., Yuma Merger Subsidiary, Inc., and Davis Petroleum Acquisition Corp., and the transactions contemplated thereby. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
2 | Proposal to approve the reincorporation of Yuma from California to Delaware by means of a merger with and into a wholly-owned Delaware subsidiary. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3. | Proposals to approve five provisions in the amended and restated certificate of incorporation of Yuma Delaware that will be in effect after completion of the reincorporation and that are not in the current restated articles of incorporation of Yuma: | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3A. | Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that authorizes 100,000,000 shares of common stock, $0.001 par value per share, of Yuma Delaware, and 20,000,000 shares of preferred stock, $0.001 par value per share, of Yuma Delaware. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3B. | Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides the Yuma Delaware board of directors with the authority to set the number of directors on the board. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3C. |
Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides for the classification of the board of directors of Yuma Delaware into three classes with staggered terms.
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3D. | Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that restricts the ability of stockholders to remove directors without cause. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3E. | Proposal to approve the provision in the amended and restated certificate of incorporation concerning classification of directors which provides that, if at any time the former stockholders of Davis beneficially own less than 50% of the aggregate voting power of all outstanding shares of stock entitled to vote in the election of Yuma Delaware’s directors, at each annual meeting of stockholders following such date, each of the successor directors elected at such annual meeting shall serve for a one-year term. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3F. | Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that requires certain actions and proceedings with respect to Yuma Delaware be brought in the federal or state courts located within the State of Delaware. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
4. | Proposal to approve and adopt the amendment to the Yuma Certificate of Determination to provide for the conversion of the Series A Preferred Stock into shares of Common Stock. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
5. | Proposal to approve and adopt the Amendment to the Yuma 2014 Long-Term Incentive Plan. | o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
6. | Proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the proposals above. | o | o | o |
NOTE:
In their discretion, the Proxies are authorized to vote upon such other business that may properly come before the meeting or any adjournment or adjournments thereof.
|
|||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting:
|
Date:
|
||||||||||||||||||||||||||||||||||||
Signature(s) in Box
|
|||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
|
|||||||||||||||||||||||||||||||||||||
YUMA-PA
|
Computershare Trust Company, N.A.
|
||||||||||||||||||||||||||||||||||||
250 Royall Street
|
COMPANY # [●]
|
||||||||||||||||||||||||||||||||||||
Canton, Massachusetts 02021
|
Vote by Internet, Telephone or
Mail 24 Hours a Day, 7 Days a Week
|
|||||||||||||||||||||||||||||||||||||
Your Telephone or Internet vote authorizes the named Proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
|
|||||||||||||||||||||||||||||||||||||
:
|
INTERNET/MOBILE
– [●]
Use the Internet to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on [●].
|
||||||||||||||||||||||||||||||||||||
(
|
TELEPHONE
–
[●]
Use a touch-tone telephone to vote your proxy 24 hours a day, 7 days a week, until 12:00 p.m. (CT) on [●].
|
||||||||||||||||||||||||||||||||||||
*
|
MAIL
– Mark, sign and date your proxy card and return it in the postage-paid envelope provided.
|
||||||||||||||||||||||||||||||||||||
If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.
|
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL ITEMS BELOW,
SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD.
|
|||||||||||||||||||||||||||||||||||||
ò
Please detach here
ò
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE FOLLOWING PROPOSALS.
|
|||||||||
For
|
Against
|
Abstain
|
|||||||
1. |
Proposal to approve and adopt the Agreement and Plan of Merger and Reorganization, dated as of February 6, 2014, as it may be amended from time to time, by and among Yuma Energy, Inc., Yuma Delaware Merger Subsidiary, Inc., Yuma Merger Subsidiary, Inc., and Davis Petroleum Acquisition Corp., and the transactions contemplated thereby.
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
2 |
Proposal to approve the reincorporation of Yuma from California to Delaware by means of a merger with and into a wholly-owned Delaware subsidiary
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3. |
Proposals to approve five provisions in the amended and restated certificate of incorporation of Yuma Delaware that will be in effect after completion of the reincorporation and that are not in the current restated articles of incorporation of Yuma
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3A. |
Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that authorizes 100,000,000 shares of common stock, $0.001 par value per share, of Yuma Delaware, and 20,000,000 shares of preferred stock, $0.001 par value per share, of Yuma Delaware
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3B. |
Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides the Yuma Delaware board of directors with the authority to set the number of directors on the board
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3C. |
Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that provides for the classification of the board of directors of Yuma Delaware into three classes with staggered terms.
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3D. |
Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that restricts the ability of stockholders to remove directors without cause
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3E. |
Proposal to approve the provision in the amended and restated certificate of incorporation concerning classification of directors which provides that, if at any time the former stockholders of Davis beneficially own less than 50% of the aggregate voting power of all outstanding shares of stock entitled to vote in the election of Yuma Delaware’s directors, at each annual meeting of stockholders following such date, each of the successor directors elected at such annual meeting shall serve for a one-year term
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
3F. |
Proposal to approve the provision in the amended and restated certificate of incorporation of Yuma Delaware that requires certain actions and proceedings with respect to Yuma Delaware be brought in the federal or state courts located within the State of Delaware
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
4. |
Proposal to approve and adopt the amendment to the Yuma Certificate of Determination to provide for the conversion of the Series A Preferred Stock into shares of Common Stock
|
o | o | o | |||||
For
|
Against
|
Abstain
|
|||||||
5. |
Proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are not sufficient votes to approve the proposals above
|
o | o | o | |||||
NOTE:
In their discretion, the Proxies are authorized to vote upon such other business that may properly come before the meeting or any adjournment or adjournments thereof.
|
|||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting:
|
Date:
|
||||||||||||||||||||||||||||||||||||
Signature(s) in Box
|
|||||||||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
|
|||||||||||||||||||||||||||||||||||||
Very truly yours,
|
|
ROTH CAPITAL PARTNERS, LLC
|
|
/s/ Alexander G. Montano | |
Name: Alexander G. Montano | |
Its: Managing Director | |
Net Reserves
|
Future Net Revenue (M$)
|
|||||||||||||||||||
Oil
|
NGL
|
Gas
|
Present Worth
|
|||||||||||||||||
Category
|
(MBBL)
|
(MBBL)
|
(MMCF)
|
Total
|
at 10%
|
|||||||||||||||
Proved Developed Producing
|
520.3 | 395.7 | 5,718.9 | 22,459.1 | 18,809.1 | |||||||||||||||
Proved Developed Non-Producing
|
183.0 | 208.6 | 4,745.4 | 16,367.5 | 14,135.0 | |||||||||||||||
Proved Undeveloped
|
464.5 | 423.9 | 5,053.6 | 13,271.2 | 8,036.1 | |||||||||||||||
Total Proved
|
1,167.7 | 1,028.2 | 15,517.9 | 52,097.9 | 40,980.1 |
Sincerely, | |||
NETHERLAND, SEWELL & ASSOCIATES, INC.
|
|||
Texas Registered Engineering Firm F-2699
|
|||
|
By:
|
/s/ C.H. (Scott) Rees III | |
C.H. (Scott) Rees III, P.E.
|
|||
Chairman and Chief Executive Officer
|
|||
By: |
/s/ Steven W. Jansen
|
By: |
/s/ Edward C. Roy III
|
||
Steven W. Jansen, P.E. 112973
|
Edward C. Roy III, P.G. 2364
|
||||
Vice President
|
Vice President
|
||||
Date Signed: July 20, 2016 | Date Signed: July 20, 2016 | ||||
Please be advised that the digital document you are viewing is provided by Netherland, Sewell & Associates, Inc. (NSAI) as a convenience to our clients. The digital document is intended to be substantively the same as the original signed document maintained by NSAI. The digital document is subject to the parameters, limitations, and conditions stated in the original document. In the event of any differences between the digital document and the original document, the original document shall control and supersede the digital document.
|
1.
Supplemental definitions from the 2007 Petroleum Resources Management System:
2.
Developed Producing Reserves – Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate. Improved recovery reserves are considered producing only after the improved recovery project is in operation.
3.
Developed Non-Producing Reserves – Developed Non-Producing Reserves include shut-in and behind-pipe Reserves. Shut-in Reserves are expected to be recovered from (1) completion intervals which are open at the time of the estimate but which have not yet started producing, (2) wells which were shut-in for market conditions or pipeline connections, or (3) wells not capable of production for mechanical reasons. Behind-pipe Reserves are expected to be recovered from zones in existing wells which will require additional completion work or future recompletion prior to start of production. In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.
|
1.
|
a. Proved oil and gas reserves (see paragraphs 932-235-50-3 through 50-11B)
|
2.
|
b. Oil and gas subject to purchase under long-term supply, purchase, or similar agreements and contracts in which the entity participates in the operation of the properties on which the oil or gas is located or otherwise serves as the producer of those reserves (see paragraph 932-235-50-7).
|
3.
|
a. Future cash inflows. These shall be computed by applying prices used in estimating the entity's proved oil and gas reserves to the year-end quantities of those reserves. Future price changes shall be considered only to the extent provided by contractual arrangements in existence at year-end.
|
4.
|
b. Future development and production costs. These costs shall be computed by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. If estimated development expenditures are significant, they shall be presented separately from estimated production costs.
|
5.
|
c. Future income tax expenses. These expenses shall be computed by applying the appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, to the future pretax net cash flows relating to the entity's proved oil and gas reserves, less the tax basis of the properties involved. The future income tax expenses shall give effect to tax deductions and tax credits and allowances relating to the entity's proved oil and gas reserves.
|
6.
|
d. Future net cash flows. These amounts are the result of subtracting future development and production costs and future income tax expenses from future cash inflows.
|
7.
|
e. Discount. This amount shall be derived from using a discount rate of 10 percent a year to reflect the timing of the future net cash flows relating to proved oil and gas reserves.
|
8.
|
f. Standardized measure of discounted future net cash flows. This amount is the future net cash flows less the computed discount.
|
1.
|
Ÿ
The company's level of ongoing significant development activities in the area to be developed (for example, drilling only the minimum number of wells necessary to maintain the lease generally would not constitute significant development activities);
|
2.
|
Ÿ
The company's historical record at completing development of comparable long-term projects;
|
3.
|
Ÿ
The amount of time in which the company has maintained the leases, or booked the reserves, without significant development activities;
|
4.
|
Ÿ
The extent to which the company has followed a previously adopted development plan (for example, if a company has changed its development plan several times without taking significant steps to implement any of those plans, recognizing proved undeveloped reserves typically would not be appropriate); and
|
5.
|
Ÿ
The extent to which delays in development are caused by external factors related to the physical operating environment (for example, restrictions on development on Federal lands, but not obtaining government permits), rather than by internal factors (for example, shifting resources to develop properties with higher priority).
|