WEB NEWS Comments & Business Outlook
Item 1.03 Bankruptcy or Receivership
(a) On June 16, 2016, in the Grand Court of the Cayman Islands, in a matter entitled "In the Matter of Arabella Exploration, Inc." (the "Registrant"), Christopher Kennedy and Matthew Wright were appointed joint provisional liquidators of the Registrant. Messrs. Kennedy and Wright were given all of the powers of the Registrant's Board of Directors.
On June 17, 2016, each of the four directors of the Registrant resigned as a director. Their names are Berke Bakay, Jason Hoisager, Richard Hauser, and William Heyn.
A hearing with regard to the Petition pursuant to which the June 16, 2016 Order was based occurred on July 7, 2016.
A legal notice relating to the appointment of Messrs. Kennedy and Wright as Joint Official Liquidators appeared on page 18 of the Financial Times on July 13, 2016 and is attached to this Form 8-K as Exhibit 99.1.
The Winding Up Order issued by the Grand Court of the Cayman Islands dated July 7, 2016 relating to the appointment of the Joint Official Liquidators and their powers is attached to this Form 8-K as Exhibit 99.2.
See Item 5.01 of this Form 8-K.
Item 5.01 Changes in Control of Registrant
(a) A change in control of the Registrant occurred on June 16, 2016, by reason of the issuance of an Order by the Grand Court of the Cayman Islands appointing Christopher Kennedy and Matthew Wright as joint provisional liquidators of the Registrant. Messrs. Kennedy and Wright were given all of the powers of the Registrant's Board of Directors.
On June 17, 2016, each of the four directors of the Registrant resigned as a director. Their names are Berke Bakay, Jason Hoisager, Richard Hauser, and William Heyn.
A hearing with regard to the Petition pursuant to which the June 16, 2016 Order was based occurred on July 7, 2016.
A legal notice relating to the appointment of Messrs. Kennedy and Wright as Joint Official Liquidators appeared on page 18 of the Financial Times on July 13, 2016 and is attached to this Form 8-K as Exhibit 99.1.
The Winding Up Order issued by the Grand Court of the Cayman Islands dated July 7, 2016 relating to the appointment of the Joint Official Liquidators and their powers is attached to this Form 8-K as Exhibit 99.2.
Comments & Business Outlook
ARABELLA EXPLORATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended
March 31, 2016
March 31, 2015
(unaudited)
(unaudited)
Revenues:
Oil and gas revenue
$
236,878
$
346,669
Other revenue – administrative overhead
10,800
12,000
Total revenues
247,678
358,669
Costs and expenses:
Lease operating expenses
111,306
182,529
Ad valorem and production taxes
18,225
17,945
Depreciation, depletion and amortization
78,478
190,322
Accretion of asset retirement obligation
420
480
General and administrative expenses
646,519
995,860
Total costs and expenses
854,948
1,387,136
Loss from operations
(607,270
)
(1,028,467
)
Other expense
Interest expense
928,953
2,160,657
Other expenses
928,953
2,160,657
Net loss
$
(1,536,223
)
$
(3,189,124
)
Net loss per ordinary share:
Basic
$
(0.31
)
$
(0.64
)
Diluted
$
(0.31
)
$
(0.64
)
Weighted average ordinary shares outstanding:
Basic
5,020,303
5,020,303
Diluted
5,020,303
5,020,303
CFO Trail
Comments & Business Outlook
ARABELLA EXPLORATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014
2015
2014
Revenues:
Oil and gas revenue
$
1,475,856
$
3,408,296
Other revenue – administrative overhead
39,600
-
Other operating revenue – gain on sale of oil and gas properties
-
3,084,917
Total revenues
1,515,456
6,493,213
Costs and expenses:
Lease operating expenses
1,100,312
1,633,456
Ad valorem and production taxes
73,182
153,231
Depreciation, depletion and amortization
767,116
1,444,315
(Reduction) accretion of asset retirement obligation
(1,353
)
1,770
General and administrative expenses
2,876,348
5,154,056
Impairment of oil and gas properties
21,202,608
-
Total costs and expenses
26,018,213
8,386,827
Loss from operations
(24,502,757
)
(1,893,614
)
Other expense
Interest expense, related party
-
(40,722
)
Interest expense
(7,153,516
)
(2,882,212
)
Other expense
(7,153,516
)
(2,922,934
)
Net loss before taxes
(31,656,273
)
(4,816,548
)
Provision for income taxes
-
-
Net loss
$
(31,656,273
)
$
(4,816,548
)
Net loss per ordinary share:
Basic
$
(6.31
)
$
(0.98
)
Diluted
$
(6.31
)
$
(0.98
)
Weighted average ordinary shares outstanding:
Basic
5,020,303
4,928,978
Diluted
5,020,303
4,928,978
Comments & Business Outlook
Item 1.02 Termination of a Material Definitive Agreement.
On September 1, 2015, Arabella Exploration, Inc. (“Arabella”) received a text message and email from the third party buyer (“Buyer”) in the Purchase and Sale Agreement (“PSA”) between Arabella and the Buyer, dated as of July 1, 2015, terminating the PSA pursuant to Section 13.1 of the PSA. The Buyer cited several items to justify its unexpected cancelation of the PSA including a number of standard closing information items as well as certain third party approvals. The letter agreement with McCabe Petroleum Corporation (“McCabe”), dated as of April 15, 2015, remains in place but is dependent on a transaction similar to the one contemplated in the PSA being consummated simultaneously. Arabella is currently searching for such a replacement or another strategic alternative.
Comments & Business Outlook
ARABELLA EXPLORATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended
For the six months ended
June 30,
June 30,
June 30,
June 30,
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues:
Oil and gas revenue
$
270,515
$
976,373
617,184
$
1,762,197
Other revenue – administrative overhead
7,800
-
19,800
-
Other operating revenue – gain on sale of oil and gas properties
-
1,768,521
-
3,004,721
Total revenues
278,315
2,744,894
636,984
4,766,918
Costs and expenses:
Lease operating expenses
81,531
438,652
264,060
552,352
Ad valorem and production taxes
14,471
46,878
32,415
79,017
Depreciation, depletion and amortization
121,400
331,731
311,722
571,374
Accretion of asset retirement obligation
480
180
960
810
General and administrative expenses
819,987
1,295,961
1,815,848
2,601,085
Total costs and expenses
1,037,869
2,113,402
2,425,005
3,804,638
(Loss) income from operations
(759,554
)
631,492
(1,788,021
)
962,280
Other expense (expense)
Interest Expense, related party
-
(16,073
)
-
(16,073
)
Interest expense
(2,160,821
)
-
(4,321,478
)
Other expenses
(2,160,821
)
(16,073
)
(4,321,478
)
(16,073
)
Net (loss) income before taxes
(2,920,375
)
615,419
(6,109,499
)
946,207
Provision for income taxes
-
(215,417
)
-
(327,885
)
Net (loss) income
$
(2,920,375
)
$
400,002
(6,109,499
)
$
618,322
Net (loss) income per ordinary share:
Basic
$
(0.58
)
$
0.08
$
(1.22
)
$
0.13
Diluted
$
(0.58
)
$
0.07
$
(1.22
)
$
0.10
Weighted average ordinary shares outstanding:
Basic
5,020,303
4,838,199
5,020,303
4,834,035
Diluted
5,020,303
5,910,560
5,020,303
6,325,676
Management Discussion and Analysis
Three Months Ended June 30, 2015 Compared to the Three Months Ended June 30, 2014
Other Revenue. Other revenue relates to administrative overhead fees paid to Arabella Operating by other working interest owners to operate our wells. Arabella Operating was paid $7,800 for the three months ended June 30, 2015 and did not operate our wells for the three months ended June 30, 2014.
Other Operating Revenue. Other operating revenue in the three months ended June 30, 2014 relates to oil and gas property sales. In the three months ended June 30, 2014, we sold three non-producing properties for $2,924,854, with a net profit of $1,722,123, and one non-operated, producing property for $327,734 with a net profit of $46,398. Contingent conditions on the sale of the Weatherby acreage may result in an additional $78,300 of revenue. We did not have any property sales in the three months ending June 30, 2015. Other operating revenue from the sale of oil and gas properties fluctuates due to market demand and preparation of the land. We buy and sell parcels of land when the opportunity to generate significant profit presents itself.
Comments & Business Outlook
Item 1.01 Entry into a Material Definitive Agreement.
• $15 million in cash, subject to certain closing adjustments.
The following chart summarizes the changes to Arabella’s properties, production and capital structure as a result of the transactions.
Arabella
Pre-Transactions
Removed Added
Arabella
Post-Transactions
Gross Wells(1) 18 6 4 16
Net BOE/Day(2) 78 76 88 90
Gross Acres 34,921 2,560 20,844 53,205
Net Acres 4,972 1,314 20,140 23,798
Senior Secured Notes $ 16,000,000 $ 10,000,000 — $ 6,000,000
Shares Outstanding 5,020,303 1,003,597 — 4,016,706
Comments & Business Outlook
ARABELLA EXPLORATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended
March 31, 2015
March 31, 2014
(unaudited)
(unaudited)
Revenues:
Oil and gas revenue
$
346,669
$
785,824
Other revenue – administrative overhead
12,000
-
Other operating revenue – gain on sale of oil and gas properties
-
1,236,200
Total revenues
358,669
2,022,024
Costs and expenses:
Lease operating expenses
182,529
113,700
Ad valorem and production taxes
17,945
32,139
Depreciation, depletion and amortization
190,322
239,643
Accretion of asset retirement obligation
480
630
General and administrative expenses
995,860
1,305,124
Total costs and expenses
1,387,136
1,691,236
(Loss) income from operations
(1,028,467
)
330,788
Other expense
Interest expense
2,160,657
-
Other expenses
2,160,657
-
Net (loss) income before taxes
(3,189,124
)
330,788
Provision for income taxes
-
(112,468
)
Net (loss) income
$
(3,189,124
)
$
218,320
Net (loss) income per ordinary share:
Basic
$
(0.64
)
$
0.05
Diluted
$
(0.64
)
$
0.03
Weighted average ordinary shares outstanding:
Basic
5,020,303
4,829,826
Diluted
5,020,303
6,724,408
Management Discussion and Analysis
Oil and Natural Gas Revenues. Our oil and natural gas revenues decreased by $439,155, or 56%, to $346,669 for the three months ended March 31, 2015, as compared to $785,824 for the three months ended March 31, 2014. Our revenues are a function of oil and natural gas production volumes sold and average sales prices received for those volumes. The decrease in revenues is due to the substantially lower price of oil realized in the period ended March 31, 2015 ($42.29 per barrel in the quarter ended March 2015 as compared to $94.05 in the prior year period).
Other Revenue. Other revenue relates to administrative overhead fees paid to Arabella operating to operate our wells. Arabella operating was paid $12,000 for the three months ended March 31, 2015 and did not operate our wells for the three months ended March 31, 2014.
Other Operating Revenue. Other operating revenue in the three months ended March 31, 2014 relates to oil and gas property sales. In the three months ended March 31, 2014, we sold our gross 640, net 353, acres in Loving County – otherwise known as our Johnson 44 lease. This acreage was purchased at $2,500/acre and was sold at approximately $6,000/acre, grossing $2,119,200 with a net profit of $1,236,200. We did not have any property sales in the three months ending March 31, 2015. Other operating revenue from the sale of oil and gas properties fluctuates due to market demand and preparation of the land. We buy and sell parcels of land when the opportunity to generate significant profit presents itself.
Comments & Business Outlook
ARABELLA EXPLORATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
2014
2013
Revenues:
Oil and gas revenue
$
3,408,296
$
1,421,915
Other operating revenue – gain on sale of oil and gas properties
3,084,917
-
Total revenues
6,493,213
1,421,915
Costs and expenses:
Lease operating expenses
1,633,456
152,052
Ad valorem and production taxes
153,231
64,033
Depreciation, depletion and amortization
1,444,315
469,230
Accretion of asset retirement obligation
1,770
663
General and administrative expenses
5,029,056
412,268
General and administrative expenses allocated from Arabella Petroleum Company, LLC
-
131,950
Total costs and expenses
8,261,828
1,230,196
(Loss) income from operations
(1,768,615
)
191,719
Other expense
Interest expense, related party
(40,722
)
-
Interest expenses
(2,882,212
)
-
Other expenses
(2,922,934
)
-
Net (loss) income before taxes
(4,691,549
)
191,719
Provision for income taxes
-
-
Net (loss) income
$
(4,691,549
)
$
191,719
Net (loss) income per ordinary share:
Basic
$
(0.95
)
$
0.06
Diluted
$
(0.95
)
$
0.06
Weighted average ordinary shares outstanding:
Basic
4,928,978
3,157,695
Diluted
4,928,978
3,201,305
Management Disucssion and Analysis
Comparison of Years ended December 31, 2014 and December 31, 2013
Deal Flow
Arabella Exploration, Inc.
This prospectus also relates to the issuance of: (i) 4,106,500 ordinary shares underlying outstanding warrants issued in our initial public offering pursuant to a prospectus dated March 16, 2011, and (ii) 400,000 units underlying a unit purchase option issued to the underwriters in our initial public offering, 400,000 ordinary shares and 400,000 warrants underlying such units, and 400,000 ordinary shares underlying such warrants.
We will not receive any of the proceeds from the sale of ordinary shares by the selling stockholders. However, we could receive up to $20,532,500 from the exercise of the warrants for up to 4,106,500 ordinary shares that are presently offered under this prospectus. We could receive up to $3,520,000 upon the exercise of the unit purchase option issued to the underwriters in our IPO, up to $2,000,000 upon the exercise of the warrants issuable upon exercise of such unit purchase option, up to $33,000,000 upon the exercise of 6,600,000 warrants issued to our founders in connection with our initial public offering and up to $6,500,000 upon the exercise of 1,300,000 warrants issued in conjunction with the sale of our Senior Secured Notes. We intend to use any proceeds received from the exercise, as the case may be, for working capital and other general corporate purposes. We, however, cannot assure you that any of the warrants will be exercised. The selling stockholders may sell the shares as set forth herein under “Plan of Distribution.”
Arabella’s shares, warrants and units (defined as consisting of one share and one warrant to purchase one share) are traded on the Over-the-Counter Bulletin Board under the symbols AXPLF, AXLWF and AXPUF, respectively. On November 21, 2014, the closing sale price of the shares, warrants and units was $4.50, $0.97 and $8.15, respectively. You are urged to obtain current market quotations of Arabella’s shares before purchasing any of the shares being offered for sale pursuant to this prospectus.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2013, 2012 AND 2011
2013
2012
2011
Revenues:
Oil and gas revenue
$ 1,421,915 $ 65,881 $ 16,543
Other operating revenue – gain on sale of oil and gas properties
— 402,901 34,467
Total revenues
1,421,915 468,782 51,010
Costs and expenses:
Lease operating expenses
152,052 12,526 5,753
Ad valorem and production taxes
64,033 3,174 819
Depreciation, depletion and amortization
469,230 27,696 5,724
Accretion of asset retirement obligation
663 215 97
General and administrative expenses
412,268 10,010 10,011
General and administrative expenses allocated from Arabella Petroleum Company, LLC
131,950 93,845 30,071
Total costs and expenses
1,230,196 147,466 52,475
Net income (loss)
$ 191,719 $ 321,316 $ (1,465 )
Net income (loss) per ordinary share:
Basic
$ 0.06 $ 0.10 $ (0.00 )
Diluted
$ 0.06 $ 0.10 $ (0.00 )
Weighted average ordinary shares outstanding:
Basic
3,157,695 3,125,000 3,125,000
Diluted
3,201,305 3,125,000 3,125,000
Management Discussion and Analysis
Comparison of Years ended December 31, 2013 and December 31, 2012
