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.
(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.
Auditor trail
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 is scheduled to be heard on July 7, 2016.
See Items 5.01 and 5.02 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 is scheduled to be heard on July 7, 2016.
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
Comments & Business Outlook
ARABELLA EXPLORATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended September 30,
For the nine months ended September 30,
2015
2014
2015
2014
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues:
Oil and gas revenue
$
394,324
$
953,896
$
1,011,509
$
2,716,093
Other revenue – administrative overhead
4,200
-
24,000
-
Other operating revenue – gain on sale of oil and gas properties
-
80,196
-
3,084,917
Total revenues
398,524
1,034,092
1,035,509
5,801,010
Costs and expenses:
Lease operating expenses
52,072
335,720
316,132
888,072
Ad valorem and production taxes
21,163
42,449
53,579
121,466
Depreciation, depletion and amortization
103,593
383,556
415,315
954,930
Accretion of asset retirement obligation
480
480
1,440
1,290
General and administrative expenses
800,847
1,718,151
2,616,694
4,319,236
Total costs and expenses
978,155
2,480,356
3,403,160
6,284,994
Loss from operations
(579,631
)
(1,446,264
)
(2,367,651
)
(483,984
)
Other expenses
Interest Expense, related party
-
(24,649
)
-
(40,722
)
Interest expense
(1,640,438
)
(720,219
)
(5,961,917
)
(720,219
)
Other expenses
(1,640,438
)
(744,868
)
(5,961,917
)
(760,941
)
Net loss before taxes
(2,220,069
)
(2,191,132
)
(8,329,568
)
(1,244,925
)
Income tax benefit
-
327,885
-
-
Net loss
$
(2,220,069
)
$
(1,863,247
)
$
(8,329,568
)
$
(1,244,925
)
Loss per ordinary share:
Basic
$
(0.44
)
$
(0.37
)
(1.66
)
$
(0.25
)
Diluted
$
(0.44
)
$
(0.37
)
(1.66
)
$
(0.25
)
Weighted average ordinary shares outstanding:
Basic
5,020,303
5,020,303
5,020,303
4,896,807
Diluted
5,020,303
5,020,303
5,020,303
4,896,807
Management Discussion and Analysis
Oil and Natural Gas Revenues. Our oil and natural gas revenues decreased by $559,572, or 59%, to $394,324 for the three months ended September 30, 2015, as compared to $953,896 for the three months ended September 30, 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 September 30, 2015 ($48.58 per barrel in the quarter ended September 2015 as compared to $86.25 in the prior year period) and to the decreased volumes of production.
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 $4,200 for the three months ended September 30, 2015 and did not operate our wells for the three months ended September 30, 2014.
Other Operating Revenue. Other operating revenue in the three months ended September 30, 2014 relates to oil and gas property sales. In the three months ended September 30, 2014, we sold a non-producing property for $293,333, with a net profit of $80,196. We did not have any property sales in the three months ending September 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.
Lease Operating Expense. Lease operating expenses decreased from $335,720 in the three months ended September 30, 2014 to $52,072 in the three months ended September 30, 2015. This decrease is the result of reduced operations due to low oil prices. Lease operating expenses can vary based upon conditions at the well site and well productivity.
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 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
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, 2012Arabella’s oil and natural gas revenues increased by $1,356,034, or 2,058%, to $1,421,915 for the year ended December 31, 2013, as compared to $65,881 for the year ended December 31, 2012. Arabella’s revenues are a function of oil and natural gas production volumes sold and average sales prices received for those volumes. The reason for the increase in revenues is due to increased sales of oil and natural gas due to the completion of wells in the second half of 2013. In the second half of 2013, the Topo Chico #4, Graham #1H, Locker State #1H and the Woods #1H began production. Production from these wells combined with relatively consistent prices for oil and natural gas and the fact that Arabella did not have meaningful production until the second quarter of 2013 accounted for the increase in revenue.
