ARABELLA EXPLORATION, INC. company history: the story so far

History

A blank-check shell bought a Texas oil company in 2013, saw its 2015 asset sale collapse, and was put into court-ordered liquidation in Cayman in 2016.

2013: A shell looks for a deal

The company began as Lone Oak Acquisition Corporation, a blank-check company: a shell that raises money from investors to buy a business later. By March 2013 it could not finish a deal before its March 24 deadline. It asked shareholders to vote on March 22 to extend by six months, to September 24, 2013, rather than liquidate. Holders who did not want to wait could take about $8.21 a share from the trust account, about $28.2 million in total as of February 27, 2013. Those who stayed would receive a $0.10 per share dividend if the extension passed.

On October 23, 2013, Lone Oak agreed to acquire Arabella Exploration, LLC, a Texas oil and gas company. The owners would receive 3,125,000 shares at closing, plus up to 1,705,002 more held in escrow and released only if proved reserves grew by set amounts at the end of 2014, 2015 and 2016. Closing required no more than 505,636 IPO shares to be redeemed and at least $5,000,000 in net cash. Shares on issue rose from 3,125,000 at the end of 2012 to 4,829,826 at the end of 2013, and reached 5,020,303 in 2014.

2015-2016: Failed sale and liquidation

The record for 2014 is quiet. In July 2015 Arabella agreed to sell five prospects (Locker State, Graham, Woods, Jackson and Emily Bell) to an unnamed buyer. Under a linked letter agreement with McCabe Petroleum, it would receive cash and properties it valued at about $47 million. That included $15 million in cash and the return of 1,003,597 of its shares for cancellation. Its senior secured notes would fall from $16 million to $6 million.

On September 1, 2015, the buyer terminated the deal, citing closing information items and third-party approvals. Arabella called this unexpected. The McCabe agreement stayed, but depended on a similar deal closing at the same time. Arabella said it was looking for a replacement or other strategic alternative.

On June 16, 2016, the Cayman Islands court appointed Christopher Kennedy and Matthew Wright as provisional liquidators, with all the powers of the board. All four directors resigned the next day. After a July 7 hearing, the court issued a Winding Up Order, making them Joint Official Liquidators. As of July 15, 2016, what shareholders would receive was not disclosed, and the fate of the McCabe agreement and the five prospects was unknown.

Written from the 6 story beats below (2013 to 15 July 2016), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

shares on issue market cap (log scale)

20165.0m shares · US$904k market cap

15 July
After the July 7, 2016 hearing, the Cayman court issued a Winding Up Order, and Kennedy and Wright are named Joint Official Liquidators (a notice ran in the Financial Times on July 13, 2016). This moves the June provisional appointment into a formal winding up. The filing gives no information on what shareholders will receive, so their position is unresolved.
bankruptcy or receivership
5.0m shUS$904k
22 June
On June 16, 2016, the Grand Court of the Cayman Islands appointed Christopher Kennedy and Matthew Wright as joint provisional liquidators of Arabella, giving them all the powers of the board. The four directors (Berke Bakay, Jason Hoisager, Richard Hauser, William Heyn) resigned on June 17, and Hoisager also resigned as CEO, CFO and President. A hearing on the petition was set for July 7, 2016. This follows the failed 2015 asset sale, though the filing does not state the reason for the petition.
bankruptcy or receivership
5.0m shUS$904k

20155.0m shares · US$2.8m market cap

8 Sept
The buyer terminated the July 2015 purchase agreement on September 1, 2015, citing closing information items and third-party approvals, which Arabella called unexpected. The McCabe letter agreement stays in place but depends on a similar transaction closing at the same time, and Arabella says it is searching for a replacement deal or other strategic alternative. This reverses the planned sale, so the cash and note reduction described in July are not happening.
material agreement termination
5.0m shUS$2.8m
21 July
Arabella agreed to sell its Locker State, Graham, Woods, Jackson and Emily Bell prospects to an unnamed buyer and, under a separate letter agreement with McCabe Petroleum, to receive cash and properties worth about $47 million by Arabella's own estimate. This includes $15 million cash, a producing property of about 88 BOE/day, a 20,000-acre Midland Basin participation agreement, and an option on royalty interests. It would also get back 1,003,597 of its shares for cancellation, and senior secured notes would fall from $16 million to $6 million. Closing was expected around July 31, 2015, subject to conditions including the buyer's board approval and financing.
material agreement
5.0m shUS$12.6m

20133.1m shares

25 Oct
Lone Oak announced a merger agreement dated October 23, 2013 to acquire Arabella Exploration, LLC, a Texas oil and gas company, which resolves the search for a deal that the 2013 extension was meant to allow. Target holders would receive 3,125,000 Lone Oak shares at closing plus up to 1,705,002 more shares held in escrow, released only if proved reserves grow by set amounts at the end of 2014, 2015 and 2016 (with cost limits); unearned shares are cancelled. The deal needs no Lone Oak shareholder vote, but IPO shareholders can redeem for their share of the trust, and closing requires no more than 505,636 IPO shares tendered and Lone Oak having at least $5,000,000 net cash.
business combination
3.1m sh
5 Mar
This filing was made by Lone Oak Acquisition Corporation, a blank-check shell company (the vehicle that later became Arabella Exploration, Inc.), whose contact person is Berke Bakay, an existing large shareholder. Lone Oak says it cannot finish a business combination by its March 24, 2013 deadline, so it asks shareholders to vote on March 22, 2013 to extend by six months, to September 24, 2013, instead of liquidating. Shareholders who do not want to wait can redeem shares for about $8.21 each from the trust account (about $28.2 million total as of Feb 27, 2013), and those who stay would get a $0.10 per share dividend if the extension is approved.
business combination
3.1m sh