Each one in plain English, with the numbers worked through for a shareholder.
31 Aug 2015bankruptcy or receivership▼ BadMajor
On August 28, 2015 Armada and its subsidiaries ceased operations and filed for Chapter 7 bankruptcy in the Eastern District of Texas, Sherman Division. A trustee will take control and liquidate the assets. The filing defaulted the Prosperity Bank term note, with about $3,486,664 now due, and the CFO and COO have left. The filing does not state what shareholders will receive; that Chapter 7 liquidation could leave equity with little or nothing is an inference, not stated.
On March 5, 2015 Armada and Prosperity Bank converted the matured credit line into a $3,472,693 term loan with no further advances. Interest is paid monthly, principal of $50,000 a month starts October 5, 2015, and everything is due March 5, 2016. The rate is prime plus 1% with a 5.75% floor, secured by the Kansas leases. The bank removed the financial covenants and waived earlier violations, which resolves the default thread; Armada paid an $8,681.73 fee.
17 Dec 2014material agreement termination▼ BadMajor
Armada ended the $16,350,000 Tabbs Bay purchase on December 11, 2014, citing the sharp fall in oil prices, the high operating cost of the properties, and WTI closing below $76.74; the $100,000 deposit is to be returned. The year-end release says the related financing also fell away, Bear Creek #1 remains uncompleted, and Armada is seeking a working-interest sale or joint venture for it. It is also seeking a lender extension and says it received an offer for all or part of the Kansas property at or above the payoff. It plans to cut expenses. This resolves the Tabbs Bay thread.
Armada sold its remaining 27.124% of TNR Holdings to Gulfstar on November 26, 2014 for $5,012,473, so it no longer has any interest in the South Louisiana fields. This completes the exit from the Louisiana assets that came from the Mesa deal. The bank credit facility matured November 22, 2014 and Armada failed to repay it; $4,600,000 of principal was paid from the sale proceeds, leaving $3,472,693 owed, secured by the Kansas leases. Armada is working to refinance, with no assurance it will succeed, and says the bank could enforce its rights if not.
On October 16, 2014 Armada agreed to buy eight leases (about 576 acres, Harris County, Texas, about 190 net barrels a day) from Tabbs Bay Energy for $16,350,000 cash, with the price adjusted by the WTI oil price at closing. It paid a $100,000 non-refundable deposit, and closing was due by November 14, 2014 (extendable to December 12 with another $100,000). Funding was to come from a new bank facility and equity or debt sales, but no firm commitment existed, and without financing Armada would forfeit the deposit.
Armada says it breached a general-and-administrative-expense-to-revenue covenant on its Prosperity Bank (formerly F&M) credit facility for the quarters ended March 31 and June 30, 2014 (140.89% against a 27% limit), which is an event of default. About $8,111,375 was outstanding at June 30, 2014, the bank could demand immediate repayment, and Armada has asked for a waiver but has no answer yet. Armada attributes the breach to the Gulfstar asset reallocation and the move to midcontinent and Rocky Mountain operations.
A press release says Armada began drilling the Bear Creek #1 well in Carbon County, Wyoming (100% working interest, target depth about 8,457 feet, roughly 15 days of drilling expected). Starting the well means it met its drilling obligation under the Anadarko farmout and keeps the rest of the farmout acreage, resolving that open thread. The release also says Armada sold its remaining Oklahoma acreage to focus on Kansas and Wyoming; no price or buyer is given.
On April 10, 2014 Armada closed Gulfstar's second purchase (Tranche B, $6,700,053 for 25.925% of TNR Holdings), taking Gulfstar to 60.3% and control, so Armada will stop consolidating TNR Holdings and will account for its stake under the equity method. Armada also closed the Kansas purchase from Piqua Petro (six leases, about 1,040 acres, Woodson County), paying the $6,400,000 balance after the $100,000 deposit, subject to an operating-cost adjustment; current production is about 80 barrels a day. The F&M/Prosperity loan was amended: $4,603,125 of letters of credit moved off Armada's borrowings, the borrowing base was reset to $8,200,000, and the Kansas leases were pledged to the bank. This resolves the pending Tranche B and Piqua threads.
On March 14, 2014 Armada agreed to buy six oil and gas leases from Piqua Petro covering about 1,040 acres in Woodson County, Kansas, producing about 80 barrels a day, for $6,500,000 in cash. It paid a $100,000 non-refundable deposit, targets closing by April 3, 2014, and the deal is subject to due diligence conditions. Armada plans to pay by drawing the Tranche B Gulfstar funding ($6,700,053), which would raise Gulfstar's stake in TNR Holdings to 60.3%. This continues the Gulfstar thread and adds Kansas as a new area.
On December 20, 2013 Armada agreed with Gulfstar Resources to sell interests in a new subsidiary, TNR Holdings, which holds the Louisiana oil properties that came from Mesa. Gulfstar bought a 34.375% stake for $6,250,000 and is obliged to buy another 25.925% for $6,700,053 within 90 days of the first closing. It has an option on a further 9.7% for $4,549,968, which would bring it to 70% if all are funded. Gulfstar gets 8% cumulative priority on distributions, approval rights over major decisions, and royalty interests in future Wyoming and Oklahoma wells drilled with the proceeds. Armada agrees to keep F&M Bank borrowings under $8,222,693 and letters of credit under $4,603,125. This is new funding but gives up part of the ownership of the Louisiana assets.
On October 31, 2013 Armada and Anadarko signed a third amendment to the Wyoming farm-out contract, moving the deadline to start the first test well from December 31, 2013 to July 31, 2014. Armada then has 180 days after reaching contract depth in that well to start a second one. Armada says a location has been tentatively selected and the extra time allows more careful evaluation. This extends the earlier deadline of August 1, 2013 noted for the test well, and the drilling is now later than first set.
