CASTLE ENERGY CORP company history: the story so far

History

Castle Energy sold its oil and gas properties to Delta in 2002, settled its Chevron dispute in 2005, agreed to merge into Delta, then deregistered in April 2006.

2002-2004: Selling to Delta, buying wells back

In 2002 Castle Energy sold all its domestic oil and gas properties to Delta under an agreement dated January 15, 2002. The sale closed on May 31, 2002. Castle received $18,236,000 in cash and 9,566,000 Delta shares, appraised at $26,952,000, which left it with about 44% of Delta. Delta held an option to buy back up to 3,188,667 of those shares at $4.50 within a year.

The record is then quiet until 2004. In March of that year Castle sold 2,260,414 Delta shares for $20,917,797, cutting its stake to about 25%. On March 31 it bought interests in 138 western Pennsylvania gas wells from Delta for $8,121,000, about $7,671,000 after expected adjustments. It had owned most of these properties before the 2002 sale. Three Castle officers and directors, Joseph Castle, John Keller and Russell Lewis, also sat on Delta's board.

2005-2006: Settlement, merger and exit

On September 19, 2005 Castle paid $5.75 million to settle its long-running Chevron lawsuit over environmental damage at the former Indian Refinery. In return it received a full release and protection against environmental claims for that site. It expected a one-time charge of about $2.7 million after tax, against an earlier reserve of $1.55 million. Founder Joseph L. Castle II had died on August 15, 2005, and the filing set new salaries, including $250,000 for Richard Staedtler as CEO.

On November 8, 2005 Castle agreed to merge into a Delta subsidiary. Its shareholders were to receive about 1.164 Delta shares per Castle share, 8,500,000 in total, while the 6,700,000 Delta shares Castle held, about 14%, would be cancelled. The board saw this as the most favourable alternative, and the merger could not proceed until the Chevron case was settled. Directors and the founder's estate and family, holding about 29.1% of Castle, agreed to vote in favour.

On March 28, 2006 Castle sent out the final proxy statement for a shareholder vote on April 28, 2006. The offer was valued at $23.61 per Castle share on March 24. On April 28, 2006, Castle deregistered its securities, ending its obligation to file reports with the SEC.

Written from the 6 story beats below (2002 to 28 Apr 2006), 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.

2006

28 Apr
CASTLE ENERGY CORP deregistered its securities, ending its obligation to file reports with the SEC.
listing compliance notice
28 Mar
Castle sent stockholders the final proxy statement for the Delta merger, with a special meeting on April 28, 2006 to vote on it. Holders get about 1.164 Delta shares per Castle share (8,500,000 Delta shares in total), valued at $23.61 per Castle share on March 24, 2006 based on Delta's $20.28 close; the value will move before closing. Castle's directors who voted on the merger unanimously recommend a yes vote, and a majority of outstanding Castle shares must approve. Officers, all directors and the estate and family of founder Joseph L. Castle II, holding about 29.1% of shares, have agreed to vote in favour; not voting counts as a vote against, and the filing says there are no dissenters' appraisal rights. This continues the merger announced in November 2005 and moves it to the shareholder vote stage.
business combination

2005

10 Nov
On November 8, 2005 Castle agreed to merge into a Delta subsidiary, with Castle shareholders receiving about 1.164 Delta shares per Castle share (about 8,500,000 Delta shares in total), and the 6,700,000 Delta shares Castle owns (about 14%) will be cancelled. It needs approval from a majority of Castle shareholders and regulators, a $5,000,000 termination fee can apply in specified circumstances, and directors and the Castle founder's estate and family have agreed to vote in favour. The press release says the board viewed this as the most favourable alternative and that the merger could not happen until the Chevron case was settled; the target closing date is February 28, 2006.
business combination
29 Sept
Castle settled its long-running Chevron lawsuit over environmental damage at the former Indian Refinery by paying $5.75 million on September 19, 2005, in return for a full release and indemnification against environmental claims for that refinery. It expects a one-time charge of about $2.7 million after tax in the fourth quarter (a previous $1.55 million reserve had been set aside). The filing also sets new officer salaries (Richard Staedtler as CEO at $250,000) and an 18-month salary continuation at $300,000 a year for the estate of Joseph L. Castle II, who died August 15, 2005.
material agreement

2004

13 Apr
On March 31, 2004 Castle bought interests in 138 western Pennsylvania gas wells from Delta for $8,121,000 (about $7,671,000 net after expected adjustments of roughly $450,000); it had owned most of these properties before selling to Delta in 2002. Castle also sold 2,260,414 Delta shares in March 2004 for $20,917,797, cutting its stake to about 25% of Delta, and three Castle officers/directors (Joseph Castle, John Keller, Russell Lewis) also sit on Delta's board.
asset acquisition disposition

2002

17 June
On May 31, 2002 Castle completed the sale of all its domestic oil and gas properties to Delta Petroleum Company under the agreement dated January 15, 2002. It received $18,236,000 cash plus 9,566,000 Delta shares (appraised at $26,952,000), leaving it with about 44% of Delta, and Delta holds an option to buy back up to 3,188,667 of those shares at $4.50 within a year. This matches the 44% holding disclosed in the June 2002 ownership notice.
asset acquisition disposition