FOOTHILLS EXPLORATION, INC.

FOOTHILLS EXPLORATION, INC. deregistered its securities, ending its obligation to file reports with the SEC.

listing compliance notice

On May 28, 2020 the company created Series A Preferred Stock (10,000,000 shares designated, each convertible into 200 common shares) and issued all 10,000,000 shares. Beijing Gas Blue Sky Holding Limited, described as a related party, received 5,000,000 shares for $50,000 cash under an April 6, 2020 agreement. Executive Chairman Kevin Sylla received 5,000,000 shares in exchange for $100,000 of debt owed to him. The filing states these shares convert into 2,000,000,000 common shares and vote alongside common holders on an as-if-converted basis. After a change of control (as defined), the preferred holders can elect a majority of the board. For existing common shareholders this is very large potential dilution and a shift in voting power (inference from the stated terms), set against the 475M authorized common noted earlier.

capital raising announcement

On October 9, 2019 the company decided not to go ahead with either Montana acquisition (the 87-well deal signed May 23 and the 12-well deal signed June 26). The filing cites extra financial requirements, including additional bonding, that the Montana oil and gas regulator asked for on the shut-in wells, plus other reasons it does not disclose. This resolves both pending Montana deals as not closing, so the growth plan built around them in 2019 is dropped.

material agreement termination

On June 26, 2019 the company's subsidiary signed a second Montana letter agreement, for 12 shut-in wells and about 5,769 acres (four gas wells plus pipelines, gathering and compression facilities in Stillwater and Golden Valley counties), at an undisclosed price. A non-refundable deposit was paid (amount not stated), the company assumes the seller's liabilities for the assets, closing is due within 60 days of full execution, and completion is not assured. The company also said it is marketing 60 units at $50,000 each in Foothills Production II, LLC, to raise up to $3,000,000. Investors would get a net profits interest (50% for four years, then 25% for four more), plus 50,000 company shares and A- and B-warrants (50,000 each at $0.20 and $0.40) per unit. The wells are shut-in, so no production is stated. This is separate from the May 23 87-well Montana letter agreement, and it makes the FP2 vehicle a funding route for Montana, though the filing does not tie the raise to a specific deal (inference).

material agreement

On May 23, 2019 the company's Wyoming subsidiary signed a letter agreement to buy 87 Montana wells and acreage from an unrelated seller, as foreshadowed in the May 20 filing: 29 gas wells (10 producing, 19 shut-in) in Sweet Grass and Stillwater counties and 58 oil and injection wells in Musselshell and Rosebud counties, with about $1.1 million annual gross oil revenue. Closing is due within 60 days of full execution, and is subject to Montana Board of Oil and Gas Conservation approval and financing. No price is disclosed, and the filing says closing is not assured.

material agreement

The company closed a $131,250 convertible note on May 15, 2019 (net $125,000, 12% interest, due May 15, 2020), convertible after 180 days at 55% of the lowest recent trading price. To cover the required share reserve, Executive Chairman Kevin Sylla lent 1.4 million of his shares, to be returned once shareholders' April 18 approval to raise authorized common stock from 100 million to 475 million shares takes effect. The company also said it is in advanced discussions to buy Montana oil and gas assets (87 wells, about $1.1 million annual gross oil revenue, about 106 barrels/day gross), through a new vehicle, with no assurance it will close. The authorized share increase is a sign of expected further dilution (inference).

capital raising announcement

On March 28, 2019 the company closed the purchase of about 16,387 net acres of undeveloped leases in Wyoming's Wind River Basin (Fremont County) from an affiliate of American Shale Energy, for an undisclosed sum plus a reserved overriding royalty. This gives it 100% working interest and 82.5% net revenue interest. This is the second deal of 2019 after the Green River Basin gas wells. Federal leases of 16,066 net acres carry about $128,584 in delay rentals over four years, and about 320 net acres of fee leases may be lost if not renegotiated. A finder, Geopinion, gets restricted shares (the filing text reads '125,00', apparently a typo). The acreage is undeveloped, with no production stated.

material agreement

On March 6, 2019 the company closed the Wyoming gas acquisition flagged in the November 2018 letter of intent (agreement dated December 11, 2018): 22 natural gas wells on about 18,214 gross acres in the Greater Green River Basin, 78% held by production, for about $700,000 cash. The wells produce around 900 Mcf/d, and title transfer awaits the BLM process. It was funded by a $705,882 senior secured convertible note (proceeds $600,000, 10% interest, due September 1, 2019, convertible at $0.50) with warrants for 1,125,000 shares at $0.50 and a guarantee from Sylla. The note is secured by the acquired assets, and the lender also gets a 10% net profits interest from September 2, 2019 to September 1, 2022, with $20,000 monthly payments under a cash management agreement. This resolves the letter of intent but adds short-term debt due in about six months.

capital raising announcement

On November 1, 2018 the company issued a $380,000 convertible note (10% original issue discount, 12% interest, due May 1, 2019) for $342,000 of proceeds, plus 650,000 restricted shares and two 5-year warrant tranches (687,500 and 2,062,500 shares) at $0.20. The lender can convert at 50% of the lowest recent trading price, and the filing itself warns shareholders could be materially diluted and a change in control could occur. Proceeds are to retire certain loan obligations currently due, plus working capital. Separately, a subsidiary signed a letter of intent to buy producing natural gas properties in Wyoming (about 18,000 gross acres, mostly stripper gas production), subject to due diligence, definitive agreements and financing; no price is given. The company's address has moved to Los Angeles from Denver. The terms are much harsher than the 2017 notes (conversion at $0.665 and warrants at $1.00), a point the filing's own figures support.

capital raising announcement

On September 29, 2017 the company issued a $250,000 note to an unaffiliated investor, due January 2, 2018 (interest-free if paid on time, 15% afterward), along with warrants for 375,000 shares at $0.665 (to 2019), 375,000 at $1.25 and 185,000 at $2.00 (both to 2020). Executive Chairman Kevin Sylla personally guaranteed the note. Because of price-protection terms in earlier unit sales, it will also issue 136,015 shares and matching warrants to earlier investors (100,752 to Wilshire), with warrant prices reset to $0.665, which dilutes existing holders. The proceeds are for general operating purposes.

capital raising announcement

On May 11, 2017 the company signed a purchase agreement with an undisclosed seller for Utah and Colorado assets: 67,330 gross acres (49,600 net), 85 wells (31 producing, 54 shut-in), of which it would operate 66. It expects to close by June 30, 2017 and says it would bring total Rockies acreage above 100,000 acres. The filing gives no price or financing details, and closing is subject to conditions with no assurance it will happen.

material agreement

The company borrowed $1,000,000 from Full Wealth Investment Hong Kong (January 5, 2017) and $1,250,000 from Berwin Trading (January 6, 2017) on unsecured debentures at 9% interest, each due in 120 days (11% if overdue). Proceeds are meant for obligations under the Total Belief purchase, working capital and target drilling. This is the financing the Total Belief deal required, adds $2,250,000 of short-term debt, and Berwin is the same investor that bought shares in 2016.

material agreement

On December 30, 2016 the company (through a subsidiary) bought Utah and related interests from Total Belief Limited, a subsidiary of Hong Kong-listed New Times Energy, for $10,750,000: $75,000 cash at closing, $675,000 cash within 10 business days, 2,083,334 restricted shares valued at $4,000,000 ($1.92 each), and a $6,000,000 no-interest note due in 18 months. It gets an entry into the Uinta Basin, six shut-in Natural Buttes wells it plans to rework, a 55.63% stake in Grey Hawk Exploration (non-operated interest in two producing wells), and the remaining 25% of Tiger Energy Partners International from Green Stone. The press release says the deal also lifts its Ladysmith interest from 35% to up to 75% and that it must raise at least $2,250,000 within 10 business days of closing, with only non-binding assurances of funding. This is the company's first producing-type asset after being pre-revenue, and it adds new shares and a large debt; a related party (Kevin Sylla, tied to principal holder Wilshire) introduced the deal.

material agreement

On December 12, 2016 the company agreed with Magna Operating, LLC to take part in the Labokay prospect (about 240 acres, Calcasieu Parish, Louisiana), its first Gulf Coast project. Its subsidiary owed Magna $144,000 for land, lease and admin costs, will drill and operate a test well, and earns 100% before payout with Magna backing in for 20% after; the company expects to start drilling in early Q1 2017 and gets a five-year area of mutual interest with access to Magna's 3D seismic data.

material agreement

Now named Foothills Exploration, Inc. (FTXP), the company signed a farmout with Koch Exploration Company on the Ironwood and Paw Paw prospects in Wyoming's Big Horn Basin (about 10,583 acres combined). It gets 100% of the first Paw Paw well until payout, after which Koch backs in for 25%, and can earn 75% of Ironwood by paying all costs of a test well by July 1, 2017. The company says it plans to drill its first well before the end of 2016; the 7 million barrel figure is a possible recoverable estimate, not proven reserves.

material agreement

On June 30, 2016 the company agreed to sell 3,007,519 new shares to Berwin Trading Limited at $0.665 per share, raising $2 million. This is the first new money raised since the Foothills Petroleum share exchange and adds new shares for existing holders (dilution).

capital raising announcement

Key Link Assets Corp., a shell that had planned to buy grocery stores, acquired all of Foothills Petroleum, Inc. on May 27, 2016 in a share exchange, issuing 6,003,759 new shares (4,500,000 to Wilshire Energy Partners and 1,503,759 to Alternus Capital Holdings). Foothills Petroleum's holders now own about 71.8% of roughly 8,363,759 shares outstanding, and the company's business becomes oil and gas acquisition and development. Foothills Petroleum has no revenue and holds Wyoming leases (38,120 acres Springs Prospect, a 35% working interest in the 3,061-acre Ladysmith prospect) and about $1,000,000 of 8% convertible notes owed to Alternus; the filing also says Wilshire got 700,000 warrants and 14.1 million shares bought earlier by Foothills (about 96%) are cancelled.

asset acquisition disposition