GEORESOURCES INC

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

listing compliance notice

The Halcón merger closed on August 1, 2012. Each GeoResources share was cancelled and converted into $20.00 in cash plus 1.932 Halcón shares; Halcón paid about $525.7 million in cash and issued about 51.3 million shares. GeoResources became a wholly owned Halcón subsidiary, was then merged into Leopard Sub II and renamed Halcón Geo Holdings LLC, and now guarantees Halcón's 9.75% senior notes due 2020. Nasdaq trading was suspended and a Form 25 delisting application was filed. The company says it intends to file a Form 15 to end its reporting obligations. All GeoResources directors resigned, and Lodzinski, Ehler and Mury left the company, while Robert Anderson (Executive Vice President and COO) stayed as an officer. Floyd Wilson, Mark Mize and Stephen Herod took over the board. Warrants were assumed by Halcón and converted into warrants for the same merger consideration; options vested in full and RSUs settled. This resolves the merger thread begun on April 24, 2012.

business combination

GEORESOURCES INC's exchange filed to remove a class of its securities from listing.

listing compliance notice

GeoResources filed its definitive joint proxy statement with Halcón for the merger. Both companies' shareholder meetings are set for 10:00 a.m. on July 31, 2012 in Houston. GeoResources holders will vote on adopting the merger agreement (needs a majority of outstanding shares), an advisory vote on executive merger-related pay, and a possible adjournment. The board unanimously recommends voting for all three. Each share would receive $20.00 in cash plus 1.932 Halcón shares, fixed regardless of share price moves. Halcón holders will also vote on electing Michael Vlasic, a GeoResources director, to Halcón's board if the merger closes. This moves the merger toward a vote, but the vote has not happened yet.

business combination

On April 24, 2012 GeoResources agreed to be acquired by Halcón Resources: each GeoResources share would get $20.00 in cash plus 1.932 Halcón shares, fixed regardless of share price changes. GeoResources would become a wholly owned Halcón subsidiary and then be merged into another Halcón subsidiary. Closing needs both companies' shareholder votes, regulatory approvals and an effective registration statement; GeoResources owes a termination fee of about $27.8 million (about 2.75% of the merger consideration) under specified circumstances. Officers and directors holding about 17.1% have agreed to vote in favour, and CEO Lodzinski signed a six-month non-compete that takes effect on closing. This is a new thread that, if completed, would end shareholders' stand-alone position (the outcome is not yet decided, so no equity treatment is assigned).

business combination

On November 9, 2011 GeoResources signed a Third Amended and Restated Credit Agreement with Wells Fargo as agent: a $450.0 million five-year revolving facility with a $180.0 million initial borrowing base, maturing November 9, 2016. It replaces the $250.0 million July 2009 facility, with interest at LIBOR plus 1.75-2.75% (cheaper than the 2.25-3.0% before). The interest coverage covenant is no longer listed; current ratio (at least 1.0) and funded debt/EBITDAX (at most 4.0) remain, along with the Lodzinski-succession default.

material agreement

On January 12, 2011 GeoResources agreed to a public offering of 6,164,000 shares at $25.00, completed January 19, 2011: 5,175,000 sold by the company and 989,000 by selling shareholders VILLCo Energy and Chandler Energy (linked to directors Vlasic and Collis Chandler). The company expects about $122.6 million net proceeds, with about $87.0 million to repay its credit facility in full and the rest for Bakken and Eagle Ford drilling, leasehold and general purposes. The new shares dilute existing holders.

material agreement

On July 13, 2009 GeoResources signed a Second Amended and Restated Credit Agreement, raising its revolving facility to up to $250.0 million (from $200M) with an initial borrowing base of $135.0 million and maturity extended to October 16, 2012. Interest is LIBOR plus 2.25-3.0% (previously LIBOR plus 1.50-2.25%), so borrowing is more expensive, and the same financial covenants and Lodzinski-succession default carry over. This replaces the October 2007 Wachovia facility, now with a lender group led by Wachovia as agent; the filing notes Wells Fargo acquired Wachovia on December 31, 2008.

material agreement

On May 29, 2009 GeoResources, through its subsidiary Catena, bought producing Giddings Field (Grimes and Montgomery Counties, Texas) interests from its affiliated partnership SBE Partners LP for $48.4 million cash, funded by borrowing on its revolving credit facility. This lifts its partnership share in SBE Partners from 2% to 30% and its direct working interests from 6.5-7.8% to 34-37%, building on the Giddings partnership with GE from early 2007. The filing also furnishes press releases saying a Bakken Shale acquisition closed May 20, 2009 (net cost about $10.4 million, a 15% interest in about 60,000 net acres, via the existing Slawson joint venture), and that borrowings for the two deals totalled $58.0 million. Financials for the acquired properties were promised by amendment.

asset acquisition disposition

On June 5, 2008 GeoResources agreed to sell 1,533,334 restricted shares at $22.50 each, plus five-year warrants for 613,336 shares at $32.43, to non-affiliated accredited investors for $34.5 million gross; the deal closed June 9, 2008. Wachovia Capital Markets, the placement agent, was paid about $1.7 million. The company must file a resale registration statement by July 9, 2008, and the warrants cannot be exercised until six months after closing. This adds new shares (and potential warrant shares), which dilutes existing holders; the filing does not state what the proceeds will be used for.

capital raising announcement

On May 30, 2008 GeoResources agreed, through a new partnership OKLA Energy Partners, LP, to buy producing Oklahoma oil and gas properties from B&W Operating, L.L.C. and others for $60.5 million cash, subject to closing adjustments. GeoResources' subsidiary takes 18% and OKLA 82%; OKLA is owned 98% by a GE unit as limited partner and 2% by GeoResources' subsidiary Catena as general partner, and GeoResources will fund about $13.0 million with cash. The properties have over 200 producing wells and over 90 mostly proved undeveloped drilling locations, with production about 90% natural gas; closing was expected in the first week of June. This is a third partnership with GE Energy Financial Services, following the Giddings field deal in early 2007 and the earlier Gulf Coast partnership whose LP interest GeoResources bought in October 2007.

material agreement

On October 16, 2007 GeoResources bought the 98% limited partner interest in AROC Energy, LP (it already held the 2% general partner stake) from TIFD III-X LLC for $91.1 million cash, plus $12.952 million to cancel the partnership's hedges. The assets are in Louisiana, the Gulf Coast, South Texas, the Permian Basin and the Black Warrior Basin, and the company plans to dissolve the partnership. It was funded with $8.052 million cash and $96.0 million borrowed under an amended and restated Wachovia credit facility, which raises the September 2007 facility to up to $200 million with a $110 million initial borrowing base, maturing October 16, 2010, so the earlier unknown drawn amount is now largely answered. The company says the deal roughly doubles reserves and production (acquired proved reserves 7.6 MMBOE, production 1,962 BOEPD, per company estimates), and it entered new four-year oil swaps and gas collars with Wachovia for 2008-2011. It also expects to sell some existing and acquired non-core properties.

asset acquisition disposition

On September 26, 2007 GeoResources signed a senior secured revolving credit facility with Wachovia Bank (agent) and U.S. Bank of up to $100 million, with an initial borrowing base of $35 million, maturing September 26, 2010 and secured by substantially all assets. Interest is LIBOR plus 1.50%-2.0% or prime plus 0.5%-1.0%, with a 0.375% commitment fee. Covenants include a current ratio of at least 1.0, funded debt to EBITDA of no more than 4.0 and interest coverage of at least 3.0, and default triggers include a change of control or Lodzinski leaving as CEO without Wachovia approving a successor. Director Scott Stevens is a Principal of Wachovia Capital Partners, which owns 1,888,560 company shares and is part of the Wachovia group. The filing does not say whether any amount was drawn or whether this replaces the Southern Bay bank facility.

debt financing

On May 24, 2007 GeoResources sold the drilling rig and equipment of its Western Star Drilling subsidiary to Redhawk Drilling, LLC for $1.5 million: $1.0 million in cash plus a $500,000 note paid in two $250,000 installments (Nov 1, 2007 and May 1, 2008) at 7% interest, secured by the rig. The filing says this ends the company's drilling segment, and Redhawk agreed to supply drilling at standard day rates for 24 months or 24 wells. The attached press release also reports a second completed well in Montgomery County, Texas (14.5 MMCFPD initial rate, limited by pipeline capacity; company owns a 10% interest and is operator) and a first North Dakota well since the April merger (100% working interest, first production targeted mid-June).

asset acquisition disposition

The merger with Southern Bay and Chandler's business (via PICA) closed on April 17, 2007, resolving the pending deal. GeoResources issued 10,690,000 new shares (8,263,000 to Southern Bay's partners, 1,931,000 to Chandler's members, 496,000 for Colorado Yuma working interests), about 73.4% of its shares, so control changed. Vlasic FAL, L.P. received 5,022,018 shares (34.4%); the company now has Houston headquarters, new management, a NASDAQ Global Market listing (symbol GEOI) from April 18, and registration rights for the new holders. Southern Bay is treated as the accounting acquirer, so its history becomes the reported history.

business combination

GEORESOURCES INC's exchange filed to remove a class of its securities from listing.

listing compliance notice

GeoResources issued its definitive proxy for a special meeting on March 29, 2007 (record date February 16) to approve the Southern Bay and Chandler mergers. Existing shareholders would own about 26.2% afterward. Southern Bay bought Texas producing working interests for about $7.4 million plus $870,000 drilling costs on February 13, funded by a $5 million capital call, a $3 million bank drawdown and $270,000 of working capital; GeoResources raised Southern Bay's debt ceiling in the merger agreement to $9.1 million. A leonardite sale at about $1 million could allow a dividend of roughly $.06 per share, but a sale is not assured. This updates the earlier preliminary proxy, which had a December 2006 meeting date.

business combination

GeoResources filed a preliminary proxy for a December 14, 2006 special meeting to vote on the Southern Bay and Chandler mergers. Former owners of the acquired businesses would hold about 73.8% of the combined company, so current shareholders would be heavily diluted. Votes are also sought on raising authorized stock to 100 million common and 20 million preferred shares and on enlarging the incentive plan to 2,000,000 shares. If the company sells its leonardite assets before closing, half the proceeds could be paid to shareholders as a dividend.

business combination

GeoResources agreed on September 14, 2006 to merge with Southern Bay Oil & Gas, L.P. and Chandler Energy, LLC, issuing 8,263,000 shares to Southern Bay's owners and 1,931,000 to Chandler's owners, plus up to 496,000 shares for working interests in a Colorado project. Existing shareholders must approve the share issuance, a larger authorized share count and a bigger employee incentive plan (300,000 to 1,750,000 shares); Frank Lodzinski would become CEO and Jeffrey Vickers would move to VP, Williston Basin. The company expects closing in late 2006 or Q1 2007, with no assurance.

business combination