History
New Western Energy built Texas and Oklahoma oil holdings through share-and-cash deals, then sold Kansas leases to clear debt and swapped its main debenture for 50 million options.
2012-2013: Buying up wells
New Western Energy, run by Javan Khazali, set out to grow by buying oil and gas leases. On January 2, 2012 it completed the purchase of Royal Texan Energy Co. for 1,000,000 new shares, $35,000 cash, a $55,000 promissory note and a guarantee of about $50,000 of Royal Texan's bank debt. The business held leases on about 1,280 acres in Shackelford and Stephens Counties, Texas, with 43 wells, three of them active, and ran as a separate subsidiary.
On December 31, 2012 the company bought eight leases in Rogers County, Oklahoma from Pioneer Oil Development LLC for $600,000. It paid with 400,000 shares and $300,000 in cash over 12 months through two promissory notes. The leases covered 1,520 acres, 106 oil wells and 8 disposal wells, and the company said it would need to spend more to bring them into production. Shares on issue rose from about 64.2 million at the end of 2011 to 68.0 million at the end of 2012 and 72.2 million at the end of 2013.
In November 2013 it raised money through convertible debentures with warrants, booking $1.12 of debt for every dollar received. The deal closed at $1.5 million of principal for $1.2 million of new cash, the rest being old debt rolled in, plus warrants over 7.5 million shares at 25 cents. Management presented it as funding for Kansas and Oklahoma drilling.
2014-2015: Merger failure and debt clearing
On January 23, 2014 New Western agreed to acquire Legend Oil and Gas Ltd. by merger, issuing one New Western share for every three Legend shares, about 40.9 million shares in total. The deal would have added Legend's Canadian production and Kansas properties. On April 30, 2014 both sides mutually ended the agreement with no further liability, and the filing gave no reason.
On September 5, 2014 the company sold two Wilson County, Kansas leases, bought in December 2013 for $470,000, to an unrelated purchaser who had taken over the $1,040,000 owed to Hillair Capital. The debt was cancelled, Hillair's security over company assets was released, and the company booked a gain.
On September 18, 2015 it settled the November 2013 debenture by granting an existing shareholder and creditor options over 50,000,000 shares at a $0.00 exercise price, expiring in 2020. The creditor cancelled the debenture and released its security, with the claims valued at $2,000,000. As of September 23, 2015, the debenture was cleared, but exercise of the options could add up to 50 million shares, against 77.4 million on issue at the end of 2015's count. The status of the 7.5 million warrants was not stated.
Written from the 8 story beats below (2012 to 23 Sept 2015), which come from the company's own announcements and filings.