Sable Natural Resources Corp company history: the story so far

History

A company that bought a big oilfield services business in 2010 lost it to its financier by 2012, then bought oil fields with secured debt in 2014 and saw its subsidiary file Chapter 11 in 2015.

2010-2012: The Francis deal and its collapse

In November 2010 the company bought Francis Drilling Fluids, a Louisiana oilfield fluids and services provider, in a deal valued at $52,677,466. It paid $21.5 million cash, issued 5,407,339 shares valued at $2.00, gave a $750,000 seller note and paid off $19,612,788 of Francis debt. Funding came from a PNC Bank facility of up to $24 million and $20 million from WayPoint Nytex for preferred stock and warrants. Those warrants could reach 51% of the common stock if default conditions were met, so the deal carried heavy dilution risk.

Trouble came fast. In April 2011 PNC and WayPoint gave notices of default after covenants were missed, which the company blamed on integration difficulties and higher than expected capital spending at Francis. On May 4, 2011 WayPoint demanded the company buy back its securities for $30,000,000. A forbearance agreement on September 30, 2011 held off enforcement, but required a recapitalisation within 60 days, with the buyback priced at $32,371,264. WayPoint gave notice of default again on November 14, 2011.

On May 4, 2012 Francis was sold to FDF Resources Holdings LLC for $62,500,000, a sale WayPoint directed. The subsidiary received about $4,481,000 in cash, with $6,250,000 held in escrow for release at 18 and 36 months. In November 2012 the company sold its 15% Newark E&P interest for $3.2 million.

2013-2015: Upham and Chapter 11

The record for 2013 is quiet. Then in October 2014 the company, through Sable Operating Company, arranged a loan of up to $15 million at 13% interest and paid $9.5 million cash for Upham Oil & Gas leases covering 19,881 acres and 123 wells, 49 of them producing. Notes of $8.9 million were issued at closing, secured by a first lien on the assets. Lenders received warrants over about 4,895,000 shares at $0.50, including RKJ Holdings, owned by President and COO Cory Hall, which lent $2.85 million. Shares on issue rose from 26,728,695 at the end of 2013 to 35,157,501 at the end of 2014.

On August 6, 2015 noteholders gave notice of acceleration and set a foreclosure sale for September 1. The company put the default at $11.325 million. On August 28, 2015 Sable Operating Company filed for Chapter 11 in the Northern District of Texas. As of September 3, 2015, the filing covered only that subsidiary, and it did not say whether the parent had filed or what would happen to shareholders' stock.

Written from the 7 story beats below (2010 to 3 Sept 2015), 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.

shares on issue market cap (log scale)

201535.2m shares

3 Sept
On August 28, 2015, the subsidiary Sable Operating Company filed for Chapter 11 bankruptcy in the Northern District of Texas. The company attributes it to a default of $11.325 million on the 13% senior secured notes that financed the 2014 Upham purchase, after holders gave notice on August 6 of acceleration and a foreclosure sale set for September 1, 2015. The filing covers only the subsidiary, which holds the Upham assets; it does not say the parent company filed or what will happen to shareholders' stock.
bankruptcy or receivership
35.2m sh

201434.9m shares

21 Oct
Through its subsidiary Sable Operating Company (formerly NYTEX Petroleum, Inc.), the company arranged a loan of up to $15 million at 13% interest (due October 15, 2017) and used it to buy, for $9.5 million cash, 100% of leases covering 19,881 acres with 123 wells (49 producing, 69 shut-in) from Upham Oil & Gas and affiliated sellers. $8.9 million of notes were issued at closing, secured by a first lien on the purchased assets, and lenders received warrants over about 4,895,000 shares at $0.50 (up to 8,250,000 if the loan is fully drawn). Lender RKJ Holdings, owned by company President/COO and director Cory Hall, lent $2.85 million and got warrants over 1,567,500 shares. This gives the company operating oil and gas assets again after the 2012 sales, funded with secured debt and potentially dilutive warrants.
asset acquisition disposition
34.9m sh

201226.7m shares

4 Dec
On November 29, 2012, through its subsidiary NYTEX Petroleum, Inc., the company sold its 15% interest in about 17,000 leasehold acres (including two producing wells and a carried interest in seven more drilling prospects) to Newark E&P, LLC for $3.2 million in cash. This is a further disposal after the May 2012 sale of Francis Drilling Fluids, and the filing does not say what use the cash will be put to.
material agreement
26.7m sh
10 May
On May 4, 2012 the Francis Drilling Fluids business was sold by merger to unaffiliated FDF Resources Holdings LLC for $62,500,000, so the company no longer owns it. The filing says WayPoint directed the sale after the company defaulted under the forbearance agreement (WayPoint gave notice of default on November 14, 2011) and the company did not control its timing or price. After paying debts including PNC, the WayPoint put amount, expenses and other items, the subsidiary received about $4,481,000 in cash; $6,250,000 is held in escrow, with releases at 18 and 36 months. The company also received $812,500 of accrued management fees, $110,279 of expense reimbursement and $150,000 from WayPoint, and mutual releases were signed. This ends the Francis/WayPoint saga that began in November 2010. The filing text is truncated, so the later terms of the Omnibus Agreement are not covered.
business combination
27.5m sh

201127.3m shares

6 Oct
On September 30, 2011 the company and its Francis subsidiaries signed a forbearance agreement: WayPoint agreed to hold off enforcing its rights over the defaults and the unpaid $30 million put demand. In return, the company must recapitalize within 60 days by repurchasing WayPoint's securities for $32,371,264 (as of September 30, 2011) plus default-rate interest and legal fees, and it must find a lead investor within 35 days or show progress. WayPoint also agreed not to exercise its warrants for a majority of the stock or change officers and directors during the period. This is a temporary reprieve, not a fix.
material agreement
27.3m sh
10 May
PNC Bank (April 13, 2011) and WayPoint (April 14, 2011) gave notices of default after covenants were missed as of November 30, 2010 and February 28, 2011; the company cites integration difficulties at Francis Drilling Fluids and higher than expected capital spending there. On May 4, 2011 WayPoint demanded the company repurchase its warrants and preferred stock for $30,000,000 within five business days. The company says it does not expect to have the funds in time, and is negotiating, with no assurance of success. This turns the financing behind the Francis deal into a serious problem.
debt financing
26.2m sh

2010

30 Nov
On November 23, 2010, the company bought Francis Drilling Fluids (a Louisiana oilfield fluids and services provider) in a deal valued at $52,677,466: $21.5 million cash, 5,407,339 company shares valued at $2.00, a $750,000 seller note and payoff of $19,612,788 of Francis debt. It was financed by a PNC Bank senior facility of up to $24 million and $20 million from WayPoint Nytex for preferred stock and warrants. The WayPoint warrants could reach 51% of the common stock if default conditions are met, and WayPoint gets board designation rights, so shareholders face heavy potential dilution and loss of control. This is a major shift from the earlier small Supreme Vacuum stake sale. The filing text is truncated, so further terms are not covered.
asset acquisition disposition