Texas South Energy, Inc.

On April 30, 2019 the company received a formal Default Notice and Demand for Payment from GulfSlope and Delek under the Tau joint operating agreement for $2,870,183.11 due as of April 18, 2019. That amount includes the $1,299,229 default reported in March, so the unpaid sum has grown from the earlier $1.9 million figure. The company again says it is trying to raise capital, and warns that a successful foreclosure could cost it all its rights in the Tau Prospect.

material agreement termination

As of March 15, 2019 the company was declared in default under its joint operating agreement with GulfSlope over $1,299,229 due February 12, 2019 for drilling the Tau Prospect; GulfSlope says billings have raised the total to $1,915,304, and drilling continues, so more will be owed. The agreement gives a lien on the company's Tau leases and the operator may pursue foreclosure, which the company says could mean losing all its rights in Tau if it fails to raise capital. This is a setback for the Delek farm-out drilling the company announced in January 2018.

material agreement termination

On January 8, 2018 the company signed a participation agreement with Delek GOM Investments (a Delek Group subsidiary) and GulfSlope to farm out its Gulf of Mexico leases. The initial wells are the Canoe and Tau prospects. In each phase Delek earns a 75% working interest by paying 90% of exploration well costs, the company keeps 5% while paying 2% of costs, and Delek pays the company $405,000 per exploration plan filed. Delek also gets an option to buy up to 5% of the company's stock per phase (20% maximum) at a 10% discount to the 30-day average price, expiring January 8, 2020. To pay a consultant, Hi-View Investment Partners, the company issued 20 million shares and will assign a 0.2% net profits interest; the shares come back if Delek hasn't paid the $405,000 within six months. Other issuances: 7,250,000 shares for $145,000 (Oct 2017), 650,000 shares for $13,000 (Jan 2018), and $400,000 of a promissory note converted into 15,000,000 shares. This moves the earlier 20% offshore interests toward drilling, but cuts the company's share of those prospects to 5% and adds dilution.

capital raising announcement

On January 4, 2017 the company bought onshore oil and gas assets in Louisiana and Texas from Sydson Energy and Sydson Resources, including a 37.5% working interest in the Sugarberry South Project (two existing wells that tested at over 400 barrels a day combined) and 50% interests in undrilled acreage in the West Tuleta and Ray fields in Bee County, Texas. Payment includes 100 million shares to Michael Mayell, a $250,000 note due March 5, 2017, $1,250,000 of Sydson's obligations on retained interests, carried interests and $500,000 for seismic data on one prospect. Leadership changed: Mayell became CEO, John Connally III became chairman (65.1 million shares, $420,000 salary), and founder James Askew resigned as officer and director to become a consultant at $35,000 a month with 27 million shares. This adds producing-area assets to the company's earlier offshore 20% interests and heavily dilutes existing holders. The filing was truncated, so some share-issuance details are not captured.

asset acquisition disposition

On September 18, 2015 the company paid the final $1.8 million of the $10 million total under its GulfSlope farm-out agreement of March 10, 2014, and now holds a 20% working interest in the five Prospects. This completes the deal begun in 2014; GulfSlope remains operator and the company owes its share of annual rental costs. The company's address also changed to 2001 Kirby Dr., Houston.

material agreement

Noteholders converted $6,993,000 of principal plus $27,436.86 of interest from the March 2014 convertible notes into 35,102,181 shares, which ends the company's obligations under that note agreement and dilutes existing holders. Separately, the company issued a $1,000,000 promissory note at 10% interest, maturing June 30, 2015, with a warrant for 2,000,000 shares at $0.25 (expiring June 30, 2015), effective June 12, 2014.

capital raising announcement

On March 10, 2014 the company agreed with GulfSlope Energy to buy up to a 20% working interest in five Gulf prospects for up to $10 million, payable by April 11, 2014. To fund it, it set up up to $10 million of 1% convertible notes (convertible at $0.20 per share, up to 50 million shares, maturing August 15, 2014), with $1 million funded on March 10 and the rest due in later tranches. Money goes back to noteholders if GulfSlope is not the high bidder on leases. CEO James Askew is also a GulfSlope director and owns 8.8% of it, a related-party link.

capital raising announcement

On January 24, 2014 the company replaced its auditor M&K CPAS with LBB & Associates for the fiscal year ending October 31, 2013. The filing discloses an unresolved disagreement over how to value shares issued to an employee and a consultant: M&K wanted the market price ($0.45 and $0.75), while the company argued for the private-placement prices ($0.00034 and $0.05). M&K's earlier reports carried a going-concern doubt.

auditor change