WHITTIER ENERGY CORP company history: the story so far

History

Whittier Energy grew from a 2003 reverse merger into a Gulf Coast explorer through debt and preferred stock, then agreed in 2007 to a $11.00-per-share cash sale to Sterling Energy.

2003-2004: A reverse merger and first acquisitions

The company began as Olympic Resources, which agreed on July 8, 2003 to merge with Whittier Energy Company. The merger closed on September 10, 2003. Whittier's holders ended up with about 85% of the common stock, so existing Olympic shareholders were reduced significantly. Headquarters moved to Houston, and the board and officers were replaced, with Bryce Rhodes as CEO, James Jeffs as Chairman and Michael Young as CFO. Olympic contributed non-operated gas interests, mainly in California. Whittier contributed operated interests in one Texas field and two Louisiana fields, plus non-operated interests in about fifteen fields.

In November 2003 the company proposed a one-for-ten reverse stock split and a move of its incorporation from Wyoming to Nevada, with the name changing to Whittier Energy Corporation. About 94.5 million common shares were outstanding then. By May 2004 the filings show the company under its new name, incorporated in Nevada.

Growth came in small steps. In 2004 it bought an average 73% operated interest in the Cut Off Field in Louisiana for $1.65 million, and raised its Bonnie View Field interest to 71.38%. In June 2004 it bought operated interests in three South Texas gas fields for about $7.5 million. Payment was about $5.7 million in cash, including about $3.1 million borrowed from Compass Bank, plus a roughly $1.8 million 7% convertible note, a commitment to drill four wells and a warrant for 300,000 shares. A private placement closed on June 30, 2004, selling 1.38 million shares at $1.75 with warrants at $2.50 to raise $2,415,000. If the resale registration was not effective by the end of 2004, the company owed buyers another 345,000 shares and warrants.

2005: The RIMCO purchase

The record for the rest of 2004 is quiet. On April 18, 2005 Whittier agreed to buy RIMCO Production Company for $56 million, which the company said would lift proved reserves from 2.66 million to about 6.75 million barrels of oil equivalent. The purchase closed on June 15, 2005. Funding came from about $50 million of Series A preferred stock (852,912 shares, about $46.9 million net, with Whittier Ventures and some officers and directors taking part) and a new $75 million BNP Paribas credit line with a $30.5 million borrowing base, about $20 million of which was drawn. The draw also repaid about $9.5 million of bank debt. Each preferred share converts into 30 common shares, or 10 after a planned one-for-three reverse split, which was planned for around July 1, 2005. The deal brought Beaver Dam Creek, Big Escambia Creek and Permian Basin fields, and about 95% of proved reserves sat in three areas.

2006: Two more acquisitions

Whittier kept buying. On May 1, 2006 it signed two deals worth a combined $31.9 million for properties with about 18.9 billion cubic feet equivalent of proved reserves. Westhoff Ranch in Jackson County, Texas (a 75% operated interest) closed on June 1 for about $19.9 million. On May 31 the BNP Paribas facility was raised to a $38 million borrowing base, a $100 million limit and a June 2009 maturity.

The Imperial Petroleum purchase closed on August 9 for three fields in Mississippi and Texas, at about $10.6 million rather than the $12 million first announced for four fields. Current net production was about 400 thousand cubic feet equivalent a day, below the roughly 664 cited in May. The credit agreement was restated with a $45 million borrowing base. In December 2006 the Westhoff financial statements were flagged for restatement, and its net revenue interest was corrected to about 62.3%.

2007: Sale to Sterling Energy

On January 19, 2007 Whittier agreed to be acquired by Sterling Energy plc for $11.00 per share in cash, about $145 million for equity holders, with Sterling assuming about $43 million of net liabilities. A $5.5 million termination fee could be owed to Sterling in certain circumstances. Whittier Ventures and all directors and officers agreed to vote 1,941,196 shares, about 15.4%, in favor. Executives were offered retention bonuses and change-of-control payments.

A final proxy was filed on February 28, setting a stockholder meeting for March 27, 2007. A majority of the 12,723,132 shares outstanding had to approve. On March 28 the exchange filed to remove the shares from listing, and on March 29 the company deregistered its securities, ending its duty to file reports with the SEC.

Written from the 19 story beats below (2003 to 29 Mar 2007), 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.

2007

29 Mar
WHITTIER ENERGY CORP deregistered its securities, ending its obligation to file reports with the SEC.
listing compliance notice
28 Mar
WHITTIER ENERGY CORP's exchange filed to remove a class of its securities from listing.
listing compliance notice
28 Feb
Whittier filed the final proxy statement for the Sterling merger, setting the stockholder meeting for March 27, 2007 (record date February 20, 2007), with mailing from about March 1. The terms are unchanged: $11.00 in cash per share, board recommends a vote in favor, and a majority of the 12,723,132 outstanding shares must approve. This resolves the open question of the meeting date; the vote and closing are still pending.
business combination
15 Feb
Whittier filed a preliminary proxy statement asking stockholders to approve the Sterling merger at $11.00 per share in cash. The board unanimously recommends a vote in favor; a majority of outstanding shares is required, and the meeting date was still blank. Nevada appraisal rights are available to eligible holders. Options and warrants in the money would be cashed out ($3.50 per warrant share), and the deal is valued at about $145.4 million. The 12,723,132 shares outstanding are noted, and about 15.4% are already committed to vote in favor. This continues the January 2007 merger; shareholders' positions are not yet ended.
business combination
24 Jan
Whittier filed the formal details of the January 19, 2007 Sterling merger: each share converts to $11.00 in cash, and the company may owe Sterling a $5.5 million termination fee in certain circumstances. Whittier Ventures and every director and executive officer signed voting agreements covering 1,941,196 shares (about 15.4%), up from the 14.34% Whittier Ventures commitment in the earlier record. It also reports that the board approved a retention plan and change-of-control payments for executives: retention bonuses of $120,000 (Rhodes), $120,000 (Silverman) and $87,500 (Stone), and change-of-control payments of $240,000, $240,000 and $175,000. Employment agreements were amended for tax-rule compliance (Section 409A).
business combination
19 Jan
Whittier agreed on January 19, 2007 to be acquired by Sterling Energy plc for $11.00 per share in cash, about $145 million to equity holders, with Sterling also assuming about $43 million of net liabilities. Both boards approved, and Whittier Ventures (about 14.34% of shares) agreed to vote in favor. Closing needs Whittier stockholder approval and routine regulatory approvals, and was expected in the first quarter of 2007. Shareholders' positions are not yet ended.
business combination

2006

15 Aug
On August 9, 2006 Whittier completed the Imperial Petroleum purchase of three fields in Mississippi and Texas for about $10.6 million cash (below the $12M first announced, which covered four fields), with an average 50% working interest. The press release gives current net production of about 400 Mcfe/d, lower than the roughly 664 Mcfe/d cited in May. It also amended and restated its BNP Paribas credit agreement, raising the borrowing base from $38M to $45M, with a $100M maximum made up of $94M revolver and $6M term loans (LIBOR plus 3.75%, repayable 18 months from borrowing).
asset acquisition disposition
6 June
Whittier closed the Westhoff Ranch purchase on June 1, 2006: a 75% operated working interest for about $19.9 million cash before closing adjustments, with net production of 3.1 million cubic feet of gas equivalent per day. On May 31 it also amended its BNP Paribas credit facility, raising the borrowing base from $30.5M to $38.0M, the maximum limit from $75M to $100M, and extending maturity one year to June 15, 2009. The Imperial deal was still pending, which the press release expected to close in early July.
asset acquisition disposition
5 May
Whittier signed two deals on May 1, 2006 to buy oil and gas properties for a combined $31.9 million cash: Westhoff Ranch in Jackson County, Texas ($19.9M plus 5% simple interest from May 1, for a 75% operated interest) and four fields from Imperial Petroleum ($12M, subject to Imperial shareholder approval). The filing says the properties carry about 18.9 Bcfe of proved reserves and about 3.8 Mmcfe/d of net production, and closings are expected by June 1 and June 30, 2006. This continues the acquisition growth that began with RIMCO in 2005.
material agreement

2005

21 June
Whittier completed the RIMCO acquisition on June 15, 2005 for about $56 million ($55M cash plus $1M assumed bank debt). It funded the deal with about $50M of Series A preferred stock (852,912 shares, about $46.9M net, with Whittier Ventures and some officers and directors taking part) and a new $75M BNP Paribas revolver with a $30.5M borrowing base, of which about $20M was drawn. The draw also repaid about $8.5M of Whittier bank debt and $1M of RIMCO's. This resolves the main open thread. Whittier now has Beaver Dam Creek (89% WI), Big Escambia Creek and Permian Basin fields, and about 95% of proved reserves in three areas. The filing says it acquired 23.1 Bcf of proved reserves. A $2.125M holdback covers indemnity claims, and the reverse split is planned for around July 1, 2005. Three executives were given employment agreements at $200,000 base salary.
asset acquisition disposition
8 June
On June 7, 2005 Whittier priced a private sale of 833,333 shares of Series A 8% convertible preferred stock at $60 per share, expected to close June 15 alongside the RIMCO purchase. This is the equity part of the funding for RIMCO. Each preferred share converts into 30 common shares, or 10 after a planned one-for-three reverse split and a Nasdaq National Market listing. This confirms the reverse split inferred earlier and means new shares for existing holders (inference: dilution). 8% dividends start only if conversion has not happened by Dec 31, 2005.
capital raising announcement
20 Apr
Whittier signed a merger agreement on April 18, 2005 to buy RIMCO Production Company, a private Delaware company, for $56 million ($55 million cash plus $1 million of assumed bank debt), expected to close by June 17, 2005. Whittier says it intends to fund the deal with a combination of equity and bank debt, and closing is conditioned on obtaining that cash, RIMCO shareholder approval and regulatory approvals; holders of 55.6% of RIMCO have agreed to vote in favour. The release says it would lift pro forma proved reserves to about 6.75 million barrels of oil equivalent from 2.66 million; this is far larger than the June 2004 South Texas purchase of about $7.5M and implies new financing, which may dilute shareholders (inference).
material agreement

2004

15 July
The private placement that opened in June closed on June 30, 2004: 1.38 million shares at $1.75 plus three-year warrants for 1.38 million shares at $2.50, raising $2,415,000, fully subscribed. If the resale registration is not effective by December 31, 2004, the company must issue another 345,000 shares and warrants to the buyers. This resolves the earlier offering announcement and adds dilution from new shares and warrants.
capital raising announcement
2 July
On June 17, 2004 the company bought operated working interests in three South Texas gas fields (Tom Lyne, Scott & Hopper, Cameron) for about $7.5 million from Texas Independent Exploration, GulfCoast Acquisitions, Frederick Zimmerman and others. Payment was about $5.7 million cash (including about $3.1 million more borrowed from Compass Bank), a roughly $1.8 million 7% six-year subordinated note convertible at $2.00 per share, a commitment to drill four wells within 24 months, a gas price-sharing deal through June 2008, and a warrant for 300,000 shares at $2.50. Net production is about 1.4 Mmcfd. Further financial statements are promised within 60 days.
asset acquisition disposition
18 June
The company completed the first closing of a private placement of units, each of 15,000 common shares plus a warrant for 15,000 shares at $2.50, priced at $26,250 per unit, for up to 92 units and $2,415,000 in total. Proceeds partly paid for its South Texas gas field acquisition. If the resale registration is not effective within six months of the final closing, buyers get extra units worth 25% of their subscription, which would dilute existing holders.
capital raising announcement
18 May
By this filing the company is Whittier Energy Corporation, incorporated in Nevada, so the reincorporation and name change appear to have been completed (inference from the filing's header). It bought an average 73% operated working interest in the Cut Off Field, Lafourche Parish, Louisiana for $1.65 million, paid with $650,000 of working capital and $1.0 million from its Compass Bank revolving credit line, and increased its Bonnie View Field interest to 71.38% for about $95,000. It plans to drill the Schirmer 1-19 well in May 2004, will sidetrack the Cavenham Forest 5-1 well in the Beaver Dam Creek Field, hired EnerCom for investor relations, and moved headquarters to 333 Clay Street, Houston.
drilling progress report

2003

18 Nov
The company filed a preliminary proxy for a December 16, 2003 special meeting to vote on a one-for-ten reverse stock split and on merging into its Nevada subsidiary Whittier Energy Corporation, which would move its incorporation from Wyoming to Nevada and change its name. This carries out the name change flagged after the merger. About 94.5 million common shares are outstanding, and Whittier Holdings, Inc. is listed with 36.6% and Whittier Ventures LLC (via its trustees) with 32.3%, while Pollock and Pierce hold 2.3% and 1.4%.
business combination
25 Sept
The Whittier merger closed on September 10, 2003, making Whittier a wholly owned subsidiary of Olympic; each of Whittier's 100,000 shares became 793.93142 Olympic common shares plus one preferred share (convertible into 60 common shares once 6,000,000 more shares are authorized), leaving former Whittier holders with about 85%. Headquarters moved to Houston, the board and officers were replaced (Rhodes CEO, Jeffs Chairman, Young CFO), Pollock received a warrant for 450,000 shares at $0.20, and a name change to Whittier Energy Corporation is planned at the next annual meeting. Olympic brought non-operated gas interests mainly in California; Whittier brought operated interests in one Texas field and two Louisiana fields plus non-operated interests in about fifteen fields. This completes the merger announced in August.
asset acquisition disposition
28 Aug
Olympic Resources told shareholders that its subsidiary WEC Acquisition had agreed on July 8, 2003 to merge with Whittier Energy Company (a Nevada corporation), with Whittier's holders to receive Olympic common and Series A preferred stock and end up with about 85% of Olympic's common stock after conversion. The board is to be mostly replaced (Jeffs, Dahl, Sorensen, Rhodes and Buckner joining; Bryce Rhodes to become CEO), and existing shareholders' stakes will be reduced significantly. No shareholder vote is required because Olympic's own consent as WEC's sole shareholder suffices.
business combination