Each one in plain English, with the numbers worked through for a shareholder.
21 June 2005asset acquisition disposition● NeutralMajor
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.
Whittier furnished more RIMCO information for the pending acquisition: unaudited RIMCO accounts for the first quarter of 2005 and 2004, reserve and production data, and pro forma statements. The visible RIMCO figures show Q1 2005 oil and gas sales of $4.8M and net income of $1.5M. The filing adds no new deal terms.
8 June 2005capital raising announcement● NeutralMajor
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.
Whittier furnished financial and reserve information on RIMCO, the company it agreed in April 2005 to buy for about $55 million cash plus assumed liabilities: RIMCO's audited 2004 and 2003 accounts, combined reserve and production data, and pro forma statements. The visible RIMCO figures show oil and gas sales of $17.3M in 2004 against $34.7M in 2003, and operating income of $5.6M against $15.5M. The pending purchase itself is unchanged.
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).
Whittier finished drilling Scott & Hopper #4 (9,725 feet), with logs showing about 30 feet of net pay in the main target and over 50 feet in shallower sands; completion and testing are planned for March 2005. This fulfils the nine-month drilling commitment from the June 2004 South Texas acquisition; the second commitment well must spud by Dec 31, 2005. Rachal #1 was perforated in February and is to be fracked and tied in during March. Results are preliminary, with no production figures yet.
Whittier reported it drilled and set casing on the Rachal #1 well in Webb County (23 feet gross pay, 16 net; 30% working interest) and is preparing to spud Scott & Hopper #4 in Brooks County, a roughly $1.9 million well, in late January 2005. Spudding before March 16, 2005 meets the nine-month drilling commitment from the June 2004 South Texas acquisition; a second well must start by Dec 31, 2005 or 50% of the remaining undeveloped acreage interest goes back to the seller. The release also repeats the Grant Thornton auditor appointment.
Whittier's audit committee dismissed Brown Armstrong (auditor since Nov 2003) effective January 13, 2005 and appointed Grant Thornton LLP for the year ended December 31, 2004. The filing states Brown Armstrong's opinions for the last two years were unqualified and there were no disagreements; the former auditor's letter agrees.
The SEC declared effective Whittier's resale registration statement (Form SB-2) covering up to 4,320,470 shares, including shares, $2.50 warrants and shares under the $2.00 convertible note. Because it became effective before the Dec 31, 2004 deadline, the company says it will not have to issue the extra 345,000 shares and warrants to the June placement investors. This resolves that open thread; Whittier receives no money from resales by the holders.
Whittier announced two new prospects: the Rachal Prospect in Webb County, Texas (30% working interest, operator, Rachal #1 well expected to spud before year-end, estimated $550,000 cost) and the Amber Prospect in New Iberia Parish, Louisiana (30% operated interest, test well planned for Q1 2005, estimated $750,000). It also bought an additional 11% average interest in the Rayne Field, Louisiana for about $174,000, raising its operated interest to about 33%, and reported six more Greater Mayfield, Oklahoma wells completed since Q2 (15 producing in total, net production up to 1 Mmcfd from 425 Mcfd). This adds new drilling plans and small acquisitions to its Texas and Louisiana operations, building on the Mayfield minor interests held earlier.
Exploration Capital Partners Limited Partnership, Resource Capital Investment Corporation OF ABO, Rule Family Trust udt, Arthur Richards Rule Not Appli disclosed a new substantial WHITTIER ENERGY CORP shareholding (7.20% of votes).
