CARBON NATURAL GAS COMPANY (OTCMKTS:CRBO) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement

On August 15, 2017, Carbon Appalachian Company, LLC (“Carbon Appalachian”), a venture owned by Carbon Natural Gas Company, a Delaware corporation (“Carbon” or the “Company”) and two institutional investors, completed the acquisition of natural gas producing properties and related facilities located predominantly in the State of West Virginia (the “Acquisition”). The purchase price was $21.5 million, subject to normal and customary pre and post-closing adjustments. Carbon Appalachian will also fund, as part of the Acquisition, an inventory of field development and enhancement projects and general working capital. Carbon Appalachian expects to commence the initial field production enhancement projects during the third and fourth quarters of 2017.

Also on August 15, 2017, Carbon and the two institutional investors amended and restated the Limited Liability Company Agreement (“LLC Agreement”) of Carbon Appalachian. to the amended and restated LLC Agreement, Carbon increased its capital commitment from $2,000,000 to $23,560,000 and its portion of each subsequent capital call from 2.0% to 26.5%. Aggregate capital commitments of all Members remained at $100,000,000. As each subsequent call for capital is made, Carbon will contribute its new percentage of 26.5% and its ownership interest represented by Class A Units will increase incrementally. The Company remains the sole manager of Carbon Appalachian and maintains the ability to earn additional ownership interests of Carbon Appalachian (represented by Class B Units) after certain return thresholds to the holders of Class A Units are met. The Company also maintains its 1.0% carried interest represented by Class C Units.

In connection with and concurrently with the closing of the acquisition described above, Carbon Appalachia Enterprises, LLC (f/k/a Carbon Tennessee Company, LLC), an indirect subsidiary of Carbon Appalachian, borrowed $8,000,000 from its existing senior secured asset-based revolving credit facility (the “Credit Facility” and such agreement being the “Credit Agreement”) with LegacyTexas Bank and received additional funding in the amount of $14 million from its members, including $3,710,000 from Carbon. The contributed funds and funds drawn from the Credit Facility were used to pay the purchase price.

On August 16, 2017, the Company issued a press release concerning certain events relating to this Item 1.01. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1.

Section 9 – Financial Statements and Exhibits

Item 1.01 Financial Statements and Exhibits.

(d)Exhibits:

* Filed herewith

Carbon Natural Gas Co Exhibit
EX-99.1 2 f8k081517ex99i_carbonnatural.htm PRESS RELEASE DATED AUGUST 16,…
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About CARBON NATURAL GAS COMPANY (OTCMKTS:CRBO)

Carbon Natural Gas Company (Carbon) is a holding company. The Company owns and operates oil and natural gas and oil interests in the Appalachian and Illinois Basins of the United States. The Company produces and sells oil, natural gas, natural gas condensate and natural gas liquids. Carbon conducts its oil and natural gas operations through Nytis LLC. Carbon’s oil and gas properties are located in Illinois, Indiana, Kentucky, Ohio, Tennessee and West Virginia. Nytis LLC owns working interests in approximately 850 gross wells (over 570 net) and royalty interests located in Kentucky, Ohio, Tennessee and West Virginia, and has leasehold positions in approximately 17,000 net developed acres and over 184,800 net undeveloped acres. Nytis LLC owns working interests in approximately 60 gross (over 30 net) coalbed methane wells in the Illinois Basin, and has a leasehold position in approximately 1,700 net developed acres and over 66,700 net undeveloped acres.