Fortem Resources Inc. (OTCMKTS:FTMR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On April 12, 2017, our company entered into and closed a
Membership Interest Purchase Agreement (theMPA)
with Blue Phoenix Energy, LLC and Pacific Petroleum, LLC, whereby
Blue Phoenix and Pacific Petroleum sold and transferred all of
the outstanding membership interest of Black Dragon, LLC to our
company in consideration for the pre-closing payment of
US$100,000 as a non-refundable deposit and the issuance of an
aggregate of 20 million common shares in the capital of our
company, with 10 million shares issued to Blue Phoenix and 10
million issued to Pacific Petroleum.
Black Dragons sole asset consists of the rights and obligations
arising from a Purchase and Sale Agreement dated effective March
1, 2017 (the PSA) between WEM Dragon, LLC (the
Seller) and Black Dragon. to the terms of the
MPA, the parties may rescind the transactions, including the
issuance of common shares thereunder, upon mutual agreement in
the event that Black Dragon elects to terminate the PSA on or
before April 17, 2017 due to the assertion by Black Dragon of one
or more title defects as determined in accordance with the PSA.
In the event that Black Dragon elects such termination and the
parties have made certain closing deliveries under the MPA, such
closing deliverables will be returned to the providing party and
the closing under the MPA will be deemed not to have occurred
(except for the payment of US$100,000 which was paid prior to
closing on a non-refundable basis).
In consideration for the assignment of the assets from the Vendor
to Black Dragon, Black Dragon has agreed to pay the Vendor a
purchase price consisting of a cash component and a carry
obligation as further set forth below. The assets to be conveyed
by the Vendor to Black Dragon (the Assets)
include certain leases, hydrocarbons, wells, agreements,
equipment, surface rights agreements and assignable permits all
as further set out in the PSA.
Cash Consideration
Under the PSA, Black Dragon has agreed to pay the Vendor cash
consideration totalling US$2.7 million based upon the following
schedule:
US$100,000 as a non-refundable deposit within 10 business days of
closing (completed);
US$900,000 on or before September 1, 2017;
US$900,000 on or before March 1, 2018; and
US$800,000 on or before September 1, 2018.
However, if Black Dragon pays a total of US$2.4 million on or
before September 1, 2017, the parties have agreed that the cash
consideration above will be deemed to have been paid in full.
Carry Obligation
Under the PSA, and in addition to the cash consideration, Black
Dragon has agreed to pay all costs and expenses incurred on the
assets with respect to any and all exploration, development and
production during the carry period. The Carry
Period continues until the later of either (i) the date
that Black Dragon pays the full cash consideration set out above
or (ii) the date that Black Dragon pays all costs and expenses
for the drilling, logging, testing and completion two new wells,
each well with a horizontal leg extending at least 2,000 in the
target zone within the Moenkopi formation (the Two
Obligation Wells). Black Dragon is required to drill to
completion or cause to be drilled to completion (or plugging and
abandonment) the Two Obligation Wells on or before February 28,
2019, failing which, Black Dragons right to earn any assignment
in and to the assets will terminate immediately. For each
vertical well drilled to 200 below the top of the Kaibab
formation through completion (or plugging or abandonment) within
a Federal Unit, the obligation deadline will be amended to the
later of (i) the current obligation deadline or (ii) 6 months
from the date the rig that drilled such vertical well to total
depth has been removed from the wellsite.
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Within 10 business days after the later of Black Dragon paying
the cash consideration in full or Black Dragon meeting in full
its carry obligation, the Vendor will convey to Black Dragon an
undivided 75% of the Vendors right, title and interest in and to
the assets, or a 80% net revenue interest in the assets as
further described in the PSA. Except for a breach of any other
representation or warranty of the Vendor, and as a due diligence
right, Black Dragons sole and exclusive remedy with respect to
any matter that constitutes a title defect will be to withdraw
from the PSA on or before April 17, 2017 without cost or penalty
and the PSA will be considered terminated, provided that the
initial payment of US$100,000 will be non-refundable.
Joint Operating Agreement
The parties have agreed that the interests of the parties in the
assets will be subject to the terms of a Joint Operating
Agreement (the JOA), to the extent that all or
any portion of the assets or interests related thereto are not
subject to a third party operating agreement. Black Dragon will
be designated as the operator under the JOA, subject only to its
removal or resignation under the terms of the JOA or for good
cause as determined in the PSA.
Additional Payments
On or before September 1, 2017, Black Dragon is required to pay
WEM Dragon US$102,000 for rental, minimum royalty, option
payments and shut-in royalty payments due on the leases through
December 31, 2018.
The description of the PSA and the terms thereunder are qualified
in their entirety by the full text of the agreement, a copy of
which is attached hereto as Exhibit 10.1.
General
We issued shares to one U.S. person (as that term is defined in
Regulation S of the Securities Act of 1933) relying on Rule 506
of Regulation D and/or Section 4(a)(2) of the Securities Act of
1933. We issued shares to one non-U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933) in an
offshore transaction relying on Regulation S and/or Section
4(a)(2) of the Securities Act of 1933.
Except as disclosed in this Item 1.01, we are not aware of any
arrangements, the operation of which may at a subsequent date
result in a change in control of our company.
Item 2.01 Completion of Acquisition or Disposition of
Assets
The information contained in the section titled Item 1.01 Entry
into a Material Definitive Agreement above is responsive to this
Item 2.01.
Item 3.02 Unregistered Sales of Equity
Securities
The information contained in the section titled Item 1.01 Entry
into a Material Definitive Agreement above is responsive to this
Item 3.02.
Item 8.01 Other Events
A copy of our press release dated April 17, 2017 is furnished
herewith.
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Item 9.01 |
Financial Statements and Exhibits. |
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(a) |
Financial Statements of Businesses |
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The financial statements required by this item are not |
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(b) |
Pro Forma Financial Information. |
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The pro forma financial information required by this item |
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(d) |
Exhibits. |
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10.1 |
Membership Interest Purchase Agreement dated April 12, 2017 |
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99.1 |
Press release dated April 17, 2017 |
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About Fortem Resources Inc. (OTCMKTS:FTMR)
Fortem Resources Inc., formerly Strongbow Resources Inc. is focused on the acquisition, exploration and development of oil and gas properties located in the United States and Canada. The Company’s net probable reserves are approximately 89,600 barrels of oil. The Company has a well on approximately 160 developed acres. The Company has approximately 4,960 gross acres and 4,960 net undeveloped acres. The Company seeks to focus on the exploration and drilling of the Farmout Lands, identify and complete additional asset acquisition(s), and pursue joint venture agreements with third parties to explore for oil and gas in Canada and the United States. As of February 29, 2016, the Company had no proved undeveloped reserves. The Company has generated no revenue from pre-production sales of oil and commercial production. Fortem Resources Inc. (OTCMKTS:FTMR) Recent Trading Information
Fortem Resources Inc. (OTCMKTS:FTMR) closed its last trading session 00.00 at 1.95 with 4,928 shares trading hands.