Texas South Energy, Inc. (NYSE:NRG) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 – Entry into a Material Definitive Agreement
On January 4, 2017 (Closing), Texas South Energy, Inc. (the
Company and Texas South) entered into an asset purchase agreement
(Asset Purchase Agreement) with Sydson Energy, Inc. (Sydson
Energy) and Sydson Resources, L.P. (Sydson Resources and
collectively with Sydson Energy, Sydson), where Sydson agreed to
sell, transfer and assign to the Company certain onshore oil and
gas assets and interests, certain tangible assets, and certain
employees and a consultant of Sydson have agree to become
employees and a consultant of the Company. Texas South owns
interests in seven offshore prospects in the Gulf of Mexico (GOM)
in conjunction with GulfSlope Energy, Inc. in water depths of
between 300 and 1,000. GulfSlope has conducted extensive seismic
work on the prospects focusing on the high potential subsalt play
at depths of 15,000 to 25,000 prior to acquiring them in the
Federal Lease Sale. The Company owns a 20% working interest (WI)
in five of the prospects and up to 70% WI in two of the prospects
that have shallow oil potential above 5,000. Sydson is a private
oil and gas company with land operations in Texas and Louisiana
that has been in business since 1982. The oil and gas assets
include the following:
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In the Bayou Bouillon Field, St. Martin and Iberville Parishes, Louisiana, Texas South has acquired a 37.5% WI in the Sugarberry South Project comprising 420 acres with a net revenue interest of 70%. The property has two existing wells which have tested at over 400 BOPD combined from two (2) productive zones above 2,100 with an additional shallower zone behind pipe containing approximately 30 of oil pay and almost 60 of gas pay. Texas South expects to install production facilities and drill additional development wells in this fault block and to drill up to three exploratory wells in adjacent fault blocks targeted in the same zones. Through the Sydson transaction, the Company also is now a party to letters of intent to acquire up to a 45% WI in an additional 1,000 acres in the Bayou Bouillon area based on a proprietary 55 square mile 3-D seismic survey that demonstrates updip potential in existing reservoirs at about 10,000. The downdip wells in these same reservoirs have produced over 20 MMBO and 21 BCFG from 59 completions. Texas Souths partner in the Bayou Bouillon project, and the owner of a 50% WI in the Bayou Bouillon acreage, is Thyssen Petroleum, USA, a privately held independent oil and gas exploration and production company based in Houston and Monaco. |
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In Texas, Texas South has acquired a 50% WI in the undrilled acreage above 4,500 in the West Tuleta Field, Bee County, Texas comprised of approximately 1,800 gross acres and 900 net acres with a net revenue interest of approximately75%. The primary drilling objectives are the Vicksburg and Hockley sands which are structurally high on this acreage to historic downdip production from these sands totaling over 500,000 BO. |
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In the adjacent Ray Field, also in Bee County, Texas, the Company has acquired a 50% WI in the undrilled, acreage on the Walton, Campbell, and Ray leases comprising approximately 75 gross acres with a net revenue interest of approximately 75%. The primary drilling objectives on this acreage are also the Vicksburg and Hockley sands updip to prior production, also above 3,700. |
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In other areas of Southeast Texas, the Company has acquired an interest in a proprietary 85 square mile 3-D seismic survey targeting Lower Wilcox Sands at approximately 10,000. There are eight currently defined and mapped prospects in which the Company intends to acquire leases that are apparent on the seismic data and match the geologic setting of three existing Lower Wilcox fields within the boundaries of the survey. |
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Northwest of the survey, the Company intends to acquire leases covering approximately 1,000 acres for horizontal projects above 6,000 in the Austin Chalk and Buda Lime formation. These projects are adjacent to substantial prior production and contain both conventional and unconventional oil targets. |
In connection with the asset acquisition, certain officers and
employees of Sydson have become officers, a consultant and
employees of the Company, including Michael J. Mayell who became
Chief Executive Officer of the Company, James L. Gunderson who
became Manager of Land of the Company, Robert L. Goldstein, who
will serve as a geological consultant to the Company, and Lecia
Alexander, who became Controller of the Company. Certain other
non-executive employees and consultants of Sydson became at-will
employees of the Company. John B Connally III joined the board of
Texas South as chairman.
Mr. Mayell has over 45 years of experience in the oil and gas
business. He began his career with Shell Oil Company in New
Orleans, La. in the drilling and production engineering groups
responsible for drilling and producing fields both onshore and
offshore South Louisiana. Mr. Mayell founded Sydson in 1982 and
this entity has been in operation since that time. In 1985, Mr.
Mayell co-founded the Meridian Resource Corporation (NYSE) and
served as the president and chief operating officer of Meridian
for over 20 years. Mr. Mayell received his Bachelor of Science
degree in mechanical engineering from Clarkston University.
Mr. Connally presently serves as chairman of the Texas Lt.
Governors Energy Advisory Board. Mr. Connally has significant oil
and gas experience, both as a practicing lawyer and as an
executive. Mr. Connally was a founding shareholder of Texas South
and GulfSlope Energy, Inc., and a founding director of Nuevo
Energy, Inc, Endeavor International Corp, and Pure Energy Group
(where he also served as chief executive officer) and Pure Gas
Partners. Mr. Connally was a law partner with Baker Botts, and
received both his Bachelor of Arts and JD from the University of
Texas.
Mr. Gunderson has held land positions in Chevron, Murphy, Cities,
Ladd and Meridian. Mr. Gunderson has been with Sydson since 2009.
Mr. Gunderson received a BBA degree in petroleum land management
from the University of Oklahoma.
Mr. Goldstein has served as a consultant to Sydson for over 10
years and has over 40 years of experience in Gulf Coast geology
interpretation. Mr. Goldstein has served as a geologist with
Amerada Hess, Houston Oil and Minerals and Meridian. Mr.
Goldstein received his Bachelor of Arts Geology degree from
Rutgers University and received his Masters degree in Geology
from Florida State University.
Mrs. Alexander began her career in accounting with Arthur
Anderson before moving into corporate accounting in 1985. She
later opened her consulting practice focusing on the healthcare
and oil and gas industries and has been Sydsons lead accountant
since 2010. Mrs. Alexander received her Bachelor in Accountancy
degree from the University of Mississippi in 1980.
In connection with the asset acquisition, the Company acquired a
variety of proprietary seismic data, computer equipment,
furniture and fixtures and other office furniture and equipment.
The office of the Company has been moved to 4550 Post Oak Place
Dr., Suite 300, Houston, TX 77027.
The consideration payable by the Company to Sydson and affiliates
is (i) at Closing, an aggregate of 100 million shares of Company
common stock to Michael J. Mayell, (ii) (A) $250,000 through a
promissory note due March 5, 2017 and (B) $1,250,000 through the
payment by the Company of Sydsons obligations attributable to
retained working interests in the oil and gas prospects conveyed
to the Company, to be paid by the Company at the time it pays its
associated costs with respect to its ownership interests in such
oil and gas prospects, (iii) carried interests to casing point
for its working interests on the first well in each of the West
Tuleta prospect, Ray Field prospect, one prospect under
negotiation, and up to three wells in the Bayou Bouillon prospect
to be paid by the Company at the time it pays its associated
costs with respect to its ownership interests in such oil and gas
prospects, and (iv) a payment of $500,000 for the seismic data at
one prospect under negotiation after completion of the first well
in such prospect.
In connection with the Closing of the Asset Purchase Agreement,
the Company entered into an employment agreement with Mr. Mayell.
The term of his employment agreement began on January 4, 2017 and
terminates on December 31, 2019. Upon December 31 of each
calendar year, commencing on December 31, 2017, the term shall be
extended for one additional year, provided that neither the
Company nor Employee notify the other on or prior to 90 days
before the applicable December 31st date that either
party does not intend to extend this Agreement. The Company shall
pay to Mr. Mayell a base salary of $420,000 per annum and Mr.
Mayell shall be entitled to standard and customary benefits. Mr.
Mayell has agreed to standard non-disclosure and non-competition
provisions. Upon termination of Mr. Mayell by the Company other
than for cause, Mr. Mayell is entitled to receive three years of
his then compensation as severance.
Subsequent to the Closing, James M. Askew resigned as an
executive officer and director of Texas South and entered into a
consulting agreement with the Company that began on January 5,
2017 and terminates on December 31, 2019, and such term shall be
extended for an additional one-year period upon December 31 of
each calendar year, commencing on December 31, 2017, provided
that neither the Company nor Consultant notify the other on or
prior to 90 days before the applicable December 31st
that either party does not intend to extend this Agreement. The
Company shall pay to Mr. Askew $35,000 net per month and issued
Mr. Askew 27 million shares of Company common stock. Upon
termination of Mr. Askew by the Company other than for cause, Mr.
Askew is entitled to receive three years of his then consulting
compensation as severance.
Subsequent to the Closing, the Company also entered into an
employment agreement with John B. Connally III to serve as
chairman of the board that began on January 5, 2017 and
terminates on December 31, 2019. Upon December 31 of each
calendar year, commencing on December 31, 2017, the term shall be
extended for one additional year, provided that neither the
Company nor Employee notify the other on or prior to 90 days
before the applicable December 31st date that either
party does not intend to extend this Agreement. The Company shall
pay to Mr. Connally a base salary of $420,000 per annum, issued
him 65.1 million shares, and Mr. Connally shall be entitled to
standard and customary benefits. Mr. Connally has agreed to
standard non-disclosure provisions. Upon termination of Mr.
Connally by the Company other than for cause, Mr. Connally is
entitled to receive three years of his then compensation as
severance.
Item 2.01 Completion of Acquisition or Disposition of
Assets
The completion of the acquisition of certain assets is
incorporated by reference from Item 1.01 above.
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant
The incurrence of certain liabilities and obligations in
connection with asset acquisitions is incorporated by reference
from Item 1.01 above.
Item 3.02 Unregistered Sales of Equity
Securities
Between December 6, 2016 and December 8, 2016, Texas South issued
an aggregate of 10,000,000 shares of its common stock at a
purchase price of $0.02 per share receiving gross proceeds of
$200,000, which proceeds were used for general corporate
purposes.
On December 13, 2016, the Company issued 500,000 shares of common
stock at a purchase price of $0.02 per share receiving gross
proceeds of $10,000, which proceeds were used for general
corporate purposes.
On December 29, 2016, the Company issued 1,000,000 shares of
common stock at a purchase price of $0.02 per share receiving
gross proceeds of $20,000, which proceeds were used for general
corporate purposes.
On January 3, 2016, the Company issued an aggregate of 14,725,000
shares of common stock for services rendered valued at $0.005 per
share.
On January 4, 2016, the Company issued 100,000,000 shares of
common stock to the Asset Purchase Agreement to Mr. Mayell, which
shares were valued at $0.005 per share.
On January 5, 2016, the Company issued an aggregate of 92.1
million shares of common stock to an executive officer and
consultant, which shares were valued at $0.005 per share.
The issuance of the shares described above was made without
registration under the Securities Act of 1933, as amended (the
Act), in reliance on the exemptions provided by Section 4(a)(2)
of the Act, Regulation D under the Act and in reliance on similar
exemptions. No advertising or general solicitation was made in
connection with the sale and issuance of the Companys common
stock.
Item 5.01 Changes in Control of Registrant
At the Closing of the Asset Purchase Agreement, Messrs. Mayell
and Connally were elected directors with Mr. Connally serving as
the chairman and Mr. Mayell was appointed chief executive officer
and president of the Company. On January 5, 2017, James Askew
resigned as an executive officer and director of the Company.
Item 5.02 Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers
The appointment of certain officers, election of certain
directors, and resignation of an officer and director are
incorporated by reference from Items 1.01 and 5.01 above.
Item 9.01 Financial Statements and Exhibits
The following exhibits are to be filed as part of this Form 8-K:
| EXHIBIT NO. | IDENTIFICATION OF EXHIBIT | |
| 10.1 |
Asset Purchase Agreement by and among Texas South Energy, Inc., Sydson Resources, L.P., and Sydson Energy, Inc., dated January4,2017 |
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| 10.2 |
Employment Agreement by and between the Company and Michael J. Mayell dated January 4, 2017 |
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| 10.3 |
Consulting Agreement by and between the Company and James M. Askew dated January 5, 2017 |
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| 10.4 |
Employment Agreement by and between the Company and John B. Connally, III dated January 5, 2017 |
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| 99.1 | Press Release dated January 10, 2017 |
About Texas South Energy, Inc. (NYSE:NRG)
NRG Energy, Inc. (NRG) is an integrated power company that produces, sells and delivers energy, and energy products and services in various power markets in the United States. The Company’s segments include NRG Business, which includes power generation, the carbon capture business and energy services; NRG Home, which includes NRG Home Retail, which consists of residential retail services and products, and NRG Home Solar, which includes the installation and leasing of residential solar services; NRG Renew, which includes solar and wind assets, excluding those in the NRG Yield and NRG Home Solar segments; NRG Yield, and corporate activities. NRG Yield includes certain of the Company’s contracted generation assets. Its corporate segment includes Boston Energy Trading and Marketing LLC (BETM), international business and electric vehicle services. It owns and operates approximately 50,000 megawatts of generation, and engages in the trading of wholesale energy, capacity and related products. Texas South Energy, Inc. (NYSE:NRG) Recent Trading Information
Texas South Energy, Inc. (NYSE:NRG) closed its last trading session up +0.15 at 13.62 with 8,770,640 shares trading hands.
