Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 10-K Torchlight Energy Resources, Inc. 10-K HTML 909K
2: EX-10.15 Agreement and Plan of Reorganization and Plan of HTML 143K
Merger With McCabe Petroleum Corporation and
Warwink Properties, LLC
3: EX-10.16 Purchase Agreement With Torchlight Energy, Inc. HTML 66K
and McCabe Petroleum Corporation
4: EX-10.17 Promissory Note for $3,250,000 by Torchlight HTML 42K
Energy, Inc. to McCabe Petroleum Corporation
5: EX-10.18 Assignment of Farmout Agreement Between Hudspeth HTML 62K Oil Corporation, Founders Oil & Gas, LLC and Wolfbone Investments, LLC
6: EX-10.19 12% 2020 Senior Unsecured Promissory Note for HTML 72K
$4,500,000 With David A. Straz, Jr Revocable Trust
of 1986
7: EX-21.1 Subsidiaries List HTML 20K
8: EX-23.1 Consent of Briggs & Veselka Co. HTML 20K
9: EX-23.2 Consent of Petech Enterprises, Inc. HTML 22K
13: EX-99.1 Report of Petech Enterprises, Inc. HTML 24K
10: EX-31.1 Certification of Principal Executive Officer HTML 24K
Required by Rule 13A - 14(1) or Rule 15D - 14(A)
of the Securities Exchange Act of 1934, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
11: EX-31.2 Certification of Principal Financial Officer HTML 24K
Required by Rule 13A - 14(1) or Rule 15D - 14(A)
of the Securities Exchange Act of 1934, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
12: EX-32.1 Certification of Principal Executive Officer and HTML 23K
Principal Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and Section
1350 of 18 U.S.C. 63.
20: R1 Document and Entity Information HTML 46K
21: R2 Consolidated Balance Sheets HTML 102K
22: R3 Consolidated Balance Sheets (Parenthetical) HTML 42K
23: R4 Consolidated Statements of Operations HTML 65K
24: R5 Consolidated Statement of Stockholders' Equity HTML 77K
25: R6 Consolidated Statements of Cash Flow HTML 116K
26: R7 1. Nature of Business HTML 22K
27: R8 2. Going Concern HTML 22K
28: R9 3. Significant Accounting Policies HTML 52K
29: R10 4. Oil & Gas Properties HTML 42K
30: R11 5. Related Party Payables HTML 21K
31: R12 6. Commitments and Contingencies HTML 31K
32: R13 7. Stockholders' Equity HTML 101K
33: R14 8. Income Taxes HTML 33K
34: R15 9. Promissory Notes HTML 25K
35: R16 10. Asset Retirement Obligations HTML 25K
36: R17 11. Subsequent Events HTML 23K
37: R18 3. Significant Accounting Policies (Policies) HTML 99K
38: R19 4. Oil & Gas Properties (Tables) HTML 25K
39: R20 6. Commitments and Contingencies (Tables) HTML 22K
40: R21 7. Stockholders' Equity (Tables) HTML 57K
41: R22 8. Income Taxes (Tables) HTML 31K
42: R23 10. Asset Retirement Obligations (Tables) HTML 24K
43: R24 2. Going Concern (Details Narrative) HTML 24K
44: R25 3. Significant Accounting Policies (Details HTML 24K
Narrative)
45: R26 4. Oil & Gas Properties (Details) HTML 30K
46: R27 4. Oil & Gas Properties (Details Narrative) HTML 26K
47: R28 5. Related Party Payables (Details Narrative) HTML 22K
48: R29 6. Commitments and Contingencies (Details) HTML 24K
49: R30 6. Commitments and Contingencies (Details HTML 20K
Narrative)
50: R31 7. Stockholders' Equity (Details) HTML 69K
51: R32 7. Stockholders' Equity (Details 1) HTML 40K
52: R33 7. Stockholders' Equity (Details 2) HTML 34K
53: R34 7. Stockholders' Equity (Details Narrative) HTML 74K
54: R35 8. Income Taxes (Details) HTML 31K
55: R36 8. Income Taxes (Details 1) HTML 33K
56: R37 8. Income Taxes (Details Narrative) HTML 21K
57: R38 9. Promissory Notes (Details Narrative) HTML 21K
58: R39 10. Asset Retirement Obligations (Details) HTML 29K
60: XML IDEA XML File -- Filing Summary XML 91K
59: EXCEL IDEA Workbook of Financial Reports XLSX 53K
14: EX-101.INS XBRL Instance -- fil-20171231 XML 646K
16: EX-101.CAL XBRL Calculations -- fil-20171231_cal XML 132K
17: EX-101.DEF XBRL Definitions -- fil-20171231_def XML 157K
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19: EX-101.PRE XBRL Presentations -- fil-20171231_pre XML 435K
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61: ZIP XBRL Zipped Folder -- 0001654954-18-002713-xbrl Zip 82K
‘EX-10.18’ — Assignment of Farmout Agreement Between Hudspeth Oil Corporation, Founders Oil & Gas, LLC and Wolfbone Investments, LLC
THIS
Assignment of Farmout Agreement (“Assignment”) is
entered into on November 15, 2017, but to be effective as of
October 1, 2017 (“Effective Date”) by and among
Founders Oil & Gas, LLC (“Founders”) and Hudspeth
Oil Corporation (“Hudspeth”), Torchlight Energy
Resources (“Torchlight”) and Wolfbone Investments, LLC
(“Wolfbone”) (Hudspeth, Torchlight and Wolfbone,
collectively “Partners”) and Pandora Energy, LP
(“Pandora”)( Pandora is a Party to this Assignment only
as to Section 1.2). The companies named above and their respective
successors and assigns (if any), may sometimes individually be
referred to as “Party” and collectively as the
“Parties.”
RECITALS
WHEREAS, Hudspeth,
Pandora and Founders have previously entered into Farmout Agreement
dated September 23, 2015 (“Original Farmout
Agreement”), a copy of which is attached hereto as Exhibit
“A” and made a part hereof. The capitalized terms
contained in the Original Farmout Agreement shall have the same
meaning in this Assignment unless they are otherwise defined in
this Assignment.
WHEREAS, in the
Original Farmout Agreement, Hudspeth, Pandora and Founders agreed,
among other things, that in consideration for Founders paying
specified amounts and drilling a number of wells, Hudspeth and
Pandora would assign to Founders an undivided 50% working interests
and a 37.5% net revenue interests in the Oil and Gas Leases on the
terms and conditions set forth therein;
WHEREAS, Founders
has met its obligations through the Effective Date under the
Original Farmout Agreement and in doing so has spent approximately
$9,588,000;
WHEREAS, Founders
desires to assign certain of its rights and its remaining
obligations under the Original Farmout Agreement to Partners and
Partners desires to acquire such rights and assume such
obligations; and
WHEREAS, some of
the Oil and Gas leases, generally known as the General Land Offices
leases described in the Farmout Agreement have terminated and the
remaining Oil and Gas leases generally known as the University
Lands leases described on Exhibit B, attached hereto and made a
part hereof, and only such University Land Board Leases shall be
subject to this Assignment (“Remaining Leases”) and in
this Assignment the expression “Farmout Lands” shall
refer only to the lands and Hydrocarbons covered by the Remaining
Leases.
NOW,
THEREFORE, for and in consideration of the sum of Ten Dollars and
00/100 ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, together
with the mutual covenants, conditions and obligations contained
herein, the Parties agree as follows:
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C:
I.
ASSIGNMENT, ASSUMPTION and RELEASE
1.1
Assignment
A.
Founders does
hereby grant, assign and transfer unto Partners all of its right,
title and interest, except as provided in paragraph B, below in and
to the Original Farmout Agreement and the Remaining Leases subject
to the terms and provisions of III, below (“Assigned
Interest”).
B.
Founders shall
retain an undivided 9.5% of 8/8ths working interest and a 9.5% of
75% of 8/8ths net revenue interest (collectively, “Retained
Interest”) in and to the Remaining Leases. The Retained
Interest shall be “carried” by Partners as
follows:
1.
Partners shall pay
(a) all Carry Costs on all wells drilled on the Remaining Leases
and (b) all other costs and expenses, including land costs such as
bonuses, delay rentals and brokerage, relating to or arising out of
the Remaining Leases until such time as Partners has paid
$40,500,000 in total costs (“Founders’
Carry”).
2.
Partners shall
provide to Founders on a regular basis its plans relating to its
future compliance with Drilling and Development Agreement No. 2837
between the General Land Office of the State of Texas and Founders
Oil & Gas Operating, LLC (“Development Agreement”)
If at any time prior to the satisfaction of Founders’ Carry,
Partners elects (a) not to continue meeting the continuous drilling
schedule under the Development Agreement or (b) not to otherwise
comply with the Development Agreement or (c) not to comply with the
terms of all of the Remaining Leases, Partners shall notify
Founders in writing at least 90 days before such well must be
commenced or action or inaction taken to avoid otherwise failing to
comply with the Development Agreement or failing to comply with
such Remaining Leases and, at the request of Founders, Partners
shall immediately reassign to Founders the Assigned Interest and
use good faith efforts to have Founders Oil & Gas Operating,
LLC appointed as operator under the Operating Agreement, or in the
case of (c) at the request of Founders, Partners shall immediately
reassign to Founders the Assigned Interest in such Remaining
Leases. If, however, Founders elects not to proceed with its
obligations under the Development Agreement, then Founders shall
give at least 60 days written notice in advance of any deadline to
Partners, so that Partners may endeavor to find another farmee. In
such case, Founders will assign the Remaining Leases to Partners,
or to their farmee; provided that, Founders shall retain its
interest in any wells drilled prior to such assignment and the
sections upon which they are located.
3.
After Partners has
satisfied the Founders’ Carry on the Remaining Leases,
Founders will be responsible for its entire proportional share of
expenses related to its Retained Interest, and the Parties will
operate under the terms of the Operating Agreement and the
Remaining Leases.
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1.2
Assumption, Substitution and Vesting
A.
Partners do hereby
assume and agree to pay, perform and to be responsible for all
obligations of Founders under the Original Farmout
Agreement.
B.
Hudspeth and
Pandora do hereby agree to the complete substitution of Partners
for Founders as the “Farmee” party to the Original
Farmout Agreement and do hereby release and discharge Founders from
all of its obligations and responsibilities under the Original
Farmout Agreement. Hudspeth and Pandora agree that their execution
of this Assignment shall constitute their prior written consent for
purposes of Section 9.5 of the Original Farmout
Agreement.
C.
Hudspeth and
Pandora confirm that as of the Effective Date, Founders has fully
and properly complied with all of its obligations under the
Original Farmout Agreement accruing as of such date.
D.
Hudspeth and
Pandora do hereby agree that Founders is fully vested with the
Retained Interest and the Retained Interest is no longer subject to
the Original Farmout Agreement.
E.
Partners, Hudspeth
and Pandora agree that they will not terminate, allow to lapse or
amend the Original Farmout Agreement without the prior written
consent of Founders.
F.
Hudspeth and
Pandora agree if they are reassigned the Assigned Interest by
virtue of Early Termination under Section 3.2 of the Original
Farmout Agreement or are reassigned the Assigned Interest by virtue
of failure of performance under Section 3.5(B) of the Original
Farmout Agreement or otherwise reassigned the Assigned Interest,
the Founders’ Carry will continue to burden and encumber the
Assigned Interest after such reassignment and will continue until
satisfaction and all owners of the Assigned Interest subsequent to
such reassignment shall pay and be responsible for the
Founders’ Carry as if such Assigned Interest had been
assigned as provided in Section 3.2. For the elimination of any
doubt, nothing in this Section shall enlarge Founders’ Carry
beyond the Retained Interest.
G.
The Original
Farmout Agreement shall in all respects remain in full force and
effect and this Assignment shall not constitute an amendment
thereto except to the extent otherwise provided in this
Assignment.
1.3
Allocation of Revenues and Expenses
A.
All revenues,
proceeds, income, costs and expenses paid prior to the Effective
Date relating to the Assigned Interest shall be allocated to
Founders and all revenues, proceeds, income, costs and
expenses paid on or after the Effective Date relating to the
Assigned Interest shall be allocated to Partners.
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B.
To the extent
Founders has spent as of the date hereof an amount greater than
$9,500,000 relating to activities and commitments under the
Original Farmout Agreement, Partners will reimburse Founders for
such greater amount up to $100,000 within 30 days of the signing of
this Assignment.
II.
TITLE AND ENCUMBRANCES
2.1
Founders Makes No
Warranty of Title. Founders does not represent or warrant
title to the Farmout Lands, but represents that:
A.
except for the
Encumbrances, it has not granted any Mineral Interests (or the
right to earn any Mineral Interests) in the Farmout Lands, whereby
a third party may acquire any portion of Founders’ Mineral
Interests in the Farmout Lands;
B.
it is not aware of
any act or omission whereby Founders is (or would be) in default
under the terms of the Remaining Leases and it has not received, or
otherwise become aware of, any notice of default for the Farmout
Lands that has not been remedied;
C.
the Farmout Lands
are as of the date hereof free and clear of all liens, charges,
encumbrances, demands and adverse claims or other burdens created
by, through or under Founders, other than the Encumbrances;
and
D.
as of the date
hereof, none of the Mineral Interests of Founders in the Farmout
Lands is subject to any preferential, pre-emptive or first purchase
rights created by through or under Founders that become operative
by virtue of this Assignment or the transactions to be effected by
it.
2.2
Maintaining Title -
Carrying Phase.
A.
During the period
that Partners has the obligation to carry Founders under Section
1.1 B (the “Carry Period”),
(1)
Partners will not
grant any Mineral Interests in the Farmout Lands and will not do or
cause to be done any act or omission whereby the Farmout Lands
become encumbered, terminated or forfeited except with the prior
written consent of Founders, not to be unreasonably withheld or
delayed; and
(2)
Partners will not
enter into any joint operating agreement or other material
agreement affecting the Farmout Lands without the prior written
consent of Founders, not to be unreasonably withheld or
delayed;
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B.
If, prior to the
end of the Carry Period, the payment of an extension, renewal,
bonus, security, penalty or compensatory royalty is required to
maintain in good standing any portion of the Farmout Lands, which
obligation accrues after the date of this Assignment, Partners may
elect to either pay such amount or fail to pay such amount, but if
it elects to pay such amount it shall pay the entire amount and
such amount shall count against the Founders’ Carry.
Notwithstanding the foregoing, nothing herein shall require
Partners to obtain extensions or renewals of the Remaining
Leases.
III.
ASSIGNMENT TO PARTNERS
3.1
Assignment of
Farmout Lands. Concurrently with the signing of this
Assignment, Founders shall execute, acknowledge and deliver to
Partners the assignment attached hereto as Schedule
“C”. Such assignment shall convey to Partners title to
Assigned Interest in the Remaining Leases except the Retained
Interest and the Parties shall take such other actions as are
necessary to effect the transfer to Partners of such interest with
all applicable Governmental Entities. In the event the Assigned
Interests include state, federal or Indian leases, such assignment
may assign operating rights (in lieu of record title) as may be
necessary or desirable under applicable regulations.
3.2
Limitation on
Assignment. Partners shall not assign the Assigned Interest
or any portion thereof without the prior written consent of
Founders, which consent may or may not be given at Founders’
sole discretion, and in any permitted assignment of the Assigned
Interest, the assignee shall specifically assume the obligations of
Partners to Founders under this Assignment and the parties shall
expressly provide that the obligations of Partners to Founders
under this Assignment are covenants that touch and run with the
land. Any assignment not receiving the consent of Founders shall be
void.
3.3
Subject to
Participation Agreement Provisions. Partners will bear its
proportionate share of the McCabe Back-In granted by Article III of
the Participation Agreement and will make all assignments provided
for in the same.
IV.
INFORMATION TO PARTNERS
4.1
Founders and
Partners to Supply Information. As long as Founders Oil
& Gas Operating, LLC is the operator under the Operating
Agreements, Founders shall supply to Partners a full set of all
geologic, seismic and engineering data related to the Remaining
Leases. As long as Partners or any of them is the operator under
the Operating Agreements, Partners shall supply to Founders a full
set of all geologic, seismic and engineering data related to the
Remaining Leases.
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V.
OPERATIONS
5.1
Founders A 25 Well
A.
University Founders
A 25 Well. On behalf of Partners, Founders will cause
Founders Oil & Gas Operating, LLC (“Operating
Company”) to take such actions in accordance with the
applicable Operating Agreement as are reasonably necessary to spud
the University Founders A 25 Well (the “Well”) on or
before December 1, 2017 including preparation of roads and location
and consummation of the drilling contract. Operating Company shall
cash call Partners in accordance with paragraph S of Article XVI of
the Operating Agreement for all of the estimated costs and expenses
relating to the drilling and subsequent operations on such well.
Notwithstanding the terms of such paragraph S, Partners shall pay
such call within 14 days of receipt.
B.
Direction and
Indemnity In conducting operation on the Well after spudding
such well, as long as Operating Company is Operator, Founders will
cause Operating Company to follow the unanimous direction of
Torchlight, McCabe Petroleum Corporation and Greg McCabe in the
drilling and subsequent operations on the Well. At the request of
Partners, Founders will cause Operating Company to resign as
Operator and Founders will vote its Retained Interest to elect such
new Operator as directed by Partners. Additionally, at the request
of Partners, Operating Company will resign from the Operating
Committee, Founders will maintain its two seats and Partners may
name a replacement for Operating Company. Partners hereby agree to
release, indemnify and hold harmless Operating Company and Founders
and their directors, officer, employees representatives, agents,
contractors and subcontractors (collectively, “Founders
Indemnitees”) from and against any and all claims,
obligations, damages, liabilities, losses and causes of action
(including costs of litigation and attorneys’ fees), fines
and penalties (collectively, “Claims”) arising out or
related to the drilling of and subsequent operations on the Well
EVEN IF SUCH CLAIMS ARE CAUSED IN
WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, GROSS, JOINT, OR
CONCURRENT, BUT EXCLUDING WILLFUL MISCONDUCT), STRICT LIABILITY OR
OTHER LEGAL FAULT OF THE FOUNDER INDEMNITEES.
5.2
University
Lands. The Development Agreement shall remain in place and
Partners shall be responsible and pay any transfer fees or consents
costs arising out such agreement and the various transactions
contemplated in this Assignment.
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VI.
GOVERNING LAW / DISPUTE RESOLUTION
6.1
Governing
Law. This Assignment and the relationship of the Parties
hereto shall be interpreted and construed in accordance with the
laws of the State of Texas.
6.2
Dispute
Resolution. If any dispute, controversy or claim arises
under or in connection with this Assignment (a "Dispute"), the
applicable provisions in the Joint Operating Agreement shall govern
the resolution of the Dispute.
6.3
Confidentiality
Regarding Disputes. All negotiations, mediation and
arbitration relating to a Dispute are confidential and neither
their existence nor their content may be disclosed by the Parties,
their employees, officers, directors, counsel, consultants and
expert witnesses.
VII.
GENERAL / MISCELLANEOUS
7.1
Further
Assurances. From time to time, as and when reasonably
requested by a Party, the other Party shall execute and deliver, or
cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such further
and other actions to implement or give effect to this
Assignment.
7.2
Waiver. No
waiver by a Party hereto of any breach of any of the covenants,
provisos, conditions, restrictions or stipulations herein contained
shall take effect or be binding upon that Party unless the same be
expressed in writing under the authority of that Party and any
waiver so given shall extend only to the particular breach so
waived and shall not limit or affect any rights with respect to any
other or future breach.
7.3
Entire
Agreement. This Assignment supersedes any and all other
agreements, documents, writings and verbal understandings between
the Parties relating to the subject matter hereof, other than the
Original Farmout Agreement and the Operating Agreements, and any
amendments thereto and expresses the entire agreement of the
Parties with respect to the subject matter hereof.
7.4
Amendment.
No amendment or variation of the provisions of this Assignment
shall be binding upon any Party unless it is in writing executed by
the Parties.
7.5
Severability.
If any provision of this Assignment is deemed or determined to be
void, voidable or unenforceable, in whole or in part, it shall be
deemed not to affect or impair the validity of any other provision
of this Assignment and such void, voidable or unenforceable
provision shall be severable from this Assignment.
7.6
No
Partnership. Nothing contained in this Assignment shall be
construed as creating a partnership or similar
association.
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7.7
Waiver of Consequential Damages. EACH PARTY HEREBY EXPRESSLY
DISCLAIMS, WAIVES AND RELEASES THE OTHER PARTY FROM SPECIAL,
EXEMPLARY, PUNITIVE, CONSEQUENTIAL, INCIDENTAL, AND INDIRECT
DAMAGES (INCLUDING LOSS OF, DAMAGE TO OR DELAY IN PROFIT, REVENUE
OR PRODUCTION) RELATING TO, ASSOCIATED WITH, OR ARISING OUT OF THIS
ASSIGNMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY. NO LAW,
THEORY, OR PUBLIC POLICY SHALL BE GIVEN EFFECT WHICH WOULD
UNDERMINE, DIMINISH, OR REDUCE THE EFFECTIVENESS OF THE FOREGOING
WAIVER, IT BEING THE EXPRESS INTENT, UNDERSTANDING, AND AGREEMENT
OF THE PARTIES THAT SUCH DAMAGE WAIVER IS TO BE GIVEN THE FULLEST
EFFECT, NOTWITHSTANDING THE NEGLIGENCE (WHETHER SOLE, JOINT OR
CONCURRENT), GROSS NEGLIGENCE, WILLFUL MISCONDUCT, STRICT LIABILITY
OR OTHER LEGAL FAULT OF ANY PARTY.
7.8
Execution of
Memorandum. The
Parties agree to execute a Memorandum of Assignment to be filed
against the Farmout Lands to evidence the Parties respective rights
and obligations under this Assignment.
7.9
Covenants.
The Parties agree that the covenants in this Agreement touch,
relate to and pertain to the Farmout Lands and therefore constitute
covenants that run with the land.
[SIGNATURE PAGE FOLLOWS]
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IN
WITNESS WHEREOF the Parties hereto have executed this Assignment
effective as of the Effective Date.
