Business Context and Reporting Period
This Form 8-K is filed by EnerJex Resources, Inc. (not Ageagle Aerial Systems Inc.) for the reporting period ending December 14, 2011. The filing details the entry into a material definitive agreement to form a new partnership for oil property development and an amendment to an existing credit facility.
Key Financial Metrics and Agreements
Rantoul Partners Formation
- Entity: Rantoul Partners, a Delaware general partnership formed with Viking Energy Partners, LLC and FL Oil Holdings, LLC.
- Asset Contribution: EnerJex contributed assets valued at $15,000,000 (subject to a lien held by Texas Capital Bank).
- Cash Contributions:
- Viking Energy Partners: Initial $2,000,000; Total committed $4,000,000.
- FL Oil Holdings: Initial $350,000; Total committed $1,000,000.
- Ownership Structure (Post-Contributions):
- EnerJex Resources, Inc.: 75.00% ($15,000,000)
- Viking Energy Partners, LLC: 20.00% ($4,000,000)
- FL Oil Holdings, LLC: 5.00% ($1,000,000)
Debt and Liquidity
- Credit Facility: Entered into a First Amendment to an Amended and Restated Credit Agreement with Texas Capital Bank, N.A.
- Loan Amount: Second Amended and Restated Promissory Note in the amount of $50,000,000.
- Collateral: The amendment adds Rantoul Partners as a borrower and pledges Rantoul's assets as additional security.
- Closing Date: December 15, 2011.
Material Changes
The filing represents a significant strategic shift involving the consolidation of oil properties in Kansas under a new partnership structure. The company has secured additional capital from partners totaling $5,000,000 (combined initial and future commitments) and restructured its debt facility to include the new partnership entity as a co-borrower, increasing the secured debt exposure to $50,000,000.
Outlook, Risks, and Contingencies
- Future Capital Calls: Partners are obligated to make additional cash contributions on March 1, 2012; August 1, 2012; and March 1, 2013.
- Area of Mutual Interest: EnerJex retains the right to develop other leases within the defined area, with partners holding a right to participate up to their percentage interest.
- Liens: The contributed assets are subject to a lien held by Texas Capital Bank.
- Disclosure: The filing references a press release dated December 19, 2011, which is not deemed "filed" under the Exchange Act.
Investor Verification Checklist
- Verify the exact terms of the Rantoul Partners General Partnership Agreement (Exhibit 10.1) regarding profit distribution and management control.
- Review the First Amendment to the Credit Agreement (Exhibit 10.2) for interest rates, covenants, and maturity dates of the $50,000,000 note.
- Confirm the status of the lien held by Texas Capital Bank on the contributed assets and how it interacts with the new partnership structure.
- Monitor the scheduled capital contribution dates (2012-2013) to ensure partners meet their financial obligations.