Stratex Oil & Gas and Richfield Oil & Gas Enter Into
Agreement and Plan of Merger
HOUSTON, TX and SALT LAKE CITY,
UT--(Marketwired - May 07, 2014) - Stratex Oil
& Gas Holdings, Inc. (OTCQB:
STTX) ("Stratex") and Richfield Oil & Gas Company
("Richfield") announced today that the two companies, together with
Richfield Acquisition Corp. ("RAC"), a wholly-owned subsidiary of
Stratex, have entered into an Agreement and Plan of Merger (the
"Merger Agreement"), pursuant to which, subject to the satisfaction
or waiver of certain conditions, RAC will merge with and into
Richfield (the "Merger"), with Richfield becoming a wholly-owned
subsidiary of Stratex.
Upon the consummation of the Merger, based on the number of
shares of Richfield common stock outstanding on May 6, 2014, each
outstanding share of Richfield common stock (other than shares held
by those Richfield stockholders properly exercising dissenters'
rights) would be converted into 1.009 shares of Stratex common
stock. However, the number of shares of Stratex common stock that
may actually be issued with respect to a share of Richfield common
stock is subject to decrease based on the formula set forth in the
Merger Agreement in the event additional shares of Richfield common
stock are issued prior to the consummation of the Merger.
Richfield's stockholders will receive cash in lieu of fractional
shares of Stratex. Stratex will file an S-4 registration
statement with the Securities and Exchange Commission ("SEC") to
register all shares of common stock issuable to the Richfield
shareholders upon consummation of the Merger. The Merger is
subject to the approval of Richfield's shareholders.
Concurrently with the entry into the Merger Agreement, Stratex,
Richfield, and certain of Richfield's subsidiaries entered into a
Note and Security Agreement (the "Loan Agreement") providing for
pre-merger advances of up to $3,000,000 by Stratex to Richfield and
its subsidiaries. Up to $2,000,000 of this amount will be dedicated
specifically to fast forwarding the pre-merger development of
Richfield's high quality and scalable Kansas properties, under
a mutually agreeable work program. The remaining $1,000,000
($500,000 of which was advanced upon the entry into the Merger
Agreement) will be used by Richfield for general corporate purposes
approved by Stratex. The obligations of Richfield and its
subsidiaries under the Loan Agreement are secured by security
interests and mortgages in all of Richfield's assets. Upon
entering into the Merger Agreement, Stratex also purchased from
Richfield an undivided 3% of the 8/8ths working interest in the
Liberty # 1 well located in Juab County, Utah, along with certain
leases covering approximately 447 mineral acres for cash
consideration of $500,000. By virtue of this purchase, Stratex
was also granted a right of first refusal to acquire an
undivided 3% of 8/8ths of Richfield's working interest in certain
deep rights pertaining to the Utah Overthrust Project near Fountain
Green, Utah.
In order to facilitate the consummation of the proposed
Merger, the Board of Directors of Stratex and Richfield determined
that it is in the best interests of both companies that Alan
D. Gaines resign as Chairman of the Board of Directors of
Richfield, and immediately commence serving as Chairman of the
Board of Directors of Stratex. Mr. Gaines entered into a five
year employment agreement with Stratex to serve in such
capacity. Stephen Funk, Stratex' present Chief Executive
Officer will continue to serve in that capacity post-merger.
Douglas C. Hewitt, Sr., Richfield's present Chief Executive
Officer, will continue to serve in that capacity and as Interim
Chairman of the Board of Directors of Richfield to facilitate the
Merger. Following the Merger, it is anticipated that Mr.
Hewitt will become a consultant to Stratex with responsibility to
oversee the Company's operations in Utah.
Managements of both Stratex and Richfield feel strongly that the
combination of Richfield's properties and Stratex' current cash on
hand and access to additional capital will create an outstanding
opportunity to fully exploit and develop Richfield's significant,
primarily oil producing asset base.
Richfield's Kansas properties are located within the prolific
Central Kansas Uplift ("CKU"), an area noted for long life
oilfields, excellent historical well control, relatively shallow
target payzones, and superior wellbore economics. Richfield boasts
a significant inventory of 95 low risk, low cost and high rate of
return drilling, behind pipe, salt water disposal, offset and/or
rework/recompletions in the Arbuckle formation (57 new drilling, 38
recompletions), as well as unbooked horizontal Mississipian
locations. The Arbuckle, a vast water drive reservoir system, has
produced more than 2.4 billion barrels of oil since the late 1920s.
As leasehold ownership in this area has long been fragmented,
excellent potential exists for bolt-on acquisitions and drilling
opportunities. Therefore, Richfield's CKU mid-continent area,
along with Stratex' south Texas properties will become the core
operating regions for the post-merger company.
Perhaps the crown jewel of Richfield's asset base is the world
class upside represented by Richfield's ownership of extensive
Central Utah Overthrust acreage (totaling 33,270 gross, 12,530 net
acres). Managements of both Stratex and Richfield believe there is
the potential for the discovery of very significant reserves,
associated with unbooked resource potential in the Navajo
Sandstone, Mancos Shale, and deeper Mississipian formations (170
prospective drilling locations). Richfield owns an 89.5% working
interest ("WI") in its HUOP Freedom Trend Prospect and a 56.6% WI
in the Liberty Prospect. The HUOP Freedom Trend Prospect is on
trend with two significant discoveries made by Occidental Petroleum
Corp. and Wolverine Gas & Oil, announced in 2003 and
2008. In addition, Richfield owns a 3% WI in a 20,000 acre
Area of Mutual Interest ("AMI") through its Independence Project, a
high thermal maturity and organically rich Mancos Shale play (31
drilling locations), which Managements of both companies believe
could shortly become a highly sought after shale play in the
continental United States.
Richfield's year-end 2013 independent engineering report
reported SEC PV10 for proved reserves totaling $28.9 million, of
which $3.0 million (10.2%) was represented by proved developed
producing reserves. Inclusion of probable ("2P") reserves increases
SEC PV10 to $109.0 million. Proved reserves total 1.43 million
barrels of oil equivalent, with oil representing 87% of the total.
Inclusion of probables increases reserves to 4.0 million barrels of
oil equivalent (70% oil). No reserves or value were attributed to
Richfield's Utah potential, which Managements of both companies
believe could be quite considerable.
About Stratex Oil & Gas Holdings, Inc.
Stratex Oil & Gas Holdings, Inc. is an independent energy
company focused on the acquisition and subsequent organic
exploitation and development of primarily operated crude oil
properties in Texas, within the prolific Eagle Ford Shale play, as
well as non-operated working interests in North Dakota, Montana and
Kansas. Stratex is fully committed to the creation of long term
value for all of its stakeholders. For more information visit:
http://www.stratexoil.com.
About Richfield Oil & Gas Company
Richfield is an independent exploration and production company
headquartered in Salt Lake City, Utah with substantially all of its
current producing assets located in Kansas, with potential high
impact leases in Utah, and Wyoming. Founded in April 2011,
Richfield is dedicated to exploiting its asset base and to growing
organically through the exploitation and development of its
existing field inventory by the use of drilling, workover,
recompletion and other lower-risk development projects, in order to
increase proved reserves and production. Please
visit www.richfieldoilandgas.com for additional
information.
Important Information for Investors and Shareholders
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed transaction
between Stratex and Richfield, Stratex and Richfield will file
relevant materials with the Securities and Exchange Commission (the
"SEC"), including a Stratex registration statement on Form S-4 that
will include a proxy statement of Richfield that also constitutes a
prospectus of Stratex, and a definitive joint proxy
statement/prospectus will be mailed to shareholders of
Richfield. INVESTORS AND SECURITY HOLDERS OF STRATEX AND
RICHFIELD ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS
AND OTHER DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY AND
IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. Investors and security holders
will be able to obtain free copies of the registration statement
and the joint proxy statement/prospectus (when available) and other
documents filed with the SEC by Stratex or Richfield through the
website maintained by the SEC at http://www.sec.gov. Copies of the
documents filed with the SEC by Stratex will be available free of
charge on Stratex' website at www.stratexoil.com. Copies of
the documents filed with the SEC by Richfield will be available
free of charge on Richfield's website at
www.richfieldoilandgas.com.
Stratex, Richfield, their respective directors and certain of
their respective executive officers may be considered participants
in the solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive officers
of Stratex is set forth in its Annual Report on Form 10-K for the
year ended December 31, 2013, which was filed with the SEC on March
31, 2014, its Current Reports on Form 8-K filed with the SEC on May
7, 2014 and April 16, 2014. These documents can be obtained
free of charge from the sources indicated above. Additional
information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint
proxy statement/prospectus and other relevant materials to be filed
with the SEC when they become available. Information about the
directors and executive officers of Richfiled is set forth in its
Annual Report on Form 10-K for the year ended December 31, 2013,
which was filed with the SEC on April 14, 2014 and its Current
Reports on Form 8-K filed with the SEC on May 7, 2014. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the participants in the
proxy solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this communication regarding the proposed
transaction between Stratex and Richfield, including any statements
regarding the expected timetable for completing the transaction,
benefits and synergies of the transaction, future opportunities for
the combined company and products, and any other statements
regarding Stratex' and Richfield's future expectations, beliefs,
plans, objectives, financial conditions, assumptions or future
events or performance that are not historical facts are
"forward-looking" statements made within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements
are often, but not always, made through the use of words or phrases
such as "may", "believe", "anticipate", "could", "should",
"intend", "plan", "will", "expect(s)", "estimate(s)", "project(s)",
"forecast(s)", "positioned", "strategy", "outlook" and similar
expressions. All such forward-looking statements involve estimates
and assumptions that are subject to risks, uncertainties and other
factors that could cause actual results to differ materially from
the results expressed in the statements. Among the key factors that
could cause actual results to differ materially from those
projected in the forward-looking statements are the following: the
timing to consummate the proposed transaction; the risk that a
condition to closing of the proposed transaction may not be
satisfied; the risk that a regulatory approval that may be required
for the proposed transaction is not obtained or is obtained subject
to conditions that are not anticipated; Stratex' ability to achieve
the synergies and value creation contemplated by the proposed
transaction; Stratex' ability to promptly, efficiently and
effectively integrate Richfield's operations into those of Stratex;
and the diversion of management time on transaction-related
issues. Additional information concerning these and other
factors can be found in Stratex' and Richfield's respective filings
with the SEC, including their most recent Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K. Stratex and Richfield assume no obligation to update any
forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only
as of the date hereof.
Investor Contacts Stratex: WSR Communications, Inc.Phone: (772)
219-7525IR@WSRCommunications.comRichfield:Investor
Relations: RedChip Companies, Inc.Mike BowdoinVice President
of Salesmike@redchip.com(800) 733-2447, ext. 110
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