Quarterly report pursuant to Section 13 or 15(d)

COMMON AND PREFERRED STOCK

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COMMON AND PREFERRED STOCK
3 Months Ended
Mar. 31, 2018
Equity [Abstract]  
COMMON AND PREFERRED STOCK
COMMON AND PREFERRED STOCK

The Company’s Amended and Restated Articles of Incorporation authorize the issuance of up to 147,500,000 shares.  The shares are classified in two classes, consisting of 142,500,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share.  The board of directors is authorized to establish one or more series of preferred stock, setting forth the designation of each such series, and fixing the relative rights and preferences of each such series.  The Company has neither designated nor issued any shares of preferred stock.

Common Stock

The following is a schedule of changes in the number of shares of common stock outstanding during the three months ended March 31, 2018 and the year ended December 31, 2017:

 
Three Months Ended March 31, 2018
 
Year Ended December 31, 2017
Beginning Balance
66,791,633

 
63,259,781

Restricted Stock Grants (Note 6)
127,999

 
911,355

Legal Settlement

 
3,000,000

Other Surrenders - Tax Obligations
(89,601
)
 
(270,510
)
Other Forfeitures
(892,086
)
 
(108,993
)
Ending Balance
65,937,945

 
66,791,633



2018 Activity

During the three months ended March 31, 2018, 0.1 million shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards.  The total value of these shares was approximately $0.2 million, which is based on the market prices on the dates the shares were surrendered.

During January 2018, 0.9 million shares of common stock were forfeited in connection with the resignation of the Company’s former interim chief executive officer and chief financial officer. The total amount of share-based compensation expense that was reversed in connection with his resignation was approximately $1.2 million.

Exchange Transaction
On January 31, 2018, the Company entered into the Exchange Agreement (see Note 4). If the Exchange Agreement is consummated, the Company would be required to issue approximately $155.0 million of the Company’s common stock (the “Exchange Consideration”) to the Supporting Noteholders as partial consideration for their exchange of the Outstanding Notes.
In addition, one of the conditions to closing of the Exchange Transaction is that the Company raise at least $140.0 million in gross cash proceeds from the sale of its common stock (the “Equity Raise”). During April 2018, to satisfy a portion of the Equity Raise requirement, the Company completed an underwritten public offering of common stock (the “Public Offering”) pursuant to which it has issued 62.3 million shares of common stock and received gross proceeds of $93.4 million (see Note 12). In addition, during the three months ended March 31, 2018, the Company and various investors entered into subscription agreements (the “Subscription Agreements”) whereby such investors agreed to purchase up to $52.0 million of the Company’s common stock, subject to the closing of the Exchange Agreement.
The shares of common stock to be issued as Exchange Consideration and pursuant to the Subscription Agreements are expected to be valued at the public offering price of the shares issued in the Public Offering, which was $1.50 per share. As a result, in addition to the 62.3 million shares of common stock issued in April 2018 pursuant to the Public Offering, upon closing of the Exchange Transaction, the Company would be required to issue an additional approximately 103.2 million shares of our common stock as Exchange Consideration, and up to an additional approximately 34.7 million shares of our common stock pursuant to the Subscription Agreements.

Acquisition Agreement

On April 25, 2018, the Company entered into a definitive agreement with Salt Creek Oil and Gas, LLC to acquire oil and gas properties, subject to typical closing conditions.  The transaction is expected to close in early June 2018, and the consideration payable by the Company upon closing would include the issuance of 6 million shares of the Company’s common stock.

Stock Repurchase Program

In May 2011, the Company’s board of directors approved a stock repurchase program to acquire up to $150 million of the Company’s outstanding common stock.  The stock repurchase program allows the Company to repurchase its shares from time to time in the open market, block transactions and in negotiated transactions.

During the three months ended March 31, 2018 and March 31, 2017, the Company did not repurchase shares of its common stock under the stock repurchase program.  The Company’s accounting policy upon the repurchase of shares is to deduct its par value from Common Stock and to reflect any excess of cost over par value as a deduction from Additional Paid-in Capital.