UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 11, 2014
Black Ridge Oil & Gas, Inc.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
| 000-53952 | 27-2345075 |
| (Commission File Number) | (I.R.S. Employer Identification No.) |
| 10275 Wayzata Boulevard, Suite 100, Minnetonka, Minnesota | 55305 |
| (Address of principal executive offices) | (Zip Code) |
(952) 426-1241
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
| [_] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 240.14d-2(b)) |
| [_] | Soliciting material pursuant to Rule 14a-12 under Exchange Act (17 CFR 240.14a-12) |
| [_] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [_] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c) |
Item 1.01 Entry into a Material Definitive Agreement.
On September 11, 2014, Black Ridge Oil & Gas, Inc., a Nevada corporation (the “Company”), entered into an amendment (the “Amendment”) to the Credit Agreement dated August 8, 2013, by and between the Company and Cadence Bank, N.A., a national banking association (the “Bank”) (“Senior Credit Facility”). The Amendment increases the borrowing base amount from $20,000,000 to $35,000,000. The foregoing description of the Amendment to the Credit Agreement is a summary only and is qualified in its entirety by reference to the Fourth Amendment to Credit Agreement, attached hereto as Exhibit 10.1, which is incorporated herein by reference.
On September 11, 2014, Chambers Energy Management, LP, as administrative agent (“Chambers”), and several other lenders under the Company’s Second Lien Credit Agreement dated August 8, 2013 (the “Subordinated Credit Facility”) consented to the Amendment and changed the reference to the amount under the First Lien Carve Out from $20,000,000 to $35,000,000 (the “Subordinated Credit Facility Consent”). In consideration of the Company’s projected cash needs, the Company and Chambers reduced the current availability under the Chambers subordinated credit facility by $5,000,000 to $30,000,000 with additional availability to be approved by Chambers on an as needed basis for acquisitions. The foregoing description of the Subordinated Credit Facility Consent is a summary only and is qualified in its entirety by reference to the Consent to Second Lien Credit Agreement, attached hereto as Exhibit 10.2, which is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On September 11, 2014, the Company issued a press release regarding the Amendment and Subordinated Credit Facility Consent and certain other information. A copy of the press release is being furnished pursuant to Regulation FD as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The information in the press release and this Item 7.01 shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Furthermore, the press release shall not be deemed to be incorporated by reference into the Company's filings under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except as set forth with respect thereto in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
10.1 Fourth Amendment to Credit Agreement, dated September 11, 2014 by and between Black Ridge Oil & Gas, Inc., as Borrower, and Cadence Bank, N.A., as Lender.
10.2 Consent Related to Second Lien Credit Agreement, dated September 11, 2014, provided by Chambers Energy Management, LP, as Administrative Agent, and the several other lenders.
99.1 Press release (furnished).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BLACK RIDGE OIL & GAS, INC. | |
| (Registrant) | |
| Date: September 11, 2014 | |
| /s/ James Moe, Chief Financial Officer | |
| James Moe, Chief Financial Officer | |
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Exhibit 10.1
FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Fourth Amendment”) is dated and effective as of September 11, 2014 (the “Effective Date”), by and between BLACK RIDGE OIL & GAS, INC., a Nevada corporation (the “Borrower”), and CADENCE BANK, N.A., a national banking association (the “Lender”).
R E C I T A L S:
1. The Borrower and the Lender have heretofore entered into a Credit Agreement dated as of August 8, 2013, as amended by that certain First Amendment to Credit Agreement dated as of December 13, 2013, as further amended by that certain Second Amendment to Credit Agreement dated as of March 24, 2014, and as further amended by that certain Third Amendment to Credit Agreement dated as of April 21, 2014 (as amended, the “Agreement”), pursuant to which the Lender established in favor of the Borrower certain credit facilities and loans.
2. The Borrower has requested that the Lender increase the Borrowing Base Amount under the Agreement, and the Lender, subject to the terms and conditions hereof, has agreed to honor the Borrower’s request.
3. The parties also have agreed to make certain other changes to the Agreement.
NOW, THEREFORE, the parties hereto, in consideration of the mutual covenants hereinafter set forth and intending to be legally bound hereby, do hereby further amend the Agreement and agree as follows:
A. Defined Terms. Capitalized terms used herein which are defined in the Agreement are used herein with such defined meanings, as said definitions may be amended by this Fourth Amendment.
1. The following new definition is hereby added to Section 1.1 of the Agreement:
“Fourth Amendment” means that certain Fourth Amendment to Credit Agreement by and between Black Ridge Oil & Gas, Inc. and Cadence Bank, N.A., dated September 11, 2014.
B. Increase to Borrowing Base Amount. Subject to the terms and conditions of the Agreement, as amended by this Fourth Amendment, and in accordance with Section 2.2 of the Agreement, the Lender hereby increases the Borrowing Base Amount from $20,000,000 to $35,000,000. The parties agree that notwithstanding any conflicting requirement in Section 2.2 of the Agreement, the next Borrowing Base Amount redetermination is scheduled for December 1, 2014 with a reserve report due from Borrower not later than November 15, 2014. Following the December 1, 2014 redetermination, the redetermination dates set forth in Section 2.2 of the Agreement shall resume.
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C. Amendment to Section 12.10 (Commodity Transactions). Section 12.10 of the Agreement is hereby deleted in its entirety and restated as follows:
Section 12.10 Commodity Transactions. Borrower shall not enter into any speculative commodity transactions of any type or Hedging Agreement relating to the sale of aggregate Hydrocarbons production in excess of ninety percent (90%) of the total volume of such production projected in the most recent independent engineering report delivered to Lender pursuant to Section 11.1(d), or quarterly internally generated engineering report of Borrower as reviewed and approved by Lender, to come from Borrower’s proved developed producing reserves during the term of such Hedging Agreement. Notwithstanding the foregoing, the maximum duration of any permitted Hedging Agreement shall not exceed forty-two (42) months.
D. Amendment to Article XI (Affirmative Covenants). Article XI of the Agreement is hereby amended to include the following new provision as Section 11.22:
Section 11.22 Incremental Hedging. Borrower agrees to hedge pursuant to Hedging Agreements not less than eighty percent (80%) of its forecasted proved developed producing (PDP) oil reserves for calendar years 2015, 2016 and 2017, as shown in the engineering report delivered by Borrower to Lender prior to the date of the Fourth Amendment for the second quarter of 2014. The required Hedging Agreements are to be in place within fifteen (15) days after the date of this Fourth Amendment.
E. Conditions Precedent. The effectiveness of this Fourth Amendment shall be subject to the Lender’s satisfactory receipt of (i) a signed original of this Fourth Amendment by Borrower, (ii) a signed original of the Fourth Amendment to Intercreditor Agreement between the Lender and Chambers Energy Management, L.P., (iii) copies of all other documents, instruments and certificates which the Lender or its counsel may reasonably request in connection herewith, and (iv) all fees, charges and expenses which are due and payable under this Fourth Amendment. Lender reserves the right, in its sole discretion, to waive any one or more of the foregoing conditions precedent.
F. Representations; No Default. On and as of the date of this Fourth Amendment, and after giving effect to this Fourth Amendment, the Borrower confirms, reaffirms, and restates the representations and warranties set forth in the Agreement and the Loan Documents; provided, that each reference to the Agreement herein shall be deemed to include the Agreement as amended by this Fourth Amendment.
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G. Confirmation of Collateral Documents. All of the liens, privileges, priorities and equities existing and to exist under and in accordance with the terms of the Loan Documents are hereby renewed, extended and carried forward as security for all of the Loans and all other debts, obligations and liabilities of the Borrower to Lender. More specifically, the Borrower hereby acknowledges and confirms that the Mortgage and Security Agreement secure all present and future indebtedness of Borrower to Lender, including without limitation all of the Loans. Further, the parties to this Fourth Amendment acknowledge that all Loans are cross-defaulted and cross-secured.
H. Payment of Expenses.
(a) Concurrently with the execution of this Fourth Amendment, Borrower agrees to pay a facility fee in the amount of $135,000.00, in accordance with Section 5.1 of the Agreement.
(b) Borrower agrees to pay or reimburse the Lender for all legal fees and expenses of counsel to the Lender in connection with the transactions contemplated by this Fourth Amendment.
I. Amendments. There are no oral agreements between the Lender and the Borrower. The Agreement, as amended by this Fourth Amendment and the other Loan Documents, sets forth the entire agreement of the parties with respect to the subject matter hereof and supersede all prior written and oral understandings between the Borrower and the Lender with respect to the matters herein and therein set forth. The Agreement, as amended by this Fourth Amendment, cannot be modified or amended except by a writing signed and delivered by the Borrower and the Lender.
J. Waiver of Defenses. In consideration of the Lender’s execution of this Fourth Amendment, the Borrower does hereby irrevocably waive any and all claims and/or defenses to payment on any indebtedness arising under the Agreement and owed by Borrower to the Lender that may exist as of the date of execution of this Fourth Amendment.
K. Governing Law and Counterparts. This Fourth Amendment shall be governed by and construed in accordance with the laws of the State of Texas. This Fourth Amendment may be executed in any number of counterparts, all of which counterparts, when taken together, shall constitute one and the same instrument.
L. Continued Effect. Except as expressly modified herein, the Agreement, as amended by this Fourth Amendment, shall continue in full force and effect. The Agreement, as amended by this Fourth Amendment, is hereby ratified and confirmed by the parties hereto.
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M. Resolutions/Consents. The Borrower hereby certifies to the Lender that all corporate resolutions previously delivered to Lender in connection with the Agreement remain in effect.
[Signatures on following page]
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IN WITNESS WHEREOF, the Borrower has caused this Fourth Amendment to Credit Agreement to be executed and delivered as of the date hereinabove provided by the undersigned duly authorized officer.
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BORROWER: BLACK RIDGE OIL & GAS, INC.
By: /s/ Ken DeCubellis Name: Ken DeCubellis Title: Chief Executive Officer
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Borrower’s Signature Page
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IN WITNESS WHEREOF, the Bank has caused this Fourth Amendment to Credit Agreement to be executed and delivered as of the date hereinabove provided by the undersigned duly authorized officer.
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BANK: CADENCE BANK, N.A. By: /s/ Steven Taylor Name: Steven Taylor Title: Vice President
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Bank’s Signature Page
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Exhibit 10.2
CHAMBERS ENERGY CAPITAL
600 Travis Street, Suite 7330
Houston, Texas 77002
September 11, 2014
Black Ridge Oil & Gas, Inc.
10275 Wayzata Blvd., Suite
310
Minnetonka, MN 55305
Attention: Mr. James Moe
Ladies and Gentlemen:
Reference is made to that certain Credit Agreement, dated as of August 8, 2013, among Black Ridge Oil & Gas, Inc., as borrower (the “Borrower”), Chambers Energy Management, LP, as agent (“Agent”), and the lenders party thereto (as amended, supplemented or otherwise modified, the “Credit Agreement”). Each capitalized term used herein but not defined herein shall have the meaning ascribed to such term in the Credit Agreement.
The Borrower, the Lenders and Agent hereby agree to make the following amendments to the Credit Agreement:
(a) the definition of “First Lien Carve Out” appearing in Section 1.1 of the Credit Agreement is hereby amended by replacing each reference to “$20,000,000” appearing therein with “$35,000,000”; and
(b) the definition of “Available Commitments” appearing in Section 1.1 of the Credit Agreement is hereby amended by replacing “$25,000,000” where it appears therein with “$30,000,000”.
Each of the parties hereto hereby acknowledges that (i) the letter from Agent and the Lenders to the Borrower, dated April 21, 2014, pursuant to which the Available Commitments were increased from $25,000,000 to $30,000,000, (ii) the letter from Agent and the Lenders to the Borrower, dated June 17, 2014, pursuant to which the Available Commitments were increased from $30,000,000 to $35,000,000, are hereby superseded by this letter and (iii) the amount of Available Commitments as of the date hereof is $30,000,000.
Except as specifically amended herein, the Credit Agreement shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. This letter agreement shall not operate as a waiver of any right, power or remedy of any Lender or Agent under any of the Loan Documents, nor constitute a waiver of any provision of the Loan Documents.
THIS LETTER AGREEMENT AND ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
[Signature pages follow]
| Very truly yours, | |
| CHAMBERS ENERGY CAPITAL II, LP, | |
| By: CEC Fund II GP, LLC, as its general partner | |
| as a Lender | |
| By:___/s/ J. Robert Chambers________ | |
| Name: J. Robert Chambers | |
| Title: Managing Director | |
| CHAMBERS ENERGY CAPITAL II TE, LP, | |
| By: CEC Fund II GP, LLC, as its general partner | |
| as a Lender | |
| By: __/s/ J. Robert Chambers_________ | |
| Name: J. Robert Chambers | |
| Title: Managing Director | |
| CHAMBERS ENERGY MANAGEMENT, LP | |
| as Agent | |
| By: /s/ J. Robert Chambers_______________ | |
| Name: J. Robert Chambers | |
| Title: President and Chief Executive Officer |
Signature Page to Letter Agreement
Acknowledged and Agreed:
BLACK RIDGE OIL & GAS, INC.
By: /s/ Kenneth DeCubellis______________
Name: Kenneth DeCubellis
Title: Chief Executive Officer
Signature Page to Letter Agreement
Exhibit 99.1
Black Ridge Oil & Gas, Inc. Announces Increase to Senior Secured Credit Facility Borrowing Base
MINNETONKA, MN, September 10, 2014 – Black Ridge Oil & Gas, Inc. (the "Company") (OTCQB: ANFC) announced an increase to the Cadence Bank, N.A. (“Cadence”) senior secured credit facility borrowing base to $35 million, a 75% increase from the previous borrowing base of $20 million. The increase is largely based on the Company’s production and growth as of the June 30, 2014 quarterly filing and concurrent lender reserve analysis. The Cadence credit facility is the least expensive tranche of capital currently available to the Company, carrying annual interest rates from 3.0% to 3.5% above LIBOR. In connection with the increase in the senior secured credit facility, and in consideration of the Company’s projected cash needs, the Company and Chambers Energy Management, L.P. (“Chambers”) reduced the current availability under the Chambers subordinated credit facility by $5 million to $30 million with additional availability to be approved by the lender on an as needed basis for acquisitions. Total availability to the Company under the two facilities is $65 Million, with $44 Million drawn as of June 30, 2014.
Ken DeCubellis, Black Ridge's CEO, commented, “The 75% increase in our Cadence borrowing base, to $35 million, is a significant milestone for the Company and reflects both the high quality of the Company’s assets and the rapid rate of growth of our proved reserves. Looking at our capital expenditures through June of 2015, we expect to fund our growth from cash flow and the increased Cadence borrowing base, which will result in a meaningful reduction in our cost of capital and build shareholder value.”
About the Company
Black Ridge Oil & Gas, Inc. is an oil and gas exploration and production company based in Minnetonka, Minnesota. Black Ridge's focus is exclusive to the Williston Basin Bakken and Three Forks trend in North Dakota and Montana. For additional information, visit the Company's website at www.blackridgeoil.com.
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Contact
Black Ridge Oil & Gas, Inc.
Ken DeCubellis, Chief Executive Officer
952-426-1241
www.blackridgeoil.com
SOURCE Black Ridge Oil & Gas, Inc.