AFSE
Item 1.01 Entry into a Material Definitive Agreement.
Acquisition of Oil and Gas Interests
On August 31, 2011, we entered into a participation agreement with Bering Exploration, Inc. relating to 365 mineral acres located in Beauregard Parish, Louisiana, in which we hold a 5% interest. Under this agreement, we have agreed to participate in the drilling of an initial test well, which is to be drilled to a depth of approximately 10,800 feet under a turnkey contract with Bering.
On September 12, 2011, we entered into a Share Purchase Agreement with Treaty Energy Corporation. Under this agreement, (A) we purchased 400 Class A Voting shares of Treaty Belize Energy, LTD (“TBE”), which shares represent 4% of such class of shares; (B) we paid $100,000 in cash for such shares; and (C) we have anti-dilution protection. We also hold an option to purchase additional shares up to10% of TBE, at a total cost of approximately $500,000. In addition, we hold an option to purchase up to 15% ownership of Paradise Energy, LTD for up to one Year at a cost of $360,000, $25,000 of which has been paid by us as a deposit.
In January 2012, Treaty Belize Energy (TBE) reported that it had drilled its initial well near Independence Village, Belize, located adjacent to the Port of Big Creek in the Stann Creek District, and that oil in commercial quantities had been detected. The defined producing zone is between 1,235 and 1,290 feet. The level of initial production from this well is expected to be approximately 60 barrels per day. There is no assurance that this well will produce oil and/or gas in such quantities as would benefit our company. That is, production from this well may never result in cash distributions to us. A second, deeper well on the lease owned by TBE is planned for an as-yet determined date. There is no assurance that the second well will produce oil and/or gas.
We do not currently possess sufficient capital with which to make the further investments described above and there is no assurance that we will be able to obtain such needed capital.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On August 31, 2011, we entered into a participation agreement with Bering Exploration, Inc. relating to 365 mineral acres located in Beauregard Parish, Louisiana, in which we hold a 5% interest. Under this agreement, we have agreed to participate in the drilling of an initial test well, which is to be drilled to a depth of approximately 10,800 feet under a turnkey contract with Bering.
On September 12, 2011, we entered into a Share Purchase Agreement with Treaty Belize Energy (TBE). Under this agreement, (A) we purchased 400 Class A Voting shares of Treaty Belize Energy, LTD (“TBE”), which shares represent 4% of such class of shares; (B) we paid $100,000 in cash for such shares; and (C) we have anti-dilution protection. We also hold an option to purchase additional shares up to10% of TBE, at a total cost of approximately $500,000. In addition, we hold an option to purchase up to 15% ownership of Paradise Energy, LTD for up to one Year at a cost of $360,000, $25,000 of which has been paid by us as a deposit.
We acquired these interests with funds on hand.
Item 7.01 Regulation FD Disclosure.
Oil and Gas Business Plan
As we indicated in our Quarterly Report on Form 10-Q for the period ended September 30, 2011, we have acquired an interest in two oil and gas prospects. Our intention is to be involved in the exploration, development, acquisition and production of oil and gas. Our involvement in the oil and gas business can be expected to take any form of ownership and participation, depending upon the opportunities made available to our company.
Risk Factors
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below before deciding to purchase shares of our common stock. If any of the events, contingencies, circumstances or conditions described in the risks below actually occur, our business, financial condition or results of third party operations upon which our royalty and similar interests may depend could be seriously harmed. The trading price of our common stock could, in turn, decline and you could lose all or part of your investment.
Risks Related to Our Company
Our limited history makes an evaluation of our company extremely difficult, and profits are not assured.
In view of our lack of history in the oil and gas business and the fact that we do not have a current revenue stream from operations, it may be difficult for investors to evaluate our business and prospects. Each investor must consider our business and prospects in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. For our business plan to succeed, we will engaged in the following activities: find and acquire rights in attractive oil and gas properties; develop or cause third parties to develop the oil and gas properties to a stage at which oil and gas are being produced in commercial quantities; procure purchasers of commercial production of oil and gas; comply with applicable laws and regulations; identify and enter into binding agreements with suitable business partners for future projects; raise a sufficient amount of funds to continue acquisition, exploration and development programs; respond to competitive developments and market changes; and attract, retain and motivate qualified personnel.
There can be no assurance that we will be successful in undertaking any or all of such activities. A failure to undertake successfully most, if not all, of the activities described above could materially and adversely affect our business, prospects, financial condition and results of operations. In addition, there can be no assurance that exploration and production activities, if any, will produce oil and gas in commercial quantities, if any at all. There can be no assurance that sales of oil and gas production will generate significant revenues for a sustained period or that we will be able to achieve or sustain profitability in any future period.
Cumulative voting is not available to shareholders.
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