Thursday, October 10, 2013 8:22:20 AM
Lastnight RNCH filing!-.0096 CRAZY`STORY`READ:
Remember back in April WDCO buying 30 million shares between .016 and .019?
And then after that this came out?
http://promotionstocksecrets.com/promotion-secrets-aps-wdco/
According to filings they have over $2,000,000 in cash and equivalents
see image below....
now they just came out with MATERIAL DEFINITIVE AGREEMENT- see text for filing below.
Thinking this could be the next big thing. Between April and now... it appears as such.
275m Authorized, 119,862,791 Outstanding
Filing also says this: Prior to Rancher’s entry into the Participation Agreement and AAPL Form 610 operating agreement, Rancher was a shell company. As a result of entry into these agreements, the acquisition of assets as described in Item 2.01 above, and the addition of operations under the agreements (as described above in Items 1.01 and 2.01 above), we believe Rancher is no longer a shell company.
[img]i.imgur.com/DHkJ9Rx.jpg
archive.fast-edgar.com/20131009/Aabaa-8nabBBj557-6-BU-8Phj-o-mN/[/img]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 3, 2013
RANCHER ENERGY CORP.
(Exact name of registrant as specified in its charter)
Nevada 000-51425 98-0422451
(State or other jurisdiction of (Commission File (IRS Employer Identification
of incorporation) Number) Number)
P.O. Box 40, Henderson, Colorado 80640
(Address of Principal Executive Offices) (Zip Code)
(303) 629-1125
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
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 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the 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)
SECTION 1 – REGISTRANT’S BUSINESS AND OPERATIONS
Item 1.01 Entry Into A Material Definitive Agreement
On October 3, 2013 (effective September 30, 2013), Rancher Energy Corp. (“Rancher”) executed a Participation Agreement with PetroShare Corp., a privately-held Colorado corporation not affiliated with Rancher (“PetroShare”), for the purposes of drilling at least one and up to two oil and/or gas wells to test the Niobrara formation to a depth of approximately 7,850 feet total vertical depth (TVD) in Moffatt County, Colorado. The following description of the Participation Agreement is qualified in its entirety by reference to the Participation Agreement which agreement is included herewith as Exhibit 10.1.
On October 7, 2013, Rancher paid 30% of the costs of drilling the first well (Kowach 3-25) in exchange for a 30% working interest (25.309% net revenue interest), subject to a reduction of the working interest to 25% (and a proportional reduction of the net revenue interest) if Rancher and PetroShare do not complete a business combination. Rancher and PetroShare have entered into a non-binding letter of intent by which the two parties are negotiating and pursuing a business combination. Any business combination will be subject to approval by Rancher’s stockholders and a number of other conditions precedent.
The estimated cost for drilling the first well is $1,824,460 ($547,338 net to Rancher), and if warranted an additional $471,772 for completion ($141,517 net to Rancher). Rancher has an option not to participate in the second well, based on the results obtained from the first well. If Rancher participates in the second well (of which there can be no assurance), the estimated cost for drilling the second well (Voloshin 3-25) is $1,982,998 ($594,899 net to Rancher), and if warranted an additional $474,247 for completion ($142,274 net to Rancher).
It is expected that drilling on the first well will commence within the next several weeks. PetroShare will be the operator of the wells pursuant to a standard AAPL Form 610 operating agreement and exhibits thereto. Two other companies, not affiliated with either Rancher or PetroShare, are also participating in the proposed drilling operation.
SECTION 2 – FINANCIAL INFORMATION
Item 2.01 Completion of Acquisition or Disposition of Assets
Pursuant to the Participation Agreement described in Item 1.01 above, upon payment, Rancher acquired a 30% working interest in the oil and gas leases on the property described below in Item 2.01(b). Rancher believes this to be a significant amount of assets acquired otherwise than in the ordinary course of business.
(a) The asset described above was acquired by Rancher upon Rancher’s payment of the costs of drilling the first well under the Participation Agreement on October 7, 2013.
(b) Pursuant to the terms of the Participation Agreement disclosed in Item 1.01 above, Rancher acquired a 30% working interest in the oil and gas leases on the following described property:
Township 6 North, Range 90 West, 6th P.M., Section 25, all of Lot 1 (42.05 acres), Lot 2 (42.05 acres), Lot 3 (42.04 acres), Lot 4 (42.03 acres), Lot 5 (41.98 acres), Lot 6 (41.98 acres), Lot 7 (41.98 acres), Lot 8 (41.98 acres), Lot 9 (41.92 acres), Lot 10 (41.91 acres), Lot 11 (41.91 acres), Lot 12 (41.90 acres), Lot 13 (41.85 acres), Lot 14 (41.85 acres), Lot 15 (41.86 acres), and Lot 16 (41.86 acres), Moffat County, Colorado.
(c) The above-described working interest was acquired from PetroShare Corp., a non-affiliate of Rancher. Rancher and PetroShare Corp. have no material relationship other than as described above in Item 1.01.
(d) Rancher will pay 30% of the costs of drilling and completion in exchange for a 30% working interest (25.309% net revenue interest), subject to a reduction of the working interest to 25% (and a proportional reduction of the net revenue interest) if Rancher and PetroShare do not complete a business combination. Rancher paid $507,748 on October 7, 2013 and an additional $39,590 on October 9, 2013 as its 30% share of the costs under the above-described Participation Agreement, and may pay up to a total of $1,426,029 if both wells are drilled to completion (see Item 1.01 above for more details).
(e) Not applicable.
(f) Prior to the above-described acquisition of the working interest, Rancher was a shell company. As a result of the acquisition of the working interest, and as a result of the beginning of operations (see Item 5.06 below) as a party to the Participation Agreement and AAPL Form 610 operating agreement described above in Item 1.01, we believe Rancher is no longer a shell company. Nevertheless, if the operations under the Participation Agreement and the operating agreement are fruitless, Rancher may become a shell company once again.
FORM 10 INFORMATION
Item 1 Business
Rancher incorporates by reference Form 10 Item 1, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 1A Risk Factors
Rancher incorporates by reference Form 10 Item 1A, which was previously reported in its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2013, filed on August 14, 2013.
Item 2 Financial Information
Rancher incorporates by reference Form 10 Item 2, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013, and as it was previously reported in its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2013, filed on August 14, 2013.
Item 3 Properties
Rancher incorporates by reference Form 10 Item 3, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013. In addition:
(a) The leasehold interests in which Rancher acquired rights on October 7, 2013 as a result of the payment of estimated drilling expenses, are located in Section 25 of Township 6 North, Range 90 West, 6th P.M., Moffatt County, Colorado.
(b) There are no other producing oil and gas wells on said Section 25. PetroShare has advised Rancher that it has commenced building the location for the contemplated wells.
(c) The properties are not held in fee, but are subject to standard oil and gas leases which provide for three to six year terms (expiring in 2014 through 2016) unless oil and gas operations are continuing at the expiration of the term of the lease. Based on preliminary title work, it appears that PetroShare owned a 100% working interest (approximately 78.3% net revenue interest) in the minerals underlying Section 25. Section 25 has had five wells drilled on it between 1956 and 1965. Three of these wells produced from the Niobrara and two produced from the Trout Creek formation. The last well produced until 1998. Oil was produced from the Niobrara formation, while the gas was produced from both the Niobrara and Trout Creek formations. The producing field in this area is known as the Buck Peak field, which is the largest producing Niobrara oil field in the Sand Wash basin. While there has been successful production from this field in the past, there can be no assurance that the planned drilling operations will be successful or result in the commercial production of oil or natural gas.
Item 4 Security Ownership of Certain Beneficial Owners and Management
Rancher incorporates by reference Form 10 Item 4, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 5 Directors and Executive Officers
Rancher incorporates by reference Form 10 Item 5, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 6 Executive Compensation
Rancher incorporates by reference Form 10 Item 6, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 7 Certain Relationships and Related Transactions, and Director Independence
Rancher incorporates by reference Form 10 Item 7, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 8 Legal Proceedings
Rancher incorporates by reference Form 10 Item 8, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 9 Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Rancher incorporates by reference Form 10 Item 9, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 10 Recent Sales of Unregistered Securities
Rancher incorporates by reference Form 10 Item 10, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 11 Description of Registrant’s Securities
Rancher is authorized to issue an aggregate of 275,000,000 shares of common stock, par value $0.0001 per share. After the acquisition of the leasehold working interests described above in Item 2.01, 119,862,791 shares were outstanding. Rancher’s common stock is traded on the OTCQB.
Common Stock
All outstanding shares of the Company’s common stock are of the same class and have equal rights and attributes. There is no preferred stock. Dividends may be declared by the board of directors out of Rancher’s funds to the extent and in the manner permitted by law.
Voting. The holders of Rancher’s common stock are entitled to one (1) vote for each share held of record, and each fractional share shall be entitled to a corresponding fractional vote on each matter submitted to a vote of the stockholders on which the holders of the common sstock are entitled to vote. There is no cumulative voting allowed in the election of directors. The affirmative vote of a majority of the common stock represented at a stockholders’ meeting and entitled to vote on the subject matter shall be the act of the stockholders except to the extent the articles of incorporation or Nevada statutes require a greater percentage of vote such as in connection with the amendment of Rancher’s articles of incorporation (N.R.S. § 78.390(1)(c)), a control share acquisition (such as the merger, N.R.S. § 78.3791), or removal of directors (N.R.S. § 78.335).
Preemptive Rights. No stockholder of Rancher or any person with the right to convert any security or obligation to common stock of Rancher shall have any preemptive right.
No Assessment. After the amount payable for the shares has been fully paid, the shares of Rancher shall not be assessable for any purpose, and no stock issued as fully paid shall ever be assessable or assessed. No stockholder of Rancher is individually liable for the debts or liabilities of Rancher.
No Board Classification. The Rancher board of directors is not classified or staggered, and the entire board may (pursuant to N.R.S. § 78.335) be removed, with or without cause, upon a vote of two-thirds of the shares entitled to vote at a meeting of the stockholders. To remove directors, a shareholders’ meeting must be called specifically for that purpose.
Warrants, Rights, and Options
As of the date of this report, options to acquire 10,000,000 shares of common stock are outstanding. These options are exercisable at $0.035 per share, and will expire in October 2019. All the options are exercisable within 60 days.
Item 12 Indemnification of Directors and Officers
Rancher incorporates by reference Form 10 Item 12, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 13 Financial Statements and Supplementary Data
Rancher incorporates by reference Form 10 Item 13, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013, and as it was previously reported in its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2013, filed on August 14, 2013.
Item 14 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Rancher incorporates by reference Form 10 Item 14, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 15 Financial Statements and Exhibits
Rancher incorporates by reference Form 10 Item 15, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013, and as it was previously reported in its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2013, filed on August 14, 2013.
SECTION 5 – CORPORATE GOVERNANCE AND MANAGEMENT
Item 5.06 Change in Shell Company Status
Prior to Rancher’s entry into the Participation Agreement and AAPL Form 610 operating agreement, Rancher was a shell company. As a result of entry into these agreements, the acquisition of assets as described in Item 2.01 above, and the addition of operations under the agreements (as described above in Items 1.01 and 2.01 above), we believe Rancher is no longer a shell company. The material terms of these agreements are described in Items 1.01 and 2.01 above, and are further disclosed in full by the attachment of the Participation Agreement hereto as Exhibit 10.1. Rancher is a non-operator under the AAPL Form 610 operating agreement, the terms of which are standard. If the wells contemplated under the Participation Agreement and the operating agreement are dry holes and plugged and abandoned, Rancher may become a shell company once again.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
The following is a complete list of exhibits filed as part of this Report. Exhibit numbers correspond to the numbers in the exhibit table of Item 601 of Regulation S-K.
Exhibit No. Description
10.1 Participation Agreement between Rancher Energy Corp. and PetroShare Corp. dated as of September 30, 2013
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
RANCHER ENERGY CORP.
By: /s/ Jon C. Nicolaysen
Jon C. Nicolaysen, President and
Chief Executive Officer
Date: October 8, 2013
Exhibit 10.1
PARTICIPATION AGREEMENT
This Participation Agreement (hereinafter “Agreement”) is made and entered into effective September 30, 2013, by and between PetroShare Corp., hereinafter referred to as “PetroShare”, and Rancher Energy Corp. (“Participant”).
RECITALS:
A. PetroShare has acquired certain oil and gas leases described on Exhibit “A”, attached hereto (“Existing Leases”).
B. Participant wishes to participate with PetroShare in the drilling, and development of the Leases pursuant to the provisions of this Agreement.
Now therefore, the parties hereto, for the mutual promises contained herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, do hereby contract and agree as follows:
I. DEFINITIONS
1. Effective Date: The Effective Date is September 30, 2013.
2. Existing Leases: The oil and gas leases on Exhibit “A”, attached hereto which includes the acreage required for the drilling of the obligation well(s).
3. Obligation Wells: The wells will be drilled from a common well pad and will be the Kowach #3-25 well, located in NESW Section 25, T6N R90W, a vertical well bore and the Voloshin #3-25 well, located in NESW Section 25, T6N R90W; directional well bore to test the Niobrara formation at approximately, 7850 feet TVD. Upon reaching total depth in the first Obligation Well and upon the completion of mud logging and open hole logging operations, PetroShare will provide such data to all JOA working interest participants along with its well evaluation report. JOA participants shall have forty eight (48) hours from the receipt of the data to make its election whether to proceed with the drilling of the second Obligation Well. In the event, a simple majority of JOA participants elect not to proceed or not with the drilling of the second Obligation Well, PetroShare shall release the rig and waive the requirement to drill the second Obligation Well.
4. Operator: PetroShare Corp.
5. Operating Agreement: A joint operating agreement substantially in the form attached hereto as Exhibit “B”.
6. Participant Interest: An Expense and Working Interest in the Leases and Obligation Well(s) of 30.0% thereafter having a net revenue interest of not less than 23.509%.
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7. Reversionary Working Interest: In the event that the acquisition contemplated in that certain Letter of Intent dated September 12, 2013 by and between the parties hereto is not completed, Participants Interest in the Leases and Obligation Wells shall be reduced to 25.0% and the net revenue interest shall be proportionately reduced. It is the intent that the Participant carry PetroShare and bear all costs and expenses associated with the Leases and Obligation Wells for 5.0% of the expenses associated therewith in the event the acquisition is not completed as set forth herein.
8. Working Interest: The cost bearing interest created by oil and gas leases. Working Interest may also refer to the share of ownership attributable to an unleased mineral interest.
9. Net Revenue Interest: The share of the gross production proceeds after payment of royalty and overriding royalty interests.
10. Project Area: As set forth in Exhibit A
II. PROSPECT FEE
A. Payment of Prospect Fee. Participant agrees to pay 30% of the total cost and expense of the Obligation Wells for a 30% Working Interest (to be reduced to a 25% Reversionary Working Interest in the event of the circumstances described in Article I, (7), in lieu of a prospect fee.
III. DRILLING AND DEVELOPMENT.
A. Obligation Wells. Participant agrees to pay for its Participant Interest share of the drilling, completion and equipping, or the plugging and abandonment, of the Obligation Wells. PetroShare shall use its commercially reasonable efforts to commence the drilling of the first Obligation Well by October 15, 2013.
B. Interests Earned. Upon Participant paying the Prospect Fee, together with its share of the costs for the drilling, completion and equipping, or the plugging and abandonment of an Obligation Well(s), Participant shall be assigned an undivided interest in and to the Leases equal to Participant’s Interest or the Reversionary Working Interest as the case may be, of PetroShare’s interest in the Existing Leases as to the unit for such Obligation Well, and as to all depths from the surface to the deepest depth drilled in the Obligation Well. All assignments will be subject to all royalties, overriding royalties, production payments, net profits interests and similar burdens existing as of the date hereof. PetroShare shall proceed with recording such assignments on a timely basis.
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C. Subsequent Drilling and Development Operations. After drilling and completion of the Obligation Well(s), all subsequent wells (“Subsequent Wells”) and subsequent operations with respect to the Obligation Wells shall be proposed in accordance with the Operating Agreement and the provisions of this Agreement with Participant being responsible for its Participant Interest or Reversionary Working Interest as the case may be, subject to any elections to not participate in the Operating Agreement.
IV. OPERATIONS WITHIN PROJECT AREA
A. Operating Agreement. All operations within the Project Area shall be conducted pursuant to the joint operating agreement attached hereto as Exhibit “B” (“Operating Agreement”), reference to which is hereby made for all purposes, except as expressly modified by the terms hereof. PetroShare Corp., shall be designated as Operator subject to the resignation and removal provisions of the Operating Agreement. In the event of a conflict between this Agreement and the Operating Agreement, this Agreement shall control.
B. Cash Advances. Notwithstanding anything in the Operating Agreement to the contrary, PetroShare shall have the right to require cash advances from Participant with respect to the proposed drilling and completion of one or more Obligation Well(s). Such request shall be in the form of one or more Authorities for Expenditure (“AFEs”) and payment shall be due within 10 days following receipt of the AFEs. Provided however, that such AFE’s shall not be issued by PetroShare more than 30 days in advance of the confirmed spud date (i.e. drilling commencement date) of the applicable Obligation Well(s).
V. PROPORTIONATE REDUCTION
A. Proportionate Reduction Clause: If an oil and gas lease or other Mineral Interest covers less than the entire mineral fee estate, or if a party’s interest in the applicable lease or Mineral Interest is less than a 100% ownership interest, any interest conveyed or reserved pursuant to this Agreement is intended to be proportionately reduced to accord to (i) the proportion of mineral interest covered by the relevant oil and gas lease or other Mineral Interest, and (ii) the proportion of ownership held by the conveying party, in the case of a conveyance, or the burdened party, in the case of a reservation of interest.
VI. CONFIDENTIALITY
A. Confidentiality. The parties acknowledge that the information that is the subject matter of this Agreement (including but not limited to all well information acquired by operations conducted under the Operating Agreement) is sensitive and confidential proprietary information belonging to the parties. Each party, for itself and its Affiliates, agrees not to release or disclose or otherwise make the information available to or to furnish any of said information to any third party without (i) obtaining the agreement of the third party to maintain such information confidential and to not use such information other than in connection with investing in or participating with or purchasing interests from the disclosing party, or (ii) first obtaining the express written consent of the other party. Any such release or disclosure if approved shall be conditioned upon the third party expressly agreeing to all terms herein and becoming a party to and subject to this Confidentiality Agreement. Nothing contained above shall restrict or impair any party’s right to use or disclose any of the information which is: (1) at the time of disclosure available to the public through no act or omission of that party; (2) can be shown was lawfully in that party’s possession prior to the time of this Agreement; or (3) is independently made available to that party by a third party who is independently entitled to disclose such information and that party shows that the right of such third party to disclosure existed prior to the date of this Agreement.
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B. Public Disclosure. Subject to the exceptions set forth below, and unless otherwise agreed upon by the parties, prior to substantial leasing completion in the AMI as contemplated by this Agreement, the parties intend to keep material information concerning the entering into of this Agreement and the location of the Project Area confidential to the extent any disclosure thereof could impair the leasing activities of the parties. Notwithstanding such intent, either party may make any public disclosure to the extent that, upon advice of such party’s counsel, such disclosure is advisable to comply with United States or state securities laws, rules or regulations. Any proposed press release or other disclosure, shall be provided to the other party in advance on a confidential basis for its information and comment.
VII. TAX ELECTION
This Agreement is not intended to create, and shall not be construed to create, a relationship of partnership or an association for profit between or among the parties hereto except as provided herein. Each party hereby affected elects to be excluded from the application of all the provisions of Subchapter “K”, Chapter 1, Subtitle “A”, of the Internal Revenue Code of 1986 and all amendments thereto.
VIII. PAYMENT OF DELAY RENTALS AND LEASE EXTENSIONS
Operator shall be responsible for making any payment of delay rentals, shut in royalties and minimum royalty payments on the Leases. Participant shall bear and pay its share of such payments. Participant shall be billed and shall pay for said costs in the manner set forth for the billing and paying of direct costs in the COPAS accounting procedures attached to the form of Operating Agreement. Operator shall not be liable to Participant for any loss resulting from a good faith effort to properly do so.
IX. NO JOINT LIABILITY
The rights, duties, obligations and liabilities of the parties hereto shall be several and not joint or collective. Each party hereto shall be responsible only for its obligations as herein set out and shall be liable only for its share of the cost and expense as herein provided; it being the express purpose and intention of the parties that their interest in this Agreement and the rights and property acquired in connection herewith shall be held by them as tenants in common. Except for the tax election which the parties may have made, it is not the purpose or intention of this Agreement to create any mining partnership, commercial partnership or other partnership.
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X. ASSIGNMENTS OF LEASES
Any assignment of any interest pursuant to this Agreement by and between the parties hereto shall be made with a special warranty of title by through and under the assignor, but not otherwise and on the form attached hereto as Exhibit “C” which shall be for recording in the official records of the county in which the Lease lies. Where applicable, separate assignments of operating rights shall likewise be made on such State and Federal forms as required by rule or regulation. Any assignment hereafter executed shall specifically refer to, and be made subject to, the terms and conditions hereof.
XI. FORCE MAJEURE
Should any party be prevented or hindered from complying with any obligation created hereunder, other than the obligation to pay money, by reason of fire, flood, storm, act of God, governmental authority, governmental action or inaction, failure or delay in obtaining any necessary permits, labor disputes, war, the inability to secure qualified labor, geoscience data, title abstracts, curative title work, lease brokers, entry onto the land, drilling equipment and drilling rig(s) at prevailing market rates, drilling tools, materials or transportation, or any other cause not enumerated herein but which is beyond the normal control of the party whose performance is affected, then the performance of any such obligation shall be suspended during the period of such prevention or hindrance, provided the affected party promptly notifies the other party of such force majeure circumstances and exercises all reasonable diligence to remove the cause of force majeure.
XII. EXHIBITS
The following exhibits are attached to this Agreement:
Exhibit “A” – Leases
Exhibit “B” – Form of Joint Operating Agreement
Exhibit “C” – Form of Assignment
If the terms of any of these Exhibits conflict with the terms of this Agreement, this Agreement shall control.
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XIII. MISCELLANEOUS
A. Assignment: Participant may assign its interest under this Agreement provided that Participant remains liable for or guarantees the performance of its assignee and provided Participant gives PetroShare appropriate documentation evidencing such assignment.
B. Governing Law: This Agreement and other instruments executed in accordance with it, except for assignments of lands, or the execution hereof shall be governed by and interpreted according to the laws of the State of Colorado. Forum and venue shall be exclusively in Denver, Colorado. As to assignments of lands, they shall be governed by the laws of the State wherein they lie.
C. Entire Agreement: This Agreement, the documents to be executed hereunder, and the Exhibits attached hereto constitute the entire agreement between the parties, supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements between the parties except as specifically set forth herein. No supplement, amendment, alteration, modification, waiver or termination of the Agreement shall be binding unless executed in writing by the parties hereto.
D. Waiver: No waiver of any of the provisions of the Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
E. Captions; Definition of “Including”: The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. The term “including” or “includes”, as used herein, shall mean “including, without limitation,” and “includes, without limitation”.
F. Binding: This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors, assigns and legal representatives.
G. Notices: Any notice hereunder shall be given in writing by mail, courier, personally, E-mail or by facsimile and shall be effective when delivered to the party intended to be notified. The contact information for each party is as follows:
If to PetroShare:
PetroShare Corp.
7200 So. Alton Way, Ste B220
Centennial, CO 80112
Attn: Frederick J. Witsell
(303) 500-1168 Office
(303) 770-6885 fax
(303) 881-2157 cell
fwitsell@petrosharecorp.com
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If to Participant:
Rancher Energy Corp.
c/o A.L. (Sid) Overton, Esq.
6950 East Belleview Ave., Suite. 202
Greenwood Village, CO 80111
Attn: Jon Nicolaysen
(303) 779-5900 Office
(303) 779-6006 Fax
sidoverton@oalaw.net
Any party may change their foregoing contact information by notice to the other party.
H. Expenses: Except as otherwise provided herein, each party shall be solely responsible for all expenses incurred by it in connection with this transaction (including fees and expenses of its own counsel and accountants).
I. Execution: This Agreement may be executed in multiple original counterparts, all of which shall together constitute a single agreement and each of which, when executed, shall be binding for all purposes thereof on the executed party, its successors and assigns.
J. Severability: If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any materially adverse manner to either party.
K. Arbitration: Any dispute arising under this Agreement (“Arbitrable Dispute”) shall be referred to and resolved by binding arbitration in Denver, Colorado, to be administered by and in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Arbitration shall be initiated within the applicable time limits set forth in this Agreement and not thereafter or if no time limit is given, within the time period allowed by the applicable statute of limitations, by one party (“Claimant”) giving written notice to the other party (“Respondent”) and to the Denver Regional Office of the American Arbitration Association (“AAA”), that the Claimant elects to refer the Arbitrable Dispute to arbitration. All arbitrators must be neutral parties who have never been officers, directors or employees of the parties or any of their Affiliates, must have not less than ten (10) years experience in the oil and gas industry, and must have a formal financial/accounting, engineering or legal education. The hearing shall be commenced within thirty (30) days after the selection of the arbitrator. The parties and the arbitrators shall proceed diligently and in good faith in order that the arbitral award shall be made as promptly as possible. The interpretation, construction and effect of this Agreement shall be governed by the Laws of Colorado, and to the maximum extent allowed by law, in all arbitration proceedings the Laws of Colorado shall be applied, without regard to any conflicts of laws principles. All statutes of limitation and of repose that would otherwise be applicable shall apply to any arbitration proceeding. The tribunal shall not have the authority to grant or award indirect or consequential damages, punitive damages or exemplary damages.
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L. Further Assurances: During the time in which this Agreement is in effect, the parties shall, at any time and from time to time, and without further consideration, execute and deliver or use reasonable efforts to cause to be executed and delivered such other instruments of conveyance and contract, and to take such other actions as either party may reasonably may request effect the intent of this Agreement.
M. Not to be Construed Against Drafter: The parties acknowledge that they have had an adequate opportunity to review each and every provision contained in this Agreement, that they have participated equally in the drafting hereof and that they have had adequate time to submit same to legal counsel for review and comment. Based on said review and consultation, the parties agree with each and every term contained in this Agreement. Based on the foregoing, the parties agree that the rule of construction that a contract be construed against the drafter, if any, shall not be applied in the interpretation and construction of this Agreement.
N. Laws and Regulations: Any reference to any federal, state, local, or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.
O. Third-Party Beneficiaries: This Agreement is not intended to confer any rights or remedies upon any Person other than the parties and their respective successors and permitted assigns.
P. Investment Representations: Participant understands (1) that the interests evidenced by this Agreement have not been registered under the Securities Act of 1933, the Colorado Securities Act or any other state securities laws (the “Securities Acts”).
Prior to acquiring the interests, Participant has made an investigation of the PetroShare and its business and has had made available to it all information with respect thereto which it needed to make an informed decision to acquire the interest. Participant considers itself to be an entity possessing experience and sophistication as an investor which are adequate for the evaluation of the merits and risks of its investment in the interest.
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IN WITNESS WHEREOF, this Agreement is executed effective as of the date hereinabove provided.
Parties:
PETROSHARE CORP
By: ________________________
Name: Stephen J. Foley
Title: CEO
RANCHER ENERGY CORP.
By: ____________________________
Name: Jon Nicolaysen
Title: President & CEO
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EXHIBIT A
Leases Project Area
Attached to and made a part of that certain Participation Agreement by and between PetroShare Corp and Rancher Energy Corp., dated September 30, 2013.
See Attached Lease Schedule
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EXHIBIT B
Joint Operation Agreement
Attached to and made a part of that certain Participation Agreement by and between PetroShare Corp and Rancher Energy Corp., dated September 30, 2013.
See Attached JOA
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EXHIBIT “C”
ASSIGNMENT
STATE OF COLORADO )
COUNTY OF _________________ )
KNOW ALL MEN BY THESE PRESENTS, that PetroShare Corp., with an office at ______________________, hereinafter referred to as “Assignor”, for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00), the receipt and adequacy of which is hereby acknowledged and full acquittance granted therefor, has granted, sold, conveyed and delivered and does hereby grant, sell, convey and deliver unto _________________ with an office at _____________________, hereinafter collectively referred to as “Assignee”, ___% of Assignor’s right, title and interest in the following properties (real, personal or mixed) and rights (contractual or otherwise) unless expressly reserved or excluded herein, the following being referred to herein collectively as the Assets:
(a) the oil and gas leases described on Exhibit “A”, attached hereto, in the amounts of the working interests specified thereon (the “Leases”);
(b) The rights and interests in, to and under, or derived from, all of the presently existing and valid unitization and pooling agreements and units (including all units formed by voluntary agreement and those formed under the rules, regulations, orders or other official acts of any governmental entity having appropriate jurisdiction) to the extent they relate to any of the Leases;
(c) The rights and interests in, to and under, or derived from, all of the presently existing and valid joint operating agreements, oil sales contracts, casinghead gas sales contracts, gas sales contracts, processing contracts, gathering contracts, transportation contracts, easements, rights-of-way, servitudes, surface leases and other contracts to the extent they are described on Exhibit “C”, attached hereto (the “Contracts”);
(d) The rights and interests in and to all personal property and improvements, including without limitation, tanks, buildings, fixtures, machinery, equipment, pipelines, utility lines, power lines, telephone lines, roads and other appurtenances, to the extent the same are situated upon and/or used or held for use by Seller in connection with the ownership, operation, maintenance and repair of the Leases; and
(f) The rights and interests in all permits and licenses of any nature owned, held or operated in connection with operations for the exploration and production of oil, gas or other minerals to the extent the same are used or obtained in connection with any of the Leases or other property described in Exhibit “A” (“Permits”);
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TO HAVE AND TO HOLD the Assets, together with all and singular the rights and appurtenances thereunto in anywise belonging, unto Assignee, its successors and assigns, forever, subject to the following terms and conditions:
1. Special Warranty of Title. Assignor represents and warrants that the Assets are free and clear of all liens, encumbrances, security interests or other adverse claims arising by, through or under Assignor, but not otherwise. Assignor shall warrant and defend the title to the Assets conveyed to Assignee against every person whomsoever lawfully claims the Assets or any part thereof by, through, or under Assignor, but not otherwise.
2. Successors and Assigns. The terms, covenants and conditions contained in this Assignment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and such terms, covenants and conditions shall be covenants running with the land and with each subsequent transfer or assignment of the Assets, or any part thereof.
3. Participation Agreement. This Assignment is made in accordance with and is subject to the terms, covenants and conditions contained in that certain Participation Agreement dated as of ____________, 2013, by and between Assignor and Assignee (“Participation Agreement”), all of which shall remain in full force and effect in accordance with their terms as set forth therein and shall not be deemed to have been merged with this Assignment. If there is a conflict between the provisions of the Participation Agreement and this Assignment, the provisions of the Participation Agreement shall control the rights and obligations of the parties.
4. Further Assurances. Assignor and Assignee agree to take all such further actions and to execute, acknowledge and deliver all such further documents that are necessary or useful in carrying out the purpose of this Assignment.
5. Counterparts. This Assignment is being executed in multiple counterparts each of which shall for all purposes be deemed to be an original and all of which shall constitute one instrument.
ASSIGNOR:
PetroShare Corp.
By:
Name:
Title:
ASSIGNEE:
By: ________________________________________
Name:
Title:
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STATE OF__________________________ )
) ss.
COUNTY OF ________________________ )
The foregoing instrument was acknowledged before me this ____ day of ________, 2013, by _______________, as ___________of PetroShare Corp.
Witness my hand and seal.
My Commission Expires: ________________________
Notary Public
STATE OF__________________________ )
) ss.
COUNTY OF ________________________ )
The foregoing instrument was acknowledged before me this ____ day of ________, 2013, by _______________, as ________________ of ____________________.
Witness my hand and seal.
My Commission Expires:___________________________
Notary Public
Remember back in April WDCO buying 30 million shares between .016 and .019?
And then after that this came out?
http://promotionstocksecrets.com/promotion-secrets-aps-wdco/
According to filings they have over $2,000,000 in cash and equivalents
see image below....
now they just came out with MATERIAL DEFINITIVE AGREEMENT- see text for filing below.
Thinking this could be the next big thing. Between April and now... it appears as such.
275m Authorized, 119,862,791 Outstanding
Filing also says this: Prior to Rancher’s entry into the Participation Agreement and AAPL Form 610 operating agreement, Rancher was a shell company. As a result of entry into these agreements, the acquisition of assets as described in Item 2.01 above, and the addition of operations under the agreements (as described above in Items 1.01 and 2.01 above), we believe Rancher is no longer a shell company.
[img]i.imgur.com/DHkJ9Rx.jpg
archive.fast-edgar.com/20131009/Aabaa-8nabBBj557-6-BU-8Phj-o-mN/[/img]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 3, 2013
RANCHER ENERGY CORP.
(Exact name of registrant as specified in its charter)
Nevada 000-51425 98-0422451
(State or other jurisdiction of (Commission File (IRS Employer Identification
of incorporation) Number) Number)
P.O. Box 40, Henderson, Colorado 80640
(Address of Principal Executive Offices) (Zip Code)
(303) 629-1125
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
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 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the 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)
SECTION 1 – REGISTRANT’S BUSINESS AND OPERATIONS
Item 1.01 Entry Into A Material Definitive Agreement
On October 3, 2013 (effective September 30, 2013), Rancher Energy Corp. (“Rancher”) executed a Participation Agreement with PetroShare Corp., a privately-held Colorado corporation not affiliated with Rancher (“PetroShare”), for the purposes of drilling at least one and up to two oil and/or gas wells to test the Niobrara formation to a depth of approximately 7,850 feet total vertical depth (TVD) in Moffatt County, Colorado. The following description of the Participation Agreement is qualified in its entirety by reference to the Participation Agreement which agreement is included herewith as Exhibit 10.1.
On October 7, 2013, Rancher paid 30% of the costs of drilling the first well (Kowach 3-25) in exchange for a 30% working interest (25.309% net revenue interest), subject to a reduction of the working interest to 25% (and a proportional reduction of the net revenue interest) if Rancher and PetroShare do not complete a business combination. Rancher and PetroShare have entered into a non-binding letter of intent by which the two parties are negotiating and pursuing a business combination. Any business combination will be subject to approval by Rancher’s stockholders and a number of other conditions precedent.
The estimated cost for drilling the first well is $1,824,460 ($547,338 net to Rancher), and if warranted an additional $471,772 for completion ($141,517 net to Rancher). Rancher has an option not to participate in the second well, based on the results obtained from the first well. If Rancher participates in the second well (of which there can be no assurance), the estimated cost for drilling the second well (Voloshin 3-25) is $1,982,998 ($594,899 net to Rancher), and if warranted an additional $474,247 for completion ($142,274 net to Rancher).
It is expected that drilling on the first well will commence within the next several weeks. PetroShare will be the operator of the wells pursuant to a standard AAPL Form 610 operating agreement and exhibits thereto. Two other companies, not affiliated with either Rancher or PetroShare, are also participating in the proposed drilling operation.
SECTION 2 – FINANCIAL INFORMATION
Item 2.01 Completion of Acquisition or Disposition of Assets
Pursuant to the Participation Agreement described in Item 1.01 above, upon payment, Rancher acquired a 30% working interest in the oil and gas leases on the property described below in Item 2.01(b). Rancher believes this to be a significant amount of assets acquired otherwise than in the ordinary course of business.
(a) The asset described above was acquired by Rancher upon Rancher’s payment of the costs of drilling the first well under the Participation Agreement on October 7, 2013.
(b) Pursuant to the terms of the Participation Agreement disclosed in Item 1.01 above, Rancher acquired a 30% working interest in the oil and gas leases on the following described property:
Township 6 North, Range 90 West, 6th P.M., Section 25, all of Lot 1 (42.05 acres), Lot 2 (42.05 acres), Lot 3 (42.04 acres), Lot 4 (42.03 acres), Lot 5 (41.98 acres), Lot 6 (41.98 acres), Lot 7 (41.98 acres), Lot 8 (41.98 acres), Lot 9 (41.92 acres), Lot 10 (41.91 acres), Lot 11 (41.91 acres), Lot 12 (41.90 acres), Lot 13 (41.85 acres), Lot 14 (41.85 acres), Lot 15 (41.86 acres), and Lot 16 (41.86 acres), Moffat County, Colorado.
(c) The above-described working interest was acquired from PetroShare Corp., a non-affiliate of Rancher. Rancher and PetroShare Corp. have no material relationship other than as described above in Item 1.01.
(d) Rancher will pay 30% of the costs of drilling and completion in exchange for a 30% working interest (25.309% net revenue interest), subject to a reduction of the working interest to 25% (and a proportional reduction of the net revenue interest) if Rancher and PetroShare do not complete a business combination. Rancher paid $507,748 on October 7, 2013 and an additional $39,590 on October 9, 2013 as its 30% share of the costs under the above-described Participation Agreement, and may pay up to a total of $1,426,029 if both wells are drilled to completion (see Item 1.01 above for more details).
(e) Not applicable.
(f) Prior to the above-described acquisition of the working interest, Rancher was a shell company. As a result of the acquisition of the working interest, and as a result of the beginning of operations (see Item 5.06 below) as a party to the Participation Agreement and AAPL Form 610 operating agreement described above in Item 1.01, we believe Rancher is no longer a shell company. Nevertheless, if the operations under the Participation Agreement and the operating agreement are fruitless, Rancher may become a shell company once again.
FORM 10 INFORMATION
Item 1 Business
Rancher incorporates by reference Form 10 Item 1, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 1A Risk Factors
Rancher incorporates by reference Form 10 Item 1A, which was previously reported in its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2013, filed on August 14, 2013.
Item 2 Financial Information
Rancher incorporates by reference Form 10 Item 2, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013, and as it was previously reported in its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2013, filed on August 14, 2013.
Item 3 Properties
Rancher incorporates by reference Form 10 Item 3, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013. In addition:
(a) The leasehold interests in which Rancher acquired rights on October 7, 2013 as a result of the payment of estimated drilling expenses, are located in Section 25 of Township 6 North, Range 90 West, 6th P.M., Moffatt County, Colorado.
(b) There are no other producing oil and gas wells on said Section 25. PetroShare has advised Rancher that it has commenced building the location for the contemplated wells.
(c) The properties are not held in fee, but are subject to standard oil and gas leases which provide for three to six year terms (expiring in 2014 through 2016) unless oil and gas operations are continuing at the expiration of the term of the lease. Based on preliminary title work, it appears that PetroShare owned a 100% working interest (approximately 78.3% net revenue interest) in the minerals underlying Section 25. Section 25 has had five wells drilled on it between 1956 and 1965. Three of these wells produced from the Niobrara and two produced from the Trout Creek formation. The last well produced until 1998. Oil was produced from the Niobrara formation, while the gas was produced from both the Niobrara and Trout Creek formations. The producing field in this area is known as the Buck Peak field, which is the largest producing Niobrara oil field in the Sand Wash basin. While there has been successful production from this field in the past, there can be no assurance that the planned drilling operations will be successful or result in the commercial production of oil or natural gas.
Item 4 Security Ownership of Certain Beneficial Owners and Management
Rancher incorporates by reference Form 10 Item 4, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 5 Directors and Executive Officers
Rancher incorporates by reference Form 10 Item 5, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 6 Executive Compensation
Rancher incorporates by reference Form 10 Item 6, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 7 Certain Relationships and Related Transactions, and Director Independence
Rancher incorporates by reference Form 10 Item 7, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 8 Legal Proceedings
Rancher incorporates by reference Form 10 Item 8, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 9 Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Rancher incorporates by reference Form 10 Item 9, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 10 Recent Sales of Unregistered Securities
Rancher incorporates by reference Form 10 Item 10, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 11 Description of Registrant’s Securities
Rancher is authorized to issue an aggregate of 275,000,000 shares of common stock, par value $0.0001 per share. After the acquisition of the leasehold working interests described above in Item 2.01, 119,862,791 shares were outstanding. Rancher’s common stock is traded on the OTCQB.
Common Stock
All outstanding shares of the Company’s common stock are of the same class and have equal rights and attributes. There is no preferred stock. Dividends may be declared by the board of directors out of Rancher’s funds to the extent and in the manner permitted by law.
Voting. The holders of Rancher’s common stock are entitled to one (1) vote for each share held of record, and each fractional share shall be entitled to a corresponding fractional vote on each matter submitted to a vote of the stockholders on which the holders of the common sstock are entitled to vote. There is no cumulative voting allowed in the election of directors. The affirmative vote of a majority of the common stock represented at a stockholders’ meeting and entitled to vote on the subject matter shall be the act of the stockholders except to the extent the articles of incorporation or Nevada statutes require a greater percentage of vote such as in connection with the amendment of Rancher’s articles of incorporation (N.R.S. § 78.390(1)(c)), a control share acquisition (such as the merger, N.R.S. § 78.3791), or removal of directors (N.R.S. § 78.335).
Preemptive Rights. No stockholder of Rancher or any person with the right to convert any security or obligation to common stock of Rancher shall have any preemptive right.
No Assessment. After the amount payable for the shares has been fully paid, the shares of Rancher shall not be assessable for any purpose, and no stock issued as fully paid shall ever be assessable or assessed. No stockholder of Rancher is individually liable for the debts or liabilities of Rancher.
No Board Classification. The Rancher board of directors is not classified or staggered, and the entire board may (pursuant to N.R.S. § 78.335) be removed, with or without cause, upon a vote of two-thirds of the shares entitled to vote at a meeting of the stockholders. To remove directors, a shareholders’ meeting must be called specifically for that purpose.
Warrants, Rights, and Options
As of the date of this report, options to acquire 10,000,000 shares of common stock are outstanding. These options are exercisable at $0.035 per share, and will expire in October 2019. All the options are exercisable within 60 days.
Item 12 Indemnification of Directors and Officers
Rancher incorporates by reference Form 10 Item 12, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 13 Financial Statements and Supplementary Data
Rancher incorporates by reference Form 10 Item 13, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013, and as it was previously reported in its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2013, filed on August 14, 2013.
Item 14 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Rancher incorporates by reference Form 10 Item 14, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013.
Item 15 Financial Statements and Exhibits
Rancher incorporates by reference Form 10 Item 15, which was previously reported in its Annual Report on Form 10-K for the fiscal year ending March 31, 2013, filed on June 25, 2013, and as it was previously reported in its Quarterly Report on Form 10-Q for the fiscal quarter ending June 30, 2013, filed on August 14, 2013.
SECTION 5 – CORPORATE GOVERNANCE AND MANAGEMENT
Item 5.06 Change in Shell Company Status
Prior to Rancher’s entry into the Participation Agreement and AAPL Form 610 operating agreement, Rancher was a shell company. As a result of entry into these agreements, the acquisition of assets as described in Item 2.01 above, and the addition of operations under the agreements (as described above in Items 1.01 and 2.01 above), we believe Rancher is no longer a shell company. The material terms of these agreements are described in Items 1.01 and 2.01 above, and are further disclosed in full by the attachment of the Participation Agreement hereto as Exhibit 10.1. Rancher is a non-operator under the AAPL Form 610 operating agreement, the terms of which are standard. If the wells contemplated under the Participation Agreement and the operating agreement are dry holes and plugged and abandoned, Rancher may become a shell company once again.
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
The following is a complete list of exhibits filed as part of this Report. Exhibit numbers correspond to the numbers in the exhibit table of Item 601 of Regulation S-K.
Exhibit No. Description
10.1 Participation Agreement between Rancher Energy Corp. and PetroShare Corp. dated as of September 30, 2013
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
RANCHER ENERGY CORP.
By: /s/ Jon C. Nicolaysen
Jon C. Nicolaysen, President and
Chief Executive Officer
Date: October 8, 2013
Exhibit 10.1
PARTICIPATION AGREEMENT
This Participation Agreement (hereinafter “Agreement”) is made and entered into effective September 30, 2013, by and between PetroShare Corp., hereinafter referred to as “PetroShare”, and Rancher Energy Corp. (“Participant”).
RECITALS:
A. PetroShare has acquired certain oil and gas leases described on Exhibit “A”, attached hereto (“Existing Leases”).
B. Participant wishes to participate with PetroShare in the drilling, and development of the Leases pursuant to the provisions of this Agreement.
Now therefore, the parties hereto, for the mutual promises contained herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, do hereby contract and agree as follows:
I. DEFINITIONS
1. Effective Date: The Effective Date is September 30, 2013.
2. Existing Leases: The oil and gas leases on Exhibit “A”, attached hereto which includes the acreage required for the drilling of the obligation well(s).
3. Obligation Wells: The wells will be drilled from a common well pad and will be the Kowach #3-25 well, located in NESW Section 25, T6N R90W, a vertical well bore and the Voloshin #3-25 well, located in NESW Section 25, T6N R90W; directional well bore to test the Niobrara formation at approximately, 7850 feet TVD. Upon reaching total depth in the first Obligation Well and upon the completion of mud logging and open hole logging operations, PetroShare will provide such data to all JOA working interest participants along with its well evaluation report. JOA participants shall have forty eight (48) hours from the receipt of the data to make its election whether to proceed with the drilling of the second Obligation Well. In the event, a simple majority of JOA participants elect not to proceed or not with the drilling of the second Obligation Well, PetroShare shall release the rig and waive the requirement to drill the second Obligation Well.
4. Operator: PetroShare Corp.
5. Operating Agreement: A joint operating agreement substantially in the form attached hereto as Exhibit “B”.
6. Participant Interest: An Expense and Working Interest in the Leases and Obligation Well(s) of 30.0% thereafter having a net revenue interest of not less than 23.509%.
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7. Reversionary Working Interest: In the event that the acquisition contemplated in that certain Letter of Intent dated September 12, 2013 by and between the parties hereto is not completed, Participants Interest in the Leases and Obligation Wells shall be reduced to 25.0% and the net revenue interest shall be proportionately reduced. It is the intent that the Participant carry PetroShare and bear all costs and expenses associated with the Leases and Obligation Wells for 5.0% of the expenses associated therewith in the event the acquisition is not completed as set forth herein.
8. Working Interest: The cost bearing interest created by oil and gas leases. Working Interest may also refer to the share of ownership attributable to an unleased mineral interest.
9. Net Revenue Interest: The share of the gross production proceeds after payment of royalty and overriding royalty interests.
10. Project Area: As set forth in Exhibit A
II. PROSPECT FEE
A. Payment of Prospect Fee. Participant agrees to pay 30% of the total cost and expense of the Obligation Wells for a 30% Working Interest (to be reduced to a 25% Reversionary Working Interest in the event of the circumstances described in Article I, (7), in lieu of a prospect fee.
III. DRILLING AND DEVELOPMENT.
A. Obligation Wells. Participant agrees to pay for its Participant Interest share of the drilling, completion and equipping, or the plugging and abandonment, of the Obligation Wells. PetroShare shall use its commercially reasonable efforts to commence the drilling of the first Obligation Well by October 15, 2013.
B. Interests Earned. Upon Participant paying the Prospect Fee, together with its share of the costs for the drilling, completion and equipping, or the plugging and abandonment of an Obligation Well(s), Participant shall be assigned an undivided interest in and to the Leases equal to Participant’s Interest or the Reversionary Working Interest as the case may be, of PetroShare’s interest in the Existing Leases as to the unit for such Obligation Well, and as to all depths from the surface to the deepest depth drilled in the Obligation Well. All assignments will be subject to all royalties, overriding royalties, production payments, net profits interests and similar burdens existing as of the date hereof. PetroShare shall proceed with recording such assignments on a timely basis.
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C. Subsequent Drilling and Development Operations. After drilling and completion of the Obligation Well(s), all subsequent wells (“Subsequent Wells”) and subsequent operations with respect to the Obligation Wells shall be proposed in accordance with the Operating Agreement and the provisions of this Agreement with Participant being responsible for its Participant Interest or Reversionary Working Interest as the case may be, subject to any elections to not participate in the Operating Agreement.
IV. OPERATIONS WITHIN PROJECT AREA
A. Operating Agreement. All operations within the Project Area shall be conducted pursuant to the joint operating agreement attached hereto as Exhibit “B” (“Operating Agreement”), reference to which is hereby made for all purposes, except as expressly modified by the terms hereof. PetroShare Corp., shall be designated as Operator subject to the resignation and removal provisions of the Operating Agreement. In the event of a conflict between this Agreement and the Operating Agreement, this Agreement shall control.
B. Cash Advances. Notwithstanding anything in the Operating Agreement to the contrary, PetroShare shall have the right to require cash advances from Participant with respect to the proposed drilling and completion of one or more Obligation Well(s). Such request shall be in the form of one or more Authorities for Expenditure (“AFEs”) and payment shall be due within 10 days following receipt of the AFEs. Provided however, that such AFE’s shall not be issued by PetroShare more than 30 days in advance of the confirmed spud date (i.e. drilling commencement date) of the applicable Obligation Well(s).
V. PROPORTIONATE REDUCTION
A. Proportionate Reduction Clause: If an oil and gas lease or other Mineral Interest covers less than the entire mineral fee estate, or if a party’s interest in the applicable lease or Mineral Interest is less than a 100% ownership interest, any interest conveyed or reserved pursuant to this Agreement is intended to be proportionately reduced to accord to (i) the proportion of mineral interest covered by the relevant oil and gas lease or other Mineral Interest, and (ii) the proportion of ownership held by the conveying party, in the case of a conveyance, or the burdened party, in the case of a reservation of interest.
VI. CONFIDENTIALITY
A. Confidentiality. The parties acknowledge that the information that is the subject matter of this Agreement (including but not limited to all well information acquired by operations conducted under the Operating Agreement) is sensitive and confidential proprietary information belonging to the parties. Each party, for itself and its Affiliates, agrees not to release or disclose or otherwise make the information available to or to furnish any of said information to any third party without (i) obtaining the agreement of the third party to maintain such information confidential and to not use such information other than in connection with investing in or participating with or purchasing interests from the disclosing party, or (ii) first obtaining the express written consent of the other party. Any such release or disclosure if approved shall be conditioned upon the third party expressly agreeing to all terms herein and becoming a party to and subject to this Confidentiality Agreement. Nothing contained above shall restrict or impair any party’s right to use or disclose any of the information which is: (1) at the time of disclosure available to the public through no act or omission of that party; (2) can be shown was lawfully in that party’s possession prior to the time of this Agreement; or (3) is independently made available to that party by a third party who is independently entitled to disclose such information and that party shows that the right of such third party to disclosure existed prior to the date of this Agreement.
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B. Public Disclosure. Subject to the exceptions set forth below, and unless otherwise agreed upon by the parties, prior to substantial leasing completion in the AMI as contemplated by this Agreement, the parties intend to keep material information concerning the entering into of this Agreement and the location of the Project Area confidential to the extent any disclosure thereof could impair the leasing activities of the parties. Notwithstanding such intent, either party may make any public disclosure to the extent that, upon advice of such party’s counsel, such disclosure is advisable to comply with United States or state securities laws, rules or regulations. Any proposed press release or other disclosure, shall be provided to the other party in advance on a confidential basis for its information and comment.
VII. TAX ELECTION
This Agreement is not intended to create, and shall not be construed to create, a relationship of partnership or an association for profit between or among the parties hereto except as provided herein. Each party hereby affected elects to be excluded from the application of all the provisions of Subchapter “K”, Chapter 1, Subtitle “A”, of the Internal Revenue Code of 1986 and all amendments thereto.
VIII. PAYMENT OF DELAY RENTALS AND LEASE EXTENSIONS
Operator shall be responsible for making any payment of delay rentals, shut in royalties and minimum royalty payments on the Leases. Participant shall bear and pay its share of such payments. Participant shall be billed and shall pay for said costs in the manner set forth for the billing and paying of direct costs in the COPAS accounting procedures attached to the form of Operating Agreement. Operator shall not be liable to Participant for any loss resulting from a good faith effort to properly do so.
IX. NO JOINT LIABILITY
The rights, duties, obligations and liabilities of the parties hereto shall be several and not joint or collective. Each party hereto shall be responsible only for its obligations as herein set out and shall be liable only for its share of the cost and expense as herein provided; it being the express purpose and intention of the parties that their interest in this Agreement and the rights and property acquired in connection herewith shall be held by them as tenants in common. Except for the tax election which the parties may have made, it is not the purpose or intention of this Agreement to create any mining partnership, commercial partnership or other partnership.
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X. ASSIGNMENTS OF LEASES
Any assignment of any interest pursuant to this Agreement by and between the parties hereto shall be made with a special warranty of title by through and under the assignor, but not otherwise and on the form attached hereto as Exhibit “C” which shall be for recording in the official records of the county in which the Lease lies. Where applicable, separate assignments of operating rights shall likewise be made on such State and Federal forms as required by rule or regulation. Any assignment hereafter executed shall specifically refer to, and be made subject to, the terms and conditions hereof.
XI. FORCE MAJEURE
Should any party be prevented or hindered from complying with any obligation created hereunder, other than the obligation to pay money, by reason of fire, flood, storm, act of God, governmental authority, governmental action or inaction, failure or delay in obtaining any necessary permits, labor disputes, war, the inability to secure qualified labor, geoscience data, title abstracts, curative title work, lease brokers, entry onto the land, drilling equipment and drilling rig(s) at prevailing market rates, drilling tools, materials or transportation, or any other cause not enumerated herein but which is beyond the normal control of the party whose performance is affected, then the performance of any such obligation shall be suspended during the period of such prevention or hindrance, provided the affected party promptly notifies the other party of such force majeure circumstances and exercises all reasonable diligence to remove the cause of force majeure.
XII. EXHIBITS
The following exhibits are attached to this Agreement:
Exhibit “A” – Leases
Exhibit “B” – Form of Joint Operating Agreement
Exhibit “C” – Form of Assignment
If the terms of any of these Exhibits conflict with the terms of this Agreement, this Agreement shall control.
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XIII. MISCELLANEOUS
A. Assignment: Participant may assign its interest under this Agreement provided that Participant remains liable for or guarantees the performance of its assignee and provided Participant gives PetroShare appropriate documentation evidencing such assignment.
B. Governing Law: This Agreement and other instruments executed in accordance with it, except for assignments of lands, or the execution hereof shall be governed by and interpreted according to the laws of the State of Colorado. Forum and venue shall be exclusively in Denver, Colorado. As to assignments of lands, they shall be governed by the laws of the State wherein they lie.
C. Entire Agreement: This Agreement, the documents to be executed hereunder, and the Exhibits attached hereto constitute the entire agreement between the parties, supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties, and there are no warranties, representations or other agreements between the parties except as specifically set forth herein. No supplement, amendment, alteration, modification, waiver or termination of the Agreement shall be binding unless executed in writing by the parties hereto.
D. Waiver: No waiver of any of the provisions of the Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
E. Captions; Definition of “Including”: The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. The term “including” or “includes”, as used herein, shall mean “including, without limitation,” and “includes, without limitation”.
F. Binding: This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors, assigns and legal representatives.
G. Notices: Any notice hereunder shall be given in writing by mail, courier, personally, E-mail or by facsimile and shall be effective when delivered to the party intended to be notified. The contact information for each party is as follows:
If to PetroShare:
PetroShare Corp.
7200 So. Alton Way, Ste B220
Centennial, CO 80112
Attn: Frederick J. Witsell
(303) 500-1168 Office
(303) 770-6885 fax
(303) 881-2157 cell
fwitsell@petrosharecorp.com
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If to Participant:
Rancher Energy Corp.
c/o A.L. (Sid) Overton, Esq.
6950 East Belleview Ave., Suite. 202
Greenwood Village, CO 80111
Attn: Jon Nicolaysen
(303) 779-5900 Office
(303) 779-6006 Fax
sidoverton@oalaw.net
Any party may change their foregoing contact information by notice to the other party.
H. Expenses: Except as otherwise provided herein, each party shall be solely responsible for all expenses incurred by it in connection with this transaction (including fees and expenses of its own counsel and accountants).
I. Execution: This Agreement may be executed in multiple original counterparts, all of which shall together constitute a single agreement and each of which, when executed, shall be binding for all purposes thereof on the executed party, its successors and assigns.
J. Severability: If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any materially adverse manner to either party.
K. Arbitration: Any dispute arising under this Agreement (“Arbitrable Dispute”) shall be referred to and resolved by binding arbitration in Denver, Colorado, to be administered by and in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Arbitration shall be initiated within the applicable time limits set forth in this Agreement and not thereafter or if no time limit is given, within the time period allowed by the applicable statute of limitations, by one party (“Claimant”) giving written notice to the other party (“Respondent”) and to the Denver Regional Office of the American Arbitration Association (“AAA”), that the Claimant elects to refer the Arbitrable Dispute to arbitration. All arbitrators must be neutral parties who have never been officers, directors or employees of the parties or any of their Affiliates, must have not less than ten (10) years experience in the oil and gas industry, and must have a formal financial/accounting, engineering or legal education. The hearing shall be commenced within thirty (30) days after the selection of the arbitrator. The parties and the arbitrators shall proceed diligently and in good faith in order that the arbitral award shall be made as promptly as possible. The interpretation, construction and effect of this Agreement shall be governed by the Laws of Colorado, and to the maximum extent allowed by law, in all arbitration proceedings the Laws of Colorado shall be applied, without regard to any conflicts of laws principles. All statutes of limitation and of repose that would otherwise be applicable shall apply to any arbitration proceeding. The tribunal shall not have the authority to grant or award indirect or consequential damages, punitive damages or exemplary damages.
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L. Further Assurances: During the time in which this Agreement is in effect, the parties shall, at any time and from time to time, and without further consideration, execute and deliver or use reasonable efforts to cause to be executed and delivered such other instruments of conveyance and contract, and to take such other actions as either party may reasonably may request effect the intent of this Agreement.
M. Not to be Construed Against Drafter: The parties acknowledge that they have had an adequate opportunity to review each and every provision contained in this Agreement, that they have participated equally in the drafting hereof and that they have had adequate time to submit same to legal counsel for review and comment. Based on said review and consultation, the parties agree with each and every term contained in this Agreement. Based on the foregoing, the parties agree that the rule of construction that a contract be construed against the drafter, if any, shall not be applied in the interpretation and construction of this Agreement.
N. Laws and Regulations: Any reference to any federal, state, local, or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.
O. Third-Party Beneficiaries: This Agreement is not intended to confer any rights or remedies upon any Person other than the parties and their respective successors and permitted assigns.
P. Investment Representations: Participant understands (1) that the interests evidenced by this Agreement have not been registered under the Securities Act of 1933, the Colorado Securities Act or any other state securities laws (the “Securities Acts”).
Prior to acquiring the interests, Participant has made an investigation of the PetroShare and its business and has had made available to it all information with respect thereto which it needed to make an informed decision to acquire the interest. Participant considers itself to be an entity possessing experience and sophistication as an investor which are adequate for the evaluation of the merits and risks of its investment in the interest.
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IN WITNESS WHEREOF, this Agreement is executed effective as of the date hereinabove provided.
Parties:
PETROSHARE CORP
By: ________________________
Name: Stephen J. Foley
Title: CEO
RANCHER ENERGY CORP.
By: ____________________________
Name: Jon Nicolaysen
Title: President & CEO
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EXHIBIT A
Leases Project Area
Attached to and made a part of that certain Participation Agreement by and between PetroShare Corp and Rancher Energy Corp., dated September 30, 2013.
See Attached Lease Schedule
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EXHIBIT B
Joint Operation Agreement
Attached to and made a part of that certain Participation Agreement by and between PetroShare Corp and Rancher Energy Corp., dated September 30, 2013.
See Attached JOA
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EXHIBIT “C”
ASSIGNMENT
STATE OF COLORADO )
COUNTY OF _________________ )
KNOW ALL MEN BY THESE PRESENTS, that PetroShare Corp., with an office at ______________________, hereinafter referred to as “Assignor”, for and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00), the receipt and adequacy of which is hereby acknowledged and full acquittance granted therefor, has granted, sold, conveyed and delivered and does hereby grant, sell, convey and deliver unto _________________ with an office at _____________________, hereinafter collectively referred to as “Assignee”, ___% of Assignor’s right, title and interest in the following properties (real, personal or mixed) and rights (contractual or otherwise) unless expressly reserved or excluded herein, the following being referred to herein collectively as the Assets:
(a) the oil and gas leases described on Exhibit “A”, attached hereto, in the amounts of the working interests specified thereon (the “Leases”);
(b) The rights and interests in, to and under, or derived from, all of the presently existing and valid unitization and pooling agreements and units (including all units formed by voluntary agreement and those formed under the rules, regulations, orders or other official acts of any governmental entity having appropriate jurisdiction) to the extent they relate to any of the Leases;
(c) The rights and interests in, to and under, or derived from, all of the presently existing and valid joint operating agreements, oil sales contracts, casinghead gas sales contracts, gas sales contracts, processing contracts, gathering contracts, transportation contracts, easements, rights-of-way, servitudes, surface leases and other contracts to the extent they are described on Exhibit “C”, attached hereto (the “Contracts”);
(d) The rights and interests in and to all personal property and improvements, including without limitation, tanks, buildings, fixtures, machinery, equipment, pipelines, utility lines, power lines, telephone lines, roads and other appurtenances, to the extent the same are situated upon and/or used or held for use by Seller in connection with the ownership, operation, maintenance and repair of the Leases; and
(f) The rights and interests in all permits and licenses of any nature owned, held or operated in connection with operations for the exploration and production of oil, gas or other minerals to the extent the same are used or obtained in connection with any of the Leases or other property described in Exhibit “A” (“Permits”);
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TO HAVE AND TO HOLD the Assets, together with all and singular the rights and appurtenances thereunto in anywise belonging, unto Assignee, its successors and assigns, forever, subject to the following terms and conditions:
1. Special Warranty of Title. Assignor represents and warrants that the Assets are free and clear of all liens, encumbrances, security interests or other adverse claims arising by, through or under Assignor, but not otherwise. Assignor shall warrant and defend the title to the Assets conveyed to Assignee against every person whomsoever lawfully claims the Assets or any part thereof by, through, or under Assignor, but not otherwise.
2. Successors and Assigns. The terms, covenants and conditions contained in this Assignment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and such terms, covenants and conditions shall be covenants running with the land and with each subsequent transfer or assignment of the Assets, or any part thereof.
3. Participation Agreement. This Assignment is made in accordance with and is subject to the terms, covenants and conditions contained in that certain Participation Agreement dated as of ____________, 2013, by and between Assignor and Assignee (“Participation Agreement”), all of which shall remain in full force and effect in accordance with their terms as set forth therein and shall not be deemed to have been merged with this Assignment. If there is a conflict between the provisions of the Participation Agreement and this Assignment, the provisions of the Participation Agreement shall control the rights and obligations of the parties.
4. Further Assurances. Assignor and Assignee agree to take all such further actions and to execute, acknowledge and deliver all such further documents that are necessary or useful in carrying out the purpose of this Assignment.
5. Counterparts. This Assignment is being executed in multiple counterparts each of which shall for all purposes be deemed to be an original and all of which shall constitute one instrument.
ASSIGNOR:
PetroShare Corp.
By:
Name:
Title:
ASSIGNEE:
By: ________________________________________
Name:
Title:
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STATE OF__________________________ )
) ss.
COUNTY OF ________________________ )
The foregoing instrument was acknowledged before me this ____ day of ________, 2013, by _______________, as ___________of PetroShare Corp.
Witness my hand and seal.
My Commission Expires: ________________________
Notary Public
STATE OF__________________________ )
) ss.
COUNTY OF ________________________ )
The foregoing instrument was acknowledged before me this ____ day of ________, 2013, by _______________, as ________________ of ____________________.
Witness my hand and seal.
My Commission Expires:___________________________
Notary Public
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