I've made this point over and over again. Read the files. Ignis is NOT the owner of the last acquisitions. Silver point is the only owner and they will pay Ignis a manager fee of the revenues for the exploitation of the wells.
In the last acquisition IGPG doesn' t earn one penny of it ! Maybe they will earn - by paying Silver Point - 50 % of the price of the acquisition but that will be paid off through revenues in the future...... That can take a while (36months).
All the calculations about the share price due to the acquisition of the Barnett Shale acres are thereby false and misleading. There is no such value as $2,0 a share...
"...On September 27, 2006, through our wholly-owned subsidiary, Ignis Barnett Shale, LLC, we entered into a purchase and sale agreement with W.B. Osborn Oil & Gas Operations., Ltd. and St. Jo Pipeline, Limited to acquire 45% of W.B. Osborn Oil & Gas Operations and St. Jo Pipeline’s interest in the acreage, oil and natural gas producing properties, and natural gas gathering and treating system located in the St. Jo Ridge Field in the North Texas Fort Worth Basin. To fund Ignis Barnett Shale’s acquisition of the properties as contemplated by the Purchase Agreement, on November 15, 2006, we entered into an Amended and Restated Limited Liability Company Agreement of Ignis Barnett Shale with affiliates of Silver Point Capital, L.P. Under the terms of the LLC Agreement, we agreed to manage the day-to-day operations of Ignis Barnett Shale and the Silver Point affiliates agreed to fund 100% of the purchase price of the transaction and 100% of future acreage acquisitions and development costs of Ignis Barnett Shale to the extent approved by Silver Point. Ignis Barnett Shale’s budget and generally all material decisions affecting Ignis Barnett Shale are subject to the approval of Silver Point.
Distributions from Ignis Barnett Shale will be made first to Silver Point until Silver Point has received a return of its aggregate capital contributions and a specified return on such contributions. Thereafter, we can earn up to 50% of the cash distributions after Ignis Barnett Shale meets performance criteria specified in the LLC Agreement.
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The effective date of the above transaction was June 1, 2006. At June 1, 2006, there were 14 producing wells. As of December 31, 2007, 26 wells are on production, one well is in completion, and one well is awaiting completion. For the quarter ended December 31, 2007, net production to the Ignis Barnett Shale, LLC averaged 105 bopd and 905 mcfpd of gas. Cumulative gross production through October 2007 from Osborn’s Barnett Shale wells has been in excess of 615,000 barrels of oil and 2.9 Bcf of gas. Ignis Barnett Shale, LLC also derives revenue from joint ownership in a 26-mile gas gathering and treating system that transmits and processes third party gas in the area. Our goal is to continue to expand this system to service not only our wells, but additional third parties, as well. Five of our wells have been horizontally drilled.
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We will earn our share of equity upon Silver Point realizing a specified return under the terms of the Purchase and Sale Agreement. We have the opportunity to earn up to 50% equity in the partnership. Until such time as we begin to earn our equity share, we are not allowed to consolidate the results of these operations into our own in accordance with EITF Abstracts, Issue No. 04-5, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights. For the quarter ended December 31, 2007, we have not earned our share of equity and therefore we have not recorded any financial transactions relating to this venture. During the quarter and six month period ended December 31, 2007, management fees were paid to us in the amount of $45,000, and $90,000 respectively. ----------------------------------------- Silver Point pays the acquisition and pays for the drilling. In other words, Silver point is the boss.IGPG has nothing to say about the property and is not the owner. Just the operator.
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Ignis Barnett Shale Joint Venture
On November 15, 2006, we entered into a joint venture with affiliates of Silver Point Capital, L.P. through a limited liability company named Ignis Barnett Shale, LLC. The joint venture acquired 45% of the interests in the acreage, oil and natural gas producing properties and natural gas gathering and treating system located in the St. Jo Ridge Field in the North Texas Fort Worth Basin then held by W.B. Osborn Oil & Gas Operations, Ltd. and St. Jo Pipeline, Limited. The purchase price for the acquisition was $17,600,000, subject to certain adjustments, plus $850,000 payable by Ignis Barnett Shale in thirty-six monthly installments of $23,611, beginning one month after closing. In addition, Ignis Barnett Shale agreed to fund additional lease acquisitions up to a total of $5,000,000 for a period of two years.
Under the terms of Ignis Barnett Shale’s operating agreement, we agreed to manage the day-to-day operations of Ignis Barnett Shale and the Silver Point affiliates agreed to fund 100% of the purchase price of the transaction and 100% of future acreage acquisitions and development costs of Ignis Barnett Shale to the extent approved by Silver Point. Ignis Barnett Shale’s budget, its operating plan, financial and hedging arrangements, if any, and generally all other material decisions affecting Ignis Barnett Shale are subject to the approval of Silver Point. We assigned our intellectual property directly related to the Ignis Barnet Shale all of our intellectual property related to the joint venture and its activities. Distributions from Ignis Barnett Shale will be made when and if declared by Silver Point as follows:
(i) To the Silver Point affiliates pro rata until the Silver Point affiliates have received an amount equal to their aggregate capital contributions; then
(ii) 100% to the Silver Point affiliates pro rata until they have received an amount representing a rate of return equal to 12%, compounded annually, on their aggregate capital contributions; then
(iii) 100% to us until the amount distributed to us under this clause (iii) equals 12.5% of all amounts distributed pursuant to clauses (ii) and (iii); then
(iv) 87.5% to the Silver Point affiliates pro rata and 12.5% to us until the amount distributed to the Silver Point affiliates represents a return equal to 20%, compounded annually, on their aggregate capital contributions; then
(v) 100% to us until the amount distributed to us under clauses (iii), (iv), and (v) equals 20% of all amounts distributed pursuant to clauses (ii), (iii), (iv), and (v); then
(vi) 80% to the Silver Point affiliates pro rata and 20% to us until the amount distributed to the Silver Point affiliates represents a return equal to 30%, compounded annually, on their aggregate capital contributions; then
(vii) 100% to us until the amount distributed to us under clauses (iii), (iv), (v), (vi), and (vii) equals 25% of all amounts distributed pursuant to clauses (ii), (iii), (iv), (v), (vi), and (vii); then
(viii) 75% to the Silver Point affiliates pro rata and 25% to us until the amount distributed to the Silver Point affiliates represents a return equal to 60%, compounded annually, on their aggregate capital contributions; then
(ix) 50% to the Silver Point affiliates pro rata and 50% to us.
Ignis Barnett Shale’s operating agreement also provides that Silver Point may remove us as a member and our interest in the joint venture will be forfeited if we provide them with “cause” or if we enter bankruptcy. Generally, Silver Point will have “cause” to remove us from the joint venture if:
• we or any of our officers or significant employees or consultants: (i) commits a felony or crime of moral turpitude; (ii) commits fraud, bad faith or gross negligence in performance of their duties to the joint venture; or (iii) commits a material breach of the joint venture agreement;
• we attempt to transfer out interest in the joint venture in violation of the operating agreement; or
• if we fire or terminate our consulting relationships with Michael Piazza, Fred Stein or Eric Hanlon.
If we lose the services of Mr. Piazza, Mr. Stein or Mr. Hanlon because they have quit, died or become disabled, and we are unable to find a replacement to Silver Point’s reasonable satisfaction, then our distributions from the joint venture will be reduced as follows:
Years of service prior to termination Name < 1 1-2 2-3 > 3 Mike Piazza 25% 20% 15% 5% Eric Hanlon 20% 15% 10% 5% Fred Stein 30% 25% 20% 5%
The operating agreement provides that Silver Point will have a right of first offer on any debt or equity financing we undertake prior to November 15, 2008, subject to similar rights we previously granted to Cornell Capital.
We also agreed not to make any additional investments in parts of three North Texas counties, the area of mutual interest that Ignis Barnett Shale established with W.B. Osborn Oil & Gas Operations, until the joint venture has satisfied its obligation to W.B. Osborn Oil & Gas Operations to purchase an additional $5 million of acreage. Thereafter, the joint venture will have a right of first offer on any future investment opportunity we desire to make in the area of mutual interest. If the joint venture does not exercise its right of first offer, we can pursue the opportunity, subject to some limitations during the first 18 months after the joint venture completes the $5 million additional investment with W.B. Osborn Oil & Gas Operations. If the joint venture exercises its right to pursue an opportunity, we will have the opportunity to co-invest up to 50% of such investment up to $10 million.
We charge a management fee to the partnership to handle day-to-day operations. For the year ended June 30, 2007, we recorded $142,500 in fees. Until such date the Company earns an equity interest in the Ignis Barnett Shale Partnership, we will not consolidate or record any transactions with regard to this partnership. Therefore no financial impact effects our financial statements as of June 30, 2007. http://www.pinksheets.com/edgar/GetFilingHtml?FilingID=5477396
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This is the only REAL property they have in the Fort Worth basin: We hold 12.5% of the working interest, which is equal to a 9.38% net revenue interest before payout and 10% of the working interest, which is equal to a 7.5% net revenue interest after payout, in three wells located in the Barnett Shale trend in Greater Fort Worth Basin, Texas. Rife Energy Operating, Inc. is the operator of the prospect and holds a majority of the remaining working interest. All three wells have been drilled. One well has been completed and is producing oil and gas. The other two wells have been partially completed to test the geological formations and have some revenue production. During the third calendar quarter of 2006, we anticipate that we will complete these two wells, which will bring them up to their full production potential. The Barnett Shale Prospect currently holds proved reserves and is producing oil and gas. We have estimated proved reserves of 2,072 bbl’s of oil and 13,085 mcf’s of gas. Between April 6, 2006 and June 30, 2006 the Barnett Shale wells produced 324 barrels of oil and 2.1 million cubic feet of gas, net to us.
Distributions from Ignis Barnett Shale will be made first to Silver Point until Silver Point has received a return of its aggregate capital contributions and a specified return on such contributions. Thereafter, we can earn up to 50% of the cash distributions after Ignis Barnett Shale meets performance criteria specified in the LLC Agreement.
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