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HNR Acquisition Corp *

HNR Acquisition Corp *

Jan 29, 2021 by Matt Cianci

PROPOSED BUSINESS COMBINATION: Pogo Resources, LLC

ENTERPRISE VALUE: $tbd million
ANTICIPATED SYMBOL: tbd

HNR Acquisition Corp proposes to combine with Pogo Resources, LLC

Pogo Resources, LLC is an independent oil and gas company that focuses on the acquisition, development, and exploitation of operated and producing oil and natural gas properties in the Permian Basin. With offices in Dallas, TX, and Hobbs, NM, the company’s management comprises industry experts with many decades of operational experience at both major oil and gas companies and smaller, entrepreneurial ventures.

SUBSEQUENT EVENT – 11/3/23 – LINK

OTC Equity Prepaid Forward Transactions

  • On November 2, 2023, HNR Acquisition Corp (HNRA) entered into a Forward Purchase Agreement with Meteora Capital Partners for up to 3,000,000 shares.
  • The Forward Purchase Agreement allows for a prepayment shortfall in U.S. dollars equal to 0.50% of the product of the Recycled Shares and the Initial Price.
    • The Seller has the discretion to sell Recycled Shares at prices exceeding the Reset Price at any time after November 2, 2023, or starting on the 180th day after the Trade Date at any sales price, without incurring an Early Termination Obligation until the proceeds from such sales cover 100% of the Prepayment Shortfall, as detailed in the “Shortfall Sales” section of the Forward Purchase Agreement.
    • These sales are referred to as “Shortfall Sales,” and the shares involved are called “Shortfall Sale Shares.”
    • The decision to classify a sale as a “Shortfall Sale” or an “Optional Early Termination” is at the Seller’s sole discretion, as explained further in the “Optional Early Termination” and “Shortfall Sales” sections of the Forward Purchase Agreement.
  • The Forward Purchase Agreement stipulates that the Seller will receive a direct cash payment, the “Prepayment Amount,” calculated as
    • (x) the number of HNRA Shares specified in a Pricing Date Notice multiplied by the “Initial Price” as defined in HNRA’s Certificate of Incorporation, dated February 10, 2022, amended as needed, minus
    • (y) the “Prepayment Shortfall.”
  • After the Closing, the “Reset Price” will initially be $10.00, but it can be decreased through a Dilutive Offering Reset if such an event occurs.
    • In the event of a Dilutive Offering Reset, the Purchased Amount covered by the Forward Purchase Agreement will be increased to a quantity of Shares calculated as (i) the Purchased Amount divided by (ii) the result of dividing (a) the price of the Dilutive Offering by (b) $10.00.
  • From time to time and on any date following the Trade Date (referred to as an “OET Date”), the Seller may, at its sole discretion, terminate the Transaction partially or entirely by providing a written notice (the “OET Notice”) to the Counterparty.
    • This notice must be delivered by the later of (a) the fifth Local Business Day following the OET Date and (b) no later than the next Payment Date following the OET Date. The OET Notice specifies the quantity of Shares to be reduced (referred to as the “Terminated Shares”).
    • The Counterparty is entitled to receive from the Seller an amount equal to (x) the number of Terminated Shares multiplied by (y) the Reset Price as of the related OET Date.
    • The payment date can be mutually agreed upon within a quarter.
  • The “Valuation Date” will be the earlier of
    • (a) three (3) years after the Closing Date pursuant to the A&R MIPA
    • (b) a date specified by the Seller in a written notice to the Counterparty at Seller’s discretion, after the occurrence of certain events
    • (c) a date specified by the Seller in a written notice at Seller’s sole discretion. The Valuation Date notice becomes effective immediately upon delivery from Seller to Counterparty in accordance with the Forward Share Purchase Agreement.
  • On the “Cash Settlement Payment Date,” which is the tenth Local Business Day following the last day of the Valuation Period, the Seller will pay the Counterparty an amount equal to the Settlement Amount, and no return of the Prepayment Amount is required.
    • If the Settlement Amount less the Settlement Amount Adjustment is negative, and specific conditions apply, neither party is liable for any payment under the Cash Settlement Payment Date section of the Forward Purchase Agreement.

FPA Funding Amount PIPE Subscription Agreements

  • According to the FPA Funding PIPE Subscription Agreement, the Seller agreed to purchase a total of up to 3,000,000 HNRA Shares from HNRA on the Closing Date, excluding the Recycled Shares related to the Forward Purchase Agreement.

SUBSEQUENT EVENT – 10/30/23 – LINK

  • On October 24, 2023, the Company and FIBT extended the Commitment Termination Date to November 15, 2023, through a First Amendment to the Debt Commitment Letter.

SUBSEQUENT EVENT – 8/30/23 – LINK

  • The purchase price for the Target Interests was amended from $100M to $63M.
  • Amended Conditions to Closing
    • The Company can pay the Cash Consideration to Seller ($33,000,000 cash, up to $15,000,000 through the Seller Promissory Note, and up to $20,000,000 through OpCo Preferred Units), and give the Unit Consideration and Class B Common Stock to Seller
  • Amended Conditions to Termination
    • October 30, 2023 (the “Outside Date”).
    • By Seller, if the Closing has not occurred on or before November 15, 2023 and Sponsor has not effected the extension of time allowed for the SPAC to consummate a purchase.

Backstop Agreement

  • The agreement allows the Seller to make the Founders buy Seller’s Preferred Units at a price of $10.00 per unit, plus a factor that increases every day.
    • The Seller can exercise this right for six months after the Trust Shares are no longer restricted.
    • To ensure the Founders can buy the Preferred Units, they will put 1,500,000 shares of Class A Common Stock into a trust.

EXTENSION – 5/16/23 – LINK

  • The SPAC approved the extension from May 15, 2023 to November 15, 2023.
    • 4,115,597 shares were redeemed for $10.56 per share.
    • $120K per month will be deposited into the trust account.

EXTENSION – 2/9/23 – LINK

  • The SPAC will be extending from February 15, 2023 to May 15, 2023.
    • The Sponsor’s designee has timely deposited into trust account an aggregate of $862,500, representing $0.10 per public share of the Company, in order to effect such extension.

TRANSACTION

  • The purchase price for the Target Interests will be
    • (a) cash in the amount of $100,000,000 in immediately available funds; provided, that up to $15,000,000 of the Cash Consideration may be payable through a promissory note to Seller and
    • (b) 2,000,000 shares of the Company’s common stock, valued at $10.00 per share; provided, that, at Closing, 500,000 shares of Share Consideration will be placed in escrow for the benefit of the Company.
      • The Base Purchase Price is subject to adjustment in accordance with the MIPA.

SPAC FUNDING

  • To the extent the minimum cash amount is less than $100,000,000, the Seller may issue a promissory note to, and payable by the Company, in an amount equal to the lesser of
    • (i) the difference between $100,000,000 and the minimum cash amount and
    • (ii) $15,000,000, providing for a maturity date that will be six months from the Closing Date, bearing an interest rate equal to the greater of 12% per annum and the highest interest rate applicable to the Company financing, and with no penalty for prepayment; provided, that if the Promissory Note is not repaid in full on or prior to its stated maturity date, the Company will owe interest equal to the lesser of 18% per annum and the highest amount permissible under law, compounded monthly.

LOCK-UP

  • Sponsor and Company
    • None are mentioned at this time.

NOTABLE CONDITIONS TO CLOSING

  • The Company will be ready, willing, and able to pay the Cash Consideration to Seller (with at least $85,000,000 payable in cash and no more than $15,000,000 subject to payment through the terms of the Seller Promissory Note) and issue the Share Consideration to Seller
    • The Minimum Cash Amount plus the principal amount of the Seller Promissory Note will equal a total amount of $100,000,000

NOTABLE CONDITIONS TO TERMINATION

  • By Seller or the Company if Closing has not occurred on or before March 31, 2023 (the “Outside Date”); provided, that if the proxy statement is in definitive form and has been mailed to the Company’s stockholders of record prior to March 31, 2023 and a special meeting of the Company’s stockholders is scheduled to be held on or prior to April 15, 2023, then the Outside Date will be extended to April 30, 2023
    • On October 24, 2023, the Company and FIBT extended the Commitment Termination Date to November 15, 2023, through a First Amendment to the Debt Commitment Letter. – LINK

ADVISORS

  • None are listed at this time.

SUBSEQUENT EVENT – 10/21/22 – LINK

  • The SPAC entered into a common stock purchase agreement with White Lion Capital, LLC
    • The Company has the right, but not the obligation to require White Lion to purchase, from time to time, up to $150,000,000 in the aggregate gross purchase price of newly issued shares of the Company’s Class A common stock.
  • Subject to the satisfaction of certain customary conditions including, the Company’s right to sell shares to White Lion will commence on the effective date of the registration statement and extend until December 31, 2025.
    • During such term, subject to the terms and conditions of the Common Stock Purchase Agreement, the Company may notify White Lion when the Company exercises its right to sell shares.
    • The number of shares sold pursuant to any such notice may not exceed
      • (i) the lower of
        • (a) $2,000,000 and
        • (b) the dollar amount equal to the product of
          • (1) the Effective Daily Trading Volume
          • (2) the closing price of Common Stock on the Effective Date
          • (3) 400% and
          • (4) 30%, divided by the closing price of Common Stock on Nasdaq preceding the Notice Date and
      • (ii) a number of shares of Common Stock equal to the Average Daily Trading Volume multiplied by the Percentage Limit.
  • The purchase price to be paid by White Lion for any such shares will equal 96% of the lowest daily volume-weighted average price of Common Stock during a period of two consecutive trading days following the applicable Notice Date.
  • In consideration for the commitments of White Lion, as described above, the Company has agreed that it will issue to White Lion shares of Common Stock having a value of $1,500,000 based on the volume-weighted average price of the Common Stock on a date which is the earlier to occur of
    • (i) two Trading Days prior to the filing of the registration statement it will file pursuant to the White Lion RRA and
    • (ii) after the closing of any business combination agreement, the Trading Day prior to the Investor sending a written request to the Company for such commitment shares, and to include such shares in the registration statement it will file pursuant to the White Lion RRA.

MANAGEMENT & BOARD

Executive Officers

Donald H. Goree, 64
Chief Executive Officer, Director and Chairman

Mr. Goree is also the Founder of Houston Natural Resources, Inc., a global natural resource corporation located in Houston, Texas and controlling member of our sponsor, and has served as its Chairman and Chief Executive Officer since January 2018. Mr. Goree is also the Chairman and Chief Executive Officer of Houston Natural Resources Corp, positions he has held since April 2020. Mr. Goree has over 40 years’ experience in the oil and gas industry involving exploration and production, oil and gas pipeline construction and operations, natural gas gathering, processing and gas liquification. In 2003, Mr. Goree founded Global Xchange Solutions AG., a publicly reporting corporation, private equity, investment bank and market-making firm, based in Zurich, Switzerland, with offices in Frankfurt, Germany and London, United Kingdom, and served as Chairman and Chief Executive Officer of Global Xchange Solutions from 2002 to 2012. Global Xchange Solutions sponsored listings of private companies to the London Stock Exchange, AIM, the Frankfurt Stock Exchange, the Berlin Stock Exchange and the Börse Stuttgart, and provided public company development and market development advice. From 2003 to 2005, Mr. Goree served as Chairman and Chief Executive officer of Azur Holdings, Inc., a Fort Lauderdale, Florida-based, OTC-listed luxury real estate developer of mid-rise waterfront condominiums. From 2012 to 2019, Mr. Goree served as the Managing Director of Rhone Merchant House Ltd., a firm which provides merchant banking and investment banking services to a small and elite list of clients. Mr. Goree has an Executive Master of Business and Entrepreneurship degree from the Rice University Jones Graduate School of Business.

Donald W. Orr, 69
President and Director

Mr. Orr is a geologist with over 42 years of experience in petroleum geology and production operations, and has drilled over 250 wells with a success rate exceeding 70% and worked-over or rejuvenated more than 200 wells as owner and operator. Mr. Orr began his career as a junior geologist with Texas Oil and Gas Corporation in 1976. In February 1979, Mr. Orr helped form American Shoreline, Inc., an independent oil and gas company. Mr. Orr was previously held the title of Senior Geologist at Seven Energy LLC, a wholly owned subsidiary of Weatherford International plc from June 2005 to August 2008, where he helped pioneered numerous innovations in UBD (underbalanced drilling), including drilling with unconventional materials and devising the methodology for unlocking the productive capacity of the Buda Lime through the use of UBD. In June 2009, Mr. Orr founded XNP Resources, LLC, an independent oil and gas company engaged in the exploration, development, production, and acquisition of oil and natural gas resources. Shortly thereafter, XNP Resources teamed up with Tahoe Energy Partners, LLC in 2012 to acquire oil and gas leases for drilling in the Rocky Mountain region. At Mr. Orr’s direction, XNP Resources began acquiring a strategic leasehold position in the Sand Wash Basin in Colorado. As a result of Mr. Orr’s foresight, XNP Resources was able to secure a major leasehold position in the heart of what has become the highly competitive Niobrara Shale formation in western Colorado. By virtue of its early entrance, XNP Resources was able to sell a portion of its ownership for a substantial profit. Upon successful completion of that sale in Colorado, Mr. Orr and XNP Resources teamed up again with Tahoe Energy in order to acquire a significant leasehold in Wyoming in order to target a new emerging shale play along the western edge of the Powder River Basin. Following an extensive geological evaluation process, the team leased 119,000 acres. In 2014, Contango Oil and Gas made a substantial offer to buy our leasehold. Since 2014, Mr. Orr has been developing an unconventional resource play in Alaska that contains over 600 billion cubic feet of gas in stacked coal reservoirs. More recently, Mr. Orr assembled a team of oil and gas professionals in order to study certain oil provinces in Columbia. S.A. The team has identified multiply targets with reserves totaling over 300 million barrels of oil in each target. Since 2014, Mr. Orr has been developing an unconventional resource play in Alaska that contains over 600 billion cubic feet of gas in stacked coal reservoirs. Mr. Orr also serves as President and on the Board of Directors of Houston Natural Resources, Inc. Mr. Orr has a Bachelor of Science degree in Geology from Texas A&I University, with a minor in Mathematics.

Board of Directors

Joseph V. Salvucci, Sr., 65
Independent Director

Mr. Salvucci acquired PEAK Technical Staffing USA (“PEAK”), peaktechnical.com in 1986 and has grown the business to be a premier provider of USA-based contract engineers and technical specialists, on assignment worldwide through a comprehensive, customer focused, enterprise-wide Managed Staffing Solution. During his 35 year tenure as owner of the company, PEAK has expanded from Pittsburgh to do business in all 50 States, Canada, Europe, South America, India, and the Philippines. Mr. Salvucci is also active in several professional and charitable organizations. He served 10 years on the board of directors culminating as President of the National Technical Services Association, a trade association representing 300,000 contractors on assignment in the technical staffing industry, later merging with the American Staffing Association. He is an active member of the Young Presidents Organization Gold, formerly known as the World Presidents Organization (WPO), and has served as a member of the WPO International Board, as well as chairman of East Central US (ECUS) Region and Pittsburgh chapters. As a 1976 Civil Engineering graduate of the University of Pittsburgh, he was member of the Triangle (Engineering) Fraternity and its Alumni Association. He earned the Triangle Fraternity Distinguished Alumnus Citation in 2011 and currently serves on the Board of Directors. After earning the rank of Eagle Scout in 1970, he has remained active with the Boy Scouts of America, having served as Chairman of the Pittsburgh Chapter of the National Eagle Scout Association, earning the NOESA (National Outstanding Eagle Scout Award) and the Silver Beaver Award and is currently VP of Development and a board member of the Laurel Highlands Council in Western Pennsylvania. He was awarded the Manifesting the Kingdom Award by the Catholic Diocese of Pittsburgh in 2011. He was awarded the “Big Mac Award” from the Ronald McDonald Charities. He earned his BS in Civil Engineering from the University of Pittsburgh in 1976 and attended Harvard Business School’s OPM 33.

Diego Rojas, 67
Independent Director

Mr. Rojas has 40 years’ experience in the oil and gas industry with most of that experience in energy operations onshore, offshore and internationally. He began his career in 1975 with Exxon Company USA in their Southeast Division headquarters in New Orleans, Louisiana, and eventually became District Engineering Manager for Exxon’s Offshore District, with responsibility for more than 75 engineers, 200 offshore platforms and 2,000 wells. After leaving Exxon, Mr. Rojas led several independent companies both in the United States and Latin America, including Enercap Corp (formerly, DCR Petroleum), which he founded in 1983, and served as Principal Owner until 1985. Prior to DRC Petroleum, Mr. Rojas was an independent acquisitions and operations consultant involved in exploration and production (E&P) and services company activities. From 1991 to 1994, Mr. Rojas served as Vice President of King Ranch Capital, where he managed King Rand Capital’s acquisitions group. For the past five years Mr. Rojas has served as a consultant with Enerlat, a private consulting company which he controls. Mr. Rojas graduated with honors from the University of Florida with a Bachelor of Science in Mechanical Engineering.

Joseph V. Salvucci, Jr., 37
Independent Director

Mr. Salvucci began his career with PEAK in November 2010 and is currently serving as the President and Chief Operating Officer overseeing nine branches with several hundred employees, and the Marketing and Recruiting Process Enhancement departments. Joseph also oversees strategic initiatives, including Staff Training, Career Pathing, and Organic Growth. A graduate of Susquehanna University in Pennsylvania, Mr. Salvucci earned his Bachelor of Science in Business Administration with emphasis in Finance, and studied Business in London. Before joining PEAK, Mr. Salvucci worked with Merrill Lynch in various banking and brokerage back-office functions from 2007 to 2009. In addition to his responsibilities as President/COO of PEAK, Mr. Salvucci serves on the board of Temporary Services Insurance Limited, a Workers’ Compensation company serving staffing companies.

 

 

 

ByMatt Cianci