HOUSTON and SALT LAKE CITY, May 7,
2014 /PRNewswire/ -- Stratex Oil & Gas Holdings,
Inc. (OTCBB: STTX) ("Stratex") and Richfield Oil & Gas Company
(OTCQX: ROIL) ("Richfield")
announced today that the two companies, together with Richfield
Acquisition Corp. ("RAC"), a wholly-owned subsidiary of Stratex,
have entered into an Agreement and Plan of Merger (the "Merger
Agreement"), pursuant to which, subject to the satisfaction or
waiver of certain conditions, RAC will merge with and into
Richfield (the "Merger"), with
Richfield becoming a wholly-owned
subsidiary of Stratex.
Upon the consummation of the Merger, based on the number of
shares of Richfield common stock outstanding on May 6, 2014, each outstanding share of
Richfield common stock (other than
shares held by those Richfield
stockholders properly exercising dissenters' rights) would be
converted into 1.009 shares of Stratex common stock. However, the
number of shares of Stratex common stock that may actually be
issued with respect to a share of Richfield common stock is subject to decrease
based on the formula set forth in the Merger Agreement in the event
additional shares of Richfield common stock are issued prior to the
consummation of the Merger. Richfield's stockholders will receive cash in
lieu of fractional shares of Stratex. Stratex will file an
S-4 registration statement with the Securities and Exchange
Commission ("SEC") to register all shares of common stock issuable
to the Richfield shareholders upon
consummation of the Merger. The Merger is subject to the
approval of Richfield's
shareholders.
Concurrently with the entry into the Merger Agreement, Stratex,
Richfield, and certain of
Richfield's subsidiaries entered
into a Note and Security Agreement (the "Loan Agreement") providing
for pre-merger advances of up to $3,000,000 by Stratex to Richfield and its subsidiaries. Up to
$2,000,000 of this amount will be
dedicated specifically to fast forwarding the pre-merger
development of Richfield's
high quality and scalable Kansas properties, under a mutually agreeable
work program. The remaining $1,000,000 ($500,000 of which was advanced upon the entry
into the Merger Agreement) will be used by Richfield for general corporate purposes
approved by Stratex. The obligations of Richfield and its subsidiaries under the
Loan Agreement are secured by security interests and mortgages
in all of Richfield's
assets. Upon entering into the Merger Agreement, Stratex also
purchased from Richfield an
undivided 3% of the 8/8ths working interest in the Liberty # 1 well
located in Juab County, Utah,
along with certain leases covering approximately 447 mineral acres
for cash consideration of $500,000.
By virtue of this purchase, Stratex was also granted a right
of first refusal to acquire an undivided 3% of 8/8ths of
Richfield's working interest in
certain deep rights pertaining to the Utah Overthrust Project near
Fountain Green, Utah.
In order to facilitate the consummation of the proposed
Merger, the Board of Directors of Stratex and Richfield determined that it is in the best
interests of both companies that Alan D. Gaines resign as Chairman of the Board of
Directors of Richfield, and
immediately commence serving as Chairman of the Board of Directors
of Stratex. Mr. Gaines
entered into a five year employment agreement with Stratex to serve
in such capacity. Stephen
Funk, Stratex' present Chief Executive Officer will continue
to serve in that capacity post-merger. Douglas C. Hewitt, Sr., Richfield's present Chief Executive Officer,
will continue to serve in that capacity and as Interim Chairman of
the Board of Directors of Richfield to facilitate the Merger.
Following the Merger, it is anticipated that Mr. Hewitt will become
a consultant to Stratex with responsibility to oversee the
Company's operations in Utah.
Managements of both Stratex and Richfield feel strongly that the combination
of Richfield's properties and
Stratex' current cash on hand and access to additional capital will
create an outstanding opportunity to fully exploit and develop
Richfield's significant, primarily
oil producing asset base.
Richfield's Kansas properties are located within the
prolific Central Kansas Uplift ("CKU"), an area noted for long life
oilfields, excellent historical well control, relatively shallow
target payzones, and superior wellbore economics. Richfield boasts a significant inventory of 95
low risk, low cost and high rate of return drilling, behind pipe,
salt water disposal, offset and/or rework/recompletions in the
Arbuckle formation (57 new drilling, 38 recompletions), as well as
unbooked horizontal Mississipian locations. The Arbuckle, a vast
water drive reservoir system, has produced more than 2.4 billion
barrels of oil since the late 1920s. As leasehold ownership in this
area has long been fragmented, excellent potential exists for
bolt-on acquisitions and drilling opportunities. Therefore,
Richfield's CKU mid-continent
area, along with Stratex' south Texas properties will become the core
operating regions for the post-merger company.
Perhaps the crown jewel of Richfield's asset base is the world class
upside represented by Richfield's
ownership of extensive Central Utah Overthrust acreage (totaling
33,270 gross, 12,530 net acres). Managements of both Stratex and
Richfield believe there is the
potential for the discovery of very significant reserves,
associated with unbooked resource potential in the Navajo
Sandstone, Mancos Shale, and deeper Mississipian formations (170
prospective drilling locations). Richfield owns an 89.5% working interest
("WI") in its HUOP Freedom Trend Prospect and a 56.6% WI in the
Liberty Prospect. The HUOP Freedom Trend Prospect is on trend with
two significant discoveries made by Occidental Petroleum Corp. and
Wolverine Gas & Oil, announced in 2003 and 2008. In
addition, Richfield owns a 3% WI
in a 20,000 acre Area of Mutual Interest ("AMI") through its
Independence Project, a high thermal maturity and organically rich
Mancos Shale play (31 drilling locations), which Managements of
both companies believe could shortly become a highly sought after
shale play in the continental United
States.
Richfield's year-end 2013
independent engineering report reported SEC PV10 for proved
reserves totaling $28.9 million, of
which $3.0 million (10.2%) was
represented by proved developed producing reserves. Inclusion of
probable ("2P") reserves increases SEC PV10 to $109.0 million. Proved reserves total 1.43
million barrels of oil equivalent, with oil representing 87% of the
total. Inclusion of probables increases reserves to 4.0 million
barrels of oil equivalent (70% oil). No reserves or value were
attributed to Richfield's
Utah potential, which Managements
of both companies believe could be quite considerable.
About Stratex Oil & Gas Holdings, Inc.
Stratex
Oil & Gas Holdings, Inc. is an independent energy company
focused on the acquisition and subsequent organic exploitation and
development of primarily operated crude oil properties in
Texas, within the prolific Eagle
Ford Shale play, as well as non-operated working interests in
North Dakota, Montana and Kansas. Stratex is fully committed to the
creation of long term value for all of its stakeholders. For more
information visit: http://www.stratexoil.com
About Richfield Oil & Gas Company
Richfield is an independent
exploration and production company headquartered in Salt Lake City, Utah with substantially all of
its current producing assets located in Kansas, with potential high impact leases in
Utah, and Wyoming. Founded in April 2011, Richfield is dedicated to exploiting its asset
base and to growing organically through the exploitation and
development of its existing field inventory by the use of drilling,
workover, recompletion and other lower-risk development projects,
in order to increase proved reserves and production. Please
visit www.richfieldoilandgas.com for additional
information.
Investor Contacts
Stratex:
WSR Communications, Inc.
Phone: (772) 219-7525
IR@WSRCommunications.com
Richfield:
Investor Relations:
RedChip Companies, Inc.
Mike Bowdoin, Vice President of
Sales
mike@redchip.com
(800) 733-2447, ext. 110
Professional Relations:
Acorn Management Partners, LLC
Kelly Runfola-SVP
KRunfola@AcornManagementPartners.com
678-736-5688
Important Information for Investors and
Shareholders
This communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. In connection with the
proposed transaction between Stratex and Richfield, Stratex and Richfield will file relevant materials with
the Securities and Exchange Commission (the "SEC"), including a
Stratex registration statement on Form S-4 that will include a
proxy statement of Richfield that
also constitutes a prospectus of Stratex, and a definitive joint
proxy statement/prospectus will be mailed to shareholders of
Richfield. INVESTORS AND SECURITY HOLDERS OF STRATEX AND
RICHFIELD ARE URGED TO READ THE
JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS THAT WILL BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and security holders will be able to obtain free copies
of the registration statement and the joint proxy
statement/prospectus (when available) and other documents filed
with the SEC by Stratex or Richfield through the website maintained by
the SEC at http://www.sec.gov. Copies of the documents filed with
the SEC by Stratex will be available free of charge on Stratex'
website at www.stratexoil.com. Copies of the documents filed
with the SEC by Richfield will be
available free of charge on Richfield's website at
www.richfieldoilandgas.com.
Stratex, Richfield, their
respective directors and certain of their respective executive
officers may be considered participants in the solicitation of
proxies in connection with the proposed transaction. Information
about the directors and executive officers of Stratex is set forth
in its Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC
on March 31, 2014, its Current
Reports on Form 8-K filed with the SEC on May 7, 2014 and April
16, 2014. These documents can be obtained free of
charge from the sources indicated above. Additional
information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the joint
proxy statement/prospectus and other relevant materials to be filed
with the SEC when they become available. Information about
the directors and executive officers of Richfiled is set forth in
its Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC
on April 14, 2014 and its Current
Reports on Form 8-K filed with the SEC on May 7, 2014. These documents can be
obtained free of charge from the sources indicated above.
Additional information regarding the participants in the proxy
solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the joint proxy statement/prospectus and other relevant materials
to be filed with the SEC when they become available.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this communication
regarding the proposed transaction between Stratex and Richfield, including any statements regarding
the expected timetable for completing the transaction, benefits and
synergies of the transaction, future opportunities for the combined
company and products, and any other statements regarding Stratex'
and Richfield's future
expectations, beliefs, plans, objectives, financial conditions,
assumptions or future events or performance that are not historical
facts are "forward-looking" statements made within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as
amended. These statements are often, but not always,
made through the use of words or phrases such as "may", "believe,"
"anticipate," "could", "should," "intend," "plan," "will,"
"expect(s)," "estimate(s)," "project(s)," "forecast(s)",
"positioned," "strategy," "outlook" and similar expressions. All
such forward-looking statements involve estimates and assumptions
that are subject to risks, uncertainties and other factors that
could cause actual results to differ materially from the results
expressed in the statements. Among the key factors that could cause
actual results to differ materially from those projected in the
forward-looking statements are the following: the timing to
consummate the proposed transaction; the risk that a condition to
closing of the proposed transaction may not be satisfied; the risk
that a regulatory approval that may be required for the proposed
transaction is not obtained or is obtained subject to conditions
that are not anticipated; Stratex' ability to achieve the synergies
and value creation contemplated by the proposed transaction;
Stratex' ability to promptly, efficiently and effectively integrate
Richfield's operations into those
of Stratex; and the diversion of management time on
transaction-related issues. Additional information
concerning these and other factors can be found in Stratex' and
Richfield's respective filings
with the SEC, including their most recent Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K. Stratex and Richfield assume no obligation to update any
forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements that speak
only as of the date hereof.
SOURCE Richfield Oil & Gas Company
