SCHEDULE
14C INFORMATION STATEMENT
Reg.
§240.14c-101
Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934
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Preliminary
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Confidential,
for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
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[X]
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Definitive
Information Statement
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T-REX
OIL, INC.
(Name
of Registrant as Specified In Its Charter)
Not
Applicable
(Name
of Person(s) Filing Information Statement, if other than the Registrant)
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computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
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(1)
Title of each class of securities to which transaction applies:
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(2)
Aggregate number of securities to which transaction applies:
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(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was determined):
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(4)
Proposed maximum aggregate value of transaction:
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(5)
Total fee paid:
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paid previously with preliminary materials.
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(3)
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(4)
Date Filed:
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T-REX
OIL, INC.
520
Zang Street, Suite 250
Broomfield,
CO 80021
NOTICE
OF ACTION TO BE TAKEN BY
THE
SHAREHOLDERS
October
26, 2016
To
The Shareholders of T-Rex Oil, Inc.:
This
information statement is being provided on behalf of the board of directors (the “Board”) of T-Rex Oil, Inc. (the
“Company”) to record holders of shares of our common stock (“Holders of Record”) as of the close of business
on the record date of August 19, 2016 (“the Record Date”).
The
purpose of this Information Statement is to is to inform the holders of record, as of the close of business on August 19, 2016
(the “Record Date”), of shares of common stock, par value $0.001 per share (the “Common Stock”), of T-Rex
Oil, Inc., a Colorado corporation, that our Board of Directors approved the following:
The
spin-off of T-Rex’s subsidiary, Nexfuels, Inc. (“Nexfuels”), resulting in the T-Rex common stockholders, on
the Record Date, owning a direct interest in Nexfuels that is proportionate to their ownership in T-Rex.
We
encourage you to read the attached Information Statement carefully for further information regarding these actions. As a record
holder of T-Rex common stock you became a beneficial owner of the right to receive shares of Nexfuels as of August 19, 2016. You
will be entitled to receive one (1) share of Nexfuels common stock for every two (2) shares of T-Rex common stock owned by you
on August 19, 2016. However, in accordance with rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the actual distribution of Nexfuels shares to T-Rex stockholders will not occur until Nexfuels becomes a reporting
company under the Exchange Act.
Colorado
corporation law requires a stockholder vote to be taken only in the event of a sale of all or substantially all of the assets
of the corporation. In this case, the assets of Nexfuels equaled less than 10% of T-Rex’s assets as August 19, 2016. Accordingly,
no vote is required upon the Nexfuels spin-off. The Company is providing this Information Statement voluntarily, merely for informational
purposes because Nexfuels is not currently a reporting subsidiary.
THIS
IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS’ MEETING WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED
HEREIN.
This
Information Statement is being furnished to you solely for the purpose of informing stockholders of the matters described herein
in substantial compliance with Regulation 14C of the Exchange Act. This Information Statement is first being mailed or furnished
to stockholders on or about October 31, 2016.
The
Company will bear the expenses relating to this information statement, including expenses in connection with preparing and mailing
this information statement and all documents that now accompany or may in the future supplement it.
Only
one information statement is being delivered to multiple shareholders sharing an address, unless the Company has received contrary
instructions from one or more of the shareholders. The Company will undertake to deliver promptly upon written or oral request
a separate copy of the information statement to a shareholder at a shared address to which a single copy of the information statement
was delivered. You may make a written or oral request by sending a written notification to the Company’s principal executive
offices stating your name, your shared address and the address to which the Company should direct the additional copy of the information
statement or by calling the Company’s principal executive offices. If multiple shareholders sharing an address have received
one copy of this information statement and would prefer the Company mail each shareholder a separate copy of future mailings,
you may send notification to or call the Company’s principal executive offices. Additionally, if current shareholders with
a shared address received multiple copies of this information statement and would prefer us to mail one copy of future mailings
to shareholders at the shared address, notification of that request may also be made by mail or telephone call to the Company’s
principal executive offices.
We
appreciate your continued interest in T-Rex Oil, Inc.
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T-REX
OIL, INC.
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/s/
Donald Walford
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Donald
Walford,
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Chief
Executive Officer
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WE
ARE NOT ASKING YOU FOR A PROXY AND
YOU
ARE REQUESTED NOT TO SEND US A PROXY.
T-REX
OIL, INC.
520
Zang Street, Suite 250
Broomfield,
CO 80021
October
27, 2016
INFORMATION
STATEMENT AND NOTICE OF ACTIONS TAKEN BY
THE
BOARD OF DIRECTORS
General
Information
This
Information Statement is being provided to the stockholders of T-Rex in connection with the following transaction:
The
spin-off of T-Rex’s subsidiary, Nexfuels, Inc. (“Nexfuels”), resulting in the T-Rex common stockholders, on
the Record Date, owning a direct interest in Nexfuels that is proportionate to their ownership in T-Rex. However, in accordance
with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the actual distribution of
Nexfuels shares to T-Rex stockholders will not occur until Nexfuels becomes a reporting company under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).
The
Company will pay all costs associated with the distribution of this Information Statement, including the costs of printing and
mailing. The Company will only deliver one Information Statement to multiple stockholders sharing an address unless the Company
has received contrary instructions from one or more of the stockholders. The Company will promptly deliver a separate copy of
this Information Statement and future stockholder communication documents to any stockholder at a shared address to which a single
copy of this Information Statement was delivered, or deliver a single copy of this Information Statement and future stockholder
communication documents to any stockholder or holders sharing an address to which multiple copies are now delivered, upon written
or oral request to the following address:
T-Rex
Oil, Inc.
520
Zang Street, Suite 250
Broomfield,
Colorado 80021
Stockholders
may also address future requests regarding delivery of information statements and/or annual reports by contacting the Company
at the address listed above.
Information
Stockholder Vote
Pursuant
to Colorado corporation law, the dividend spin-off of our subsidiary, Nexfuels does not require approval by the vote of our common
stockholders and this Information Statement is for informational purposes only pursuant to SEC rules. The SEC provides conditions
that must be met when a parent is spinning off a subsidiary and not immediately registering the shares:
1.
The parent shareholders do not provide consideration for the spun-off shares:
T-Rex
shareholders will not provide consideration for the shares of Nexfuels common stock distributed to them.
2.
The spin-off is pro rata to the parent shareholders:
T-Rex
will distribute one (1) share of Nexfuels common stock for every two (2) shares of T-Rex common stock owned. This distribution
will be made as a pro rata dividend.
3.
The parent must provide adequate information about the spin-off and the subsidiary to its shareholders and the trading markets:
The
parent, T-Rex, has submitted the information statement to the SEC that describes the spin-off and the subsidiary that substantially
complies with Regulation 14A or Regulation 14C under the Exchange Act. In addition, T-Rex’s filings under the Exchange Act
include all current information about the spin-off and the operations of Nexfuels and its subsidiaries and the interests being
spun-off. This condition will be satisfied when Nexfuels registers as a reporting company under the Exchange Act.
4.
The parent has a valid business reason for the spin-off:
T-Rex’s
Board of Directors believes that the spin-off will accomplish a number of important business objectives as described below under
“Explanation of Actions to be Taken for the Dividend Spinoff.”
5.
If the parent is spinning off restricted securities, the parent must have either: (i) held the restricted shares for two years
or (ii) have formed the subsidiary, rather than having acquired it from a third-party:
The
two-year holding period requirement does not apply since T-Rex formed the subsidiary being spun-off, rather than acquiring the
business from a third party.
The
Company will not be required to register the spin-off dividend shares. However, stockholders of T-Rex will receive book entry
restricted shares at such time as Nexfuels registers as a reporting company under the Exchange Act.
Outstanding
Voting Stock of the Company
As
of the Record Date, the Company had: 275,000,000 authorized shares of common stock, of which 17,097,822 were issued and outstanding
and 25,000,000 authorized shares of preferred stock of which shares are issued, but not outstanding, and not entitled to vote
or to receive the Nexfuels dividend.
The
holders of warrants and options to purchase an aggregate of 4,127,127 shares of T-Rex common stock
ARE NOT
entitled to
share in the Nexfuels dividend shares. Thus, a total of 17,097,622 shares issued and/or reserved for issuance are entitled to
receive the Nexfuels dividend shares. Each common stockholder will receive one (1) share of restricted Nexfuels common stock for
every two (2) shares of T-Rex common stock owned on August 19, 2016.
Authorization
or Issuance of Securities Otherwise for Exchange
Nexfuels
was incorporated under the laws of Colorado on July 11, 2016. Nexfuels has 100,000,000 shares of common stock, $0.001 par value
authorized and 25,000,000 shares of preferred stock authorized. As of August 18, 2016, there was 1 share issued and outstanding
held by T-Rex.
The
reasons for the spin-off and distribution of Nexfuels shares are set forth under “Explanation of Actions to be Taken for
the Dividend Spin-off.” The existing stockholders of T-Rex as of August 19, 2016 will receive their proportionate share
of Nexfuels common stock for no additional consideration.
Nexfuels
Common Stock
Each
share of common stock entitles its holder to one non-cumulative vote per share and, subject to the preferential rights of the
preferred stockholders, if any, the holders of more than 50% of the shares voting for the election of directors can elect all
the directors if they choose to do so, and in such event the holders of the remaining shares will not be able to elect a single
director. Holders of shares of common stock are entitled to receive such dividends as the Board of Directors may, from time to
time, declare out of Company funds legally available for the payment of dividends. Upon any liquidation, dissolution or winding
up of the Company, holders of shares of common stock are entitled to receive, pro rata, all of the assets of the Company available
for distribution to stockholders after the satisfaction of the liquidation preference of the preferred stockholders, if any. The
common stock is not convertible or redeemable. Neither the Company’s Certificate of Incorporation nor its By-Laws provide
for pre-emptive rights. None of the stockholders have any pre-emptive rights to subscribe for or purchase any stock, warrants
or other securities of the Company.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
following table sets forth certain information as of October 25, 2016, regarding the beneficial ownership of our common stock,
by (i) each person or entity who, to our knowledge, owns more than 5% of our common stock; (ii) our named executive officers;
(iii) each director; and, (iv) all of our executive officers and directors as a group. Unless otherwise indicated in the footnotes
to the following table, each person named in the table has sole voting and investment power and that person’s address is
c/o T-Rex, Inc., 520 Zang St, Suite 250, Broomfield, Colorado 80021. Shares of common stock subject to options, warrants, or other
rights currently exercisable or exercisable within 60 days of the date of this Information Statement, are deemed to be beneficially
owned and outstanding for computing the share ownership and percentage of the stockholder holding the options, warrants or other
rights, but are not deemed outstanding for computing the percentage of any other stockholder.
Name of Beneficial Owner
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Number of
Shares
Beneficially
Owned
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Percentage
Beneficially
Owned (1)
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Executive Officers & Directors
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Donald Walford, CEO & Chairman
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1,080,000
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6.31
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%
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Martin Gottlob, VP of Geology & Director
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750,000
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4.38
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%
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Allen Heim, VP of Operations & Director
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755,000
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4.41
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%
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Andrew VanderPloeg, Director
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491,195
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2.87
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%
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Herbert Sears, Director
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66,667
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0.39
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%
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All executive officer and directors as a group (6 persons)
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3,142,862
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18,38
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%
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5% Owners
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SchwabenKapital GmbH (2)
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1,480,152
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8.65
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%
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Werner Biberacher (2)
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2,149,222
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12.57
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%
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RMI GmbH (3)
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1,487,442
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8.69
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%
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Rainer Mayerhoffer (3)
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1,926,463
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11.26
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%
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Jon Nicolaysen
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1,052,500
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6.15
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%
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(1)
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Based
on 17,097,622 shares of our common stock issued and outstanding on October 25, 2016. Does not include shares of our common
stock issuable upon the exercise of options and warrants issued and outstanding.
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(2)
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Mr.
Werner Biberacher is the manager of SchwabenKapital GmbH and as such has the ability to vote the shares of SchwabenKapital
GmbH. Mr. Biberacher holds 669,070 shares of common stock individually.
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(3)
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Mr.
Mayerhoffer has the ability to vote the shares of RMI GmbH. Mr. Mayerhoffer holds 439,021 shares individually.
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QUESTIONS
AND ANSWERS ABOUT THE DIVIDEND SPIN-OFF
What
do stockholders need to do to participate in the spin-off?
Nothing.
You are not required to take any action to receive common stock in the dividend spin-off, although we urge you to read this entire
document carefully. No stockholder approval of the distribution is required by applicable law, and we are not seeking such stockholder
approval.
Do
I have to pay anything for the dividend stock?
No.
You do not have to pay anything for the dividend stock you receive in the distribution. The distribution is in effect a dividend
of certain property owned by the Company to its stockholders.
Do
I have to send in my T-Rex, Inc. stock certificate?
No.
You do not have to do anything to receive the dividend stock. If you are a T-Rex, Inc. stockholder as of the Record Date, you
will be automatically credited with shares of Nexfuels Power, Inc. common stock to be distributed when Nexfuels becomes a reporting
company.
How
many shares of common stock will I receive?
You
will receive one share of Nexfuels common stock, $.001 par value, for every two (2) shares of T-Rex, Inc. common stock you owned
as of the Record Date.
Will
I get a stock certificate?
No.
The Company will not be required to register the spin-off dividend shares provided Nexfuels registers as a reporting company under
the Exchange Act. Stockholders of T-Rex will receive book entry restricted shares only when Nexfuels registers as a reporting
company, in accordance with SEC rules and regulations. At such time, transfer agent of Nexfuels will create an account for each
T-Rex stockholder. On the effective date of the distribution, the transfer agent will credit the shares issued to each registered
stockholder to their respective accounts with the transfer agent. This is called a “book-entry” system.
Will
my T-Rex common stock continue to be publicly traded?
Yes.
The T-Rex common stock will continue to be traded on the Over-The-Counter Market QB.
Will
the dividend shares I receive in the distribution be publicly traded?
No.
The dividend shares you receive for Nexfuels will not be publicly traded in the forseeable future.
RISK
FACTORS RELATING TO THE DISTRIBUTION
Certain
adverse tax consequences could arise by reason of the distribution.
It
is possible that our stockholders could recognize a taxable gain on the difference between the fair market value of the common
stock of Nexfuels it is receiving if it is greater than the stockholder’s tax basis in T-Rex common stock. The Company will
distribute a Form 1099 to its stockholders reporting the fair value of the Nexfuels dividend shares. It will be up to each stockholder
to determine his (her) basis in their T-Rex shares against the value of the Nexfuels dividend shares received. Furthermore, if
the IRS successfully challenges the tax-free status of the distribution, those T-Rex stockholders who receive Nexfuels common
stock in the distribution may suffer adverse tax consequences resulting from the characterization of the distribution as a taxable
dividend to such stockholders.
The
dividend shares you receive will not be registered and not freely tradable.
The
dividend shares you receive for Nexfuels will not be registered nor publicly traded. The decision to register as a reporting company
with the SEC and distribute the Nexfuels shares depends on the completion of stand-alone audited financial statements of Nexfuels
and consideration of Nexfuels’ financing efforts. Furthermore, Nexfuels decision to commence public trading in Nexfuels
common stock depends on numerous factors, including management’s concerns over the securities markets, investment bankers’
concerns, or for any other valid reason.
Forward
Looking Statements
This
Information Statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this
Information Statement are forward-looking statements. Words such as “believes, “projects “anticipates,”
“plans,” “expects,” “may,” “will,” “should,” “intends,”
and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on the
Company’s current beliefs and expectations, and involve known and unknown risks, uncertainties and other factors that may
cause our actual results, levels of activity, performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by these forward-looking statements. Investors should not
place any undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors
which are, in some cases, beyond the Company’s control which could, and likely will, materially affect actual results, levels
of activity, performance or achievements. Any forward-looking statement reflects the Company’s current views with respect
to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations,
growth strategy, liquidity, and any pending litigation. Such risks, uncertainties and other factors, which could impact the Company
and the forward-looking statements contained herein are included in the Company’s filings with the SEC, including the Company’s
Form 10-Ks, Form 10-Qs, Form 8-Ks, Proxy Statements and other filings. The Company assumes no obligation to publicly update or
revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those
anticipated in these forward-looking statements, even if new information becomes available in the future.
APPROVAL
BY THE BOARD OF DIRECTORS
In
April 2016, the Company entered into a Confidentiality Agreement and a Memorandum of Understanding (“MOU”) with Rocky
Mountain Power, a division of PacifiCorp. The Memorandum provides both parties the opportunity for a period of 18 months to explore
the feasibility of a Carbon Dioxide Capture Facility, exclusively. Upon the entrance into such agreement, management and the Board
of Directors began to explore opportunities for the financing and development of such project, including the development of the
carbon dioxide recovery project in a separate company able to develop the project and able to obtain necessary financing without
the further dilution of the shareholders of T-Rex.
Nexfuels
was formed under the laws of Colorado on July 11, 2016, as a wholly-owned subsidiary. In July 2016, the Board reviewed in detail
and approved an equity plan to implement its strategy to assign the carbon dioxide recovery project to Nexfuels. At the time of
incorporation, Mr. Edward Nichols was appointed the President and a director of Nexfuels. Messrs. Walford and Sears, directors
of T-Rex were appointed to the Board of Directors of Nexfuels, as was Mr. Thomas Sweeney.
During
August 2016, the Board of T-Rex, with the advice of legal advisors: (i) determined those shareholders of T-Rex to participate
in the Nexfuels dividend shares; and (ii) approved the transfer to Nexfuels all of carbon dioxide recovery project.
On
September 27, 2016, T-Rex publicly announced that it had set an August 19, 2016 as the official Record Date for the spin-off of
Nexfuels to its securityholders, subject to certain regulatory notifications, approvals and other customary closing conditions.
In
August 2016, the Nexfuels Board reaffirmed the August 19, 2016 Record Date.
EXPLANATION
OF ACTIONS TO BE TAKEN FOR THE DIVIDEND SPIN-OFF
The
Board of Directors of the Company has adopted a resolution to assign its carbon dioxide recovery project to Nexfuels, Inc. Our
Board of Directors believes that spinning-off the carbon dioxide recovery project will accomplish a number of important objectives.
The spin-off will separate distinct lines of business with different financial, investment and operating characteristics so that
each can adopt business strategies and objectives tailored to their respective markets. This will allow Nexfuels and the carbon
dioxide recovery project, which have operations that are distinct from T-Rex’s oil exploration and production operations
to better focus and prioritize the allocation of both companies’ management and implement their financial resources for
achievement of their corporate objectives.
As
described below, T-Rex is an independent oil and gas exploration and production company focused on the acquisition, enhancement
and development of oil and gas assets primarily in the Rocky Mountain region of Wyoming. Based on a 2007 research study conducted
by the Enhanced Oil Recovery Institute at the University of Wyoming using reservoir production data provided by the Wyoming Oil
and Gas Conservation Commission (“WOGCC”), Wyoming has produced 7,024 million barrels of oil from 1,237 producing
fields with the top 400 fields producing 97.7% of the total produced oil, or 6,865 million barrels of oil. A research report published
by the Independent Petroleum Association of America in November 2014 ranked Wyoming as the 9th largest U.S. state in terms of
crude oil production and the 5
th
largest U.S. state in terms of natural gas production. T-Rex’s management team
has extensive experience acquiring, enhancing and operating oil and gas assets in Wyoming, which we believe will provide a competitive
advantage in executing the Company’s business strategy.
Management
believes that separation of the companies will benefit both companies’ businesses and their stockholders. To focus management
and personnel on the two distinct segments, Nexfuels has brought in its own initial management team. Equally important is that
the financing of the two segments is very different. The spinoff is intended to facilitate better access by both companies to
the capital markets. The carbon dioxide recovery project will require large amounts of financing that are accessed from capital
markets that include debt financing and equity financing.
The
Board of Directors saw the value in the carbon dioxide recovery project, however, it was determined that in order to raise sufficient
funds to implement their commercialization, it would need to raise substantial amounts of money, which would dilute current shareholder
interests in T-Rex. Therefore, to focus and better implement these strategies, the Board unanimously approved the assignment of
the carbon dioxide recovery project to Nexfuels and eventual the spin off of Nexfuels.
Record
shareholders of T-Rex, as of the Record Date of August 19, 2016, will receive one share of Nexfuels common stock for every two
shares (2) of T-Rex common stock owned. The stock dividend will be based upon 17,097,622 shares of T-Rex common stock that are
issued and outstanding as of the Record Date.
T-Rex
will distribute up to approximately 8,548,811 shares of Nexfuels common stock. The Nexfuels dividend shares will be sent to T-Rex
stockholders in book entry only after Nexfuels becomes a reporting company under the Exchange Act.
Record
shareholders of T-Rex will not automatically receive a paper certificate for shares of common stock. Only after Nexfuels is registered
with the SEC as a reporting company, can the Nexfuels transfer agent create an account for each T-Rex stockholder. On the effective
date of the distribution, the transfer agent will credit the restricted shares issued to each registered stockholder to their
respective accounts with the transfer agent. This is called a “book-entry” system.
The
Business of T-Rex Post Nexfuels Dividend
T-Rex
will continue its operations in oil and gas industry, focusing on the development of its existing properties.
Cole
Creek Oil Field, Wyoming
Located
in the southwest margin of the Powder River Basin in Natrona and Converse Counties, approximately 20 miles to the northeast of
Casper, Wyoming. Our Leasehold historically produces from 4 Cretacious sand formations, the Shannon, the Frontier, the Dakota
and the Lakota. Additionally, there is potential in the Muddy and the Tensleep or Minnelusa formations. We are currently reprocessing
and reinterpreting Seismic data previously performed on parts of the property.
Production
in the field at this time is from the 2nd Frontier and the Dakota and averages 60 BOPD. We have identified several behind pipe
opportunities and plan to develop them in the near term.
Covering
approximately 13,400 gross acres and 19 producing wells and 23 existing well bores.
We
intend to focus on the re-development of the Shannon and Frontier formation using new technology and 3-D seismic re-work methods.
We intend to drill edge and infill wells initially then develop the property for tertiary recovery using polymer floods, surfactants
and possibly CO
2
injection.
Burke
Ranch Project, Natrona County, Wyoming
The
Burke Ranch Field of Wyoming consists of approximately 4,500 acres located in the southwest corner of the Powder River Basin.
The project has a potential for 40+ development and exploratory wells. Historically, the Dakota Formation has been the primary
objective. The Burke Ranch Unit was originally developed on 80 acre spacing. Downsizing the spacing to 40 acres and drilling infill
and edge wells offers low risk and high potential production.
We
are currently permitting a small 3 D seismic project on our acreage to enable us to better define the best development opportunities.
There could be additional potential in the Frontier (Wall Creek), Second Frontier, Niobrara, Mowry, and Tensleep Formations.
Burke
Ranch Field offers a variety of drilling and development opportunities.
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Tensleep
Formation - new drilling on seismic anomaly
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Dakota
Formation – additional development of the Dakota Formation to re-work the field to increase existing production
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Frontier
Formation – to recomplete the existing wells to access existing reserves behind pipe.
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Big
Horn Basin Prospect
The
Big Horn Basin, located in north-central Wyoming, is a geological structural basin of sedimentary rocks dating from the Cambrian
to Miocene. The principal productive reservoir of oil in the Big Horn Basin to date has been the Pennsylvanian Tensleep Formation.
Other producing horizons include the Mississippian Madison Limestone, Permian Phosphoria and the Cretaceous Frontier Sandstone.
Our
Big Horn Basin projects currently produce from the Triassic Crow Mountain, Permian Phosphoria and Frontier formations. They provide
us with both development and exploration opportunities.
The
Big Horn Basin Prospect properties have a combination of development and exploration projects.
Rawhide
- This is an opportunity for development of existing production and exploration for deeper reserves. Cumulative historical
production to date is approximately 147.0 MBO.
Meeteetse
“Deep”
- This is an opportunity to develop a large Phosphoria-Tensleep oil field. This is the largest project
in the Western Interior portfolio. In mid-2008, the Carter 1 discovery well was re-entered and recompleted in the Phosphoria formation
to restore production. Extensive testing and analysis have established Phosphoria 2P reserves on the 240 acre lease block.
Baird
Peak
- Baird Peak is a well-defined structure with 200’ of closure, with multiple pay objectives. Historically, it has
produced 128,000 BO.
Nebraska
Sioux
and Kimball County, Nebraska
We
have development of the project through T-Rex #1. The project consists of:
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We
have a 100% WI and a 75% NRI in the well and key acreage of 240 acres.
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We
have sufficient acreage to drill two new wells in an up-dip direction structurally.
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The
Company has a 31.25% WI until payout, at which time the Company would get an additional 25% working interest for a total of
56.25% in a water injection-disposal project.
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Water
injection well application for permit was submitted and in early April 2015 it was approved for injection rates of 5,000 barrels
of water per day, pending appeal.
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Water
injection well has been drilled and cased with 7 inch pipe.
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Drilling
Program and Field Activities
We
initiated our operations in Wyoming with the acquisition of the acreage in the Burke Ranch in 2014. Since closing the Cole Creek
acquisition, we have focused the majority of our activities in this field and developing a recompletion program and 3D Seismic
reprocessing and interpretation program.
We
believe there remain a number of activities to complete in the field, including further re-completions, down-spaced drilling and
enhanced oil recovery techniques which will most likely start with CO2 “huff and puff” treatments.
Business
Strategies
Our
objective is to create shareholder value by identifying and assembling a portfolio of low-risk assets with attractive economic
profiles and leveraging our technical and managerial expertise to deliver industry-leading results. We seek to achieve this objective
by executing the following strategies:
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Pursue
Out of Favor Fields.
We believe that many of our peers are currently looking to exit Wyoming to pursue other areas
of operations. We attribute this trend to either the smaller size of their respective holdings, the fact that the majority
of these assets represent conventional oil and/or natural gas production or the possibility that they currently lack the resources
to focus on the best management of these assets. By contrast, given our management experience in this area, we seek to aggregate
these assets, to achieve economies of scale, driving down our per unit operating costs, while increasing production by detailed
field management and enhancement.
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Seek
Held by Production Acreage that Can Provide Future Upside.
Our acquisition strategy is based on identifying and acquiring
producing properties that we believe can be enhanced. However, given our experience in Wyoming, we anticipate that there will
be further upside achieved if commodity prices improve through the exploration of deeper productive horizons. While we do
not quantify this upside value, we seek acquisitions where we can secure this upside optionality while executing our core
business strategy.
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The
Business of Nexfuels
Nexfuels
Inc. was formed under the laws of Colorado on July 11, 2016 and was created through a spin out of existing intellectual property
and rights from T-Rex through an assignment of certain contracts and rights to develop CO2 capture opportunities. The development
of CO2 capture systems and the related delivery pipelines are a significant undertaking, requiring years of work and large amounts
of capital. Nexfuels will fund its operations separately from T-Rex.
Nexfuels
will be focused on the development of exhaust stack supplies of carbon dioxide for use in enhanced oil recovery in the United
States. The company intends to develop, build and operate commercial scale carbon capture systems on existing coal fueled electric
power plants in the United States. Once the carbon dioxide has been captured, purified and condensed the company will sell and
deliver the CO2 to oil producers in the surrounding areas through a company owned and operated CO2 pipeline.
Nexfuels
expects to generate revenues from three sources. Tipping fees paid by the power plant operator where Nexfuels has installed a
CO2 capture system. These fees will be paid for each ton of CO2 captured monthly. CO2 delivery fees will be paid by the oil field
operator when Nexfuels delivers the CO2 at the delivery point. These fees will be paid for each
mscf
(1,000 standard cubic
feet) of CO2 delivered on a monthly basis. The oil field operator will also pay Nexfuels a royalty for each barrel of oil recovered
from CO2 flooded fields. The royalties are earned as oil is extracted from the field and are paid on a monthly basis.
Nexfuels
expects to generate significant volumes of federal tax credits for the capture and use of CO2 in enhanced oil recovery operations.
Under current federal tax rules, each ton of CO2 captured and used in enhanced oil recovery is eligible for a tax credit equal
to $10.92 per ton. The cumulative tax credits in any given calendar year are projected to be greater than the tax burden incurred
by Nexfuels. Nexfuels will look to sell the excess tax credits to eligible entities. Additional federal legislation has been proposed
to increase and lengthen the qualifying period for carbon capture tax credits which could result in larger volumes of excess tax
credits being generated.
Nexfuels
initial operating expenses will be focused on securing the rights to assess the technical and economic feasibility of installing
CO2 capture systems on coal burning power plants across the western part of the United States. Once these rights have been secured
for a particular power plant, the company will then incur expenses for each individual power plant as it is put through a series
of internal and external assessments to determine the feasibility of developing and operating a CO2 capture system.
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Business
Development
- Secure the exclusive right to assess, develop and construct a CO2 capture system on a coal burning power
plant. These rights are secured through binding contracts with the power plant owner and include the requirement to provide
access to the plant, its operating information and the cooperation of the plants personnel.
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Power
Plant Assessments
- These assessments are conducted by an Independent Engineer that has familiarity with the plant being
assessed and has direct knowledge of CO2 capture systems. The assessments include a regulatory and permitting review, a technical
review of the plant and an economic review of the cost to build and operate various industrial grade CO2 capture systems.
These assessments will be combined with work completed by Nexfuels staff in assessing the market for CO2 in the surrounding
100 mile radius of the plant and with regard to proximity to existing CO2 transport pipelines. The output of these assessments
includes economic pro forma for the cost to build and operate a CO2 capture system and any related delivery pipeline for the
next 20 years.
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Pre-Development
Activities
- If a power plant’s regulatory, technical and economic studies indicate a positive result, that project
will move into the pre-development phase where certain rights and partners will need to be identified and contracted. These
activities include reaching binding terms with the power plant owner ensuring Nexfuels has the right to build and operate
a CO2 capture system on the power plant, cooperation in obtaining all necessary non-ministerial permits from local, state
and federal regulators as well as various other economic and inter-operating agreement terms necessary for the two systems
to operate in unison. Nexfuels will also be making a series of selections with regard to the CO2 capture technology to be
used for the plant, the Engineering, Procurement and Construction contractor to be used for the CO2 plant as well as the pipeline
EPC and operator.
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Full
Development and Permitting
- Full development activities will commence once the required economic terms have been agreed
to between the power plant and Nexfuels and all other contracts have been executed enabling the design and engineering of
the plant and the development of the permitting sets and applications. Development will require significant amounts of capital
and it is expected that a separate fund raising will be conducted prior to a plant’s development start.
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Construction.
Construction of the CO2 capture system and the pipeline will be dependent on securing the required construction financing
as well as long term debt, equity and any available government grants or subsidies. The construction of the CO2 capture system
and pipeline will be occurring simultaneously and are expected to span between 24 and 30 months in duration. It is expected
that a separate project level financing will need to be conducted to fund the construction and initial operation of the CO2
capture system and pipeline.
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Operation.
Operations will begin once the construction has been completed and the customers for the CO2 have completed their investments
in their CO2 injection systems. Operations will need to be managed in unison with the coal burning power plant and will require
integrated operations and health and safety plans.
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T-Rex
Oil entered into an exclusive Memorandum of Understanding with PacifiCorp, owned by Berkshire Hathaway Energy, to negotiate a
contract to install a carbon capture system on PacifiCorp’s Dave Johnston power plant in Glenrock, Wyoming (“the Johnston
MOU”). The Johnston MOU will be assigned to Nexfuels. Under the terms of the Johnston MOU, Nexfuels has the right to assess
the regulatory, technical and economic feasibility of installing a CCS on the Dave Johnston power plant. The Johnston MOU further
provides that the two parties will work in good faith to negotiate and finalize binding agreements for the installation and operation
of a CCS on the power plant.
T-Rex
Oil entered into a second exclusive Memorandum of Understanding with PacifiCorp to negotiate a contract to install a carbon capture
system on PacificCorp’s Wyodak Plan in Gillete, Wyoming (“the Wyodak MOU”). This Wyodak MOU will also be assigned
to Nexfuels. Similar to the Johnston MOU, the Wyodak MOU, Nexfuels has the right to assess the regulatory, technical and economic
feasibility of installing a CCS on the Wyodak power plant. The Wyodak MOU further provides that the two parties will work in good
faith to negotiate and finalize binding agreements for the installation and operation of a CCS on the power plant.
T-Rex
Oil hired Sargent & Lundy, LLC to provide the regulatory, technical and economic studies of installing the CO2 capture system
and the CO2 pipeline. The regulatory and permitting studies were completed in June, 2016 and in summary show no fatal flaws or
red flags with regard to local, state and federal permitting. The technical and economic studies are currently underway and will
be completed in October 2016. The engagement agreement with Sargent & Lundy and the feasibility study will be assigned to
Nexfuels.
No
Dissenter’s Rights
Under
Colorado Law, our dissenting shareholders are not entitled to appraisal rights with respect to this dividend subsidiary spin-off,
and we will not independently provide our shareholders with any such right.
U.S.
Federal Income Tax Consequences
You
are urged to consult a tax advisor to determine the particular tax consequences of the spin-off to you, including the effect of
any federal, state, local and any other tax laws. See “Risk Factors Relating to the Distribution” above.