Oct 13 2021 (Wed)
Essentially Viking Energy, which is owned by CEI, is assigning assets that it used to own in Ichor Energy Holdings to TO Ichor 2021 (a different company). There is no acquisition taking place. This is a deposition of assets. I break down what’s going and provide my thoughts on why this good for CEI.
(If you already know what an 8-k is, just ignore this part)
Form 8-K is used to update investors and the SEC about a significant event affecting a company. The stock price of the company is often affected by 8-K triggering events, but whether the price goes up or down depends on whether the form contains good or bad news. Naturally, less significant news will have less of a significant impact on stock prices.
This is taken directly from the 8-K Filing
On October 5, 2021, Viking Energy Group, Inc. (“Viking”), a majority-owned subsidiary of Camber Energy, Inc. (“Camber” or the “Company”), entered into an Assignment of Membership Interests (the “Assignment Agreement”) with TO Ichor 2021, L.L.C. (“Assignee”), pursuant to which Viking assigned all of its membership interests in Ichor Energy Holdings, L.L.C. (“Holdings”) to the Assignee, effective October 5, 2021. Holdings is the owner of all of the membership interests in Ichor Energy, LLC (“Ichor Energy”), which owns all of the membership interests of Ichor Energy LA, LLC (“Ichor LA”) and Ichor Energy TX, LLC (“Ichor TX” and, together with Holdings, Ichor Energy and Ichor LA, the “Ichor Entities”), which collectively owned approximately 58 producing wells, 31 salt water disposal wells, 46 shut in wells and 4 inactive wells as of June 30, 2021. The assets held by the Ichor Entities were acquired by the Ichor Entities in December 2018 from an affiliate of the Assignee (the “Original Acquisition”).
What does this mean? To clarify, an assignor passes on the rights and obligations of the contract assignment. An assignee receives the rights and obligations of the contract assignment. An assignor is an original party to the contract.
Viking Energy is a subsidiary of Camber Energy (CEI)
Viking used to own an interest in Ichor Energy Holding, L.L.C
Viking (Assignor), is providing ownership of the Ichor Energy Holding, L.L.C to TO Ichor 2021, L.L.C (Assignee)
Viking is sending disposing of:
Viking is getting rid of some of their assets. But at the same time, they are also eliminating a big portion of their liabilities. If you check out the pro-forma (Pro forma, a Latin term that means “for the sake of form” or “as a matter of form”, is a method of calculating financial results using certain projections or presumptions) financial statement you will see thy have eliminated close to $66 million in liabilities. (Link)
Since Viking is a subsidiary of CEI, changes or impacts to Vikings financial statements will impact CEI’s financial statements. because Viking eliminated a large portion of Liabilities this will improve their balance sheet and should have a positive impact on CEI’s balance sheet.