UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2013
Commission File No. 000-54162
(Exact name of registrant as specified in its charter)
| | |
| Canada | | 61-1606563 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| |
1160 Eugenia Pl, Suite 100, Carpinteria, California USA 93013 | | Tel: (805) 566 2900 |
| (Address of principal executive offices) | | (Registrant’s telephone number, including area code) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| | | | | | |
| Large accelerated filer | | ¨ | | Accelerated filer | | ¨ |
| | | |
| Non-accelerated filer | | x (Do not check if a smaller reporting company) | | Smaller reporting company | | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
69,834,396 shares, no par value, of the Registrant’s common stock were issued and outstanding as of November 12, 2013.
INDEX
2
PART 1. FINANCIAL INFORMATION
Interim Consolidated Financial Statements of
NIMIN ENERGY CORP.
As of and for the periods ended September 30, 2013 and 2012
Expressed in US dollars
3
NiMin Energy Corp.
Consolidated Statements of Net Assets as of September 30, 2013 and December 31, 2012 (Liquidation Basis)
(Expressed in U.S. dollars)
| | | | | | | | |
| | | September 30,
2013 | | | December 31,
2012 | |
| | | (Unaudited) | | | (Audited) | |
| Assets | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 7,622,549 | | | $ | 9,657,306 | |
Other accounts receivable | | | 17,523 | | | | 60,129 | |
Income tax receivable | | | — | | | | 329,185 | |
| | | | | | | | |
Total assets | | $ | 7,640,072 | | | $ | 10,046,620 | |
| | | | | | | | |
| Liabilities | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 142,418 | | | $ | 71,654 | |
Accrued professional fees related to liquidation | | | 1,313,490 | | | | 1,481,470 | |
Other costs related to liquidation | | | 418,641 | | | | 452,717 | |
Asset retirement obligations | | | — | | | | 203,861 | |
| | | | | | | | |
Total liabilities | | $ | 1,874,549 | | | $ | 2,209,702 | |
| | | | | | | | |
Net assets in liquidation (Note 2) | | $ | 5,765,523 | | | $ | 7,836,918 | |
| | | | | | | | |
Net assets in liquidation per outstanding share | | $ | 0.08 | | | $ | 0.11 | |
See accompanying notes to consolidated financial statements.
4
NiMin Energy Corp.
Consolidated Statement of Operations and Comprehensive Loss (Going Concern Basis)
(Expressed in U.S. dollars)
(Unaudited)
| | | | |
| | | Six months
ended June 30,
2012 | |
Crude oil and natural gas revenues | | $ | 10,985,590 | |
Expenses: | | | | |
Operating costs | | | 4,257,619 | |
General and administrative | | | 6,043,260 | |
Liquidation related expenses | | | 7,537,423 | |
Depreciation, depletion, amortization, and accretion | | | 1,697,361 | |
Gain on crude oil derivative contract | | | (189,507 | ) |
| | | | |
| | | 19,346,156 | |
| | | | |
Income before other items | | | (8,360,566 | ) |
| | | | |
Interest income | | | 10,673 | |
Interest expense | | | (6,443,178 | ) |
Foreign exchange (loss) | | | (438 | ) |
Change in fair value of options | | | 296,519 | |
Change in fair value of warrants | | | 235,134 | |
Other | | | (22,818 | ) |
Other reclamation costs | | | (659,115 | ) |
Gain on sale of oil & gas properties and equipment | | | 46,280,232 | |
| | | | |
| | | 39,697,009 | |
| | | | |
Income before taxes | | | 31,336,443 | |
Income tax expense | | | 2,478,263 | |
| | | | |
Net Income and comprehensive Income | | | 28,858,180 | |
| | | | |
Basic and diluted income per share | | $ | 0.41 | |
| | | | |
See accompanying notes to consolidated financial statements.
5
NiMin Energy Corp.
Consolidated Statement of Cash Flows (Going Concern Basis)
(Expressed in U.S. dollars)
(Unaudited)
| | | | |
| | | Six months
ended June 30,
2012 | |
Cash flows from operating activities: | | | | |
Net income | | $ | 28,858,180 | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | | | | |
Depreciation, depletion, amortization, and accretion | | | 1,697,361 | |
Change in fair value of options | | | (296,519 | ) |
Change in fair value of warrants | | | (235,134 | ) |
Gain on sale of oil & gas properties | | | (46,377,296 | ) |
Stock-based compensation | | | 2,289,567 | |
Write down of fixed assets | | | 82,731 | |
Loss on sale of non-oil & gas properties | | | 97,064 | |
Non-cash interest expense | | | 3,497,867 | |
Decrease in assets: | | | | |
Trade accounts receivable | | | 1,061,589 | |
Prepaid expenses | | | 311,922 | |
Crude oil inventory | | | 149,553 | |
Increase in liabilities: | | | | |
Accounts payable and accrued liabilities | | | 7,850,251 | |
Asset retirement obligation | | | 659,114 | |
| | | | |
Net cash provided by (used in) operating activities | | | (353,750 | ) |
| | | | |
Cash flows from investing activities: | | | | |
Purchase of and expenditures on crude oil and natural gas properties | | | (1,579,255 | ) |
Sale of oil & gas properties | | | 119,245,819 | |
Increase in restricted investments | | | (3,143,741 | ) |
| | | | |
Net cash provided by (used in) investing activities | | | 114,522,823 | |
| | | | |
Cash flows from financing activities: | | | | |
Repayment of long-term debt | | | (36,000,000 | ) |
Repurchase of options | | | (29,108 | ) |
| | | | |
Net cash provided by (used in) financing activities | | | (36,029,108 | ) |
| | | | |
Change in cash and cash equivalents during the period | | | 78,139,965 | |
Cash and cash equivalents at beginning of the period | | | 3,811,028 | |
| | | | |
Cash and cash equivalents at end of the period | | $ | 81,950,993 | |
| | | | |
Supplemental disclosure of cash flow information: | | | | |
Cash paid for interest | | $ | 2,945,444 | |
See accompanying notes to consolidated financial statements.
6
NiMin Energy Corp.
Consolidated Statement of Changes in Net Assets in Liquidation as of September 30, 2013 (Liquidation Basis)
(Expressed in U.S. dollars)
(Unaudited)
| | | | | | | | |
| | | Three months
ended Sept. 30,
2013 | | | Nine months
ended Sept. 30,
2013 | |
Net Assets in Liquidation | | $ | 6,132,020 | | | $ | 7,836,918 | |
Decrease to net assets: | | | | | | | | |
Adjustments to assets | | | — | | | | (28,689 | ) |
Adjustments to liquidation accruals | | | (377,790 | ) | | | (2,022,794 | ) |
Foreign exchange adjustment | | | 11,293 | | | | (19,912 | ) |
| | | | | | | | |
Net Assets in Liquidation as of September 30, 2013 | | $ | 5,765,523 | | | $ | 5,765,523 | |
See accompanying notes to consolidated financial statements.
7
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
| 1 | Description of the Business |
NiMin Energy Corp. (the “Company” or “NiMin”) was incorporated under the name NiMin Capital Corp. under theBusiness Corporations Act (Alberta) on May 31, 2007. The Company changed its name to NiMin Energy Corp. on September 3, 2009, and consolidated its shares on the basis of one new post-consolidation share (“Common Shares”) for each three existing Common Shares.
The principal business of the Company was conducted through its wholly owned subsidiary, Legacy Energy, Inc. (“Legacy”), a Delaware company that was engaged in the exploration, development, and production of crude oil and natural gas properties in the states of California and Wyoming until the sale of its assets in June 2012.
The annual and special meeting (the “Special Meeting”) of holders (“Shareholders”) of Common Shares of the Company (“Common Shares”) was held on June 26, 2012. At the Special Meeting, in addition to annual items of business, Shareholders were asked to consider and vote on, among other things, special resolutions approving the proposed sale of all or substantially all of the Company’s assets (the “Sale of Assets”) including those assets held by NiMin’s wholly-owned subsidiary, Legacy, pursuant to purchase and sale agreements with respect to its Wyoming based assets and California based assets.
At the Special Meeting, the Shareholders were also asked to consider and vote on the voluntary winding up and dissolution of the Company pursuant to the laws of theBusiness Corporations Act (Alberta) (the “Winding Up”) and the distribution to Shareholders of the net proceeds of the Sale of Assets (less the settlement of obligations of Legacy) and cash on hand, as part of such liquidation and dissolution after satisfaction of all liabilities of the Company.
Both the Sale of Assets and the Winding Up were approved by the Shareholders at the Special Meeting. In order for the Company to complete the Winding Up, the appropriate corporate steps were required to be taken for the dissolution and liquidation of Legacy. Pursuant to the approval of the Sale of Assets, Legacy proceeded with the sale of the Wyoming oil and gas assets and the California oil and gas assets all as more particularly described below.
On June 28, 2012, Legacy completed its previously announced sale of its assets in Wyoming’s Big Horn Basin (the “Wyoming Assets”) to BreitBurn Operating L.P., a wholly-owned subsidiary of BreitBurn Energy Partners L.P. (NASDAQ: BBEP “BreitBurn”), for total cash consideration of approximately $93 million, being the original purchase price of approximately $98 million less approximately $5 million adjusted to account for preliminary purchase price adjustments. On August 30, 2012, Legacy completed its final settlement with BreitBurn and received approximately $2.3 million based on the final purchase price adjustments.
On June 29, 2012, Legacy completed its previously announced sale of its assets in California’s San Joaquin Basin (the “California Assets”) to Southern San Joaquin Production, LLC for total cash consideration of approximately $26 million, being the original purchase price of approximately $27 million, less approximately $1 million adjusted to account for preliminary purchase price adjustments. Pursuant to the terms of the purchase and sale agreement, $3 million of the $26 million purchase price paid on closing had been deposited with an escrow agent until December 28, 2012, in connection with various indemnities contained therein. On August 30, 2012, Legacy completed its final settlement with Southern San Joaquin Production LLC and received $347,938 based on the final purchase price adjustments. On December 28, 2012, the $3 million was released to NiMin from the escrow account.
8
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
The Winding Up and the dissolution and liquidation of Legacy contemplates the orderly disposition of the assets, the orderly discharge of all outstanding liabilities, including all outstanding debt, and after the establishment of appropriate reserves, the distribution of cash to Shareholders in installments.
On September 24, 2012, the Board declared an initial distribution to Shareholders of $1.01 per Common Share. The distribution was made as a return of capital to Shareholders of record at the close of business on October 9, 2012. The distribution of $70,532,740 was paid on October 22, 2012.
Upon completion of the disposition of all remaining assets of Legacy and the settlement of all liabilities of the Company and Legacy, the Company intends to distribute the remaining net proceeds of the liquidation and dissolution of both Legacy and the Company to Shareholders in one final distribution on a future date which has not yet been determined.
NiMin’s wholly-owned subsidiary, Legacy Energy, Inc., a Delaware company, dissolved in accordance with the laws of Delaware on September 17, 2012.
NiMin voluntarily delisted its Common Shares from the Toronto Stock Exchange (“TSX”) after the close of trading on October 22, 2012, the date on which NiMin’s initial distribution was “payable” and its listing was transferred to the NEX, a separate board of the TSX Venture Exchange, effective as of opening of the market on October 23, 2012. From October 23, 2012, and onwards until the time that is on or about the date of dissolution, NiMin’s Common Shares trade on the NEX under the symbol “NNN.H”.
The Company announced that the Common Shares of the Company were delisted from the OTCQX effective July 23, 2012.
The unaudited interim financial information of the Company has been prepared in accordance with Article 10 of the Securities and Exchange Commission’s, or the SEC, Regulation S-X. Accordingly, it does not include all of the information required by generally accepted accounting principles in the U.S., or U.S. GAAP, for complete financial statements. The consolidated statement of net assets at December 31, 2012, was derived from the audited financial statements at that date and does not include all the disclosures required by U.S. GAAP. In the opinion of management, the accompanying financial information contains all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s unaudited consolidated financial statements of interim periods. These unaudited consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, or the 2012 10-K. Operating results for any interim period are not necessarily indicative of the results that may be expected for the full year.
As a result of the Shareholders’ approval of the Winding Up of the Company, the liquidation basis of accounting was adopted effective June 30, 2012. This basis of accounting is considered appropriate when, among other things, liquidation of a company is imminent and the net realizable values of assets are reasonably determinable. Under this basis of accounting, assets are valued at their net realizable values and liabilities are stated at their estimated settlement amounts. Further, all costs of liquidation are accrued as of September 30, 2013. Financial information presented as of and subsequent to June 30, 2012, includes a Consolidated Statement of Net Assets and a Consolidated Statement of Changes in Net Assets in Liquidation, as required under the liquidation basis of accounting. Financial information included for periods ending prior to June 30, 2012, is presented under the going concern basis of accounting.
9
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
These unaudited interim consolidated financial statements of the Company are presented in U.S dollars.
A statement of operations is not presented for the three and nine months ended September 30, 2013, due to the liquidation basis of accounting. Instead, a statement of changes in net assets has been reported.
Accrued Cost of Liquidation
Under the liquidation basis of accounting, the Company has accrued for the estimated costs to be incurred in liquidation, as follows:
| | | | | | | | | | | | | | | | |
Accrued Liquidation Costs | | Balances as of
December 31,
2012 | | | Adjustments
to accrual | | | Payments | | | Balances as of
September 30,
2013 | |
Lease obligation | | $ | — | | | $ | — | | �� | $ | — | | | $ | — | |
Professional fees | | | 1,481,470 | | | | 1,446,597 | | | | (1,614,577 | ) | | | 1,313,490 | |
Payroll related costs | | | — | | | | — | | | | — | | | | — | |
Other | | | 452,717 | | | | 236,855 | | | | (270,931 | ) | | | 418,641 | |
| | | | | | | | | | | | | | | | |
Total | | $ | 1,934,187 | | | $ | 1,683,452 | | | $ | (1,885,508 | ) | | $ | 1,732,131 | |
| | | | | | | | | | | | | | | | |
The Company will continue to incur operating costs through the liquidation of the Company (the “Liquidation Period”). On a regular basis, we evaluate our assumptions, judgments and estimates that can have a significant impact on our reported net assets in liquidation based on the most recent information available to us, and when necessary make changes accordingly. Actual costs and income may differ from our estimates, which might reduce net assets available in liquidation to be distributed to Shareholders.
The Winding Up and the dissolution and liquidation of the Company continue to be assessed and the exact amount and timing of further distribution(s) to Shareholders can only be determined upon completion of the orderly disposition of assets and orderly discharge of all liabilities. Once management of the Company has completed those required steps, current estimates will be revised to reflect actual numbers. The numbers reflected in the statement of net assets and the estimated $0.08 net assets in liquidation per outstanding share include management estimates made as of September 30, 2013, for the next four months, the estimated remaining period for dissolution. They do not necessarily reflect the final dollars that may be available to the Company for distribution to Shareholders. Any distribution amounts can only be calculated upon completion of all the dispositions, discharges and determinations of reserves.
| 3 | Asset Retirement Obligations |
The Company’s asset retirement obligations are based on net ownership in wells and facilities and management’s estimate of the timing and expected future costs associated with site reclamation, facilities dismantlement and the plugging and abandonment of wells.
10
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
The following table provides a reconciliation of the beginning and ending aggregate carrying amount of the obligation associated with the retirement of property and equipment:
| | | | | | | | |
| | | Period ended
September 30,
2013 | | | Year ended
December 31,
2012 | |
Balance, beginning of year | | $ | 203,861 | | | $ | 1,180,661 | |
Change in estimate | | | 339,341 | | | | 163,850 | |
Reduction to liabilities | | | (543,202 | ) | | | (1,180,336 | ) |
Accretion expense | | | — | | | | 39,686 | |
| | | | | | | | |
Balance, end of year | | $ | — | | | $ | 203,861 | |
| | | | | | | | |
There is no remaining balance sheet liability at September 30, 2013, related to the completion of well site restoration in Louisiana. The Company received confirmation that the former well site has been released for unrestricted use from the state of Louisiana on August 30, 2013.
On June 30, 2010, the Company entered into a senior secured loan (the “Senior Loan”) in the amount of $36 million from a U.S. based institutional private lender. The Company borrowed $36 million subject to an original issuer discount of 7.5%, a commitment fee of 1%, a placement fee of 1% and a transaction fee of 3%. Debt issuance costs of $4.9 million were incurred and were being amortized to net income under the effective interest method. The Senior Loan had a 12.5% fixed interest rate and a term of five years. Interest was payable quarterly beginning September 30, 2010.
As part of the Winding Up of the Company, on June 28, 2012, the Company prepaid the entire amount of the Senior Loan and as a result, a prepayment penalty of 2% representing $707,705 was applied in addition to the accrued interest of $1,118,853 and principal of $36,000,000. The remaining unamortized debt issuance cost of $3.23 million as of June 28, 2012, related to the Senior Loan, was written off and was included in the period ended June 30, 2012, interest expense.
| | a. | Authorized and Outstanding |
Common Shares
NiMin was authorized to issue an unlimited number of Common Shares. As of September 30, 2013, and December 31, 2012, 69,834,396 Common Shares were issued and outstanding.
Preferred Shares
NiMin was also authorized to issue an unlimited number of Preferred Shares issuable in series. As of September 30, 2013, and December 31, 2012, no Preferred Shares have been issued.
11
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
The Company established a stock option plan as approved by the shareholders whereby options to purchase Common Shares may be granted to the Company’s directors, officers, employees and consultants. The exercise prices of stock options were denominated in Canadian dollars. The number of Common Shares issuable under the Company’s stock option plan cannot exceed 15% of the issued and outstanding common shares of the Company. The exercise price of each option equals the market price of the Company’s stock on the date of grant and the option has a maximum life of ten years. The vesting period is determined by the Board of Directors at the time of grant. Options issued by the Company generally vest one-third on the first, second, and third anniversary of the date of grant. Following the approval of the Winding Up of the Company, all outstanding unvested options became automatically vested and the Company recognized the remaining grant date fair value of approximately $1.7 million in the period ended June 30, 2012.
Pursuant to Section 3.5 of the Company’s stock option plan, the Company completed the sale of all or substantially all of the Company’s assets and, as such, terminated all unexercised options under the plan in July 2012.
The following table sets forth a reconciliation of the stock option activity for the period ended September 30, 2013, and December 31, 2012:
| | | | | | | | |
| | | Number of
shares | | | Weighted
Average Exercise
Price (CDN$) | |
Stock options outstanding at December 31, 2011 (i) | | | 9,220,001 | | | | 1.24 | |
| | | | | | | | |
Options exercised | | | — | | | | — | |
Options forfeited (i) | | | (60,000 | ) | | | 1.61 | |
Options repurchased (i) | | | (600,000 | ) | | | 1.00 | |
Options cancelled | | | (8,560,001 | ) | | | 1.29 | |
| | | | | | | | |
Stock options outstanding at December 31, 2012 | | | — | | | | — | |
| | | | | | | | |
Options exercised | | | — | | | | — | |
Options forfeited | | | — | | | | — | |
Options repurchased | | | — | | | | — | |
Options cancelled | | | — | | | | — | |
| | | | | | | | |
Stock options outstanding at September 30, 2013 | | | — | | | | — | |
| | | | | | | | |
| (i) | The 2.70 million stock options relating to former employees were modified upon transition to a consulting role in 2012 to allow for continued vesting. The resulting $104,483 was recognized as incremental stock-based compensation expense during the nine months ended September 30, 2012. As the related options were denominated in Canadian dollars, which is not the functional currency of the Company (which is the U.S. dollar), the vested options were recorded at their fair value at the end of each period and the change in fair value was recognized in earnings. |
Total compensation expense was amortized over the vesting period of the options. Compensation expense of $2.29 million has been recognized during the six months ended June 30, 2012.
12
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
As of June 30, 2012, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company’s option plan.
| | | | | | | | |
| | | Number of
Unvested
Options | | | Weighted-
Average Grant-
Date Fair Value
per Option
(CDN$) | |
Balance December 31, 2011 | | | 4,083,343 | | | | 0.99 | |
| | | | | | | | |
Vested | | | (4,023,343 | ) | | | 0.99 | |
Granted | | | — | | | | — | |
Forfeited | | | (60,000 | ) | | | 0.94 | |
| | | | | | | | |
Balance September 30, 2012 | | | — | | | | — | |
| | | | | | | | |
When stock options were exercised, the Company issued Common Shares from the pool of authorized shares.
Each warrant was exercisable by the holder thereof to acquire one Common Share at any time before the expiration date, after which time the warrants expire and become null and void.
Each whole warrant issued in connection with the private placement was exercisable for a period of 36 months from September 1, 2011, at an exercise price of $1.60. The warrants were subject to a hold period of four months plus one day from the date of issue.
As a result of the approval of the Winding Up of the Company in June 2012, an aggregate of 2,188,970 unexercised warrants were terminated in July 2012.
13
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
The following table sets forth a reconciliation of the warrant activity for the periods ended September 30, 2013, and December 31, 2012:
| | | | | | | | | | | | |
| | | Number of
Warrants | | | Equity
Component
Amount | | | Weighted
Average
Exercise
Price
(CDN$) | |
Warrants outstanding at December 31, 2011 | | | 2,285,900 | | | | 844,488 | | | | 1.79 | |
| | | | | | | | | | | | |
Warrants exercised | | | — | | | | — | | | | — | |
Warrants expired | | | — | | | | — | | | | — | |
Warrants cancelled | | | (2,188,970 | ) | | | (844,488 | ) | | | 1.79 | |
| | | | | | | | | | | | |
Warrants outstanding at December 31, 2012 | | | 96,930 | | | | — | | | | 1.72 | |
| | | | | | | | | | | | |
Warrants exercised | | | — | | | | — | | | | — | |
Warrants expired | | | — | | | | — | | | | — | |
Warrants cancelled | | | — | | | | — | | | | — | |
| | | | | | | | | | | | |
Warrants outstanding at September 30, 2013 | | | 96,930 | | | | — | | | | 1.72 | |
| | | | | | | | | | | | |
During third quarter of 2012, pursuant to the Winding Up of the Company, the Company values the warrants based on the expected cash distribution to shareholders as this represents management’s best estimate on the valuation of the underlying equity instruments as of June 30, 2012, and going forward. As the warrants have an exercise price greater than the expected cash distribution to shareholders, the value of the warrants were determined to approximate zero.
The following table summarizes NiMin’s warrants exercisable at September 30, 2013:
| | | | | | | | |
Expiration Date | | Number of
Warrants | | | Exercise
Price per share
(CDN$) | |
March 10, 2016 | | | 96,930 | | | | 1.72 | |
| | | | | | | | |
| | | 96,930 | | | | 1.72 | |
| | | | | | | | |
Basic earnings (loss) per share were computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings (loss) per common share were calculated using the treasury stock method to determine the dilutive effect of the stock options. The treasury stock method assumes that the proceeds received from the exercise of “in the money” stock options and warrants were used to repurchase commons shares at the average market price during the period. The weighted average number of shares assumed to be outstanding was as follows:
14
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
| | | | |
| | | Six months ended
June 30, | |
| | | 2012 | |
Net income | | $ | 28,858,180 | |
Basic and diluted shares outstanding (i) | | | 69,834,396 | |
Income per basic and diluted share | | $ | 0.41 | |
| | | | |
| (i) | For the six months ended June 30, 2012, 10.8 million stock options and warrants were excluded from the diluted loss per share calculation because their effect was anti-dilutive as a result of the options and warrants being out of the money. |
On May 6, 2013, the Company received a refund for U.S. income taxes of $327,174 resulting from an overpayment of income taxes in 2012. The Company generated additional net operating losses during the nine months ended September 30, 2013, but deferred tax assets have been recorded at their net realizable value of $0 under the liquidation basis of accounting.
The Company’s financial instruments consist of cash and cash equivalents, warrants, accounts payable and accrued liabilities. For the six months ended June 30, 2012, the fair value of the commodity derivative was obtained from the counterparty and therefore was considered level 2. Due to the pending liquidation, the Company valued the warrants based on the expected cash distribution to shareholders as this represents management’s best estimate of the valuation of the underlying equity instruments. As the warrants have an exercise price greater than the expected cash distribution to shareholders, the value of the warrants were determined to approximate zero.
Commodity price risk was the risk that the future cash flows will fluctuate as a result of changes in commodity prices. Commodity prices for crude oil and natural gas were impacted by world economic events that dictate the levels of supply and demand.
In January 2010, the Company entered into a derivative financial contract for 7,500 Bbls of NYMEX West Texas Intermediate (“NYMEX WTI”) crude oil production per month at a fixed rate of $85.10 per barrel until December 2012.
15
NiMin Energy Corp.
Notes to Interim Consolidated Financial Statements
(Expressed in U.S. dollars)
(Unaudited)
In December 2010, the Company entered into a derivative financial contract for 125 Bbls of oil per day for 2011 and 250 Bbls of oil per day for 2012 at a fixed rate of $90.40 per barrel.
In November 2011, the Company entered into a derivative financial contract for 100 Bbls of oil per day for 2012 at a fixed price of $96.75 per barrel.
We do not designate our derivative financial instruments as hedging instruments for accounting purposes and, as a result, we recognize the current change in a derivative’s fair value in earnings.
For the six months ended June 30, 2012, the Company’s change in derivative contracts included a realized gain of $189,507.
During the second quarter of 2012, the Company terminated and settled all derivative contracts as of May 17, 2012, and at September 30, 2013, did not carry derivative contracts on the balance sheet.
| 8 | Related Party Transactions |
The Company used the services of Simon, Peragine, Smith and Redfearn LLP to assist in general legal matters related to contracts and lease agreements of its properties. For the period ended September 30, 2013, the Company recorded legal expenditures of $25 as compared to $138,206 for the period ended September 30, 2012. Mr. Redfearn is currently a member of the Company’s Board of Directors, and is a partner of the law firm.
Effective February 1, 2013, the Legacy Energy Liquidating Trust, a Delaware statutory trust (the “Liquidating Trust”), was established to provide for the transfer of certain assets of Legacy to the Liquidating Trust in order to satisfy any future unknown claims against Legacy following its dissolution and liquidation. NiMin is the sole owner of beneficial ownership interests in the Liquidating Trust. The Board of Directors of NiMin will fund the Liquidating Trust with assets, which will include $250,000 in cash. In addition, the Board will fund the liquidating trust with any other assets of Legacy that are not otherwise disposed of in liquidation which the Board deems to be reasonably likely to be sufficient to provide compensation for claims that have not been made known to Legacy or that have not arisen but that, based on facts known to Legacy and NiMin, may arise following dissolution, as required by Delaware law. On January 3, 2016, the Liquidating Trust will terminate by its terms and any remaining assets in the Liquidating Trust will be distributed to the owners of the beneficial interests.
NiMin has determined that the appropriate amount to fund the Liquidating Trust to meet unknown claims and the ongoing obligations of the Liquidating Trust is $250,000, which shall be funded prior to the dissolution of NiMin. NiMin intends to sell the beneficial ownership interests in the Liquidating Trust along with the patents in the CMD process and rights to an overriding royalty on non-producing properties to Pacific Oil and Gas LLC, a company owned by Clancy Cottman and Bill Gumma, two directors of NiMin, for aggregate proceeds of $1,000 in order to complete the dissolution and liquidation of NiMin.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following management discussion and analysis (“MD&A”) should be read in conjunction with the Company’s Annual Report on Form 10-K as amended from time to time, (“Annual Report”) and filed with the United States Securities and Exchange Commission (“SEC”) on March 11, 2013, our interim consolidated financial statements for the period ended September 30, 2012, and our historical consolidated financial statements and the accompanying notes included elsewhere in the Annual Report.
In this MD&A, unless otherwise specified, all dollar amounts are expressed in US Dollars (“$”).
FORWARD LOOKING STATEMENT
This MD&A contains certain forward-looking information, which is based upon the current internal expectations, estimates, projections, assumptions and beliefs of NiMin, as of the date of such statements or information. Words such as “plan,” “expect,” “project,” “intend,” “believe,” “anticipate,” “estimate,” “may,” “will,” “potential,” “proposed,” and other similar words, or statements that certain events or conditions “may” or “will” occur, are intended to identify forward-looking information. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in the forward-looking information. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking information will not occur. Such forward-looking information in this MD&A speaks only as of the date of this Quarterly Report.
Although NiMin believes that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. NiMin cannot guarantee future results, levels of activity, performance or achievements.
Statements made in this MD&A regarding the payment of additional liquidating distributions and of the timing of the dissolution are forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties, and there can be no assurance that the expectations reflected in those statements will be realized or achieved. Such risks and uncertainties include, without limitation, possible contingent liabilities and other obligations arising from the sale of the Company’s properties and previous operation of its business; and risks associated with the liquidation and dissolution of the Company, including, without limitation, settlement of the Company’s liabilities and the actual timing of the liquidating distributions and dissolution.
The Board will need to make provision for the satisfaction of all of the Company’s known and unknown liabilities, which could substantially delay or limit the Company’s ability to make distribution in full to Shareholders.
Amounts available for the final distribution to Shareholders will depend on the amount the Board of NiMin determines are appropriate to be transferred to the Liquidating Trust, as defined herein, in accordance with Delaware law, and the consideration received by NiMin for the sale of the beneficial ownership interests in the Liquidating Trust.
BOE Presentation
Barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas (“mcf”): one barrel of oil (“bbl”) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
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Overview
NiMin Energy Corp. (“NiMin”, “we” or the “Company”) was an oil and gas company engaged in the acquisition, development and production of oil and gas properties in the United States until June 30, 2012, when we ceased to have oil and gas operations.
The annual and special meeting (the “Special Meeting”) of holders of Common Shares (“Shareholders”) was held on June 26, 2012. At the Special Meeting, in addition to annual items of business, Shareholders were asked to consider and vote on, among other things, special resolutions approving the proposed sale of all or substantially all of the Company’s assets (the “Sale of Assets”) including those assets held by NiMin’s wholly-owned subsidiary, Legacy pursuant to purchase and sale agreements with respect to its Wyoming based oil and gas assets (“Wyoming Assets”) and California based oil and gas assets (“California Assets”).
At the Special Meeting, the Shareholders were also asked to consider and vote on the voluntary liquidation and dissolution of the Company pursuant to the laws of theBusiness Corporations Act(Alberta) (the “Winding Up”) and the distribution to Shareholders of the net proceeds of the Sale of Assets (less the settlement of obligations of Legacy), and cash on hand, as part of such liquidation and dissolution after satisfaction of all liabilities of the Company.
Both the Sale of Assets and the Winding Up were approved by the Shareholders at the Special Meeting. In order for the Company to complete the Winding Up, the appropriate corporate steps were required to be taken for the dissolution and liquidation of Legacy which dissolution was filed in Delaware on September 17, 2012. Pursuant to the approval of the Sale of Assets, Legacy proceeded with the sale of the Wyoming Assets and the California Assets all as more particularly described below.
On June 28, 2012, Legacy completed its previously announced sale of its Wyoming Assets to BreitBurn Operating L.P., a wholly-owned subsidiary of BreitBurn Energy Partners L.P. (“BreitBurn”), for total cash consideration of approximately $93 million, being the original purchase price of approximately $98 million less, approximately $5 million adjusted to account for preliminary purchase price adjustments. On August 30, 2012, Legacy completed its final settlement with BreitBurn and received approximately $2.3 million based on the final purchase price adjustments.
On June 29, 2012, Legacy completed its previously announced sale of its California Assets to Southern San Joaquin Production, LLC for total cash consideration of approximately $26 million, being the original purchase price of approximately $27 million, less approximately $1 million adjusted to account for preliminary purchase price adjustments. Pursuant to the terms of the purchase and sale agreement, $3 million of the $26 million purchase price paid on closing was deposited with an escrow agent until December 28, 2012, in connection with various indemnities contained therein. On August 30, 2012, Legacy completed its final settlement with Southern San Joaquin Production LLC and received $347,938 based on the final purchase price adjustments. On December 28, 2012, the $3 million was released to NiMin from the escrow account.
The Winding Up and the dissolution and liquidation of Legacy contemplates the orderly disposition of the assets, the orderly discharge of all outstanding liabilities, including all outstanding debt, and after the establishment of appropriate reserves, the distribution of cash to Shareholders in installments.
On September 24, 2012, the Board declared an initial distribution to Shareholders of $1.01 per Common Share in connection with the Winding Up. The distribution was made as a return of capital to Shareholders of record at the close of business on October 9, 2012. The distribution of $70,532,740 was paid on October 22, 2012.
Upon completion of the disposition of all remaining assets of Legacy and the settlement of all liabilities of the Company and Legacy, the Company intends to distribute the net proceeds of the liquidation and dissolution of both Legacy and the Company to Shareholders in one final distribution on a future date which has not yet been determined.
NiMin voluntarily delisted the Common Shares from the TSX after the close of trading on October 22, 2012, and its listing was transferred to the NEX, a separate board of the TSX Venture Exchange (“NEX”), effective as of opening of the market on October 23, 2012. From October 23, 2012, and onwards until the time that is on or about the date of dissolution, the Common Shares will trade on the NEX under the symbol “NNN.H”.
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As a result of the Shareholders’ approval of the Winding Up, the liquidation basis of accounting was adopted effective June 30, 2012. This basis of accounting is considered appropriate when, among other things, liquidation of a company is imminent and the net realizable values of assets are reasonably determinable. Under this basis of accounting, assets are valued at their net realizable values and liabilities are stated at their estimated settlement amounts. Further, all costs of liquidation are accrued as of September 30, 2013. Financial information presented as of and subsequent to June 30, 2012, includes a Consolidated Statement of Net Assets and a Consolidated Statement of Changes in Net Assets in Liquidation, as required under the liquidation basis of accounting. Financial information included for periods ending prior to June 30, 2012, is presented under the going concern basis of accounting.
Data for the statement of operations is not presented for 2013, because using the liquidation basis of accounting, net income/(loss) is no longer reported.
Oil and Gas Sales Report
Average daily production sold by region(1)
| | | | |
| | | Six months ended
June 30, 2012 | |
California(2) | | | | |
Oil—Bbl/d | | | 242 | |
Gas—Mcf/d | | | — | |
Total California (boe/d) | | | 242 | |
Wyoming(2) | | | | |
Oil—Bbl/d | | | 652 | |
Gas—Mcf/d | | | — | |
Total Wyoming (boe/d) | | | 652 | |
Total Oil (Bbl/d) | | | 894 | |
Total Gas (Mcf) | | | — | |
Total (boe/d) | | | 894 | |
Notes:
| (1) | These numbers are net to NiMin’s working interest for the relevant properties. |
| (2) | The Wyoming and California properties were sold on June 28, 2012, and June 29, 2012, respectively. |
Crude oil and natural gas sales
Given that the sale of the Wyoming Assets and California Assets closed on June 28, 2012, and June 29, 2012, respectively, the associated revenues are included in revenues and expenses for the period ending June 30, 2012. However, the purchase and sale agreements provide adjustments to the purchase price be made related to revenues and operating expenses for the period of April 1, 2012, through the closing date of the sale of the properties. As such, the purchase price of the sale of the properties in June 2012 was adjusted for revenues and operating expenses for the period of April 1, 2012, through closing date of the sale of the properties.
For the six months ended June 30, 2012, the Company recorded gross revenues of $13.78 million. Gross revenues were generated entirely from oil sales and had no gas sales for the period.
19
Crude Oil Derivative Contracts
Commodity price risk was the risk that the future cash flows will fluctuate as a result of changes in commodity prices. Commodity prices for crude oil and natural gas were impacted by world economic events that dictate the levels of supply and demand.
In January 2010, the Company entered into a derivative financial contract for 7,500 Bbls of NYMEX West Texas Intermediate (“NYMEX WTI”) crude oil production per month at a fixed rate of $85.10 per barrel until December 2012.
On December 20, 2010, we agreed to economically hedge the future sales of 125 barrels of NYMEX WTI crude oil per day at a fixed price of $90.40 starting January 1, 2011, for a period of 12 months and 250 barrels of NYMEX WTI crude oil per day at a fixed price of $90.40 starting January 1, 2012, for a period of 12 months.
On November 11, 2011, we entered into a swap contract to minimize the variability in cash flows due to price movements in crude oil. We agreed to economically hedge the future sales of 100 barrels of NYMEX WTI crude oil per day at a fixed price of $96.75 starting January 1, 2012, for a period of 12 months.
We do not designate our derivative financial instruments as hedging instruments for accounting purposes and, as a result, we recognize the current change in a derivative’s fair value in earnings. For the six months ended June 30, 2012, the Company’s change in derivative contracts included a realized gain of $189,507.
During the second quarter of 2012, the Company terminated and settled all derivative contracts as of May 17, 2012, and at September 30, 2013, did not carry derivative contracts on the balance sheet.
Royalties
California
The Company paid a crude oil production fee (“Production Fee”) consisting of 100% of the first 635.10 barrels of crude oil produced per month which commenced in 2008 and declines at a rate of 5.5% each year.
For the six months ended June 30, 2012, the Production Fee rate was 506.40 barrels of oil per month and the Company recorded royalties in California in the amount of $1.31 million.
Wyoming
For the six months ended June 30, 2012, the Company recorded $1.47 million in royalties in Wyoming representing an average rate of 16.12%.
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Operating Costs
| | | | |
| | | Six months ended
June 30, 2012 | |
| | | ($) | |
Operating costs | | | 4,257,619 | |
Average operating costs per boe | | | 26.45 | |
For the six months ended June 30, 2012, the Company incurred operating costs in the amount of $4.26 million.
Operating costs included severance taxes paid in Wyoming. There was no severance tax in the state of California. For the six months ended June 30, 2012, the Company recorded $996,327 in severance taxes.
General and Administrative Expenses (“G&A”)
| | | | |
| | | Six months ended
June 30, 2012 | |
| | | ($) | |
G&A expense before stock-based compensation | | | 3,753,693 | |
Average per boe | | | 23.32 | |
Stock-based compensation (“SBC”) | | | 2,289,567 | |
Average per boe | | | 14.22 | |
| | | | |
G&A | | | 6,043,260 | |
| | | | |
Average per boe | | | 37.55 | |
For the six months ended June 30, 2012, the Company recorded G&A expense, excluding SBC, of $3.75 million.
For the six months ended June 30, 2012, the Company recorded SBC in the amount of $2.29 million.
Depreciation, Depletion, Amortization and Accretion Expense (“DD&A”)
| | | | |
| | | Six months ended
June 30, 2012 | |
| | | ($) | |
DD&A expense | | | 1,697,361 | |
Average per boe | | | 10.55 | |
We followed the full-cost method of accounting, and all costs included in proved properties and all future development costs, along with our total proved reserves, determine the period’s depletion cost.
For the six months ended June 30, 2012, the Company recorded DD&A in the amount of $1.68 million.
21
Change in Fair Value of Warrants and Options
The exercise price of certain warrants was denominated in Canadian dollars, which was not the functional currency of the Company. As a result, these warrants were recorded at their fair value at the end of each period and the change in fair value was recognized in earnings.
During the six months ended June 30, 2012, none of the issued warrants were exercised. At June 30, 2012, a gain of $235,134, with respect to outstanding warrants, was recognized in earnings during the six months ended June 30, 2012. The fair value of the warrants was calculated using the Black-Scholes Merton Model (“Black-Scholes Model”).
At June 30, 2012, a gain of $296,519, with respect to outstanding options, was recognized in earnings during the six months ended June 30, 2012. The fair value of the options was calculated using the Black-Scholes Model.
Interest Income and Expense
For the six months ended June 30, 2012, the Company recorded interest expense of $6.44 million ($3.49 million non-cash) related to the Senior Loan. The amortization of debt issuance cost related to the Senior Loan was included in interest expense.
For the six months ended June 30, 2012, the Company recorded interest income in the amount of $10,673.
Income Tax
At June 30, 2012, the Company had estimated an income tax liability of $2.48 million relating to taxable gains resulting from the sale of its oil and gas properties. The estimated income tax liability was curtailed from the $6.5 million to $8.1 million liability range provided at the Company’s Special Meeting due to updated information including but not limited to, 2012 estimated tax losses and alternative minimum tax adjustments. Further, the difference between the federal tax statutory rate of 35% and the effective tax rate of 7.9% was due to the tax liability being offset by deferred tax assets related to the net operating loss carryforwards that were previously subject to full valuation allowance.
Liquidity and Capital Resources
The Winding Up and the dissolution and liquidation of Legacy contemplates the orderly disposition of the assets, the orderly discharge of all outstanding liabilities, including all outstanding debt, and after the establishment of appropriate reserves, the distribution of cash to shareholders in installments.
Upon completion of the disposition of all remaining assets of Legacy and the settlement of all liabilities of the Company and Legacy, the Company will distribute the net proceeds of the liquidation and dissolution of both Legacy and the Company to Shareholders. NiMin’s wholly-owned subsidiary, Legacy Energy, Inc., a Delaware company, dissolved in accordance with the laws of Delaware on September 17, 2012.
The Board declared an initial distribution to Shareholders of $1.01 per Common Share in connection with the Winding Up of NiMin. The distribution was made as a return of capital to Shareholders of record at the close of business on October 9, 2012. The distribution was paid on October 22, 2012.
The amount and timing of any subsequent distributions to shareholders will depend on a number of factors, several of which cannot be determined at this time, including the ultimate amount of our known, unknown, and contingent liabilities. As a result, the amount of cash remaining following completion of our liquidation and dissolution could vary from our current estimates.
Overall net assets in liquidation decreased from $7,836,918 at December 31, 2012, to $5,765,523 at September 30, 2013. The decrease primarily resulted from changes in liquidation accruals related to professional fees of $1,446,598, asset retirement obligations of $339,341, and adjustments to other liquidation accruals of $236,855. The Company is awaiting the tax clearance from the Canada Revenue Agency. The remaining decrease in net assets related to uncollectable accounts receivable of $28,689 and foreign exchange adjustments of $19,912 during the nine month period.
22
On May 6, 2013, the Company received a refund for U.S. income taxes of $327,174 resulting from an overpayment of income taxes in 2012. The Company generated additional net operating losses during the nine months ended September 30, 2013, but deferred tax assets have been recorded at their net realizable value of $0 under the liquidation basis of accounting.
The numbers reflected in the statement of net assets and the estimated $0.08 net assets in liquidation per outstanding share include management estimates made as of September 30, 2013, for the next four months, the estimated remaining period for dissolution. They do not necessarily reflect the final dollars that may be available to the Company for distribution to Shareholders. Any distribution amounts can only be calculated upon completion of all the dispositions, discharges and determinations of reserves.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements during the nine months ended September 30, 2013.
Critical Accounting Policies and Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a detailed discussion of our critical accounting policies, please refer to our Annual Report. The Company adopted the liquidation basis of accounting effective June 30, 2012. This basis of accounting is considered appropriate when, among other things, liquidation of a company is imminent and the net realizable values of assets are reasonably determinable. Under this basis of accounting, assets are valued at their net realizable values and liabilities are stated at their estimated settlement amounts. The Company will continue to incur operating costs from September 30, 2013, through the liquidation of the Company. On a regular basis, we evaluate our assumptions, judgments and estimates that can have a significant impact on our reported net assets in liquidation based on the most recent information available to us, and when necessary make changes accordingly. Actual costs and income may differ from our estimates, which might reduce net assets available in liquidation to be distributed to shareholders.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity Price Risk
Our primary market risk was market changes in oil and natural gas prices. Commodity prices for crude oil and natural gas were impacted by world economic events that dictate the levels of supply and demand. During the year ended December 31, 2011, we entered into swap contracts to minimize the variability in cash flows due to price movements in crude oil (See Item 2 – “MD&A – Crude Oil and Derivative Contracts”).
During the second quarter of 2012, the Company terminated and settled all derivative contracts as of May 17, 2012, and at September 30, 2013, did not carry derivative contracts on the balance sheet.
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| ITEM 4. | CONTROLS AND PROCEDURES |
| | (a) | Disclosure Controls and Procedures |
Our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) conducted an evaluation regarding the effectiveness of the design and operation of the Company’s disclosure control and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 (“Exchange Act”) as of the end of the period covered by this quarterly Report on Form 10-Q.
Based on the evaluation, management concluded that as of September 30, 2013, the Company’s disclosure controls and procedures continue to be ineffective because of the material weaknesses as described in Management’s Report on Internal Control over Financial Reporting in our annual report on Form 10-K for the year ended December 31, 2012, as amended from time to time, and filed with the SEC on March 11, 2013.
| | (b) | Changes in Internal Control Over Financial Reporting |
There were no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2013, that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
The amount and timing of the final liquidating distribution to our Shareholders are subject to risks. These risks include those described below and may include additional risks and uncertainties not presently known to us. The amount and timing of the final liquidating distribution to our Shareholders could be materially adversely affected by any of these risks. These risks should be read in conjunction with the other information in this Quarterly Report.
The final liquidating distribution to Shareholders may be less than we currently estimate. In this Quarterly Report, we have estimated our net assets in liquidation and our net assets in liquidation per outstanding share, pursuant to requirements for liquidation accounting. These estimates will be affected by factors which may be outside of our control, including unforeseen contingent liabilities arising out of the sale of our properties or the previous conduct of our business and expenses we incur prior to the liquidation and dissolution of the Company. We have accrued for various expenses including professional fees and other costs related to the liquidation, and in the event the Company is not dissolved within the timeframe we have estimated, or if we encounter unforeseen circumstances that increase these fees and costs from our current estimates, the amount available for distribution to Shareholders will be less.
The dissolution of the Company could take longer than we currently anticipate. Before the Company can be dissolved, the Board will need to make provision for the satisfaction of all of the Company’s known and unknown liabilities, the Company will need to obtain tax clearance in Canada, and all of the Company’s remaining assets will need to be liquidated. If any of these actions take longer than anticipated, the Company’s costs could increase, which would decrease the amount of cash available for distribution, and could delay or limit the Company’s ability to make the final distribution to Shareholders.
Following the completion of the sale of our Wyoming Assets and our California Assets, we have no other material oil and gas properties. We currently lease our office space, through the final dissolution of NiMin.
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We are not aware of any claims which could have a material impact to our financial statements, and we do not know of any material proceedings contemplated by governmental authorities. We are not aware of any material proceedings to which any director, officer or any of our affiliates, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, our affiliates, or security holder, is a party adverse to us or our consolidated subsidiary or has a material interest adverse to us or our consolidated subsidiary.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not Applicable.
None.
| | |
EXHIBITS | | |
| |
| 31.1 | | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| |
| 31.2 | | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| |
| 32.1 | | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NIMIN ENERGY CORP.
(Registrant)
| | | | | | |
| Dated: November 12, 2013 | | | | | | By: /s/ Clarence Cottman III |
| | | | | | Clarence Cottman III |
| | | | | | Chief Executive Officer |
| | | |
| | | | | | By: /s/ Jonathan S. Wimbish |
| | | | | | Jonathan S. Wimbish |
| | | | | | Chief Financial Officer |
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