SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
June 8, 2006
BASELINE OIL & GAS CORP.
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(Exact Name of Registrant as Specified in its Charter)
Nevada 333-116890 30-0226902
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State of Commission IRS Employer
Incorporation File Number I.D. Number
20022 Creek Farm, San Antonio, Texas 78259
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Address of principal executive offices
Registrant's telephone number: (210) 481-5177
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.02 Termination of a Material Definitive Agreement
On June 8, 2006, Baseline Oil & Gas Corp. ("we" or the "Company") entered
into a Mutual Termination Agreement (the "Termination Agreement") with Rex
Energy Operating Corp. ("Rex Energy") and certain of its affiliates
(collectively, the "Rex Parties"), pursuant to which we and the Rex Parties
mutually terminated (i) that certain purchase agreement between us dated January
16, 2006 (the "Purchase Agreement") and (ii) that certain stock agreement dated
January 16, 2006 (as amended on March 10, 2006, the "Stock Agreement"). For a
summary of the transactions previously contemplated by the Purchase Agreement
and the Stock Agreement, reference is made to our Report on Form 8-K, filed with
the SEC on January 17, 2006 and our Annual Report on Form 10-KSB filed on March
31, 2006.
Pursuant to the Termination Agreement, a copy of which is filed as Exhibit
99.1 hereto, we have also entered into a Mutual Release Agreement (the "Release
Agreement") and a Mutual Non-Disparagement Agreement (the "Non-Disparagement
Agreement") with the Rex Parties, copies of which are filed as Exhibits 99.2 and
99.3, respectively, hereto.
Pursuant to the Termination Agreement, the Rex Parties surrendered for
cancellation, 12,069,250 shares of our common stock, previously issued to them
pursuant to the Stock Agreement. After giving effect to the cancellation of such
shares, we have 30,271,818 shares of common stock outstanding as of the date
hereof and options, warrants and convertible promissory notes to purchase up to
an additional 19,871,590 shares of our common stock. Pursuant to the Release
Agreement, we and the Rex Parties have agreed to release and hold each other
harmless from all Claims stemming from Controversies (each as defined in the
Release Agreement) arising out of our dealings with one another.
Nothing in the Termination Agreement, the Release Agreement or the
Non-Disparagement Agreement effects our rights with respect to the New
Albany-Indiana, LLC, a Delaware limited liability company in which we own a 50%
non-managed membership interest ("New Albany"). As previously disclosed, New
Albany holds an undivided 48.75% working interest (40.7% net revenue interest)
in (i) certain oil, gas and mineral leases covering approximately 80,000 acres
in the State of Indiana and (ii) all of the rights of Aurora Energy Ltd.
("Aurora") under a certain Farmout Agreement with a third party. In addition,
New Albany holds an option from Aurora, exercisable by New Albany until August
1, 2007, to acquire a fifty percent (50%) working interest in any and all
acreage leased or acquired by Aurora or its affiliates in additional counties in
Indiana (currently estimated to be 50,000 acres), at a fixed price of $25 per
acre. New Albany also holds a 45% working interest in certain oil, gas and
mineral leases acquired from Source Rock Resources, Inc., covering approximately
21,000 acres in Knox and Sullivan Counties in Indiana, which the Company
believes contain New Albany Shale formation stratum. The Rex Parties continue to
own the other 50% membership interest in New Albany, and Rex Energy Wabash, LLC
is the managing member of New Albany and manages its day-to-day operations.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
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99.1 Mutual Termination Agreement dated June 8, 2006
99.2 Mutual Release Agreement dated June 8, 2006
99.3 Mutual Non-Disparagement Agreement dated June 8, 2006
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 8, 2006
BASELINE OIL & GAS CORP.
By: /s/ Barrie M. Damson
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Barrie M. Damson
Chairman & CEO
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Exhibit Index
Exhibit No. Description
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99.1 Mutual Termination Agreement dated June 8, 2006
99.2 Mutual Release Agreement dated June 8, 2006
99.3 Mutual Non-Disparagement Agreement dated June 8, 2006
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