Petroleum Africa
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Friday, August 28, 2015
Hydrocarb Energy Corp. was successful in paying down strategic notes prior to conversion. The company, since January 2015, saw seven different of these strategic notes with varying amounts and conversion terms sold, funded, and disclosed in its SEC filings in an aggregate amount of $1,831,100.
To date approximately 31% of this strategic note balance has been paid off at premiums and expects to fully redeem the remaining strategic convertible debt over the coming few months.
xBeginning earlier this year the company entered into strategic financings using mainly unsecured notes that have rights for conversion into the company’s common stock, which rights generally begin six months after issuance. As a critical liquidity decision, the company accepted such financings with the plan to pay off such notes prior to conversion into the company’s common stock. The financings referred to by the company to be “Strategic Convertible Debt” all have the common feature of having the right to convert into the company’s common stock at a discount to market. A much preferred fixed floor priced conversion was not available at the time. For that reason the goal of the company was established to pay off such debt (at a premium if necessary) prior to any conversions.
Kent Watts, chairman and CEO, stated, “We are approaching full capacity for operations in Galveston Bay after completing the 2014 rework and recompletion program and then solving production facility problems that we encountered earlier in the year. With the rest of our production coming online we expect to realize positive cash flow from operations going forward, despite the weak environment for oil prices. We believe that paying off our Strategic Debt at this time will enhance the market for our common stock and allow us to move forward to fully develop our producing assets, a process that has the potential to at least double our production again from where we are today. Accomplishing that goal would greatly enhance our cash flow and should result in solid net income in the future.”
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