UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): September 18, 2012 (September 17, 2012)
 
CARBON NATURAL GAS COMPANY
(Exact name of registrant as specified in charter)
 
Delaware
 
000-02040
 
26-0818050
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
1700 Broadway, Suite 1170, Denver, Colorado
 
80290
(Address of principal executive offices)
 
(Zip code)
 
(720) 407-7043
(Registrant's telephone number including area code)
 
 
 
(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):
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 

 

 
Section 1
Registrant’s Business and Operations
 
Item 1.01
Entry Into a Material Definitive Agreement.

On September 17, 2012, Nytis Exploration Company LLC (“Nytis LLC”), a Delaware limited liability company (and subsidiary of the registrant, Carbon Natural Gas Company, a Delaware corporation (“Carbon”)), entered into a Participation Agreement (the “Participation Agreement”) with Liberty Energy LLC (“Liberty”), a Massachusetts limited liability company that will permit Liberty to participate with Nytis LLC in the drilling and completion of wells on certain of Nytis LLC’s leases located in Kentucky.

Pursuant to the Participation Agreement, Liberty paid to Nytis LLC an initial payment of $3,655,553.  Upon this initial payment, Nytis LLC assigned to Liberty a forty percent (40%) working interest in the covered leases.  In addition to the initial payment, Liberty will carry a greater percentage of the costs associated with the first 20 wells drilled under the Participation Agreement subject to a maximum cap for any individual well as well as a maximum cap for the first 20 wells in the aggregate.  Liberty has committed to participate in the first ten (10) wells on the basis described above and may elect to participate in the following ten (10) wells in two groups of five (5) on that same basis.  Following the drilling of these initial 20 wells, the parties will pay their respective costs on an unpromoted basis.

Should Liberty decide not to participate in all 20 of the initial wells on this basis, it will re-assign the 40% working interest for the properties in which it does not participate and will retain a 40% working interest in the approved spacing units associated with only those wells in which it did so participate.  If Liberty does participate fully in the first 20 wells then it will have no further re-assignment obligations and hold its 40% working interest in all of the leases and the parties will continue to develop these oil and gas interests on an unpromoted basis pursuant to an industry-standard joint operating agreement.

Forward-Looking Statements

This Current Report on Form 8-K may contain certain “forward-looking” statements, as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, in connection with the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements.

Such forward-looking statements include statements about our expectations, beliefs or intentions regarding actions contemplated by or described in this Current Report, our potential business, financial condition, results of operations, strategies or prospects.  You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made and are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” or “will,” and similar expressions or variations. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. Furthermore, such forward-looking statements speak only as of the date of this Current Report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
 
 
 
 

 

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, hereunto duly authorized.
 
 
 
CARBON NATURAL GAS COMPANY
 
   
/s/ Patrick R. McDonald
 
 
Patrick R. McDonald,
President and CEO
Dated:  September 18, 2012