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EX-32.2 - EXHIBIT 32.2 - AgEagle Aerial Systems Inc.v451806_ex32-2.htm
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EX-31.1 - EXHIBIT 31.1 - AgEagle Aerial Systems Inc.v451806_ex31-1.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2016

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 000-30234

 

 

 

ENERJEX RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   88-0422242
(State or other jurisdiction of incorporation or   (I.R.S. Employer Identification No.)
organization)    
     
4040 Broadway    
Suite 508    
San Antonio, Texas   78209
(Address of principal executive offices)   (Zip Code)

 

(210) 451-5545
(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 (§232.405 of this chapter) 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 the 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  ¨  (Do not check if a smaller reporting company)   Smaller reporting company  x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes    ¨      No     x 

 

The number of shares of Common Stock, $0.001 par value, outstanding on November 14, 2016 was 8,423,936 shares.

 

 

 

 

ENERJEX RESOURCES, INC.

FORM 10-Q

TABLE OF CONTENTS

 

    Page
PART I     FINANCIAL STATEMENTS  
ITEM 1. FINANCIAL STATEMENTS 2
  Condensed Consolidated Balance Sheets at September 30, 2016 (Unaudited) and December 31, 2015 2
  Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (Unaudited) 3
  Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (Unaudited) 4
  Notes to Condensed Consolidated Financial Statements (Unaudited) 5
  FORWARD-LOOKING STATEMENTS 10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 20
ITEM 4. CONTROLS AND PROCEDURES 20
     
PART II    OTHER INFORMATION  
ITEM 1. LEGAL PROCEEDINGS 21
ITEM 1A. RISK FACTORS 21
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 21
ITEM 4. MINE SAFETY DISCLOSURES 21
ITEM 5. OTHER INFORMATION 22
ITEM 6. EXHIBITS 22
     
SIGNATURES 24

 

i 

 

 

PART 1 – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

EnerJex Resources, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

 

   September 30,   December 31, 
   2016   2015 
   (Unaudited)     
Assets          
Current assets:          
Cash and cash equivalents  $862,968   $3,101,682 
Accounts receivable   820,653    977,488 
Derivative receivable   81,546    2,531,401 
Inventory   226,132    144,327 
Marketable securities   210,990    210,990 
Deposits and prepaid expenses   323,586    247,325 
Total current assets   2,525,875    7,213,213 
Non-current assets:          
Fixed assets, net of accumulated depreciation of $1,770,469 and $1,658,073   2,125,888    1,995,010 
Oil and gas properties using full-cost accounting, net of accumulated DD&A of $15,135,312 and $14,935,386   4,079,212    11,706,939 
Other non-current assets   828,916    919,239 
Total non-current assets   7,034,016    14,621,188 
Total assets  $9,559,891   $21,834,401 
Liabilities and Stockholders’ Deficit          
Current liabilities:          
Accounts payable  $380,649   $1,142,842 
Accrued liabilities   770,904    1,131,057 
Current portion of long term debt   17,925,000    1,986,660 
Total current liabilities   19,076,553    4,260,559 
Asset retirement obligation   3,257,821    3,091,478 
Long-term debt   -    16,625,000 
Other long-term liabilities   2,521,542    390,937 
Total non-current liabilities   5,779,363    20,107,415 
Total liabilities   24,855,916    24,367,974 
Commitments & Contingencies          
Stockholders’ Deficit:          
10% Series A Cumulative Perpetual Redeemable Preferred Stock, $0.001 par value, 25,000,000 shares authorized; 938,248 shares issued and outstanding September 30, 2016 and December 31, 2015   938    938 
Series B Convertible Preferred stock, $0.001 par value, 1,764 shares authorized, issued and outstanding at September 30, 2016 and December 31, 2015   2    2 
Common stock, $0.001 par value, 250,000,000  shares authorized; shares issued and outstanding 8,423,936  at September 30, 2016 and December 31, 2015   8,424    8,424 
Paid-in capital   69,066,228    68,848,944 
Accumulated deficit   (84,371,617)   (71,391,881)
Total stockholder’s deficit   (15,296,025)   (2,533,573)
Total liabilities and stockholders’ deficit  $9,559,891   $21,834,401 

 

See Notes to Condensed Consolidated Financial Statements (unaudited).

 

 

 2 

 

 

EnerJex Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2016   2015   2016   2015 
                 
Oil revenues  $454,825   $943,597   $1,581,972   $3,822,466 
Natural gas revenues   18,929    85,793    43,461    290,246 
Total revenues   473,754    1,029,390    1,625,433    4,112,712 
                     
Expenses:                    
Direct operating costs   569,109    859,688    1,916,774    3,308,069 
Depreciation, depletion and  amortization   63,644    112,288    312,322    1,200,521 
Impairment of oil and gas asset   800,000    9,720,983    7,444,597    37,543,972 
Professional fees   43,968    136,464    181,086    487,287 
Salaries   297,244    471,756    1,044,639    1,485,515 
Administrative expense   124,090    95,700    435,616    525,733 
Total expenses   1,898,055    11,396,879    11,335,034    44,551,097 
Loss from operations   (1,424,301)   (10,367,489)   (9,709,601)   (40,438,385)
                     
Other income (expense):                    
Interest expense   (339,719)   (306,933)   (1,001,937)   (937,638)
Gain (loss) on derivatives   (68,459)   941,076    (2,449,855)   (1,234,573)
Other income   138,075    787,526    2,312,261    2,998,869 
Total other income (expense)   (270,103)   1,421,669    (1,139,531)   826,658 
Net loss  $(1,694,404)  $(8,945,820)  $(10,849,132)  $(39,611,727)
                     
Net loss  $(1,694,404)  $(8,945,820)  $(10,849,132)  $(39,611,727)
Preferred dividends  $(860,061)  $(586,404)  $(2,130,604)  $(1,602,806)
Net loss attributable to common stockholders  $(2,554,465)  $(9,532,224)  $(12,979,736)  $(41,214,533)
Net loss per share basic and diluted  $(.30)  $(1.13)  $(1.54)  $(5.02)
Weighted average shares   8,423,936    8,424,146    8,423,936    8,212,396 

  

See Notes to Condensed Consolidated Financial Statements (unaudited).

 

 3 

 

 

EnerJex Resources, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

   For the Nine Months Ended 
   September 30, 
   2016   2015 
Cash flows from operating activities          
Net loss  $(10,849,132)  $(39,611,727)
Depreciation, depletion and amortization   312,322    1,200,521 
Impairment of oil and gas assets   7,444,597    37,543,972 
Deferred financing costs   90,323    63,159 
Stock, options and warrants issued for services   217,283    314,965 
Accretion of asset retirement obligation   169,110    206,397 
Settlement of asset retirement obligation   (2,767)   (2,244)
Loss on derivatives   2,449,855    1,626,112 
Loss on sale of fixed assets   -    13,661 
Adjustments to reconcile net loss to cash used in operating activities:          
Accounts receivable   156,835    256,051 
Inventory   (81,805)   13,528 
Prepaid expenses   (76,261)   (112,333)
Accounts payable   (762,193)   (2,260,800)
Accrued liabilities   (360,153)   66,988 
Cash flows used in operating activities   (1,291,986)   (681,750)
           
Cash flows from investing activities          
Additions to fixed assets   (243,274)   (7,568)
Additions to oil and gas properties   (16,794)   (221,524)
Proceeds from the sale of oil and gas properties        2,867,303 
Proceeds from the sale of fixed assets        33,142 
Proceeds from the liquidation of marketable securities        1,360,172 
Cash flows (used in) provided by investing activities   (260,068)   4,031,525 
           
Cash flows from financing activities          
Repayments of debt   (686,660)   (4,487,692)
Proceeds from borrowings        500,000 
Proceeds from sale of preferred stock        4,668,816 
Dividends paid on preferred stock        (1,602,806)
Cash flows provided by financing activities   (686,660)   (921,682)
           
Net (decrease) increase in cash   (2,238,714)   2,428,093 
Cash – beginning   3,101,682    805,524 
Cash – ending  $862,968   $3,233,617 
           
Supplemental disclosures:          
Interest paid  $919,089   $462,160 
Income taxes paid  $-   $- 
           
Non-cash transactions:          
Share based payments issued for services  $217,283   $314,965 

 

See Notes to Condensed Consolidated Financial Statements (unaudited). 

 

 4 

 

EnerJex Resources, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

 

Note 1 – Basis of Presentation

 

The unaudited condensed consolidated financial statements of EnerJex Resources, Inc. (“we”, “us”, “our”, “EnerJex” and “Company”) have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation.  All such adjustments are of a normal recurring nature.  The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year.  Certain amounts in the prior year statements have been reclassified to conform to the current year presentations.  The statements should be read in conjunction with the financial statements and footnotes thereto included in our Annual Report Form 10-K for the fiscal year ended December 31, 2015.

  

Our consolidated financial statements include the accounts of our wholly-owned subsidiaries, EnerJex Kansas, Inc., Black Sable Energy, LLC, Working Interest, LLC and Black Raven Energy, Inc. for the three and nine month periods ended September 30, 2016 and for the year ended December 31, 2015. All intercompany transactions and accounts have been eliminated in consolidation.

 

Note 2 – Going Concern

 

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

 

On October 3, 2011, the Company, entered into an Amended and Restated Credit Agreement with Texas Capital Bank, and other financial institutions and banks (“TCB” or “Bank”) that may become a party to the Credit Agreement from time to time. The facilities provided under the Amended and Restated Credit Agreement was to be used to refinance a prior outstanding revolving loan facility with TCB dated July 3, 2008, and for working capital and general corporate purposes. On August 15, 2014 the Company entered into an Eighth Amendment to the Amended and Restated Credit Agreement. Among other things the Eighth Amendment extended the maturity of the Agreement by three years to October 3, 2018. On August 12, 2015, the Company entered into a Tenth Amendment to the Amended and Restated Credit Agreement. Among other things the Tenth Amendment established the requirement of monthly borrowing base reductions commencing September 1, 2015 and continuing on the first of each month thereafter. On November 13, 2015, the Company entered into a Eleventh Amendment to the Amended and Restated Credit Agreement. The Eleventh Amendment reflects the following changes: (i) waived certain provisions of the Credit Agreement, (ii) suspend certain hedging requirements, and (iii) to make certain other amendments to the Credit Agreement.

 

On April 1, 2016 the Company informed the Bank that it would cease making the mandatory monthly borrowing base reduction payments and did not make the required April 1, 2016 payment. The Company made its mandatory quarterly interest payment on April 6, 2016 and on April 7, 2016 entered into a Forbearance Agreement whereby the Bank agreed to not exercise remedies and rights afforded it under the Amended and Restated Credit Agreement for thirty days. On May 31, 2016, the Company and the Bank amended to the Forbearance Agreement to extend the forbearance period to August 31, 2016. On July 29, 2016, the Company and the Bank entered into a Third Forbearance Agreement which extended the forbearance period to October 1, 2016. Upon the expiration of the Third Forbearance agreement, the Company did not enter into a fourth Forbearance Agreement. Also, at that time the Company discontinued payment of interest on its outstanding loan obligations with the Bank.

 

The Company is evaluating plans to restructure, amend or refinance existing debt through private options. However, if the Company is not able to restructure, amend or refinance its existing debt, the debt is due and payable and the Company does not have sufficient liquidity to repay those amounts. In that event, if the Company is unable to reach an agreement with the Bank, the Company could be required to immediately file for protection under Chapter 11 of the U.S. Bankruptcy Code.

 

As shown in the accompanying unaudited condensed consolidated financial statements, the Company has incurred losses in 2015 and 2016, also generating negative cash flows from operating activities. As of September 30, 2016, the Company had an accumulated deficit of $84,371,617 and a working capital deficit (total current liabilities exceeded total current assets) of $16,550,678.  The Company’s cash balance and revenues generated are not currently sufficient and cannot be projected to cover operating expenses for the next twelve months from the filing date of this report.

 

These factors raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 5 

 

Note 3 – Stock Options

 

A summary of stock options is as follows: 

 

   Options   Weighted
Avg.
Exercise
Price
   Warrants   Weighted
Avg.
Exercise
Price
 
Outstanding December 31, 2015   288,331   $10.17    1,904,286   $2.75 
Granted   -    -    -    - 
Cancelled   -    -    -    - 
Exercised   -    -    -    - 
Outstanding September 30, 2016   288,331   $10.17    1,904,286   $2.75 

 

Note 4 – Fair Value Measurements

 

We hold certain financial assets which are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“ASC Topic 820-10”). ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

 

Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. 

 

Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. We consider the derivative liability to be Level 2. We determine the fair value of the derivative liability utilizing various inputs, including NYMEX price quotations and contract terms.

 

Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider our marketable securities to be Level 3

 

Our derivative instruments consist of fixed price commodity swaps and deferred premium puts.

 

   Fair Value Measurement 
   Level 1   Level 2   Level 3 
Crude oil contracts  $-   $81,546   $- 
Marketable Securities  $-   $-   $210,990 

 

 6 

 

Note 5 – Asset Retirement Obligation

 

Our asset retirement obligations relate to the liabilities associated with the abandonment of oil and natural gas wells. The amounts recognized are based on numerous estimates and assumptions, including future retirement costs, inflation rates and credit adjusted risk-free interest rates. The following shows the changes in asset retirement obligations:

 

Asset retirement obligations, December 31, 2015  $3,091,478 
Liabilities settled during the period   (2,767)
Accretion   169,110 
Asset retirement obligations, September 30, 2016  $3,257,821 

 

Note 6 – Derivative Instruments

 

We have entered into certain derivative or physical arrangements with respect to portions of our crude oil production to reduce our sensitivity to volatile commodity prices and/or to meet hedging requirements under our Credit Facility. We believe that these derivative arrangements, although not free of risk, allow us to achieve a more predictable cash flow and to reduce exposure to commodity price fluctuations. However, derivative arrangements limit the benefit of increases in the prices of crude oil. Moreover, our derivative arrangements apply only to a portion of our production.

 

We have an Inter-creditor Agreement in place between us, our counterparties, BP Corporation North America, Inc. (“BP”) and our agent Texas Capital Bank, N.A., which allows Texas Capital Bank to also act as agent for the counterparties for the purpose of holding and enforcing any liens or security interests resulting from our derivative arrangements. Therefore, we are not required to post additional collateral, including cash.

 

The following derivative contract was in place at September 30, 2016:

 

   Term  Monthly Volumes  Price/Bbl   Fair Value 
Deferred premium put  10/16-12/16   5,000 Bbls  $60.00   $81,546 

 

Monthly volume is the weighted average throughout the period.

 

The total fair value of the derivative contract is shown as a derivative receivable in both the current and non-current sections of the balance sheet. 

 

Note 7 – Long-Term Debt

 

Senior Secured Credit Facility

 

On October 3, 2011, the Company and DD Energy, Inc., EnerJex Kansas, Inc., Black Sable Energy, LLC and Working Interest, LLC (“Borrowers”) entered into an Amended and Restated Credit Agreement with Texas Capital Bank, N.A. (the “Bank”) and other financial institutions and banks that may become a party to the Credit Agreement from time to time. The facilities provided under the Amended and Restated Credit Agreement were used to refinance Borrowers’ prior outstanding revolving loan facility with Bank, dated July 3, 2008, and for working capital and general corporate purposes. 

 

At our option, loans under the facility will bear stated interest based on the Base Rate plus Base Rate Margin, or Floating Rate plus Floating Rate Margin (as those terms are defined in the Credit Agreement). The Base Rate will be, for any day, a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 0.50% and (b) the Bank’s prime rate. The Floating Rate shall mean, at Borrower’s option, a per annum interest rate equal to (i) the Eurodollar Rate plus Eurodollar Margin, or (ii) the Base Rate plus Base Rate Margin (as those terms are defined in the Amended and Restated Credit Agreement). Eurodollar borrowings may be for one, two, three, or nine months, as selected by the Borrowers. The margins for all loans are based on a pricing grid ranging from 0.00% to 0.75% for the Base Rate Margin and 2.25% to 3.00% for the Floating Rate Margin based on the Company’s Borrowing Base Utilization Percentage (as defined in the Amended and Restated Credit Agreement). 

 

On December 15, 2011, we entered into a First Amendment to Amended and Restated Credit Agreement and Second Amended and Restated Promissory Note in the amount of $50,000,000 with the Bank. The Amendment reflected the addition of Rantoul Partners as an additional Borrower and added as additional security for the loans the assets held by Rantoul Partners. 

 

On August 31, 2012, we entered into a Second Amendment to Amended and Restated Credit Agreement with the Bank. The Second Amendment: (i) increased our borrowing base to $7,000,000, (ii) reduced the minimum interest rate to 3.75%, and (iii) added additional new leases as collateral for the loan. 

 

 7 

 

On November 2, 2012, we entered into a Third Amendment to Amended and Restated Credit Agreement with the Bank. The Third Amendment (i) increased our borrowing base to $12,150,000, and (ii) clarified certain continuing covenants and provided a limited waiver of compliance with one of the covenants so clarified for the quarter ended December 31, 2011. 

 

On January 24, 2013, we entered into a Fourth Amendment to Amended and Restated Credit Agreement, which was made effective as of December 31, 2012 with the Bank.  The Fourth Amendment reflects the following changes: (i) the Bank consented to the restructuring transactions related to the dissolution of Rantoul Partners, and (ii) the Bank terminated a Limited Guaranty, as defined in the Credit Agreement, executed by Rantoul Partners in favor of the Bank. 

 

On April 16, 2013, the Bank increased our borrowing base to $19.5 million. 

 

On September 30, 2013, we entered into a Fifth Amendment to the Amended and Restated Credit Agreement.  The Fifth Amendment reflects the following changes:  (i) an expanded principal commitment amount of the Bank to $100,000,000, (ii) an increase in our Borrowing Base to $38,000,000, (iii) the addition of Black Raven Energy, Inc. to the Credit Agreement as a borrower party, (iv) the addition of certain collateral and security interests in favor of the Bank, and (v) the reduction of our current interest rate to 3.30%.   

 

On November 19, 2013, we entered into a Sixth Amendment to the Amended and Restated Credit Agreement. The Sixth Amendment reflects the following changes: (i) the addition of Iberia Bank as a participant in our credit facility, and (ii) a technical correction to our covenant calculations.

 

On May 22, 2014, we entered into a Seventh Amendment to the Amended and Restated Credit Agreement. The Seventh Amendment reflects the Bank’s consent to our issuance of up to 850,000 shares of our 10% Series A Cumulative Perpetual Preferred Stock.

 

On August 15, 2014, we entered into an Eighth Amendment to the Amended and Restated Credit Agreement. The Eighth Amendment reflects the following changes: (i) the borrowing base was increased from $38 million to $40 million, and (ii) the maturity of the facility was extended by three years to October 3, 2018.

 

 On April 29, 2015, we entered into a Ninth Amendment to the Amended and Restated Credit Agreement. In the Ninth Amendment, the Banks (i) re-determined the Borrowing Base based upon the recent Reserve Report dated January 1, 2015, (ii) imposed affirmative obligations on the Company to use a portion of proceeds received with regard to future sales of securities or certain assets to repay the loan, (iii) consented to non-compliance by the Company with certain terms of the Credit Agreement, (iv) waived certain provisions of the Credit Agreement, and (v) agreed to certain other amendments to the Credit Agreement.

 

On May 1, 2015, the Borrowers and the Banks entered into a Letter Agreement to clarify that up to $1,000,000 in proceeds from any potential future securities offering will be unencumbered by the Banks’ Liens as described in the Credit Agreement through November 1, 2015, and that, until November 1, 2015, such proceeds shall not be subject to certain provisions in the Credit Agreement prohibiting the Company from declaring and paying dividends that may be due and payable to holders of securities issued in such potential offerings or issued prior to the Letter Agreement.

 

On August 12, 2015, we entered into a Tenth Amendment to the Amended and Restated Credit Agreement. The Tenth Amendment reflects the following changes: (i) allow the Company to sell certain oil assets in Kansas, (ii) allow for approximately $1,300,000 of the proceeds from the sale to be reinvested in Company owned oil and gas projects and (iii) apply not less than $1,500,000 from the proceed of the sale to outstanding loan balances.

 

On November 13, 2015, the Company entered into a Eleventh Amendment to the Amended and Restated Credit Agreement. The Eleventh Amendment reflects the following changes: (i) waived certain provisions of the Credit Agreement, (ii) suspend certain hedging requirements, and (iii) to make certain other amendments to the Credit Agreement.

  

Our current borrowing base is $17,925,000 of which we had borrowed $17,925,000 as of September 30, 2016. At September 30, 2016 and at December 31, 2015 the interest rate on amounts borrowed under our credit facility was approximately 5.5% and 4.3% respectively. This facility expires on October 3, 2018. 

  

On April 1, 2016 the Company informed the Bank that it would cease making the mandatory monthly borrowing base reduction payments and did not make the required April 1, 2016 payment. The Company made its mandatory quarterly interest payment on April 6, 2016 and on April 7, 2016 entered into a Forbearance Agreement whereby the Bank agreed to not exercise remedies and rights afforded it under the Amended and Restated Credit Agreement for thirty days. On May 31, 2016, the Company and the Bank amended the Forbearance Agreement to extend the forbearance period to August 31, 2016. On July 29, 2016, the Company and the Bank entered into a Third Forbearance Agreement which extended the forbearance period to October 1, 2016. Upon the expiration of the Third Forbearance agreement, the Company did not enter into a fourth Forbearance Agreement. Also, at that time the Company discontinued payment of interest on its outstanding loan obligations with the Bank.

 

The Company is evaluating plans to restructure, amend or refinance existing debt through private options. However, if the Company is not able to restructure, amend or refinance its existing debt, the debt is due and payable and the Company does not have sufficient liquidity to repay those amounts. In that event, if the Company is unable to reach an agreement with the Bank, the Company could be required to immediately file for protection under Chapter 11 of the U.S. Bankruptcy Code.

 

 8 

 

 

Note 8 – Commitments & Contingencies

 

As of September 30, 2016 the Company had an outstanding irrevocable letter of credit in the amount of $50,000 issued in favor of the Texas Railroad Commission. The letter of credit is required by the Texas Railroad Commission for all companies operating in the state of Texas with production greater than limits they prescribe.

 

Rent expense for the nine months ended September 30, 2016 and 2015 was approximately $104,000 and $112,000 respectively. Future non-cancellable minimum lease payments are approximately $35,000 for the remainder of 2016, $145,000 for 2017, $90,000 for 2018 and $77,000 for 2019. 

 

Note 9 – Impairment of Oil and Gas Properties

 

Pursuant to full cost accounting rules, the Company must perform a ceiling test each quarter on its proved oil and natural gas assets within each separate cost center. All of the Company’s costs are included in one cost center as all of the Company’s operations are located in the United States. The Company’s ceiling test was calculated using trailing twelve-month, unweighted-average first-day-of-the-month prices for oil and natural gas as of September 30, 2016, which were based on a West Texas Intermediate oil price of $41.97 per Bbl and a Henry Hub natural gas price of $2.39 per Mcf (adjusted for basis and quality differentials), respectively. This test resulted in a pre-tax write-down of $800,000 for the quarter ended September 30, 2016 and $7,444,597 for the nine month period ended September 30, 2016. In 2015 the Company recorded pre –tax write-downs of approximately $48.9 million. Additional material write-downs of the Company’s oil and gas properties could occur in subsequent quarters in the event that oil and natural gas prices remain at current depressed levels, or if the Company experiences significant downward adjustments to its estimated proved reserves.

 

Note 10 – Subsequent Events

  

On October 1, 2016, the Company and the Bank could not reach an agreement to extend the Third Amendment to the Forbearance Agreement. Following this outcome, the Company decided to discontinue payment of interest on its outstanding loan obligations with the Bank. The Company is evaluating plans to restructure, amend or refinance existing debt through private options and is optimistic of a successful outcome. However, it could seek a protected reorganization under chapter 11 of the U.S. federal bankruptcy code.

 

We have reviewed all material events through the date of this report in accordance with ASC 855-10.

 

 9 

 

 

FORWARD-LOOKING STATEMENTS

 

This report contains forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact, contained in this report, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” or “should” or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or elsewhere in this report, which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. The factors impacting these risks and uncertainties include, but are not limited to:

 

  inability to attract and obtain additional development capital;
  inability to achieve sufficient future sales levels or other operating results;
  inability to efficiently manage our operations;
  effect of our hedging strategies on our results of operations;
  potential default under our secured obligations or material debt agreements;
  estimated quantities and quality of oil reserves;
  declining local, national and worldwide economic conditions;
  fluctuations in the price of oil;
  continued weather conditions that impact our abilities to efficiently manage our drilling and development activities;
  the inability of management to effectively implement our strategies and business plans;
  approval of certain parts of our operations by state regulators;
  inability to hire or retain sufficient qualified operating field personnel;
  increases in interest rates or our cost of borrowing;
  deterioration in general or regional economic conditions;
  adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
  the occurrence of natural disasters, unforeseen weather conditions, or other events or circumstances that could impact our operations or could impact the operations of companies or contractors we depend upon in our operations;
  inability to acquire mineral leases at a favorable economic value that will allow us to expand our development efforts;
  adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations; and
  changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate.

 

You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this report. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this report to conform our statements to actual results or changed expectations. For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see "Risk Factors" in this document and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

  

All references in this report to "we," "us," "our," "company" and "EnerJex" refer to EnerJex Resources, Inc. and our wholly-owned operating subsidiaries, EnerJex Kansas, Inc., Black Sable Energy, LLC, Working Interest, LLC, and Black Raven Energy, Inc. unless the context requires otherwise. We report our financial information on the basis of a December 31 st fiscal year end.

 

AVAILABLE INFORMATION

 

We file annual, quarterly and other reports and other information with the SEC.  You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov or on our website at www.enerjex.com .  You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm.  Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at EnerJex Resources, Inc., 4040 Broadway, Suite 508, San Antonio, Texas 78209. 

 

 10 

 

 

INDUSTRY AND MARKET DATA

 

The market data and certain other statistical information used throughout this report are based on independent industry publications, government publications, reports by market research firms or other published independent sources. In addition, some data are based on our good faith estimates.

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes to our financial statements included elsewhere in this report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under ITEM 1A. Risk Factors and elsewhere in this report.

 

Overview

 

Our principal strategy is to acquire, develop, explore and produce domestic onshore oil properties. Our business activities are currently focused in Kansas, Colorado and Texas.

 

We continue to investigate multiple opportunities to both unlock value and accelerate growth in an accretive manner on behalf of shareholders, including but not limited to mergers, acquisitions, joint ventures, and non-dilutive financings. There can be no assurance of the results or timing associated with this process.

 

We have substantially curtailed capital spending in the current commodity price environment. Once the commodity market improves, we intend to focus our capital budget on the development of our Colorado and Kansas properties where we have identified hundreds of drilling locations and reactivation or recompletion opportunities that we believe will generate high rates of return with low risk profiles.

 

Recent Developments

 

The following is a brief description of our most significant corporate developments that have occurred since the end of 2015:

 

On April 1, 2016 the Company informed the Bank that it would cease making the mandatory monthly borrowing base reduction payments and did not make the required April 1, 2016 payment. The Company made its mandatory quarterly interest payments on April 6, 2016, and May 2, 2016. On April 7, 2016 the Company entered into a Forbearance Agreement whereby the Bank agreed to not exercise remedies and rights afforded it under the Amended and Restated Credit Agreement for thirty days. The thirty day period was to be used by the Company to pursue strategic alternatives.

 

On April 28, 2016 the Bank informed the Company that it would extend the above Forbearance Agreement period to May 31, 2016 upon effecting a principal reduction of $125,000. In addition, the Company will receive an automatic extension to September 15, 2016 upon meeting certain terms and conditions specified by the Bank. On May 31, 2016, the Company and the Bank amended to the Forbearance Agreement to extend the forbearance period to August 31, 2016. On July 29, 2016, the Company and the Bank amended the Forbearance Agreement to extend the forbearance period to October 1, 2016.

 

On October 1, 2016, the Company and the Bank could not reach an agreement to extend the Third Amendment to the Forbearance Agreement. Following this outcome, the Company decided to discontinue payment of interest on its outstanding loan obligations with the Bank. The Company is evaluating plans to restructure, amend or refinance existing debt through private options and is optimistic of a successful outcome. However, it could seek a protected reorganization under chapter 11 of the U.S. federal bankruptcy code.

 

 11 

 

 

Net Production, Average Sales Price and Average Production and Lifting Costs

 

The table below sets forth our net oil production (net of all royalties, overriding royalties and production due to others), the average sales prices, average production costs and direct lifting costs per unit of production for the periods ended September 30, 2016 and September 30, 2015.

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2016   2015   2016   2015 
                 
Net Production                    
Oil (Bbl)   14,015    22,346    44,961    84,310 
Natural gas (Mcf)   11,493    50,202    39,692    171,275 
                     
Average Sales Prices                    
Oil (Bbl)  $32.45   $42.23   $35.19   $45.34 
Natural gas (Mcf)  $1.65   $1.71   $1.09   $1.69 
                     
Average Production Cost (1)                    
Per barrel of oil equivalent (“Boe”)  $39.72   $31.65   $43.22   $39.95 
                     
Average Lifting Costs (2)                    
Per Boe  $35.73   $27.99   $37.16   $29.31 

 

  (1) Production costs include all operating expenses, transportation expenses, depreciation, depletion and amortization, lease operating expenses and all associated taxes. Impairment of oil properties is not included in production costs.
  (2) Direct lifting costs do not include impairment expense or depreciation, depletion and amortization.

 

 12 

 

 

Results of Operations for the Three and Nine Months Ended September 30, 2016 and 2015 compared.

 

Income:

 

   Three Months Ended   Increase /   Nine Months Ended   Increase / 
   September 30,   (Decrease)   September 30,   (Decrease) 
   2016   2015   $   2016   2015   $ 
Oil revenues  $454,825   $943,597   $(488,772)  $1,581,972   $3,822,466   $(2,240,494)
Natural gas revenues   18,929    85,793    (66,864)   43,461    290,246    (246,785)
Total  $473,754   $1,029,390   $(555,636)  $1,625,433   $4,112,712   $(2,487,279)

   

Oil Revenues

 

 Oil revenues for the three months ended September 30, 2016 were $454,825 compared to revenues of $943,597 for the three months ended September 30, 2015. Of the revenue decrease of $488,772 approximately $270 thousand was due to lower production volumes. Production decreased in the third quarter of 2016 from 22,346 barrels produced in 2015 to 14,015 barrels produced in 2016. Production decreases in the quarter are primarily the result of depletion and the curtailment of both growth and maintenance capital. Additionally, revenues decreased approximately $218 thousand due to lower crude oil prices. Crude oil prices dropped $9.78 or 23.2% from an average price of $32.45 per barrel for the third quarter of 2016 compared to $42.23 per barrel for the same period in 2015.

 

Oil revenues for the nine months ended September 30, 2016 were $1,581,972 compared to revenues of $3,822,466 for the nine months ended September 30, 2015. Of the revenue decrease of $2,240,494 approximately $1.4 million was due to lower production volumes. Production decreased in the first nine months of 2016 from 84,310 barrels produced in 2015 to 44,961 barrels produced in 2016. Production decreases are the result of depletion, the curtailment of both growth and maintenance capital expenditures, and sale of non-core assets. Additionally, revenues decreased approximately $.8 million due to lower crude oil prices. Crude oil prices dropped $10.15 or 22.4% from an average price of $45.34 per barrel for the first nine months of 2015 compared to $35.19 per barrel for the same period in 2016.

 

Natural Gas Revenues

 

Natural gas revenues for the three months ended September 30, 2016 were $18,929 compared to revenues of $85,793 for the three months ended September 30, 2015. Of the revenue decrease of $66,864 approximately $64,000 was due to lower production volumes. Production decreased in the third quarter 2016 from 50,202 mcf produced in 2015 to 11,493 mcf for the comparable period of 2016. The production decrease was due primarily to depletion of reserves and the curtailment of both growth and maintenance capital expenditures. Additionally, approximately $3 thousand of the revenue decrease was due to lower natural gas prices. Natural gas prices dropped $.06 or 3.6% from an average price of $1.71 per mcf in the third quarter of 2015 to an average price of $1.65 per mcf for the same period of 2016.

 

Natural gas revenues for the nine months ended September 30, 2016 were $43,461 compared to revenues of $290,246 for the nine months ended September 30, 2015. Of the revenue decrease of $246,785 approximately $143 thousand was due to lower production volumes. Production decreased in the first nine months of 2016 from 171,275 mcf in 2015 to 39,692 mcf for the comparable period of 2016. Production decreases are the result of natural depletion and the curtailment of both growth and maintenance capital expenditures. Additionally, revenues declined $104 thousand due to lower natural gas prices. Natural gas prices dropped $.60 or 35.4% from an average price of $1.69 per mcf for the first nine months of 2015 to an average price of $1.09 per mcf for the same period of 2016.

 

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Expenses:

 

   Three Months Ended   Increase /   Nine Months Ended   Increase / 
   September 30,   (Decrease)   September 30,   (Decrease) 
   2016   2015       2016   2015     
Production expenses:                              
Direct operating costs  $569,109   $859,688   $(290,579)  $1,916,774   $3,308,069   $(1,391,295)
Depreciation, depletion and amortization   63,644    112,288    (48,644)   312,322    1,200,521    (888,199)
Impairment of oil & gas properties   800,000    9,720,983    (8,920,983)   7,444,597    37,543,972    (30,099,375)
Total production expenses   1,432,753    10,692,959    (9,260,206)   9,673,693    42,052,562    (32,378,869)
                               
General expenses:                              
Professional fees   43,968    136,464    (92,496)   181,086    487,287    (306,201)
Salaries   297,244    471,756    (174,512)   1,044,639    1,485,515    (440,876)
Administrative expense   124,090    95,700    28,390    435,616    525,733    (90,117)
Total general expenses   465,302    703,920    (238,618)   1,661,341    2,498,535    (837,194)
Total production and general expenses   1,898,055    11,396,879    (9,498,824)   11,335,034    44,551,097    (33,216,063)
                               
(Loss) from operations   (1,424,301)   (10,367,489)   (8,943,188)   (9,709,601)   (40,438,385)   (30,728,784)
                               
Other income (expense)                              
Interest expense   (339,719)   (306,933)   32,786    (1,001,937)   (937,638)   64,299 
Gain (loss) on derivatives   (68,459)   941,076    1,009,535    (2,449,855)   (1,234,573)   1,215,282 
Other income   138,075    787,526    649,451    2,312,261    2,998,869    686,608 
Total other income (expense)   (270,103)   1,421,669    1,691,772    (1,139,531)   826,658    1,966,189 
                               
Net (loss)  $(1,694,404)  $(8,945,820)  $(7,251,416)  $(10,849,132)  $(39,611,727)  $(28,762,595)

 

Direct Operating Costs

 

Direct operating costs include direct labor and equipment costs related to pumping, gauging, pulling, well repairs, compression, transportation costs, and general maintenance requirements in our oil and gas fields. These costs also include certain contract labor costs, and other non-capitalized expenses.

 

Direct operating costs for the three months ended September 30, 2016 decreased $290,579, or 33.8% to $569,109 from $859,688 for the three months ended September 30, 2015. Direct operating costs per boe increased $7.74 or approximately 27.6% in 2016 compared to 2015 at $35.73 per boe and $27.99 per boe respectively.

 

Direct operating costs for the nine months ended September 30, 2016 decreased $1,391,295, or 42.1% to $1,916,774 from $3,308,069 for the nine months ended September 30, 2015. Direct operating costs per boe increased $7.85 or approximately 26.8% in 2016 compared to 2015 at $37.16 per boe and $29.31 per boe respectively.

  

Depreciation, Depletion and Amortization

 

Depreciation, depletion and amortization for the three months ended September 30, 2016 was $63,644 compared to $112,288 for the three months ended September 30, 2015. The decrease in depletion expense of approximately $58,000 is due to a lower per boe depletion rates in 2016 compared to 2015 combined with lower production in 2016 versus 2015. The lower depletion rate resulted from the write-down of oil and gas properties mandated by the Securities and Exchange Commission’s Full Cost Ceiling Test rules (see footnote 9 to the financial statements for a full explanation of the Ceiling Test). Depletion expense per boe decreased $3.09 or 69.6% in the third quarter of 2016 compared to the same period of 2015.

 

Depletion expense decreased approximately $832,000 for the nine months ended September 30, 2016 compared to the first nine months of 2015. This decrease was due primarily to the write-down of oil and gas assets referred to above, resulting in a depletion expense per boe decrease of $5.27 or 57.6% for the first nine months of 2016 compared to the same period of 2015.

 

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Impairment of Oil and Gas Properties

 

Under the full cost method of accounting, capitalized oil and gas property costs less accumulated depletion and net of deferred income taxes may not exceed an amount equal to the sum of the present value, discounted at 10%, of estimated future net revenues from proved oil and gas reserves and the cost of unproved properties not subject to amortization (without regard to estimates of fair value), or estimated fair value, if lower, of unproved properties that are not subject to amortization. Should capitalized costs exceed this ceiling, an impairment expense is recognized.

 

For the three months ended September 30, 2016, we recognized an impairment expense on our evaluated oil and gas properties of $800,000 compared to $9,720,983 for the three months ended September 30, 2015. For the nine months ended September 30, 2016 the write-down was $7,444,597 versus $37,543,972 for the comparable period of 2015.

 

Professional Fees

 

Professional fees for the three months ended September 30, 2016 were $43,968 compared to $136,464 for the three months ended September 30, 2015. The decrease in professional fees of approximately $92,000 was due primarily to reduced spending in 2016 on consultation fees associated with an investor relations consulting groups and reduced legal expenses.

 

For the nine months ended September 30, 2016 professional fees were $181,086 compared to $487,287 for the third quarter of 2015. The decrease in professional fee expenses were due primarily to reduced spending on investor relations, utilization of third party engineering consultants and legal fees.  

 

Salaries

 

Salaries for the third quarter of 2016 decreased 37% from $471,756 in the third quarter of 2015 to $297,244 in the current quarter. Salaries for nine months ended September 30, 2016 decreased $440,876 or 29.7% to $1,044,639 compared to $1,485,515 for the nine months ended September 30, 2015.  These decreases in salaries were due to reductions of Company personnel.

 

Administrative Expenses

 

For the third quarter of 2016 Administrative expense increased $28,390 or 29.7% to $124,090 from $95,700 in the third quarter of 2015. The increase in costs was due primarily to lower G&A reimbursements from a joint venture partner and slightly increased insurance and IT costs.

 

Administrative expenses for the nine months ended September 30, 2016 were $435,616 compared to $525,733 for the nine months ended September 30, 2015. Administrative expenses decreased approximately $90,000 or 17.1% in 2016 due primarily lower SEC related expenditures, lower travel costs, lower rents and diminished expenditures for employee training. These decreases were partially offset by lower reimbursements from a joint venture partner.

 

Interest Expense

 

Interest expense for the third quarter of 2016 was $339,719 compared to $306,933 for the comparable quarter of 2015, an increase of approximately $33,000. Interest expense for the nine months ended September 30, 2016 was $1,001,937 compared to $937,638 for the nine months ended September 30, 2015 an increase of approximately $64,000. Interest expense increased as a result of higher interest rates. This increase was partially offset by decreased outstanding borrowings in 2016 compared to 2015.

 

Gain (Loss) on Derivatives

 

We incurred an unrealized losses of $68,459 in the third quarter of 2016 and $2,449,855 for the nine months ended September 30, 2016 due to the marking to market of our derivative contracts for the quarter and nine months of 2016 compared to an unrealized gain of $941,076 in the third quarter of 2015 and an unrealized loss of $1,234,573 for the nine months ended September 30, 2015. The change in values was due primarily to the completion of contracts during the quarter and nine month period ending September 30, 2016.

 

Other Income

 

Other income decreased $649,451 in the third quarter of 2016 compared to the same period in 2015 and decreased $686,608 for the nine month period ended September 30, 2016 compared to the same period of 2015. These decreases were due primarily to the realization of gains and the concomitant expiration of contracts in our portfolio of derivative contracts for the respective accounting periods.

 

 15 

 

 

Liquidity and Capital Resources

 

Liquidity is a measure of a company's ability to meet potential cash requirements. We have historically met our capital requirements through debt financing, revenues from operations, asset sales, and the issuance of equity securities. Due to the decline in oil prices, the resulting decline in our reserves as reflected in our reserve report which caused a corresponding reduction in our borrowing base, and the recent issuances of equity securities from our "shelf" registration, it will be more difficult in 2016 to use our historical means of meeting our capital requirements to provide us with adequate liquidity to fund our operations and capital program.

 

The Company’s liquidity outlook has continued to decline due to continued low commodity prices. The significant risks and uncertainties described in the Risk Factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

As of the filing date, November 14, 2016, the Company is in default under its credit facility with the Bank. If the Company is unable to obtain a waiver or other suitable relief from the Bank under the credit facility the Bank could accelerate the outstanding indebtedness, which would make it immediately due and payable. If the Company is unable to obtain a waiver from or otherwise reach an agreement with the Bank, the Company will not have sufficient liquidity to repay its indebtedness.

 

The Company is evaluating plans to restructure, amend or refinance existing debt through private options. However, if the Company is not able to restructure, amend or refinance its existing debt, the debt is due and payable and the Company does not have sufficient liquidity to repay those amounts. In that event, if the Company is unable to reach an agreement with the Bank, the Company could be required to immediately file for protection under Chapter 11 of the U.S. Bankruptcy Code.

 

The following table summarizes total current assets, total current liabilities and working capital.

 

   September 30,
2016
   December 31,
2015
   Increase /
(Decrease)
 
             
Current Assets  $2,525,875   $7,213,213   $(4,687,338)
                
Current Liabilities  $19,076,553   $4,260,559   $(14,815,994)
                
Working Capital  $(16,550,678)  $2,952,654   $(19,503,332)

 

Senior Secured Credit Facility

 

On October 3, 2011, the Company and DD Energy, Inc., EnerJex Kansas, Inc., Black Sable Energy, LLC and Working Interest, LLC (“Borrowers”) entered into an Amended and Restated Credit Agreement with Texas Capital Bank, N.A. (the “Bank”) and other financial institutions and banks that may become a party to the Credit Agreement from time to time. The facilities provided under the Amended and Restated Credit Agreement were used to refinance Borrowers prior outstanding revolving loan facility with Bank, dated July 3, 2008, and for working capital and general corporate purposes. 

 

At our option, loans under the facility will bear stated interest based on the Base Rate plus Base Rate Margin, or Floating Rate plus Floating Rate Margin (as those terms are defined in the Credit Agreement). The Base Rate will be, for any day, a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 0.50% and (b) the Bank’s prime rate. The Floating Rate shall mean, at Borrower’s option, a per annum interest rate equal to (i) the Eurodollar Rate plus Eurodollar Margin, or (ii) the Base Rate plus Base Rate Margin (as those terms are defined in the Amended and Restated Credit Agreement). Eurodollar borrowings may be for one, two, three, or nine months, as selected by the Borrowers. The margins for all loans are based on a pricing grid ranging from 0.00% to 0.75% for the Base Rate Margin and 2.25% to 3.00% for the Floating Rate Margin based on the Company’s Borrowing Base Utilization Percentage (as defined in the Amended and Restated Credit Agreement).

 

On December 15, 2011, we entered into a First Amendment to Amended and Restated Credit Agreement and Second Amended and Restated Promissory Note in the amount of $50,000,000 with the Bank, which closed on December 15, 2011. The Amendment reflected the addition of Rantoul Partners as an additional Borrower and added as additional security for the loans the assets held by Rantoul Partners. 

 

On August 31, 2012, we entered into a Second Amendment to Amended and Restated Credit Agreement with the Bank. The Second Amendment: (i) increased our borrowing base to $7,000,000, (ii) reduced the minimum interest rate to 3.75%, and (iii) added additional new leases as collateral for the loan.

 

On November 2, 2012, we entered into a Third Amendment to Amended and Restated Credit Agreement with the Bank. The Third Amendment (i) increased our borrowing base to $12,150,000, and (ii) clarified certain continuing covenants and provided a limited waiver of compliance with one of the covenants so clarified for the quarter ended December 31, 2011.

 

On January 24, 2013, we entered into a Fourth Amendment to Amended and Restated Credit Agreement, which was made effective as of December 31, 2012 with the Bank.  The Fourth Amendment reflects the following changes: (i) the Bank consented to the restructuring transactions related to the dissolution of Rantoul Partners, and (ii) the Bank terminated a Limited Guaranty, as defined in the Credit Agreement, executed by Rantoul Partners in favor of the Bank.

 

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On April 16, 2013, the Bank increased our borrowing base to $19.5 million.

 

On September 30, 2013, we entered into a Fifth Amendment to the Amended and Restated Credit Agreement.  The Fifth Amendment reflects the following changes: (i) an expanded principal commitment amount of the Bank to $100,000,000, (ii) an increase in our Borrowing Base to $38,000,000, (iii) the addition of Black Raven Energy, Inc. to the Credit Agreement as a borrower party, (iv) the addition of certain collateral and security interests in favor of the Bank, and (v) the reduction of our current interest rate to 3.30%.  

 

On November 19, 2013, we entered into a Sixth Amendment to the Amended and Restated Credit Agreement. The Sixth Amendment reflects the following changes: (i) the addition of Iberia Bank as a participant into our credit facility, and (ii) made a technical correction to our covenant calculations.

 

On May 22, 2014, we entered into a Seventh Amendment to the Amended and Restated Credit Agreement. The Seventh Amendment reflects the Bank’s consent to our issuance of up to 850,000 shares of our 10% Series A Cumulative Perpetual Preferred Stock.

 

On August 15, 2014, we entered into an Eighth Amendment to the Amended and Restated Credit Agreement. The Eighth Amendment reflects the following changes: (i) the borrowing base was increased from $38 million to $40 million, and (ii) the maturity of the facility was extended by three years to October 3, 2018.

 

On April 29, 2015, we entered into a Ninth Amendment to Amended and Restated Credit Agreement. In the Ninth Amendment, the Banks (i) re-determined the Borrowing Base based upon the recent Reserve Report dated January 1, 2015, (ii) imposed affirmative obligations on the Company to use a portion of proceeds received with regard to future sales of securities or certain assets to repay the loan, (iii) consented to non-compliance by the Company with certain terms of the Credit Agreement, (iv) waived certain provisions of the Credit Agreement, and (v) agreed to certain other amendments to the Credit Agreement.

 

On May 1, 2015, the Borrowers and the Banks entered into a Letter Agreement to clarify that up to $1,000,000 in proceeds from any potential future securities offering will be unencumbered by the Banks’ Liens as described in the Credit Agreement through November 1, 2015, and that, until November 1, 2015, such proceeds shall not be subject to certain provisions in the Credit Agreement prohibiting the Company from declaring and paying dividends that may be due and payable to holders of securities issued in such potential offerings or issued prior to the Letter Agreement.

 

On August 12, 2015, we entered into a Tenth Amendment to the Amended and Restated Credit Agreement. The Tenth Amendment reflects the following changes: (i) allow the Company to sell certain oil assets in Kansas, (ii) allow for approximately $1,300,000 of the proceeds from the sale to be reinvested in Company owned oil and gas projects and (iii) apply not less than $1,500,000 from the proceed of the sale to outstanding loan balances.

 

On November 13, 2015, the Company entered into a Eleventh Amendment to the Amended and Restated Credit Agreement. The Eleventh Amendment reflects the following changes: (i) waived certain provisions of the Credit Agreement, (ii) suspend certain hedging requirements, and (iii) to make certain other amendments to the Credit Agreement.

  

Our current borrowing base is $17,925,000, of which we had borrowed $17,925,000 as of September 30, 2016. At September 30, 2016 and at December 31, 2015 the interest rate on amounts borrowed under our credit facility was approximately 5.5% and 4.3% respectively. This facility expires on October 3, 2018. 

 

On April 1, 2016 the Company informed the Bank that it would cease making the mandatory monthly borrowing base reduction payments and did not make the required April 1, 2016 payment. The Company made its mandatory quarterly interest payment on April 6, 2016 and on April 7, 2016 entered into a Forbearance Agreement whereby the Bank agreed to not exercise remedies and rights afforded it under the Amended and Restated Credit Agreement for thirty days. On May 31, 2016, the Company and the Bank amended the Forbearance Agreement to extend the forbearance period to August 31, 2016. On July 29, 2016, the Company and the Bank entered into a Third Forbearance Agreement which extended the forbearance period to October 1, 2016. Upon the expiration of the Third Forbearance agreement, the Company did not enter into a fourth Forbearance Agreement. Also, at that time the Company discontinued payment of interest on its outstanding loan obligations with the Bank.

 

The Company is evaluating plans to restructure, amend or refinance existing debt through private options. However, if the Company is not able to restructure, amend or refinance its existing debt, the debt is due and payable and the Company does not have sufficient liquidity to repay those amounts. In that event, if the Company is unable to reach an agreement with the Bank, the Company could be required to immediately file for protection under Chapter 11 of the U.S. Bankruptcy Code.

 

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Satisfaction of our cash obligations for the next 12 months

 

We intend to meet our near term cash obligations through the monetization of derivative contracts, assets sales and cash flow generated from operations. Due to the declines in oil prices, the resulting decline in our reserves caused a corresponding reduction to our borrowing base, and recent issuances of equity securities from our “shelf” registration, it will be more difficult in 2016 to use our historical means to meet our cash obligations in the next twelve months.

 

Summary of product research and development

 

We do not anticipate performing any significant product research and development under our plan of operation.

 

Expected purchase or sale of any significant equipment

 

We anticipate that we will purchase the necessary production and field service equipment required to produce oil during our normal course of operations over the next twelve months.

 

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Significant changes in the number of employees

 

We added two technical employees in October 2014 and by September 1, 2015, we had eliminated 11 full time positions associated with non-core asset sales. We currently have 16 full-time employees, including field personnel. As production and drilling activities increase or decrease, we may have to continue to adjust our technical, operational and administrative personnel as appropriate. We are using and will continue to use independent consultants and contractors to perform various professional services, particularly in the area of land services, reservoir engineering, geology drilling, water hauling, pipeline construction, well design, well-site monitoring and surveillance, permitting and environmental assessment. We believe that this use of third-party service providers may enhance our ability to contain operating and general expenses, and capital costs.

 

Off-Balance Sheet Arrangements

 

 We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies and Estimates

 

Our critical accounting estimates include the value of our oil and gas properties, asset retirement obligations, and share-based payments.

 

Oil and Gas Properties

 

We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities. 

 

Proved properties are amortized using the units of production (UOP) method. Currently we only have operations in the Unites States of America. The UOP calculation multiplies the percentage of estimated proved reserves produced each quarter by the cost of these reserves. The amortization base in the UOP calculation includes the sum of proved property, net of accumulated depreciation, depletion and amortization (DD&A), estimated future development costs (future costs to access and develop proved reserves) and asset retirement costs, less related salvage value. 

 

The cost of unproved properties are excluded from the amortization calculation until it is determined whether or not proved reserves can be assigned to such properties or until development projects are placed into service. Geological and geophysical costs not associated with specific properties are recorded as proved property immediately. Unproved properties are reviewed for impairment quarterly. 

 

Under the full cost method of accounting, the net book value of oil and gas properties, less deferred income taxes, may not exceed a calculated “ceiling.” The ceiling limitation is (a) the present value of future net revenues computed by applying current prices of oil & gas reserves (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil & gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves computed using a discount factor of 10 percent and assuming continuation of existing economic conditions plus (b) the cost of properties not being amortized plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized less (d) income tax effects related to differences between book and tax basis of properties. Future cash outflows associated with settling accrued retirement obligations are excluded from the calculation. Estimated future cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months held flat for the life of the production, except where prices are defined by contractual arrangements.

 

Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as additional DD&A in the statement of operations. The ceiling calculation is performed quarterly. For the nine months ended September 30, 2016, we incurred a $7,444,597 impairment charge and for the nine months ended September 30, 2015 our impairment charge was $37,543,972. For the year ended December 31, 2014, there were no impairments resulting from the quarterly ceiling tests. 

 

Proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless a significant portion (greater than 25%) of our reserve quantities are sold, in which case a gain or loss is recognized in income.

 

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Asset Retirement Obligations

 

The asset retirement obligation relates to the plugging and abandonment costs when our wells are no longer useful. We determine the value of the liability by obtaining quotes for this service and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future however we monitor the costs of the abandoned wells and we will adjust this liability if necessary.

 

Share-Based Payments

 

The value we assign to the options and warrants that we issue is based on the fair market value as calculated by the Black-Scholes pricing model. To perform a calculation of the value of our options and warrants, we determine an estimate of the volatility of our stock. We need to estimate volatility because there has not been enough trading of our stock to determine an appropriate measure of volatility. We believe our estimate of volatility is reasonable, and we review the assumptions used to determine this whenever we issue new equity instruments. If we have a material error in our estimate of the volatility of our stock, our expenses could be understated or overstated.

 

Effects of Inflation and Pricing

 

The oil industry is very cyclical and the demand for goods and services of oil field companies, suppliers and others associated with the industry puts extreme pressure on the economic stability and pricing structure within the industry. Material changes in prices impact revenue stream, estimates of future reserves, borrowing base calculations of bank loans and value of properties in purchase and sale transactions. Material changes in prices can impact the value of oil companies and their ability to raise capital, borrow money and retain personnel. We anticipate business costs and the demand for services related to production and exploration will fluctuate while the commodity prices for oil remains volatile.

 

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting Company as defined by Rule 12b-2 under the Securities Exchange Act of 1934, and are not required to provide the information required under this item.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Our chief executive officer, Robert G. Watson, Jr., and our chief financial officer, Douglas M. Wright, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report pursuant to Exchange Act Rule 13-a-15(b). Based on the evaluation, Mr. Watson and Mr. Wright concluded that our disclosure controls and procedures are effective.

 

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II—OTHER INFORMATION

 

ITEM 1.  LEGAL PROCEEDINGS.

 

We may become involved in various routine legal proceedings incidental to our business. However, to our knowledge as of the date of this transition report, there are no material pending legal proceedings to which we are a party or to which any of our property is subject, except the legal proceedings discussed below.

 

ITEM 1A. RISK FACTORS

 

 In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2015 Annual Report on Form 10-K filed on April 11, 2016, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially affect our business, financial condition or future results

 

The Company is in default of its obligations under its Senior Secured Credit Facility

 

On April 1, 2016 the Company informed the Bank that it would cease making the mandatory monthly borrowing base reduction payments and did not make the required April 1, 2016 payment. The Company made its mandatory quarterly interest payment on April 6, 2016 and on April 7, 2016 entered into a Forbearance Agreement whereby the Bank agreed to not exercise remedies and rights afforded it under the Amended and Restated Credit Agreement for thirty days. On May 31, 2016, the Company and the Bank amended the Forbearance Agreement to extend the forbearance period to August 31, 2016. On July 29, 2016, the Company and the Bank entered into a Third Forbearance Agreement which extended the forbearance period to October 1, 2016. Upon the expiration of the Third Forbearance agreement, the Company did not enter into a fourth Forbearance Agreement. Also, at that time the Company discontinued payment of interest on its outstanding loan obligations with the Bank.

 

The Company is evaluating plans to restructure, amend or refinance existing debt through private options. However, if the Company is not able to restructure, amend or refinance its existing debt, the debt is due and payable and the Company does not have sufficient liquidity to repay those amounts. In that event, if the Company is unable to reach an agreement with the Bank, the Company could be required to immediately file for protection under Chapter 11 of the U.S. Bankruptcy Code.

 

We may seek the protection of the United States Bankruptcy Court (“Bankruptcy Court”) which may harm our business.

 

The Company is analyzing various strategic alternatives to address its and our liquidity and capital structure, including strategic and refinancing alternatives through a private restructuring. However, a filing under Chapter 11 of the U.S. Bankruptcy Code (“Chapter 11”) may be unavoidable. Seeking Bankruptcy Court protection could have a material adverse effect on our business, financial condition, results of operations and liquidity. As long as a Chapter 11 proceeding continues, our senior management would be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on our business operations. Bankruptcy Court protection also might make it more difficult to retain management and other key personnel necessary to the success and growth of our business. Also during the Chapter 11 proceedings, our ability to enter into new commodity derivatives covering additional estimated future production would be dependent upon either entering into unsecured hedges or obtaining Bankruptcy Court approval to enter into secured hedges.

 

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

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ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6.  EXHIBITS.

 

Exhibit
No.
  Description
2.1   Agreement and Plan of Merger between Millennium Plastics Corporation and Midwest Energy, Inc. effective August 15, 2006 (incorporated by reference to Exhibit 2.3 to the Form 8-K filed on August 16, 2006).
2.2   Agreement and Plan of Merger by and among Registrant, BRE Merger Sub, Inc., Black Raven Energy, Inc. and West Coast Opportunity Fund, LLC dated July 23, 2013 (incorporated by reference to Exhibit 10.4 on Form 8-K filed July 29, 2013).
3.1   Amended and Restated Articles of Incorporation, as currently in effect (incorporated by reference to Exhibit 3.1 to the Form 10-Q filed on August 14, 2008)
3.2   Amended and Restated Bylaws, as currently in effect (incorporated by reference to Appendix C to Schedule 14A, filed on September 6, 2013)
3.3   Certificate of Amendment of Articles of Incorporation as filed with the Nevada Secretary of State on  May 29, 2014 (incorporated by reference as Exhibit 3.1 on Current Report Form 8-K filed on May 29, 2014)
3.4   Certificate of Amendment of Articles of Incorporation (incorporated by reference as Exhibit 3.1 on Current Report Form 8-K filed on May 29, 2014)
3.5   Amended and Restated Certificate of Designation for Series A Preferred Stock (incorporated by reference to Exhibit 4.6 to the Form S-1/A filed on September 3, 2014)
3.6   Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock (incorporated by reference as Exhibit 4.1 on Current Report Form 8-K filed on March 11, 2015)
4.1   Specimen common stock certificate (incorporated by reference to Exhibit 4.3 to the Form S-1/A filed on May 27, 2008)
4.2   Specimen Series A Preferred Stock Certificate (incorporated by reference to Exhibit 4.4 to the Form S-1/A filed on September 3, 2014)
4.3   Specimen Series B Convertible Preferred Stock Certificate (incorporated by reference as Exhibit 4.2 on Current Report Form 8-K filed on March 11, 2015)
4.4   Certificate of Designation for Series A Preferred Stock (incorporated by reference to Exhibit 4.1 to the Form 8-K filed on January 6, 2011).
4.5   Form of Warrant to Purchase Common Stock (incorporated by reference as Exhibit 4.3 on Current Report Form 8-K filed on March 11, 2015)
4.6   Form of Placement Agent Warrant (incorporated by reference as Exhibit 4.4 on Current Report Form 8-K filed on March 11, 2015)
10.1   Form of Officer and Director Indemnification Agreement (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on October 16, 2008)  
10.2   Amendment 4 to Joint Exploration Agreement effective as of November 6, 2008 between MorMeg, LLC and EnerJex Resources, Inc.  (incorporated by reference to Exhibit 10.15 to the Form 10-K filed July 14, 2009)
10.3   Amendment 5 to Joint Exploration Agreement effective as of December 31, 2009 between MorMeg LLC and EnerJex Resources, Inc. (incorporated by reference to Exhibit 10.15 to the Form 10-Q filed on February 16, 2010)
10.4   Amendment 6 to Joint Exploration Agreement effective as of March 31, 2010 between MorMeg LLC and EnerJex Resources, Inc. (incorporated by reference to Exhibit 10.24 to the Form 10-K filed on July 15, 2010)
10.5   Amended and Restated EnerJex Resources, Inc. Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 16, 2008)
10.6   Joint Development Agreement between EnerJex Resources, Inc. and Haas Petroleum, LLC dated December 31, 2010 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on January 27, 2011).
10.7   Joint Operating Agreement between EnerJex Resources, Inc. and Haas Petroleum, LLC and MorMeg, LLC dated December 31, 2010 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on January 27, 2011).

 

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10.8   Amended and Restated Credit Agreement dated October 3, 2011 (incorporated by reference to Exhibit 10.1 on Form 8-K filed on October 6, 2011).
10.9   Option and Joint Development Agreement by and among Registrant and MorMeg, LLC dated August 2011 (incorporated by reference to Exhibit 10.1 on Form 8-K filed on November 15, 2011).
10.10   First Amendment to Amended and Restated Credit Agreement dated December 14, 2011 (incorporated by reference to Exhibit 10.2 on Form 8-K filed on December 14, 2011).
10.11   Second Amendment to Amended and Restated Credit Agreement dated August 31, 2012 (incorporated by reference to Exhibit 10.1 on Form 8-K filed on November 8, 2012).
10.12   Third Amendment to Amended and Restated Credit Agreement dated November 2, 2012 (incorporated by reference to Exhibit 10.2 on Form 8-K filed on November 8, 2012).
10.13   Amended and Restated Employment Agreement by and among Registrant and Robert G. Watson, Jr. dated December 31, 2012 (incorporated by reference to Exhibit 10.1 on Form 8-K filed on January 4, 2013).
10.14   Fourth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank dated December 31, 2012 (incorporated by reference to Exhibit 10.2 on Form 8-K filed on January 30, 2013).
10.15   First Amendment to Amended & Restated Mortgage Security Agreement, Financing Statement and Assignment of Production by and among Working Interest, LLC and Texas Capital Bank dated December 31, 2012 (incorporated by reference to Exhibit 10.3 on Form 8-K filed on January 30, 2013).
10.16   Mortgage, Security Agreement, Financing Statement and Assignment of Production and Revenues by and among Working Interest, LLC and Texas Capital Bank dated December 31, 2012 (incorporated by reference to Exhibit 10.4 on Form 8-K filed on January 30, 2013).
10.17   2013 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 on Registration Statement on Form S-8 filed on September 12, 2013).
10.18   Fifth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated September 30, 2013 (incorporated by reference to Exhibit 10.1 on Form 8-K filed October 1, 2013).
10.19   Ninth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated November 19, 2013 (incorporated by reference to Exhibit 10.37 on Form 10-Q filed May 13, 2014).
10.20   Exchange Agreement between EnerJex Resources, Inc. and holders of Series A preferred stock (incorporated by reference to Exhibit 10.38 on Form S-1/A Amendment No. 2 filed September 3, 2014).
10.21   Seventh Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated May 22, 2014 (incorporated by reference to Exhibit 10.1 to Form 8-K filed May 27, 2014).
10.22   Form of Securities Purchase Agreement dated as of March 11, 2015 (incorporated by reference as Exhibit 10.1 on Current Report Form 8-K filed on March 11, 2015)
10.23   Eighth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated August 13, 2014 (incorporated by reference as Exhibit 10.23 on Form 10-K filed March 31, 2015).
10.24   Ninth Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated April 29, 2015 (incorporated by reference to Exhibit 10.1 to Form 8-K filed May 5, 2015).
10.25   Purchase Agreement by and among Registrant and Northland Securities, Inc. dated May 8, 2015 (incorporated by reference as Exhibit 1.1 of Form 8-K filed May 8, 2015.)
10.26   Tenth Amendment to the Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated September 8, 2015 (incorporated by reference to Exhibit 10.26 of Form 10-Q filed November 16, 2015).
10.27   Eleventh Amendment to Amended and Restated Credit Agreement by and among Registrant and Texas Capital Bank, N.A. dated November 16, 2015 (incorporated by reference to Exhibit 10.1 to Form 8-K filed November 16, 2015).
10.28   Forbearance Agreement dated April 4, 2016 (incorporated by reference to Exhibit 10.28 to Form 10-K filed April 11, 2016).
10.29   Second Amendment to Forbearance Agreement dated May 31, 2016 (incorporated by reference to Exhibit 10.1 to Form 8-K filed June 3, 2016)
10.30   Third Amendment to Forbearance Agreement dated July 29, 2016 (incorporated by reference to Exhibit 10.1 to Form 8-K filed August 1, 2016)
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 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2   Certification of 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*

 

* Filed herewith.

 

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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

ENERJEX RESOURCES, INC.  
(Registrant)  
   
By: /s/ Robert G. Watson, Jr.  
  Robert G. Watson, Jr. Chief Executive Officer  
   
Date: November 14, 2016  

 

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