Scottsdale, Arizona-based American Standard Energy Corp. will sell Eagle Ford Shale interests to reduce its payables and debt.
Eagle Ford sale
The oil and gas exploration and production company and its affiliates have agreed to sell roughly 1,200 leasehold acres in its Auld Shipman project in Frio and LaSalle Counties, Texas to Antler Bar Investments LLC for total consideration of approximately $16.40 million, including the reduction of $2.75 million principal value of the Convertible Promissory Notes owned by affiliates of Pentwater Capital Management. The balance of the consideration included the transfer of liabilities owed by the company to the project operator. Antler Bar Investments is also an affiliate of Pentwater.
"While Auld Shipman has the potential to be a solid Eagle Ford producing asset, it was simply not the right asset at the right time for American Standard," said Scott Feldhacker, CEO of American Standard. "The ability to reduce our payables and debt by over $16 million and eliminate nearly $2 million in monthly expenditures was a prudent move for our company at this stage in its lifecycle, especially given the erratic production history of the field and infrastructure performance issues we experienced."
Convertible notes amendments
In addition, the company and Pentwater entered into various Amendments and limited waivers related to the convertible notes. The terms of the Amendments include: (1) 100% of the net cash proceeds of any disposition of assets by the Company must be used to prepay the Secured Convertible Promissory Note , dated February 9, 2012 and amended on July 23, 2012, and must be approved by Pentwater; (2) The company must engage operational consultants with engineering expertise within thirty days from September 11, 2012; (3) Pentwater shall have the right to nominate, and the company shall take all steps necessary, to elect two directors to the company's board of directors to fill the vacancies left upon the resignation of certain directors; and (4) The principal amount of the Note, dated February 9, 2012 and amended July 23, 2012, was increased by $89,059 to correct an earlier administrative error regarding the Original Issue Discount on the notes.
In conjunction with the sale and the Amendments to the Convertible Promissory Notes, the company also announces changes to its Board of Directors.
Robert Thompson, the chairman of the board of directors of American Standard has chosen to retire from his position to focus on further development of other business interests.
In addition, directors Scott David and Jim Leeton have also elected to resign from the board of directors, effective immediately. Scott David has agreed to remain as an advisor to the company.
Replacing Robert Thompson as non-executive chairman is Wayne Squires, founder, president and CEO of Orion Drilling Company LLC. Orion, based in Corpus Christi, Texas, is a contract drilling company with rigs operating in Texas and Pennsylvania.