Item 1.01 Entry into a Material Definitive Agreement.
On January 8, 2018, GulfSlope Energy, Inc. (the "Company") entered into a
participation agreement (the "Agreement") with Delek GOM Investments, LLC, a
subsidiary of Delek Group Ltd. ("Delek"), and Texas South Energy, Inc. ("Texas
South") (collectively, the "Parties") for the farm-out of the Company's
interests in its Gulf of Mexico oil and gas leases (the "Farm-out"). The
Agreement sets out the terms and conditions of the Parties participation in the
drilling of a multi-phase exploration program targeting the Company's prospects
(the "Prospects") located on the Company's existing leases (the "Leases").
Under the terms of the Agreement, the Parties have committed to drill the
Company's "Canoe" and "Tau" prospects (the "Initial Phase") with Delek having
the option to participate in two additional two-well drilling phases and a
final, three-well drilling phase (collectively, the "Phases"). In each Phase,
Delek will earn a 75% working interest upon paying 90% of the exploratory costs
associated with drilling each exploratory well. The Company will retain a 20%
working interest while paying 8% of the exploratory costs associated with
drilling each well. In addition, Delek will pay the Company approximately $1.1
million in cash for each Prospect exploration plan filed with BOEM and/or BSEE.
Also, each Party will be responsible for its pro rata share (based on working
interest) of delay rentals associated with the Prospects. The Company will be
the Operator during exploratory drilling of a Prospect, however, subsequent to a
commercial discovery, Delek will have the right to become the Operator. Delek
will have the right to terminate this Agreement at the conclusion of any
drilling Phase. Delek will also have the option to purchase up to 5% of the
Company's common stock, par value $0.001 per share (the "Common Stock"), upon
fulfilling its obligation for each Phase (maximum of 20% in the aggregate) at a
price per share equal to a 10% discount to the 30-day weighted average closing
price for the Common Stock preceding the acquisition. This option will expire
January 8, 2020. The foregoing description of the Agreement does not purport to
be a complete description of the terms, provisions and conditions of such
document, and represents only a summary of certain of the principal terms,
provisions and conditions thereof.
The Company will assign an eight-tenths of one percent of eight/eights net
profits interest in certain of the Company's oil and gas leases to include
Vermilion Area, South Addition 378, Ship Shoal Area, South Addition 336, and
Ship Shoal Area, South Addition 351, to Hi-View Investment Partners, LLC
("Hi-View") in consideration for consulting services provided pursuant to a
non-exclusive consulting engagement dated October 25, 2017, by and between
Hi-View, the Company, and Texas South (the "Advisory Agreement"). Hi-View will
be entitled to additional assignments on the same terms and conditions as
described above related to any of the Leases whereby Delek elects to participate
in drilling of an exploratory well. In addition, the Company issued an aggregate
of eighty million shares of Common Stock to Hi-View in consideration for
consulting services provided pursuant to the Advisory Agreement. In the event
that Delek has not funded the approximately one million one hundred thousand
payment referenced above within six months of execution of this Agreement, then
the Common Stock will be returned by Hi-View to the Company.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth above in Item 1.01 is hereby incorporated by reference
into this Item 3.02.
The shares of Common Stock is being issued in reliance upon the exemption from
registration provided by Section 4(a)(2) of the Securities Act of 1933.
Item 7.01 Regulation FD Disclosure.
On January 8, 2018, the Company issued a press release announcing the entry into
the agreements referred to above with Delek and Texas South. A copy of the news
release issued by the Company is attached hereto as Exhibit 99.1. The
information in this Item 7.01 and Exhibit 99.1 shall not be deemed "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to liabilities of that Section.
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included in this Current Report on Form 8-K that address
activities, events or developments that the Company expects, believes or
anticipates will or may occur in the future are forward-looking statements. The
Company's estimates and forward-looking statements are mainly based on its
current expectations and estimates of future events and trends, which affect or
may affect its businesses and operations, or of preliminary results of past
performance which are yet to be finalized. Although the Company believes that
these estimates and forward-looking statements are based upon reasonable
assumptions, they are subject to several risks and uncertainties and are made in
light of information currently available to the Company. When used in this
Current Report on Form 8-K, the words "anticipate," "believe," "intend,"
"expect," "estimate," "plan," "will" or other similar words are intended to
identify forward-looking statements. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the Company, which may cause actual results to differ materially from those
implied or expressed by the forward-looking statements. Further information on
such assumptions, risks and uncertainties is available in the Company's other
filings with the U.S. Securities and Exchange Commission. The Company undertakes
no obligation and does not intend to update or correct these forward-looking
statements to reflect events or circumstances occurring after the date of this
Current Report on Form 8-K, except as required by applicable law. You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Current Report on Form 8-K. All
forward-looking statements are qualified in their entirety by this cautionary
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are furnished as part of this current report
on Form 8-K:
99.1 News Release dated January 8, 2018, announcing Strategic
Partnership in Gulf of Mexico.
99.2 Participation Agreement By and Between GulfSlope Energy, Inc.,
Texas South Energy, Inc., and Delek GOM Investments, LLC.
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