Item 1.01 Entry into a Material Definitive Agreement.
On January 8, 2018, Texas South Energy, Inc. (the "Company") entered into a
participation agreement dated effective January 1, 2018 (the "Agreement") with
Delek GOM Investments, LLC, a subsidiary of Delek Group Ltd. ("Delek"), and
GulfSlope Energy, Inc. ("GulfSlope") (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 up to 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 January 2018,
the Company acquired from GulfSlope its 20% interest in the Vermilion South
Addition Block 378 ("Canoe Prospect") and in August 2017 the Company acquired
from GulfSlope its 20% interest in Ship Shoal Block 351 and in Ship Shoal Block
336, which are collectively referred to as the Tau Prospect. 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 5%
working interest while paying 2% of the exploratory costs associated with
drilling each well. In addition, Delek will pay the Company $405,000 for each
exploration plan filed with BOEM and/or BSEE on a Prospect in each Phase. Also,
each Party will be responsible for its pro rata share (based on working
interest) of delay rentals associated with the Prospects. GulfSlope 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 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 Company's 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 a two-tenths of one percent of 8/8ths 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 GulfSlope (the "Advisory Agreement"). Hi-View will be entitled to
additional assignments on the same terms and conditions as described above
related to any of Leases whereby Delek elects to participate in drilling of an
exploratory well. In addition, the Company issued twenty million shares of its
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
$405,000 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.
During October 2017, the Company sold 7,250,000 shares of common stock to
certain accredited investors for an aggregate total of $145,000.
During January 2018, the Company issued 20,000,000 shares of common stock to
Hi-View pursuant to the Advisory Agreement.
During January 2018, the Company sold 650,000 shares of common stock to certain
accredited investors for an aggregate total of $13,000.
During January 2018, the Company converted $400,000 of the principal amount of
an unsecured promissory note into 15,000,000 shares of the Company's common
stock, a principal amount of $200,000 was converted at $0.02 per share and a
principal amount of $200,000 was converted at $0.04 per share.
The issuances of these securities did not involve the payment of any sales
commissions and were exempt pursuant to Section 4(a)(2) of the Securities Act of
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 GulfSlope. 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 Texas South Energy, Inc.,
GulfSlope Energy, Inc., and Delek GOM Investments, LLC
© Edgar Online, source Glimpses