form8k_03022009.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington
D.C. 20549
Form
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): February 27,
2009
NORTHERN
OIL AND GAS, INC.
(Name of
small business issuer in its charter)
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Nevada
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000-33999
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95-3848122
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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315
Manitoba Avenue – Suite 200
Wayzata,
Minnesota 55391
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55391
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (952)
476-9800
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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SECTION
1 - REGISTRANTS BUSINESS AND OPERATIONS
Item
2.03 – Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
CIT Capital USA Inc.
Financing
On
February 27, 2009, Northern Oil and Gas, Inc. (the “Company”) completed the
closing of a revolving credit facility with CIT Capital USA Inc. (“CIT”) that
will provide up to a maximum principal amount of $25 million of working capital
for exploration and production operations (the “Facility”). The
borrowing base of funds available to the Company under the Facility will be
redetermined semi-annually based upon the net present value, discounted at 10%
per annum, of the future net revenues expected to accrue from its interests in
proved reserves estimated to be produced from its oil and gas
properties. $11 million of financing is initially available under the
Facility. An additional $14 million of financing could become
available upon subsequent borrowing bas redeterminations based on the deployment
of funds from the Facility. The Facility terminates on February 27,
2012.
The
Company has the option to designate the reference rate of interest for each
specific borrowing under the Facility as amounts are
advanced. Borrowings based upon the London interbank offering rate
(LIBOR) will be outstanding for a period of one, three or six months (as
designated by the Company) and bear interest at a rate equal to 5.50% over the
one-month, three-month or six-month LIBOR rate to be no less than
2.50%. Any borrowings not designated as being based upon LIBOR will
have no specified term and generally will bear interest at a rate equal to 4.50%
over the greater of (a) the current three-month LIBOR rate plus 1.0% or (b) the
current prime rate as published by JP Morgan Chas Bank, N.A. The
Company has the option to designate either pricing
mechanism. Payments are due under the Facility in arrears, in the
case of a loan based on LIBOR on the last day of the specified loan period and
in the case of all other loans on the last day of each March, June, September
and December. All outstanding principal is due and payable upon
termination of the Facility.
The
applicable interest rate increases under the Facility and the lenders may
accelerate payments under the Facility, or call all obligations due under
certain circumstances, upon an event of default. The Facility
references various events constituting a default on the Facility, including, but
not limited to, failure to pay interest on any loan under the Facility, any
material violation of any representation or warranty under the Credit Agreement
in connection with the Facility, failure to observe or perform certain
covenants, conditions or agreements under the Facility, a change in control of
the Company, default under any other material indebtedness of the Company,
bankruptcy and similar proceedings and failure to pay disbursements from lines
of credit issued under the Facility.
The
Facility requires that the Company enter into swap agreements with Macquarie
Bank Limited (“Macquarie”) for each month of the thirty-six (36) month period
following the date on which each such swap agreement is executed, the notional
volumes for which (when aggregated with other commodity swap agreements and
additional fixed-price physical off-take contracts then in effect other than
basis differential swaps on volumes already hedged pursuant to other swap
agreements), as of the date such swap agreement is executed, is not less than
50% of, nor exceeds 80% of, the reasonably anticipated projected production from
the Company’s proved developed producing reserves. The hedged
production is estimated to be equal to approximately 20% of 2009 total
production and less than 10% of production volumes in 2010-12.
All
obligations of the Company under the Facility and the swap agreements with
Macquarie are secured by a first priority security interest in any and all
assets of the Company pursuant to the terms of a Guaranty and Collateral
Agreement and perfected by a mortgage, notice of pledge and security and similar
documents.
At the
closing, the Company issued to CIT warrants to purchase 300,000 shares of the
Company’s common stock exercisable at any prior to February 27, 2012, at an
exercise price of $5.00 per share. The warrants provide for
adjustments to the exercise price and number of shares issuable on a
weighted-average basis in the event that the Company issues any shares of common
stock during the term of such warrants at a price
per share
less than $5.00. The warrants were issued pursuant to the exemption
from registration provided in Section 4(2) of the Act. The recipient
of the warrants was afforded an opportunity for effective access to files and
records of the Company that contained the relevant information needed to make
its investment decision, including the Company’s financial statements and
reports filed pursuant to the Exchange Act. The Company has committed
to registered shares issuable upon exercise of the warrants with the United
States Securities and Exchange Commission.
Copies of
material definitive documentation entered into by the Company at the closing of
the Facility are included as exhibits to this Form 8-K. The foregoing
description of the material terms of the Facility are qualified in their
entirety by reference to the material agreements filed herewith.
SECTION
9 - FINANCIAL STATEMENTS AND EXHIBITS
Item
9.01 – Financial Statements and Exhibits
(d)
Exhibits
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Exhibit
Number
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Description
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10.1
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Credit
Agreement dated as of February 27, 2009 among Northern Oil and Gas, Inc.,
as Borrower, CIT Capital USA Inc., as Administrative Agent, and The
Lenders Party Hereto
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10.2
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Form
of Note Under that Certain Credit Agreement dated as of February 27, 2009
among Northern Oil and Gas, Inc., as Borrower, CIT Capital USA Inc., as
Administrative Agent, and The Lenders Party Hereto
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10.3
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Guaranty
and Collateral Agreement dated as of February 27, 2009 made by Northern
Oil and Gas, Inc. in favor of CIT Capital USA Inc., as Administrative
Agent
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10.4
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Warrant
to Purchase Shares of Northern Oil and Gas, Inc. Common Stock Issued to
CIT Capital USA Inc. on February 27, 2009
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99.1
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Press
Release dated March 2, 2009
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned hereunto
duly authorized.
NORTHERN OIL
AND GAS, INC.
Date: March
2,
2009 By
/s/ Michael L.
Reger
Michael
L. Reger, Chief Executive Officer