Washington, DC 20549



Form 8-K




Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): January 15, 2020




(Exact name of registrant as specified in its charter)



Delaware   000-55872   27-3439423

(State or other jurisdiction

of incorporation)



File Number)


(IRS Employer

Identification No.)


10940 Wilshire Blvd., 23rd Floor

Los Angeles, CA 90024

(Address of principal executive offices) (Zip Code)


(424) 901-6655

(Registrant’s telephone number, including area code)



(Former name or former address, if changed since last report)



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:


[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Securities registered pursuant to Section 12(b) of the Act:


Title of each class   Trading Symbol(s)  

Name of each exchange on which registered

N/A   N/A   N/A


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).


Emerging growth company [  ]


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]






Item 8.01. Other Events


Foothills Exploration, Inc. (“Foothills” or the “Company”) is hereby presenting information regarding its oil and natural gas prospective resources issued by an independent third-party engineering firm on January 6, 2020, for the Company’s interest in 16,387 acres located in the Wind River Basin, Wyoming, known as the Beaver Creek East Project, which indicates Prospective Resources of approximately 21 million barrels of undiscovered oil, with a PV-10 value of $372 million (after risk).


Oil and Natural Gas Resources Information


Foothills’ oil and gas prospective resources were independently prepared by Chapman Petroleum Engineering Ltd. out of Calgary Canada (“Chapman”). Chapman’s analysis included a review of the available technical data including the geological and geophysical interpretation presented by the Company, proposed contractual terms, information from relevant nearby wells or analogous reservoirs and the proposed program for each prospect.


Chapman reviewed this material with respect to the estimated resources and productivity that would be expected if a successful program, the anticipated capital costs (including drilling, completion and equipment), the average operating costs in the area and expected product prices. They also considered the availability of market access, and production and transportation infrastructure within economic reach of the area.


The economic analysis was performed for the Company’s interest position. Based on its analysis, after consideration of risk, Chapman has concluded that the potential of these prospects is of sufficient merit to justify the work program being proposed by the Company and furthermore, Chapman recommends and supports the Company’s participation.


The purpose of the report was to independently determine the feasibility of the Company undertaking the development of the prospective resources in the Beaver Creek East area, Wind River Basin, Wyoming, and determine the range of the magnitude of the prospective resources and the economic value before and after the consideration of risk.


Due to the risks involved in exploring for oil and gas reserves, Chapman’s assessment of the project cannot be considered a guarantee that any wells drilled will be successful.




In summary, Chapman’s analysis indicates that the Company’s Prospective Resources and economics (before income tax) as of August 31, 2019, for its leasehold position located in the Beaver Creek East Area of Wyoming’s Wind River Basin are as presented in Table 1 below.


Table 1

Summary of Company Prospective Resources and Economics

Before Income Tax

September 1, 2019

(as of August 31, 2019)


Foothills Exploration, LLC


Beaver Creek East Area, Wind River Basin, Wyoming, USA


   Resources   Cumulative Cash Flow (BIT) - M$ 
   Oil   Conventional Natural Gas   NGL                     
   MSTB   MMcf   Mbbls   Discounted at: 
    Gross    Net    Gross    Net    Gross    Net    Undisc.    5%/yr   10%/yr   15%/yr   20%/yr
BEFORE RISK                                                       
Arithmetic Average                                                       
Development Program (Madison)   24,179    21,157    0    0    0    0    1,149,612    662,831    412,305    271,002    185,721 
Development Program (Tensleep)   30,381    26,583    0    0    0    0    1,603,601    838,816    495,441    317,188    214,834 
Development Program (Frontier, Dakota, Muddy Zones)   0    0    78,375    68,578    413    248    192,198    124,271    83,073    57,056    40,049 
Development Program (Phosphoria Zone)   0    0    28,487    24,926    150    90    27,925    13,182    4,669    (291)   (3,172)
Total Before Risk Arithmetic Average   54,560    47,740    106,862    93,504    562    357    2,973,337    1,639,100    995,487    644,954    437,431 
AFTER RISK                                                       
Arithmetic Average After Risk                                                       
Development Program (Madison)   8,221    7,193    0    0    0    0    387,172    221,667    136,488    88,445    59,449 
Development Program (Tensleep)   12,760    11,165    0    0    0    0    670,264    349,055    204,837    129,971    86,982 
Development Program (Frontier, Dakota, Muddy Zones)   0    0    27,431    24,002    144    87    67,269    43,495    29,075    19,970    14,017 
Development Program (Phosphoria Zone)   0    0    10,255    8,973    54    32    10,053    4,746    1,681    (105)   (1,142)
Total After Risk Arithmetic Average   20,981    18,358    37,686    32,976    198    119    1,134,759    618,962    372,081    238,280    159,306 


M$ means thousands of dollars

MSTB means thousands of barrels

Mbbls means thousands of barrels  

NGL means natural gas liquids


Gross resources are the total of the Company's working interest share before deduction of royalties owned by others


Net resources are the total of the Company's working and/or royalty interest share after deducting the amounts attributable to royalties owned by others


Columns may not add precisely due to accumulative rounding of values throughout the report


The diagram below depicts the resource classification system used in Chapman’s report. The Company’s resources in the Wind River Basin are classified as “Prospective Resources.” See blue shaded section of diagram below.


Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulation by application of future development projects. Prospective Resources have both an associated Chance of Discovery and a Chance of Development.


Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.





The Company will need to initially raise $12 million to begin the work program described in the Chapman report.


Greater Green River Basin – Point of Rocks Project


Production is still currently shut-in on the asset. On September 17, 2019, the Company issued a current report on Form 8-K disclosing a PV-10 valuation of the proved oil and gas reserves on these properties at $1.98 million. The Company must now post all of the required surety bonds in order to finalize the transfer of operations from the seller, which it anticipates doing before the end of February. Foothills closed on the acquisition and paid for these properties in March 2019. The Seller has entered into formal proceedings to have Foothills complete all the obligations for bonding in a timely manner. The parties entered into an agreement that provides certain stipulations for the posting of the bonds and oversight of the wells during this time. The Company is also in discussions to have the note, which is collateralized by these properties, refinanced and assigned. No assurances can be made that the Company will be able to meet the lender’s payment obligations or regulatory bonding requirements. Failure to meet the obligations of the secured lender could result in the sale or divestiture of this asset.


Debt Management


Company management has been in ongoing discussions regarding payment of its notes with all of its debtholders. Management is currently working with the parties to either extend or repay the obligations to their satisfaction. Nevertheless, in the absence of an agreement with these parties, management remains committed to considering all available pathways to refinance or repay the notes so it can execute its business model.




Investors are urged to consider closely the disclosures and risk factors in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in the other reports and filings with the SEC, available from the Company’s offices or website. These forms can also be obtained from the SEC via the internet at www.sec.gov.






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.


Date: January 17, 2020




By: /s/ B. P. Allaire  
  B. P. Allaire  
  Chief Executive Officer