Houston-based mining company upgrades its listing

The stock of Contango Ore is now trading on the NYSE American. It was previously traded over-the-counter. The company has a market capitalization of $181 million.



The company has its head office in the Greenway Plaza area. It engages in the exploration of gold, silver and copper in southeast Alaska. The company’s main operations are a 30% interest in Peak Gold, LLC which leases 675,000 acres from the Tetlin Tribal Council. Contango also owns a 100% interest in mineral rights of another 200,000 acres nearby.

The company has been working to develop its main property since 2009. In September 2020, it sold a 70% share to Kinross Gold for $39 million, including $32 million in cash. Kinross will be operator of the property and will have primary responsibility to generate production.

Contango Ore is seeking other properties in Alaska and, in August 2021, bought the mineral rights to a mine north of Anchorage for an initial payment of $5 million. The purchase price could rise to $30 million.

The chairman and co-founder of Contango Ore is Brad Juneau. He also co-founded Contango Oil and Gas, another publicly-traded company in Houston. He now runs Juneau Exploration L.P.

Rick Van Niewenhuyse was appointed CEO in January 2020 and is an experienced minerals mining executive. Leah Gaines has been the CFO since October 2013. She is also the CFO of Juneau Exploration.

You can see the full list of Houston-area public companies here.

Contango Ore press release

 

 

Goodrich Petroleum to be taken private by Encap Investments

Goodrich Petroleum, an E&P company based in downtown Houston, is to go private after agreeing to be acquired by an affiliate of Encap Investments for $23 per share. Including the assumption of debt, the transaction is valued at $480 million.



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Goodrich was formed in 1975 and went public via a reverse takeover of Patrick Petroleum in 1995. The company primarily owns gas producing wells in the Haynesville Basin.

The company filed for bankruptcy in 2016 during which lenders wrote off $426 million in debt in exchange for most of the equity in the successor company.

Encap Investments is a Houston-based investment firm. It will buy Goodrich using a $7 billion fund raised in 2017.

The offer price represents an approximately 7% premium to the closing price of the stock on November 19, 2021. Certain stockholders have agreed to support the deal. In addition, there is $32.5 million of 13.5% loan notes that can convert to equity at $21.33. Taking the conversion into account, more than 50% of shareholders support the deal.

The deal is expected to close in December 2021.

[UPDATE 11-23-21 Gen IV Investments who were the second largest shareholder (~12%) sold their shares to EnCap. Frankin, the largest shareholder (15%) and Anchorage Capital Group (10%) tendered their shares in support, in addition to the senior management (12%). These percentages exclude the shares that their parties own from the convertible notes.]

SEC filing – Goodrich going private

Nabors Energy Transition Corp completes $276 million IPO

Nabors Energy Transition Corp (NETC) has completed its upsized Initial Public Offering by selling 27,600,000 units at $10 apiece.



The SPAC or blank check company intends to acquire a company that is involved in energy transition such as alternative energy, energy storage, emissions reduction and carbon capture.

The sponsor of the SPAC is a company co-owned by Nabors Industries, a global leader in land-based drilling rigs and Tony Petrello, the current Chairman and CEO of Nabors.

In fact, all the management team of the SPAC are employed by Nabors including William Restrepo (CFO), Guillermo Sierra (VP – Energy Transition) and Siggi Meissner (President of Engineering and Technology).

The management team will not be paid a salary by the SPAC until it closes on a transaction. However, to me, it appears that there is plenty of scope for conflicts of interest. In the prospectus, NETC states that ‘potential conflicts with Nabors are naturally mitigated by the differing nature of the investments that Nabors would consider more suitable’.

In August, Nabors issued a press release that ‘it continues investment in energy transition with Quaise Inc’. It provided $12 million in financing to Quiase, a company developing millimeter wave drilling technology to access deep geothermal energy. That technology appears to be within the remit of the SPAC, even if the size isn’t.

https://www.prnewswire.com/news-releases/nabors-energy-transition-corp-announces-closing-of-276-000-000-initial-public-offering-including-full-exercise-of-underwriters-option-to-purchase-additional-units-301429394.html

 

 

 

Spirit of Texas Bank to be acquired for $581 million

Spirit of Texas Bancshares, based in Conroe, has agreed to be acquired by Simmons First National Corporation, in a transaction worth $581 million.

Spirit of Texas Bank operates 37 branches, primarily in the Texas triangle between Houston, Dallas-Fort Worth and San Antonio.



Simmons, based in Arkansas, operates 209 branches, but only 23 in Texas, around Dallas/Fort Worth and towns north of there.  It did have five locations in Austin and San Antonio but sold them to Spirit in February 2020 for $131 million. Simmons has been on an acquisition spree recently. Just last month, the company completed the acquisitions of two Tennessee-based banks for $278 million.

Spirit of Texas started in 2008 by acquiring First Bank of Snook in College Station. It went public in May 2008, raising $42 million. That valued the bank at around $200 million. It has made four  acquisitions since going public.

Founder and CEO of Spirit, Dean Bass, will retire and join the Simmons board as an independent director.

Two weeks ago, two Houston-based banks, Allegiance and CBTX, announced a $1.5 billion merger.

Both transactions are expected to close in the second quarter of 2022.

Simmons Spirit acquisition – investor presentation

Court assesses $170 million in penalties against two Houston opthalmologists

A US District Judge has assessed penalties of $170 million on Dr. Mustapha Kibirige and Dr. Emelike Agomo in relation to fraudulently billing Medicare.



Dr. Libirige owns and operates Outreach Diagnostic Clinic, based in the midtown area of Houston. Dr. Agomo joined the clinic in 2010. The clinic examines patients for glaucoma.

Between February 2006 and December 2011, the clinic billed Medicare for the glaucoma tests performed. Devices that measure eye pressure using a portable pen or puffs of air are billed under one billing code. Imaging scans of a retina are billed under a separate code which has a higher reimbursement rate.  The clinic was performing the former, but billing under the latter.

The clinic submitted 14,450 claims in this manner and received $807,450 in payments from Medicare.

An optometrist at the clinic, who started in 2005, became uncomfortable with the billing practices. In June 2012, he resigned, having failed to persuade Drs. Kibirige and Agomo to change their practices. He later blew the whistle.

The government won a summary judgment in March 2020 against the clinic. As a result, the judge assessed a penalty of

  • Treble damages of $2,422,350
  • A penalty of $11,803 for each claim submitted or $170,553,350.

$11,803 is the minimum penalty that could have been assessed under the statute.

https://www.justice.gov/usao-sdtx/pr/court-assesses-more-170m-penalties-against-two-area-ophthalmologists

Summary Judgment – Damages

Woodlands doctor agrees to pay $0.5 million to settle allegations of fraud

Dr. Emad Bishai, who practices in The Woodlands, has agreed to pay $523,331 to settle allegations that he submitted fake claims for the placement of electro-acupuncture devices as well as making false statements when applying for a loan from the Paycheck Protection Program (PPP).

Dr. Bishai is an anesthesiologist and pain management physician who owns The Woodlands Pain Institute PLLC.



From July 2017 to May 2019, Dr. Bishai billed Medicare and TRICARE (healthcare for military) programs for the surgical implantation of neurostimulator electrodes. This is an invasive procedure for which Medicare pays thousands of dollars. Instead, needles were inserted into the ears of patients and a neurostimulator were taped behind the ears.

In addition to the financial settlement, Dr. Bishai and Woodlands Pain Institute PLLC have agreed to a seven-year-period of exclusion from participation in any federal health care programs.

Indictment re Controlled Substances 

When applying for a $213,400 PPP loan in May 2020 on behalf of his clinic, he answered ‘No’ to the question of whether he had been indicted. In fact, Dr. Bishai was indicted in November 2019 for prescribing controlled substances to patients without a valid medical purpose. Prosecutors allege that his prescriptions resulted in four overdose deaths. Three other doctors in Montgomery County were also indicted at the same time. Charges against one of them were later dropped.

The indictments arose out of a horrific car crash in 2015 in Conroe when a family of four, driving home from a Sunday church service, were killed by another driver, who was impaired due to Valium and oxycodone. Dr Rezik Saqer, the doctor who prescribed the drugs in that case, was later sentenced to 7 years in prison on federal fraud charges. Montgomery County Officials then went looking for other pill mill doctors in the area.

Trial delayed

The trial by jury for Dr. Bishai on the controlled substances charges was set to begin late last month but it was postponed to a later date.

https://www.justice.gov/usao-sdtx/pr/woodlands-pain-doctor-pays-half-million-dollars-fraudulent-ppp-and-billing-allegations

 

Noble to merge with Maersk Drilling in a $3.4 billion stock deal

Noble Corporation, based in Sugar Land, has agreed to merge with Maersk Drilling in an all-stock transaction worth $3.4 billion. Maersk has its head office in Denmark and is listed on the Copenhagen stock exchange.



The combined company will have 20 floater rigs and 19 jackup rigs that can operate in harsh environments such as the North Sea. The fleet will be the second largest behind Valaris, though Transocean is the largest offshore operator by revenue.

Noble is taking an active role in the consolidation of companies in the offshore drilling market. Having exited bankruptcy in February 2021, it acquired Pacific Drilling for $357 million in an all-stock transaction in March 2021.

The shareholders of Noble and Maersk will each own 50% of the combined business. The company will keep the Noble name and will continue to be based in Houston.

Noble Chairman, Chuck Sledge, will become Chair of the combined company, while Noble CEO, Robert Eifler, takes the combined CEO role. Claus Hemmingsen, Chairman of Maersk, will be one of the three directors designated by Maersk. Noble will appoint three directors in addition to Mr. Sledge.

Other positions on the executive leadership team are to determined. Richard Barker is the CFO of Noble. He joined in March 2020  and has an investment banking background. The current CFO of Maersk is Houston-based Christine Morris. She joined in January of this year. Ms. Morris was previously CFO at BJ Services and Head of Financial Planning and Analysis at Halliburton.

The company expects to achieve $125 million in annual cost synergies within two years. The Maersk office in Copenhagen will be scaled down significantly. However, the Maersk Stavanger office in Norway will become the hub for North Sea operations.

The deal is expected to close in mid-2022.

SEC filing – Noble Maersk merger

 

 

Third Coast Bank completes $88 million IPO

Third Coast Bank, a community bank based in Humble, has completed its initial public offering (IPO). It raised $88 million by offering 3.5 million shares at $25, the mid-point of the range.

Yesterday, two large publicly-traded Houston community banks, Allegiance and CBTX, announced they would merge.



The bank has total assets of $2 billion. It has 12 branches mostly in small towns close to large metropolitan areas. It has 5 in the Houston-area, 2 in Dallas/Plano, 2  around San Antonio, 2 in Beaumont, 1 in Austin and 1 in Detroit, TX. Some of those came with the acquisition of Heritage Bank in January 2020.

Third Coast was formed in 2008 by founder and CEO Bart Caraway. He was previously the CFO and COO at Houston-based Patriot Bank.

The CFO is John McWhorter.  He joined in January 2021 and was previously CFO at Bank of Houston and Cadence Bank

S-1 filing – Third Coast Bank

Houston banks to merge in $1.5 billion all-stock transaction

Houston-based banks, Allegiance Bank and CBTX, have agreed to merge in an all-stock transaction. The combined market capitalization will be around $1.5 billion. and it will have $8.7 billion in deposits, placing it 6th in the Houston region (behind JP Morgan, Wells Fargo, Bank of America, PNC and Zions).



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Allegiance has 28 branches, 27 in Houston and 1 in Beaumont. CBTX has 19 branches in Houston, 15 in the Beaumont area and one in Dallas.

Allegiance shareholders will own 54% of the combined stock, CBTX 46%. The bank name has yet to be determined.

Steve Retzloff, CEO of Allegiance, will become Executive Chairman, while Paul Egge, CFO of Allegiance, will take the same role in the combined company. Bob Franklin, CEO of CBTX, will become CEO of the combined company.

Both banks began operations in 2007. Allegiance initially concentrated on organic growth but in recent years made four acquisitions including Farmers & Merchants and Post Oak Bank. It completed its IPO in 2015.

CBTX started out in Beaumont in 2007 with the acquisition of CountyBank and later bought Crosby State Bank, Vista Bank and Memorial City Bank to expand into Houston. It went public in 2017.

The banks expect annualized pre-tax cost savings of $36 million. That’s net of $1 million of incremental costs for increased regulations and risk management that are required when a bank exceeds $10 billion in assets.

Closing is expected in the 2nd quarter of 2022.

SEC filing – Allegiance and CBTX merger

CFO at Houston-based chemical company resigns after two years

Lorin Crenshaw, CFO at Orion Engineered Carbons SA, has resigned to become CFO at Kansas-based Compass Materials. Bob Hrivnak, the company’s Chief Accounting Officer will serve as the interim CFO while the company conducts a search for a replacement.



Orion has its head office in the Kingwood area, though it is technically registered in Luxembourg. The company manufactures Carbon black, a powdered form of carbon used in consumables and additives for polymers, printing inks and coatings. It has 14 production sites around the world and revenues of $1.4 billion.

The company went public in 2014 and has a market capitalization of $1.14 billion.

Mr. Crenshaw has been the CFO at Orion for exactly two years. Prior to that he spent many years at Albemarle, a chemical manufacturer. Compass Materials is another chemical manufacturer that has about the same revenues as Orion but a market capitalization twice as large.

When he joined Orion, Mr. Crenshaw received a $180,000 sign-on bonus that was paid over two years. However all the executives got a reduced bonus payout for 2020 because EBITDA did not hit target.

At Compass, Mr. Crenshaw will receive a substantial increase in base salary (from $421,000 to $537,000) and a one-time bonus of $780,000 (most of which is to be paid in January 2022).

Mr Hrivnak joined Orion in 2020. He was previously the CFO for just over a year at Spokane-based Clearwater Paper. At that company he was hired by a new CEO who lasted even less time! Prior to that, he worked for a number of companies including Fluor and Tyco.

SEC filing – Orion CFO departure