Battalion Oil appoints new CFO

Leave a reply

Battalion Oil has appointed Kristen McWatters as its new CFO, effective January 26, 2023. She replaces Kevin Andrews, who has agreed to stay on until April 13 in an advisory role. Mr. Andrews had been the CFO since August 2020.

The company is based in NW Houston and has working interests in approximately 40,000 net acres in the Delaware Basin. Its market capitalization is currently $193 million.



The company was formerly known as Halcon Resources. It went into bankruptcy in August 2019. The company emerged in October 2019, having eliminated over $750 million of debt. In return, the debt holders got 91% of the newly reorganized equity. It changed its name to Battalion in January 2020.

Ms. McWatters was previously the CFO at Goodrich Petroleum, a similar E&P company to Battalion. Goodrich went into Chapter 11 in 2016, she joined as Assistant Controller in 2017. The company regained its listing in April 2017 and Ms. McWatters became CFO in December 2020. She left after Goodrich was taken private by Encap Investments in a $480 million deal.

For the past few months, Ms. McWatters has been interim Chief Accounting Officer at Perella Weinberg Partners, a publicly-traded investment bank. Perella, through its subsidiary, TPH, happened to advise Goodrich on its sale transaction.

Ms. McWatters will receive a base salary of $300,000. No severance arrangements were disclosed for Mr. Andrews in the filing announcing Ms. McWatters’ appointment. According to the last proxy, Mr. Andrews is entitled to a payment of $500,000 if his employment is terminated without cause.

SEC filing 8-K Battalion CFO

 

 

 

 

Flotek CEO steps down

Leave a reply

Flotek Chairman and CEO, John Gibson, is out after three years at the struggling specialty chemicals company. He is replaced, on an interim basis, by Harsha Agadi, a non-executive board director.



The company has its head office in NW Houston and has been losing money at an EBITDA level since 2016. Its share price is $1.52 and is has a market cap of $104 million. In February 2022, Flotek agreed to supply ProFrac Holdings high volume, low margin chemicals in return for convertible notes.  Revenues in Q3 2022 were $46 million, over three times larger than Q3 2021. Profac now owns 51% of Flotek.

Mr. Gibson joined the company in January 2020. Four months later, the company paid $36 million (including $25 million in cash) for an oilfield data analytics company.  The purchase price included $17.5 million of goodwill and $12.9 million of intangible assets. Four months after the acquisition, the company wrote down those assets by $24.2 million. The remaining goodwill was written off in 2021.

Mr. Gibson will receive a cash severance of $1.5 million. As part of the agreement, Mr. Gibson has agreed to forfeit all of his outstanding options and unvested restricted stock units.

Mr. Agardi has been on the Board since 2020. He has been the CEO at a publicly-traded insurance claims company, Friendly’s Ice Cream and Church’s Chicken. Whilst interim CEO, he will receive a salary of $50,000 a month.

Dispute with former CEO

The company is also in dispute with John Chisholm, the CEO prior to Mr. Gibson. In December 2021, the company conducted an internal investigation into his activities during the period 2014 to 2018. The company found evidence of related party transactions/self-dealing, inappropriate personal expenses, and general corporate waste.

Flotek’s board engaged a third party to review the findings of the investigation. After the third-party review, the company concluded that its current and historical financial statements can be relied upon, that proper action had been taken, and that no members of current management were implicated in any way.

Mr. Chisholm filed a countersuit against the company as he has not been paid his remaining severance of $0.4 million.

That severance hadn’t been paid because, in 2019, the IRS notified the company had it had not properly withheld certain employment taxes in 2014  (Mr. Chisholm provided his services through a management company). The amount involved is $1.8 million. Mr. Chisholm had indemnified the company, but it is Flotek who has to pay the IRS first and then recoup the money from Mr. Chisholm.

New CFO last month

Flotek appointed a new CFO, Bond Clement, just last month.

[Full Disclosure – I worked at Flotek between 2006-2009 and still own a small number of shares]

SEC filing – Flotek CEO out

Black Stone Minerals CFO to depart

Leave a reply

Jeff Wood, the President and CFO of Black Stone Minerals (BSM), is leaving the company at the end of February. Evan Kiefer, currently VP, Finance and Investor Relations, will become interim CFO upon Mr. Wood’s departure.

BSM has its head office in downtown Houston and is one of the largest owners and managers of oil and gas mineral rights in the USA. It has a market capitalization of $3.5 billion.

Mr. Wood joined the company in 2016 and added the additional duties of President two years later. It is not clear why Mr. Wood is leaving. The company has been performing well. It tends to hedge a big percentage of its production. That makes sense as it is primarily held as a yield stock, but does come in for occasional criticism for leaving money on the table when oil and gas prices rise rapidly, like they did earlier in 2022.

The 8-K filed with the SEC states that the company and Mr. Wood will be negotiating a severance agreement. That’s interesting because Mr. Wood already has a severance agreement in place. That would pay him 1x base salary ($358,000), plus target annual bonus (100%) plus pro-rata bonus for the year of termination. Restricted stock would also vest under the current agreement.

Mr. Kiefer joined the company in October 2013 as an analyst and was promoted to VP two years ago.

SEC 8-K filing – CFO departure

Houston insurance company completes $134 million IPO

Leave a reply

Skyward Specialty Insurance Group has completed its upsized Initial Public Offering, raising $134 million at a $588 million market capitalization. Its shares ended the week at $19.10 after opening at $15 (ticker SKWD).



The company, which has its head office in the Memorial City area, specializes in commercial property and casualty insurance. The company tries to target niche markets not well served by the mainstream carriers. For example, its Industry Solutions unit focuses on Construction, Energy and Specialty Trucking.

For the nine months ended September 2022, the company had net written premiums of $496 million. Its combined ratio (losses plus expenses) was 97.8% for 2021.

The company was formed in 2007 by Stephen Way. Mr. Wray formed the company shortly after he left HCC Insurance Holdings (which he also founded), a publicly-traded company. Like many companies at the time, HCC was caught using incorrect measurement dates for pricing stock options.  HCC was acquired by Tokio Marine in 2015.

Canadian firm Westaim took a 44% stake in the company in 2014 and in 2020 replaced Mr. Wray with Andrew Robinson as CEO. Shortly afterwards, the company changed its name from Houston International Insurance Group to Skyward Specialty Insurance Group. Mr. Wray is no longer on the board.

CFO Mark Haushill joined the company in 2015. He has been the CFO at two other publicly-traded insurance companies

SEC filing – Propectus

Weatherford appoints new CFO after long search

Leave a reply

Weatherford International has appointed Arun Mita as its new CFO. He replaces Keith Jennings, who left in July 2022.

Mr. Mita joins from Mitsubishi Power Americas where he has been CFO since 2014. Before that, he spent 14 years at Siemens in the US and Germany. He started his career at Price Waterhouse in India before moving to the US with KPMG. He will relocate from Orlando.

Mr. Mita will receive a base salary of $525,000 and a cash sign-on bonus of $410,000. He will also receive long-term incentives worth $1.7 million. 40% will vest over 3 years, the rest will vest after 3 years, subject to the achievement of performance metrics.

It should be noted that Mr. Jennings joined in September 2020 with a similar package (including sign-on bonus and relocation assistance) before leaving with a severance of over $1 million (1x base plus target annual bonus plus pro-rated target bonus). Mr. Jennings started six weeks before Girish Saligram joined as CEO.

The business has improved its performance in the past year as the oilfield sector has recovered. In the third quarter, revenues and adjusted EBITDA were up about 20% year-on-year. That allowed the business to flip from net losses before taxes to net profits.  In that time, net debt is virtually unchanged at around $1.2 billion, but the leverage ratio has dropped from 3.3 times a year ago to 1.8 times at September 2022.

Unlike certain competitors, Weatherford has not pulled out of Russia and generates 6%-7% of its revenues in Russia. In its Q1 filing for the first quarter of 2022, the company disclosed that its net assets in Russia were $106 million. That jumped to $168 million at the end of Q2. In Q3, the company did not disclose the amount of net assets in Russia.

SEC filing – 8-K Weatherford CFO Jan 2023

 

Coya Therapeutics completes $15 million IPO

Leave a reply

Coya Therapeutics, a biotechnology company with its head office in the Galleria area, has completed its $15 million initial public offering (IPO). It will have a fully diluted market capitalization of $50 million.

The company is developing proprietary new therapies to enhance the function of regulatory T cells (‘Tregs’).  Tregs are a subpopulation of T cells (a type of white blood cell) that modulate the immune system. Tregs were first discovered in 1995. Coya is initially focused on therapies for neurodegenerative, autoimmune and metabolic diseases where Treg dysfunction has been identified as an important pathophysiological component of the disease.

The company’s leading prospect is for the treatment of amyotrophic lateral sclerosis, or ALS (sometimes called Lou Gehrig’s disease). Clinical trials are expected in the first half of 2024.

Coya was formed in November 2020 by Dr. Howard Berman. Prior to this, Dr. Berman worked at AbbVie Inc, Eli Lily and Novartis. He began his career at MD Anderson in the technology transfer division where he was responsible for assessing the market, patent and scientific merits of numerous oncology-based technologies.

The CFO/COO of the company is David Snyder, based in Austin. He joined in March 2022. COYA is the fourth biotechnology business he has brought to market as CFO.

The company has an exclusive license and sponsored research agreement with The Methodist Hospital.

The stock is listed on Nasdaq under the symbol COYA.

Coya is the 7th Houston-area company to complete an IPO in 2022. You can see the complete list of Houston-area public companies here.

Coya Therapeutics – S-1 filing

Flotek appoints new CFO

Leave a reply

Flotek Industries, a specialty chemicals company, has appointed Bond Clement as its new CFO. He replaces Mike Borton, who left in May 2022.

Seham Carson, the Corporate Controller, had been interim CFO since Mr. Borton left. She is expected to remain with the company in a senior financial role.

Flotek has been losing money at an EBITDA level since 2016. Its share price is $1.13 and is has a market cap of $82 million. Earlier this year, Flotek agreed to supply ProFrac Holdings high volume, low margin chemicals in return for convertible notes.  Revenues in Q3 2022 were $46 million, over three times larger than Q3 2021. Profac now owns 51% of Flotek.

Mr. Clement joins from Donovan Marine, a privately-held distributor of recreational marine products where he had been CFO since September 2021. Prior to that, he spent 17 years at PetroQuest Energy, an E&P company. He was CFO for 12 years.

PetroQuest was publicly-traded until 2018. High debt forced the company into bankruptcy in November of that year. It emerged from bankruptcy three months later, having shed $292 million in debt.

Mr. Clement will receive a base salary of $400,000 and a sign-on bonus of $50,000. He will also get $50,000 to relocate from Lafayette, LA to Houston.

SEC 8-K filing – Flotek CFO appointment

Sysco CFO resigns to take the same role at Cardinal Health

Leave a reply

Aaron Alt, the CFO of Sysco, the food distributor, has resigned to become the CFO of Cardinal Health, based in Dublin, Ohio.

Mr. Alt had been the CFO at Sysco (market cap $40 billion) for just over two years. Prior to that, he was CFO at Dallas-based Sally Beauty Holdings and also worked for Target and Sara Lee Corporation. He holds an M.B.A. from J.L. Kellogg School of Management at Northwestern University.



At Cardinal (market cap $20 billion), Mr Alt will receive a base salary of $825,000. That’s a small increase on his base at Sysco ($791,000). He will also receive a cash sign-on bonus of $1 million and a lump sum payment of $250,000 for his intended relocation. Mr. Alt will also be eligible for annual long-term stock incentives with a target value of $3.5 million. That’s about a $1 million higher than his annual target at Sysco.

In August, the Cardinal CEO Mike Kaufmann resigned, to be replaced by CFO Jason Hollar. The following week, activist shareholder Elliott Management took a large stake in the business. Cardinal has sinced agreed to appoint an Elliott representative to the board and appoint four other new independent directors.

Cardinal has under-performed its competitors in the past few years and, according to the Wall Street Journal, Elliott will likely push for the sale of the medical supplies business.

Sysco appointed Neil Russell, Senior VP of Corporate Affairs and Chief Communications Officer, as its interim CFO. The company has commenced a search for Mr. Alt’s successor.

SEC filing – 8-K Cardinal Health CFO

Social Influencers charged in $114m Pump-and-Dump scheme

Leave a reply

Eight men have been indicted in a $114 million ‘Pump and Dump’ securities fraud that ran from January 2020 until April 2022. All have been arrested and will appear in court in Houston. There is both a criminal complaint filed by the Justice Department and a civil complaint, filed by the SEC.



The men allegedly manipulated stock prices by publishing false and misleading information on Twitter, on podcasts and through an online forum called Atlas Trading. Edward Constantin from Montgomery, TX and Perry Matlock from The Woodlands co-founded Atlas. Mr. Constantin, aka “MrZackMorris” had 551,000 Twitter followers while Mr. Matlock had 340,000.

Another defendant, John Rybaracyzk, from Spring had 267,000 followers and founded another stock trading forum on Discord. Other defendants are from Beverly Hills, New Jersey, Miami and Houston.

The scheme was simple. One or more of the group would buy a penny stock and tell the others in the group, allowing them to buy in at lower prices, prior to the manipulation. Then they would promote the stock to their followers. They would announce price targets, tease upcoming news and/or state their intentions to buy or hold their current positions.

After promoting the stock, they would sell their shares. Often they would continue to recommend their followers buy the stock, while not disclosing that they were selling their shareholding.

In the indictment, the first example given is of Camber Energy (CEI), a Houston-based penny stock. On August 3-4, 2021 three defendants bought a combined 2.2 million shares at an average price of 46 cents each. At 3.37pm on August 4, one defendant posts on Twitter and on Atlas “I added CEI for the swing… Last time it was at these prices, we went to $3”. Matlock posts on Atlas one minute later, echoing the sentiment.

Within the next four minutes, all three had sold a combined 465,000 shares after the stock rose by a penny. The cycle of promotional tweets and simultaneous sales happened five more times that day as the stock rose to 50 cents. Between August 3 and August 5, the three defendants made $54,989 through their misleading posts on CEI.

Constantin followed with a similar pattern and between September 1, 2021 and October 5, 2021, he made $4.3 million on buying and selling CEI stock.

It appears that someone known to all the defendants is working with prosecutors and helped build the case against them. The indictment refers to two unindicted co-conspirators. It also refers to private Discord chats between some of the defendants that were surreptitiously recorded.

That includes these two classics from one of the defendants, Daniel Knight (who lives in Houston);

‘Get caught? … We’re robbing f*cking idiots of their money…’

“. . . I mention a stock the less likely I get involved whenever all of Atlas gets a class action lawsuit . . . I’m playing this extremely smart, for the very long term. If you don’t think all
these f*ckers go to jail or at least get sued, you are crazy. . . .PJ is posting McLarens, $10 mill accounts, green 400 f*cking days in a row, come on. Every purchase over $10,000
immediately gets turned to the SEC. And it’s like everything he f*cking buys. . . . Just wait and see. . . . It’s market manipulation.

All defendants are charged with one count of conspiracy to commit securities fraud. Most are also charged with multiple counts of securities fraud. If convicted, each defendant faces a maximum penalty of 25 years in prison for conspiracy to commit securities fraud and each charged count of securities fraud. Constantin also faces a maximum penalty of 10 years in prison if convicted of engaging in unlawful monetary transactions.

Criminal Indictment

Houston SPAC to take Infrared Cameras public

Leave a reply

 

Sportsmap Tech Acquisition Corp, a Houston SPAC (Special Purpose Acquisition Company) is to take Infrared Cameras Holdings (“ICI”) public in a $100 million deal.



ICI designs and develops thermal cameras and sensing hardware as well as a proprietary subscription software used to analyze thermal data points. Commercial applications include the detection of methane leaks in wells and pipelines and monitoring of conveyor belt equipment in warehouses. The business presumably got a boost with temperature screening during COVID.

ICI was formed in 1995 and is based in Beaumont, Texas. CEO Gary Strahan has lived there since he was two. He started out as a welder and diver, performing underwater non-destructive testing and then worked for companies developing infrared cameras before starting ICI.

No financial details about ICI were disclosed in today’s announcement.

Sportsmap went public in October 2021 with a $100 million IPO. The business aimed to make an acquisition in sports technology such as wearables, data analytics, new methods of fan engagement, and new esports and gambling platforms. Oh Well!

A couple of names well known to Houston sports fans are also Directors of Sportsmap.

  • Reid Ryan, former President of the Houston Astros. He is the son of Nolan Ryan.
  • Oliver Luck, former General Manager of the Houston Dynamo and former CEO of the Houston Sports Authority.  He is the father of Andrew Luck, the number one draft pick in 2012.

The deal should close in the first half of 2023. Under the terms of its IPO, Sportsmap has until April 2023 to complete a deal, otherwise it has to return the money it raised to investors.

SEC filing – 8-K Sportsmap ICI