Majority of Management Warrants Vest Only on Performance
MIDLAND, Texas, Dec. 13 /PRNewswire-FirstCall/ -- United Heritage Corporation (NASDAQ:UHCP), a public company involved in the development of medium gravity crude oil assets today clarified the compensation arrangements it has made with certain members of its new management team pointing out that the warrants granted do not fully vest until certain oil production targets have been met.
The Company has agreed to issue a warrant to DK True Energy Development Ltd. (the "Consultant"), a company controlled by David Kahn and a member of Blackwood Ventures, LLC, the Company's largest shareholder, in exchange for the Consultant's agreement to (i) deliver a development plan, (ii) implement a pilot program to establish the production and recovery levels of oil from the Glen Rose formation in the Wardlaw Field (the "Pilot"), and (iii), if the Pilot is successful, fully develop the oil in place at the Wardlaw Field.
The Consultant received a warrant to purchase 5,250,000 shares of the Company's common stock with an exercise price of $1.05 that vests, subject to shareholder approval, as follows: (i) the right to purchase 743,750 shares will vest immediately upon receipt of shareholder approval as consideration for the Consultant's agreement to provide the services described above in exchange for the warrant in lieu of cash compensation, (ii) the right to purchase 1,166,666 shares will vest when the Company's announces that it is moving forward with a development program based on the results of the Pilot, and (iii) the right to purchase 417,448 shares will vest when the Company produces an average of 250 barrels of oil per day over 30 days ("bopd30av"), 500 bopd30av, 750 bopd30av, 1,000 bopd30av, 1,250 bopd30av, 1,500 bopd30av, 1750 bopd30av and 2,000 bopd30av. The warrant will be fully vested when production reaches 2,000 bopd30av.
The Consultant's warrant can only be exercised on a cashless basis. The number of shares to be issued will be calculated by (i) taking the average of the closing bid and asked prices of the common stock quoted in the Over-The-Counter Market Summary or the last reported sale price of the common stock or the closing price quoted on the Nasdaq Capital Market or on any exchange on which the common stock is listed, whichever is applicable, as reported by Bloomberg L.P. for the thirty (30) trading days prior to the date of the Company's receipt of the Warrant and delivery of the properly endorsed Notice of Exercise (the "Election Price"), (ii) deducting the exercise price of $1.05 from the Election Price, (iii) multiplying this result by the number of warrants being exercised, (iv) and dividing this result by the Election Price. For example, if the Election Price were $3.00 per share on the date the Consultant exercised the warrant, and the Consultant exercised the warrant as to all 5,250,000 shares, then the Company would be required to issue 2,625,000 shares of common stock.
The Company has also hired Paul Watson as COO and Geoff Beatson as Vice President of Engineering and Production. Each of these individuals will provide services through their personal services corporations. Aside from cash, the compensation to be paid for the services of Mr. Watson and Mr. Beatson consists of warrants to purchase a total of 2,600,000 shares of common stock that vest as follows: (i) the right to purchase 650,000 shares of common stock at $2.00 per share will vest upon completion of a successful Pilot (ii) the right to purchase 650,000 shares of common stock at $2.00 per share will vest when 1,000 bopd30av has been achieved, (iii) the right to purchase 650,000 shares of common stock at $2.50 per share will vest when 2,000 bopd30av has been achieved, and (iv) the right to purchase 650,000 shares of common stock at $3.00 per share will vest when 3,000 bopd30av has been achieved.
Chip Langston, interim CEO and interim President of the Company said "United Heritage has secured some very talented individuals and has structured the majority of their compensation so that it is received only after the oil starts coming out of the ground in significant quantities. We expect to achieve 3,000 bopd30av of production within 16 months from the commencement of full development of the Wardlaw Field. If we meet that target, assuming a long term price of $65.00 (currently West Texas Crude $92.00) per barrel, the Company's gross revenue per month would equate to more than $3,500,000 after royalties and discounts." About United Heritage Corporation United Heritage Corporation, founded in 1981 and based in Midland, TX, is focused on the development of on-shore oil and gas assets. The company has four leases covering 10,500 acres in the Wardlaw Field located in Edwards County, TX. A report received by the Company in 1984 estimated 168 million barrels of oil in place on the property. The oil is categorized as "medium crude", the deposits are in the light gravity range of heavy oil at 14-25 API gravity. The Company believes that ultimate recovery could be in the region of 40%. Management believes its acreage has always held great reserves, but the technology to properly extract the reserves is still being considered. Some oil production has already been established from the field, and the Company expects to complete the Pilot on this acreage during the first quarter of 2008.
Private Securities Litigation Reform Act Safe Harbor Statement: The matters discussed in this release contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended that involve risks and uncertainties. All statements other than statements of historical information provided herein, including the statement that the Company expects to achieve 3,000 barrels of oil per day every thirty days and that the Company could earn revenues in excess of $3,500,000 per month, may be deemed to be forward-looking statements. Without limiting the foregoing, the words "believe," "anticipate," "plan," "expect" and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from those that we may anticipate include without limitation, whether we are able to raise sufficient funds to implement our plan to develop the Wardlaw Field and whether we are able to successfully develop the Wardlaw Field. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis, judgment, belief or expectation only as of the date hereof.
Contact:
Chip Langston of UHC
+1-432-687-1131
DATASOURCE: United Heritage Corporation CONTACT: Chip Langston of UHC, +1-432-687-1131
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