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Note 9 - Shareholders' Equity
 3 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Equity [Text Block]

9. SHAREHOLDERS’ EQUITY

 

Equity Issuance

 

On January 22, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC (the “Representative”), as representative of the several underwriters named in the Underwriting Agreement (the “Underwriters”), relating to an underwritten offering of 4,871,400 shares of common stock, at a price to the public of $2.65 per share (such offering, the “Offering”).

 

The sale of 4,871,400 shares of Common Stock (including the full 635,400 Option) in connection with the Offering, closed on January 23, 2025. The Company generated approximately $11.9 million of net proceeds from the Offering, after deducting the underwriting discounts and commissions and offering costs payable by us, and plans to use such proceeds for the development of its recent acquisition in Montana, general corporate purposes, and working capital, or for other purposes that our board of directors, in their good faith, deems to be in the best interest of the Company. Additionally, management used $1.574 million from the Option exercise to purchase shares of common stock from Sage Road Capital, LLC (a current shareholder of the Company whose co-manager is Joshua L. Batchelor, a then member of the Board of Directors of the Company) and its affiliates at a price equal to the public offering price of the Offering, less underwriting discounts, which sale took place in January 2025, as discussed below.

 

Related Party Share Repurchase

 

On January 27, 2025, the Company entered into a Share Repurchase Agreement with Banner Oil & Gas, LLC (“Banner”), Woodford Petroleum, LLC (“Woodford”), and Sage Road Energy II, LP, (“Sage Road”, and together with Banner and Woodford, the “Selling Stockholders”). In his capacity as co-Managing Partner of Sage Road Capital, LLC, which indirectly controls and manages certain funds which own a majority interest in Banner, Woodford and Sage Road, Joshua L. Batchelor, a then member of the Board of Directors of the Company, may be deemed to beneficially own the shares of common stock held by the Selling Stockholders.

 

Pursuant to the Share Repurchase Agreement, the Company, in a private transaction, outside of, and separate from the Company’s previously disclosed share repurchase program, on January 27, 2025, repurchased (a) 534,020 shares of common stock held by Banner, (b) 41,229 shares of common stock held by Woodford, and (c) 60,151 shares of common stock held by Sage Road, for an aggregate of $1.574 million or approximately $2.48 per share, which is the net price per share of the 4,871,400 shares of Common Stock which we sold in our underwritten public offering which closed on January 23, 2025, less underwriting discounts and commissions, and which represented an 8.2% premium to the closing sales price of the Company's Common Stock on January 27, 2025.

 

The share repurchase program was approved by the disinterested members of the Board of Directors of the Company, as well as the Company’s Audit Committee, comprised solely of independent directors not affiliated with Mr. Batchelor or the Selling Stockholders.

 

Stock Option Plans

 

From time to time, the Company may grant stock options under its incentive plan covering shares of common stock to employees of the Company. Stock options, when exercised, are settled through the payment of the exercise price in exchange for new shares of stock underlying the option. These awards typically expire ten years from the grant date.

 

For the three months ended March 31, 2025 and 2024, there was no compensation expense related to stock options. As of  March 31, 2025 and  March 31, 2024, all stock options had vested. No stock options were granted or exercised during the three months ended March 31, 2025 and 2024. The stock options had de minimis intrinsic values for the periods reported. Presented below is information for stock options outstanding and exercisable as of March 31, 2025, and December 31, 2024:

 

  

March 31, 2025

  

December 31, 2024

 
      Weighted      Weighted 
      Average      Average 
  Number of  Exercise  Number of  Exercise 
  

Shares

  

Price

  

Shares

  

Price

 
                 

Stock options outstanding and exercisable

  16,500  $10.00   22,176  $30.48 

 

The following table summarizes information for stock options outstanding and for stock options exercisable at March 31, 2025 by the remaining contractual term:

Options Outstanding and Exercisable

 
   

Exercise

  

Weighted

  

Remaining

 
   

Price

  

Average

  

Contractual

 

Number of

  

Range

  

Exercise

  

Term

 

Shares

  

Low

  

High

  

Price

  

(years)

 
                  
16,500  $7.20  $11.60  $10.00   2.5 

 

 

Restricted Stock

 

The Company grants restricted stock under its incentive plans covering shares of common stock to employees and directors of the Company. Significantly all of the restricted stock awards are time-based awards and are amortized ratably over a requisite service period. Time-based awards vest ratably following the grant date, provided the grantee is employed on the vesting dates. Forfeitures of restricted stock awards are recognized as they occur. Restricted stock granted to employees is reduced by shares forfeited to pay withholding tax. Non-vested shares of restricted stock are not included in common shares outstanding until vesting has occurred.

 

The following table presents the changes in non-vested restricted stock awards to all employees and directors for the three months ended March 31, 2025:

 

      

Weighted-Avg.

 
      

Grant Date

 
      

Fair Value

 
  

Shares

  

Per Share

 
         

Non-vested restricted stock as of December 31, 2024

  1,450,695  $1.41 

Granted

  1,140,000  $2.03 

Vested

  (851,515) $1.52 

Non-vested restricted stock as of March 31, 2025

  1,739,180  $1.76 

 

For the three months ended March 31, 2025 and 2024, the Company recognized $0.5 million and $0.2 million, respectively, of stock compensation expense related to restricted stock grants. Total compensation cost related to non-vested awards not yet recognized in the Company’s Condensed Consolidated Statements of Operations as of March 31, 2025 was $2.4 million. This cost is expected to be recognized over a weighted average period of 2.0 years.

 

Share Repurchase Program

 

On January 29, 2025, the Board of Directors of the Company authorized and approved an extension of the ongoing share repurchase program for up to $5.0 million of the outstanding shares of the Company’s common stock originally approved by the Board of Directors on April 26, 2023 and extended on March 19, 2024, and set to expire on June 30, 2025. Subject to any future extension in the discretion of the Board of Directors of the Company, the repurchase program is now scheduled to expire on June 30, 2026, when a maximum of $5.0 million of the Company’s common stock has been repurchased, or when such program is discontinued by the Board of Directors.

 

Under the stock repurchase program, shares are repurchased from time to time in the open market or through negotiated transactions at prevailing market prices, or by other means in accordance with federal securities laws. Repurchases are made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance. The repurchase program is funded using the Company’s working capital. The repurchased shares are cancelled and therefore will not be held in treasury or reissued.

 

The following table presents the activity in the share repurchase program for the three months ended March 31, 2025 and 2024:

 

  

Three Months Ended March 31,

 
  

2025

  

2024

 
  

(in thousands)

 
         

Shares repurchased

  126   318 

Weighted average price per share

 $1.865  $1.059 

Value of shares repurchased

 $234  $337