Sun River Energy Pitches Investors on $39M to Fund Drilling Budget for 2012

Coral Capital Partners was mentioned in the article below, which was originally published on November 28th, 2011 in the PIPE’s Report.

Sun River Energy Pitches Investors on $39M to Fund Drilling Budget for 2012

By Dan Lonkevich
November 28, 2011 12:24 PM PST

Oil and gas producer Sun River Energy has recently been trying to raise $39 million to fund its drilling budget for 2012.

An investor presentation obtained by The PIPEs Report shows that Dallas-based Sun River was recently planning to raise $14 million by issuing 7 million units, each consisting of a common share and a warrant to purchase a common share. The units were to be priced at $2 each, and the warrants were to have an exercise price of $3. In a second, $25 million private placement, Sun River was to issue preferred stock that would pay an 8% dividend and convert, for a term of two years, into common shares at $5.25 each.

The investor presentation was dated Oct. 31.

Shares of Sun River rose 10 cents to $2.25 at 12.19 p.m. New York time in over-the-counter trading. They’ve traded between $1.89 and $5.17 over the past 52 weeks.

Representatives of the company couldn’t immediately be reached for comment by The PIPEs Report.

Sun River said in the presentation that it planned to use $9 million of the proceeds for exploratory test drilling in Colfax County, N.M., where the company has 171,000 acres of land rights. Sun River also planned to spend $2.5 million to lease an additional 100,000 acres in Colfax County. The company also planned to spend $13.9 million for development drilling in Texas, where it has more than 9,600 acres.

Sun River said its first identified development prospect in the Raton Basin of Colfax County may hold 80 million to 100 million barrels of oil. Overall, Sun River claims proved, developed, producing reserves of 4.9 billion cubic feet of natural gas equivalent and proved undeveloped reserves of 8.7 billion cubic feet of gas equivalent.

The company also has mineral rights to 154,000 acres of land in Colfax County, which it claims contains gold and silver. Sun River also has 178,000 acres with mineral rights to coal and 40,400 acres of timber rights.

The company said it plans seismic studies on previous prospects and to complete three test wells under its 2011-to-2012 development plan.

Sun River said it has a $50 million operational budget for 2011 and 2012, of which $25 million would come from the preferred stock placement and the rest from the unit placement and subsequent placements.

The company previously raised $11.1 million from two private placements. It raised $10 million from a convertible preferred stock PIPE in installments from December 2010 until January 2011. Investors included Centaur Value FundSherbrook PartnersNext View PartnersSeaside 88Warburg Opportunity Trading FundBrio CapitalMicro PIPE Fund,Fairfield Investments, and Bank of Guttenberg.

Sun River also raised $1.1 million from a private placement of common stock to LPC Investment, a Castle Rock, Colo.-based hedge fund, in 2007.

In the meantime, Sun River is embroiled in litigation with multiple investors, contractors and other holders of its restricted stock over its refusal to lift the restrictive legends that would permit the sales of the shares.

Sun River filed a suit to take back restricted stock issued to Mirador Consulting, a Boca Raton, Fla.-based firm that introduced the energy company to potential investors and investment bankers.

Similarly, Sun River filed suits to take back stock from Nova Leasing, a Casper, Wyo.-based oil and gas producer that sold assets to Sun River, and Coral Capital Partners, an Atlanta-based investment consulting company whose president researched and wrote reports on Sun River’s properties.

Each of these cases is pending, but Sun River lost on a similar lawsuit filed against LPC Investment.


Coral Capital Partners was awarded a judgment in its favor against Sun River Energy, Inc. following a trial on October 23rd, 2013.  Please see our blog entry “Coral Capital Partners Victorious in Sun Energy Litigation” for a further explanation of the trial, and how Sun River dropped all of its claims prior to trial. It should also be noted that the District Court Judge ruled in our favor in the dispute over the proposed settlement, and our decision to not enter into what was a clearly one-sided agreement.

About Coral Capital Partners

Coral Capital Partners is an independent consulting and advisory firm focused on companies and participants in the lower and middle markets. We partner with our clients to provide cost effective solutions to real world issues and situations. Our experienced team brings a diverse set of skills that allows us to service a wide variety of needs.  Our area of services and expertise focuses on bringing services and solutions to our clients that are normally only available to much larger firms.  Coral Capital Partners, Inc.  provides services to Investment Banks,  Private Equity Funds, investors, and both privately held and publicly traded companies, as well as various stakeholders in those organizations.  This has included international public companies with operations on three (3) continents to smaller privately held domestic companies.  Our experience in the areas of corporate advisory, due diligence reviews, and regulatory compliance allows for a cost effective and efficient solution to the issues at hand.  Please feel free to contact our offices to see how we may be of assistance.