Orbit Petroleum reported that following its purchase of Tipton Enterprises, Inc. also known as Tipton Oil and Gas, (TOGA) and its subsidiaries, Gilbert's Lease Service, Toga Well Services and Blackrock Transportation, Orbit has been joined in certain legal claims, disputes and litigation filed by Tipton creditors. Orbit is currently investigating the claims against it and intends to vigorously defend its assets and shareholders against such legal action.
Orbit is investigating certain accounting irregularities, unpaid operating costs and unpaid royalty distributions which were not disclosed to Orbit by the Sellers of TOGA prior to the acquisition. Orbit will seek to work through all claims made by creditors of TOGA in an effort to achieve a quick resolution of these problems, if possible. However, such claims and legal disputes may well have an impact on the ability of Orbit to secure development funding which it has been seeking to expand operations and increase field production.
Orbit Petroleum closed the Tipton Acquisition on October 4, 2007. Orbit acquired Tipton Enterprises which includes properties in Chaves, Lea, Eddy and Roosevelt Counties, New Mexico for $8,825,000. Orbit paid $2,625,000 with $825,000 in stock and $1,800,000 in cash. Much of the $1,800,000 was paid with loans provided to Orbit by insiders and associates. The balance of $6,200,000 includes the assumption of roughly $3,000,000 in debt and $3,200,000 which is to be paid in cash to the Sellers over time. Orbit plans to adjust (reduce) the $3,200,000 to be paid to the Sellers of TOGA by certain liabilities for unpaid royalty and operating expenses and costs that were not disclosed and were unknown to Orbit at closing. The overall liability to Orbit for total debt incurred in the acquisition is still being reconciled.
The TOGA properties include approximately 24,320 acres in 10 unitized fields with three fields comprising more than 16,000 acres. Current production is approximately 130 BOPD from 109 active wells.
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