Item 1.01 Entry into a Material Definitive Agreement
On June 28, 2006 CanArgo Energy Corporation, ("CanArgo"), entered into a Note
and Warrant Purchase Agreement (the "Purchase Agreement") with Persistency, a
Cayman Islands company with limited liability ("Persistency"), relating to the
purchase of CanArgo's 12% Subordinated Convertible Guaranteed Notes, due
June 28, 2010 (the "Subordinated Notes").
On May 27, 2009, CanArgo entered into a further agreement (the "Agreement") with
Persistency whereby Persistency agrees and covenants that prior to August 31,
2009, absent the Company's consent, or the Subordinated Notes becoming
immediately due and payable, or a Change of Control as defined in the Purchase
Agreement (other than as a result of a transaction with Persistency or its
affiliate), it will not convert or exchange, or seek to convert or exchange, any
or all of the Subordinated Notes into shares of common stock of CanArgo, or into
any other security convertible or exchangeable into shares of common stock of
CanArgo, pursuant to Section 11.7 of the Purchase Agreement.
A copy of the Agreement is attached hereto as Exhibit 10.1.
Item 2.02 Results of Operations and Financial Condition.
On May 30, 2009, CanArgo Energy Corporation ("CanArgo" or the "Company")
reported its unaudited financial results for the three months ending March 31,
2009.
Operating Revenues from Continuing Operations for the three month period ended
March 31, 2009 deteriorated to $1.5 million from $2.6 million for the
corresponding period for 2008. This deterioration was attributable to a decrease
in the realised price for oil sold at the Ninotsminda Field in Georgia despite
there being higher volumes of oil sold.
The Company reported net income for the three month period ended March 31, 2009
of $1.9 million compared to a net loss of $1.2 million in the corresponding
period for 2008. This was attributable to the Company recording Total Other
Income of $2.9 million compared to Total Other Expense of $1.0 million for the
corresponding period for 2008. The improvement in net income attributable to
Total Other Income was offset partially by an increased Operating Loss from
Continuing Operations.
Operating Loss from Continuing Operations for the three month period ended
March 31, 2009 increased to $1.0 million compared to an Operating Loss of
$0.2 million in the corresponding period for 2008. This was due to the
deterioration in Operating revenues from Continuing Operations, increased Field
Operating Expenses and Direct Project Costs offset partially by reduced Selling,
General and Administrative
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Expenses and reduced Depreciation, Depletion and Amortization.
Total Other Income for the three month period ended March 31, 2009 of
$2.9 million included a $3.9 million gain in Settlement of Accounts Payable.
This gain was attributable to a Settlement Agreement that the Company entered
into on February 9, 2009 with WEUS Holding Inc ("WEUS") a subsidiary of
Weatherford International Ltd as reported previously.
A copy of the unaudited consolidated results of operations and financial
condition are attached to the Press Release attached hereto as Exhibit 99.1.
The information set forth herein and in the exhibit is preliminary in nature,
has been prepared by management and has not been reviewed or audited by the
Company's auditors. Accordingly, such information does not necessarily reflect
results of the Company's operations and financial condition that may be
reportable after completion of a review or audit and, while management is
reasonably confident that such information is materially accurate, such
preliminary results may be subject to change and should not be regarded as a
definitive report on results of operations and financial condition of the
Company as at March 31, 2009 and as at December 31, 2008 and for the fiscal year
then ended. Although these statements have been produced on a best effort basis
and management believes they are accurate, they may not be relied upon.
As previously reported, the Company is currently in default in making interest
payments under its outstanding Senior Subordinated Convertible Guaranteed Notes
due September 1, 2009 and its 12% Subordinated Convertible Guaranteed Notes due
June 28, 2010. The Company is continuing its negotiations with certain of the
Note holders with a view to addressing such defaults. The Company is also
currently in default under the terms of its Settlement Agreement with WEUS and
is in discussions to resolve this default as well. There can be no assurance,
however, that such negotiations and discussions will be successfully concluded.
Item 7.01. Regulation FD Disclosure.
May 30, 2009 Guernsey, British Isles - CanArgo Energy Corporation ("CanArgo" or
the "Company") (OSE: CNR; Pink Sheets: CANR) today reported its unaudited
financial results for the three months ending March 31, 2009.
CanArgo is an independent oil and gas exploration and production company with
its oil and gas operations currently located in Georgia.
The information in this item 7.01 (including its exhibit) shall not be deemed to
be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), or otherwise subject to liability of that section. The
information in this report (including its exhibit) shall not be incorporated by
reference into any registration statement or other document filed under the
Securities Act of 1933, as amended, or the Exchange Act, regardless of any
general incorporation language in such filing, except as shall be expressly set
forth by specific reference in such filing.
A copy of the Press Release is attached hereto as Exhibit 99.1.
