UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 3, 2006
TRANS ENERGY, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 0-23530 93-0997412
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
210 Second Street, P.O. Box 393, St. Mary's, West Virginia 26170
(Address of principal executive offices)
Registrant's telephone number, including area code: (304) 684-7053
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
FORM 8-K
Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
On January 3, 2006, Trans Energy, Inc. entered into a definitive agreement
to sell its well servicing and maintenance business in exchange for shares of
Trans Energy common stock, certain natural gas properties and other
considerations. Under the terms of the agreement, Trans Energy's wholly owned
subsidiary, Arvilla, Inc., will sell to Clarence E. Smith and Rebecca L. Smith,
both directors of Trans Energy, 100% of the outstanding membership interests of
Arvilla Oilfield Services, LLC, a West Virginia limited liability company
("AOS"). Part of the reason for the sale of AOS is due to the inability of the
board of directors to agree on the direction of AOS and Trans Energy. Closing of
the agreement is contingent upon certain conditions and escrow provisions.
AOS provides well servicing, workover and related transportation services
to independent oil and natural gas producers in the northeast region of the
United States. It also performs ongoing maintenance and major overhauls
necessary to optimize the level of production from existing oil and natural gas
wells and provides certain ancillary services during the drilling and completion
of new wells. AOS offers its services in Ohio, Pennsylvania, New York, Virginia,
Kentucky and West Virginia and also owns a fleet of well service equipment.
Trans Energy acquired AOS from Clarence and Rebecca Smith on January 31,
2005 through a merger of its subsidiary, Trans Energy Acquisitions, with and
into Arvilla, Inc., with Arvilla being the surviving entity. As consideration,
Trans Energy issued 1,185,024 shares of its common stock, of which 1,042,821
shares were issued to the Smiths, both of whom became directors of Trans Energy
following the acquisition. AOS's operations were previously conducted as Arrow
Oilfield Service Company, a division of Belden & Blake Corporation, a privately
held company engaged in the exploration, development and production of oil and
natural gas reserve. In June 2004, the Smiths acquired Arrow Oilfield Services
from Belden & Blake and created Arvilla Oilfield Services, LLC as the operating
entity. Subsequently, the Smiths created Arvilla, Inc. that acquired all the
membership interests of Arvilla Oilfield Services in order to facilitate its
acquisition by Trans Energy.
Pursuant to the definitive agreement, Clarence and Rebecca Smith have
agreed to return to Trans Energy 521,411 shares of their Trans Energy common
stock. The Smiths have also agreed to convey to Trans Energy all of their
interest in and to five oil and gas wells located in Tyler County, West
Virginia. Assignments for the wells are to be held in escrow pending
satisfaction by Trans Energy of two promissory notes in the aggregate amount of
$763,000 payable to AOS and to Arvilla Pipeline Construction Co., Inc., a
separate entity owned by Clarence and Rebecca Smith. Until the notes are paid in
full, all income derived from the five wells will be retained by the Smiths, who
will be responsible for making all debt service payments related to the five
wells during that time. The notes are cross collateralized by certain oil and
gas leases, together with the oil and gas wells currently and hereafter situated
thereon, which are owned by a separated Trans Energy subsidiary, Prima Oil
Company, Inc.
Additionally, the definitive agreement provides for the payment of certain
bonuses to Clarence and Rebecca Smith equal to approximately $85,000 each. The
closing of the agreement is expressly conditioned upon receiving the written
consent for the sale of AOS from certain banks and lenders having the right to
call a loan on the ownership transfer of AOS. Also upon execution of the
agreement, Clarence Smith resigned as Chief Executive Officer of Trans Energy,
but will remain on Trans Energy's board of directors until the closing of the
agreement. At the closing of the agreement, both Clarence and Rebecca Smith will
resign as directors of Trans Energy and Arvilla, Inc. Finally, the closing of
the transaction is expressly conditioned on the receipt of a fairness opinion
from a qualified independent party stating that the transactions contemplated by
the definitive agreement are fair to Trans Energy and its stockholders.
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All documents relating to the definitive agreement, including the
promissory notes, deeds and other documents necessary to consummate the
transactions contemplated by the agreement, will be held in a special escrow
account until such time as the aforementioned fairness opinion is delivered and
certain other conditions are satisfied. It is anticipated that all the terms of
the trans action will be fulfilled and the closing of the sale of AOS will be
accomplished during the first quarter of fiscal 2006.
Section 5 - Corporate Governance and Management
Item 5.02 Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers
On January 3, 2006 and in connection with the execution of the definitive
agreement to sell AOS, Clarence Smith resigned as our Chief Executive Officer,
which resignation has been accepted by the board of directors. Mr. Smith will
remain as a director until the closing of the definitive agreement, at which
time he will resign. Mr. Smith was appointed as a director immediately following
the acquisition of AOS in January 2005 and became our CEO on February 28, 2005.
His resignation as CEO was a provision of the agreement to sell AOS.
On January 6, 2006, our board of directors elected James K. Abcouwer as our
new President and Chief Executive Officer. Mr. Abcouwer fills the vacant CEO
position created by the resignation of Clarence Smith. Mr. Abcouwer, age 52, is
a25-year energy industry executive and former CEO of Columbia Natural Resources,
Inc., an independent natural gas producer in the Appalachian Basin. He has also
served as President and CEO of EnergyUSA, a unit of NiSource Inc. Mr. Abcouwer
is a 1975 graduate of the United States Military Academy at West Point, and
received a Masters in Business Administration degree from Harvard Business
School in 1982. Additionally, he is co-owner of Northstar Energy Corp. of
Charleston, W Va., an independent oil and gas development company.
Also on January 6, 2006, our board announced the promotion of William F.
Woodburn to Chief Operating Officer. Mr. Woodburn, age, 64, has been a director
and executive officer of Trans Energy since August 1991and currently serves as
our Secretary / Treasurer. He has been actively engaged in the oil and gas
business in various capacities for the past twenty years. For several years
prior to 1991, Mr. Woodburn supervised the production of oil and natural gas and
managed the pipeline operations of Tyler Construction Company, Inc. and Tyler
Pipeline, Inc. Prior to his involvement in the oil and gas industry, Mr.
Woodburn was employed by the United States Army Corps of Engineers for
twenty-four years and was resident engineer on several construction projects.
Mr. Woodburn graduated from West Virginia University with a B.S. in civil
engineering.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(c) Exhibits
Exhibit No. Description
10.1 Definitive Agreement to sell Arvilla Oilfield Services, LLC
99.1 Press Release of January 9, 2006
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Notes about Forward-looking Statements
Statements contained in this Current Report which are not historical facts,
including all statements regarding the consummation of the acquisition of
assets, may be considered "forward- looking statements" under the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are based
on current expectations and the current economic environment. Trans Energy
cautions the reader that such forward-looking statements are not guarantees of
future performance. Unknown risks and uncertainties as well as other
uncontrollable or unknown factors could cause actual results to materially
differ from the results, performance or expectations expressed or implied by
such forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRANS ENERGY, INC.
Date: January 9, 2006 By /S/ WILLIAM F. WOODBURN
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William F. Woodburn
Chief Operating Officer and Director
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