Dallas, Texas, USA
December 5, 2024
Arcadia Biosciences, Inc.® (Nasdaq: RKDA) and Roosevelt Resources LP announced today that they have entered into a definitive securities exchange agreement which, when completed, will combine the two companies in an all-stock transaction. Under the terms of the agreement, Arcadia will issue to the partners of Roosevelt shares of Arcadia common stock at the closing of the transaction in exchange for all of the equity interests in Roosevelt. Following the closing of the transaction, the current equity owners of Roosevelt and the Arcadia shareholders as of the closing are expected to own approximately 90% and 10%, respectively, of the outstanding shares of Arcadia, subject to certain possible adjustments as provided in the definitive agreement.
“Since July 2023, Arcadia has been undergoing a strategic review with external advisors to evaluate the best alternatives for maximizing shareholder value,” said T.J. Schaefer, president and CEO of Arcadia. “During that time, we have streamlined our operations to focus on Zola® coconut water, reduced operating expenses and generated non-dilutive capital through the sale of our GoodWheatTM brand and our wheat IP. After a comprehensive and prolonged review, we have concluded that a business combination with Roosevelt Resources is the best alternative to create value for Arcadia and its shareholders.”
Roosevelt is a privately held, Dallas, Texas based exploration and production company led by industry veteran Elliott “Tony” Roosevelt, Jr. and his team of experienced oil and gas professionals with an extensive background in development of major oil and natural gas projects. Roosevelt’s primary asset is a carbon capture utilization and storage (CCUS) oil and natural gas project spanning 16,208 (13,892 net) contiguous acres on the Northwest Shelf of the Texas Permian Basin that Roosevelt plans to develop over the next 40+ years as an enhanced oil recovery (EOR) project reaching an anticipated peak production capacity in 2051 of 55,000 gross barrels of oil equivalent per day (boepd). [1]
Roosevelt’s Assets and Operations
- Roosevelt’s CCUS project is located within the RR-Googins field, which is part of the Texas Railroad Commission designated Platang (San Andres) Field in Yoakum County, Texas and covers 25 square-miles. The planned development of the project is expected to result in one of the largest CCUS projects in the United States.
- Roosevelt has commissioned third party studies with respect to the oil in place in the project which serve as the framework for the full field development. The most recent model prepared by Schlumberger estimates 956 million gross technically recoverable barrels of oil equivalent (“boe”) over an estimated 70-year life of the project. [1]
- Over $82 million has been invested by Roosevelt in the project to date with a goal of reducing risks relating to the development plan. Appraisal wells confirming hydrocarbon saturation in the San Andres reservoir within the RR-Googins field have been on-line since 2015, and have produced approximately 1.2 million gross boe since then, with current production of approximately 450 gross boepd. The internally prepared reserve report of Roosevelt as of September 30, 2024 using the SEC pricing methodology estimates proved undeveloped reserves of approximately 780 million gross boe and proved developed producing reserves of approximately 3.8 million gross boe.
- Roosevelt intends to deploy the use of horizontal drilling to construct carbon dioxide (CO2) injection wells together with producing hydrocarbon wells, with the goal of leveraging improved capital efficiency compared to conventional straight hole drilling for subsurface CO2 flooding.
- Roosevelt estimates that development costs to complete the initial CO2 distribution system, drill CO2 injection wells and complete initial CO2 injection(s) through 2025 will be in the range of $125 million. Roosevelt’s development anticipates that field total production will increase an average of approximately 4,000 gross boepd each year for the first ten years after CO2 response, reaching an anticipated rate exceeding 40,000 gross and remaining greater than 40,000 gross boepd for over 30 years. It is anticipated that a peak production rate of approximately 55,000 gross boepd will be achieved for ten years beginning in 2051.
- Roosevelt is currently in discussions with various groups to source anthropogenic CO2 long-term supply agreements that Roosevelt believes should result in carbon advantaged oil production as the project develops.
- The RR-Googins field is transversed by a major CO2 pipeline and is strategically located approximately 20 miles from existing infrastructure in the Permian Basin including Denver City, the world’s largest CO2 hub distributing CO2 from the Cortez, Sheep Mountain and Bravo CO2 pipelines.
- Roosevelt intends to apply a Miscible Ascending Dispersion (MAD) method to the field utilizing both natural and anthropogenic CO2 in seeking to recognize a higher recovery factor compared to traditional CO2 floods elsewhere in the Permian Basin. The MAD application currently has a processing patent application pending that, if granted, would allow Roosevelt to apply the MAD method to other fields and basins to achieve higher rates of oil recovery.
About the Proposed Transaction, Management and Organization
At the closing of the transaction and thereafter, the following are expected to occur:
- Arcadia will effectuate a change of its corporate name to Roosevelt Resources, Inc.
- Assuming Nasdaq approval of the company’s application for continued listing of its shares on the Nasdaq Capital Market, the company’s shares are expected to trade under a new trading symbol.
- Current management of Roosevelt will manage the combined entity with Tony Roosevelt serving as chief executive officer, Jimmy Hawkins serving as president and chief operations officer, and Jerrel Branson serving as chief financial officer.
- One or more members of Arcadia management and personnel may continue to assist in managing the existing on-going operations of Arcadia.
Elliott “Tony” Roosevelt, Jr., chairman and CEO of Roosevelt stated, “This asset has been in the Roosevelt Family for over 100 years. Starting in 2007, we started the study and evaluation of the RR-Googins field to position it for field wide development. Through the application of technology, drilling and producing oil and planning and sourcing necessary components for field development, we believe we are positioned to now execute on this promising project. This business combination with Arcadia will position us to continue the next steps in this field development.”
Investor Call
Senior management from Arcadia and Roosevelt will hold an investor call on December 11, 2024 at 4:30 p.m. ET to discuss key details and benefits of this transaction. Interested participants may join the conference call using the following options:
- An audio-only webcast of the conference call will be available, with a link posted in the Investors section of Arcadia’s website.
- To join the live call, please register here, and a dial-in number and unique PIN will be provided.
The related slide presentation will be available in the Investors section of Arcadia’s website at www.arcadiabio.com and on Roosevelt’s website at www.rooseveltresources.com.
Timing and Approvals
The transaction is expected to close during the first quarter of 2025 or thereafter, and it is subject to customary closing conditions and regulatory approvals, including the filing and effectiveness of a registration statement to be filed by Arcadia with the Securities and Exchange Commission, approval by the Arcadia stockholders, at a special meeting of stockholders, of proposals relating to the proposed transaction, approval by Nasdaq of the shares to be issued in the transaction and continued listing of the common stock on the Nasdaq Capital Market, and other closing conditions.
Transaction Advisors
Lake Street Capital Markets acted as exclusive financial advisor to Arcadia, and Weintraub Tobin is serving as legal advisor to Arcadia.
Roth Capital Partners acted as exclusive financial advisor to Roosevelt, and Jones & Keller is serving as legal advisor to Roosevelt.
About Arcadia Biosciences, Inc.
Since 2002, Arcadia Biosciences (Nasdaq: RKDA) has been innovating high-value, healthy ingredients to meet consumer demands for healthier choices. With its roots in agricultural innovation, Arcadia cultivates next-generation wellness products. For more information, visit www.arcadiabio.com.
About Roosevelt Resources, LP
Since 2007, Roosevelt has assembled a proposed carbon capture utilization and storage (CCUS) project spanning 16,208 gross (13,892 net) contiguous acres in the Permian Basin planned to be produced as a CO2 enhanced oil recovery (EOR) project. For more information visit www.rooseveltresources.com.
Topics
Species
