EnerJex Resources Inc. (NYSEAMERICAN:ENRJ)
EnerJex Resources Inc. (NYSEAMERICAN:ENRJ) shares gained 43.9% after the independent energy company announced it had entered into a merger definitive agreement with AgEagle Aerial Systems. The merger will expand the company’s footprint into the commercial agriculture drone business.
AgEagle boasts a product portfolio designed to help improve farming techniques with GPS technology and high-resolution aerial imagery. The precision agriculture sector presents unique growth opportunities given that there are more than 2.1 million farms that the combined company will be able to target.
“Our goal at EnerJex has been to maximize stockholder value and we believe AgEagle, with its strong leadership team, is well-positioned to capitalize on the fast-growing agriculture drone market,” said Louis Schott, CEO of EnerJex. “While AgEagle is focused on the agriculture market, we believe there is opportunity for drones in the oil and gas.
Investor’s reaction to the proposed merger has been positive seen by the stock breaking a key resistance level after consolodating for the better part of the year. The stock is now up by more than 30% for the year.
Under the terms of the merger agreement, EnerJex Resources Inc. (NYSEAMERICAN:ENRJ)’s Series A preferred shareholders are to own approximately 15% of the combined company. The transaction values AgEagle at $20 million prior to any financing. Each company’s board of directors have approved the proposed merger, which is set to be finalized in the fourth quarter.
However, shareholders of both EnerJex Resources Inc. (NYSEAMERICAN:ENRJ) and AgEagle must approve the transaction before it is consummated. Other closing conditions include the raising of at least $4 million, and approval by the NYSE for the listing of the combined company’s common stock.
EnerJex has announced plans to divest its principal assets including its Kansas oil and gas properties in anticipation of the merger.
Separately, EnerJex Resources Inc. (NYSEAMERICAN:ENRJ) has received a notice of non-compliance from the NASDAQ Capital Market. The notice raises concerns about the stockholder’s equity which has fallen below the minimum $2 million requirements. The share price is another concern – it has dropped below the $1 a share bid requirement
EnerJex Resources Inc. (NYSEAMERICAN:ENRJ) has since been given until November 19, 2017, to file a detailed plan on how it plans to regain compliance before April 19, 2019.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.