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): April 7, 2006
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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 2 - Financial Information
Item 2.01 Completion of Acquisition or Disposition of Assets
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On April 7, 2006, Trans Energy, Inc. finalized the 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, which
agreement was initially entered into on January 3, 2006. Under the terms of the
definitive agreement, Trans Energy's wholly owned subsidiary, Arvilla, Inc.,
sold 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").
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.
As a result of consummating the definitive agreement, Clarence and Rebecca
Smith returned to Trans Energy 521,411 shares of their Trans Energy common
stock. The Smiths have also conveyed 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 originally was 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. However, pursuant to the
First Amendment to Definitive Agreement, the parties agreed that the wells would
be transferred at the closing and Trans Energy agreed to pay AOS $176,239 on or
before April 30, 2006, and pay Arvilla Pipeline $115,000 on or before April 30,
2006. To secure these payments by Trans Energy, Clarence and Rebecca Smith will
hold a lien on a certain Lyon Leasehold Deed of Trust until the debt is
satisfied.
An additional term of the definitive agreement provided that each of
Clarence and Rebecca Smith received bonuses equal to approximately $85,000. A
further condition of the closing included 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.
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Upon execution of the definitive agreement, Clarence Smith resigned as
Chief Executive Officer of Trans Energy, but remained on Trans Energy's board of
directors until the closing. At the closing, both Clarence and Rebecca Smith
resigned as directors of Trans Energy and Arvilla, Inc. Clarence and Rebecca
Smith have also agreed not to sell an amount of their remaining Trans Energy
common stock during each calendar quarter on or after March 22, 2006, in an
aggregate amount greater that (i) 50,000 shares (adjusted for stock splits or
stock dividends; or (ii) one percent of the total outstanding shares of Trans
Energy common stock on the date of any such sale.
Finally, the closing of the transaction was 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. That opinion was issued on March 31, 2006.
Section 5 - Corporate Governance and Management
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Item 5.02 Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers
In connection with the sale of AOS, effective at the closing on April 7,
2006, Clarence Smith and Rebecca Smith resigned as directors. The resignations
were a direct result of the closing of the sale of AOS. The Company has not made
any immediate plans to fill the vacancies left on the board of directors by the
resignations.
Section 9 - Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
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(c) Exhibits
Exhibit No. Description
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10.1* Definitive Agreement to sell Arvilla Oilfield Services, LLC
10.2 First Amendment to Definitive Agreement
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* Included as an exhibit to Form 8-K filed January 9, 2006
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.
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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: April 13, 2006 By /S/ WILLIAM F. WOODBURN
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William F. Woodburn
Chief Operating Officer and Director
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