Annual report pursuant to Section 13 and 15(d)

STOCKHOLDERS' EQUITY

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STOCKHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
STOCKHOLDERS' EQUITY STOCKHOLDERS' EQUITY
Chapter 11 Bankruptcy

On February 25, 2024, the Company filed a voluntary petition to commence proceedings under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. See Note 1 ("Introduction And Basis Of Presentation") under the heading "Chapter 11 Bankruptcy" for more information regarding the Chapter 11 Case.
Stock-Based Compensation
On May 25, 2022, the Company's Stockholders approved the CorEnergy Infrastructure Trust, Inc. Omnibus Equity Incentive Plan (the "Omnibus Plan") (3,000,000 shares of Common Stock authorized), which allows the Company to grant equity awards to its employees, non-employee directors, and consultants in its employ or service (or the employ or service of any parent, subsidiary or affiliate). Incentive compensation programs play a pivotal role in the Company's effort to attract and retain key personnel essential to its long-term growth and financial success, and align long term interests of recipients with the Company's stockholders. Under the Omnibus Plan, awards may be granted in the form of options, restricted stock, restricted stock units ("RSU"s), stock appreciation rights, Common Stock awards, cash-based awards and performance-based awards.
On May 26, 2022, the Company filed a Form S-8 registration statement with the SEC, pursuant to which it registered 3,000,000 shares of Common Stock for issuance under the Omnibus Plan. As of December 31, 2023, the Company has issued 80,817 shares of Common Stock and 473,103 RSUs (net of forfeitures) to non-employee directors and certain of the Company’s employees, respectively, under the Omnibus Plan resulting in remaining availability of 2,236,293 shares of Common Stock under the plan. On February 25, 2024, the Company filed a voluntary petition under Chapter 11 of Bankruptcy Code. As a result of the Chapter 11 Case, effective March 14, 2024, the Company terminated all grants of RSU's under the Omnibus Plan and all outstanding RSU awards thereunder were canceled pursuant to the registration statements. All cash-based awards granted under the Omnibus Plan remain in effect.
Director Stock-Based Compensation
No Common Stock grants were made to the Board during the year ended December 31, 2023. During the year ended December 31, 2022, members of the Board were granted 80,817 fully vested shares of Common Stock at an aggregated weighted average grant date fair value of $2.23 per share.
The Company recognized $0 and $180 thousand of expense in general and administrative expense for the year ended December 31, 2023 and 2022, respectively, in connection with these grants.
Restricted Stock Units
The Company’s Board has granted awards of RSU's, to certain of the Company’s employees under the Omnibus Plan. The number of awards granted to each employee is derived from the employee's bonus target and a 20-day volume weighted average price (VWAP) of CorEnergy's Common Stock with the number of RSUs fixed as of the grant date. The Company records stock-based compensation expense on a ratable recognition method over the requisite service period for the entire award. Each RSU represents the right to receive one share of Common Stock at a future date. The RSUs vest over three years, with 1/3 vesting on March 15th each year. These RSUs will be settled within 30 days of vesting, and will accrue dividend equivalents, when and if declared, equal to dividends declared on the Company's Common Stock over the vesting period, which will be paid to the holder in cash or, at the discretion of the Compensation and Corporate Governance Committee of the Board, in the form of additional shares of Common Stock having a fair market value equal to the amount of such dividend equivalents upon vesting of the units. Forfeitures for the RSU's and dividend equivalents will be accounted for when they occur.
The following table represents the RSU activity for the year ended December 31, 2023:
Restricted Stock Units Weighted Average Grant Date
Fair Value
Outstanding at January 1, 2023 674,312  $ 2.58 
Granted —  — 
Vested (153,202) 2.58 
Forfeited (201,209) 2.58 
Outstanding at December 31, 2023 319,901  $ 2.58 
Expected to vest as of December 31, 2023 — 
The following table represents the nonvested RSU activity for the year ended December 31, 2022:
Restricted Stock Units Weighted Average Grant Date
Fair Value
Outstanding at January 1, 2022 —  $ — 
Granted 682,890  2.58 
Vested —  — 
Forfeited (8,578) 2.58 
Outstanding at December 31, 2022 674,312  $ 2.58 
Expected to vest as of December 31, 2022 674,312 
As of December 31, 2023, the estimated remaining unrecognized compensation cost related to stock-based compensation arrangements was $483 thousand. The weighted average period over which this remaining compensation expense is expected to be recognized is 1.2 years. See subsequent event below.
On February 25, 2024, the Company filed a voluntary petition under Chapter 11 of the Bankruptcy Code. In conjunction, the Board of Directors cancelled all of the outstanding unvested RSU awards previously granted to management and employees, resulting in expense of $483 thousand.
The following table presents the Company's stock-based compensation expense:
For the Year Ended
December 31, 2023 December 31, 2022
General and administrative expense $ 260,169  $ 540,891 
Transportation and distribution expense 44,690  71,226 
Total $ 304,859  $ 612,117 
Preferred Stock
The Company's authorized preferred stock consists of 69,367,000 shares with a par value of $0.001 per share. On January 27, 2015, the Company sold, in an underwritten public offering, 2,250,000 depositary shares, each representing 1/100th of a share of Series A Preferred Stock. Pursuant to this offering, the Company issued 22,500 whole shares of Series A Preferred Stock. On April 18, 2017, the Company closed a follow-on underwritten public offering of 2,800,000 depositary shares, each representing 1/100th of a share of 7.375% Series A Preferred Stock, at a price of $25.00 per depositary share. On May 10, 2017, the Company sold an additional 150,000 depositary shares at a public offering price of $25.00 per depositary share in connection with the underwriters' exercise of their over-allotment option to purchase additional shares. Following the offering, the Company had a total of 5,200,000 depositary shares outstanding, or 52,000 whole shares.
The depositary shares pay an annual dividend of $1.84375 per share, equivalent to 7.375% of the $25.00 liquidation preference. The depositary shares may be redeemed on or after January 27, 2020, at the Company's option, in whole or in part, at the $25.00 liquidation preference plus all accrued and unpaid dividends to, but not including, the date of redemption. The depositary shares have no stated maturity, are not subject to any sinking fund or mandatory redemption and are not convertible into any other securities of the Company except in connection with certain changes of control. Holders of the depositary shares generally have no voting rights, except for limited voting rights if the Company fails to pay dividends for six or more quarters (whether or not consecutive) and in certain other circumstances. The depositary shares representing the Series A Preferred Stock trade on the OTC markets under the ticker "CORLQ."
As of December 31, 2023, the Company had a total of 5,181,027 depositary shares outstanding, or approximately 51,810 whole shares, with an aggregate par value of $51.81.
Common Stock
As of December 31, 2023, the Company had 15,353,833 of common shares issued and outstanding.
Class B Common Stock
On June 29, 2021, the stockholders approved (i) the issuance of Class B Common Stock upon conversion of the Series B Preferred Stock issuable pursuant to the terms of the Crimson Transaction, which will effectively make the Crimson Class A-2 Units exchangeable directly for Class B Common Stock following receipt of CPUC approval, and (ii) the issuance of Class B Common Stock pursuant to the terms of the Internalization. On July 6, 2021, the Company issued 683,761 Class B common shares to the Contributors as partial consideration for the Internalization transaction. The Crimson Class A-3 Units are also exchangeable directly for Class B Common Stock following receipt of CPUC approval.
On February 4, 2024, upon the third anniversary of the closing date of the Crimson Transaction, the Company's Class B Common Stock was converted into Common Stock at a ratio of 0.68:1.00, resulting in 464,957 new shares of Common Stock and zero shares of Class B Common Stock outstanding. The Crimson Class A-2 Units and Class A-3 units will now be exchangeable for Common Stock as noted below.
Dividends

On February 3, 2023, the Board suspended dividend payments on the Company's Common Stock and Series A Preferred Stock. The Series A Preferred Stock dividends are cumulative and will accrue at their stated rate during any period in which dividends are not paid. Any accrued Series A Preferred Stock dividends must be paid prior to the Company resuming common dividend payments. Based on the suspension of dividend payments to CorEnergy’s public equity holders, the Crimson Class A-1, Class A-2 and Class A-3 Units will not receive dividend payments. As of December 31, 2023, the Company had $9.6 million in cumulative unpaid dividends related to its Series A Preferred Stock, which will be paid upon declaration by the Board or upon
liquidation of the Company. The preferred return on the Crimson A-1 Units are pari passu to the Series A Preferred Stock dividends. As of December 31, 2023, the Company had $3.2 million in cumulative unpaid distributions related to the Crimson Class A-1 Units. The Company expects that the Chapter 11 reorganization will extinguish all claims related to the foregoing unpaid dividends and distributions.
Non-Controlling Interest
In February 2021, the Company completed the acquisition of a 49.50% voting interest in Crimson. John D. Grier, M. Bridget Grier, and certain of their affiliated trusts (collectively, the "Grier Members") own the remaining 50.50% voting interest in Crimson. As a part of the Crimson Transaction, the Company and the Grier Members entered into a Third Amended and Restated LLC Agreement of Crimson (the "Third LLC Agreement"). Pursuant to the terms of the Third LLC Agreement, the Grier Members and the Company's interests in Crimson are summarized in the table below:
As of December 31, 2023
Grier Members CorEnergy
(in units, except as noted)
Economic ownership interests in Crimson Midstream Holdings, LLC
Class A-1 Units 1,650,245  — 
Class A-2 Units 2,460,414  — 
Class A-3 Units 2,450,142  — 
Class B-1 Units —  10,000 
Voting ownership interests in Crimson Midstream Holdings, LLC
Class C-1 Units 505,000  495,000 
Voting Interests of Class C-1 Units (%) 50.50  % 49.50  %
In June 2021, the final working capital adjustment was made for the Crimson Transaction, which resulted in an increase in the assets acquired of $1.8 million (as further described above in Note 3 ("Acquisition"). This resulted in 37,043 Class A-1 Units being issued to the Grier Members. The newly issued units resulted in an increase in non-controlling interest of $883 thousand.
After working capital adjustments, the fair value of the Grier Members' non-controlling interest, which is represented by the Crimson Class A-1, Class A-2, and Class A-3 Units listed above, was $116.2 million as of the acquisition date. As described further below, the Class A-1, Class A-2, and Class A-3 Units were eventually to be exchanged for shares of the Company's common and preferred stock subject to the approval of the CPUC ("CPUC Approval"). The Crimson Class A-1, Class A-2, and Class A-3 Units held by the Grier Members and the Crimson Class B-1 Units held by the Company represent economic interests in Crimson while the Crimson Class C-1 Units represent voting interests.
Upon receipt of CPUC approval for a change of control of Crimson's CPUC regulated assets ("CPUC Approval"), the parties were to enter into a Fourth Amended and Restated LLC Agreement of Crimson (the "Fourth LLC Agreement"), which would, among other things, (i) give the Company voting control of Crimson and its assets in connection with an anticipated further restructuring of the Company's asset ownership structure and (ii) provide the Grier Members and management members (as defined below) the right to exchange their entire interest in Crimson for securities of the Company as follows:
•Crimson Class A-1 Units would become exchangeable for up to 1,755,579, (which includes the addition of 37,043 shares as a result of the working capital adjustment) of the Company's depositary shares, each representing 1/100th of a share of the Company's Series A Preferred Stock (prior to the changes made, effective June 30, 2021, pursuant to the Stock Exchange Agreement described in the Company’s Current Report Form 8-K filed July 12, 2021, the Class A-1 Units would have become exchangeable into the Company's 9.0% Series C Preferred Stock).

•Crimson Class A-2 units would become exchangeable for up to 8,762,158 shares of the Company's non-listed Class B Common Stock. After the conversion of the Company's Class B Common Stock into Common Stock on February 4, 2024, the Class A-2 Units would be directly exchangeable for 5,958,268 shares of Common Stock.

•Crimson Class A-3 Units will become exchangeable for up to 2,450,142 additional shares of the Company's non-listed Class B Common Stock. After the conversion of the Company's Class B Common Stock into Common Stock on February 4, 2024, the Class A-3 Units will be directly exchangeable for 1,666,097 shares of Common Stock.
Class B Common Stock would eventually be converted into Common Stock on the occurrence of the earlier of the following: (i) the occurrence of the third anniversary of the closing date of the Crimson Transaction or (ii) the satisfaction of certain conditions related to an increase in the relative dividend rate of the Common Stock.
On February 4, 2024, upon the third anniversary of the closing date of the Crimson Transaction, the Company's Class B Common Stock was converted into Common Stock at a ratio of 0.68:1.00.
Prior to exchange of the Crimson Class A-1, Class A-2, and Class A-3 Units into corresponding Company securities (and after giving effect to the changes to the Company securities into which the Crimson Class A-1 and Class A-2 Units may be exchanged, as described above), the Grier Members only have the right to receive distributions to the extent that the Board determines dividends would be payable if they held the shares of Series A Preferred (for the Crimson Class A-1 Units), Series B Preferred (for the Crimson Class A-2 Units prior to July 7, 2021), and Class B Common Stock (for the Crimson Class A-2 Units (on and after July 7, 2021) and Crimson Class A-3 Units), respectively, regardless of whether the securities are outstanding. If the respective shares of Series A Preferred, Series B Preferred and Class B Common Stock are not outstanding, the Board must consider that they would be outstanding when declaring dividends on the Common Stock. Following CPUC Approval, the terms of the Fourth LLC Agreement would provide that such rights would continue until the Grier Members elect to exchange the Crimson Class A-1, Class A-2, and Class A-3 Units for the corresponding securities of the Company. In addition, after CPUC Approval, certain Crimson Units held by the Grier Members were expected to be transferred to other individuals currently managing Crimson (the "Management Members"). The following table summarizes the distributions payable under the Crimson Class A-1, Class A-2, and Class A-3 Units as if the Grier Members held the respective underlying Company securities. The Crimson Class A-1, Class A-2, and Class A-3 Units would be entitled to the distribution regardless of whether the corresponding Company security is outstanding.
Units Distribution Rights of CorEnergy Securities Liquidation Preference as of December 31, 2023 Annual Distribution per Share
Class A-1 Units
7.375% Series A Cumulative Redeemable Preferred Stock(1)
$ 26.84  $ 1.84 
Class A-2 Units Class B Common Stock N/A
Varies(2)
Class A-3 Units Class B Common Stock N/A
Varies(2)
(1) The Series A Preferred Stock will accumulate quarterly dividends and will be paid upon declaration by the Board. The liquidation preference is made up of the $25.00 liquidation preference and the $1.84 unpaid cumulative quarterly dividend for Q1, Q2, Q3, and Q4 of 2023.
During the year ended December 31, 2021, preferred returns of $2.3 million were earned by the Grier Members for the Crimson Class A-1 Units. A paid-in-kind distribution of 24,414 additional Class A-2 Units ($610 thousand) based on distributions that would have been payable on the Series B Preferred Stock. No distributions were paid to the Class A-3 Units as no distributions were declared on the Class B Common Stock.
During the year ended December 31, 2022, preferred returns of $3.2 million were earned by the Grier Members for the Class A-1 Units. No distributions were paid for the Class A-2 or Class A-3 Units as no distributions were declared on the Class B Common Stock.
During the year ended December 31, 2023, preferred returns of $3.2 million were earned by the Grier Members for the Crimson Class A-1 Units, Therefore, there was an allocation of Crimson net income to non-controlling interest in the amount of $3.2 million. No dividends were declared for the Crimson Class A-2 or Class A-3 Units.
See Note 1 ("Introduction And Basis Of Presentation") under the heading "Chapter 11 Bankruptcy" for more information regarding the proposed treatment of the foregoing Crimson units in the Chapter 11 Case.
Shelf Registration
On February 25, 2024, the Company filed a voluntary petition under Chapter 11 of the Bankruptcy Code. As a result, on February 27, 2024 and March 11, 2024, the Company terminated all offerings of securities pursuant to its prior registration statements and terminated the effectiveness of such registration statements, respectively.
On October 30, 2018, the Company filed a shelf registration statement with the SEC, pursuant to which it registered 1,000,000 shares of Common Stock for issuance under its dividend reinvestment plan. As of December 31, 2023, the Company has issued 386,379 shares of Common Stock under its dividend reinvestment plan pursuant to the shelf registration, resulting in remaining availability (subject to the current limitation discussed below) of 613,621 shares of Common Stock.
On September 16, 2021, the Company had a resale shelf registration statement declared effective by the SEC, pursuant to which it registered the following securities that were issued in connection with the Internalization for resale by the Contributors: 1,837,607 shares of Common Stock (including both (i) 1,153,846 shares of Common Stock issued at the closing of the Internalization transaction and (ii) up to 683,761 additional shares of Common Stock, which may be acquired by the Contributors upon the conversion of outstanding shares of our unlisted Class B Common Stock issued at the closing of the Internalization) and 170,213 depositary shares, each representing 1/100th fractional interest of a share of Series A Preferred Stock issued at the closing of the Internalization transaction.
On November 3, 2021, the Company filed a new shelf registration statement, which replaced the previous shelf registration statement, declared effective on November 17, 2021 by the SEC, pursuant to which the Company may publicly offer additional debt or equity securities with an aggregate offering price of up to $600.0 million. As of December 31, 2023, the Company has not issued any securities under this new shelf registration statement, so total availability remains at $600.0 million.