Contango Oil & Gas Company (“Contango”) (NYSE American: MCF)
and Mid-Con Energy Partners, LP (“Mid-Con”) (NASDAQ: MCEP) today
announced they have entered into an agreement to combine in an
all-stock merger transaction. The combination continues Contango’s
consolidation strategy, increases its exposure to oil reserves at
an attractive price, increases corporate margins via scale and
further cost rationalization, and amplifies Contango’s ability to
play offense amid the dislocation in the sector, while providing
Mid-Con’s unitholders with greater liquidity, financial stability
and opportunities for growth on a larger platform.
HIGHLIGHTS
- Acquisition of PDP heavy reserves by
Contango at an attractive unlevered return
- Accretive to Contango’s reserve
base
- Mid-Con’s assets oil weighted with
low production decline profile, complementing Contango’s higher
production and cash flow profile
- Leverages Contango’s familiarity
with Mid-Con’s assets and operations via Mid-Con’s Management
Services Agreement
- Offers Mid-Con’s unitholders
enhanced liquidity, financial stability and opportunities for
growth through a larger platform
- Further cost rationalization
expected to be realized via consolidation of the entities
- Immediate free cash flow
accretion(1)
- Enhanced liquidity for the combined
entity
- Maintains strong balance sheet and
low leverage profile of Contango
- Maintains simple capital structure
comprised of bank debt and common equity
- Adds PUD inventory with low CAPEX
requirement with opportunity for near term conversion to PDP
TRANSACTION DETAILS
Under the terms of the merger agreement, Mid-Con unitholders
will receive 1.75 shares of Contango common stock for each Mid-Con
common unit owned, representing a 5 percent premium based on a
15-day volume weighted average price. This exchange ratio implies
an enterprise value for the combined entity in excess of $400
million based on Friday’s closing price. Upon completion of the
merger and closing of the concurrently announced private placement
of Contango common stock, Contango shareholders will own
approximately 87 percent of the combined company and Mid-Con
unitholders will own approximately 13 percent of the combined
company on a fully diluted basis.
The transaction, which is expected to close in late 2020 or
early 2021, has been unanimously approved by the conflicts
committee of the board of directors of Mid-Con and by the full
board of directors of Mid-Con, and by the disinterested directors
of the board of directors of Contango. Voting agreements have been
signed by over 50% of holders on both sides of the transaction,
including Goff Capital. The closing is subject to customary
shareholder and unitholder approvals and other customary conditions
to closing. Contango’s senior management team will run the combined
company, and Contango’s board of directors will remain intact. The
combined company will be headquartered in Fort Worth, TX but will
continue to maintain a presence in both the Houston and Oklahoma
markets.
MANAGEMENT COMMENTARY
Wilkie Colyer, Contango’s Chief Executive Officer stated, “This
merger is exactly the type of transaction we look for to enhance
value for our shareholders in the current market. We were able to
substantially increase our reserve base and cash flow in an
accretive transaction while meeting the needs of Mid-Con
unitholders by further rationalizing their cost structure and
mitigating their refinancing risk by combining our respective
credit facilities. In that sense, this is truly a win for both
parties involved in the merger. We of course have great familiarity
with the Mid-Con assets having a Management Services Agreement with
them and having brought on many of their employees, which has
meaningfully enhanced Contango’s expertise. This transaction is
simply the next step, and certainly not our last, in our stated
goal of consolidating a sector that is in dire need of it. This
combination increases our exposure to long lived oil reserves and
is accretive to Contango shareholders. Our definition of accretive,
by the way, is that it increases the intrinsic value of Contango on
a per share basis, and this transaction certainly fits that bill.
It also benefits Mid-Con’s unitholders by offering them enhanced
liquidity, financial stability and opportunities for growth on a
larger platform. We welcome Mid-Con lenders, unitholders, and
employees into the Contango family.”
Bob Boulware, the chairman of Mid-Con’s board of directors and
its conflicts committee of independent, disinterested directors,
stated “This merger was negotiated by our conflicts committee,
which determined, with the advice of its financial and legal
advisors, that the consideration offered in the merger is fair,
from a financial point of view, to Mid-Con’s unaffiliated public
unitholders. We are pleased to be able to provide our unitholders
with the opportunity to transition at an attractive exchange ratio
to ownership of shares in a larger, better capitalized company that
is well positioned for future growth.”
BORROWING BASE
Contango has received commitments from its and Mid-Con’s lenders
that, effective upon the closing of the merger with Mid-Con,
Contango’s borrowing base on its revolving credit facility will be
increased from $75 million to $130 million, with the next regular
redetermination scheduled for May 1, 2021.
FINANCIAL AND OPERATIONAL UPDATE
Contango ended the third quarter with $66 million of debt
outstanding on its $75 million borrowing base credit facility and
approximately $8 million of liquidity. Contango’s sales volumes for
the third quarter are in the range of 16,500 – 17,000 Boe/d, which
is at the high end of the original 14,000 – 17,000 Boe/d guidance.
Realized pricing for the third quarter, without the benefit of
hedges, was in the range of $18.85 – 19.15 per Boe. Lastly, we
incurred approximately $1.5 million of capital expenditures during
the quarter.
ADVISORS
Intrepid Partners, LLC is serving as financial advisor and
Gibson, Dunn & Crutcher LLP is serving as legal advisor to
Contango. Petrie Partners, LLC is serving as financial advisor and
Pillsbury Winthrop Shaw Pittman, LLP is serving as legal advisor to
Mid-Con.
CONFERENCE CALL
Contango management will hold a conference call to discuss the
information described in this press release on Monday, October 26,
2020 at 8:00 a.m. Central Time. Presentation materials will be
available online in advance of the call on Contango’s website at
https://ir.contango.com. Those interested in participating in the
conference call webcast may do so by clinking here to join and
entering your information to be connected. The link becomes active
15 minutes prior to the scheduled start time, and the conference
will call you. If you are not at a computer, you can join by
dialing 1-323-701-0223 (International 1-888-378-4398) and entering
participation code 496240. A replay of the call will be made
available no later than Tuesday, October 27, 2020 at 9:00 a.m.
Central Time through Friday, November 27, 2020 at 9:00 a.m. Central
Time by clicking the audio replay link here and entering
participation code 1907614.
(1) Free cash flow is a non-GAAP measure defined as operating
cash flow less capital expenditures. It should not be considered a
substitute for the GAAP measures operating cash flow or
revenues.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This communication may be deemed to be solicitation material in
respect of the proposed merger (the “Proposed Merger”). The
Proposed Merger will be submitted to Contango’s shareholders and
Mid-Con’s unitholders for their consideration. Contango and Mid-Con
intend to file a preliminary consent statement/proxy
statement/prospectus (the “Consent Statement/Proxy
Statement/Prospectus”) with the Securities and Exchange Commission
(the “SEC”) in connection with the Partnership Unitholder Approval
and the Contango Shareholder Approval (each as defined in the
Merger Agreement) in connection with the Proposed Merger. Contango
intends to file a registration statement on Form S-4 (the “Form
S-4”) with the SEC, in which the Consent Statement/Proxy
Statement/Prospectus will be included as a prospectus. Contango and
Mid-Con also intend to file other relevant documents with the SEC
regarding the Proposed Merger. After the Form S-4 is declared
effective by the SEC, the definitive Consent Statement/Proxy
Statement/Prospectus will be mailed to Contango’s shareholders and
Mid-Con’s unitholders. BEFORE MAKING ANY VOTING OR INVESTMENT
DECISION WITH RESPECT TO THE PROPOSED MERGER, INVESTORS AND
SHAREHOLDERS OF CONTANGO AND INVESTORS AND UNITHOLDERS OF MID-CON
ARE URGED TO READ THE DEFINITIVE CONSENT STATEMENT/PROXY
STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO) AND OTHER RELEVANT MATERIALS
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
MERGER.
The Consent Statement/Proxy Statement/Prospectus, any amendments
or supplements thereto and other relevant materials, and any other
documents filed by Contango or Mid-Con with the SEC, may be
obtained once such documents are filed with the SEC free of charge
at the SEC’s website at www.sec.gov or free of charge from Contango
at www.contango.com or by directing a request to Contango’s
Investor Relations Department at investorrelations@contango.com or
free of charge from Mid-Con at www.mceplp.com or by directing a
request to Mid-Con’s Investor Relations Department at
MSA.OwnerRelations@Contango.com.
ABOUT CONTANGO
Contango Oil & Gas Company is a Houston, Texas based,
independent oil and natural gas company whose business is to
maximize production and cash flow from its offshore properties in
the shallow waters of the Gulf of Mexico and onshore properties in
Texas, Oklahoma, Louisiana and Wyoming and, when determined
appropriate, to use that cash flow to explore, develop, and
increase production from its existing properties, to acquire
additional PDP-heavy crude oil and natural gas properties or to pay
down debt. Additional information is available on the Company's
website at http://contango.com. Information on our website is not
part of this release.
ABOUT MID-CON
Mid-Con Energy is a publicly held Delaware limited partnership
formed in July 2011 to own, acquire and develop producing oil and
natural gas properties in North America, with a focus on Enhanced
Oil Recovery. Mid-Con Energy’s core areas of operation are located
primarily in Oklahoma and Wyoming. For more information, please
visit Mid-Con Energy’s website at www.mceplp.com.
NO OFFER OR SOLICITATION
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, or a solicitation
of any vote or approval, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
PARTICIPANTS IN THE SOLICITATION
Contango, Mid-Con and certain of their respective executive
officers, directors, other members of management and employees may,
under the rules of the SEC, be deemed to be “participants” in the
solicitation of proxies in connection with the Proposed Merger.
Information regarding Contango’s directors and executive officers
is available in its Proxy Statement on Schedule 14A for its 2020
Annual Meeting of Shareholders, filed with the SEC on April 28,
2020 and in its Annual Report on Form 10-K for the year ended
December 31, 2019, filed with the SEC on March 20, 2020.
Information regarding Mid-Con’s directors and executive officers is
available in its Annual Report on Form 10-K for the year ended
December 31, 2019, filed with the SEC on March 12, 2020 and its
Current Reports on Form 8-K, filed with the SEC on June 10, 2020
and August 6, 2020. These documents may be obtained free of charge
from the sources indicated above. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the Form S-4, the Consent Statement/Proxy
Statement/Prospectus and other relevant materials relating to the
Proposed Merger to be filed with the SEC when they become
available. Shareholders, unitholders, potential investors and other
readers should read the Consent Statement/Proxy
Statement/Prospectus carefully when it becomes available before
making any voting or investment decisions.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This communication contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934, as amended.
These statements are based on Contango’s and Mid-Con’s current
expectations. The words and phrases “should”, “could”, “may”,
“will”, “believe”, “plan”, “intend”, “expect”, “potential”,
“possible”, “anticipate”, “estimate”, “forecast”, “view”,
“efforts”, “goal,” “opportunity” and similar expressions identify
forward-looking statements and express Contango’s and Mid-Con’s
expectations about future events. All statements, other than
statements of historical facts, included in this communication that
address activities, events or developments that Contango expects,
believes or anticipates will or may occur in the future are
forward-looking statements. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond
Contango’s and Mid-Con’s control. Consequently, actual future
results could differ materially from Contango’s and Mid-Con’s
expectations due to a number of factors, including, but not limited
to: the risk that Contango’s and Mid-Con’s businesses will not be
integrated successfully; the risk that the cost savings, synergies
and growth from the Proposed Merger may not be fully realized or
may take longer to realize than expected; the diversion of
management time on transaction-related issues; the effect of future
regulatory or legislative actions on the companies or the
industries in which they operate; the risk that the credit ratings
of the combined company or its subsidiaries may be different from
what the companies expect; the risk that a condition to closing of
the Proposed Merger may not be satisfied; the length of time
necessary to consummate the Proposed Merger, which may be longer
than anticipated for various reasons; potential liability resulting
from pending or future litigation; changes in the general economic
environment, or social or political conditions, that could affect
the businesses; the potential impact of the announcement or
consummation of the Proposed Merger on relationships with
customers, suppliers, competitors, management and other employees;
the effect of this communication of the Proposed Merger on
Contango’s stock price or Mid-Con’s unit price; the ability to hire
and retain key personnel; reliance on and integration of
information technology systems; the risks associated with
assumptions the parties make in connection with the parties’
critical accounting estimates and legal proceedings; the volatility
of oil, gas and natural gas liquids (NGL) prices; uncertainties
inherent in estimating oil, gas and NGL reserves; the impact of
reduced demand for our products and products made from them due to
governmental and societal actions taken in response to the COVID-19
pandemic; the uncertainties, costs and risks involved in Contango’s
and Mid-Con’s operations, including as a result of employee
misconduct; natural disasters, pandemics, epidemics (including
COVID-19 and any escalation or worsening thereof) or other public
health conditions; counterparty credit risks; risks relating to
Contango’s and Mid-Con’s indebtedness; risks related to Contango’s
and Mid-Con’s hedging activities; competition for assets,
materials, people and capital; regulatory restrictions, compliance
costs and other risks relating to governmental regulation,
including with respect to environmental matters; cyberattack risks;
Contango’s and Mid-Con’s limited control over third parties who
operate some of their respective oil and gas properties; midstream
capacity constraints and potential interruptions in production; the
extent to which insurance covers any losses Contango and Mid-Con
may experience; risks related to investors attempting to effect
change; general domestic and international economic and political
conditions, including the impact of COVID-19; and changes in tax,
environmental and other laws, including court rulings, applicable
to Contango’s and Mid-Con’s business.
The financial and operational update provided in this release
represents management’s current estimates. Neither Contango’s nor
Mid-Con’s results for the third quarter are final until such
results are published in Contango’s and Mid-Con’s Forms 10-Q filed
with the SEC, and the final results may differ from the estimates
presented in this release.
In addition to the foregoing, the COVID-19 pandemic and its
related repercussions have created significant volatility,
uncertainty and turmoil in the global economy and Contango’s and
Mid-Con’s industry. This turmoil has included an unprecedented
supply-and-demand imbalance for oil and other commodities,
resulting in a swift and material decline in commodity prices in
early 2020. Contango’s and Mid-Con’s future actual results could
differ materially from the forward-looking statements in this
communication due to the COVID-19 pandemic and related impacts,
including, by, among other things: contributing to a sustained or
further deterioration in commodity prices; causing takeaway
capacity constraints for production, resulting in further
production shut-ins and additional downward pressure on impacted
regional pricing differentials; limiting Contango’s and Mid-Con’s
ability to access sources of capital due to disruptions in
financial markets; increasing the risk of a downgrade from credit
rating agencies; exacerbating counterparty credit risks and the
risk of supply chain interruptions; and increasing the risk of
operational disruptions due to social distancing measures and other
changes to business practices. Additional information concerning
other risk factors is also contained in Contango’s and Mid-Con’s
most recently filed Annual Reports on Form 10-K, subsequent
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
other SEC filings.
Many of these risks, uncertainties and assumptions are beyond
Contango’s and Mid-Con’s ability to control or predict. Because of
these risks, uncertainties and assumptions, you should not place
undue reliance on these forward-looking statements. Nothing in this
communication is intended, or is to be construed, as a profit
forecast or to be interpreted to mean that earnings per share or
unit of Contango and Mid-Con, as applicable, for the current or any
future financial years or those of the combined company will
necessarily match or exceed the historical published earnings per
share or unit of Contango and Mid-Con, as applicable. Contango and
Mid-Con do not give any assurance (1) that either Contango or
Mid-Con will achieve their expectations, or (2) concerning any
result or the timing thereof, in each case, with respect to the
Proposed Merger or any regulatory action, administrative
proceedings, government investigations, litigation, warning
letters, consent decree, cost reductions, business strategies,
earnings or revenue trends or future financial results.
All subsequent written and oral forward-looking statements
concerning Contango, Mid-Con or the Proposed Merger, the combined
company or other matters and attributable to Contango, Mid-Con or
any person acting on their behalf are expressly qualified in their
entirety by the cautionary statements above. Contango and Mid-Con
assume no duty to update or revise their respective forward-looking
statements based on new information, future events or
otherwise.
Contact:Contango Oil & Gas CompanyFarley
Dakan – (817) 502-6254President
Mid Con Energy Partners (NASDAQ:MCEP)
과거 데이터 주식 차트
부터 5월(5) 2024 으로 6월(6) 2024
Mid Con Energy Partners (NASDAQ:MCEP)
과거 데이터 주식 차트
부터 6월(6) 2023 으로 6월(6) 2024