- Combination to create the first public
minerals company with oil-weighted assets concentrated in the
core-of-the-core Eagle Ford Shale
- Falcon Minerals will be led by the
experienced Osprey Energy management team in partnership with
Blackstone and structured as a C-corporation
- Transaction includes a $115 million
PIPE investment commitment completed pre-signing for new common
stock ($10.00 per share) and from leading investment firms
- Existing Osprey investors representing
approximately $75 million of additional common stock are committed
to retaining shares through closing and not redeeming their
shares
Osprey Energy Acquisition Corp. (“Osprey”) (NASDAQ:OSPR, OSPRU,
OSPRW), an energy-focused special purpose acquisition entity, today
announced it has entered into a definitive agreement to acquire the
assets of Royal Resources (“Royal”), an entity owned by funds
managed by Blackstone Energy Partners and Blackstone Capital
Partners ("Blackstone"). The acquired Royal assets represent the
entirety of Blackstone's mineral interests in the Eagle Ford Shale,
and the transaction will create a company with a total enterprise
value of approximately $894 million.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20180604005654/en/
The combined company, which will be named Falcon Minerals
Corporation (“Falcon Minerals”), will be led by Osprey’s management
team: Jonathan Cohen, Edward Cohen and Daniel Herz. Blackstone will
retain a significant ownership stake in Falcon Minerals at closing
representing approximately 47% of outstanding common stock.
The formation of Falcon Minerals creates a unique, high growth,
core-of-the-core oil and gas minerals company with top-tier Eagle
Ford and Austin Chalk asset positions covering 251,000 gross unit
mineral acres. Net production over the first quarter was 4,764 boe
per day increasing recently to a rate approaching 7,000 boe per day
from new wells coming on line. Net production for 2018 is expected
to be approximately 6,352 boe per day. Falcon Minerals is expected
to have over 85% of its reserve value in long-lived, undeveloped
acreage with over 3,000 locations which generate IRRs to operators
in excess of 100%. The three largest operators on Falcon Minerals’
lands, which contribute over 90% of reserve value, are
ConocoPhillips, EOG and BHP/Devon.
Falcon Minerals expects to generate cash margins above 90%, and
to distribute nearly all of its free cash flow, and currently
expects to pay an initial cash dividend after closing of the
transactions of $0.90 per share per year. Currently, there are over
1,789 producing wells on the properties with expected 2018 liquids
production of greater than 73%, and over 80% of revenue derived
from oil.
The Eagle Ford and Austin Chalk benefit from proximity to the US
Gulf Coast market and significant in-place infrastructure,
supporting a premium price for crude oil sales relative to WTI,
further advantaging the economics of both plays. Falcon Minerals is
further exposed to potential value in the Marcellus Shale with over
58,000 gross unit mineral acres.
"Osprey went public in July 2017 with the intent to find a world
class and unique energy business that was poised to benefit from a
new phase as a public company, and we believe that is exactly what
we are creating with Falcon Minerals," said Jonathan Z. Cohen, CEO
of Osprey Energy Acquisition Corp. "We will have a unique
opportunity to benefit from some of the highest quality acreage in
the United States, driven by the best operators in the play
dedicated to significantly growing their production across our
position. There is a tremendous opportunity to build on this
excellent business by utilizing our organic growth and acquisition
skills in a highly fragmented oil and gas minerals industry, and we
are thrilled to partner with Blackstone and benefit from their vast
experience in the sector.”
Falcon Minerals Highlights
- 251,000 gross acres to which royalty
applies
- Over 3,000 locations each with an IRR
of greater than 100% to the operator across Karnes, DeWitt and
Gonzales counties
- Net production in the first quarter of
4,764 boe per day, recently approaching 7,000 boe per day from new
wells coming on line
- Consistent cash margins in excess of
~90%, high free cash flow conversion, and a cost structure with no
capital expenditures or direct operating expenses
- Strong basis differentials due to well
established infrastructure in the Eagle Ford and proximity to the
US Gulf Coast
- Strong financial profile with low
leverage
- 2019 free cash flow1 of approximately
$100 million based on a $60/bbl oil price, implying a ~28% discount
to the 2019 peer group average, and representing an 8.3x enterprise
value to 2019 EBITDA
- 2019 free cash flow yield2 expected of
approximately 11.6% at $10.00 per share
- 2018 free cash flow of approximately
$80 million based on a $60/bbl oil price, implying a ~17%
discount to the peer group average
"We have known Jonathan, Ed and Daniel for many years and are
excited to partner with them to lead Falcon Minerals," said Angelo
Acconcia, a Senior Managing Director with Blackstone who oversees
their private equity investments in the oil and gas sector. "Their
prior experience in thoughtfully and accretively building and
realizing significant value at both Atlas Pipeline and Atlas Energy
demonstrate their capability, and the like mindedness we share in
the opportunity, to generate significant long-term value at Falcon
Minerals.”
Transaction Details
On June 3, 2018, Osprey entered into a definitive agreement to
acquire the assets of Royal Resources from Blackstone. Upon the
closing of the business combination, Osprey will be renamed Falcon
Minerals Corporation and will be reorganized to operate as an
“Up-C”, where its operating assets are held in a separate limited
partnership to be named Falcon Minerals Operating Partnership.
Blackstone will contribute the Royal Resources assets to Falcon
Minerals Operating Partnership in exchange for $400 million of cash
and 40 million of common units of Falcon Minerals Operating
Partnership (and an equal number of non-economic shares of Class C
common stock of Falcon Minerals Corporation), subject to certain
adjustments as set forth in the definitive agreement. Each common
unit of Falcon Minerals Operating Partnership (together with one
share of Class C common stock of Falcon Minerals Corporation) will
be exchangeable into one share of Class A common stock of Falcon
Minerals Corporation.
In addition to the consideration received at closing, Blackstone
may earn an additional 10 million common units of Falcon Minerals
Operating Partnership (together with an equivalent number of Class
C common stock of Falcon Minerals Corporation) if the Falcon
Minerals Class A common stock trades above $12.50 per share for 30
days on a volume-weighted average basis, as well as an additional
10 million common units of Falcon Minerals Operating Partnership
(together with an equivalent number of Class C common stock of
Falcon Minerals Corporation) if the Falcon Minerals Class A common
stock trades above $15.00 per share for 30 days on a
volume-weighted average basis, subject to certain conditions and
adjustments as set forth in the definitive agreement.
To finance the transaction, Osprey has entered into agreements
to sell in a private placement approximately 11.5 million shares of
its Class A common stock at a price of $10.00 per share, for a
total of approximately $115 million. The investors in the private
placement include leading financial institutions, as well as
members of Osprey management. The private placement is expected to
close concurrently with the Royal transaction. In addition, Osprey
has received a contractual commitment from all of the investors in
the private placement who currently hold Osprey common stock (which
constitutes approximately $75 million of Osprey common stock in the
aggregate) that they will retain their shares at least through
closing and not redeem their shares for cash. Assuming no
redemptions of Osprey common stock, immediately following the
closing, Blackstone will own approximately 47% of the outstanding
shares of common stock of Falcon Minerals Corporation (assuming
each of its Common Units of Falcon Minerals Corporation are
converted into shares of Class A common stock of Falcon Minerals
Corporation), and the Osprey stockholders (including the PIPE
investors) will own the remaining 53%.
Osprey has also entered into a debt commitment agreement with
certain lenders, pursuant to which the lenders have committed to
make available to Osprey at closing a $500 million revolving credit
facility with an initial borrowing base of $115 million.
The transaction was unanimously approved by the Osprey board of
directors and remains subject to the approval of Osprey
shareholders and the satisfaction or waiver of other customary
conditions. Osprey has secured financing commitments for the
anticipated RBL. After giving effect to any redemptions by the
public shareholders of Osprey, the balance of the approximately
$275 million in cash held in the Osprey trust account, together
with approximately $115 million of private placement proceeds and
the debt financing will be used to pay the cash consideration to
Blackstone and closing costs. Following the consummation of the
transaction, the Falcon Minerals Class A common stock will be
listed on the New York Stock Exchange.
Upon closing, Falcon Minerals Corporation will have 11 persons
on its board of directors, including six directors appointed by
Blackstone, two directors appointed by the holder of Osprey’s
founder shares and three additional independent directors.
Advisors
Credit Suisse Securities (USA) LLC acted as capital markets
advisors to Osprey and sole placement agent on the PIPE; Wachtell,
Lipton, Rosen & Katz acted as legal counsel to Osprey; Paul
Hastings LLP and Ledgewood PC acted as Oil and Gas counsel to
Osprey. Citi acted as financial advisor and capital markets advisor
to Blackstone and is acting as Lead Arranger and Administrative
Agent on the fully underwritten RBL Facility; Kirkland & Ellis
LLP acted as legal counsel to Blackstone.
Investor Webcast and Presentation Information
At 10:00 am EST on June 4, 2018, Osprey will be holding an
investor conference call to discuss the transaction. For those who
wish to participate, the domestic toll-free access number is (877)
522-6073. Once connected with the operator, please provide the
Conference ID number of 9716669 and request access to the Falcon
Minerals Transaction Announcement Investor Call.
A replay of the call will also be available. To access the
replay, the domestic toll-free access number is (855) 859-2056 or
(404) 537-3406 and participants should provide the Conference ID
number of 9716669 and request access to the Falcon Minerals
Transaction Announcement Investor Call.
An investor presentation regarding the transaction has been
filed by Osprey Energy with the SEC on Form 8-K.
About Falcon Minerals Corporation
Falcon Minerals is a C-Corporation formed to own and acquire
high growth core-of-the-core oil and gas minerals which generate
substantial free cash flow. Upon closing, Falcon Minerals will own
mineral, royalty, and over-riding royalty interests covering
251,000 gross unit acres in the Eagle Ford and Austin Chalk in
Karnes County, DeWitt County, and Gonzales County Texas.
About Osprey Energy Acquisition Corp.
Osprey Energy Acquisition Corp. (Nasdaq: OSPR) is an energy
focused special purpose acquisition corporation formed for the
purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business
combination with one or more businesses, capitalizing on its
Management Team's experience to identify, acquire and operate a
business in the energy industry that may provide opportunities for
attractive returns. OSPR completed its $275 Million Initial Public
Offering in July, 2017.
About Blackstone
Blackstone (NYSE:BX) is one of the world's leading investment
firms. We seek to create positive economic impact and long-term
value for our investors, the companies we invest in, and the
communities in which we work. We do this by using extraordinary
people and flexible capital to help companies solve problems. Our
asset management businesses, with over $450 billion in assets under
management, include investment vehicles focused on private equity,
real estate, public debt and equity, non-investment grade credit,
real assets and secondary funds, all on a global basis. Further
information is available at www.blackstone.com. Follow Blackstone
on Twitter @Blackstone.
Forward-Looking Statements
Certain statements contained in this press release, which
reflect the current views of Osprey and Royal with respect to
future events and financial performance, and any other statements
of a future or forward-looking nature, constitute "forward-looking
statements" for the purposes of federal securities laws. These
forward-looking statements include, but are not limited to,
statements with respect to the completion of the transactions
contemplated by the definitive agreement between Osprey and Royal,
the future operating and financial performance, business plans and
prospects of the combined company and the planned dividends of the
combined company. In addition, any statements that refer to
projections, forecasts or other characterizations of future events
or circumstances, including any underlying assumptions, are
forward-looking statements. Words such as "expect," "believe,"
"anticipate," "intend," "estimate," "seek" and variations and
similar words and expressions are intended to identify such
forward-looking statements. The forward-looking statements
contained in this press release are based on Osprey's and Royal's
current expectations and beliefs concerning future developments and
their potential effects on Osprey and Royal. There can be no
assurance that future developments affecting us will be those that
we have anticipated. You should not place undue reliance on these
forward-looking statements. These forward-looking statements
involve a number of risks, uncertainties (some of which are beyond
Osprey's or Royal’s control) or other assumptions that may cause
actual results or performance to be materially different from those
expressed or implied by these forward-looking statements.
A description of certain risks and uncertainties and factors
that could cause actual results to differ materially from past
results and future plans and projected and estimated future results
can be found in Osprey's Annual Report on Form 10-K for the fiscal
year ended December 31, 2017 and in subsequent reports on Form
10-Q, including in the sections thereof captioned "Risk Factors"
and "Cautionary Note Regarding Forward-Looking Statements," as well
as in its subsequent reports on Form 8-K, all of which are filed
with the SEC and available free of charge at www.sec.gov.
None of Osprey, Royal, Blackstone or their respective affiliates
or representatives assumes any obligation to update or correct any
forward-looking statements or other information contained in this
press release.
Additional Information
This press release is for informational purposes only and shall
not constitute an offer to sell or the solicitation of an offer to
buy any securities pursuant to the proposed business combination or
otherwise, nor shall there be any sale of securities in any
jurisdiction in which the offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act. In connection
with the proposed business combination, Osprey intends to file a
proxy statement with the SEC. The definitive proxy statement and
other relevant documents will be sent or given to the stockholders
of Osprey and will contain important information about the proposed
business combination and related matters. Osprey stockholders and
other interested persons are advised to read, when available, the
proxy statement in connection with Osprey's solicitation of proxies
for the meeting of stockholders to be held to approve the business
combination because the proxy statement will contain important
information about the proposed business combination. When
available, the definitive proxy statement will be mailed to the
Osprey stockholders as of a record date to be established for
voting on the business combination. Stockholders will also be able
to obtain copies of the proxy statement, without charge, once
available, at the SEC's website at www.sec.gov.
Participants in the Solicitation
Osprey and its directors and officers may be deemed participants
in the solicitation of proxies of Osprey's stockholders in
connection with the proposed business combination. Osprey
stockholders and other interested persons may obtain, without
charge, more detailed information regarding the directors and
officers of Osprey in Osprey's Registration Statement on Form S-1
initially filed with the SEC on June 28, 2017. 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 definitive proxy
statement and other relevant materials to be filed with the SEC
regarding the proposed business combination if and when they become
available.
1 Osprey defines free cash flow as EBITDA less capital
expenditures.2 Osprey defines free cash flow yield as EBITDA less
capital expenditures less interest divided by market capitalization
at $10.00 per share.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180604005654/en/
For OspreyJeffrey Brotman,
+1-215-832-4161jbrotman@hepcollc.comorFor BlackstonePaula
Chirhart, +1-212-583-5011paula.chirhart@blackstone.com
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