Current EPM Stock Info

Evolution Petroleum Corporation (ticker: EPM) will acquire certain oil and gas assets from an affiliate of Enduro Resource Partners LLC for a purchase price of $27.5 million. Evolution intends to fund the closing of this transaction primarily with cash on hand.

According to Evolution, the agreement includes:

  • A diversified package of producing properties in two primary areas:
    • Permian Basin (approximately 88% of estimated equivalent reserves)
    • East Texas and North Louisiana (approximately 12% of estimated equivalent reserves)
  • Reserves that are 100% non-operated, with quality operating partners
  • Heavily weighted to crude oil, which comprises over 80% of the value of current production
  • Long-life reserves – reserve to production ratio (R/P) over 11 years

Enduro enters Chapter 11

In 2010, Riverstone Holdings LLC and a Texas-based private investor group committed $200 million to Enduro.

Enduro said operations were going to “continue as usual” during the sale process. The company’s first lien lenders will utilize their cash collateral to fund the company throughout the sale process. This arrangement (subject to court approval) is expected to support day-to-day operations and to enough to fund Enduro’s operations during the chapter 11 process.

Employees, royalty, working interest, joint interest billing partners and vendors should expect no material impact on day-to-day operations or interactions with the company, Enduro said.

Enduro has entered into three stalking horse purchase agreements.

Stalking horse

The Evolution-Enduro transaction represents an offer under Section 363 of the U.S. Bankruptcy Code, in connection with the Chapter 11 filing of Enduro. Such offers are commonly referred to as ”stalking horse” bids and are subject to higher bids, in accordance with the bidding procedures approved by the bankruptcy court.

Evolution said it cannot be certain that it will complete this transaction, however, the purchase and sale agreement signed between the two parties provides Evolution with certain important protections in this process, including a break-up fee plus expense reimbursement totaling $1,100,000 if Enduro accepts a higher bid for the properties.

Evolution may also submit a higher bid should it choose to.

The Section 363 sale process is expected to be concluded by mid-July 2018, but given the competitive nature of the Section 363 process, Evolution said it is deferring the public disclosure of some of the financial information and analysis that it would customarily provide relating to valuation and metrics of the transaction.

C-Suite changes

At the age of 59, Evolution President and CEO Randy Keys will retire on May 31, 2018.

Chairman Robert Herlin will move to the position of Executive Chairman and will serve as interim CEO. The board has begun a search for a new president. According to Evolution, Keys has agreed to be available as needed for consulting through the end of the year.

“The board of directors thanks Randy for his service and efforts that culminated in the first potential major acquisition in our strategy to maintain and grow our business,” Herlin said. “Randy presided over the transition of the company from high growth to stable production and a substantial increase in our dividend rate during a challenging period for our industry. We appreciate his contributions and wish him well in retirement.”

Evolution Petroleum, an EnerCom conference presenting company

Evolution Petroleum will be presenting at the 23rd annual edition of The Oil & Gas Conference®. The conference will take place August 19-22, 2018, at the Westin Denver Downtown. Investment and oil and gas professionals may register for the event through the conference website.

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