GREENWOOD VILLAGE, Colo. and
OKLAHOMA CITY, Oct. 21, 2020 /PRNewswire/ -- Tengasco Inc. (NYSE
American: TGC) ("Tengasco") and Riley Exploration – Permian, LLC
("Riley") announced today that they have entered into a definitive
merger agreement in an all-stock transaction. Under the terms of
the merger agreement, Tengasco will issue approximately 203 million
shares of Tengasco common stock to Riley members at the closing of
the transaction. Following the closing of the transaction,
the current members of Riley will own 95% of Tengasco and the
current Tengasco stockholders will own the remaining 5%. In
addition, Riley will become a wholly owned subsidiary of
Tengasco.
Riley is a private equity backed company focused on developing
conventional oil and natural gas properties in the Northwest Shelf
of the Permian Basin. Riley was formed with the goal of building a
premier Permian Basin pure-play acquisition, exploration, and
development company, focusing on oil-rich, geologically driven
sweet spots within legacy oilfields that are conducive to newer
drilling and completion techniques. Riley's acreage is
primarily located on large contiguous blocks in Yoakum County, Texas and Lea, Roosevelt and Chaves Counties in New Mexico; and the offset legacy assets are
located in the Permian Basin San Andres fields, which include the
Wasson and Brahaney Fields.
Riley's assets have a shallower decline profile than most
unconventional reservoirs, which provides Riley with optionality in
terms of capital deployment, development schedule, and management
of organic growth. As a result, Riley has a strong balance
sheet with a low debt to trailing twelve months Adjusted EBITDAX
ratio of 1.4:1, has been able to grow production quarter over
quarter, and has a record of paying cash dividends to common
unitholders for the past 6 quarters totaling $25 million to date.
Key facts related to Riley's assets and operations
include:
- Organic Growth - Long-lived oil-weighted production
growth.
- Focus on Returns - Free cash flow and history of dividend
payments.
- Lean Balance Sheet - Low debt profile of less than 1.4 x Debt /
TTM Adjusted EBITDAX.
- Riley's estimated total proved, probable and possible reserves
at September 30, 2019 based on a third-party reservoir
engineer report were approximately 54,803, 60,580 and 8,926 MBoe,
respectively.
- Nine months ended June 30, 2020
average daily production of 7,073 Net Boe/d (81% oil, 10% Natural
Gas and 9% NGLs).
- Management team has a total of over 100 years of collective oil
and gas experience, including significant experience in horizontal
drilling in the Northwest Shelf of the Permian Basin.
- 44,880 net acres as of June 30,
2020.
At the consummation of the merger, the following is expected
to occur:
- Tengasco will change its name to Riley Exploration Permian,
Inc.
- Tengasco's common stock will continue to trade on the NYSE
American, but under a new symbol, expected to be "REPX."
- Current management of Riley will become the management of
Tengasco with Bobby Riley serving as
CEO and Kevin Riley as President.
Michael Rugen, the interim CEO and
the CFO of Tengasco will continue as CFO of Tengasco.
- The corporate office will be relocated to Riley's current
office in Oklahoma City, OK.
- We anticipate reverse stock split in a range from 8-to-1 to
12-to-1 will be completed following closing.
- The Board of Directors of Tengasco will consist of:
-
- Bobby Riley – Chairman of the
Board and Chief Executive Officer
- Bryan Lawrence – Non-Employee
Director
- Philip Riley – Non-Employee
Director
- Michael Rugen - Director
- Unnamed Independent Director
Mr. Rugen stated, "We started a process at the beginning of the
year to explore strategic alternatives that we hoped could maximize
the value of Tengasco for our stockholders. We sought a
candidate that would provide a solid asset base, proven management,
a healthy balance sheet and growth that could be accelerated based
upon market conditions. Riley not only meets these objectives
but exceeds them in that they have a history of paying a cash
dividend to common unitholders that is expected to continue,
resulting in our stockholders participating in that dividend going
forward. We are confident in the future of Riley and look
forward to closing this merger as quickly as possible."
Bobby Riley further stated,
"Riley is positioned to be one of a new breed of E&P companies
that offers a mix of assets that provides for strong capital
efficiency and optionality for our stakeholders. We believe
we will not only maintain our conservative balance sheet, but will
improve it over the next year, while maintaining or possibly even
increasing our cash dividend over the same period. With our
strong hedge position, we are confident heading into the future,
and anticipate continued growth, that can be accelerated based upon
prevailing market conditions. We believe that providing our
stockholders with stockholder friendly policies, along with
conservative fiscal management and growth options constitutes the
new breed of energy company that the market has been waiting
for."
Investor Call
Tengasco and Riley will host an investor call on Thursday, October 22, 2020 at 4:30 P.M. Eastern time to discuss the announced
merger. Call information is:
Webcast link:
https://edge.media-server.com/mmc/p/ovir2gs8
|
Conference ID:
5374379
|
US/CANADA Participant
Toll-Free Dial-In
Number:
|
(833)
665-0660
|
US/CANADA Participant
International Dial-In Number:
|
(914)
987-7314
|
Timing and Approvals
The transaction is expected to close during the first quarter of
2021, and it is subject to customary closing conditions and
regulatory approvals, including the approval of Tengasco
stockholders and Riley members.
Advisors
ROTH Capital Partners acted as exclusive financial advisor to
Tengasco, Inc. and Davis Graham
& Stubbs LLP is serving as legal advisor to Tengasco.
Truist Securities acted as exclusive financial advisor to Riley
Exploration – Permian, and DiSanto
Law and Thompson & Knight LLP are serving as legal
advisors to Riley.
About Tengasco, Inc.
Tengasco Inc. is an independent oil and gas company that
explores for, develops, and produces domestic oil and natural gas
reserves. Tengasco's activities are focused in the
State of Kansas.
About Riley Exploration – Permian, LLC
Riley Exploration – Permian, LLC is an independent oil and
natural gas company focused on steadily growing its reserves,
production and cash flow through the acquisition, exploration,
development and production of oil, natural gas, and natural gas
liquids, or NGLs, in the Permian Basin.
No Offer or Solicitation
Communications in this news release do not constitute an offer
to sell or the solicitation of an offer to subscribe for or buy any
securities or a solicitation of any vote or approval with respect
to the proposed transaction or otherwise, nor shall there be any
sale, issuance or transfer 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 public offer 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.
Additional Information for Stockholders
In connection with the proposed transaction, Tengasco intends to
file materials with the Securities and Exchange Commission ("SEC"),
including a Registration Statement on Form S-4 (the "Registration
Statement") that will include a proxy statement/prospectus. After
the Registration Statement is declared effective by the SEC,
Tengasco intends to mail a definitive proxy statement/prospectus to
the stockholders of Tengasco. This news release is not a substitute
for the proxy statement/prospectus or the Registration Statement or
for any other document that Tengasco may file with the SEC and send
to Tengasco's stockholder in connection with the proposed
transaction. INVESTORS AND SECURITY HOLDERS OF TENGASCO ARE URGED
TO CAREFULLY AND THOROUGHLY READ THE REGISTRATION STATEMENT AND THE
PROXY STATEMENT/PROSPECTUS, AS EACH MAY BE AMENDED OR SUPPLEMENTED
FROM TIME TO TIME, AND OTHER RELEVANT DOCUMENTS FILED BY TENGASCO
WITH THE SEC, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT TENGASCO, RILEY, THE PROPOSED
TRANSACTION, THE RISKS RELATED THERETO AND RELATED MATTERS.
Investors will be able to obtain free copies of the Registration
Statement and proxy statement/prospectus, as each may be amended
from time to time, and other relevant documents filed by Tengasco
with the SEC (when they become available) through the website
maintained by the SEC at www.sec.gov. Copies of documents filed
with the SEC by Tengasco will be available free of charge from
Tengasco's website at www.tengasco.com under the "Investor"
tab.
Participants in the Proxy Solicitation
Tengasco, Riley and their respective directors, managers and
certain of their officers and other members of management and
employees may be deemed, under SEC rules, to be participants in the
solicitation of proxies from Tengasco's stockholders in connection
with the proposed transaction. Information regarding the officers
and directors of Tengasco is included in its definitive proxy
statement for its 2019 annual meeting filed with the SEC on
November 1, 2019. Additional
information regarding such persons, as well as information
regarding Riley's directors, managers and officers and other
persons who may be deemed participants in the proposed transaction,
will be set forth in the Registration Statement and proxy
statement/prospectus and other materials when they are filed with
the SEC in connection with the proposed transaction. Free copies of
these documents may be obtained as described in the paragraphs
above.
Cautionary Statement Regarding Forward-Looking
Information
Certain statements in this news release concerning the proposed
transaction, including any statements regarding the expected
timetable for completing the proposed transaction, the results,
effects, and benefits of the proposed transaction, future
opportunities for the combined company, future financial
performance and condition, guidance and any other statements
regarding Tengasco's or Riley's future expectations, beliefs,
plans, objectives, financial conditions, assumptions or future
events or performance that are not historical facts are
"forward-looking" statements based on assumptions currently
believed to be valid. Forward-looking statements are all statements
other than statements of historical facts. The words "anticipate,"
"believe," "ensure," "expect," "if," "intend," "estimate,"
"probable," "project," "forecasts," "predict," "outlook," "aim,"
"will," "could," "should," "would," "potential," "may," "might,"
"anticipate," "likely" "plan," "positioned," "strategy," and
similar expressions or other words of similar meaning, and the
negatives thereof, are intended to identify forward-looking
statements. Specific forward-looking statements include statements
regarding the ability of the combined company to pay a dividend and
the amount of such dividend, the decline profile of Riley's assets,
the ability of Riley to grow production, the anticipated reverse
stock split, Tengasco's and Riley's plans and expectations with
respect to the proposed transaction and the anticipated impact of
the proposed transaction on the combined company's results of
operations, financial position, growth opportunities and
competitive position. The forward-looking statements are intended
to be subject to the safe harbor provided by Section 27A of the
Securities Act of 1933, Section 21E of the Securities Exchange Act
of 1934 and the Private Securities Litigation Reform Act of
1995.
These forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those anticipated, including, but not limited to, the
possibility that stockholders of Tengasco may not approve the
issuance of new shares of Tengasco common stock in the transaction
or other proposals that are a condition to the transaction or that
the stockholders of Tengasco and the members of Riley may not
approve the merger agreement; the risk that a condition to closing
of the proposed transaction may not be satisfied, that either party
may terminate the merger agreement or that the closing of the
proposed transaction might be delayed or not occur at all;
potential adverse reactions or changes to business or employee
relationships, including those resulting from the announcement or
completion of the transaction; the diversion of management time on
transaction-related issues; the ultimate timing, outcome and
results of integrating the operations of Tengasco and Riley; the
effects of the business combination of Tengasco and Riley,
including the combined company's future financial condition,
results of operations, strategy and plans; changes in capital
markets and the ability of the combined company to finance
operations in the manner expected; the fact that any dividend
payments will be at the discretion of the combined company's Board
of Directors and may be subject to legal, contractual or other
restrictions; the effects of commodity prices; the risks of oil and
gas activities; and the fact that operating costs and business
disruption may be greater than expected following the public
announcement or consummation of the proposed transaction.
Expectations regarding business outlook, including changes in
revenue, pricing, capital expenditures, cash flow generation,
strategies for our operations, oil and natural gas market
conditions, legal, economic and regulatory conditions, and
environmental matters are only forecasts regarding these
matters.
Additional factors that could cause results to differ materially
from those described above can be found in Tengasco's Annual Report
on Form 10-K for the year ended December 31,
2019 and in its subsequently filed Quarterly Reports on Form
10-Q, each of which is on file with the SEC and available from
Tengasco's website at www.tengasco.com under the "Investor" tab,
and in other documents Tengasco files with the SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Tengasco does not assume any obligation to update forward-looking
statements to reflect circumstances or events that occur after the
date the forward-looking statements were made or to reflect the
occurrence of unanticipated events except as required by federal
securities laws. As forward-looking statements involve significant
risks and uncertainties, caution should be exercised against
placing undue reliance on such statements.
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SOURCE Tengasco, Inc.