Eclipse Resources Corporation (NYSE:ECR) (the “Company” or
“Eclipse Resources”) and Blue Ridge Mountain Resources, Inc.
(OTCPK: BRMR) (“Blue Ridge”) today announced that they have entered
into a definitive merger agreement under which Eclipse Resources
and Blue Ridge will combine in an all-stock transaction (the
“Transaction”). In the Transaction, Blue Ridge stockholders will
receive consideration consisting of 4.4259 shares of Eclipse
Resources common stock for each share of Blue Ridge common stock,
before adjustment for a 15-to-1 reverse stock split of Eclipse
Resources common stock to be effected concurrently with closing of
the Transaction. Based on the closing price of Eclipse Resources
common stock on August 24, 2018, the Transaction implies an
enterprise value for the combined company of approximately $1.4
billion and an equity value of approximately $908 million1. The
Transaction has been unanimously approved by the board of directors
of each company, and has been approved by the written consent of
stockholders of Eclipse Resources holding a majority of the
outstanding common shares of Eclipse Resources. Stockholders of
Blue Ridge owning approximately 60% of the outstanding common
shares of Blue Ridge have entered into a voting agreement with both
companies to, among other things, vote or provide written consents
in favor of approval of the Transaction, subject to certain terms
and conditions.
In conjunction with this joint press release, Eclipse Resources
and Blue Ridge have posted a presentation with additional details
regarding the Transaction to their respective corporate websites.
For Eclipse Resources, the presentation is posted to the Investor
Center of its website at www.eclipseresources.com and for Blue
Ridge, the presentation is posted to the Investors tab of its
website at www.brmresources.com.
Pro Forma Transaction
Highlights
- Scale: Creating one of the largest
Utica focused operators with Q4 2018 estimated production of
500-560 MMcfe per day2 and ~227,000 net effective undeveloped core
acres providing over 20 years of prolific wet and dry gas
inventory
- Debt Metrics: Leverage ratio of ~2.1x
based on pro forma debt to Q2 2018 annualized EBITDAX with line of
sight to 1.5x – 1.7x of annualized EBITDAX in Q4 20183
- Liquidity: $312 million4 near term
liquidity including an estimated $150 million increase in the
borrowing base under the Company’s revolving credit facility at
close and no near term debt maturities
- Growth: Self-funded 2-3 rig business
plan targeting annual production growth greater than 20% and
becoming cash flow generating in 20205
- Management and Operational Excellence:
John Reinhart, President and CEO of Blue Ridge, to become President
and CEO of the combined company and will lead a management team
that leverages both companies’ proven operating expertise in the
basin
- Corporate Synergies: Transaction
enhances capital efficiency and operating margins on a per unit
basis while providing approximately $15 million in anticipated
annual corporate G&A savings across the combined asset
base6
- Midstream and Downstream Synergies:
Shared midstream providers along with an expanded production base
allow for increased optionality and optimization of midstream and
downstream commitments, producer netbacks and decreasing weighted
average transportation costs due to growth in uncommitted combined
natural gas volumes
- Consolidation Platform: Combined
company positioned for accretive acquisitions to add scale and cash
flow
1 Based on second quarter 2018 financial statements2 Based on
estimated combined company initial estimates subject to revision
upon closing3 Based on estimated combined company Q4 EBITDAX
estimates of $90-110 million, pro forma for potential transition
costs4 Based on initial estimated combined company corporate
revolving credit facility borrowing base of $375 million, subject
to bank approval and syndication process; net of outstanding
letters of credit5 Cash flow is defined as EBITDAX less capital
costs6 Based on combined company initial estimates subject to
revision upon closing
Benjamin W. Hulburt, Chairman, President and CEO of Eclipse
Resources, commented on the Transaction, “This transaction provides
a compelling opportunity for both Eclipse Resources and Blue Ridge
shareholders to benefit from the strength of the combined company.
This combination allows both of us to consolidate premier assets
that significantly increase the Company’s production and cash flow,
seamlessly fit into a consolidated drilling program and provide for
considerable G&A synergies, all while allowing for accelerated
growth without adding to the Company’s debt obligations.”
John Reinhart, President and CEO of Blue Ridge, commented, “We
are excited about the highly complementary nature of this
combination. Based on pro forma estimated fourth quarter of 2018
production of 500-560 MMcfe per day, a high performing management
team, strong balance sheet, high quality asset base, and expected
corporate, operational, and midstream synergies, we believe the
combined company will possess a substantial scale advantage and an
excellent foundation for significant organic growth with attractive
cash flows while maintaining the optionality for bolt-on
value-accretive acquisitions within the basin.”
Terms of the Transaction
Under the terms of the Transaction, a newly-formed subsidiary of
Eclipse Resources will be merged into Blue Ridge, with Blue Ridge
surviving as a wholly-owned subsidiary of Eclipse Resources. In the
merger, Blue Ridge stockholders will receive 4.4259 shares of
Eclipse Resources common stock for each share of Blue Ridge common
stock held by them, representing consideration to each Blue Ridge
stockholder of $7.44 per share based on the closing price of
Eclipse Resources common stock on August 24, 2018. The exchange
ratio will be adjusted to reflect a 15-to-1 reverse stock split of
the Eclipse Resources common stock to be effected concurrently with
closing of the Transaction. Upon closing of the Transaction,
existing Eclipse shareholders will own approximately 57.5% of the
outstanding shares of the combined company and Blue Ridge
shareholders will own approximately 42.5%.
EnCap Investments, owning collectively approximately 57% of the
outstanding shares of common stock of Eclipse Resources, have
entered into a voting agreement with Eclipse Resources and Blue
Ridge to, among other things, provide the written consents
approving the Transaction, which have been delivered by them
concurrently with the signing of the merger agreement.
Certain stockholders of Blue Ridge owning approximately 60% of
the outstanding shares of common stock of Blue Ridge have entered
into a voting agreement with Eclipse Resources and Blue Ridge to,
among other things, vote or provide written consents in favor of
approval of the Transaction, subject to certain terms and
conditions.
The Transaction is expected to close in the fourth quarter of
2018 and is subject to customary regulatory approvals, approval by
the holders of a majority of Blue Ridge common stock, and certain
other customary closing conditions.
Organization and
Leadership
Upon closing of the Transaction, John Reinhart, the current
President and CEO of Blue Ridge, will serve as President and CEO of
the combined company. It is anticipated that there will be four
direct reports to the CEO. Matthew DeNezza, the current Executive
Vice President and CFO of Eclipse Resources, will serve as the
interim CFO for the combined company through November 30, 2018 or
until the permanent CFO is publicly announced prior to November 30,
2018. Oleg Tolmachev, the current Executive Vice President and COO
of Eclipse Resources, will continue to serve the combined company
in that capacity. Paul Johnston, currently Senior Vice President
and General Counsel of Blue Ridge, will become Executive Vice
President and General Counsel of the combined company. Matthew
Rucker, currently Vice President Resource Planning and Development
of Blue Ridge, will become Senior Vice President Resource Planning
and Development for the combined company. At closing, the board of
directors of Eclipse Resources will become a declassified board and
will consist of a total of ten directors, five designated by
Eclipse Resources and five designated by Blue Ridge (one of whom
will be John Reinhart).
Conference Call
A joint conference call to review the Transaction is scheduled
for Monday, August 27, 2018 at 10:00am Eastern Time. To participate
in the call, please dial 877-709-8150 or 201-689-8354 for
international callers and reference Eclipse Resources–Blue Ridge
Business Combination Call. A replay of the call will be available
through October 3, 2018. To access the phone replay dial
877-660-6853 or 201-612-7415 for international callers. The
conference ID is 13682942. A live webcast of the call may be
accessed through the Investor Center on the Company’s website at
www.eclipseresources.com. The webcast will be archived for replay
on the Company’s website for six months.
Advisors and Counsel
Jefferies LLC is acting as financial advisor to Eclipse
Resources, and Norton Rose Fulbright US LLP is acting as legal
advisor to Eclipse Resources. Vinson & Elkins LLP is acting as
legal advisor to EnCap Investments, the majority stockholder of
Eclipse Resources.
Barclays is acting as financial advisor to Blue Ridge, and
Bracewell LLP is acting as legal advisor to Blue Ridge.
About Eclipse Resources
Corporation
Eclipse Resources is an independent exploration and production
company engaged in the acquisition and development of oil and
natural gas properties in the Appalachian Basin, including the
Utica and Marcellus Shales. For more information, please visit the
Company’s website at www.eclipseresources.com.
About Blue Ridge Mountain Resources,
Inc.
Blue Ridge is an Irving, Texas-based independent exploration and
production company engaged in the acquisition, development and
production of natural gas and natural gas liquids. Blue Ridge is
active in two of the most prolific unconventional shale resource
plays in North America, the Marcellus and Utica Shales. For more
information, please visit Blue Ridge’s website at
www.brmresources.com.
No Offer or Solicitation
This communication relates to a proposed business combination
transaction (the “Transaction”) between Eclipse Resources
Corporation (“Eclipse Resources”) and Blue Ridge Mountain
Resources, Inc. (“Blue Ridge”). This communication is for
informational purposes only and 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, in any jurisdiction, pursuant
to the Transaction or otherwise, nor shall there be any sale,
issuance, exchange or transfer of the securities referred to in
this document in any jurisdiction in contravention of applicable
law. No 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 and Where to
Find It
A copy of the definitive merger agreement will be filed as part
of a Current Report on Form 8-K filed by Eclipse Resources with the
U.S. Securities and Exchange Commission (“SEC”) in accordance with
the rules of the SEC. In connection with the Transaction, Eclipse
Resources will also file with the SEC a registration statement on
Form S-4 that will include a consent solicitation statement of Blue
Ridge and an information statement of Eclipse Resources and that
also constitutes a prospectus of Eclipse Resources. Eclipse
Resources may also file other documents with the SEC regarding the
Transaction. The definitive consent solicitation
statement/information statement/prospectus will be sent to the
stockholders of Eclipse Resources and Blue Ridge. This document is
not a substitute for the registration statement and consent
solicitation statement/information statement/prospectus that will
be filed with the SEC or any other documents that Eclipse Resources
may file with the SEC or that Eclipse Resources or Blue Ridge may
send to stockholders of Eclipse Resources or Blue Ridge in
connection with the Transaction. INVESTORS AND SECURITY HOLDERS
OF ECLIPSE RESOURCES AND BLUE RIDGE ARE URGED TO READ THE
REGISTRATION STATEMENT, THE CONSENT SOLICITATION
STATEMENT/INFORMATION STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT
DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN
THEIR ENTIRETY, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE TRANSACTION AND RELATED MATTERS.
Investors and security holders will be able to obtain free
copies of the registration statement and the consent solicitation
statement/information statement/prospectus (when available) and all
other documents filed or that will be filed with the SEC by Eclipse
Resources through the website maintained by the SEC at www.sec.gov.
Copies of documents filed with the SEC by Eclipse Resources will be
made available free of charge on Eclipse Resources’ website at
www.eclipseresources.com or by contacting Eclipse Resources’
Investor Relations Department by phone at 814-325-2059.
Participants in
Solicitation
Eclipse Resources, Blue Ridge and certain of their respective
directors, executive officers and members of management and
employees may be deemed to be participants in the solicitation of
consents from the holders of Blue Ridge’s common stock in respect
to the Transaction.
Information regarding Eclipse Resources’ directors and executive
officers is contained in Eclipse Resources’ Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K. Information regarding Blue Ridge’s directors and executive
officers will be contained in the consent solicitation
statement/information statement/prospectus and other relevant
materials filed with the SEC. You can obtain a free copy of these
documents at the SEC’s website at www.sec.gov or by accessing
Eclipse Resources’ website at www.eclipseresources.com.
Investors may obtain additional information regarding the
interests of those persons who may be deemed participants in the
Transaction by reading the consent solicitation
statement/information statement/prospectus and other relevant
documents filed with the SEC regarding the Transaction when they
become available. You may obtain free copies of these documents as
described above.
Forward-Looking Statements and
Cautionary Statements
This joint press release contains “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). All statements, other than statements
of historical fact included in this joint press release, regarding,
among other things, strategy, future operations, financial
position, estimated revenues and income/losses, projected costs and
capital expenditures, prospects, plans and objectives of management
are forward-looking statements. When used in this joint press
release, the words “plan,” “endeavor,” “will,” “would,” “could,”
“believe,” “anticipate,” “intend,” “estimate,” “expect,” “project”
and similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. These forward-looking statements are based
on Eclipse Resources’ and Blue Ridge’s current expectations and
assumptions about future events and are based on currently
available information as to the outcome and timing of future
events. When considering forward-looking statements, you should
keep in mind the risk factors and other cautionary statements
described in the consent solicitation statement/information
statement/prospectus and under Item 1A. Risk Factors in Eclipse
Resources’ Annual Report on Form 10-K filed with the Securities
Exchange Commission on March 2, 2018 (the “2017 Annual Report”) and
in Eclipse Resources’ Quarterly Reports on Form 10-Q.
With respect to the proposed Transaction described herein,
forward-looking statements may include, but are not limited to,
statements regarding the expected timing and likelihood of the
completion of the Transaction; the timing, receipt and anticipated
terms and conditions of any required governmental and regulatory
approvals for the Transaction; the ability to complete the
Transaction considering the various closing conditions, including
approval by Blue Ridge’s stockholders; pro forma descriptions of
the combined company and its operations, integration and transition
plans, synergies, cost savings, opportunities and anticipated
future performance; the benefits of the Transaction and its impact
on the combined company’s business, operations, assets, results of
operations, liquidity and financial position; and any statements of
assumptions underlying any of the foregoing. In addition,
forward-looking statements may include statements about business
strategy; reserves and potential resources; general economic
conditions; financial strategy, liquidity and capital required for
developing properties and timing related thereto; realized natural
gas, natural gas liquids and oil prices; timing and amount of
future production of natural gas, natural gas liquids and oil;
hedging strategy and results; future drilling plans; competition
and government regulations, including those related to hydraulic
fracturing; the anticipated benefits under commercial agreements;
marketing of natural gas, natural gas liquids and oil; leasehold
and business acquisitions; the costs, terms and availability of
gathering, processing, fractionation and other midstream services;
the costs, terms and availability of downstream transportation
services; general economic conditions; credit markets; uncertainty
regarding future operating results, including initial production
rates and liquid yields in type curve areas; and plans, objectives,
expectations and intentions contained in this joint press release
that are not historical.
Eclipse Resources and Blue Ridge caution you that the
forward-looking statements pertaining to the proposed Transaction
described herein are subject to risks and uncertainties related to
the benefits from, or completion of, the proposed Transaction,
including, without limitation, failure to satisfy any of the
conditions precedent to the proposed Transaction (including the
possibility that stockholders of Blue Ridge may not approve the
Transaction), disruption of management time from ongoing business
operations due to the Transaction, adverse effects on the market
price of the common stock of Eclipse Resources or Blue Ridge and on
either company’s operating results because of a failure to complete
the proposed Transaction or because of any announcements related to
the Transaction, adverse effects on the ability of Eclipse
Resources and Blue Ridge to retain customers and retain and hire
key personnel and maintain relationships with their suppliers and
customers, failure to realize the expected benefits of the proposed
Transaction, negative effects of announcement or consummation of
the proposed Transaction on the market price of the common stock of
Eclipse Resources or Blue Ridge, and significant transaction costs,
unknown liabilities and/or unanticipated expenses such as
litigation expenses. In addition, if and when the proposed
Transaction is consummated, there will be risks and uncertainties
related to the combined company’s ability to successfully integrate
the operations of Eclipse Resources and Blue Ridge, including the
risk that the combined company may not operate as effectively and
efficiently as expected, may be unable to achieve synergies or may
take longer than expected to achieve synergies. In addition, all
forward-looking statements are subject to risks and uncertainties,
most of which are difficult to predict and many of which are beyond
the control of Eclipse Resources and Blue Ridge, incident to the
exploration for and development, production, gathering and sale of
natural gas, natural gas liquids and oil. These risks include, but
are not limited to, legal and environmental risks, drilling and
other operating risks, regulatory changes, commodity price
volatility and declines in the price of natural gas, natural gas
liquids and oil, inflation, lack of availability of drilling,
production and processing equipment and services, counterparty
credit risk, the uncertainty inherent in estimating natural gas,
natural gas liquids and oil reserves and in projecting future rates
of production, cash flow and access to capital, the timing of
development expenditures, and the other risks described in the
consent solicitation statement/information statement/prospectus and
under Item 1A. Risk Factors in the 2017 Annual Report and in
Eclipse Resources’ Quarterly Reports on Form 10-Q.
All forward-looking statements, expressed or implied, included
in this joint press release are expressly qualified in their
entirety by this cautionary statement and are based on assumptions
that Eclipse Resources or Blue Ridge believes to be reasonable but
that may not prove to be accurate. This cautionary statement should
also be considered in connection with any subsequent written or
oral forward-looking statements that Eclipse Resources, Blue Ridge
or persons acting on their behalf may issue. Except as otherwise
required by applicable law, Eclipse Resources and Blue Ridge
disclaim any duty to update any forward-looking statements to
reflect new information or events or circumstances after the date
of this joint press release. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date hereof.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180827005169/en/
Eclipse Resources CorporationDouglas Kris,
814-325-2059Investor Relationsdkris@eclipseresources.comorBlue Ridge Mountain
Resources, Inc.Michael Koy, 469-293-2166EVP &
CFOir@brmresources.com
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