Annual report pursuant to Section 13 and 15(d)

SUBSEQUENT EVENTS

v3.20.4
SUBSEQUENT EVENTS
12 Months Ended
Dec. 31, 2020
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS SUBSEQUENT EVENTS
Reliance Acquisition

On February 3, 2021, the Company entered into a purchase and sale agreement (the “Reliance PSA”) with Reliance Marcellus, LLC (“Reliance”) pursuant to which the Company agreed to acquire (the “Reliance Acquisition”) certain oil and gas properties, interests and related assets located in the Appalachian Basin (the “PSA Assets”) for an unadjusted aggregate purchase price of $250.0 million, plus warrants to purchase 3,250,000 shares of the Company’s common stock at an exercise price equal to $14.00 per share (the “Warrants”), subject to certain customary purchase price adjustments. The Reliance PSA contains customary representations and warranties, covenants and indemnification provisions and has an effective date of July 1, 2020. The obligations of the parties to complete the transactions contemplated by the Reliance PSA are subject to the satisfaction or waiver of customary closing conditions set forth therein. The anticipated closing date under the Reliance PSA is April 1, 2021.

In connection with the pending Reliance Acquisition, on February 3, 2021, the Company also entered into a cooperation agreement (the “Cooperation Agreement”) with an unaffiliated third party, Arch Investment Partners, LLC (“Arch”). Pursuant to the Cooperation Agreement, the Company expects to assign an undivided 30% interest in and to the Reliance PSA, including the right to acquire an equivalent share of the PSA Assets transferred under the Reliance PSA, to Arch, with Arch assuming the obligation to fund 30% of the aggregate cash purchase price payable to Reliance under the Reliance PSA. As a result, if all of the PSA Assets were transferred at closing, the Company would acquire an undivided 70% interest in those assets for an unadjusted aggregate purchase price payable by the Company comprised of $175.0 million in cash and the Warrants.

Certain of the PSA Assets to be purchased in connection with the pending Reliance Acquisition are subject to both preferential purchase and consent rights, which, if exercised or not obtained within certain periods of time designated in the Reliance PSA, would result in the exclusion of such assets from the pending Reliance Acquisition and a reduction of the purchase price thereunder. Certain of the preferential purchase rights were exercised by third parties prior to the issuance of these financial statements, and as a result the related assets will be excluded from the assets transferred at closing. The unadjusted cash purchase price payable by the Company will be reduced by an estimated $48.6 million to reflect these excluded assets, from $175.0 million to $126.4 million. Additional adjustments are possible at or prior to closing.

Financing Transactions

Unsecured VEN Bakken Note Repayment

On January 4, 2021, the Company used borrowings under the Revolving Credit Facility to repay $65.0 million in aggregate principal amount under the Unsecured VEN Bakken Note, which was a scheduled repayment thereunder. On February 18, 2021, the Company used proceeds from the 2028 Notes Offering (described below) to repay the remaining $65.0 million in aggregate principal amount outstanding under the Unsecured VEN Bakken Note, and as a result the note has been retired in full.

Amendment to Revolving Credit Facility

On February 3, 2021, in anticipation of the financing transactions described below, the Company entered into a second amendment (the “Amendment”) to its Revolving Credit Facility, which permits the Company to (i) issue unsecured senior debt securities in an aggregate principal amount not to exceed $600.0 million (which was used to issue the 2028 Notes described below) and (ii) repay the remaining outstanding balance of the Unsecured VEN Bakken Note and the Second Lien Notes. The Amendment also amended certain other provisions of the Revolving Credit Facility.
Offering of Common Stock

On February 9, 2021, the Company closed an underwritten public offering (the “Equity Offering”) of 14,375,000 shares of its common stock at a price to the public of $9.75 per share. The Company estimates that the Equity Offering resulted in net proceeds of approximately $132.4 million, after deducting underwriting discounts and commissions and estimated offering expenses. The Company intends to use the net proceeds from the Equity Offering to fund a portion of the cash purchase price for the pending Reliance Acquisition.

Offering of Senior Notes due 2028

On February 18, 2021, the Company closed a private offering (the “2028 Notes Offering”) of $550.0 million in aggregate principal amount of new 8.125% senior unsecured notes due 2028 (the “2028 Notes”), priced at par. The Company estimates that the 2028 Notes Offering resulted in net proceeds of approximately $537.0 million, after deducting the initial purchasers’ discounts and estimated offering expenses. The Company used a portion of the net proceeds on February 18, 2021, to (i) repay the remaining $65.0 million in aggregate principal amount outstanding under the Unsecured VEN Bakken Note, and (ii) redeem $272.1 million in aggregate principal amount of Second Lien Notes pursuant to the Tender Offer (defined below). The Company intends to use the remaining net proceeds to (i) fund a portion of the cash purchase price for the pending Reliance Acquisition, (ii) repay borrowings under the Revolving Credit Facility, (iii) repurchase or redeem all remaining outstanding Second Lien Notes on or before May 15, 2021, and (iv) for general corporate purposes.

See “Indenture — Senior Notes due 2028” below for details regarding the terms of the 2028 Notes.

Second Lien Notes — Tender Offer, Consent Solicitation and Fourth Supplemental Indenture

In connection with the 2028 Notes Offering, the Company commenced a cash tender offer to purchase any and all of its outstanding Second Lien Notes (the “Tender Offer”). As of February 17, 2021 (the “Early Tender and Consent Date”), an aggregate of $272.1 million principal amount (or 94.6%) of the outstanding Second Lien Notes had been validly tendered pursuant to the Tender Offer and not validly withdrawn (the “Early Tendered Notes”). On February 18, 2021, the Company purchased all of the Early Tendered Notes for an aggregate cost of approximately $283.3 million, including all premiums and accrued interest due in respect of such Early Tendered Notes pursuant to the Tender Offer. Immediately thereafter, there was $15.7 million in aggregate principal amount of Second Lien Notes remaining outstanding.

In connection with the Tender Offer, the Company also solicited consents (the “Consent Solicitation”) to certain proposed amendments (the “Proposed Amendments”) to the 2L Indenture governing the Second Lien Notes. The requisite consents were obtained as of the Early Tender and Consent Date. As a result, on February 18, 2021, the Company entered into the Fourth Supplemental Indenture (the “Fourth Supplemental Indenture”) with Wilmington Trust, National Association, as trustee and as collateral agent. The Fourth Supplemental Indenture implements the Proposed Amendments which, among other things, amends the 2L Indenture to eliminate substantially all restrictive covenants and certain of the default provisions contained therein.

Indenture — Senior Notes due 2028

On February 18, 2021, the Company and Wilmington Trust, National Association, as trustee, entered into an indenture (the “2028 Notes Indenture”), pursuant to which the Company issued $550.0 million in aggregate principal amount of the 2028 Notes. The 2028 Notes will mature on March 1, 2028. Interest on the 2028 Notes is payable semi-annually in arrears on each March 1 and September 1, commencing September 1, 2021, to holders of record on the February 15 and August 15 immediately preceding the related interest payment date, at a rate of 8.125% per annum.

Prior to March 1, 2024, the Company may redeem all or a part of the 2028 Notes at a redemption price equal to 100% of the principal amount of the 2028 Notes redeemed, plus an applicable make-whole premium and accrued and unpaid interest to the redemption date. On or after March 1, 2024, the Company may redeem all or a part of the 2028 Notes at redemption prices (expressed as percentages of principal amount) equal to 104.063% for the twelve-month period beginning on March 1, 2024, 102.031% for the twelve-month period beginning on March 1, 2025, and 100% beginning on March 1, 2026, plus accrued and unpaid interest to the redemption date.

The 2028 Notes Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries, if any, to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or distributions in respect of equity interests or redeem, repurchase or retire equity securities or subordinated indebtedness; (iii) transfer or sell certain assets; (iv) make investments; (v) create liens to secure indebtedness; (vi) enter into
agreements that restrict dividends or other payments from any non-guarantor subsidiary to the Company; (vii) consolidate with or merge with or into, or sell substantially all of the Company’s assets to, another person; (viii) enter into transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications, and many of these covenants will be terminated if the 2028 Notes achieve an investment grade rating from either Moody’s Investors Services, Inc. or S&P Global Ratings.

The 2028 Notes Indenture contains customary events of default, including, but not limited to: (i) default for 30 days in the payment when due of interest on the 2028 Notes; (ii) default in payment when due of the principal of, or premium, if any, on the 2028 Notes; (iii) failure by the Company or certain of its subsidiaries, if any, to comply with certain of their respective obligations, covenants or agreements contained in the 2028 Notes or the 2028 Notes Indenture, subject to certain notice and grace periods; (iv) failure by the Company or any of its restricted subsidiaries to pay indebtedness within any applicable grace period or the acceleration of any such indebtedness if the total amount of such indebtedness exceeds $35.0 million; (v) failure by the Company or any of its restricted subsidiaries that is a Significant Subsidiary (as defined in the 2028 Notes Indenture) to pay final non-appealable judgments aggregating in excess of $35.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; (vi) except as permitted by the 2028 Notes Indenture, any guarantee of the 2028 Notes is held in any judicial proceeding to be unenforceable or invalid, or ceases for any reason to be in full force and effect, or is denied or disaffirmed by a Guarantor (as defined in the 2028 Notes Indenture); and (vii) certain events of bankruptcy or insolvency described in the 2028 Notes Indenture with respect to the Company and its restricted subsidiaries that are Significant Subsidiaries.