Formation of Vantage creates a premier
oil-weighted, pure-play Williston Basin independent oil and gas
operator with a highly-differentiated return of capital story
Vantage Energy Acquisition Corp. (“VEAC”) (NASDAQ: VEAC, VEACU,
VEACW), an energy-focused special purpose acquisition entity led by
Roger Biemans, former Chairman & CEO of Vantage Energy LLC, and
President of Encana Oil & Gas (USA), today announced it has
entered into definitive agreements with QEP Energy Company, a
wholly owned subsidiary of QEP Resources, Inc. (collectively,
“QEP”), to acquire the entirety of QEP’s Williston Basin assets in
North Dakota and Montana, which includes the South Antelope and
Fort Berthold leasehold and various mineral interests, for $1.65
billion cash consideration, prior to post-effective date
adjustments, and up to 5.8 million shares of Vantage (as defined
below) common stock if certain stock price targets are achieved.
Upon closing the transaction, Vantage Energy
Acquisition Corp. will change its name to Vantage Energy Inc.
(“Vantage”), which will be led by Mr. Biemans as Vantage’s
full-time Chairman, President and CEO. In addition to Mr.
Biemans’ leadership and the rest of the current Vantage team,
Vantage expects to retain a significant portion of QEP’s High
Plains business unit team, including operations, engineering,
geoscience, land, administrative and finance groups.
The transaction is subject to approval by VEAC
shareholders and other customary closing conditions, and the new
company will trade on the NASDAQ under the ticker “VEI” upon
closing, which is expected to occur late in the first quarter or
early in the second quarter of 2019.
The formation of Vantage creates a large-scale,
pure-play Williston Basin operator with strong free cash flow and
low-risk growth opportunities. The acquired assets consist of
more than 100,000 net acres and are currently producing at the rate
of 46,000 barrels of oil equivalent (“Boe”) per day. We
believe the combination of outstanding cash margins, a robust base
of oil-weighted production and an attractive set of development
drilling and refrac projects with attractive economics will
position Vantage to deliver exceptionally efficient growth in both
EBITDA and free cash flow. We believe these attributes
position Vantage as a highly-differentiated opportunity for
investors seeking capital efficiency and return of capital to
shareholders.
NGP Vantage Energy LLC (“NGP Vantage” or the
“Sponsor”) and Mr. Biemans formed VEAC in early 2017 with the
intent to build a premier pure-play operator focused on identifying
opportunities with superior rock quality, repeatability, high
growth potential and operational upside in order to generate an
attractive return on investment for its shareholders.
Following its initial public offering (“IPO”) in April 2017, NGP
Vantage evaluated numerous opportunities and ultimately decided to
pursue QEP’s Williston Basin assets given its ability to achieve
its stated IPO goals at an attractive entry price. As part of
the transaction, David Wolf, CEO at Fuse Energy and former CFO at
Berry Petroleum, will join Vantage as CFO. Mr. Biemans and
Mr. Wolf share a similar view of maintaining a conservative capital
structure and an active hedging program to allow maximum
flexibility under various commodity price scenarios.
“Since our IPO, the Vantage team has evaluated
opportunities across North America with a relentless focus on
resource quality and equity value creation. With this
acquisition, we believe we have delivered on our IPO goals by
acquiring assets in the core of a world-class oil resource play
with a strong production base and significant projected free cash
flow growth for years to come,” said Mr. Biemans. “Vantage
represents a highly-differentiated return of capital opportunity
for our shareholders, with a day-one dividend and a deep inventory
of low-risk, high-return reinvestment opportunities.
Furthermore, the valuation of the transaction presents an
attractive, low-multiple investment opportunity with significant
upside in a basin with rapidly improving well results. We
look forward to working with our shareholders to close the
transaction.”
“We partnered with Roger Biemans and the Vantage
team to leverage their exceptional technical capabilities towards
identifying and executing a business combination that delivers
compelling value to public investors,” said Scott Gieselman, NGP
Partner and VEAC Director. “I congratulate the Vantage team
on an acquisition that exemplifies the criteria we established at
IPO of finding an asset with superior rock quality, attractive
return on investment and significant upside. NGP is thrilled
to support the transaction via a meaningful equity investment in
Vantage and looks forward to continuing our partnership with Roger
Biemans and Vantage.”
Vantage Company Highlights1
- High margin, oil-weighted assets in the core of the Bakken, a
world-class resource play
- Highly differentiated return of capital story with initial
proposed annual dividend of $0.25 per share
- Approximately 46,000 Boe per day of current estimated
production in 2H 2018 (67% oil, 83% liquids)
- 102,800 net acres with an 81% and 79% net revenue interest at
South Antelope and Fort Berthold, respectively
- Highly predictable and consistent geology across the position,
leading to low-risk, high-return inventory of growth-oriented
projects
- Estimated 2019 EBITDA of $427 million and approximately $629
million of estimated 2H 2018-2020 free cash flow after capital
investment2
- Peer leading 21% free cash flow yield3. Modest leverage
(<1.5x 2018 estimated EBITDA) and more than $600 million of
initial liquidity at closing
- July 1, 2018 effective date, with approximately $322 million
projected post-effective date free cash flow resulting in a closing
purchase price of $1.39 billion
- $1.3 billion of committed debt financing, including a credit
facility with a $900 million initial borrowing base and $400
million in bridge loans, which are expected to be replaced by an
offering of Senior Notes prior to closing
Transaction Details On November
6, 2018, VEAC entered into definitive agreements to acquire QEP’s
Williston Basin position for approximately $1.65 billion in cash
and up to 5.8 million shares of Vantage stock if certain stock
price targets are achieved, subject to customary purchase price
adjustments and with an effective date of July 1, 2018. The
acquisition will be financed using a combination of $560 million in
cash from the VEAC IPO being held in trust (assuming no
redemptions), $185 million in proceeds from an equity issuance from
NGP Vantage under the forward purchase agreement entered into at
IPO and approximately $642 million debt (<1.5x 2018 estimated
EBITDA) at closing. Debt will be comprised of a $400 million
bridge to a proposed bond offering and $242 million drawn on a $900
million credit facility. Upon the closing of the business
combination, the company will be renamed Vantage Energy Inc.
With an anticipated initial enterprise value of $1.52 billion and
an estimated $427 million of EBITDA for 2019, the transaction is
valued at approximately 3.6x 2019 estimated EBITDA. 4 Vantage
intends to propose an initial annual dividend of $0.25 per
share.
Assuming no redemptions of VEAC public shares,
the VEAC public investors will own 63% of the issued and
outstanding shares of common stock of Vantage immediately following
the closing, while NGP Vantage will own 37%. The transaction
was unanimously approved by the board of VEAC and remains subject
to the approval of VEAC shareholders and the satisfaction or waiver
of other customary conditions. VEAC has secured financing
commitments for the anticipated funded debt and reserve based
lending facility. Following the consummation of the
transaction, Vantage’s common shares will remain listed on the
NASDAQ. Upon closing, Vantage will maintain a seven-person
board, which will include Roger Biemans as Chairman, two appointees
named by NGP Vantage and four additional independent directors.
In connection with the transaction, QEP will
continue to provide transition services for up to 120 days
post-closing. QEP’s High Plains business unit includes more
than 150 dedicated operating, technical and field level employees
immediately available for hire. Please see the investor
presentation for more detail.
1 For additional information regarding the
assumptions used with respect to the below company highlights
please see the Investor Presentation available on the SEC website.
2 VEAC defines free cash flow as EBITDA less capital expenditure
and interest. 3 VEAC defines free cash flow yield as EBITDA
less capital less interest divided by market capitalization at
$10.00 per share. Estimated 2019 to 2021 average free cash flow
yield. 4 The $1.52 billion enterprise value includes the effect of
VEAC’s sponsor shares and projected cash needs at close.
Advisors Citigroup and Goldman
Sachs & Co. LLC served as financial advisors. Citigroup,
BMO Capital Markets and Goldman Sachs & Co. LLC provided
committed financings in support of the acquisition. Vinson
& Elkins LLP provided legal counsel to Vantage. BMO
Capital Markets served as financial advisor and Latham &
Watkins LLP provided legal counsel to QEP.
Investor Conference call and
Presentation InformationAt 11:00 a.m. EST on November 7,
2018, Vantage is scheduled to hold an investor conference call to
discuss the transaction. For those who wish to participate,
the domestic toll-free access number is (800) 894-5910 and the
international toll-free access number is (785) 424-1052. Once
connected with the operator, please provide the Conference ID of
“VANTAGE” and request access to the Vantage Transaction
Announcement Investor Call. Our corporate presentation is
posted on our website: www.vantageenergy.com.
A replay of the call will also be available from
2:00 p.m. EST on November 7, 2018 to 11:59 pm EST on November 14,
2018. To access the replay, the domestic toll-free access
number is (844) 512-2921 and participants should provide the
Conference ID number of 132239.
About Vantage EnergyFollowing
completion of the transaction, Vantage will be a publicly traded
oil and gas exploration and production company with operations in
the core of the Bakken, a world-class resource play. Vantage
will focus on generating value for shareholders by targeting
high-return drilling and development opportunities and driving free
cash flow growth.
About NGP Vantage and Vantage Energy
Acquisition Corp.NGP Vantage is a portfolio company of NGP
Natural Resources XI, L.P. (“NGP XI”), an energy-focused private
equity fund with a mandate to make investments in energy and
natural resources. NGP Energy Capital Management, L.L.C.
(“NGP”), which owns NGP Vantage along with members of the Vantage
management team, has considerable experience investing in the
energy industry. Since NGP’s founding in 1988, NGP funds have
committed over $20.0 billion to more than 200 portfolio companies
across twelve private funds. NGP has experience investing
across a variety of commodity price cycles and a track record of
identifying high-quality assets, businesses and management teams
with significant resources, capital and optimization potential.
Vantage Energy Acquisition Corp. is a $560
million special purpose acquisition company formed by NGP and
former Chairman & CEO of Vantage Energy LLC and President of
Encana Oil & Gas (USA) Roger Biemans that went public on the
NASDAQ in April of 2017. VEAC was formed with the intent to
identify and acquire a business that could benefit from a hands-on
owner with extensive operational experience in the upstream oil and
gas industry in North America and that presents potential for an
attractive risk-adjusted return profile under Roger Biemans’
stewardship.
About QEP ResourcesQEP
Resources, Inc. (NYSE:QEP) is an independent crude oil and natural
gas exploration and production company with operations in two
regions of the United States: the Southern Region (primarily Texas
and Louisiana) and the Northern Region (primarily North
Dakota).
Forward-Looking StatementsThe
information in this press release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements,
other than statements of present or historical fact included in
this press release, regarding the proposed acquisition discussed
herein, VEAC’s ability to consummate the transaction, the benefits
of the transaction and Vantage’s future financial performance
following the transaction, as well as Vantage’s strategy, future
operations, financial position, estimated revenues, and losses,
projected costs, prospects, plans and objectives of management are
forward looking statements. When used in this press release,
the words “could,” “should,” “will,” “may,” “believe,”
“anticipate,” “intend,” “estimate,” “expect,” “project,” the
negative of such terms and other 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 management’s current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events. Except as otherwise required by applicable
law, VEAC and Vantage disclaim any duty to update any
forward-looking statements, all of which are expressly qualified by
the statements in this section, to reflect events or circumstances
after the date of this press release. VEAC cautions you that
these forward-looking statements are subject to all of the risks
and uncertainties, most of which are difficult to predict and many
of which are beyond the control of VEAC, incident to the
development, production, gathering and sale of oil, natural gas and
natural gas liquids. In addition, VEAC cautions you that the
forward-looking statements contained in this press release are
subject to the following factors: (i) the occurrence of any event,
change or other circumstances that could delay the business
combination or give rise to the termination of the agreements
related thereto; (ii) the outcome of any legal proceedings that may
be instituted against VEAC following announcement of the
transactions; (iii) the inability to complete the business
combination due to the failure to obtain approval of the
shareholders of VEAC, or other conditions to closing in the
transaction agreement; (iv) the risk that the proposed business
combination disrupts VEAC’s current plans and operations as a
result of the announcement of the transactions; (v) Vantage’s
ability to realize the anticipated benefits of the business
combination, which may be affected by, among other things,
competition and the ability of Vantage to grow and manage growth
profitably following the business combination; (vi) costs related
to the business combination; (vii) changes in applicable laws or
regulations; and (viii) the possibility that Vantage may be
adversely affected by other economic, business, and/or competitive
factors. Should one or more of the risks or uncertainties
described in this press release, or should underlying assumptions
prove incorrect, actual results and plans could different
materially from those expressed in any forward-looking
statements. Additional information concerning these and other
factors that may impact the operations and projections discussed
herein can be found in VEAC’s periodic filings with the Securities
and Exchange Commission (the “SEC”), including its Annual Report on
Form 10-K for the fiscal year ended December 31, 2017. VEAC's
SEC filings are available publicly on the SEC’s website at
www.sec.gov.
No Offer or SolicitationThis
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.
Important Information for Investors and
ShareholdersIn connection with the proposed business
combination, VEAC intends to file a proxy statement with the
SEC. The definitive proxy statement and other relevant
documents will be sent or given to the shareholders of VEAC and
will contain important information about the proposed business
combination and related matters. VEAC shareholders and other
interested persons are advised to read, when available, the proxy
statement in connection with VEAC’s solicitation of proxies for the
meeting of shareholders 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 VEAC
shareholders as of a record date to be established for voting on
the business combination. Shareholders will also be able to
obtain copies of the proxy statement, without charge, once
available, at the SEC’s website at www.sec.gov. In addition,
shareholders will be able to obtain free copies of the proxy
statement by directing a request to: Vantage Energy Acquisition
Corp., 5221 N. O’Connor Boulevard, Irving, Texas 75039, email:
inquiries@ngptrs.com, Attn: Jeff Zlotky. The information
contained on, or that may be accessed through, the websites
referenced in this press release is not incorporated by reference
into, and is not a part of, this press release.
Participants in the
SolicitationVEAC, QEP and their respective directors and
officers may be deemed participants in the solicitation of proxies
of VEAC’s shareholders in connection with the proposed business
combination. VEAC shareholders and other interested persons
may obtain, without charge, more detailed information regarding the
directors and officers of VEAC in VEAC’s Registration Statement on
Form S-1 initially filed with the SEC on February 17, 2017.
Additional information will be available in the definitive proxy
statement when it becomes available.
For Vantage EnergyDavid
Wolf(720) 458-6609
For NGP VantageJeff Zlotky(972)
432-1440
For QEPWilliam Kent(303)
405-6665
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