Vanguard Natural Resources, LLC Announces Closing of the Eagle Rock Energy Partners, L.P. Merger
October 08 2015 - 4:01PM
Vanguard Natural Resources, LLC (NASDAQ:VNR) (“Vanguard”) today
announced the closing of the previously announced merger with Eagle
Rock Energy Partners, L.P. (“Eagle Rock”). In accordance with
the terms of the merger agreement, Eagle Rock has become a
wholly-owned indirect subsidiary of Vanguard, and Vanguard will
issue approximately 28.75 million Vanguard common units in exchange
for all of Eagle Rock’s outstanding common units.
Scott W. Smith, Vanguard’s President and Chief
Executive Officer commented, “We are very pleased with the closing
of this transaction. The assets being acquired are attractive
bolt-ons to our Arkoma, Permian and Gulf Coast basin
operations. In addition, this transaction offers a meaningful
position in the SCOOP and STACK plays in the Anadarko basin which
will provide attractive drilling opportunities for the next several
years. Considering the previously announced merger closing
with LRR Energy, L.P., we believe that all three companies’
unitholders will benefit from a larger, more diversified entity
with lower financial leverage and strong positions in several key
U.S. basins. We believe this transaction should have a
positive impact on all aspects of our business. We welcome
the Eagle Rock unitholders into Vanguard.”
Vanguard will continue to trade on the NASDAQ
Global Select Market under the ticker symbol “VNR.” Effective
October 9, 2015, trading in Eagle Rock common units will be
discontinued. American Stock Transfer & Trust Company, LLC,
exchange agent for Vanguard and Eagle Rock, will mail letters of
transmittal to all Eagle Rock unitholders of record immediately
prior to the merger with instructions on how to surrender their
common unit certificates or common units in book-entry form in
exchange for the merger consideration. Eagle Rock unitholders
should not surrender their common unit certificates or book-entry
common units until they have completed the letters of transmittal.
Eagle Rock unitholders who held their shares in “street name”
through a bank or broker should contact their bank or broker to
determine what actions they must take to receive the merger
consideration.
Transaction Highlights
- Eagle Rock’s long-life, mature assets are well-suited for
Vanguard’s upstream MLP model;
- Proved R/P of approximately 14 years;
- Eagle Rock’s low leverage will positively impact Vanguard’s
debt metrics and credit profile;
- Assets add scale in Vanguard’s existing Gulf Coast and Permian
basins and establishes a new operating platform in the SCOOP/STACK
play in the Anadarko basin;
- Significant potential for cost savings through G&A and
operational synergies;
- Retained experienced personnel from Eagle Rock to expand
Vanguard’s employee base;
- Q2 2015 production of approximately 80 MMcfe/d, increasing
Vanguard’s Q2 2015 production by 22%;
- Balanced reserves mix of 53% natural gas, 21% oil, and 26%
natural gas liquids;
- Proved reserves at December 31, 2014 (SEC pricing) of
approximately 318 Bcfe, increases Vanguard’s estimated proved
reserves by 16%; and
- Adds approximately 1,778 producing wells and approximately
202,632 net acres;
About Vanguard Natural Resources, LLC
Vanguard Natural Resources, LLC is a
publicly traded limited liability company focused on the
acquisition, production and development of oil and natural gas
properties. Vanguard’s assets consist primarily of producing and
non-producing oil and natural gas reserves located in
the Green River Basin in Wyoming, the Arkoma
Basin in Arkansas and Oklahoma, the Anadarko Basin in
Oklahoma and North Texas, the Permian Basin in West
Texas and New Mexico, the Big Horn Basin
in Wyoming and Montana, the Piceance
Basin in Colorado, the Gulf Coast Basin in
Texas, Louisiana and Mississippi, the Williston
Basin in North Dakota and Montana, the Wind
River Basin in Wyoming and the Powder River
Basin in Wyoming. More information on Vanguard can be
found at www.vnrllc.com.
Forward-Looking Statements
This communication includes “forward-looking
statements” within the meaning of Section 27A of the
Securities Act of 1933. All statements other than historical facts,
including, without limitation, statements regarding the expected
benefits of the transaction to Vanguard and Eagle Rock and their
unitholders, the expected future reserves, production, financial
position, business strategy, revenues, earnings, costs, capital
expenditures and debt levels of the combined company, and plans and
objectives of management for future operations, are forward-looking
statements. When used in this press release, words such as we
“may,” “can,” “expect,” “intend,” “plan,” “estimate,” “anticipate,”
“predict,” “project,” “foresee,” “believe,” “will,” “should,”
“would” or “could,” or the negative thereof or variations thereon
or similar terminology, are generally intended to identify
forward-looking statements. It is uncertain what impact the
merger will have on the results of operations and financial
condition of Vanguard. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed in, or implied by, such
statements.
These risks and uncertainties include, but are
not limited to: Vanguard’s and Eagle Rock’s ability to integrate
successfully after the transaction and achieve anticipated benefits
from the proposed transaction; risks relating to any unforeseen
liabilities of Vanguard or Eagle Rock; declines in oil, NGL or
natural gas prices; the level of success in exploitation,
development and production activities; adverse weather conditions
that may negatively impact development or production activities;
the timing of exploitation and development expenditures;
inaccuracies of reserve estimates or assumptions underlying them;
revisions to reserve estimates as a result of changes in commodity
prices; impacts to financial statements as a result of impairment
write-downs; risks related to level of indebtedness and periodic
redeterminations of the borrowing base under Vanguard’s credit
agreements; the ability of Vanguard to comply with covenants
contained in the agreements governing its indebtedness; ability to
generate sufficient cash flows from operations to meet the
internally-funded portion of any capital expenditures budget;
ability to obtain external capital to finance exploitation and
development operations and acquisitions; federal, state and local
initiatives and efforts relating to the regulation of hydraulic
fracturing; failure of properties to yield oil or gas in
commercially viable quantities; uninsured or underinsured losses
resulting from oil and gas operations; inability to access oil and
gas markets due to market conditions or operational impediments;
the impact and costs of compliance with laws and regulations
governing oil and gas operations; ability to replace oil and
natural gas reserves; any loss of senior management or technical
personnel; competition in the oil and gas industry; risks arising
out of hedging transactions. Vanguard and Eagle Rock caution
that the foregoing list of factors is not exclusive.
Additional information concerning these and other risk factors are
contained in Vanguard’s and Eagle Rock’s Annual Reports on
Form 10-K for the period ended December 31, 2014,
subsequent Quarterly Reports on Form 10-Q, recent Current
Reports on Form 8-K and other SEC filings, which are available
on the SEC’s website, http://www.sec.gov. Readers are
cautioned not to place undue reliance on forward-looking
statements, which speak only as of their dates. Except as
required by law, neither Vanguard nor Eagle Rock intends to update
or revise its forward-looking statements, whether as a result of
new information, future events or otherwise.
Vanguard Natural Resources, LLC
Investor Relations Contact
Lisa Godfrey, 832-327-2234
Director of Investor Relations
investorrelations@vnrllc.com