Item 1.01 Entry into a Material Definitive Agreement
As previously disclosed, Vanguard Natural Resources, LLC (the “Company”) and certain subsidiaries (such subsidiaries, together with the Company, the “Debtors”) filed voluntary petitions for relief (the cases commenced thereby, the “Chapter 11 Cases”) under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”). The Chapter 11 Cases are being administered under the caption
In re Vanguard Natural Resources, et al.
Also as previously disclosed in the Company’s Current Report on Form 8-K filed on March 24, 2017 (the “Initial 8-K”), on March 20, 2017, Vanguard Operating, LLC, the Company’s wholly owned subsidiary and a Debtor (the “Seller”) entered into a “stalking horse” purchase and sale agreement (the “Original PSA”) with the previously identified third-party buyer (the “Buyer”). Pursuant to the terms of the Original PSA, Seller agreed to sell a substantial portion of its oil and gas properties located in Glasscock County, Texas (the “Assets,” and such sale, the “Asset Sale”). The Seller and Buyer entered into the first amended and restated purchase and sale agreement on April 12, 2017. The Bankruptcy Court entered the
Order (A) Approving Bidding Procedures for Sale of Certain Oil and Gas Assets, (B) Approving Form and Manner of Notices Thereof, (C) Approving Bid Protections for Stalking Horse Purchaser, (D) Scheduling Dates to Conduct
[Docket No. 583] (the “Bidding Procedures Order”) on April 13, 2017. On May 15, 2017, XTO Energy Inc. submitted a qualifying competing offer in compliance with the Bidding Procedures Order to purchase the Assets. As a result of the competing bid, an auction was held with respect to the Assets on May 17, 2017 following the procedures outline in the Bidding Procedures Order. The Buyer submitted the winning bid, agreeing to pay the Seller total consideration of $102,150,040 for the Assets and approximately 57 wells related to the Assets (the “Wells”).
Following the auction, the Seller and the Buyer entered into an amended and restated purchase and sale agreement with respect to certain leases included as part of the Assets for a purchase price of approximately $96.86 million (the “Leasehold PSA”) and also agreed to the form of a separate purchase and sale agreement with respect to the Wells, contemplating the Wells would be sold to the Buyer in a subsequent transaction for a purchase price of approximately $5.29 million (the “Well PSA” and, together with the Leasehold PSA, the “Asset Sale Agreements”). The Bankruptcy Court approved the Asset Sale Agreements on May 19, 2017, in the
Order (A) Approving Sale of Assets Free and Clear of All Liens, Claims, Interests and Encumbrances, (B) Authorizing Assumption and Assignment of Executory Contracts and Unexpired Leases and (C) Granting Related Relief
[Docket No. 761] (the “Sale Order”). Following the entry of the Sale Order, the Leasehold PSA closed on May 19, 2017. The Leasehold PSA requires the Buyer and Seller to execute the Well PSA by May 26, 2017.
The terms of the Leasehold PSA are substantially similar to those of the Original PSA, as described in the Initial 8-K. The Leasehold PSA contains substantially similar customary representations, warranties and covenants. The termination provisions and post-closing obligations in the Leasehold PSA are substantially similar to those in the Original PSA, except that the requirement for the Bankruptcy Court to approve the Bidding Procedures Order was removed and the requirement that the parties enter into the Well PSA by May 26, 2017 was added.
The Leasehold PSA amends the Original PSA to include the purchase of the wells as part of the Assets and provides that the Buyer has the option, rather than the obligation as contemplated in the Original PSA, to purchase certain subsequent assets. Furthermore, the Leasehold PSA limits the Seller’s maximum aggregate amount of liability with respect to indemnification for certain liabilities arising under the Asset Sale Agreements.
The summary of the Asset Sale Agreements set forth above does not purport to be complete and is qualified in its entirety by reference to the Asset Sale Agreements, which have been filed with the Bankruptcy Court and will be filed as an exhibit in our Quarterly Report on Form 10-Q for the period ended June 30, 2017.