Item 1.01
Entry into a Material Definitive Agreement.
First Amendment to Conveyance of Net Profits Interest
On September 6, 2017, Enduro Operating LLC, a Delaware limited liability company (“Enduro Operating”) and The Bank of New York Mellon Trust Company, N.A., a national association organized under the laws of the State of New York (the “Trustee”), acting not in its individual capacity but solely as the trustee of Enduro Royalty Trust, a Delaware statutory trust (the “Trust”), entered into the First Amendment to Conveyance of Net Profits Interest (the “Conveyance Amendment”). The Conveyance Amendment amends that certain Conveyance of Net Profits Interest executed as of November 8, 2011, as supplemented by the Supplement to Conveyance of Net Profits Interest executed as of November 8, 2011 (as supplemented, the “Conveyance”). The execution of the Conveyance Amendment by the Trustee on behalf of the Trust was approved by the Trust’s unitholders (the “Unitholders”) at the Special Meeting of Unitholders held on August 30, 2017 (the “Special Meeting”).
Pursuant to the terms of the Conveyance, the Trust owns a net profits interest representing the right to receive 80% of the net profits (the “Net Profits Interest”) from the sale of oil and natural gas produced from certain properties in the states of Texas, Louisiana and New Mexico (the “Underlying Properties”) held by Enduro Resource Partners LLC, a Delaware limited liability company (“Enduro”) and its affiliates. The Conveyance allowed Enduro to sell interests in the Underlying Properties free and clear of the Net Profits Interest subject to certain limitations. The Conveyance Amendment amended the Conveyance to allow Enduro to sell, free and clear of the Net Profits Interest, interests in the Underlying Properties in excess of such limitations with the approval of Unitholders holding at least 50% of the then outstanding units of the Trust at a meeting held in accordance with the requirements of the trust agreement of the Trust. The Conveyance Amendment made other conforming amendments to the Conveyance regarding the distribution of any proceeds from such an authorized disposition of the Underlying Properties.
The foregoing description of the Conveyance Amendment does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Conveyance Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Partial Release, Reconveyance and Termination Agreement
On September 6, 2017, Enduro Operating and the Trustee, acting not in its individual capacity but solely as the trustee of the Trust, entered into the Partial Release, Reconveyance and Termination Agreement (the “Partial Release”).
Pursuant to the terms of the Partial Release, the Trustee, on behalf of the Trust, reconveyed, terminated, remised, quitclaimed and released to Enduro Operating the Net Profits Interest with respect to certain of the Underlying Properties (the “Divestiture Properties”) sold pursuant to eight letter agreements or purchase and sale agreements, as applicable, (the “Transaction Agreements”) entered into between Enduro Operating and the following counterparties: (i) Chisholm Energy Holdings, LLC, a Delaware limited liability company, (ii) OXY USA, Inc., a Delaware corporation, (iii) Forge Energy, LLC, a Delaware limited liability company, (iv) Summit West Resources LP, a Texas limited partnership, (v) DE Midland III LLC, a Delaware limited liability company, (vi) Parsley Energy, L.P., a Texas limited partnership, (vii) Tracker Resource Development III LLC, a Delaware limited liability company and (viii) QEP Energy Company, a Texas corporation. The release of the Net Profits Interest associated with the Divestiture Properties was approved by the Unitholders at the Special Meeting.
A copy of the Partial Release is filed as Exhibit 10.2 to this Form 8-K and is incorporated herein by reference.