Clayton Williams Energy, Inc. Proposes Mergers to Acquire Southwest Royalties Partnerships
September 09 2011 - 1:37PM
Business Wire
Clayton Williams Energy, Inc. (“CWEI”) (NASDAQ: CWEI) today
announced that its wholly owned subsidiary, Southwest Royalties,
Inc. (“SWR”), has filed preliminary proxy statements with the
Securities and Exchange Commission (“SEC”) related to proposed
mergers between SWR and six partnerships of which SWR is the
general partner (the “Public Partnerships”). As currently proposed,
each Public Partnership that approves the merger would merge into
SWR, and the partnership interests of such Public Partnership,
other than those interests owned by SWR, would be converted into
the right to receive cash. SWR would not receive any cash payment
for its partnership interests in the Public Partnerships; however,
as a result of each merger, SWR would acquire 100% of the assets
and liabilities of the Public Partnerships.
CWEI and SWR also intend to propose mergers between SWR and 18
additional partnerships of which SWR is the general partner. CWEI
believes that the terms and conditions of the other mergers would
be substantially similar to the terms and conditions of the mergers
for the Public Partnerships described in the preliminary proxy
statements. CWEI expects that the merger agreements would be
finalized and signed promptly after clearing SEC staff comments to
the preliminary proxy statements for the Public Partnerships. Each
of the proposed mergers would be subject to significant conditions
described in the preliminary proxy statements, including approval
by the limited partners of each partnership.
As currently proposed, the amount that SWR would pay for the
limited partnership interests in the mergers would be based on each
partnership’s reserves value, net working capital and net asset
retirement obligations as of June 30, 2011. The reserves value
would be derived from the present value of estimated future net
cash flows from each partnership’s oil and gas reserves based on a
12-month historical average of the NYMEX closing prices for oil and
gas as of a date reasonably close to the mailing date of the proxy
statements. The consideration would be 100% cash.
Substantially all of the partnerships’ properties are located in
the Permian Basin of West Texas and Southeastern New Mexico where
over 70% of CWEI’s oil and gas reserves are concentrated. CWEI
expects to obtain the funds to finance the aggregate merger
consideration by conveying a volumetric production payment (“VPP”)
on certain properties acquired in the proposed mergers to a third
party. The final terms of the VPP would not be determined until
immediately prior to the closing of the mergers. CWEI does not
expect the closing of the mergers to be conditioned on receiving
proceeds from the VPP or any other financing condition.
Clayton Williams Energy, Inc. is an independent energy company
located in Midland, Texas.
Communications in this press release do not constitute an offer
to buy any securities or a solicitation of any vote or approval.
CWEI expects that the proposed mergers will be submitted to the
limited partners of the partnerships for their consideration. SWR,
in its capacity as general partner of the Public Partnerships,
filed preliminary proxy statements for the Public Partnerships with
the SEC on September 9, 2011. In addition, CWEI, SWR and the
Public Partnerships filed Schedule 13E-3s for the Public
Partnerships with the SEC on September 9, 2011. SWR, in its
capacity as general partner of the Public Partnerships, expects to
file definitive proxy statements and other materials for the Public
Partnerships at a later date. CWEI, SWR or the Public Partnerships
may also file other documents concerning the proposed mergers. WE
URGE LIMITED PARTNERS OF THE PUBLIC PARTNERSHIPS TO READ THE
APPLICABLE PRELIMINARY PROXY STATEMENT, SCHEDULE 13E-3 AND
DEFINITIVE PROXY STATEMENT (WHEN IT BECOMES AVAILABLE), ALL RELATED
SUPPLEMENTS AND AMENDMENTS (IF ANY AND WHEN THEY BECOME AVAILABLE)
AND ALL OTHER RELATED MATERIALS CAREFULLY BECAUSE THEY CONTAIN (AND
WILL CONTAIN) IMPORTANT INFORMATION ABOUT THE PUBLIC PARTNERSHIPS
AND THE PROPOSED MERGERS. Limited partners of the Public
Partnerships may obtain free copies of the applicable Preliminary
Proxy Statement and Schedule 13E-3 (and the applicable definitive
proxy statement and other related materials when they become
available) as well as other filed documents containing information
about the Public Partnerships at http://www.sec.gov, the SEC’s free
internet site. Free copies of the Public Partnerships’ SEC filings
including the applicable Preliminary Proxy Statement and Schedule
13E-3 are also available by contacting SWR at (432) 688-3451.
CWEI, SWR and their respective executive officers and directors
may be deemed, under SEC rules, to be participants in the
solicitation of proxies from the limited partners of the Public
Partnerships in connection with the proposed mergers. Information
regarding the officers and directors of CWEI and SWR is included in
the Preliminary Proxy Statement filed with the SEC on
September 9, 2011. The Preliminary Proxy Statement also
contains a description of the parties to the Merger and their
direct or indirect interests in the Public Partnerships.
This release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. All statements, other
than statements of historical or current facts, that address
activities, events, outcomes and other matters that we plan,
expect, intend, assume, believe, budget, predict, forecast,
project, estimate or anticipate (and other similar expressions)
will, should or may occur in the future are forward-looking
statements. These forward-looking statements are based on
management’s current belief, based on currently available
information, as to the outcome and timing of future events. The
Company cautions that its future natural gas and liquids
production, revenues, cash flows, liquidity, plans for future
operations, expenses, outlook for oil and natural gas prices,
timing of capital expenditures and other forward-looking statements
are subject to all of the risks and uncertainties, many of which
are beyond our control, incident to the exploration for and
development, production and marketing of oil and gas.
These risks include, but are not limited to, the possibility of
unsuccessful exploration and development drilling activities, our
ability to replace and sustain production, commodity price
volatility, domestic and worldwide economic conditions, the
availability of capital on economic terms to fund our capital
expenditures and acquisitions, our level of indebtedness, the
impact of the current economic recession on our business
operations, financial condition and ability to raise capital,
declines in the value of our oil and gas properties resulting in a
decrease in our borrowing base under our credit facility and
impairments, the ability of financial counterparties to perform or
fulfill their obligations under existing agreements, the
uncertainty inherent in estimating proved oil and gas reserves and
in projecting future rates of production and timing of development
expenditures, drilling and other operating risks, lack of
availability of goods and services, regulatory and environmental
risks associated with drilling and production activities, the
adverse effects of changes in applicable tax, environmental and
other regulatory legislation, and other risks and uncertainties are
described in the Company's filings with the Securities and Exchange
Commission. The Company undertakes no obligation to publicly update
or revise any forward-looking statements.
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