Diamondback Energy, Inc. (NASDAQ:FANG) (“Diamondback” or the
“Company”) today announced that, in connection with the pending
all-stock acquisition of QEP Resources, Inc. (“QEP”), it has
commenced (i) a cash tender offer (the “Diamondback Tender Offer”)
to purchase any and all of Diamondback’s outstanding 5.375% Senior
Notes due 2025 (the “2025 Notes”) and (ii) cash tender offers (the
“QEP Tender Offers” and, together with the Diamondback Tender
Offer, the “Tender Offers”) to purchase any and all of QEP’s
outstanding 5.375% Senior Notes due 2022 (the “2022 Notes”), 5.250%
Senior Notes due 2023 (the “2023 Notes”) and 5.625% Senior Notes
due 2026 (the “2026 Notes” and, together with the 2022 Notes and
the 2023 Notes, the “QEP Notes” and, the QEP Notes together with
the 2025 Notes, the “Notes”) from holders of each series of the
Notes. In connection with the Tender Offers, Diamondback is also
soliciting consents from holders of each series of the Notes
(collectively, the “Consent Solicitations”) to effect certain
amendments to the indentures governing each series of the Notes
(collectively, the “Indentures”). The terms and conditions of the
Diamondback Tender Offer and related Consent Solicitation are
described in the Offer to Purchase for Cash and Consent
Solicitation Statement, dated March 4, 2021 (the “Diamondback Offer
to Purchase”). The terms and conditions of the QEP Tender Offers
and Consent Solicitation are described in the Offer to Purchase for
Cash and Consent Solicitation Statement, dated March 4, 2021 (the
“QEP Offer to Purchase” and, together with the Diamondback Offer to
Purchase, the “Offers to Purchase”).
The following table summarizes the pricing terms of the Tender
Offers and Consent Solicitations:
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Payment per $1,000 Principal Amount of Notes |
|
Title of
Securities |
|
CUSIPNumber |
|
AggregatePrincipalAmountOutstanding |
|
|
Tender OfferConsideration(1) |
|
|
EarlyTenderPremium(2) |
|
|
TotalConsideration(1)(2) |
|
Diamondback 5.375% Senior Notes due 2025 |
|
25278XAH2/US25278XAH26 |
|
$ |
800,000,000 |
|
|
$ |
1,003.75 |
|
|
$ |
30 |
|
|
$ |
1,033.75 |
|
QEP 5.375% Senior Notes due
2022 |
|
74733VAB6/US74733VAB62 |
|
$ |
465,061,000 |
|
|
$ |
1,028.75 |
|
|
$ |
30 |
|
|
$ |
1,058.75 |
|
QEP 5.250% Senior Notes due
2023 |
|
74733VAC4/US74733VAC46 |
|
$ |
636,840,000 |
|
|
$ |
1,047.50 |
|
|
$ |
30 |
|
|
$ |
1,077.50 |
|
QEP 5.625% Senior Notes due
2026 |
|
74733VAD2/US74733VAD29 |
|
$ |
500,000,000 |
|
|
$ |
1,122.50 |
|
|
$ |
30 |
|
|
$ |
1,152.50 |
|
|
|
|
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|
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(1 |
) |
Excludes accrued and unpaid
interest from the last interest payment date to, but not including,
the applicable Settlement Date, which will also be paid on accepted
Notes up to but not including the applicable Settlement Date. |
(2 |
) |
The applicable Total
Consideration includes the Early Tender Premium for related Notes
tendered (and not validly withdrawn) at or prior to the Early
Tender Date. |
Each of the Tender Offers and Consent Solicitations will expire
at 11:59 p.m., New York City time, on March 31, 2021, unless
extended or earlier terminated (the “Expiration Date”). The
consideration for each $1,000 principal amount of Notes validly
tendered and not withdrawn at or prior to 5:00 p.m., New York City
time, on March 17, 2021, unless extended (the “Early Tender Date”),
and accepted for purchase pursuant to the Tender Offers will be the
applicable Total Consideration set forth in the table above, which
includes the Early Tender Premium. The consideration for each
$1,000 principal amount of each series of Notes validly tendered
after the Early Tender Date and at or prior to the Expiration Date
and accepted for purchase pursuant to the Tender Offers will be the
applicable Tender Offer Consideration set forth in the table above,
which consists of the Total Consideration less the Early Tender
Premium set forth in the table above. Holders of each series of
Notes tendered after the Early Tender Date will not be eligible to
receive the related Early Tender Premium. No additional
consideration is payable for a consent in either of the Consent
Solicitations but the Tender Offer Consideration for each series of
Notes also constitutes consideration for the related consent.
The Tender Offers and the Consent Solicitations are being made
in connection with, and are expressly conditioned upon the closing
of, the acquisition of QEP by Diamondback pursuant to the Agreement
and Plan of Merger (the “Merger Agreement”), by and among QEP,
Diamondback and Bohemia Merger Sub, Inc., a direct, wholly-owned
subsidiary of Diamondback (“Merger Sub”), dated as of December 20,
2020 (the “Merger”). The Merger is expected to close shortly after
the QEP stockholder meeting to approve the Merger, which is
scheduled for March 16, 2021, subject to satisfaction of the
conditions specified in the Merger Agreement. Following completion
of the Merger, QEP will be a direct, wholly-owned subsidiary of
Diamondback. The Tender Offers and Consent Solicitations are also
subject to the condition that Diamondback shall have completed one
or more investment grade public debt financing transactions, on
terms and conditions acceptable to Diamondback in its sole
discretion, that, together with not more than $500,000,000 of
available cash and availability under Diamondback’s credit
facility, is sufficient to fund the purchase of all Notes tendered
pursuant to the Tender Offers (the “Financing Condition”), as well
as other customary conditions specified in the Offers to Purchase.
In addition, the QEP Tender Offers are also subject to the
condition that Diamondback receives consents to the proposed
amendments to the applicable Indentures from at least a majority in
aggregate principal amount of the QEP Notes, acting as one class,
excluding any QEP Notes owned by QEP or by any person directly or
indirectly controlling or controlled by or under direct or indirect
common control with QEP. Notes validly tendered (and not validly
withdrawn) prior to the Early Tender Date, provided that all
conditions to the Tender Offers have been satisfied or waived by
Diamondback, may be accepted for purchase on any date following the
Early Tender Date but prior to the Expiration Date (the “Early
Acceptance Date”). We expect that the Early Acceptance Date will be
March 23, 2021 (such date is subject to change without notice).
Notes accepted on the Early Acceptance Date may be settled on the
business day we choose promptly thereafter (the “Initial Settlement
Date”). We expect that the Initial Settlement Date will be March
24, 2021 (such date is also subject to change without notice). The
“Final Settlement Date” with respect to the Tender Offers is the
date that we settle all Notes accepted for purchase pursuant to the
Tender Offers and not previously settled on the Initial Settlement
Date, if any, and we expect such date to be on or about April 2,
2021, the second succeeding business day after the Expiration Date.
Each of the Initial Settlement Date and the Final Settlement Date
is referred to as a “Settlement Date.” No tenders will be valid if
submitted after the Expiration Date.
Notes tendered and consents delivered may be withdrawn or
revoked at any time prior to 5:00 p.m., New York City time, on
March 17, 2021 (with respect to each series of Notes, the
“Withdrawal Date”). Holders of Notes who tender their Notes and
deliver their consents after the Withdrawal Date, but at or prior
to the Expiration Date, may not withdraw their tendered Notes and
related delivered consents. Holders of Notes who validly tender
their Notes will be deemed to have validly delivered the related
consents. Holders of Notes may not tender Notes without delivering
the related consents.
Diamondback reserves the absolute right, subject to applicable
law, to: (i) waive any or all conditions to the Tender Offers; (ii)
extend, terminate or withdraw the Tender Offers; or (iii) otherwise
amend the Tender Offers in any respect. Diamondback intends to use
a portion of the net proceeds of one or more offerings of debt or
equity securities, borrowings under our revolving credit facility,
and cash on hand, as necessary, to fund the aggregate consideration
for all Notes validly tendered (and not validly withdrawn) pursuant
to the Tender Offers and accepted for purchase, and to pay all fees
and expenses incurred in connection with the Tender Offers and
Consent Solicitations.
Goldman Sachs & Co. LLC, Morgan Stanley and Wells Fargo
Securities have been retained as dealer managers and solicitation
agents. D.F. King & Co., Inc. has been retained to serve as
both the tender agent and the information agent. Persons with
questions regarding the Tender Offers and the Consent Solicitations
should contact Goldman Sachs & Co. LLC at (212) 902-5962
(collect) or (800) 828-3182 (U.S. toll-free), Morgan Stanley at
(212) 761-1057 (collect) or (800) 624-1808 (U.S. toll-free) and
Wells Fargo Securities at (704) 410-4756 (collect) or (866)
309-6316 (U.S. toll-free). Copies of the Offers to Purchase and
other related materials may be obtained by contacting D.F. King
& Co., Inc. at 1 (866) 796-1292 (US toll-free) or 1 (212)
269-5550 (collect) or email: diamondback@dfking.com.
None of Diamondback or its affiliates, its board of directors,
QEP, the dealer managers, the tender agent and the information
agent or the trustee for the Notes makes any recommendation as to
whether holders of the Notes should tender or refrain from
tendering the Notes.
About Diamondback Energy, Inc.
Diamondback is an independent oil and natural gas company
headquartered in Midland, Texas focused on the acquisition,
development, exploration and exploitation of unconventional,
onshore oil and natural gas reserves primarily in the Permian Basin
in West Texas.
Cautionary Statement Regarding Forward Looking
Statements
This press release contains certain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1955 and other federal securities laws. Words such as
“anticipates,” “believes,” “expects,” “intends,” “will,” “should,”
“may,” “plans,” “targets,” “forecasts,” “projects,” “believes,”
“seeks,” “schedules,” “estimates,” “positions,” “pursues,” could,”
“budgets,” “outlook,” “trends,” “guidance,” “focus,” “on schedule,”
“on track,” “is slated,” “goals,” “objectives,” “strategies,”
“opportunities,” “poised,” “potential” and similar expressions may
be used to identify forward-looking statements. Forward-looking
statements are not statements of historical fact and reflect
Diamondback’s and QEP’s current views about future events. Such
forward-looking statements include, but are not limited to,
statements about the Consent Solicitations, the Tender Offers, any
future debt financing transactions, the benefits of the proposed
Merger, including future financial and operating results,
Diamondback’s and QEP’s plans, objectives, expectations and
intentions, the expected timing and likelihood of completion of the
transactions, and other statements that are not historical facts,
including estimates of oil and natural gas reserves and resources,
estimates of future production, assumptions regarding future oil
and natural gas pricing, planned drilling activity, future results
of operations, projected financial information (including projected
cash flow and liquidity), business strategy, other plans and
objectives for future operations or any future opportunities. These
statements are not guarantees of future performance and no
assurances can be given that the forward-looking statements
contained in this press release will occur as projected. Actual
results may differ materially from those projected. Forward-looking
statements are based on current expectations, estimates and
assumptions that involve a number of risks and uncertainties that
could cause actual results to differ materially from those
projected.
The risks and uncertainties that could cause actual results to
differ materially from those in forward-looking statements include,
without limitation, the ability to complete one or more investment
grade public debt financing transactions; the ability to obtain the
approval of the merger by QEP stockholders; the risk that
Diamondback and QEP may be unable to obtain governmental and
regulatory approvals required for the merger, or required
governmental and regulatory approvals may delay the merger or
result in the imposition of conditions that could cause the parties
to abandon the merger; the risk that an event, change or other
circumstances could give rise to the termination of the merger
agreement; the risk that a condition to closing of the transactions
may not be satisfied; the timing to consummate the proposed
transactions; the risk that the assets and the businesses will not
be integrated successfully; the risk that the cost savings and any
other synergies from the transactions may not be fully realized or
may take longer to realize than expected; the risk that any
announcement relating to the proposed transactions could have
adverse effects on the market price of Diamondback’s common stock
or QEP’s common stock; the risk of litigation related to the
proposed transactions; the risk of any unexpected costs or expenses
resulting from the proposed transactions; disruption from the
transactions making it more difficult to maintain relationships
with customers, employees or suppliers; the diversion of management
time from ongoing business operations due to transaction-related
issues; the volatility in commodity prices for crude oil and
natural gas, the presence or recoverability of estimated reserves,
particularly during extended periods of low prices for crude oil
and natural gas during the COVID-19 pandemic; the ability to
replace reserves; environmental risks, drilling and operating
risks, including the potential liability for remedial actions or
assessments under existing or future environmental regulations and
litigation; exploration and development risks; competition,
government regulation or other actions; the ability of management
to execute its plans to meet its goals and other risks inherent in
Diamondback’s and QEP’s businesses; public health crises, such as
pandemics (including COVID-19) and epidemics, and any related
government policies and actions; the potential disruption or
interruption of Diamondback’s and QEP’s operations due to war,
accidents, political events, civil unrest, severe weather, cyber
threats, terrorist acts, or other natural or human causes beyond
Diamondback’s or QEP’s control; the risk that the announcement or
consummation of the merger, or any other intervening event results
in a requirement under certain of QEP’s indebtedness to make a
change of control offer with respect to some or all of such debt;
and Diamondback’s ability to identify and mitigate the risks and
hazards inherent in operating in the global energy industry. Other
unpredictable or unknown factors not discussed in this press
release could also have material adverse effects on forward looking
statements.
All such factors are difficult to predict and are beyond
Diamondback’s or QEP’s control, including those detailed in
Diamondback’s annual reports on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K that are available on its
website at https://www.diamondbackenergy.com and on the Securities
and Exchange Commission’s (“SEC”) website at http://www.sec.gov,
and those detailed in QEP’s annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K that are
available on QEP’s website at https://www.qepres.com/ and on the
SEC’s website at http://www.sec.gov.
Forward-looking statements are based on the estimates and
opinions of management at the time the statements are made. Neither
Diamondback nor QEP undertakes any obligation to publicly update
any forward-looking statement, whether as a result of new
information, future events or otherwise. Readers are cautioned not
to place undue reliance on these forward-looking statements that
speak only as of the date hereof.
Important Information for Investors and Stockholders;
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale, issuance,
exchange or transfer of the securities referred to in this document
in any jurisdiction in contravention of applicable law. In
connection with the Merger, the Company filed previously with the
SEC a registration statement on Form S-4, as amended, which was
declared effective by the SEC on February 10, 2021 (the
“Registration Statement”). The Registration Statement includes a
proxy statement of QEP that also constitutes a prospectus of the
Company. Each of the Company and QEP have filed and may continue to
file other relevant documents with the SEC regarding the Merger. No
offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act. A definitive proxy statement of QEP was mailed to stockholders
of QEP on or about February 10, 2021.
INVESTORS AND SECURITY HOLDERS OF THE COMPANY AND QEP ARE URGED
TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND
OTHER DOCUMENTS THAT HAVE BEEN, AND MAY IN THE FUTURE BE, FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER.
Investors and security holders will be able to obtain free
copies of these documents and other documents containing important
information about the Company and QEP, once such documents are
filed with the SEC through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed with the SEC by
the Company are available free of charge on the Company’s website
at https://www.diamondbackenergy.com/home/default.aspx under the
tab “Investors” and then under the heading “Financial Information.”
Copies of the documents filed with the SEC by QEP are available
free of charge on QEP’s website at https://www.qepres.com under the
tab “Investors” and then under the heading “Financial
Information.”
No Offer or Solicitation
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy the Notes or to buy or sell any
other securities, or a solicitation of any vote or approval. The
Tender Offers and Consent Solicitations are made only through the
Offers to Purchase. The Tender Offers and Consent Solicitations are
not being made to holders of Notes in any jurisdiction in which the
making or acceptance thereof would not be in compliance with the
securities, blue sky and other laws of such jurisdiction. In any
jurisdiction in which the Tender Offers and Consent Solicitations
are required to be made by a licensed broker or dealer, the Tender
Offers and Consent Solicitations will be deemed to be made on
behalf of Diamondback by the dealer managers or one or more
registered brokers or dealers that are licensed under the laws of
such jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of
the Securities Act.
Participants in the Solicitation
The Company, QEP and certain of their respective directors,
executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding the directors and
executive officers of the Company is available in its definitive
proxy statement for its 2020 annual meeting, filed with the SEC on
April 24, 2020, and information regarding the directors and
executive officers of QEP is available in its definitive proxy
statement for its 2020 annual meeting, filed with the SEC on April
2, 2020.
Other information regarding the participants in the proxy
solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, is contained in the
Rule 424(b)(3) prospectus filed with the SEC on February 10, 2021.
Investors should read the prospectus carefully before making any
voting or investment decisions. You may obtain free copies of these
documents from the Company or QEP using the sources indicated
above.
Investor Contact:Adam Lawlis+1
432.221.7467alawlis@diamondbackenergy.com
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