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Item 1.01.
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Entry into a Material Definitive Agreement.
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Sabalo/Shad Acquisition
On May 7, 2021, Laredo Petroleum, Inc. (the
“Company”) entered into two separate purchase and sale agreements, one (the “Sabalo PSA”) with Sabalo
Energy, LLC and its subsidiary, Sabalo Operating, LLC (collectively, “Sabalo”), and the other (the “Shad
PSA” and, together with the Sabalo PSA, the “Sabalo/Shad PSAs”) with Shad Permian, LLC (“Shad”), which
is unaffiliated with Sabalo but owns interests in the same assets, pursuant to which the Company agreed to purchase (the
“Sabalo/Shad Acquisition”), effective as of April 1, 2021, certain oil and gas properties in the Midland Basin,
located in the Howard and Borden Counties, Texas, and related assets and contracts for an aggregate purchase price of $714.3
million, comprising $624.3 million of cash and 2,506,964 shares of the Company’s common stock, par value $0.01 per share (the
“Shares”), based upon the closing price of the Company’s common stock on April 19, 2021. Under the terms of
the Sabalo/Shad PSAs, the Company has deposited into third party escrow accounts an amount equal to $71.4 million. The Company
currently expects to fund the acquisition price and related transaction costs with respect to the Sabalo/Shad Acquisition with
proceeds from a sale of working interests in certain of its oil and gas properties in connection with the Working Interest Sale
(defined below), as more fully described below, and borrowings under its Senior Secured Credit Facility (defined below).
The Sabalo/Shad PSAs contain customary representations and
warranties, covenants, termination rights and indemnification provisions for a transaction of this size and nature, provide the
parties thereto with specified rights and obligations and allocate risk among them in a customary manner. The Company expects the
Sabalo/Shad Acquisition to close on or about July 1, 2021, subject to customary closing conditions. There can be no
assurance that all of the conditions to closing the Sabalo/Shad Acquisition will be satisfied. The Company has a right to terminate the Shad PSA if the closing under the Sabalo PSA does not occur prior to or contemporaneously with
the closing under the Shad PSA. The foregoing description of the
Sabalo/Shad PSAs does not purport to be complete and is qualified in its entirety by reference to the Sabalo PSA and the Shad PSA
filed as Exhibit 2.1 and Exhibit 2.2, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
Each of the Sabalo/Shad PSAs contain representations, warranties
and other provisions that were made only for purposes of that agreement and as of specific dates and were solely for the benefit of
the other parties thereto. Each of the Sabalo/Shad PSAs is a contractual document that establishes and governs the legal relations
among the parties thereto and is not intended to be a source of factual, business or operational information about the Company,
Sabalo, Shad or any of their respective subsidiaries or the assets to be acquired from Sabalo or Shad. The representations and
warranties made by the Company or Shad (as applicable) in the Sabalo/Shad PSAs may be (i) qualified by disclosure schedules
containing information that modifies, qualifies or creates exceptions to such representations and warranties and (ii) subject
to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Accordingly,
investors and security holders should not rely on such representations and warranties as characterizations of the actual state of
facts or circumstances.
Under the Sabalo PSA, Sabalo and one of its indirect owners agreed to enter into a standstill agreement in connection with the closing
under the Sabalo PSA (the “Standstill Agreement”). Pursuant to the terms of the Standstill Agreement, if the closing occurs,
for a period of time not to exceed two years following the closing under the Sabalo PSA, such persons will be subject to, among other things,
certain restrictions on such entities’ acquisition of shares of the Company’s common stock and on certain other activities
relating to the Company and the shares of the Company’s common stock owned by such persons and their affiliates, including the shares
constituting a portion of the purchase price to be received by Sabalo in connection with the closing under the Sabalo PSA.
Also under the Sabalo/Shad PSAs, the Company agreed to enter into
a registration rights agreement with Sabalo and Shad in connection with the closing of the Sabalo/Shad Acquisition (the
“Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, the Company will agree to
register under the Securities Act of 1933, as amended (the “Securities Act”), the resale of the shares of the
Company’s common stock constituting a portion of the purchase price to be received by such entities in connection with the
closing of the Sabalo/Shad Acquisition and to grant such person certain rights to request and/or participate in underwritten
offerings.
The foregoing descriptions of the Standstill Agreement and
Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the form of
Standstill Agreement included as Exhibit F to the Sabalo PSA filed as Exhibit 2.1 hereto and the form of Registration Rights
Agreement included as Exhibit C to each of the Sabalo PSA filed as Exhibit 2.1 hereto and the Shad PSA filed as Exhibit 2.2 hereto, respectively, and incorporated herein by reference.
Sale of Working Interest
On May 7, 2021, the Company entered into a purchase and sale agreement
(the “Sixth Street PSA”) with Piper Investments Holdings, LLC, an affiliate of Sixth Street Partners, LLC (“Sixth Street”),
pursuant to which the Company agreed to sell to Sixth Street a portion of the Company’s working interests in certain specified oil
and gas properties (the “Working Interest Sale” and, together with the Sabalo/Shad Acquisition, the “Transactions”),
for an aggregate purchase price of $405 million in cash at closing and potential cash flow-based earn-out payments after
closing, subject to certain customary adjustments.
The interests conveyed include such undivided interest in and to the
scheduled oil and leases as may be necessary to entitle the purchaser to the scheduled working interest and net revenue interest amounts,
and the undivided percentage ownership in and to the scheduled producing wellbores, comprising approximately 37.5% of the Company’s
interest in such producing wellbores, the properties being primarily located within the Glasscock and Reagan Counties, Texas, subject
to certain excluded assets and title diligence procedures.
The Sixth Street PSA contains customary representations and
warranties, covenants, termination rights and indemnification provisions for a transaction of this size and nature, provide the
parties thereto with specified rights and obligations and allocate risk among them. The Company expects the Working Interest Sale to
close on or about the same time as the closing of the Sabalo/Shad Acquisition, subject to closing of the Sabalo/Shad Acquisition and
other customary closing conditions. There can be no assurance that all of the conditions to closing the Working Interest Sale, or
under the Sixth Street PSA, will be satisfied. The foregoing description of the Sixth Street PSA does not purport to be complete and
is qualified in its entirety by reference to the Sixth Street PSA filed as Exhibit 2.3 to this Current Report on Form 8-K and
incorporated herein by reference.
The Sixth Street PSA contains representations, warranties and other
provisions that were made only for purposes of the Sixth Street PSA and as of specific dates and were solely for the benefit of the other
parties thereto. The Sixth Street PSA is a contractual document that establishes and governs the legal relations among the parties thereto
and is not intended to be a source of factual, business or operational information about the Company or Sixth Street and their respective
subsidiaries or the assets to be acquired from the Company and its affiliates. The representations and warranties made by the Company
and Sixth Street in the Sixth Street PSA may be (i) qualified by disclosure schedules containing information that modifies, qualifies
or creates exceptions to such representations and warranties and (ii) subject to standards of materiality applicable to the contracting
parties that differ from those applicable to investors. Accordingly, investors and security holders should not rely on such representations
and warranties as characterizations of the actual state of facts or circumstances.
Amendment to the Senior Secured Credit Facility
On May 7, 2021, the Company entered into the Sixth Amendment (the
“Sixth Amendment”) to the Fifth Amended and Restated Credit Agreement (as amended, the “Senior Secured Credit
Facility”) among the Company, as borrower, Wells Fargo Bank, N.A., as administrative agent, Laredo Midstream Services, LLC and
Garden City Minerals, LLC, as guarantors, and the banks signatory thereto. The Sixth Amendment, among other things, reaffirms
the Borrowing Base at $725 million, and amends the Senior Secured Credit Facility to permit (i) the Sabalo/Shad Acquisition and
the other transactions contemplated by the Sabalo/Shad PSAs and (ii) the Working Interest Sale and the other transactions
contemplated by the Sixth Street PSA, in each case, subject to the terms of the Sixth Amendment and the Senior Secured Credit
Facility.
All capitalized terms above that are not defined elsewhere have the
meanings ascribed to them in the Sixth Amendment or the Senior Secured Credit Facility, as applicable. The foregoing description of the
Sixth Amendment is a summary only and is qualified in its entirety by reference to the complete text of the Sixth Amendment, a copy of
which is attached hereto as Exhibit 10.1 and incorporated into this Item 1.01 by reference.