CTRA Coterra Energy Inc

Item 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On September 15, 2019, Contura Energy, Inc. (“Contura”) entered into a binding term sheet (the “Term Sheet”) with Eagle Specialty Materials, LLC (“ESM”), an affiliate of FM Coal, LLC, in connection with a proposed acquisition of the Belle Aye and Eagle Butte Mines (the “Western Mines”) by ESM from the Seller Parties (as defined below) in lieu of Contura making the acquisition. Subject to certain terms and conditions, Contura had previously agreed to serve as the stalking horse purchaser of the Western Mines as part of the Chapter 11 bankruptcy auction held by Blackjewel, L.L.C. (“Blackjewel”) and certain of its subsidiaries and affiliates (collectively with Blackjewel, the “Seller Parties”). ESM is proposing to acquire the Western Mines from the Seller Parties, and the Term Sheet sets forth the certain agreements between ESM and Contura that would occur in connection with any closing of ESM’s acquisition of the Western Mines from the Seller Parties (the closing of ESM’s acquisition of the Western Mines from the Seller Parties, the “Closing”). The Seller Parties are not party to the Term Sheet and the sale of the Western Mines to ESM is contingent upon a number of conditions, including ESM reaching agreement with the Seller Parties (and other third parties, as described below) regarding the terms of such sale and obtaining approval of the United States Bankruptcy Court for the Southern District of West Virginia. The closing of the transactions under the Term Sheet is conditioned upon, and would occur concurrently with, the Closing.

Pursuant to the Term Sheet, and subject to the closing conditions set forth therein, Contura agrees at Closing to make a cash payment of $90,000,000 to ESM and to convey interests in ranches known as the Belle Ayr Ranch and the Black Thunder Ranch (together, the “Ranches”) to ESM. As soon as reasonably practical, ESM agrees to arrange to have one or more sureties issue at Closing the reclamation bonds (the “Substitute Reclamation Bonds”), for the benefit of the Wyoming Department of Environmental Quality (“DEQ”), that are required in connection with the release by the DEQ at Closing of the collateral previously posted by a Contura affiliate to secure its reclamation obligations related to the Western Mines, which collateral consists of reclamation bonds and the Ranches (the “Contura Collateral”). If the Closing occurs, ESM agrees to satisfy the reclamation obligations related to the Western Mines and indemnify Contura in respect of the Contura Federal Claims (as defined below).

A Contura affiliate holds certain permits related to the Western Mines and those permits will not transfer at Closing but rather when all applicable approvals for the transfer have been obtained. Following the Closing and until the earlier of the date of the permit transfers and June 30, 2020, Contura would consent to ESM operating the Western Mines under the permits subject to and in compliance with a permit operating agreement previously entered into between a Contura affiliate and Blackjewel. ESM has agreed to use commercially reasonable efforts to have the permits transferred as promptly as possible.

Other closing conditions include:

The Term Sheet will terminate if the Closing has not occurred on or before September 27, 2019 (unless extended by the parties) or if the term sheet or definitive agreement, as applicable, for the acquisition by ESM of the Western Mines terminates in accordance with its terms and without a breach by ESM.

As noted, the closing of the transactions under the Term Sheet is subject to numerous conditions, many of which require the agreement or consent of third parties and/or are otherwise outside of the control of Contura and ESM. Therefore there can be no assurance that those conditions will be satisfied and/or waived and therefore no assurance that the transactions described in the Term Sheet will be consummated.