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Item 1.01
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Entry Into a Material Definitive Agreement
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On November 6, 2018, QEP Resources, Inc., a Delaware corporation (the "
Company"
), through its wholly owned subsidiary, QEP Energy Company, a Delaware corporation ("
Seller"
), entered into a purchase and sale agreement (the "
Purchase Agreement"
) with Vantage Acquisition Operating Company, LLC, a Delaware limited liability company ("
Buyer"
), and Vantage Energy Acquisition Corp., a Delaware corporation ("
Parent"
). The Purchase Agreement provides for the sale by Seller of oil and natural gas interests in the Williston Basin located in North Dakota and Montana (the "
Williston Basin Divestiture"
). The aggregate consideration payable to Seller for the Williston Basin Divestiture will be up to $1.725 billion, subject to purchase price adjustments, including adjustments for certain title and environmental defects asserted prior to the closing. The purchase price is comprised of $1.65 billion in cash and contractual rights to receive $50 million and $25 million in Parent common stock if the daily volume weighted average trading price of Parent's common stock for 10 out of 20 consecutive trading days is at or above $12.00 per share and $15.00 per share, respectively. The Company shall be entitled to the equity consideration if the share price thresholds are met at any time during the five year period following the closing of the transaction. The Williston Basin Divestiture has an effective date of July 1, 2018. The Company and Seller expect to close the Williston Basin Divestiture in the first quarter or early in the second quarter of 2019, subject to due diligence and the satisfaction of closing conditions.
Conditions to the Closing of the Williston Basin Divestiture and Termination Rights
Before the closing of the Williston Basin Divestiture, Buyer intends to conduct due diligence to assess the aggregate dollar value of any title and environmental defects, preferential purchase rights and certain consents. If the value of these matters exceeds 20% of the purchase price, each party has the right to decline to close. Except for its termination right, its remedy for a breach of Seller's special warranty of title and its remedy for a breach by Seller of certain limited representations, indemnifications and interim period covenants, Buyer's exclusive remedy for title matters and environmental matters will be handled through a title or environmental defect mechanism.
Each party's separate obligation to consummate the Williston Basin Divestiture is conditioned upon, among other things, (i) confirmation of the counterparty's representations and warranties as of the closing, (ii) the counterparty's performance, in all material respects, of all covenants, (iii) the absence of material legal matters prohibiting the Williston Basin Divestiture, (iv) the purchase price condition described above, (v) the counterparty being ready to deliver the closing deliverables, (vi) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and (vii) approval of the transaction by Parent's stockholders. Seller's obligation to consummate the Williston Basin Divestiture is further conditioned upon Buyer's provision of replacements for Seller's bonds, letters of credit and guarantees. Buyer's obligation to consummate the Williston Basin Divestiture is further conditioned upon (i) Parent's stockholders redeeming no more than approximately 16.6 million shares of Parent's common stock, (ii) certain litigation proceedings not exceeding a specified indemnification threshold and (iii) the Company obtaining a consent under its credit agreement with respect to certain obligations and covenants to be performed under the Purchase Agreement.
If the Purchase Agreement is terminated by Seller as a result of Buyer's failure to consummate the Williston Basin Divestiture at a time when Buyer's conditions to closing have been satisfied, then, provided certain other conditions with respect to Buyer's debt financing have been satisfied, Seller will be entitled to seek specific performance of Buyer to consummate the Williston Basin Divestiture. If the Purchase Agreement is terminated by Buyer as a result of Seller's failure to consummate the Williston Basin Divestiture at a time when Seller's conditions to closing have been satisfied, Buyer will be entitled to seek specific performance of Seller to consummate the Williston Basin Divestiture.
Others Terms of the Purchase Agreement
The Purchase Agreement contains representations, warranties and covenants for a transaction of this nature. The Purchase Agreement also contains mutual pre-closing covenants, including the obligation of Seller to conduct its business in all material respects in the usual, regular and ordinary manner consistent with its past practices and to refrain from taking certain specified actions without the consent of Buyer.
The Purchase Agreement also provides for the entry by Seller on behalf of Buyer into certain derivative contracts in connection with the Williston Basin Divestiture, which will then be novated to Buyer at the closing. In certain circumstances, Buyer is obligated to indemnify Seller for costs and expenses related to the derivative contracts (including any unwinding, if applicable) as well as liabilities arising from or attributable to the derivative contracts, whether or not the closing occurs.
The foregoing is qualified in its entirety by reference to the full text of the Purchase Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.