HOUSTON, July 22, 2016 /PRNewswire/ -- Silver Run
Acquisition Corporation ("Silver Run") (NASDAQ: SRAQ, SRAQU, SRAQW)
today announced that, subject to certain conditions, including
approval of the Silver Run stockholders, it has agreed to acquire a
controlling interest in Centennial Resource Production, LLC
("Centennial"), an independent oil and natural gas company located
in the core of the Southern
Delaware Basin. On July 6,
2016, an affiliate of Riverstone Holdings LLC ("Riverstone")
entered into a definitive agreement to purchase an approximate 89%
interest in Centennial from funds controlled by, and affiliates of,
NGP Energy Capital Management, L.L.C. (together, "NGP"). In
accordance with the definitive agreement, Riverstone has agreed to
assign, and Silver Run has agreed to assume, its right to purchase
the interest in Centennial to Silver Run and will participate in
the transaction as an equity holder directly in Silver
Run.
In connection with the assignment of Riverstone's rights under
the definitive agreement and the acquisition of the Centennial
interest by Silver Run, Riverstone and certain Riverstone
controlled investment funds will purchase an estimated $810 million of Silver Run Class A Common Stock
at $10.00 per share, including up to
$175 million from Riverstone Energy
Limited. In addition, certain funds managed by Capital World
Investors and certain funds managed by Fidelity Management and
Research Company will purchase $200
million of Silver Run Class A Common Stock at $10.00 per share. The proceeds of both stock
sales will be used to fund a portion of the cash consideration
required to effect the Centennial acquisition. Following the
closing of the Centennial acquisition and related transactions,
Riverstone and such affiliates will be the single largest
stockholder of Silver Run, with an approximate 51% ownership
interest. NGP is expected to retain a significant equity stake in
Centennial, approximating 11% of the outstanding interests, and
will have a representative on the Silver Run Board of
Directors.
Mark Papa, Chairman and Chief
Executive Officer of Silver Run, will lead Centennial following the
consummation of the transaction. Centennial's existing senior
management team led by Chief Executive Officer Ward Polzin, will provide transition services
for a period of time as Mr. Papa looks to permanently fill key
management positions. Mr. Papa commented, "Since our IPO, we have
been searching to acquire a meaningful position in one of
North America's premier oil shale
basins. There has been a lot of recent excitement about the
Delaware Basin, but we believe its
potential is still significantly underappreciated. Centennial has
an enviable position in the Delaware's southern oil-rich core. I want to
commend Ward and his team for assembling such a top-notch set of
assets and organization. I look forward to replicating the culture
and philosophy that made EOG Resources such a success during my
time there and using the Centennial assets as a platform to build
something truly special."
The anticipated initial enterprise value of the combined company
is approximately $1,735 million,
implying a multiple of 12.6x and 6.6x projected calendar 2017 and
2018 adjusted EBITDA, respectively, and post-closing equity value
of $1,835 million at $10.00 per share. Silver Run expects to be
debt-free at the closing of the transaction and have $100 million of cash-on-hand and an undrawn
revolving credit facility to fund future drilling and acquisitions.
At consummation of the transaction, Silver Run is expected to be
renamed Centennial Resource Development Corp. and trade on the
NASDAQ stock exchange under the ticker symbol "CDEV".
Centennial Highlights
- Pure-play core Delaware Basin
company
- 42,500 net acres primarily in Reeves and Ward counties
- Approximately 7,200 boe/d of net production
- 48.6 MMboe of net proved reserves as of June 2016 based on internal estimates
- Stacked pay consisting of 5 currently producing shale zones
with upside for 7 more
- 1,357 gross identified potential horizontal drilling
locations
- Among the best performers in the Southern Delaware Basin based on production
per lateral foot
Transaction Details
On July 6, 2016, Riverstone
entered into a definitive agreement to purchase an approximate 89%
interest in Centennial. Under the terms of the definitive
agreement, Riverstone retained the ability to assign its rights and
obligations to purchase the interest in Centennial to Silver Run.
On July 22, 2016, Riverstone agreed
to assign, and Silver Run agreed to assume, its right to purchase
the interest in Centennial, subject to the satisfaction of certain
conditions, including the approval of the transaction by Silver
Run's stockholders.
In connection with the transaction, Silver Run intends to obtain
equity financing through the private placement of 81 million newly
issued shares of Class A Common Stock to Riverstone and its
affiliates and 20 million newly issued shares of Class A Common
Stock to certain funds managed by Capital World Investors and
certain funds managed by Fidelity Management and Research Company.
Silver Run expects to receive approximately $1 billion in net proceeds from these sales. NGP
is expected to retain an approximate 11% interest in Centennial,
which interest may be exchanged for 20 million shares of Silver Run
Class A Common Stock. Silver Run will not use debt financing to
fund any portion of the cash consideration for the
transaction. In connection with the transaction, Silver Run
and Centennial expect to repay all existing outstanding
indebtedness and either replace or amend Centennial's revolving
credit facility to permit the transaction. As of March 31, 2016, a maximum of $140 million was available for borrowing under
Centennial's revolving credit facility.
Prior to closing the transaction, Silver Run's existing Class A
stockholders will have the opportunity to vote on the transaction,
and to redeem their shares of Class A common stock, if the
transaction is approved and consummated. In the event any
stockholders choose to have their shares redeemed, Riverstone and
its affiliates expect to purchase an equivalent number of
additional shares of Silver Run Class A Common Stock at
$10.00 per share to fund such
redemptions.
The transaction is subject to approval of Silver Run
stockholders and the satisfaction or waiver of other customary
conditions. The transaction is expected to close in September 2016.
The description of the transaction contained herein is only a
summary and is qualified in its entirety by reference to the
contribution and subscription agreements relating to the
transaction.
Advisors
Citigroup Global Markets Inc. acted as capital markets advisor
and sole private placement agent to Silver Run, and financial
advisor to Riverstone. Deutsche Bank Securities Inc. and Goldman,
Sachs & Co. acted as capital markets advisors to Silver Run;
and Weil, Gotshal & Manges LLP acted as legal counsel to Silver
Run. Evercore Group L.L.C. acted as financial advisor to Silver
Run's Board of Directors. Latham & Watkins LLP acted as legal
counsel to Riverstone. Tudor, Pickering, Holt & Co. acted as
financial advisor to Centennial in connection with the transaction;
Credit Suisse Securities (USA) LLC
and Barclays Capital Inc. acted as capital markets advisors to
Centennial; and Vinson & Elkins LLP acted as legal advisor to
Centennial.
Investor Webcast and Presentation Information
A webcast discussing the transaction can be accessed at
http://edge.media-server.com/m/p/kahmk8bg. Interested investors and
other parties may also view the accompanying investor presentation
filed today with the Securities and Exchange Commission (the
"SEC"), which can be viewed on the SEC website at www.sec.gov.
About Silver Run Acquisition Corporation
Silver Run Acquisition Corporation is an energy-focused special
purpose entity formed for the purpose of entering into a merger,
capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more
businesses. The company's strategy is to identify, acquire and,
after its initial business combination, build a company in the
energy industry that complements the experience of its management
team and can benefit from their operational experience.
About Centennial Resource Production, LLC
Centennial is an independent oil and natural gas company focused
on the development and acquisition of unconventional oil and
associated liquids-rich natural gas reserves in the Permian Basin.
Centennial's assets are concentrated in the Delaware Basin, a sub-basin of the Permian
Basin. Centennial's properties consist of large, contiguous acreage
blocks in Reeves, Ward and
Pecos counties in West Texas. Centennial was formed in 2013 by
an affiliate of NGP and its management team.
About Riverstone Holdings LLC
Riverstone Holdings LLC is an energy and power-focused private
investment firm founded in 2000 by David M.
Leuschen and Pierre F. Lapeyre,
Jr. with over $34 billion of
capital raised. Riverstone conducts buyout and growth capital
investments in the exploration & production, midstream,
oilfield services, power, and renewable sectors of the energy
industry. With offices in New
York, London, Houston, and Mexico
City, Riverstone has committed over $31 billion to more than 120 investments in
North America, Latin America, Europe, Africa, and Asia.
About NGP
Founded in 1988, NGP is a premier private equity firm in the
natural resources industry with approximately $17 billion of cumulative equity commitments
organized to make strategic investments in the energy and natural
resources sectors. For more information, please visit
www.ngpenergycapital.com.
Forward-Looking Statements
This communication includes certain statements that may
constitute "forward-looking statements" for purposes of the federal
securities laws. Forward-looking statements include, but are not
limited to, statements that refer to projections, forecasts or
other characterizations of future events or circumstances,
including any underlying assumptions. The words "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intends,"
"may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements may include, for example, statements about: Silver Run's
ability to consummate the business combination; the benefits of the
business combination; the future financial performance of Silver
Run following the business combination; changes in Centennial's
reserves and future operating results; and expansion plans and
opportunities. These forward-looking statements are based on
information available as of the date of this communication, and
current expectations, forecasts and assumptions, and involve a
number of judgments, risks and uncertainties. Accordingly,
forward-looking statements should not be relied upon as
representing Silver Run's views as of any subsequent date, and
Silver Run does not undertake any obligation to update
forward-looking statements to reflect events or circumstances after
the date they were made, whether as a result of new information,
future events or otherwise, except as may be required under
applicable securities laws. You should not place undue
reliance on these forward-looking statements. As a result of a
number of known and unknown risks and uncertainties, Silver Run's
actual results or performance may be materially different from
those expressed or implied by these forward-looking statements.
Some factors that could cause actual results to differ include: (i)
the occurrence of any event, change or other circumstances that
could delay the business combination or give rise to the
termination of the contribution agreement; (ii) the outcome of any
legal proceedings that may be instituted against Silver Run
following announcement of the proposed business combination and
transactions contemplated thereby; (iii) the inability to complete
the business combination due to the failure to obtain approval of
the stockholders of Silver Run, or other conditions to
closing in the contribution agreement; (iv) the risk that the
proposed business combination disrupts current plans and operations
of Silver Run or Centennial as a result of the announcement and
consummation of the transactions described herein; (v) Silver Run's
ability to recognize the anticipated benefits of the business
combination, which may be affected by, among other things,
competition and the ability of Silver Run to grow and manage growth
profitably following the business combination; (vi) costs related
to the business combination; (vii) changes in applicable laws or
regulations; (viii) the possibility that Silver Run or Centennial
may be adversely affected by other economic, business, and/or
competitive factors; and (ix) other risks and uncertainties
indicated in the preliminary proxy statement, including those under
the section entitled "Risk Factors."
No Offer or Solicitation
This communication is for informational purposes only and shall
not constitute an offer to sell or the solicitation of an offer to
buy any securities pursuant to the proposed transactions or
otherwise, nor shall there be any sale of securities in any
jurisdiction in which the offer, solicitation or sale would be
unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Important Information For Investors and Stockholders
In connection with the proposed business combination, Silver Run
intends to file a proxy statement with the SEC. The definitive
proxy statement and other relevant documents will be sent or given
to the stockholders of Silver Run and will contain important
information about the proposed business combination and related
matters. Silver Run stockholders and other interested persons
are advised to read, when available, the proxy statement in
connection with Silver Run's solicitation of proxies for the
meeting of stockholders to be held to approve the proposed business
combination because the proxy statement will contain important
information about the proposed business combination. When
available, the definitive proxy statement will be mailed to Silver
Run stockholders as of a record date to be established for voting
on the proposed transaction. Stockholders will also be able to
obtain copies of the proxy statement, without charge, once
available, at the SEC's website at www.sec.gov.
Participants in the Solicitation
Silver Run and its directors and officers may be deemed
participants in the solicitation of proxies of Silver Run
stockholders in connection with the proposed business combination.
Silver Run stockholders and other interested persons may obtain,
without charge, more detailed information regarding the directors
and officers of Silver Run in Silver Run's registration statement
on Form S-1, as amended as of February 17,
2016. Additional information will be available in the
definitive proxy statement when it becomes available.
Contact:
Jeffrey Taufield / Daniel Yunger
Kekst
(212) 521-4800
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SOURCE Silver Run Acquisition Corporation