Fury Resources aims to reduce the amount of merger consideration payable to Battalion’s stockholders. Battalion said it was reviewing the amended terms of a merger agreement announced in December. (Source: Shutterstock.com)
Permian producer Battalion Oil is reviewing an amendment to a planned acquisition by Fury Resources that would lower the deal’s purchase price by nearly 29% per share.
Battalion said Fury’s amendment to the original merger agreement, announced in December, would reduce the amount of merger consideration payable to Battalion’s stockholders from $9.80 per share to $7 per share, the company reported in second-quarter earnings on Aug. 14.
“The modified offer is contingent on the existing holders of the company's Series A through Series A-4 preferred equity rolling 100% of their preferred equity into new preferred equity in the surviving company following the merger in order to help support the transaction,” Battalion wrote in a filing.
Under the original merger terms, Fury would pay $9.80 per share in cash for BATL’s common stock, representing a total transaction value of around $450 million. It’s unclear how much of the original $450 million transaction value was attributable to debt.
Battalion said its board of directors and special committee were reviewing Fury’s amended proposal. Battalion said its preferred stockholders also reported reviewing the amendment.
If the amended terms were adopted, it’s not immediately clear how much the deal’s total value would decline. Hart Energy reached out to Fury Resources and Battalion Oil for more information but did not receive a response by press time.
As the parties work through the details of the merger, Battalion said that it was continuing its strategic alternatives initiative.
RELATED
Delaware Basin E&P Battalion Oil Acquired for $450 Million
Delaware Basin
Battalion owns interests in approximately 40,400 net acres in the Delaware Basin, primarily in Pecos, Reeves, Ward and Winkler counties, Texas. Battalion’s main asset—called Monument Draw—sits in the eastern part of the Delaware up against the Permian’s Central Basin Platform.
Battalion produced an average of 12,857 boe/d (49% oil) during the second quarter.
The company must manage large volumes of H2S sour gas on its Delaware Basin asset. During the first quarter, Battalion restarted operations at its acid gas injection (AGI) facility to treat sour gas for sales to midstream offtakers.
During the second quarter, the AGI facility treated approximately 18.2 MMcf/d and returned around 17 MMcf/d of sweet gas to Battalion for sales to midstream partners. That enabled Battalion to lower its operating expenses by $4.26/boe compared to the first quarter.
To date, the AGI facility has processed over 2.7 Bcf of Permian sour gas.
Battalion and its joint venture partner Caracara Services LLC continue to ramp up the facility to full operations. The companies anticipate saving around $2 million per month in gas treatment costs when the project reaches full capacity.
Battalion said the facility processed 26.6 MMcf/d on Aug. 12, which allowed the company “to return wells to production” and realize around 13,500 boe/d (7,500 bbl/d) of net production.
RELATED
Fury Road: Will $450MM Battalion M&A Fuel More Go-private Deals?
Recommended Reading
As Permian Targets Grow Scarce, 3Q M&A Drops to $12B—Enverus
2024-10-16 - Upstream M&A activity fell sharply in the third quarter as public consolidation slowed and Permian Basin targets dwindled, according to Enverus Intelligence Research.
Prairie Operating Gets Output, Acreage Boost from Nickel Road M&A
2024-10-02 - Prairie Operating closed an acquisition of acreage and production in Weld County, Colorado, where the D-J Basin player is drilling its first Niobrara horizontals.
Oxy CEO Sheds Light on Powder River Basin Sale to Anschutz
2024-11-14 - Occidental is selling non-core assets in the Lower 48 as it works to reduce debt from a $12 billion Permian Basin acquisition.
Despite Low Prices, Thrifty, Efficient E&Ps Keep Distributions Flowing
2024-10-08 - Even with lower commodity prices, producers have maintained healthy shareholder returns through dividends and buybacks thanks to M&A, drilling efficiencies and capital discipline.
Battalion Oil Walks Away from Fury Resources Buyout
2024-12-20 - The Battalion Oil-Fury Resources merger had been in discussions for more than a year, but Battalion said Fury failed to meet financial deadlines to continue the talks.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.