Despite a multibillion-dollar buyout offer from its shareholder and hedge fund Elliott Management Corp., QEP Resources Inc. said Aug. 7 it will remain an independent company.

Instead, the Denver-based oil and gas producer entered into a cooperation agreement with Elliott, which owns about 4.9% of QEP’s common stock, that includes working together to identify two new board nominees.

The hedge fund’s roughly $2.1 billion takeover offer for QEP earlier this year represented a 44% premium to the company’s closing price at the time.

RELATED:

QEP Resources Receives $2 Billion Takeover Offer From Elliott Management

As part of the agreement with Elliott on Aug. 6, the company will create a five-person operations committee that will include the two new board members plus two current independent directors and be chaired by Tim Cutt, QEP’s CEO who joined the company in December 2018.

“I want to thank Tim and the rest of the board of directors for the collaborative, constructive approach they have taken in reaching today’s agreement,” said Elliott senior portfolio manager John Pike in a statement on Aug. 7. “Despite only being in the position for seven months, Tim has led QEP toward significant improvements in its cost structure and operating efficiency.”

In early 2018, QEP hatched a strategy to become a Permian Basin pure-play operator, thanks in part to encouragement by Elliott.

The move essentially meant changing the fabric of the company by peeling off chunks of its portfolio through various asset sales with proceeds totaling billions of dollars. One of those divestitures—the sale of QEP’s Williston Basin position for $1.7 billion—hit a snag with the late-year plunge in oil prices and the deal was ultimately terminated.

Still, the company’s CEO, Tim Cutt, believes QEP has made great strides in streamlining its business and the new committee with Elliott will continue that progress.

“Our board and management team welcome the constructive perspectives of our shareholders and are committed to maximizing shareholder value,” he said in a statement. “Through the formation of this new committee, we will continue building on the progress we have already made, and I look forward to the contributions of our new directors and the new committee as we take further steps to improve performance and build shareholder value.”

The two new directors are expected to have “strong operating backgrounds in unconventional development” and are expected to be seated no later than October, according to the QEP press release.

Emily Patsy can be reached at epatsy@hartenergy.com.

Comments