Pictured, a pumpjack in the Permian Basin where QEP Resources holds about 49,224 net acres focused within the Midland Basin in Martin County, Texas. (Source: QEP Resources Inc.)
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.
Recommended Reading
Post Oak Backs New Permian Team, But PE Faces Uphill Fundraising Battle
2024-10-11 - As private equity begins the process of recycling inventory, likely to be divested from large-scale mergers, executives acknowledged that raising funds has become increasingly difficult.
SLB Earnings Rise, But Weakened 4Q and 2025 Ahead Due to Oil Glut
2024-10-22 - SLB, like Liberty Energy, revised guidance lower for the coming months, analysts said, as oilfield service companies grapple with concerns over an oversupplied global oil market.
Midstream M&A Adjusts After E&Ps’ Rampant Permian Consolidation
2024-10-18 - Scott Brown, CEO of the Midland Basin’s Canes Midstream, said he believes the Permian Basin still has plenty of runway for growth and development.
Exxon, Chevron Beat 3Q Estimates, Output Boosts Results
2024-11-01 - Oil giants Chevron and Exxon Mobil reported mixed results for the third quarter, with both companies surpassing Wall Street expectations despite facing different challenges.
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.