Permian Basin pure-play Rosehill Resources Inc. announced the partial conversion of its Class B common stock in a company release on Dec. 27

Rosehill, an independent oil and gas company focused on the Permian’s Delaware sub-basin, said Tema Oil & Gas Co. exchanged 14.1 million shares of its Class B stock for an equivalent number of shares of Class A stock.

Tema, an affiliate of Rosehill Resources, traces its origins to American Oil Co. (Amoco), which has operated in West Texas for more than 50 years. The company is sole owner of Rosehill’s Class B stock.

Rosehill was formed in April 2017 following the combination of Tema Oil and Gas Co. with KLR Energy Acquisition Corp., a special-purpose acquisition company (SPAC) led by industry veteran Garry Hanna who currently serves as chairman of Rosehill’s board.

Since its conversion from a SPAC in 2017, Rosehill has maintained dual share classes of common stock for the purposes of allowing certain benefits and voting rights related to its organizational structure, commonly referred to as an “Up-C” structure.

According to the company release, Tema informed Rosehill that the exchange was driven in part by tax planning considerations and that Tema has no intention to sell the newly exchanged shares of Class A stock in the immediate future.

After the exchange, Tema holds about 15.7 million shares of Class B and 14.1 million shares of Class A stock.

Rosehill holds a core position in the Northern and Southern Delaware Basin of 13,600 acres, according to a company investor presentation.

On Dec. 16, Rosehill released a 2020 plan highlighted by a 30% reduction in capex for comparable year-over-year production in 2019. The company’s 2020 plan includes a one-rig program will be roughly 75% directed to a diverse set of intervals in the Northern Delaware area, said David French, Rosehill’s president and CEO.

“We think focused capital allocation is key to demonstrating portfolio strength in today’s environment, and this coming year marks Rosehill’s pivot to cash neutrality inclusive of financing,” French said in a statement. “Our 2020 plan is structured to be self-funded, liquids heavy, and infrastructure light.”

Comments