2009-09-18-2009-08-03-2009-08-03

To buy company with interests in UT, WY, AL, gaining 49.3 MMBOE proved, 7,626 BOE/d.

The special-purpose acquisition company Hicks Acquisition Co. I (AMEX: TOH) plans to acquire private-equity-backed Resolute Natural Resources Co., Denver, a portfolio company of Natural Gas Partners, in a merger valued at $582 million that will take the company public. Following completion, the combined enterprise will be renamed Resolute Energy Corp. and will apply for listing on the New York Stock Exchange. Resolute, founded in 2004, focuses on long-lived onshore U.S. opportunities. The company's principal assets are a tertiary oil project in southeastern Utah and a conventional gas field in the Powder River Basin of Wyoming. The company owns the majority of the interests in and operates virtually all of its wells. In addition to its producing properties, Resolute owns exploratory acreage in the Big Horn Basin of Wyoming and the Black Warrior Basin of Alabama. Resolute's assets are 91% oil with proved reserves of 49.3 million barrels of oil equivalent, and a proved reserves-to-production ratio of 18 years at year-end 2008. In first-quarter 2009, Resolute produced an average 7,626 barrels of oil equivalent per day net (85% oil). Hicks values the deal at $11.80 per barrel of oil equivalent proved, and an enterprise value to 2010 estimated EBITDA multiple of 6.5x. Hicks Acquisition founder and sponsor Thomas O. Hicks says, "Resolute has all of the characteristics that we believe are essential for a company to succeed in the public markets: a high-quality management team with extensive experience and success in the upstream oil and gas business, a strong and flexible balance sheet, and a focused asset play in a sector poised for significant activity. In addition, Hicks Acquisition shareholders benefit from acquiring Resolute at a compelling valuation relative to its publicly traded peers. We look forward to completing the transaction and supporting the management team going forward in order to realize Resolute's full operational, financial and investment potential." The NGP and Resolute management team will contribute their entire equity position to Resolute. Following the completion of the transaction, Thomas Hicks, NGP and management will together own approximately 26% of Resolute. Hicks Acquisition public shareholders will own approximately 74%. After completion, Hicks Acquisition stockholders, including Thomas Hicks, will own approximately 82% of Resolute. Nicholas J. Sutton, chairman and chief executive of Resolute, who will continue as CEO of the combined entity, says, "As a result of this transaction, Resolute will be well positioned to generate strong returns for investors through the combination of its long-lived properties, a management team with extensive experience and proven results in upstream operations, the expected strong growth in demand for oil and gas, the potential for positive pricing trends, and a greatly improved balance sheet. We are pleased to partner with Hicks Acquisition, a group of experienced investment professionals with a demonstrated successful track record in the energy industry, and to have the continued support of NGP, a leading energy industry investment firm, both of which will remain significant investors in Resolute." Sutton and the majority of the Resolute senior management team previously worked together as the management of HS Resources Inc., an independent oil and gas company that was listed on the New York Stock Exchange prior to being sold to Kerr-McGee Corp. for $1.8 billion. "Given Resolute's high-quality asset base and management's strong track record of success, we are pleased to contribute our entire equity ownership in support of Resolute's significant growth potential as a public company," says Kenneth A. Hersh, managing partner of Natural Gas Partners. "Nick and his senior management team are among the best in the business and NGP's relationship with them dates back more than 18 years to when we made our first investment in HS Resources. At that time, HS Resources was a small, private company co-founded by Nick that grew to be a highly successful independent oil and gas company. We look forward to participating in their continued success and to working with the Hicks team which has a very strong history of investing in energy related businesses." The management of Resolute and NGP will contribute their entire equity ownership and will receive 9.2 million Resolute common shares, representing approximately 18% of the pro forma outstanding shares, and additional equity ownership consisting of 1.4 million earn-out shares and 6.9 million warrants. Also as part of the transaction, the Hicks-led sponsor will agree to eliminate approximately 53% of its founder shares, convert another approximately 14% of its founder shares to earn-out shares with a $15 per share trigger price and five-year maturity, and transfer approximately 33% of both its founder warrants and its sponsor "at risk" warrants to the seller, with the sponsor warrants being transferred in exchange for $0.50 per sponsor warrant. The founder and sponsor warrants will have an exercise price of $13 per share and an expiration date five years from closing. The deal is expected to close during third-quarter 2009. Proceeds will be used to pay Resolute's outstanding debt. Citigroup Global Markets Inc. is financial advisor for Hicks Acquisition. BMO Capital Markets, Deutsche Bank Securities Inc. and UBS Investment Bank are financial advisors to Resolute.