American Energy -- Woodford, LLC Announces Significant Balance Sheet Enhancement That Increases Invested Equity By $100 Million, Reduces Debt By $152 Million And Increases Liquidity By $171 Million
OKLAHOMA CITY, June 25, 2015 /PRNewswire/ -- American Energy – Woodford, LLC ("AEW"), an affiliate of American Energy Partners, LP, today announced that it has completed a series of transactions that increased the equity invested in the company by $100 million, reduced its debt by approximately $152 million and increased the company's liquidity by approximately $171 million. These transactions include the settlement of AEW's private offer to exchange (the "Exchange Offer") any and all of its outstanding 9.00% Senior Notes due 2022 (the "Existing Notes") for its new 12.00% Second Lien notes due 2020 (the "New Notes"). The Exchange Offer was conducted upon the terms and subject to the conditions set forth in an offering memorandum and consent solicitation statement, dated May 26, 2015, and the related letter of transmittal, and expired at 11:59 p.m. New York City time on June 22, 2015 (the "Expiration Date"). As of the Expiration Date, $339.7 million in aggregate principal amount of the Existing Notes, representing approximately 97.1% of the outstanding principal amount of the Existing Notes, were validly tendered (and not validly withdrawn) pursuant to the Exchange Offer.
On June 24, 2015 (the "Settlement Date"), AEW delivered an aggregate principal amount of approximately $237.6 million of New Notes, and a cash amount of approximately $8.4 million for accrued and unpaid interest on the Existing Notes accepted for exchange as well as for amounts payable in lieu of fractional New Notes otherwise issuable under the terms of the Exchange Offer. A total of $10.3 million in aggregate principal amount of the Existing Notes remains outstanding after settlement of the Exchange Offer (the "Remaining Notes"). As part of the Exchange Offer, AEW also received the requisite consents from eligible holders of the Existing Notes to amend the indenture under which the Existing Notes were issued (the "Existing Indenture"). On the Settlement Date, AEW entered into a new indenture for the Remaining Notes, which, among other things, eliminates or amends substantially all of the restrictive covenants and reporting requirements, and modifies certain events of default and various other provisions contained in the Existing Indenture.
The settlement of the Exchange Offer closed concurrently with the funding of $100 million of additional equity from AEW's private equity sponsor, The Energy & Minerals Group ("EMG"), Aubrey K. McClendon and other parties affiliated with Mr. McClendon. AEW used a portion of this additional equity contribution to fully repay and terminate its existing revolving credit facility, and replace it with a new $500 million revolving credit facility with an initial and undrawn borrowing base of $140 million, fully underwritten by MUFG Union Bank, N.A. (the "New Credit Facility"). AEW anticipates using the liquidity provided by the additional equity contribution and the New Credit Facility to accelerate its 2015 drilling program through the addition of a second drilling rig on its acreage in July.
Mr. McClendon, AEW's Chief Executive Officer and Chairman of the Board, stated, "The close of this exchange offer and consent solicitation marks what we believe will be the beginning of accelerated growth for AEW. With a strengthened balance sheet and approximately $200 million in liquidity, AEW is now able to play offense with a faster tempo through increased rig activity and an opportunistic approach to bolt-on acquisitions that will drive significant value creation. We appreciate the support that EMG, our noteholders and our commercial bankers showed for AEW throughout this transaction, and we look forward to delivering on our operating plan and creating enhanced value for all of our stakeholders."
Jennifer M. Grigsby, AEW's Chief Financial Officer, stated, "The combination of this successful exchange offer, the additional equity from EMG and Mr. McClendon, and the new credit facility significantly enhances the financial position of AEW and demonstrates market confidence in the quality and potential of our asset base. I am proud of the collective efforts of all of our capital providers to work together on this solution that gives the company a much stronger balance sheet and greatly enhanced liquidity to grow its production and proved reserves over the next several years."
Mitsubishi UFJ Securities (USA), Inc., Credit Suisse Securities (USA) LLC and Morgan Stanley & Co LLC served as the joint dealer managers and solicitation agents for the Exchange Offer and Consent Solicitation. The information agent and exchange agent for the Exchange Offer and Consent Solicitation (the "Information Agent") was Global Bondholder Services Corporation.
This press release contains forward-looking statements. Forward-looking statements express views regarding future plans and expectations. They include statements that include words such as "may," "could," "would," "should," "believe," "expect," "anticipate," "plan," "estimate," "target," "project," "intend" and similar words or expressions, although not all forward-looking statements contain such identifying words.
Forward-looking statements in this press release include, but are not limited to, statements regarding future operations and operating costs, business strategy, future values of anticipated reserves and future production. These statements are based on numerous assumptions and are subject to known and unknown risks and uncertainties, many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes and the uncertainty inherent in estimating oil and natural gas reserves and in projecting future rates of production, cash flow and access to capital. Actual future results may vary materially from those expressed or implied in these forward-looking statements, and AEW's business, financial condition and results of operations could be materially and adversely affected by numerous factors, including such known and unknown risks and uncertainties. As a result, forward looking statements should be understood to be only predictions and statements of our current beliefs, and not as guarantees of performance. Forward looking statements speak only as of the date hereof, and we undertake no obligation to update any forward looking statements.
All of the forward-looking statements in this press release are qualified by risks, including those risks related to our ability to: complete acquisitions and successfully transition acquired businesses and assets to the management and control of AEW; access the capital markets on terms acceptable to us or at all; execute on future drilling plans; hold our leasehold by production and convert reserves into production on an economic basis; manage rapid growth; to realize attractive oil, NGLs and natural gas prices; develop a successful marketing plan for the oil, NGLs and natural gas produced by AEW; successfully identify and acquire additional productive leasehold; recruit and retain appropriately qualified personnel; effectively utilize technology, to execute our drilling program; obtain sufficient time and attention of AEW Services, LLC, which manages AEW's business; mitigate credit risk posed by significant customers; respond to intense competition in the onshore E&P industry; respond to shifting and increasing government regulatory requirements with respect to unconventional resource recovery, including hydraulic fracture stimulation; accurately predict the timing of infrastructure development (including long-haul pipelines) and tie-in of wells; accurately predict the timing and amount of future production of oil, NGLs and natural gas; access water, sourcing, distribution and disposal systems; generate sufficient cash flow to pay fixed charges; control our operating expenses and other costs; execute on our financial strategy and access the capital required for our development program; implement our hedging strategy and deliver expected results; navigate through general credit market and economic conditions; and to avoid material legal or environmental liabilities.
The New Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or under any state securities laws. The New Notes may not be offered or sold within the United States, absent registration or an applicable exemption from registration requirements.
This press release is not an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any of AEW's securities. AEW made the Exchange Offer and Consent Solicitation only by, and pursuant to the terms of the offering memorandum and consent solicitation statement, dated May 26, 2015, and the related letter of transmittal. The Exchange Offer was not made in any state or jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky, or other laws of such state or other jurisdiction.
About American Energy – Woodford, LLC:
American Energy – Woodford, LLC is an independent oil and natural gas company affiliated with American Energy Partners, LP focused on the acquisition, development and production of oil, natural gas liquids and natural gas resources in the Woodford and Mississippi Lime plays in northern Oklahoma.
About American Energy Partners, LP:
American Energy Partners, LP was founded by Aubrey K. McClendon in April 2013 to capitalize on opportunities available in unconventional resource plays. For additional information, please visit www.americanenergypartners.com.
About The Energy & Minerals Group:
EMG is the management company for a series of specialized private equity funds. The Firm was founded by John Raymond (majority owner and CEO) and John Calvert in 2006. EMG focuses on investing across various facets of the global natural resource industry including the upstream and midstream segments of the energy complex. EMG has approximately $16.8 billion of regulatory assets under management and approximately $8.3 billion in commitments have been allocated across the energy sector since inception. For additional information, please visit www.emgtx.com.
SOURCE American Energy Partners, LP
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