Attached files
| file | filename |
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| EX-99.1 - PRESS RELEASE DATED NOVEMBER 30, 2009 - Vanguard Natural Resources, Inc. | exhibit99-1.htm |
| EX-99.2 - PRESS RELEASE DATED DECEMBER 4, 2009 - Vanguard Natural Resources, Inc. | exhibit99-2.htm |
| EX-10.2 - EXHIBIT 10.2 - Vanguard Natural Resources, Inc. | exhibit10-2.htm |
| EX-10.1 - EXHIBIT 10.1 - Vanguard Natural Resources, Inc. | exhibit10-1.htm |
| EX-10.3 - EXHIBIT 10.3 - Vanguard Natural Resources, Inc. | exhibit10-3.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of
1934
Date of
Report (Date of earliest event reported): December 4, 2009 (November 27,
2009)
Vanguard
Natural Resources, LLC
(Exact
name of registrant as specified in its charter)
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DELAWARE
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001-33756
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61-1521161
|
||
|
(State
or other jurisdiction of
incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification
No.)
|
7700
San Felipe, Suite 485
Houston,
Texas 77063
(Address
of principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (832) 327-2255
(Former
name or former address, if changed since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive
Agreement.
On November 27, 2009, pursuant to a
Purchase and Sale Agreement, Lease Amendment and Lease Royalty Conveyance
Agreement and a Conveyance Agreement (the “Purchase Agreements”),
Vanguard Natural Resources, LLC (the “Company”), and its wholly-owned subsidiary
Vanguard Permian, LLC (“Vanguard Permian”), agreed to acquire producing natural
gas and oil assets from private sellers (“Sellers”), in the Permian
Basin (the “Purchased Assets”) for $55.0 million (the “Acquisition”)
and paid one of the Sellers a non-refundable deposit of $5.5 million. This
transaction has an effective date of October 1, 2009 and was closed on December
2, 2009, as disclosed below, and is subject to customary closing conditions and
purchase price adjustments. The Company funded this acquisition with borrowings
under its existing reserve-based credit facility.
The Purchased Assets have total
estimated proved reserves of 3.2 million barrels of oil equivalent, of which
approximately 83% are oil reserves and 65% is proved developed. Based on current
net production of approximately 780 barrels of oil equivalent per day, the
properties have a reserve to production ratio of approximately 11 years. At
closing, the Company expects to operate all but one of the producing wells
located on the acquired properties.
The
parties have made customary representations, warranties, covenants and
agreements in the Purchase Agreements.
The foregoing description of the
Purchase Agreements is qualified in its entirety by reference to the full text
of the Purchase Agreements, which are attached as Exhibit 10.1, 10.2 and 10.3 to
this Form 8-K and incorporated herein by reference.
In an
effort to support stable cash flows from this transaction, the Company entered
into crude oil swaps based on NYMEX pricing for approximately 90% of the
estimated oil production from existing producing wells in the acquired
properties for the period beginning January 2010 extending through December
2013. A schedule of the oil hedges entered into is shown
below:
Hedging Schedule
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Swaps
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Contract
Period
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Volume
(Bbls)
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Price (1)
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|||
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January
1, 2010 - December 31, 2010
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146,000
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$
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86.24
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January
1, 2011 - December 31, 2011
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109,500
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$
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86.99
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January
1, 2012 - December 31, 2012
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91,500
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$
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87.18
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January
1, 2013 - December 31, 2013
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73,000
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$
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87.43
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(1) Weighted Average NYMEX Fixed Price.
In
addition to the NYMEX oil price swaps entered into above, the Company entered
into the following additional NYMEX oil derivative contracts to support the cash
flow to be received on its oil production in other areas:
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Swaps
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|||||
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Contract
Period
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Volume
(Bbls)
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Price
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|||
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January
1, 2012 - December 31, 2012
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45,750
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$
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90.02
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January
1, 2013 - December 31, 2013
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45,625
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$
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90.02
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Collars
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||||||||||||
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Contract Period
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Volume
(Bbls)
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Floor
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Ceiling
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|||||||||
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January
1, 2012 - December 31, 2012
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45,750 | $ | 80.00 | $ | 100.25 | |||||||
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January
1, 2013 - December 31, 2013
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45,625 | $ | 80.00 | $ | 100.25 | |||||||
Item 2.01. Completion of Acquisition of
Assets.
On December 2, 2009, pursuant to
Purchase Agreements the Company, and its wholly-owned subsidiary Vanguard
Permian, LLC, consummated the Acquisition of Purchased Assets from the Sellers
for $55.0 million in cash.
The $55.0 million purchase price was
funded from borrowings under the Company’s reserve-based credit facility. The
purchase price is subject to final purchase price adjustments to be determined
based on an effective date of October 1, 2009.
Item 7.01 and 8.01
Regulation FD
Disclosure; Other Events.
On
November 30, 2009, the Company issued a press release announcing the execution
and delivery of the Purchase Agreement, a copy of which is filed as
Exhibit 99.1 hereto and incorporated herein by reference.
On
December 4, 2009, the Company issued a press release announcing the closing of
the Acquisition, a copy of which is filed as Exhibit 99.2 hereto and
incorporated herein by reference.
On
December 4, 2009, the Company issued a press release announcing that the
borrowing base on its reserve-based credit facility has been set at $195 million
as a result of an interim borrowing base redetermination performed in
conjunction with the Acquisition. A copy of the press release is filed as
Exhibit 99.2 hereto and incorporated herein by reference.
Item
9.01. Financial
Statements and Exhibits.
(d)
Exhibits.
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EXHIBIT NUMBER
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DESCRIPTION
|
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Exhibit
10.1
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Purchase
and Sale Agreement, dated November 27, 2009 among Vanguard Permian, LLC,
Fortson Production Company, and Benco Energy, Inc.
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|
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Exhibit
10.2
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Lease
Amendment and Lease Royalty Conveyance Agreement, dated November 27, 2009,
among Vanguard Permian, LLC and Ben J. Fortson and Fortson
Parties
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Exhibit
10.3
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Conveyance
Agreement, dated November 27, 2009 among Vanguard Permian, LLC and Exile
Oil & Gas Company
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Exhibit
99.1
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Press
Release dated November 30, 2009
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Exhibit
99.2
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Press
Release dated December 4, 2009
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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VANGUARD
NATURAL RESOURCES, LLC
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By:
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/s/
Scott W. Smith
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Name:
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Scott
W. Smith
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Title:
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President
and Chief Executive Officer
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December
4, 2009
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EXHIBIT
INDEX
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EXHIBIT NUMBER
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DESCRIPTION
|
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Exhibit
10.1
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Purchase
and Sale Agreement, dated November 27, 2009 among Vanguard Permian, LLC,
Fortson Production Company, and Benco Energy, Inc.
|
|
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Exhibit
10.2
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Lease
Amendment and Lease Royalty Conveyance Agreement, dated November 27, 2009,
among Vanguard Permian, LLC and Ben J. Fortson and Fortson
Parties
|
|
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Exhibit
10.3
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Conveyance
Agreement, dated November 27, 2009 among Vanguard Permian, LLC and Exile
Oil & Gas Company
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Exhibit
99.1
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Press
Release dated November 30, 2009
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Exhibit
99.2
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Press
Release dated December 4, 2009
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