Each one in plain English, with the numbers worked through for a shareholder.
3 Nov 2016capital raising announcement● NeutralMajor
On Nov 2, 2016 Approach agreed with Wilks Brothers and SDW Investments to swap $130.552 million of its 7.00% Senior Notes due 2021 (about 56.7% of the notes) for 39,165,600 new common shares, about 48.5% of the fully diluted stock after the swap. The deal needs a shareholder vote under NASDAQ rules and is expected to close in Q1 2017. It adds three Wilks-designated directors (board rises to eight) and caps their stake at 48.61%. Other noteholders are to be offered a follow-on exchange, which depends on shareholders approving a rise in authorized shares from 90 million to 180 million. Existing shareholders would be heavily diluted if it closes.
On May 3, 2016 Approach signed a third amendment to its credit agreement, cutting the borrowing base to $325 million from $450 million, raising the interest margin by 100 basis points, and requiring a lien on substantially all assets of the company and guarantors. It also loosened the interest-coverage covenant, allowed up to $150 million of new junior-secured or unsecured debt, and requires cash above $35 million to repay revolver loans. The attached Q1 2016 results show a net loss of $13.7 million on revenues of $17.6 million; this reverses the borrowing base increase to $600 million in Nov 2014.
On Dec 30, 2014 Approach signed a second amendment to its May 2014 credit agreement that changes the covenant limiting optional redemption of Permitted Unsecured Notes. The filing gives no other terms or figures.
On Nov 4, 2014 Approach amended its May 2014 credit agreement, raising the borrowing base to $600 million from $450 million while keeping lender commitments at $450 million; the interest margin will now depend on use of the borrowing base rather than of commitments. The same filing carried Q3 2014 results (net income $22.4 million, revenues $68.1 million, production 14.2 MBoe/d, up 61% on the prior-year quarter) and a board change: Bryan Lawrence retired as Chairman but stays a director, CEO J. Ross Craft became Chairman, and Vean J. Gregg III became Lead Independent Director.
On August 4, 2014 Approach amended its January 1, 2011 gas purchase contract with DCP Midstream, LP, extending it through July 2023. The contract had previously run to January 2016 with annual renewals. The filing gives no other terms and says the amendment will be filed with the Q3 2014 10-Q.
11 Oct 2013asset acquisition disposition▲ GoodMajor
On October 7, 2013 Approach closed the sale of its 50% stake in Wildcat Permian Services to a JP Energy subsidiary, resolving the September 2013 agreement. Base consideration was $213.2 million after adjustments, and Approach's net proceeds at closing were about $109.1 million, including $6 million for signing an amendment to its crude oil purchase agreement. That amendment widens the dedicated area to parts of Crockett and Schleicher Counties, gives Approach priority rights to pipeline capacity, and has JP Energy guarantee Wildcat's obligations. Approach says it plans to use net operating loss carryforwards to reduce cash taxes on the gain.
On September 18, 2013 Approach, through its subsidiary Approach Midstream Holdings, agreed with JP Energy to sell its 50% interest in Wildcat Permian Services (the crude pipeline business it held an interest in since September 2012) as part of a $210 million sale of the whole company. Approach's cash proceeds are stated as $108 million before taxes, and closing depends on conditions including an amendment to the crude oil purchase agreement. The deal can be terminated if not closed by October 18, 2013.
On June 6, 2013 Approach agreed to sell $250 million of 7.00% Senior Notes due 2021 through J.P. Morgan Securities, and completed the sale on June 11, 2013. It expects net proceeds of about $243 million, to repay revolving credit facility debt, fund capital spending and cover working capital. This uses the room for unsecured notes created by the November 2012 credit amendment; the notes are guaranteed by subsidiaries and interest is payable each June 15 and December 15, starting December 15, 2013. The filing notes that affiliates of some underwriters are lenders under the credit facility and will receive part of the proceeds.
Effective May 1, 2013, a fifteenth credit agreement amendment raised the borrowing base to $315 million from $280 million, raised the lenders' maximum commitment to $500 million from $300 million, and pushed maturity out two years to July 31, 2016 (from July 2014). The same filing carries first-quarter 2013 results: production up 15% to 8.4 MBoe/d, revenues up 19% to $36.3 million, and a net loss of $347,000 ($0.01 per share) versus net income of $1.7 million a year earlier. It also says oil began flowing down the joint venture pipeline on April 3, 2013.
On November 16, 2012 Approach signed a fourteenth amendment to its credit agreement, raising the cap on unsecured senior notes it may issue from $200 million to $400 million. For notes issued before October 1, 2013, the amendment removes the cut to the borrowing base that would otherwise apply. It also adds Approach Services, LLC and Approach Midstream Holdings LLC as guarantors. The filing does not say any notes are being issued yet.
On September 19, 2012 Approach agreed to sell 5,000,000 new common shares to underwriters led by J.P. Morgan Securities, with a 30-day option for 750,000 more; closing is scheduled September 25, 2012. Proceeds are meant mainly to fund development of its Wolfcamp oil shale play and working capital, with credit facility borrowings repaid in the meantime. New shares dilute existing holders, and this is the third share sale since November 2010.
A thirteenth amendment, effective September 7, 2012, lets Approach hedge up to 100% of projected proved developed producing production for 36 months (up from 85%) and up to 85% for 60 months (up from a 36-month limit). Separately, on September 12, 2012 it signed a Crude Oil Purchase Agreement with Wildcat Permian Services LLC, a company in which Approach owns an interest, dedicating crude from certain Crockett County, Texas acreage; Wildcat will buy and transport it at a negotiated price.
On May 2, 2012 the board approved amended and restated indemnity agreements with each director and executive officer, replacing the earlier ones. They commit the company to cover expenses, judgments and settlements arising from the person's role, to the fullest extent the law permits, and to advance expenses. This is governance paperwork with no financial figures stated.
A twelfth amendment, dated December 20, 2011, assigns BNP Paribas's lender position in the credit agreement to JPMorgan Chase, KeyBank, Royal Bank of Canada and Wells Fargo. No change to amounts or pricing is stated.
On November 15, 2011 Approach agreed to sell 4,000,000 new common shares to underwriters led by J.P. Morgan Securities, with a 30-day option for 600,000 more; closing is scheduled November 21, 2011. Proceeds are meant mainly to fund development of its Wolffork oil shale play and working capital, with borrowings on the credit facility repaid in the meantime. New shares dilute existing holders, and this is the second share sale since November 2010.
An eleventh amendment, effective October 7, 2011, raises the borrowing base from $200 million to $260 million and adds Wells Fargo Bank as a sixth lender. The filing also furnishes an investor presentation for a Canaccord Genuity energy conference on October 12-13, 2011.
A tenth amendment, effective May 4, 2011, raises the borrowing base from $150 million to $200 million and the maximum commitment from $200 million to $300 million. Maturity moves to July 31, 2014, the debt-to-EBITDAX covenant loosens from 3.5x to 4x, interest margins fall, up to $200 million of senior unsecured debt is permitted, and Royal Bank of Canada joins as a fifth lender. Fees paid were a $150,000 arrangement fee and a $675,000 commitment fee.
1 Mar 2011asset acquisition disposition▲ GoodMajor
Approach's subsidiary agreed on February 23, 2011 to buy a further 38.33% working interest in Cinco Terry (Crockett County, Texas) from J. Cleo Thompson & James Cleo Thompson, Jr., L.P. and Wes-Tex Drilling Company, L.P. for $76.0 million, and completed it February 28. It was funded partly by a $67 million draw on the credit facility at 4.75% interest, leaving about $82.7 million available. This continues the Cinco Terry buildup begun with the October 2010 purchase from Magnum Hunter, and financial statements for the assets are due by May 11, 2011.
Approach subsidiaries signed a Gas Purchase Contract with DCP Midstream, LP dated January 1, 2011, under which DCP will buy and process the companies' natural gas and natural gas liquids. Residue gas is priced off the Waha index and liquids off Mont Belvieu spot prices, each less fees. The term runs to January 31, 2016, then renews annually unless cancelled on 60 days' notice.
Approach agreed on November 10, 2010 to sell 5,750,000 new common shares to underwriters led by J.P. Morgan Securities, with a 30-day option for up to 862,500 more; closing is expected November 17, 2010. Issuing new shares increases the share count, so existing holders' ownership is diluted. The filing does not state the price or what the proceeds will be used for.
2 Nov 2010asset acquisition disposition▲ GoodMajor
Approach's subsidiary bought an additional 10% working interest in the Cinco Terry field from Magnum Hunter Resources for $21.5 million (subject to adjustments, effective October 1, 2010), completed October 29, 2010. It was funded by borrowing under the $150 million credit facility. This increases the company's stake in Cinco Terry, where it already held acreage.
A ninth amendment, effective October 21, 2010, raises the borrowing base and lenders' commitment from $115 million to $150 million. KeyBank and BNP Paribas become Documentation Agent and Syndication Agent and each take a 3.33% interest from Frost. This adds borrowing room under the existing facility.
An eighth amendment to the credit agreement, effective May 3, 2010, pushes the maturity out one year to July 31, 2012 and raises the hedging limit from 75% to 85% of projected production from proved developed producing properties. The $115 million borrowing base and commitment are reaffirmed, Fortis Capital's interest moves to BNP Paribas, and a $287,500 extension fee was paid. This continues the string of amendments to the January 2008 facility.
A seventh amendment, effective February 1, 2010, replaces The Frost National Bank with JPMorgan Chase Bank as administrative agent of the credit agreement. Frost remains a lender; no change to amounts or pricing is stated.
A sixth amendment raises the credit facility's commitment from $100 million to $115 million, with other terms unchanged. Approach paid a $150,000 fee (1.00% of the increase).
Subsidiary Approach Oil & Gas amended its February 2007 lease on the El Vado East prospect in Rio Arriba County, New Mexico, effective January 1, 2009. The change extends lease deadlines during force majeure delays (such as permit failures or government orders) and allows the lease to continue past its primary term if at least two wells are drilled each lease year.
A fifth amendment extends the credit agreement's maturity by one year to July 31, 2011, in return for a $250,000 extension fee (0.25% of the $100 million commitment). This pushes back the date the facility must be repaid or refinanced.
A fourth amendment keeps the borrowing base and commitment at $100 million but raises the cost of borrowing: the Eurodollar margin goes from 1.25%-2.00% to 2.25%-3.25%, the base rate margin from 0% to 1.25%-2.25%, and the unused commitment fee from 0.375% to 0.50%. Borrowing under the facility becomes more expensive for shareholders' company.
A third amendment to the credit agreement adds Fortis Capital and KeyBank as lenders (Frost 30%, JPMorgan 30%, Fortis 20%, KeyBank 20%) and adds a covenant capping debt at 3.5 times EBITDAX. The filing also discloses the earlier May 2008 second amendment, which raised the borrowing base and commitments to $100 million.
The board ratified a 2008 performance-based bonus program for executives under the 2007 Stock Incentive Plan. It is tied to production growth, reserve growth, net asset value per share growth, EBITDAX per share growth and individual performance, with the CEO's maximum at 150% of salary. The committee can reduce but not increase payouts.
