Approach Resources Inc: announcements explained, share price

Announcements, explained

Each one in plain English, with the numbers worked through for a shareholder.

2 Nov 2017capital raising announcement● NeutralMajor

Approach reported Q3 2017 results (revenue $25.6M, net loss $8.5M, production 11.5 MBoe/d, liquidity $32.7M against a $325M borrowing base). It also agreed to buy Wolfcamp shale assets next to its Pangea West acreage from Amistad Energy Partners, a Kayne Anderson portfolio company, paying 7,573,215 new shares valued at $18.05M; closing is expected in Q4 2017. The share issue adds to the share count, and the filing says completion of additional wells was deferred to Q1 2018.

What it means for a shareholder

7.6m new shares at $18.05 to raise about $137m. That's 8.0% dilution: every existing holder's slice gets 8.0% smaller. If you held $1,000 of shares (55 at the issue price), your slice goes from 0.000064% to 0.0000589% of the company. To keep it you'd need 5 more shares - about $90 at the issue price.

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20 Mar 2017capital raising announcement● NeutralMajor

The follow-on offer to exchange 7.00% Senior Notes for stock, which followed the Wilks deal, expired on March 17, 2017 with only $14.528 million of notes tendered. Approach accepted them and will issue 4,009,728 shares (about 4.6% of the post-issuance shares), plus accrued interest, on March 22, 2017. Its 2017 capital budget and guidance are unchanged. The filing does not say whether the Wilks exchange itself has closed.

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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.

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