EVERGREEN RESOURCES INC company history: the story so far

History

Evergreen Resources bought into Colorado's Raton Basin coal bed methane in 2000, then was acquired by Pioneer Natural Resources in September 2004 and delisted.

2000-2003: Building in the Raton Basin

Evergreen Resources was a Denver-based developer of coal bed methane, natural gas held within coal seams. In September 2000 it closed a major purchase from an affiliate of KLT Gas Inc., a subsidiary of Kansas City Power & Light: interests in about 24,000 acres of producing Raton Basin properties in southern Colorado. The properties carried an estimated 153 BCF (billion cubic feet) of proved gas reserves and were producing 28 MMcf (million cubic feet) a day from 151 net wells.

The price was about $70 million in cash, drawn on its bank credit facility, plus $100 million of mandatory redeemable preferred stock (shares the company must buy back) and $6 million of common stock. Up to $4 million more in shares could follow if certain gas futures prices exceeded set levels. Evergreen also owed a net profits interest payment until the preferred stock was redeemed or July 2003, whichever came first.

The record then goes quiet until May 2003, when Evergreen filed to issue up to 1,856,523 shares to buy Carbon Energy Corporation. Each Carbon share would convert into 0.275 Evergreen shares, valuing the deal at about $84.3 million. About 1,691,339 new shares, roughly 8% of the post-merger total, would be issued. Evergreen shareholders did not need to vote. The beats do not show whether the deal completed.

2004: Sale to Pioneer

On May 3, 2004, Evergreen agreed to be acquired by Pioneer Natural Resources in a deal valued at about $2.1 billion. Shareholders could elect Pioneer shares, cash, or a mix, with $39.00 of value per share on offer at Pioneer's May 3 price. Pioneer director Scott Sheffield, who was also an Evergreen director, was recused from the board's recommendation. Sexton, Carlton and Collins were to sign one-year Raton Basin non-compete agreements.

A preliminary proxy followed in June, and the final proxy was mailed around August 30, setting a September 28 shareholder meeting and noting Colorado dissenters' rights of appraisal. Evergreen sold its Kansas properties on September 27.

The merger completed on September 28, 2004, making Evergreen a wholly-owned Pioneer subsidiary. Elections for Pioneer stock exceeded the cap and were scaled back. All-cash electors received $39.00 per share, and the default choice was 0.58175 Pioneer shares plus $19.50. Everyone also received $0.48 per share from the Kansas sale. In total about 25.4 million Pioneer shares and about $871.4 million in cash were paid, the cash funded by a $900 million credit agreement with JPMorgan Chase. Evergreen terminated its securities registration on September 30, and on October 5 its securities were notified for removal from exchange listing. The filings seen do not address the fate of the 5.875% notes or the preferred stock.

Written from the 8 story beats below (2000 to 5 Oct 2004), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

2004

5 Oct
EVERGREEN RESOURCES INC's securities were notified for removal from listing and registration on its exchange.
listing compliance notice
30 Sept
EVERGREEN RESOURCES INC terminated the registration of a class of securities, ending its reporting obligation for them.
listing compliance notice
29 Sept
On September 28, 2004, Evergreen and Pioneer completed the merger and Evergreen became a wholly-owned Pioneer subsidiary; its common stock will be delisted from the NYSE. Holders get a mix of Pioneer shares and cash based on their election, with elections for Pioneer stock over the cap so scaled back: all-cash electors get $39.00 per share, all-stock electors get 0.83746 Pioneer shares plus $10.93 cash, and the default and mixed choice is 0.58175 Pioneer shares plus $19.50 cash. Everyone also gets $0.48 per share from the September 27, 2004 Kansas property sale. In total about 25.4 million Pioneer shares and about $871.4 million cash are paid; Pioneer funded the cash with a $900 million 364-day credit agreement with JPMorgan Chase. This resolves the Pioneer merger and Kansas sale threads. The filing does not address the 5.875% notes or the preferred stock.
asset acquisition disposition
30 Aug
Evergreen filed the final proxy statement, mailed on or about August 30, 2004, setting a special shareholder meeting for September 28, 2004 (record date July 30, 2004) to vote on the Pioneer merger. Terms are as in the preliminary version: Pioneer shares equal to about 21% of its outstanding shares plus about $865 million in cash, with the board recommending FOR (Sheffield recused). New in this version: Colorado dissenters' rights of appraisal are available to record holders who follow the legal procedure. This moves the Pioneer thread from preliminary to final stage, with the vote pending.
business combination
14 June
Evergreen filed a preliminary proxy statement for a special shareholder meeting (date still blank) to vote on the May 3, 2004 merger with Pioneer, under which Evergreen would become a wholly-owned Pioneer subsidiary. Pioneer would issue shares equal to about 21% of its outstanding shares and pay about $865 million in cash (before any Kansas sale proceeds above $15 million). Evergreen's board recommends a FOR vote, with Scott Sheffield recused because he is Pioneer's chairman, president and CEO as well as an Evergreen director. Approval needs a majority of Evergreen's outstanding shares. Dissenters' rights and the election form details are not in the visible text. This continues the Pioneer thread and is not yet a final outcome.
business combination
5 May
Evergreen agreed on May 3, 2004 to be acquired by Pioneer Natural Resources in a deal the press release values at about $2.1 billion. Each Evergreen share can receive $39.00 in value (based on Pioneer's $33.52 price on May 3, 2004), elected as 1.1635 Pioneer shares, $39.00 cash, or 0.58175 Pioneer shares plus $19.50 cash (the default). In total, holders get 25 million Pioneer shares and $850 million cash, plus an extra cash payment of at least $0.35 per share (about $15 million) tied to the Kansas properties. The deal needs approval from both companies' shareholders, NYSE listing of the new Pioneer shares, and antitrust clearance. Sexton, Carlton and Collins are to sign one-year Raton Basin non-compete agreements with Pioneer. This is a new thread that would end shareholders' Evergreen stock position if completed, but it has not closed, so it is not yet an equity outcome.
business combination

2003

21 May
Evergreen filed to register up to 1,856,523 shares to buy Carbon Energy Corporation under a March 31, 2003 merger agreement, in which each Carbon share converts into 0.275 Evergreen shares. At Evergreen's March 28 price of $45.40 the deal was valued at about $84.3 million, and about 1,691,339 new Evergreen shares (roughly 8% of the post-merger total) would be issued. Yorktown Energy Partners III owns 73.2% of Carbon and the Carbon CEO 3.8%, and both agreed to vote in favor; no vote by Evergreen shareholders is needed.
business combination

2000

5 Oct
Evergreen closed the purchase on September 20, 2000 of interests in about 24,000 acres of producing coal bed methane properties in the Raton Basin from an affiliate of KLT Gas Inc. (a subsidiary of Kansas City Power & Light). It paid about $70 million in cash (drawn on its bank credit facility), $100 million in mandatory redeemable preferred stock and $6 million in common stock, and may owe up to $4 million more in shares if certain gas futures prices exceed set levels. The properties are estimated at 153 BCF of proved gas reserves and were producing 28 MMcf per day from 151 net wells; Evergreen also owes a net profits interest payment until the preferred stock is redeemed or July 2003, whichever is earlier.
asset acquisition disposition