MISSION RESOURCES CORP company history: the story so far

History

Mission Resources grew through its 2001 Bargo merger, cut debt under new management, agreed to be bought by Petrohawk in 2005, sold fields to XTO, then deregistered.

2001: The Bargo merger

The company began as Bellwether Exploration. In early 2001 it agreed to merge with Bargo Energy Company, and in February it filed to register the deal. Bargo's common holders were to receive about $1.26 per share in cash and Bellwether stock, and its preferred holders $50 million plus accrued dividends. Up to 11,428,571 new shares were registered, and Bellwether's authorized shares were to rise from 31.0 million to 65.0 million.

By March the terms were firmer. The combined company would be renamed Mission Resources Corporation, with total consideration estimated at $200.2 million. Pro forma reserves were restated at 78.5 million barrels of oil equivalent, down from over 85 million in the first filing.

The merger closed on May 16, 2001, after both sets of shareholders approved. The purchase price was about $220 million including assumed debt. The cash portion, $0.45 per Bargo share, was paid with borrowings under a Chase Manhattan Bank credit facility. A $125 million private sale of 10 7/8% senior subordinated notes was announced on May 29.

2002-2004: Cutting debt

The record for 2002 and 2003 is quiet. A June 2004 filing says a new management team that took over in late 2002 had cut debt by over $50 million since March 2003, through repurchases and equity-for-debt exchanges. Debt to book capitalization fell from 78% to 63%. In January and April 2004 Mission bought about 95% of the Jalmat field in the Permian Basin, adding about 31 Bcfe (billion cubic feet of gas equivalent) of reserves and lifting the pro forma total to about 209 Bcfe at December 31, 2003. In June 2004 it registered an offer to swap $130 million of 9 7/8% Senior Notes due 2011 for unregistered notes of the same amount, raising no new money.

2005: Sale and exit

On April 3, 2005, Mission agreed to be bought by Petrohawk Energy for about $135 million in cash and 19.2 million Petrohawk shares, roughly 60% stock and 40% cash. Shareholders could elect cash or stock, subject to proration. Holders of about 32% of Mission's stock agreed to vote in favour. A $12.5 million fee was payable by Mission in specified cases. The shareholder meeting was set for July 28, with the agreement amended since April.

On July 1, Mission sold non-operated interests in the Goldsmith and Wasson fields in Texas to XTO Energy for about $56.5 million before adjustments, receiving about $53.4 million at closing. Its lenders waived covenants for the sale and cut the borrowing base from $50 million to $35 million. Long-term debt stood at $173 million at March 31, 2005.

On July 28, 2005, the date of the shareholder vote, Mission deregistered its securities, ending its obligation to file reports with the SEC.

Written from the 9 story beats below (2001 to 28 July 2005), 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.

2005

28 July
MISSION RESOURCES CORP deregistered its securities, ending its obligation to file reports with the SEC.
listing compliance notice
5 July
Mission sold its non-operated interests in the Goldsmith and Wasson oil fields (Ector and Yoakum Counties, Texas) to XTO Energy for about $56.5 million before adjustments, about $53.4 million received at closing on July 1, 2005 (the filing's pro forma notes give July 5 as the date, an inconsistency). To go with the sale, Wells Fargo and the lenders waived covenant compliance for it and cut the credit facility's borrowing base from $50 million to $35 million, continuing the March 2005 amendment. The sale falls between the June proxy and the July 28 shareholder vote on the Petrohawk merger, which the filing does not mention; pro forma figures show removed revenue of $14.6 million for 2004 and the balance sheet shows $173 million of long-term debt at March 31, 2005, before the sale proceeds.
asset acquisition disposition
28 June
Mission sent shareholders the final joint proxy statement for the Petrohawk merger, with a special meeting on July 28, 2005 (record date June 13). Terms match the April deal (about 19.234 million Petrohawk shares and $135.4 million cash, per-share value adjusted to be equal whether cash or stock is chosen). The agreement has since been amended; the visible text does not say how. Mission's board recommends voting for it, and shareholders who vote against can seek appraisal under Delaware law. The merger is still pending, as the vote has not yet happened.
business combination
4 Apr
Mission agreed on April 3, 2005 to be bought by Petrohawk Energy in a deal of about $135 million in cash and 19.2 million Petrohawk shares, roughly 60% stock and 40% cash. Shareholders can elect cash or stock, subject to proration; the initial per-share price is $8.15 cash or 0.7718 Petrohawk shares, and the filing's example at Petrohawk's April 1 price of $11.53 gives $8.60 or 0.7458 shares. The deal needs both companies' shareholder approval and regulatory approval, and Mission owes a $12.5 million fee if it ends under specified circumstances. Holders of about 32% of Mission's stock, including Harbert (which reported a 19% stake in July 2004), signed agreements to vote in favour, and the poison pill was amended so the merger does not trigger it.
security holder rights change

2004

3 June
Mission registered an offer to swap $130 million of registered 9 7/8% Senior Notes due 2011 for its outstanding unregistered notes of the same amount; it gets no new money from the swap. The filing says a new management team that took over in late 2002 has cut debt by over $50 million since March 2003 through repurchases and equity-for-debt exchanges, lowering debt to book capitalization from 78% to 63%. It also says it bought about 95% of the Jalmat field in the Permian Basin in January and April 2004, adding about 31 Bcfe of proved reserves, to about 209 Bcfe pro forma at December 31, 2003. Guarantors are now Black Hawk Oil, Mission Holdings LLC and Mission E&P Limited Partnership. The text provided does not say what happened to the 2007 subordinated notes, which are not mentioned in the visible portion; that thread is unconfirmed.
business combination

2001

13 July
This refiled report on the May 16 merger closing adds two things. First, a May 29, 2001 press release announcing a $125 million private sale (Rule 144A) of 10 7/8% senior subordinated notes; the filing says 'due April 2001', which looks like a typo since the related notes are due 2007. Second, unaudited pro forma figures treating the merger and notes as if they had happened earlier: combined revenue of $226.3 million and net income of $41.8 million for 2000, and $62.9 million and $9.7 million for Q1 2001. These are illustrative, not actual results.
asset acquisition disposition
24 May
The Bargo merger closed on May 16, 2001, after Bellwether's stockholders approved it at the annual meeting and Bargo's shareholders approved by written consent. The purchase price was about $220 million including assumed debt, and about $139 million went to Bargo's common holders ($1.26 per share: $0.45 cash plus $0.81 in stock). The cash part was paid with borrowings under the Chase Manhattan Bank credit facility, and the company is now Mission Resources, trading as MSSN. This resolves the earlier open questions on the votes, closing and rename.
asset acquisition disposition
19 Mar
Amendment No. 1 to the Bellwether-Bargo merger registration firms up terms. The combined company will be renamed Mission Resources Corporation. Total consideration is estimated at $200.2 million: $139.3 million for Bargo common stock, options and warrants (about $0.45 cash and $0.81 in Bellwether stock per share, or $59.3 million cash and about $80 million stock), and $50.0 million plus an estimated $10.9 million accrued dividends for the preferred. Pro forma reserves are now stated as 78.5 million barrels of oil equivalent and production as 23.0 thousand barrels of oil equivalent per day, down from over 85 million and 25.0 thousand in the first filing. Bargo holders of about 80.9% of its common and 94.6% of its preferred have agreed to consent.
business combination
1 Feb
Bellwether Exploration (the company that later became Mission Resources) filed its first registration for a merger with Bargo Energy Company, under an agreement dated January 24, 2001. Bargo would merge into Bellwether; Bargo common holders would get about $1.26 per share in cash and Bellwether stock (if Bellwether's 20-day average price is $7.00-$9.00), and Bargo preferred holders would get $50 million plus accrued dividends. Up to 11,428,571 new Bellwether shares are registered; Bargo holders would own roughly 31.9%-41.1% of the combined company on a fully diluted basis. Bellwether holders keep their shares, which would represent 58.9%-68.1% of the combined company, but they vote on the deal and on raising authorized shares from 31.0 million to 65.0 million.
business combination