NBL Texas, LLC company history: the story so far

History

Formed in 2005 to buy Calpine's oil and gas business, Rosetta Resources settled with Calpine, shifted to Eagle Ford, grew into the Permian with debt, and was acquired by Noble Energy in 2015.

2006-2008: Buying Calpine's business and the fight that followed

The company, filing as Rosetta Resources Inc., was formed in 2005 to buy Calpine's domestic oil and gas business, a $1.05 billion purchase. Its first years were bumpy. In April 2006 it filed its 2005 annual report late, after NASDAQ warned it would delist the stock; NASDAQ withdrew the notice once the report arrived. The report restated third-quarter 2005 net income down $1.1 million to $8.2 million, because stock-offering costs tied to the purchase had been booked in the wrong place, and it disclosed two material weaknesses in internal controls.

The business then performed. For 2006 it reported net income of $45 million on revenue of $272 million, with fourth quarter production of 98 million cubic feet of gas equivalent a day.

The Calpine relationship soured. In August 2007 the company signed agreements to fix title problems on some properties and to extend gas marketing with Calpine to mid-2009, while noting Calpine's June 2007 lawsuit claiming the purchase price was too low by about $400 million. The company said it would fight. In November 2008 the bankruptcy court approved a settlement: the company paid $97 million in cash in total to end all disputes, and the Sacramento Basin gas purchase agreement was extended ten years.

2009-2012: Borrowing to stay on course

In April 2009 the company restated its bank revolver, with a $375 million borrowing base, and its second lien loan (debt that ranks behind the bank loan), at $75 million. Within weeks it exercised an option to lift that loan to $100 million, adding Prudential as a lender at 13.75%.

In April 2010 it began refinancing part of that debt. It sold $200 million of 9.5% senior notes due 2018, using the proceeds to repay $80 million of the second lien loan and some revolver borrowings.

In spring 2011 it sold its DJ Basin and Sacramento Basin assets for a combined $255 million, which the CEO called the final step in a shift to unconventional resources, leaving the Eagle Ford and Southern Alberta Basin as the focus. Part of the Sacramento price, $43.6 million, was held in escrow pending consents. A May 2011 revolver amendment extended maturity to 2016. In April 2012 the borrowing base was raised from $325 million to $625 million, with Wells Fargo now the agent, and in August 2012 the company prepaid the remaining Prudential second lien debt, about $20.7 million, ending that loan.

2013-2014: The Permian purchase

In March 2013 the company agreed to buy Delaware Basin interests in Gaines and Reeves Counties, Texas, from Comstock for $768 million, with a $700 million bridge loan lined up as backup. In April the revolver borrowing base rose to $800 million and 2013 capital guidance rose from $640-700 million to $840-900 million.

Permanent funding came from $700 million of 5.625% notes due 2021 and 7,000,000 new shares at $42.50, which diluted existing holders. Shares on issue rose from 52.5 million at the end of 2012 to 61.3 million at the end of 2013. The deal closed on May 14, 2013 at $811 million including adjustments, still subject to post-closing changes.

The company then swapped revolver debt for fixed-rate notes: $600 million of 5.875% notes due 2022 in November 2013 and $500 million of 5.875% notes due 2024 in May 2014, both mainly to repay revolver borrowings.

2015: Sale to Noble Energy

On March 9, 2015 the company agreed to sell 12,000,000 new shares to Morgan Stanley at $17.04, well below the $42.50 of 2013, to repay revolver borrowings and for general purposes. Shares on issue stood at 75.7 million at the end of 2015.

On May 10, 2015 it agreed to be acquired by Noble Energy in an all-stock merger, with each share converting into 0.542 Noble shares. The deal needed approval from a majority of shares and antitrust clearance, and carried a $65 million termination fee in certain circumstances. The June 16 proxy statement set a July 20 shareholder meeting, with the board unanimously recommending approval. The stated value was about $26.62 a share on May 8 and about $24.60 on June 15, and Rosetta holders would own roughly 10% of Noble.

The filings then show the end of the story. On July 20, 2015 an exchange filed to remove a class of the company's securities from listing, and on July 30 the company, now named NBL Texas, LLC, deregistered its securities, ending its obligation to file reports with the SEC.

Written from the 27 story beats below (2006 to 30 July 2015), 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.

shares on issue market cap (log scale)

201575.7m shares · US$1.51bn market cap

30 July
NBL Texas, LLC deregistered its securities, ending its obligation to file reports with the SEC.
listing compliance notice
75.7m shUS$1.51bn
20 July
NBL Texas, LLC's exchange filed to remove a class of its securities from listing.
listing compliance notice
75.7m shUS$1.51bn
16 June
The company filed its definitive proxy statement dated June 16, 2015 for a July 20, 2015 special meeting to vote on the Noble Energy merger (0.542 Noble shares per Rosetta share). The board unanimously recommends a vote FOR. The stated value per share was about $26.62 on May 8, 2015 and about $24.60 on June 15, 2015, and Rosetta holders would own roughly 10% of Noble after closing. This continues the merger thread; the vote has not yet happened.
business combination
75.7m shUS$1.77bn
11 May
On May 10, 2015 the company agreed to be acquired by Noble Energy in an all-stock merger: each Rosetta share converts into 0.542 Noble Energy shares (cash for fractions). Closing needs approval from a majority of outstanding Rosetta shares and Hart-Scott-Rodino antitrust clearance; either side can terminate if not completed by November 12, 2015, and Rosetta may owe a $65M termination fee in certain circumstances. The deal is not yet completed, so the shareholder outcome is still pending.
business combination
75.7m shUS$1.73bn
13 Mar
On March 9, 2015 the company agreed to sell 12,000,000 new common shares to Morgan Stanley at $17.04 per share, with a 30-day option for 1,800,000 more. Proceeds are intended to repay revolver borrowings and for general corporate purposes. Issuing new shares dilutes existing holders; this is far below the $42.50 paid in the April 2013 offering (a comparison, not a stated reason).
material agreement
61.6m shUS$1.09bn

201461.4m shares · US$2.91bn market cap

29 May
On May 29, 2014 the company completed its $500M offering of 5.875% senior notes due 2024, resolving the pending closing from the May 21 underwriting agreement. Net proceeds of about $491.8M are expected to repay revolver borrowings and for general corporate purposes; interest is payable June 1 and December 1, starting December 1, 2014. The filing does not link the proceeds to redeeming the 9.500% notes.
debt financing
61.4m shUS$2.91bn
28 May
On May 21, 2014 the company signed an underwriting agreement to sell $500M of 5.875% senior notes due 2024, with about $491.8M net proceeds intended to repay revolver borrowings and for general corporate purposes. The filing does not link the proceeds to redeeming the 9.500% notes.
material agreement
61.4m shUS$2.91bn

201361.3m shares · US$3.67bn market cap

15 Nov
On November 15, 2013 the company closed the $600M 5.875% senior notes due 2022, guaranteed by its subsidiaries, with interest paid June 1 and December 1 starting June 1, 2014. Net proceeds of about $590.3M are expected to repay all revolver borrowings and for general purposes; the notes are redeemable at the company's option under set terms.
debt financing
61.3m shUS$3.67bn
12 Nov
On November 7, 2013 the company signed an underwriting agreement to sell $600M of 5.875% senior notes due 2022, with about $590.3M net proceeds intended to repay all revolver borrowings and for general corporate purposes. This continues the pattern of replacing revolver debt with fixed-rate notes after the Permian purchase.
material agreement
61.3m shUS$3.67bn
14 May
On May 14, 2013 the company closed the Permian Basin acquisition from a Comstock Resources affiliate, paying $811M including closing adjustments (still subject to post-closing adjustments), effective January 1, 2013. This resolves the open Comstock deal announced in March at $768M; funding came largely from the April-issued senior notes plus borrowings on the expanded revolver.
asset acquisition disposition
61.1m shUS$2.62bn
2 May
On May 2, 2013 the company closed the $700M 5.625% senior notes due 2021, expecting about $690.5M net proceeds to fund part of the Comstock Permian purchase. The notes must be redeemed at 100% if the acquisition does not close by July 15, 2013 or the purchase agreement is terminated.
debt financing
61.1m shUS$2.62bn
23 Apr
On April 18, 2013 the company signed underwriting agreements to sell $700M of 5.625% senior notes due 2021 and 7,000,000 new common shares at $42.50 each ($40.80 net of underwriting costs), with a 30-day option for 1,050,000 more shares. This is the permanent financing for the Comstock acquisition, replacing the $700M bridge commitment as the planned route; the bridge would apply only if the offerings did not raise enough. The new shares dilute existing holders.
material agreement
52.6m shUS$2.50bn
15 Apr
The company amended its bank revolver on April 12, 2013: the borrowing base rose from $625M to $800M, the maximum credit amount rose to $1.5B (from $750M), and maturity moved to April 12, 2018. The same day's press release said $305M was outstanding after a $38.4M deposit on the pending Comstock Permian purchase, and raised 2013 capital guidance from $640-700M to $840-900M to reflect that deal.
debt financing
52.6m shUS$2.50bn
20 Mar
On March 14, 2013 the company's subsidiary agreed to buy producing and undeveloped Delaware Basin interests in Gaines and Reeves Counties, Texas from Comstock for $768M, effective January 1, 2013, subject to closing adjustments and due diligence. It has commitments for a $700M senior unsecured bridge facility (JPMorgan, Morgan Stanley, WF Investment Holdings) as backup to a high-yield notes offering, and may also use the revolver or other debt or equity; the deal must close by July 15, 2013.
material agreement
52.6m shUS$2.56bn

201252.9m shares · US$2.27bn market cap

6 Sept
On August 31, 2012 the company prepaid its fixed-rate second lien borrowings from Prudential, totalling $20,682,277.33 including principal, interest and a make-whole payment, and ended the second lien term loan agreement, which was due October 2, 2012. The 13.75% second lien debt, secured on substantially all assets, is now gone, resolving that open thread.
material agreement termination
52.9m shUS$2.27bn
30 Apr
On April 25, 2012 the company signed a fifth amendment to its revolver, now with Wells Fargo Bank as administrative agent, raising the borrowing base to $625M (from $325M) and changing the interest and commitment fee margins. It also increases the company's capacity to hedge production; the filing does not give the new margins.
debt financing
52.9m shUS$2.66bn

201153.0m shares · US$2.43bn market cap

16 May
On May 10, 2011 the company amended its senior revolver to allow up to $750M of borrowing and extended the maturity to May 10, 2016 (previously July 2012), with BNP Paribas as agent. The borrowing base is set at $325M (down from $375M), the interest margin over LIBOR is 1.75%-2.75% (was 2.25%-3.00%), and the maximum leverage ratio is loosened to 4.0 from 3.5.
debt financing
53.0m shUS$2.43bn
21 Apr
On April 15, 2011 the company's subsidiaries closed the sale of their Sacramento Basin, California assets (part of the Calpine-origin business bought in 2005) to Vintage Petroleum, LLC for $200M, subject to adjustments; $43.6M is held in escrow until consents are received, with the rest of the transfer expected by Q3 2011. A press release also says a DJ Basin (Colorado) sale closed March 31, 2011, for a combined $255M, and the CEO calls these the final step in a shift to unconventional resources, leaving Eagle Ford and Southern Alberta Basin as the focus.
asset acquisition disposition

2010

19 Apr
On April 15, 2010 the company closed the $200M offering of 9.500% senior notes due April 15, 2018, issued under an indenture with Wells Fargo as trustee and guaranteed by its subsidiaries. The notes are unsecured, so they rank behind the secured revolver and second lien loan, and their covenants restrict new debt, dividends and asset sales. The company also agreed to offer holders registered notes in exchange. This completes the offering priced April 12.
debt financing
13 Apr
On April 12, 2010 the company agreed to sell $200M of 9 1/2% senior notes due 2018 to initial purchasers led by J.P. Morgan Securities, sold privately to institutional buyers and non-US persons. The press release says the proceeds will repay $80.0M of the second lien term loans and some revolver borrowings, and pay fees. This follows the offering announced April 5.
material agreement
5 Apr
Effective April 1, 2010 the revolver borrowing base rose from $350M to $375M. On April 5, 2010 the company amended its revolver and second lien loan to allow up to $250M of unsecured senior notes and a California compression and gathering sale-leaseback of up to $15M, and announced a private offering of $200M of senior notes due 2018. Proceeds from any such notes must repay at least $80M of the second lien loan. This starts the move to refinance part of the 2009 second lien debt.
debt financing

2009

24 Apr
On April 21, 2009 the company used the option in the April 9 second lien loan, raising it from $75M to $100M. A new lender, Prudential Insurance Company of America, provided $20M of fixed-rate debt at 13.75%, and Wells Fargo Energy Capital raised its floating-rate commitment by $5M to $25M. This adds $25M of debt.
debt financing
15 Apr
On April 9, 2009 the company restated its senior revolving credit agreement with BNP Paribas as agent: up to $600M, term extended to July 1, 2012, borrowing base set at $375M (the press release says it was $400M before). It also restated its second lien term loan at $75M, extended to October 2, 2012, at LIBOR plus 8.5% with a 3.5% floor, with an option to raise it to $100M within 30 days. The revolver is secured on substantially all assets and carries a minimum current ratio of 1.0 and a maximum leverage ratio of 3.5.
debt financing

2008

13 Nov
On November 13, 2008 the bankruptcy court approved the October 22 settlement with Calpine, with closing set for December 1, 2008. The company pays $84.6 million (including $67.6 million for the withheld non-consent properties) plus $12.4 million to end all legal disputes, including Calpine's lawsuit, for $97 million in cash total; the Sacramento Basin gas purchase agreement is extended ten years. This resolves the 2007 lawsuit and title issues.
material agreement

2007

9 Aug
On August 3, 2007 the company signed agreements with Calpine to fix title issues on some Gulf of Mexico, California and Wyoming properties bought in 2005, and to extend gas marketing with Calpine through June 30, 2009; it takes on those properties' obligations including plugging and abandonment. Both agreements need bankruptcy court approval. The filing also notes Calpine's June 29, 2007 lawsuit claiming the $1.05 billion 2005 purchase was for too little value (about $400 million claimed, or return of the assets), which the company says it will fight.
material agreement
19 Mar
The company reported 2006 net income of $45 million ($0.88 diluted per share) versus $18 million for the six months of 2005 as a stand-alone company, on revenue of $272 million. Fourth quarter production was 98 MMcfe/d and net income $13 million, up from $9 million a year earlier; Q4 revenue was $73 million.
production update

2006

21 Apr
The company (filing as Rosetta Resources Inc.) filed its late 2005 annual report on April 20, 2006, after NASDAQ had warned on April 18 it would delist the stock on April 27; NASDAQ then withdrew the notice. The annual report restates Q3 2005 net income down $1.1 million to $8.2 million (EPS $0.16 diluted), because stock-offering costs tied to the Calpine oil and gas purchase were booked against paid-in capital instead of as expenses. It also reports two material weaknesses in internal controls at December 31, 2005, and selling by resale stockholders is suspended until an updated registration statement is effective. This resolves the late-filing thread from April 3.
listing compliance notice