Pioneer Southwest Energy Partners L.P.

Pioneer Southwest Energy Partners L.P. terminated the registration of a class of securities, ending its reporting obligation for them.

listing compliance notice

Pioneer Southwest Energy Partners L.P.'s exchange filed to remove a class of its securities from listing.

listing compliance notice

The final proxy statement/prospectus asks unitholders to vote on the Pioneer merger at a special meeting on December 17, 2013 (record date October 30, 2013). Terms are unchanged: unaffiliated units are cancelled and converted into 0.2325 of a Pioneer share each (other than dissenting units, reflecting the October 25, 2013 amendment). Pioneer USA's 52.4% stake is committed to vote yes and is enough to pass it. Non-votes count as votes against. Pioneer estimates the new shares will be about 3% of its outstanding stock. The last reported prices on November 6, 2013 were $46.05 for the units and $198.55 for Pioneer stock. The vote has not yet happened, so unitholders' outcome remains unresolved.

business combination

The Partnership agreed to be bought in by parent Pioneer Natural Resources: all units not owned by Pioneer USA would be cancelled and converted into 0.2325 of a Pioneer share per unit, with closing expected in Q4 2013. Pioneer USA owns 52.4% of the units (18,721,200) and has agreed to vote for the deal, which is enough to approve it, so the unaffiliated unitholders' vote cannot block it. Quarterly distributions of up to $0.52 per unit continue until closing. The conflicts committee and independent directors approved it as fair to unaffiliated unitholders. Either side can terminate if the merger is not completed by March 17, 2014. The deal was later amended in October 2013 to add appraisal rights (per the open thread). This is not yet completed, so unitholders' equity treatment is still pending.

business combination

The Partnership amended and restated its credit agreement with Bank of America, N.A. as administrative agent, extending the maturity from May 2013 to March 29, 2017 (extendable by a year, up to two times) and dropping the requirement to keep an interest coverage ratio of at least 2.5 to 1.0. The total borrowing limit stays at $300 million, with the right to add up to $100 million more if lenders increase commitments or new lenders join. Leverage (max 3.5 to 1.0) and asset-value-to-debt (min 1.75 to 1.0) covenants remain.

debt financing

The Partnership agreed to sell 2,600,000 new common units, and parent Pioneer USA agreed to sell 1,800,000 existing units, at $29.20 per unit to the public (with an option for 660,000 more units from Pioneer USA). The Partnership expects net proceeds of $72.6 million, which it will use to pay down its revolving credit facility; the money can be reborrowed, including to speed up its 2012 drilling program with a third rig. This completes the shelf offering seen in the earlier December prospectus filings. Issuing new units adds to the unit count, while Pioneer USA's sale reduces its holding. The Partnership gets none of Pioneer USA's proceeds.

material agreement

On 11 November 2009 the Partnership agreed to sell 3,105,000 new units (including 405,000 over-allotment units) at $20.74 each ($19.82 after underwriting discount). It expects net proceeds of $61.3 million, including the general partner's proportionate contribution, to repay credit facility borrowings, which funded part of the August 2009 acquisition (inference: the filing does not link the two). Closing was scheduled for 16 November 2009; this issues new units, diluting existing holders' percentage share. The press release mentions 2,700,000 units, before the over-allotment.

material agreement

On 31 August 2009 the Partnership's operating subsidiary bought more Spraberry field (Permian Basin, West Texas) oil and gas properties from parent Pioneer USA for about $171.2 million in cash, plus assigned hedges and assumed liabilities. The properties hold about 18.9 million barrels of oil equivalent of proved reserves (37% developed) and produce about 1,300 barrels a day; it was funded with about $30 million of cash and credit facility borrowings, leaving about $135 million of borrowing capacity. Because the seller is the parent, which owns about 69% of the units, the conflicts committee of independent directors recommended it, with Houlihan Lokey giving a fairness opinion. Hedge coverage was extended into 2013.

asset acquisition disposition

The IPO closed on 6 May 2008, with the underwriters having fully exercised their option for 1,237,500 extra units. The Partnership became sole owner of the Operating Company: Pioneer USA contributed a 73.36% stake in exchange for 20,521,200 units (a 71.254% limited partner interest), and the Partnership paid $141,061,250 cash for a further 26.54% stake and $22,007,724 for additional wellbores and related assets from the Retained Company. Pioneer USA keeps a 71.254% limited partner interest and the general partner a 0.1% interest, and several related-party agreements (omnibus, administrative services, tax sharing, operating) were signed with Pioneer. This completes the IPO and merger thread from the previous filing.

asset acquisition disposition

Following the 30 April 2008 IPO pricing, the Partnership agreed to sell 8,250,000 common units at $19.00 each ($17.67 after underwriting discount), with an option for 1,237,500 more, to underwriters led by Deutsche Bank, Citigroup and UBS. Parent Pioneer USA also merged several Pioneer subsidiaries on 1 May 2008 so that certain wellbores and related assets and liabilities went into the Operating Company, which the Partnership will buy part of using the IPO proceeds. The filing also describes a unit-based incentive plan for non-employee directors.

business combination