Each one in plain English, with the numbers worked through for a shareholder.
16 Jan 2013material agreement● Neutral
The Fourth Amendment to QR Energy's credit agreement took effect January 15, 2013, raising the borrowing base from $730 million to $900 million and the letter of credit commitment from $20 million to $30 million. It also put a limit on a carve-out allowing assumed debt tied to bonds or surety obligations. This gives the company more borrowing room after the recent acquisitions (the December press release linked the increase to the Jay and East Texas deals); it is capacity to borrow, not new debt drawn.
3 Jan 2013asset acquisition disposition● NeutralMajor
On December 28, 2012, QR Energy bought oil properties in the Jay field (Florida Gulf Coast area) for about $145 million from entities in its sponsor's Quantum group, paid with cash on hand and credit facility borrowings. The sellers are related parties: affiliates of the sellers own the general partner and about 31.4% of the units, and the deal was approved by the general partner's board on the recommendation of an independent conflicts committee. The company's press release (company estimates) says it expects the deal to add to distributable cash flow immediately and describes about 2,500 Boe/d of current production, and this is a second acquisition within a month after the December 4 East Texas purchase; financial statements for the acquired assets are still to be filed.
On December 7, 2012, QR Energy agreed with a group of underwriters to sell 12,000,000 new common units at $16.24 each, and the underwriters then bought a further 1,800,000 units on December 10; closing was expected December 12. The press releases put net proceeds at about $214.9 million, to repay credit facility borrowings and for general corporate purposes, and the filing says affiliates of some underwriters are lenders under the facility and will receive substantially all the net proceeds. This repays part of the borrowing used for the December 4 East Texas purchase (a connection the filing does not state), and it adds to the number of units outstanding, spreading ownership across more units.
6 Dec 2012asset acquisition disposition● NeutralMajor
On December 4, 2012, QR Energy closed the purchase of the Ark-La-Tex (East Texas field) oil properties agreed on October 26, 2012, at an adjusted price of about $214.3 million, funded with credit facility borrowings. This completes the deal announced in November and means the credit facility debt, partly repaid with the July notes proceeds, rises again. Financial statements for the acquired business will be filed later.
On October 26, 2012, QR Energy's operating subsidiary agreed to buy mainly oil properties in the Ark-La-Tex area from an undisclosed private seller for about $215 million, to be paid from cash on hand and credit facility borrowings, with closing expected in December 2012. The press release describes the properties as in the East Texas field, overlapping existing QRE properties, with current net production of about 1,400 Boe/d (90% oil) and estimated proved reserves of 10.7 million Boe; these are company estimates and it says the deal is expected to add to distributable cash flow.
QR Energy and QRE Finance filed a registration statement offering to swap up to $300 million of the unregistered 9.25% notes due 2020 (issued July 30, 2012) for identical registered notes. This fulfils the registration promise made when the notes were sold; the terms are the same, apart from no transfer restrictions or extra-interest provisions. It does not change the amount of debt or raise new money.
QR Energy and its finance subsidiary sold $300 million of 9.25% senior unsecured notes due August 2020 at 98.62% of par, for gross proceeds of $295.86 million, closing July 30, 2012. The press release says net proceeds of about $290.7 million will repay credit facility borrowings, and the credit facility's borrowing base fell from $730 million to $655 million as a result. The notes add fixed-rate long-term debt with restrictions on things like paying distributions, and the company must offer to exchange them for registered notes within a year.
