Subsequent Events

3 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

New Mexico Acquisition

On April 3, 2023 (the “Closing Date”), the Company completed its previously announced acquisition of oil and natural gas assets (the “New Mexico Acquisition”) from Pecos Oil & Gas, LLC (“Pecos”), a Delaware limited liability company and an affiliate of Cibolo Energy Partners LLC. The New Mexico Acquisition expands the Company's operations and adds significant drilling locations to the Company inventory.

The aggregate purchase price of the New Mexico Acquisition is $330 million, subject to customary purchase price adjustments pursuant to the purchase and sale agreement (the “Purchase Agreement”), and was funded through a combination of borrowings under the Company's revolving credit facility and proceeds from the issuance of $200 million of Senior Notes.

Due to the recent closing of the New Mexico Acquisition, the acquisition date fair value of the assets and liabilities of Pecos and certain other related disclosures were not yet available as of the date of this report. This acquisition will be accounted for as a business combination.

Issuance of Senior Notes

On the Closing Date, the Company (as “Issuer”) completed its issuance of $200 million aggregate principal amount of 10.50% Senior Unsecured Notes due 2028 pursuant to a note purchase agreement (the “Note Purchase Agreement”), which the Senior Notes were issued at a 6% discount. The net proceeds from the Senior Notes were used to fund a portion of the purchase price and related fees, costs and expenses for the New Mexico Acquisition.

The Issuer may, at its option, redeem, at any time and from time to time on or prior to April 3, 2026, some or all of the Senior Notes at 100% of the principal amount thereof plus the make-whole amount plus a premium of 5.25% as set forth in the Note Purchase Agreement plus accrued and unpaid interest, if any. After April 3, 2026, but on or prior to October 3, 2026, the Issuer may, at its option, redeem, at any time and from time to time some or all of the Senior Notes at 100% of the principal amount thereof plus a premium of 5.25% as set forth in the Note Purchase Agreement plus accrued and unpaid interest, if any. After October 3, 2026, the Issuer may redeem some or all of the Senior Notes at 100% of the principal amount thereof plus accrued and unpaid interest, if any. The principal remaining outstanding at the time of maturity is required to be paid in full by the Issuer.

The Senior Notes are general unsecured obligations ranking equally in right of payment with all other senior unsecured indebtedness of the Company and are senior in right of payment to all existing and future subordinated indebtedness of the Company. The Note Purchase Agreement contains customary terms and covenants, including limitations on the Company’s ability to incur additional secured and unsecured indebtedness.

Amendment to Credit Facility

On the Closing Date, the Company entered into the fourteenth amendment (the “Fourteenth Amendment”) to the Credit Facility to allow for the closing of the New Mexico Acquisition, including increasing the maximum facility amount to $1.0 billion and increasing the borrowing base to $325 million from $225 million and adding new lender parties to the syndicate, among other matters. The Company used borrowings from the Credit Facility to fund a portion of the purchase price and related fees, costs and expenses for the New Mexico Acquisition.

Amendment and Restatement of the 2021 LTIP

On April 21, 2023 at the Company's annual meeting of stockholders, the Company's stockholders approved the Amended and Restated 2021 Long Term Incentive Plan (the "A&R LTIP") that increased the total number of shares of Common Stock, par value $0.001 per share, by 950,000 shares that may be utilized for awards pursuant to the Plan from 1,387,022 to 2,337,022. The A&R LTIP is described in further detail in the Company's definitive proxy statement for the Annual Meeting filed with the Securities and Exchange Commission on March 22, 2023.

Dividend Declaration

On April 11, 2023, the Board of Directors of the Company declared a cash dividend of $0.34 per share of common stock payable on May 9, 2023 to its shareholders of record at the close of business on April 25, 2023.