UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.    )*

 

 

WPX ENERGY, INC.

(Name of Issuer)

Common Stock, $0.01 par value per share

(Title of Class of Securities)

98212B103

(CUSIP Number)

D. Martin Phillips

EnCap Investments L.P.

1100 Louisiana Street, Suite 4900

Houston, Texas 77002

(713) 659-6100

with a copy to:

W. Matthew Strock

Douglas E. McWilliams

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, Texas 77002

(713) 758-2222

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

March 6, 2020

(Date of Event Which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ☐

 

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

 

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

CUSIP No. 98212B103

 

1		Name of Reporting Person     Felix Investments Holdings II, LLC
2		Check the Appropriate Box if a Member of a Group   (A):  ☐        (B):  ☐
3		SEC Use Only
4		Source of Funds     Other (Not Applicable, See Item 3)
5		Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(D) or 2(E)     ☐
6		Citizen or Place of Organization     Delaware

NUMBER OF SHARES   BENEFICIALLY   OWNED BY EACH REPORTING PERSON WITH				7		Sole Voting Power     -0-
				8		Shared Voting Power     151,529,637
				9		Sole Dispositive Power     -0-
				10		Shared Dispositive Power     151,529,637

11		Aggregate Amount Beneficially Owned by Each Reporting Person     151,529,637
12		Check if the Aggregate Amount in Row (11) Excludes Certain Shares     ☐
13		Percent of Class Represented by Amount in Row (11)     26.6% (1)
14		Type of Reporting Person     OO (Limited Liability Company)

 

(1)	Based on 569,728,564 shares of common stock, $0.01 par value per share (“Common Stock”), of WPX Energy, Inc., a Delaware corporation (the “Issuer”), issued and outstanding as of March 9, 2020.

 

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CUSIP No. 98212B103

 

1		Name of Reporting Person     Felix Energy Investments II, LLC
2		Check the Appropriate Box if a Member of a Group   (A):  ☐        (B):  ☐
3		SEC Use Only
4		Source of Funds     Other (Not Applicable, See Item 3)
5		Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(D) or 2(E)     ☐
6		Citizen or Place of Organization     Delaware

NUMBER OF SHARES   BENEFICIALLY   OWNED BY EACH REPORTING PERSON WITH				7		Sole Voting Power     -0-
				8		Shared Voting Power     151,529,637 (1)
				9		Sole Dispositive Power     -0-
				10		Shared Dispositive Power     151,529,637 (1)

11		Aggregate Amount Beneficially Owned by Each Reporting Person     151,529,637 (1)
12		Check if the Aggregate Amount in Row (11) Excludes Certain Shares     ☐
13		Percent of Class Represented by Amount in Row (11)     26.6% (2)
14		Type of Reporting Person     OO (Limited Liability Company)

 

(1)

Includes 151,529,637 shares of Common Stock owned by Felix Investments Holdings II, LLC, a Delaware limited liability company (“Seller”). Felix Energy Investments II, LLC, a Delaware limited liability company (“Felix Energy”), is the direct and indirect sole owner of Seller, and pursuant to the limited liability company agreement of Seller (the “Seller LLC Agreement”), the members of the Seller board of managers are required to be comprised of the same individuals as the Felix Energy board of managers. Felix Energy disclaims beneficial ownership of the reported Common Stock except to the extent of its pecuniary interest therein, and this statement shall not be deemed an admission that it is the beneficial owner of the reported Common Stock for the purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), or any other purpose.

(2)	Based on 569,728,564 shares of Common Stock issued and outstanding as of March 9, 2020.

 

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CUSIP No. 98212B103

 

1		Name of Reporting Person     EnCap Energy Capital Fund X, L.P.
2		Check the Appropriate Box if a Member of a Group   (A):  ☐        (B):  ☐
3		SEC Use Only
4		Source of Funds     Other (Not Applicable, See Item 3)
5		Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(D) or 2(E)     ☐
6		Citizen or Place of Organization     Texas

NUMBER OF SHARES   BENEFICIALLY   OWNED BY EACH REPORTING PERSON WITH				7		Sole Voting Power     -0-
				8		Shared Voting Power     151,529,637 (1)
				9		Sole Dispositive Power     -0-
				10		Shared Dispositive Power     151,529,637 (1)

11		Aggregate Amount Beneficially Owned by Each Reporting Person     151,529,637 (1)
12		Check if the Aggregate Amount in Row (11) Excludes Certain Shares     ☐
13		Percent of Class Represented by Amount in Row (11)     26.6% (2)
14		Type of Reporting Person     PN

 

(1)

Includes 151,529,637 shares of Common Stock owned by Seller. EnCap Energy Capital Fund X, L.P. (“EnCap Fund X”) is a member of Felix Energy that holds the right to appoint two of the three representatives to the board of managers of Felix Energy. Felix Energy is the direct and indirect sole owner of Seller, and pursuant to the Seller LLC Agreement, the members of the Seller board of managers are required to be comprised of the same individuals as the Felix Energy board of managers. Therefore, EnCap Fund X has the sole power to vote or direct the vote or to dispose or direct the disposition of the Common Stock owned by Seller. EnCap Fund X disclaims beneficial ownership of the reported Common Stock except to the extent of its pecuniary interest therein, and this statement shall not be deemed an admission that it is the beneficial owner of the reported Common Stock for the purposes of Section 13(d) of the Exchange Act, or any other purpose.

(2)	Based on 569,728,564 shares of Common Stock issued and outstanding as of March 9, 2020.

 

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CUSIP No. 98212B103

 

1		Name of Reporting Person     EnCap Partners GP, LLC
2		Check the Appropriate Box if a Member of a Group   (A):  ☐        (B):  ☐
3		SEC Use Only
4		Source of Funds     Other (Not Applicable, See Item 3)
5		Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(D) or 2(E)     ☒
6		Citizen or Place of Organization     Delaware

NUMBER OF SHARES   BENEFICIALLY   OWNED BY EACH REPORTING PERSON WITH				7		Sole Voting Power     -0-
				8		Shared Voting Power     151,529,637 (1)
				9		Sole Dispositive Power     -0-
				10		Shared Dispositive Power     151,529,637 (1)

11		Aggregate Amount Beneficially Owned by Each Reporting Person     151,529,637 (1)
12		Check if the Aggregate Amount in Row (11) Excludes Certain Shares     ☐
13		Percent of Class Represented by Amount in Row (11)     26.6% (2)
14		Type of Reporting Person     OO (Limited Liability Company)

 

(1)

EnCap Partners GP, LLC, a Delaware limited liability company (“EnCap Partners GP”), is the sole general partner of EnCap Partners, LP (“EnCap Partners”), which is the managing member of EnCap Investments Holdings, LLC (“EnCap Holdings”), a Delaware limited liability company, which is the sole member of EnCap Investments GP, L.L.C. (“EnCap Investments GP”), a Delaware limited liability company, which is the sole general partner of EnCap Investments L.P. (“EnCap Investments LP”), which is the sole general partner of EnCap Equity Fund X GP, L.P. (“EnCap Fund X GP”), which is the sole general partner of EnCap Fund X. EnCap Fund X is a member of Felix Energy that holds the right to appoint two of the three representatives to the board of managers of Felix Energy. Felix Energy is the direct and indirect sole owner of Seller, and pursuant to the Seller LLC Agreement, the members of the Seller board of managers are required to be comprised of the same individuals as the Felix Energy board of managers. Therefore, EnCap Partners GP, EnCap Partners, EnCap Holdings, EnCap Investments GP, EnCap Investments LP, EnCap Fund X GP, EnCap Fund X and Felix Energy may be deemed to beneficially own the Common Stock owned by Seller. EnCap Partners GP, EnCap Partners, EnCap Holdings, EnCap Investments GP, EnCap Investments LP, EnCap Fund X GP, EnCap Fund X and Felix Energy disclaim beneficial ownership of the Common Stock owned by Seller except to the extent of their respective pecuniary interest therein, and this statement shall not be deemed an admission that any such entity is the beneficial owner of the reported Common Stock for the purposes of Section 13(d) of the Exchange Act, or any other purpose.

(2)	Based on 569,728,564 shares of Common Stock issued and outstanding as of March 9, 2020.

 

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Item 1. Security and Issuer

This statement on Schedule 13D (this “Schedule 13D”) relates to the shares of common stock, $0.01 par value per share (the “Common Stock”), of WPX Energy, Inc., a Delaware corporation (the “Issuer”). The address of the principal executive office of the Issuer is 3500 One Williams Center, Tulsa, Oklahoma 74172.

Item 2. Identity and Background

This Schedule 13D is being filed by Felix Investments Holdings II, LLC (“Seller”), Felix Energy Investments II, LLC (“Felix Energy” and, together with Seller, the “Felix Entities”) and EnCap Partners GP, LLC, each a Delaware limited liability company (“EnCap Partners GP”), and EnCap Energy Capital Fund X, L.P., a Texas limited partnership (“EnCap Fund X” and, together with EnCap Partners GP, the “EnCap Entities”). The Felix Entities and the EnCap Entities are sometimes referred to in this Schedule 13D individually as a “Reporting Person” and, collectively, they are referred to herein as the “Reporting Persons.”

EnCap Partners GP is the sole general partner of EnCap Partners, LP (“EnCap Partners”), which is the managing member of EnCap Investments Holdings, LLC (“EnCap Holdings”). EnCap Holdings is the sole member of EnCap Investments GP, L.L.C. (“EnCap Investments GP”), which is the sole general partner of EnCap Investments L.P. (“EnCap Investments LP”). EnCap Investments LP is the sole general partner of EnCap Equity Fund X GP, L.P. (“EnCap Fund X GP”), which is the sole general partner of EnCap Fund X. EnCap Fund X is a member of Felix Energy that holds the right to appoint two of the three representatives to the board of managers of Felix Energy. Felix Energy is the direct and indirect sole owner of Seller, and pursuant to the limited liability company agreement of Seller (the “Seller LLC Agreement”), the members of the Seller board of managers are required to be comprised of the same individuals as the Felix Energy board of managers.

The address of the principal office of the EnCap Entities is 1100 Louisiana Street, Suite 4900, Houston, Texas 77002. The address of the principal office of the Felix Entities is 1530 16th Street, Suite 500, Denver, Colorado 80202. The principal business of each of the Felix Entities is investing in securities of energy companies and related assets. The principal business of EnCap Fund X is investing in securities of energy companies and related assets. The principal business of EnCap Partners GP is indirectly managing EnCap Fund X.

Information regarding the executive officers, managers or other control persons of the Felix Entities, EnCap Fund X and EnCap Partners GP is set forth on Schedule A, Schedule B and Schedule C, respectively, attached hereto. Schedule A, Schedule B and Schedule C attached hereto set forth the following information as to each such person:

(i). name;

(ii). residence or business address;

(iii). present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted; and

(iv). citizenship.

Other than as set forth on Schedule B attached hereto, during the last five years, to the best of the Reporting Persons’ knowledge, no person named on Schedule A, Schedule B or Schedule C attached hereto, has been (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Item 3. Source and Amount of Funds or Other Consideration

The information set forth in Item 6 of this Schedule 13D is incorporated by reference in its entirety into this Item 3.

 

6

On December 15, 2019, the Issuer entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Seller. Pursuant to the Purchase Agreement and in connection with the closing of the transactions contemplated thereby (the “Acquisition”) on March 6, 2020, the Issuer acquired all of the issued and outstanding membership interests (the “Subject Securities”) of Felix Energy Holdings II, LLC, a Delaware limited liability company, previously held by Seller for aggregate consideration of $2,500,000,000 consisting of: (i) an amount in cash equal to $900,000,000, which amount is subject to certain adjustments set forth in the Purchase Agreement, and (ii) 151,529,637 unregistered, fully paid, validly issued and nonassessable shares of Common Stock (the “Issued Shares”). 11,950,286 shares of Common Stock that are part of the Issued Shares were placed into an escrow account described in Item 6 to first satisfy any amounts due by Seller to the Issuer pursuant to the indemnification provisions in the Purchase Agreement. In addition, up to 1,434,034 shares of Common Stock may be issued to the Seller pursuant to certain adjustment features set forth in the Purchase Agreement.

Item 4. Purpose of Transaction

The information set forth in Items 3 and 6 of this Schedule 13D is incorporated by reference in its entirety into this Item 4.

The Reporting Persons expect to review from time to time their investment in the Issuer and may, depending on the market and other conditions and subject to the terms of the Registration Rights Agreement and the Stockholders’ Agreement: (i) purchase additional shares of Common Stock, options or related derivatives in the open market, in privately negotiated transactions or otherwise; (ii) sell, pledge or otherwise dispose of all or a portion of the shares of Common Stock, options or related derivatives now beneficially owned or hereafter acquired by them; and (iii) engage in other proposals as the Reporting Persons may deem appropriate under the circumstances, including plans or proposals which may relate to, or could result in, any of the matters referred to in paragraphs (a) through (j), inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting Persons are currently evaluating entering into a margin loan facility with a bank pursuant to which the Reporting Persons may pledge all or a portion of the one-third of the Issued Shares not subject to transfer restrictions in the Stockholders’ Agreement. Subject to the terms of the Stockholders’ Agreement, the Reporting Persons may also engage in communications with, among others, other members of the Issuer’s board of directors (the “Board”), the Issuer’s management, other shareholders and other potential investors, potential strategic partners, financial advisors and other industry participants, regarding such matters.

Item 5. Interest in Securities of the Issuer

(a) The aggregate number and percentage of Common Stock beneficially owned by each Reporting Person is set forth in Items 7, 8, 9, 10, 11 and 13 of the cover pages to this Schedule 13D relating to such Reporting Person and is incorporated by reference into this Item 5.

(b) EnCap Partners GP is the sole general partner of EnCap Partners, which is the managing member of EnCap Holdings, which is the sole member of EnCap Investments GP, which is the sole general partner of EnCap Investments LP. EnCap Investments LP is the sole general partner of EnCap Fund X GP, which is the sole general partner of EnCap Fund X. EnCap Fund X is a member of Felix Energy that holds the right to appoint two of the three representatives to the board of managers of Felix Energy. Felix Energy is the direct and indirect sole owner of Seller, and pursuant to the Seller LLC Agreement, the members of the Seller board of managers are required to be comprised of the same individuals as the Felix Energy board of managers. Therefore EnCap Fund X has the sole power to vote or to direct the vote or to dispose or direct the disposition of the Common Stock owned by Seller. Therefore, EnCap Partners GP, EnCap Partners, EnCap Holdings, EnCap Investments GP, EnCap Investments LP, EnCap Fund X GP, EnCap Fund X and Felix Energy may be deemed to beneficially own Common Stock owned by Seller.

(c) Except as set forth in this Schedule 13D, none of the Reporting Persons or, to their knowledge, any of its directors, executive officers or other control persons named on Schedule A, Schedule B or Schedule C, attached hereto, has effected any transaction in the Common Stock during the past 60 days.

(d) No person other than the Reporting Persons has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock reported on this Schedule 13D.

 

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(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

The information provided in Items 3 and 4 of this Schedule 13D is incorporated by reference in its entirety into this Item 6.

Escrow Agreement

On March 6, 2020, in connection with the closing of the Acquisition and pursuant to the Purchase Agreement, Seller entered into an Escrow Agreement (the “Escrow Agreement”) with the Issuer and Citibank, N.A., a national banking association organized and existing under the laws of the United States of America, as escrow agent, pursuant to which 11,950,286 shares of Common Stock that are part of the Issued Shares were placed into an escrow account to first satisfy any amounts due by Seller to the Issuer pursuant to the indemnification provisions in the Purchase Agreement (such shares held in escrow, the “Escrowed Shares”). On March 6, 2021, the then-remaining Escrowed Shares will be released to Seller, save and except for a number of Escrowed Shares equal to (x) $10,000,000 plus the aggregate amount of all unsatisfied claims for indemnification that the Issuer has validly made against Seller on or before such date and which are subject to satisfaction (in whole or part) from the Escrowed Shares, divided by (y) $10.46. On September 6, 2021, the then-remaining Escrowed Shares will be released to Seller, save and except for a number of Escrowed Shares equal to the aggregate amount of all unsatisfied claims for indemnification that the Issuer has validly made against Seller on or before such date and which are subject to satisfaction (in whole or part) from the Escrowed Shares, divided by $10.46.

Registration Rights Agreement

On March 6, 2020, in connection with the closing of the Acquisition, the Issuer entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Seller, pursuant to which, among other things, the Issuer has agreed to (i) prepare a “shelf” registration statement under the Securities Act of 1933, as amended (the “Securities Act”) (the “Shelf Registration Statement”), covering the Issued Shares and any securities issued or issuable with respect to the Issued Shares by way of distribution or in connection with any reorganization or other recapitalization, merger, consolidation, or otherwise (collectively, the “Registrable Securities”), (ii) file the Shelf Registration Statement with the United States Securities and Exchange Commission (the “SEC”) within 10 business days of the execution of the Registration Rights Agreement and (iii) use its commercially reasonable efforts to cause the Shelf Registration Statement to become or be declared effective as soon as practicable following such filing. Registrable Securities cease to be Registrable Securities when (a) such share has been disposed of pursuant to an effective registration statement, (b) such share has been disposed of under Rule 144 or any other exemption from the registration requirements of the Securities Act as a result of which the transferee thereof does not receive “restricted securities” as defined in Rule 144 under the Securities Act or (c) such shares are freely tradeable by the holder thereof without volume or other limitations or requirements under Rule 144 and such holder and its affiliates collectively hold less than 5% of outstanding shares of Common Stock

In addition, the Registration Rights Agreement permits Seller to request to sell any or all of its respective Registrable Securities under a registration statement pursuant to an underwritten offering, subject to certain exceptions, including, among other things, that the gross proceeds from the sale are reasonably expected to equal or exceed $100 million in the aggregate and that the Issuer has no obligation to facilitate more than two such offerings during any 12-month period and no more than one such offering during any 90-day period. The Registration Rights Agreement also (i) provides Seller with certain customary piggyback registration rights to register the Registrable Securities held by it in other registered underwritten offerings of Common Stock conducted by the Issuer for its own account or for the account of other stockholders and (ii) sets forth the priority and respective rights of Seller with regard to the inclusion of Registrable Securities in any underwritten offering.

Stockholders’ Agreement

On March 6, 2020, in connection with the closing of the Acquisition, the Issuer entered into a Stockholders’ Agreement (the “Stockholders’ Agreement”) with Seller and EnCap Fund X. Pursuant to the Stockholders’ Agreement, Seller has the right to nominate directors (the “Investor Directors”) for appointment to the Board (the “Director Nominations”). If Seller and each of its affiliates, Skye Callantine and Michael Horton, beneficially own,

 

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in the aggregate, (i) at least 20% of the outstanding shares of Common Stock, then Seller shall be entitled to nominate two Investor Directors, and (ii) less than 20% but more than 10% of the outstanding shares of Common Stock, then Seller shall be entitled to nominate one Investor Director. The Director Nominations are subject to, among other things, the individual nominees being reasonably acceptable to the Nominating, Governance, Environmental & Public Policy Committee of the Board (the “Governance Committee”) and not be prohibited by law. Until the earlier of the date on which Seller is no longer entitled to designate any Investor Directors to the Board or Seller irrevocably waives its right to designate any Investor Directors, Seller has agreed to cause all voting securities of the Issuer held by Seller or any of its controlled affiliates to be voted in favor of all director nominees nominated by the Governance Committee, against any other nominees and against the removal of any director (other than an Investor Director) unless the Governance Committee recommends the removal of such director.

On March 6, 2020, in connection with the closing of the Acquisition and pursuant to the Stockholders’ Agreement, Messrs. D. Martin Phillips and Douglas E. Swanson, Jr. were appointed to the Board as the two initial Investor Directors nominated by Seller pursuant to its Director Nomination right. Until expiration of the Director Nomination right in accordance with the terms of the Stockholders’ Agreement, each committee of the Board shall include at least one Investor Director, subject to any limitations imposed by law or stock exchange rules (including with respect to director independence requirements).

Pursuant to the Stockholders’ Agreement, for a period of 180 days from the closing of the Acquisition, Seller has agreed, subject to certain exceptions, not to transfer or dispose of (or take other analogous actions in accordance with the terms of the Stockholders’ Agreement) any economic, voting or other rights in or to two-thirds of the Issued Shares other than to certain permitted transferees. The remaining one-third of the Issued Shares are not subject to such transfer restrictions.

Pursuant to the Stockholders’ Agreement, EnCap Fund X has agreed to standstill restrictions until March 6, 2023 in accordance with which, among other things, EnCap Fund X and its Controlled Affiliates (other than Public Portfolio Companies) (as each term is defined in the Stockholders’ Agreement) will not, unless Seller and its affiliates collectively beneficially own less than 10% of the outstanding shares of Common Stock or such action has been specifically invited in writing by the Board, (i) make any proposal or offer to the Board or any of the Issuer’s stockholders regarding, or make any public announcement, proposal or offer (including the solicitation of proxies) with respect to, or otherwise solicit, seek or offer to effect (a) any business combination, merger, tender offer, exchange offer or similar transaction involving the Issuer or any of its subsidiaries, or (b) any restructuring, recapitalization, liquidation or similar transaction involving the Issuer or its subsidiaries unless, in each case, such discussions are privately communicated and do not trigger public disclosure obligations; (ii) form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any Common Stock (unless such “group” is solely between or among EnCap Fund X, its affiliates and any other permitted transferees); (iii) enter, agree to enter, propose or offer to enter into any merger, business combination, recapitalization, restructuring, change in control transaction or other similar extraordinary transaction involving the Issuer or any of its subsidiaries (unless such transaction is affirmatively publicly recommended by the Board); (iv) otherwise act with any person, including by providing financing for another party, to seek to control or influence the management, the Board or the policies of the Issuer; (v) acquire, agree or propose or offer to acquire (including through any hedging or other similar transaction) any shares of Common Stock or securities that are convertible or exchangeable into (or exercisable for) shares of Common Stock unless immediately following any such acquisition EnCap Fund X and its Controlled Affiliates collectively beneficially own no more than the greater of (a) 151,529,637 shares of Common Stock (subject to certain adjustments) and (b) 27% of the outstanding shares of Common Stock; (vi) call, or seek to call, a meeting of the stockholders of the Issuer or initiate any stockholder proposal for action by stockholders of the Issuer; (vii) publicly disclose any intention, plan or arrangement prohibited by, or inconsistent with, the foregoing clauses (i) – (vi); (viii) except as expressly permitted by the Stockholders’ Agreement or required under the order of a court of competent jurisdiction, transfer any Common Stock into a voting trust or similar contract or subject any Common Stock to any voting agreement, pooling arrangement or similar arrangement, or grant any proxy with respect to any Common Stock, in each case other than (a) to the Issuer or a person specified by the Issuer in a proxy card provided to shareholders of the Issuer by or on behalf of the Issuer or (b) solely among EnCap Fund X and its affiliates and any other permitted transferee with respect any shares of Common Stock transferred to any such permitted transferee not in violation of the terms of the Stockholders’ Agreement; or (ix) knowingly facilitate, encourage or assist any third party to do any of the actions described in the foregoing clauses (i) – (viii).

 

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Notwithstanding the above, (i) EnCap Fund X and its Controlled Affiliates may vote their shares of Common Stock at any meeting of holders of Common Stock in their sole discretion, (ii) the limitations set forth in the Stockholders’ Agreement shall in no way limit the activities of any Investor Director, so long as such activities are undertaken in his or her capacity as a director of the Issuer, or limit any communication between or among EnCap Fund X and its affiliates or any permitted transferee with respect to any shares of Common Stock transferred to any such permitted transferee, (iii) EnCap Fund X and its affiliates may coordinate any such vote with, act in concert with, and be part of a Group (as defined in Section 13(d) of the Exchange Act) with, any other affiliate of EnCap Fund X or any permitted transferee with respect to any shares of Common Stock transferred to any such permitted transferee, and (iv) the limitations set forth in the Stockholders’ Agreement shall not apply to potential or actual purchases or sales of oil and/or gas assets or interests between EnCap Fund X or any of its Affiliates, on the one hand, and the Issuer or any of its subsidiaries, on the other hand.

The foregoing descriptions of the Purchase Agreement, the Escrow Agreement, the Registration Rights Agreement and the Stockholders’ Agreement do not purport to be complete and are qualified in their entirety by reference to the Purchase Agreement, the Escrow Agreement, the Registration Rights Agreement and the Stockholders’ Agreement, which are attached hereto as Exhibits 2 through 5, respectively, and incorporated herein by reference in their entirety.

Item 7. Material to be Filed as Exhibits

 

Exhibit Number		Description of Exhibit
1		Joint Filing Agreement, dated as of March 13, 2020.
2		Securities Purchase Agreement, dated as of December 15, 2019, by and among Felix Investments Holdings II, LLC and WPX Energy Inc. (filed as Exhibit 2.1 to the Issuer’s Current Report on Form 8-K filed with the SEC on December 16, 2019 and incorporated herein in its entirety by reference).
3		Escrow Agreement, dated as of March 6, 2020, by and among Felix Investments Holdings II, LLC, WPX Energy, Inc. and Citibank, N.A.
4		Registration Rights Agreement, dated as of March 6, 2020, by and among Felix Investments Holdings II, LLC, WPX Energy, Inc. and the other parties thereto (filed as Exhibit 10.2 to the Issuer’s Current Report on Form 8-K filed with the SEC on March 6, 2020 and incorporated herein in its entirety by reference).
5		Stockholders’ Agreement, dated as of March 6, 2020, by and among Felix Investments Holdings II, LLC, EnCap Energy Capital Fund X, L.P., WPX Energy, Inc. and the other parties thereto (filed as Exhibit 10.1 to the Issuer’s Current Report on Form 8-K filed with the SEC on March 6, 2020 and incorporated herein in its entirety by reference).

 

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SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 13, 2020

 

Felix Investments Holdings II, LLC
By:		/s/ Skye A. Callantine
Name:		Skye A. Callantine
Title:		President and Chief Executive Officer
Felix Energy Investments II, LLC
By:		/s/ Skye A. Callantine
Name:		Skye A. Callantine
Title:		President and Chief Executive Officer

 

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EnCap Energy Capital Fund X, L.P.
By:		EnCap Equity Fund X GP, L.P.,
		its General Partner
By:		EnCap Investments L.P.,
		its General Partner
By:		EnCap Investments GP, L.L.C.,
		its General Partner
By:		/s/ Douglas E. Swanson, Jr.
Name:		Douglas E. Swanson, Jr.
Title:		Managing Director
EnCap Partners GP, LLC
By:		/s/ Douglas E. Swanson, Jr.
Name:		Douglas E. Swanson, Jr.
Title:		Managing Director

 

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Schedule A

CONTROL PERSONS OF THE FELIX ENTITIES

The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the control persons of the Felix Entities are set forth below:

 

Name and Business Address		Capacity in which Serves		Principal Occupation		Name, Principal Business and Address of Organization in which Principal Occupation is Conducted
Felix Energy Investments II, LLC 1530 16th Street Suite 500 Denver, Colorado 80202		Member of Felix Investments Holdings II, LLC		n/a		n/a
EnCap Energy Capital Fund X, L.P. 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Member of Felix Energy Investments II, LLC		n/a		n/a
EnCap Equity Fund X GP, L.P. 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		General Partner of EnCap Energy Capital Fund X, L.P.		n/a		n/a
EnCap Investments L.P. 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		General Partner of EnCap Equity Fund X GP, L.P.		n/a		n/a
EnCap Investments GP, L.L.C. 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		General Partner of EnCap Investments L.P.		n/a		n/a
EnCap Investments Holdings, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Sole Member of EnCap Investments GP, L.L.C.		n/a		n/a
EnCap Partners, LP 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Managing Member of EnCap Investments Holdings, LLC		n/a		n/a
EnCap Partners GP, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		General Partner of EnCap Partners, LP		n/a		n/a

 

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Schedule B

CONTROL PERSONS OF ENCAP FUND X

The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the general partner and other control persons of EnCap Fund X are set forth below:

 

Name and Business Address		Capacity in which Serves		Principal Occupation		Name, Principal Business and Address of Organization in which Principal Occupation is Conducted
EnCap Equity Fund X GP, L.P. 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		General Partner of EnCap Energy Capital Fund X, L.P.		n/a		n/a
EnCap Investments L.P. 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		General Partner of EnCap Equity Fund X GP, L.P.		n/a		n/a
EnCap Investments GP, L.L.C. 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		General Partner of EnCap Investments L.P.		n/a		n/a
EnCap Investments Holdings, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Sole Member of EnCap Investments GP, L.L.C.		n/a		n/a
EnCap Partners, LP 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Managing Member of EnCap Investments Holdings, LLC		n/a		n/a
EnCap Partners GP, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		General Partner of EnCap Partners, LP		n/a		n/a

On July 10, 2018, EnCap Investments L.P. (“EnCap”) entered into a settlement with the United States Securities and Exchange Commission (the “SEC”) under which EnCap consented to the entry of an order (the “Order”) that finds that EnCap violated Section 206(4) under the Investment Advisers Act of 1940 (the “Advisers Act”) and Rule 206(4)-5 thereunder. Solely for the purpose of settling these proceedings, EnCap admitted to the SEC’s jurisdiction, the subject matter of these proceedings and consented to the Order. The Order required EnCap to cease and desist from committing or causing any violations and any future violations of Section 206(4) of the Advisers Act and Rule 206(4)-5 thereunder, to be censured, and to pay a civil monetary penalty in the amount of $500,000 to the SEC.

 

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Schedule C

CONTROL PERSONS OF ENCAP PARTNERS GP

The name, business address, present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted, of each of the control persons of EnCap Partners GP are set forth below. All members of the Board of Managers of EnCap Partners GP listed below are citizens of the United States.

 

Name and Business Address		Capacity in which Serves		Principal Occupation		Name, Principal Business and Address of Organization in which Principal Occupation is Conducted
David B. Miller 3811 Turtle Creek Blvd., Suite 2100 Dallas, Texas 75219		Managing Partner		Managing Partner		EnCap Partners GP, LLC 3811 Turtle Creek Blvd., Suite 2100 Dallas, Texas 75219
Gary R. Petersen 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Managing Partner		Managing Partner		EnCap Partners GP, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002
D. Martin Phillips 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Managing Partner		Managing Partner		EnCap Partners GP, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002
Robert L. Zorich 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Managing Partner		Managing Partner		EnCap Partners GP, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002
Jason M. DeLorenzo 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Managing Partner		Managing Partner		EnCap Partners GP, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002
Douglas E. Swanson, Jr. 1100 Louisiana Street, Suite 4900 Houston, Texas 77002		Managing Partner		Managing Partner		EnCap Partners GP, LLC 1100 Louisiana Street, Suite 4900 Houston, Texas 77002

 

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Exhibit 1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the common stock, $0.01 par value per share, of WPX Energy, Inc., a Delaware corporation, and further agree that this Joint Filing Agreement be included as an exhibit to such joint filings. In evidence thereof, each of the undersigned hereby executes this Joint Filing Agreement as of March 13, 2020. Each of them is responsible for the timely filing of such filings and any amendments thereto, and for the completeness and accuracy of the information concerning such person contained therein; but none of them is responsible for the completeness or accuracy of the information concerning the other persons making the filing, unless such person knows or has reason to believe that such information is inaccurate. This joint filing agreement shall remain in full force and effect until revoked by any party hereto in a signed writing provided to each other party hereto, and then only with respect to such revoking party. This joint filing agreement may be executed in any number of counterparts all of which taken together shall constitute one and the same instrument.

 

Exhibit 3

Execution Version

 

ESCROW AGREEMENT

among

WPX ENERGY, INC.,

FELIX INVESTMENTS HOLDINGS II, LLC

and

CITIBANK, N.A., as Escrow Agent

Dated as of March 6, 2020

ESCROW AGREEMENT (this “Agreement”), dated as of March 6, 2020 (the “Execution Date”), by and among WPX Energy, Inc., a Delaware corporation (“Buyer”), Felix Investments Holdings II, LLC, a Delaware limited liability company (“Seller”), and Citibank, N.A., a national banking association organized and existing under the laws of the United States of America (“Citibank”) and acting through its Agency and Trust Division and solely in its capacity as escrow agent under this Agreement, and any successors appointed pursuant to the terms hereof (Citibank in such capacity, the “Escrow Agent”). Each of Buyer and Seller are sometimes referred to herein as an “Interested Party” and are sometimes collectively referred to herein as the “Interested Parties”.

WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of December 15, 2019 (the “Purchase Agreement”), by and between the Interested Parties, the Interested Parties have agreed to establish an escrow arrangement for the purposes set forth therein;

WHEREAS, Buyer has appointed Computershare Trust Company as transfer agent for handling of the newly issued and registered securities (“Transfer Agent”); and

WHEREAS, the Interested Parties wish to appoint Citibank as Escrow Agent and Citibank is willing to accept such appointment and to act as Escrow Agent, in each case upon the terms and conditions of this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby irrevocably acknowledged, the parties hereto agree as follows:

1. Establishment of Escrow Account. On March 6, 2020, Buyer shall deposit with the Transfer Agent in an account segregated for the benefit of the Escrow Agent 11,950,287 shares of Purchaser’s unregistered common stock, par value $0.01 per share (the “Escrow Deposit”, and together with any proceeds received on account thereof or as distributions thereon, collectively, the “Escrow Property”). Pursuant to Section 3 below and at such time of registration the Escrow Agent shall then hold the Escrow Property in an account established solely with the Escrow Agent (the “Escrow Account”).

2. Claims and Payment; Release from Escrow.

(a) The Escrow Agent shall hold the Escrow Property in safekeeping and disburse the same or any part thereof only in accordance with and upon: (i) written instructions of Buyer and Seller (a “Joint Written Direction”), duly executed by an Authorized Person of each of Buyer and Seller (or counterparts thereof), or (ii) a written instruction, order or judgment (x) which has not been reversed, stayed, modified, amended, enjoined, set aside, annulled or suspended, (y) with respect to which no request for a stay, motion or application for reconsideration or rehearing, notice of appeal or petition for certiorari is filed within the deadline provided by applicable statute or regulation or as to which any appeal that has been taken or any petition for certiorari that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which certiorari was sought and (z) as to which the deadlines for filing such request, motion, petition, application, appeal or notice referred to in clause (y) above have expired of a court of competent jurisdiction (a “Final Order”).

 

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(b) Not later than two (2) Business Days after receipt of a Joint Written Direction or seven (7) Business Days after receipt of a Final Order, in either case, directing the Escrow Agent to disburse property from the Escrow Property contained in the Indemnification Escrow Account in accordance with the terms and provisions of such Joint Direction or Court Direction, the Escrow Agent shall disburse such Escrow Property in accordance therewith.

(c) Any Joint Direction or Final Order may instruct the Escrow Agent to release all or any portion of the remainder of the Escrow Property contained in the Indemnification Escrow Account.

(d) All disbursements to Buyer or Seller of all or any portion of the Escrow Property shall be made in accordance with the instructions provided to the Escrow Agent by Buyer or Seller as set forth in Schedule D attached hereto or any other instructions as may be provided in a Joint Written Direction or Final Order.

(e) Unless otherwise directed in a Joint Written Consent or Final Order, if, pursuant to any distribution made in accordance with this Section 2, the Escrow Agent will deliver shares of Purchaser’s common stock to an Interested Party (or its designee), the Escrow Agent shall also concurrently deliver to such person all Dividends (as defined below) received on account of such shares and held by the Escrow Agent at such time.

3. Safekeeping of Escrow Property.

(a) Initial Registration. At the time of issuance, Buyer shall instruct the Transfer Agent to open a segregated account on their books and records entitled “Citibank, N.A. solely in its capacity as Escrow Agent for WPX and Felix.” The Escrow Agent shall have sole right and control of such account subject to the other provisions of this Agreement. Approximately ten (10) Business Days from the issuance and deposit of such securities the shares shall be registered in the name of “Citibank, N.A. as Escrow Agent for WPX and Felix” and, without restriction, other than the transfer restrictions for the Lock-up Period (as defined in that certain Stockholders’ Agreement dated as of the Execution Date, by and among Buyer, Seller and, solely for purposes of certain Sections thereof, EnCap Energy Capital Fund X, L.P. and the Management Group (as defined therein) (the “Stockholders’ Agreement”)) pursuant to the Stockholders’ Agreement, delivered to the DTC participant account in Schedule D hereto at the request of the Escrow Agent and in accordance with the ordinary procedures of the Transfer Agent.

(b) Cash Dividends. Any cash dividends and any other cash distributions from or with respect to the Escrow Property received by the Escrow Agent from time to time during the term of this Agreement (“Dividends”) shall be held and remitted per instructions received in accordance with Section 2 above.

(c) Corporate Actions. Seller shall be entitled to exercise all voting rights with respect to the Escrow Property. The Escrow Agent shall not vote any such shares, and shall not execute or deliver any proxy with respect to voting such shares, unless and until the Escrow Agent has received written instruction from Seller. The Escrow Agent shall deliver any proxy materials to Seller upon receipt of the proxy materials. The Escrow Agent shall not be responsible for delivering a vote on behalf of Seller in the event Seller does not provide written instructions pursuant to Section 12 herein to the Escrow Agent.

 

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4. Tax Matters.

(a) The Interested Parties agree that, for U.S. federal and applicable state income tax purposes, any dividends or other distributions or proceeds with respect to the Escrow Property during a calendar year period shall be treated in accordance with Proposed Treasury Regulations Section 1.468B-8, as such Proposed Treasury Regulation may be amended or modified, including upon the issuance of temporary or final regulations. The Interested Parties and the Escrow Agent agree that the Escrow Agent will not be responsible for providing tax reporting and withholding for payments which are for compensation for services performed by an employee or independent contractor. As between the Interested Parties, any amount disbursed from the Escrow Account shall generally be treated as a payment pursuant to Buyer’s obligation to Seller arising from the Purchase Agreement to which the installment sale provisions of Section 453 of the Internal Revenue Code of 1986, as amended (the “Code”); provided, however, for the avoidance of doubt, nothing in this Section 4 shall affect Seller’s ability to elect out of the installment method under Section 453 of the Code. Neither Buyer nor Seller shall take any position for U.S. federal or applicable state income tax purposes that is inconsistent with the provisions of this Section 4(a).

(b) If the imputed interest requirements of the Code apply, the Interested Parties are solely responsible to inform the Escrow Agent, provide the Escrow Agent with all imputed interest calculations, and direct the Escrow Agent to disburse imputed interest amounts. The Escrow Agent shall rely solely on such provided calculations and information and shall have no responsibility for the accuracy or completeness of any such calculations or information or for the failure of the Interested Parties to provide such calculations or information.

(c) The Interested Parties shall, upon the execution of this Agreement, provide the Escrow Agent with a duly completed and properly executed IRS Form W-9 or applicable IRS Form W-8, in the case of a non-U.S. person, for each payee, together with any other documentation and information reasonably requested by the Escrow Agent in connection with the Escrow Agent’s tax reporting obligations under the Code and the regulations thereunder. With respect to the Escrow Agent’s tax reporting obligations under the Code, the Foreign Account Tax Compliance Act and the Foreign Investment in Real Property Tax Act and any other applicable law or regulation, the Interested Parties understand that, in the event valid U.S. tax forms or other required supporting documentation are not provided to the Escrow Agent, the Escrow Agent may be required to withhold tax from the Escrow Property and report account information on any earnings, proceeds or distributions from the Escrow Property.

(d) Should the Escrow Agent become liable for the payment of taxes, including withholding taxes relating to any funds, held by it pursuant to this Agreement or any payment made hereunder, the Escrow Agent shall satisfy such liability to the extent possible from the Escrow Property. The Interested Parties agree, jointly and severally, to indemnify and hold the Escrow Agent harmless pursuant to Section 6(c) hereof from any liability or obligation on account of taxes and other similar governmental charges that may be assessed or asserted against the Escrow Agent with respect to the Escrow Property.

 

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(e) The Escrow Agent’s rights under this Section shall survive the termination of this Agreement or the resignation or removal of the Escrow Agent.

5. Concerning the Escrow Agent.

(a) Escrow Agent Duties. Each Interested Party acknowledges and agrees that (i) the duties, responsibilities and obligations of the Escrow Agent shall be limited to those expressly set forth in this Agreement, each of which is administrative or ministerial (and shall not be construed to be fiduciary) in nature, and no duties, responsibilities or obligations shall be inferred or implied, (ii) the Escrow Agent shall not be responsible for any of the agreements referred to or described herein (including without limitation the Purchase Agreement; provided, that in the event of a conflict between this Agreement and the Purchase Agreement, the Purchase Agreement shall control as between Buyer and Seller), or for determining or compelling compliance therewith, and shall not otherwise be bound thereby, and (iii) the Escrow Agent shall not be required to expend or risk any of its own funds to satisfy payments from the Escrow Property hereunder.

(b) Liability of Escrow Agent. The Escrow Agent shall not be liable for any damage, loss or injury resulting from any action taken or omitted in the absence of gross negligence or willful misconduct (as finally adjudicated by a court of competent jurisdiction). In no event shall the Escrow Agent be liable for indirect, incidental, consequential, punitive or special losses or damages (including but not limited to lost profits), regardless of the form of action and whether or not any such losses or damages were foreseeable or contemplated. The Escrow Agent shall be entitled to rely upon any instruction, notice, request or other instrument delivered to it in accordance with the terms of this Agreement without being required to determine the authenticity or validity thereof, or the truth or accuracy of any information stated therein. The Escrow Agent may act in reliance upon any signature believed by it to be genuine and may assume that any person purporting to make any statement, execute any document, or send any instruction in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent may consult with counsel satisfactory to it, and the opinion or advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it in good faith and in accordance with the opinion and advice of such counsel, so long as such counsel was appointed with reasonable care. The Escrow Agent may perform any and all of its duties through its agents, representatives, attorneys, custodians and/or nominees. The Escrow Agent shall not incur any liability for not performing any act or fulfilling any obligation hereunder by reason of any occurrence beyond its reasonable control (including, without limitation, any provision of any present or future law or regulation or any act of any governmental authority, any act of God or war or terrorism, or the unavailability of the Federal Reserve Bank wire services or any electronic communication facility).

(c) Reliance on Orders. The Escrow Agent is authorized to comply with final orders issued or process entered by any court with respect to the Escrow Property, without determination by the Escrow Agent of such court’s jurisdiction in the matter. If any portion of the Escrow Property is at any time attached, garnished or levied upon under any court order, or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case any order, judgment or decree shall be made or entered by

 

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any court affecting such property or any part thereof, then and in any such event, the Escrow Agent is authorized to rely upon and comply with any such order, writ, judgment or decree which it is advised is binding upon it without the need for appeal or other action; and if the Escrow Agent complies with any such order, writ, judgment or decree, it shall not be liable to any of the Interested Parties hereto or to any other person or entity by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.

6. Compensation, Expense Reimbursement and Indemnification.

(a) Compensation. Each of the Interested Parties covenants and agrees, jointly and severally, to pay the Escrow Agent’s compensation specified in Schedule A. Each of the Interested Parties covenants and agrees, jointly and severally, to pay to the Escrow Agent all reasonable and documented out-of-pocket expenses actually incurred by the Escrow Agent in the performance of its role under this Agreement.

(b) Security and Offset. The Interested Parties hereby grant to the Escrow Agent a first lien upon, and right of offset against, the Escrow Property with respect to any fees or expenses due to the Escrow Agent hereunder (including any claim for indemnification hereunder). In the event that any fees or expenses, or any other obligations owed to the Escrow Agent (or its counsel) are not paid to the Escrow Agent within 30 calendar days following the delivery of an invoice for the payment of such fees and expenses or the written demand for such payment, then the Escrow Agent may, without further action or notice, pay such fees and expenses from the Escrow Property and may sell, convey or otherwise dispose of the Escrow Property (or necessary portion thereof) for such purpose. The Escrow Agent may in its sole discretion withhold from any distribution of the Escrow Property an amount of such distribution it reasonably believes would, upon sale or liquidation, produce proceeds equal to any unpaid amounts to which the Escrow Agent is entitled to hereunder.

(c) Indemnification. Each of the Interested Parties covenants and agrees, jointly and severally, to indemnify the Escrow Agent and its employees, officers, directors, affiliates, and agents (each, an “Indemnified Party”) for, hold each Indemnified Party harmless from, and defend each Indemnified Party against, any and all claims, losses, actions, liabilities, costs, damages and expenses of any nature incurred by any Indemnified Party, arising out of or in connection with this Agreement or with the administration of its duties hereunder, including but not limited to reasonable attorney’s fees, costs and expenses, except to the extent such loss, liability, damage, cost or expense shall have been finally adjudicated by a court of competent jurisdiction to have resulted solely from the Indemnified Party’s own gross negligence or willful misconduct. The foregoing indemnification and agreement to hold harmless shall survive the termination of this Agreement and the resignation or removal of the Escrow Agent.

7. Dispute Resolution. In the event of any disagreement among any of the Interested Parties to this Agreement, or between any of them and any other person, resulting in adverse claims or demands being made with respect to the subject matter of this Agreement, the Escrow Agent may, at its option, refuse to comply with any claims or demands and refuse to take any other action hereunder, so long as such disagreement continues, and in any such event, the Escrow Agent shall not be liable in any way or to any person for its failure or refusal to act, and the Escrow Agent

 

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shall be entitled to continue to so refuse to act and refrain from acting until the Escrow Agent shall have received (i) a Final Order, or (ii) Joint Written Instructions, in which case the Escrow Agent shall be authorized to disburse the Escrow Property (or any portion thereof) in accordance with such Final Order or Joint Written Instructions. The Escrow Agent shall be entitled to receive (from and at the expense of the presenting party) an opinion of counsel to the effect that any Final Order is final and not subject to appeal. The Escrow Agent shall have the option, after 30 calendar days’ notice to the Interested Parties of its intention to do so, to petition (by means of filing an action in interpleader or any other appropriate method) any court of competent jurisdiction, for instructions with respect to any dispute or uncertainty, and to the extent required or permitted by law, pay into such court the Escrow Property (or any portion thereof) for holding and disposition in accordance with the instructions of such court. The costs and expenses (including reasonable and documented out-of-pocket attorneys’ fees and expenses) actually incurred by the Escrow Agent in connection with such proceeding shall be paid by, and be the joint and several obligation of, the Interested Parties.

8. Entire Agreement; Exclusive Benefit. Except for the Purchase Agreement with respect to solely Buyer and Seller, this Agreement constitutes the entire agreement between the parties and sets forth in its entirety the obligations and duties of the Escrow Agent with respect to the Escrow Property. This Agreement is for the exclusive benefit of the parties to this Agreement and their respective permitted successors, and shall not be deemed to give, either expressly or implicitly, any legal or equitable right, remedy, or claim to any other entity or person whatsoever. No party may assign any of its rights or obligations under this Agreement without the prior written consent of the other parties.

9. Resignation and Removal.

(a) The Interested Parties may remove the Escrow Agent at any time by giving to the Escrow Agent thirty (30) calendar days’ prior written notice of removal signed by an Authorized Person of each of the Interested Parties. The Escrow Agent may resign at any time by giving to each of the Interested Parties thirty (30) calendar days’ prior written notice of resignation.

(b) Within thirty (30) calendar days after giving the foregoing notice of removal to the Escrow Agent or within thirty (30) calendar days after receiving the foregoing notice of resignation from the Escrow Agent, the Interested Parties shall appoint a successor escrow agent and give notice of such successor escrow agent to the Escrow Agent. If a successor escrow agent has not accepted such appointment by the end of such 30-day period, the Escrow Agent may either (A) safe keep the Escrow Property until a successor escrow agent is appointed, without any obligation to invest the same or continue to perform under this Agreement, or (B) apply to a court of competent jurisdiction for the appointment of a successor escrow agent or for other appropriate relief.

(c) Upon receipt of notice of the identity of the successor escrow agent, the Escrow Agent shall either deliver the Escrow Property then held hereunder to the successor escrow agent, less the Escrow Agent’s fees and reasonable and documented costs and expenses, or hold such Escrow Property (or any portion thereof) pending distribution, until all such fees, costs and expenses are paid to it. Upon delivery of the Escrow Property to the successor escrow agent, the Escrow Agent shall have no further duties, responsibilities or obligations hereunder.

 

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10. Governing Law; Jurisdiction; Waivers. This Agreement is governed by and shall be construed and interpreted in accordance with the laws of the State of Delaware without giving effect to the conflict of laws principles thereof. THE PARTIES IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURT OF CHANCERY OF THE STATE OF DELAWARE OR, IF THE COURT OF CHANCERY OF THE STATE OF DELAWARE OR THE DELAWARE SUPREME COURT DETERMINES THAT, NOTWITHSTANDING SECTION 111 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE, THE COURT OF CHANCERY DOES NOT HAVE OR SHOULD NOT EXERCISE SUBJECT MATTER JURISDICTION OVER SUCH MATTER, THE SUPERIOR COURT OF THE STATE OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF DELAWARE SOLELY IN CONNECTION WITH ANY COVERED MATTER, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY SUCH ACTION, SUIT OR PROCEEDING THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED EXCLUSIVELY BY SUCH A DELAWARE STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE. The parties irrevocably and unconditionally waive any right to trial by jury with respect to any proceeding relating to this Agreement.

11. Representations and Warranties. Each of the Interested Parties represents and warrants that it has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and this Agreement has been duly approved by all necessary action and constitutes its valid and binding agreement enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights and subject to general equity principles.

12. Notices; Instructions.

(a) Any notice or instruction hereunder shall be in writing in English, and may be sent by (i) secure file transfer or (ii) electronic mail with a scanned attachment thereto of an executed notice or instruction, and shall be effective upon actual receipt by the Escrow Agent in accordance with the terms hereof. Any notice or instruction must be executed by an authorized person of an Interested Party (the person(s) so designated from time to time, the “Authorized Persons”). Each of the applicable persons designated on Schedule B and Schedule C attached hereto have been duly appointed to act as Authorized Persons hereunder and individually have full power and authority to execute any notices or instructions, to amend, modify or waive any provisions of this Agreement, and to take any and all other actions permitted under this Agreement, all without further consent or direction from, or notice to, it or any other party. Any notice or instruction must be originated from a corporate domain. Any change in designation of Authorized Persons shall be provided by written notice, signed by an Authorized Person, and actually received and acknowledged by the Escrow Agent. Any communication from the Escrow Agent that the Escrow Agent deems to contain confidential, proprietary, and/or sensitive information shall be encrypted in accordance with the Escrow Agent’s internal procedures. The Interested Parties agree that the above security procedures are commercially reasonable.

 

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If to Buyer:

WPX Energy, Inc.

3500 One Williams Center

Tulsa, Oklahoma 74172

Attention: Dennis Cameron

E-mail: Dennis.Cameron@wpxenergy.com

With a copy to (which copy shall not constitute notice):

Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, Texas 75201

Attention: Glenn D. West, James R. Griffin and Samuel C. Peca

E-mail: gdwest@weil.com

 james.griffin@weil.com

 samuel.peca@weil.com

If to Seller:

Felix Investments Holdings II, LLC

1530 16th Street, Suite 500

Denver, Colorado 80202

Attention: John D. McCready

E-mail: johnm@felix-energy.com

With a copy to (which copy shall not constitute notice):

Vinson & Elkins LLP

1001 Fannin, Suite 2500

Houston, Texas 77002

Attention: John B. Connally, Douglas E. McWilliams and W. Matthew Strock

E-mail: jconnally@velaw.com; dmcwilliams@velaw.com; mstrock@velaw.com

If to the Escrow Agent:

Citibank, N.A.

Agency & Trust

388 Greenwich Street

New York, NY 10013

Attn.: Paolo Ippolito

Telephone: 212-816-8831

E-mail: cts.spag@citi.com; paolo.ippolito@citi.com

 

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(b) Any funds to be paid by the Escrow Agent hereunder shall be sent by wire transfer pursuant to the instructions set forth on Schedule D, or as otherwise may be instructed by the Interested Parties.

(c) Payments to the Escrow Agent shall be sent by wire transfer pursuant to the following instructions: CITIBANK, N.A., ABA: 0210-0008-9; Account Name: Escrow Concentration Account; A/C#.: 36855852; Ref: 12490600-WPX Energy Escrow Account.

13. Amendment; Waiver. Any amendment of this Agreement shall be binding only if evidenced by a writing signed by each of the parties to this Agreement. No waiver of any provision hereof shall be effective unless expressed in writing and signed by the party to be charged.

14. Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision. If any provision of this Agreement is held to be unenforceable as a matter of law, the other provisions shall not be affected thereby and shall remain in full force and effect.

15. Mergers and Conversions. Any corporation or entity into which the Escrow Agent may be merged or converted or with which it may be consolidated, or any corporation or entity resulting from any merger, conversion or consolidation to which the Escrow Agent will be a party, or any corporation or entity succeeding to the business of the Escrow Agent will be the successor of the Escrow Agent hereunder without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.

16. Termination. This Agreement shall terminate and the Indemnification Escrow Account shall be closed upon the distribution of all Escrow Property from the Indemnification Escrow Account established hereunder in accordance with the terms of this Agreement, subject, however, to the survival of obligations specifically contemplated in this Agreement to so survive.

17. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same agreement. Scanned signatures on counterparts of this Agreement shall be deemed original signatures with all rights accruing thereto except in respect to any non-US entity, whereby originals are required.

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed by a duly authorized representative as of the day and year first written above.