|9 Months Ended|
Sep. 30, 2021
|Subsequent Events [Abstract]|
|Subsequent Events||Subsequent Events
Acquisition of Lonestar Resources
On July 10, 2021, we entered into the Merger Agreement with Lonestar under which we would acquire Lonestar in the Merger. On October 5, 2021, our shareholders voted to approve the Merger and it was consummated the same day. In accordance with the terms of the Merger Agreement, Lonestar shareholders received 0.51 shares of Penn Virginia common stock for each share of Lonestar common stock held immediately prior to the effective time of the Merger. Based on the closing price of Penn Virginia common stock on October 5, 2021 of $30.19, and in connection with the Merger, the total value of Penn Virginia common stock issued to holders of Lonestar common stock, warrants and restricted stock units as applicable, was approximately $173.6 million.
The transaction will be accounted for using the acquisition method of accounting, with Ranger Oil being treated as the accounting acquirer. Under the acquisition method of accounting, the assets and liabilities of Lonestar and its subsidiaries will be recorded at their respective fair values as of the date of completion of the Merger and added to Ranger Oil’s. The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date of the Merger. Determining the fair value of the assets and liabilities of Lonestar requires judgment and certain assumptions to be made, the most significant of these being related to the valuation of Lonestar’s oil and gas properties.
Penn Virginia shareholders as of immediately prior to the consummation of the Merger own approximately 87% of the combined company, with affiliates of Juniper Capital owning 52% of the combined company, and former Lonestar shareholders own approximately 13% of the combined company.
Release of Escrowed Funds and Debt Repayments
In connection with the consummation of the Merger, the net proceeds from the offering of the 9.25% Senior Notes due 2026 and certain additional funds totaling $411.5 million were released from escrow on October 5, 2021. Obligations under the 9.25% Senior Notes due 2026 were assumed by Holdings, as borrower, and are guaranteed by the subsidiaries of Holdings that guarantee the Credit Facility.
The net proceeds from the 9.25% Senior Notes due 2026 were used to repay and discharge $249.8 million of Lonestar’s long-term debt including accrued interest and related expenses, and the remainder, along with cash on hand, of $146.2 million was used to repay the Second Lien Facility including a prepayment premium and accrued interest and related expenses.
Increased Borrowing Base of Credit Facility
Upon closing of the Merger and subject to the terms of Amendment No. 11 entered into in August 2021, our borrowing base under the Credit Facility increased to $600 million with aggregate elected commitments of $400 million.
See Note 7 for additional information on our debt.
Immediately following the Merger, we paid approximately $50 million to restructure certain of Lonestar’s derivatives, which was funded by borrowings under our Credit Facility. We have reset the majority of the swaps to reflect current market pricing.
Recapitalization of the Company’s Common StockOn October 6, 2021, the Company effected a recapitalization (the “Recapitalization”), pursuant to which (i) the Company’s common stock was renamed and reclassified as Class A Common Stock, (ii) the authorized number of shares of capital stock of the Company was increased to 145,000,000 shares, (iii) 30,000,000 shares of Class B common stock, par value of $0.01 per share, a new class of capital stock of the Company, was authorized, (iv) all outstanding shares of the Series A Preferred Stock were exchanged for newly issued shares of Class B Common Stock, and (v) the designation of the Series A Preferred Stock was cancelled.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef