Concho Resources Inc. (NYSE:CXO) Files An 8-K Entry into a Material Definitive AgreementItem 1.01
Alpha Holding Company, LLC Disposition
On January 19, 2017, Concho Resources Inc. (the “Company”), through its wholly owned subsidiary, COG Operating LLC (“Seller”), entered into a definitive securities purchase agreement (the “Purchase Agreement”) with Plains Pipeline, L.P. (“Purchaser”) to sell 50% of the issued and outstanding Class A Units of Alpha Holding Company, LLC (“AHC”) (the “Disposition”), for aggregate consideration of approximately $800 million, subject to customary purchase price adjustments, after closing of the transactions contemplated by the Class B Purchase Agreement (defined below) and repayment of the outstanding borrowings under the credit facility of Alpha Crude Connector, LLC, a wholly owned subsidiary of AHC. Contemporaneously with the execution of the Purchase Agreement, Purchaser entered into a definitive purchase agreement with Frontier Midstream Solutions, LLC (“Frontier”) to purchase 50% of the issued and outstanding Class B Units of AHC (the “Class B Purchase Agreement”). Closing under the Purchase Agreement and the Class B Purchase Agreement is anticipated to occur contemporaneously during the first half of 2017, subject to customary closing conditions, as further described below. Seller retains the right under the Limited Liability Company Agreement of AHC, subject to certain conditions, to purchase or cause AHC to purchase all of the Class B Units of AHC prior to closing under the Purchase Agreement and the Class B Purchase Agreement (an “Option Exercise”). In the event of an Option Exercise, Seller will sell all of the Class A Units and the Class B Units of AHC to Purchaser for an aggregate purchase price of approximately $1.215 billion. The Company expects the net proceeds to Seller in the event of an Option Exercise and sale to Purchaser of all of the Class A Units and the Class B Units of AHC to be substantially similar to what Seller would otherwise receive under the Purchase Agreement in the absence of an Option Exercise.
Each party’s obligation to consummate the Disposition is conditioned upon, among other things, (i) confirmation of the counterparties’ representations and warranties as of the closing, (ii) the counterparties’ performance, in all material respects, of all covenants, (iii) the receipt of all required approvals (including approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976), (iv) the absence of legal matters prohibiting the Disposition, and (v) the satisfaction or waiver by Frontier or Purchaser, as applicable, of certain conditions precedent to the consummation of the transactions contemplated by the Class B Purchase Agreement.
About Concho Resources Inc. (NYSE:CXO)
Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The Company’s operations are focused in the Permian Basin of Southeast New Mexico and West Texas, an onshore oil and natural gas basin in the United States. Its three core operating areas include New Mexico Shelf, where it targets the Yeso formation with horizontal drilling; Delaware Basin, where it uses horizontal drilling and technology to target the Bone Spring formation and the Wolfcamp shale formation, and Midland Basin, where it targets the Wolfcamp and Spraberry formations with horizontal drilling. The Company has reserves of approximately 623.5 million barrels of oil equivalent (MMBoe) that are located in its core operating areas. The Company’s core operations are focused in the Permian Basin, which underlies an area of Southeast New Mexico and West Texas approximately 250 miles wide and 300 miles long. Concho Resources Inc. (NYSE:CXO) Recent Trading Information
Concho Resources Inc. (NYSE:CXO) closed its last trading session up +5.00 at 144.05 with 1,406,089 shares trading hands.
