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Struggling Permian Basin operator Lilis Energy Inc. said Jan. 13 it has received a non-binding cash take-private offer from a major shareholder.
The offer, made by Minneapolis-based alternative investment firm Värde Partners Inc., continues a trend of take-private offers for public oil and gas companies that began to emerge last year.
Värde Partners is proposing to acquire the roughly 75% of outstanding shares of Lilis common stock it doesn’t already own in a cash merger transaction for $0.25 per common share. The non-binding cash offer is expected to expire Feb 17.
Fellow publicly traded E&P Roan Resources Inc. received a similar offer from private equity backed Citizen Energy LLC in October. Other recent take-private offers include a deal by IFM Global Infrastructure Fund that closed in November to take Buckeye Partners LP private. Tallgrass Energy LP also agreed to a sweetened take-private offer in December from a group led by Blackstone Infrastructure Partners.
Lilis Energy is a publicly traded E&P with a roughly 20,000-acre position in the Permian’s Delaware Basin. Within the past year, the Fort Worth, Texas-based company has struggled to generate returns and even temporarily suspended drilling and completion operations toward the end of second-quarter 2019 to focus on cost reductions and overall efficiencies.
Despite reporting improved operational efficiencies and G&A cost savings in its third-quarter results, Lilis said in November it had hired Barclays Capital Inc. as financial adviser to explore strategic alternatives. The company also recently received a deficiency letter for its common stock.
“The special committee of the board of directors of the company, which was formed last November, will evaluate the recent Värde offer as it continues its process of evaluating the potential for other strategic alternatives with the assistance of its financial adviser, Barclays Capital Inc.,” Lilis Energy said in its news release.
BMO Capital Markets also serves as financial adviser to the company.
Värde holds about 23.6 million of the 91.7 million outstanding shares of Lilis Energy’s common stock and all of the outstanding preferred stock of the company. Holdings also include all of the company’s Series E convertible participating preferred stock that votes with the common shares at a roughly 25.7 million converted share basis.
Lilis operates a contiguous acreage block in Loving and Winkler counties, Texas, with additional acreage in New Mexico’s Lea County. The company is focused on delineating primarily the Wolfcamp, Bone Springs and Avalon formations, according to its website.
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