The oil and gas industry’s latest merger, that of Tulsa’s Mid-Con Energy Partners and Fort Worth-based Contango Oil and Gas should be completed by early next year according to officials involved in the all-stock deal valued at about $400 million.
The combined company will be headquartered in Fort Worth, TX but will continue to maintain a presence in both the Houston and Oklahoma markets.
Under the terms of the merger agreement, Mid-Con unitholders will receive 1.75 shares of Contango common stock for each Mid-Con common unit owned, representing a 5 percent premium based on a 15-day volume weighted average price.
The exchange ratio implied an enterprise value for the combined entity in excess of $400 million based on Friday’s closing price. Upon completion of the merger and closing of the concurrently announced private placement of Contango common stock, Contango shareholders will own approximately 87 percent of the combined company and Mid-Con unitholders will own approximately 13 percent of the combined company on a fully diluted basis.
The transaction, which is expected to close in late 2020 or early 2021, has been unanimously approved by the conflicts committee of the board of directors of Mid-Con and by the full board of directors of Mid-Con, and by the disinterested directors of the board of directors of Contango.
Voting agreements have been signed by over 50% of holders on both sides of the transaction, including Goff Capital. The closing is subject to customary shareholder and unitholder approvals and other customary conditions to closing. Contango’s senior management team will run the combined company, and Contango’s board of directors will remain intact.
Under the agreement, if either company backs out of the deal, it will pay Mid-Con a $1.5 million termination fee to the other party.
The merger followed Mid-Con’s reorganization of its ownership structure carried out earlier this year. It came after the company’s revolving credit facility was cut from $95 million down to $64 million.
The company also replaced three of its board members and in July named Sherry L. Morgan as the general partner’s new CEO, Jodie L. DiGiacomo as the new chief accounting officer and Greg Westfal as the new chief operating officer.