Subsequent Events |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Subsequent Events [Abstract] | |
| Subsequent Events |
SUBSEQUENT EVENTS
6.000% Senior Notes due 2024
On October 14, 2016, the Company issued $650.0 million in aggregate principal amount of 6.000% Senior Notes due 2024 (the “2024 Notes”). The 2024 Notes were issued under an indenture, dated as of October 14, 2016, among the Company, the subsidiary guarantors party thereto and Wells Fargo Bank, N.A., as the trustee (the “Indenture”), to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in accordance with Regulation S under the Securities Act (the “2024 Notes Offering”). Under the Indenture, interest on the 2024 Notes accrues at a rate of 6.000% per annum on the outstanding principal amount thereof from October 14, 2016, payable semi-annually on April 15 and October 15 of each year, commencing on April 15, 2017. The 2024 Notes will mature on October 15, 2024. The Company received approximately $640.0 million in net proceeds from the offering of the 2024 Notes, which was used, together with cash on hand, to purchase the outstanding 2020 Notes in a concurrent cash tender offer, to pay fees and expenses thereof, and to redeem any of the 2020 Notes that remained outstanding after the completion of the tender offer. For a discussion of the tender offer and related redemption, see “-Tender Offer and Redemption-Existing 2020 Notes.”
Tender Offer and Redemption-Existing 2020 Notes
On October 6, 2016, the Company commenced a cash tender offer to purchase any and all of its 2020 Notes, which tender offer expired on October 13, 2016 and settled on October 14, 2016. Holders of the 2020 Notes that were validly tendered and accepted at or prior to the expiration time of the tender offer, or who delivered the 2020 Notes pursuant to the guaranteed delivery procedures, received total cash consideration of $1,042 per $1,000 principal amount of notes, plus any accrued and unpaid interest up to, but not including, the settlement date. An aggregate of $403.5 million in principal amount of the 2020 Notes was validly tendered in the tender offer. The remaining 2020 Notes that were not tendered in the tender offer were redeemed by the Company. The redemption payment included approximately $196.5 million in aggregate principal amount at a redemption price of 103.875% of the principal amount of the redeemed 2020 Notes, plus accrued and unpaid interest thereon to the redemption date. Upon deposit of the redemption payment with the paying agent on October 14, 2016, the indenture governing the 2020 Notes was fully satisfied and discharged. The cash tender offer for the 2020 Notes and redemption of the remaining 2020 Notes were funded with the net proceeds from the offering of the 2024 Notes (discussed in more detail above) and cash on hand.
Derivatives
In October 2016, the Company entered into fixed price swaps for the period from January 2017 through June 2017, for 20,000 MMBtu of natural gas per day at a weighted average price of $3.19 per MMBtu. For the period from July 2017 through October 2017, the Company entered into fixed price swaps for 40,000 MMBtu of natural gas per day at a weighted average price of $3.15 per MMBtu. For the period from November 2017 through December 2017, the Company entered into fixed price swaps for 70,000 MMBtu of natural gas per day at a weighted average price of $3.25 per MMBtu. For the period from January 2018 through March 2018, the Company entered into fixed price swaps for 70,000 MMBtu of natural gas per day at a weighted average price of $3.19 per MMBtu. For the period from April 2018 through December 2018, the Company entered into fixed price swaps for 20,000 MMBtu of natural gas per day at a weighted average price of $2.97 per MMBtu. The Company's fixed price swap contracts are tied to the commodity prices on NYMEX. The Company will receive the fixed price amount stated in the contract and pay to its counterparty the current market price as listed on NYMEX for natural gas.
Mammoth Energy Initial Public Offering
On October 19, 2016, Mammoth Energy closed its IPO of 7,750,000 shares of its common stock at a public offering price of $15.00 per share, of which 7,500,000 shares were sold by Mammoth Energy and 250,000 shares were sold by certain selling stockholders, including 76,250 shares sold by the Company for which it received net proceeds of $1.1 million. Prior to the completion of the IPO, the Company was issued 9,150,000 shares of Mammoth Energy common stock in return for the contribution of its 30.5% interest in Mammoth. The underwriters have an option, exercisable within 30-days after the IPO, to purchase at the same price per share up to an additional 1,162,500 shares of Mammoth Energy common stock from the selling stockholders, including up to 354,563 shares of common stock from the Company. The Company intends to use the net proceeds for the sale of its Mammoth Energy shares in the IPO for general corporate purposes. Following the IPO, the Company owned an approximate 24.2% interest in Mammoth Energy.
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