Contango Oil & Gas Company and Mid-Con Energy Partners, LP Announce Strategic Merger Continuing Contango’s Consolidation Strategy; Contango Announces Related Increase in Borrowing Base NYSE:MCF | Global Newswire

FORT WORTH, Texas and TULSA, Okla., Oct. 26, 2020 (GLOBE NEWSWIRE) —

Contango Oil & Gas Company (“Contango”) (NYSE American: MCF) and Mid-Con Energy Partners, LP (“Mid-Con”) (NASDAQ: MCEP) today announced they have entered into an agreement to combine in an all-stock merger transaction. The combination continues Contango’s consolidation strategy, increases its exposure to oil reserves at an attractive price, increases corporate margins via scale and further cost rationalization, and amplifies Contango’s ability to play offense amid the dislocation in the sector, while providing Mid-Con’s unitholders with greater liquidity, financial stability and opportunities for growth on a larger platform.


• Acquisition of PDP heavy reserves by Contango at an attractive unlevered return

• Accretive to Contango’s reserve base

• Mid-Con’s assets oil weighted with low production decline profile, complementing Contango’s higher production and cash flow profile

• Leverages Contango’s familiarity with Mid-Con’s assets and operations via Mid-Con’s Management Services Agreement

• Offers Mid-Con’s unitholders enhanced liquidity, financial stability and opportunities for growth through a larger platform

• Further cost rationalization expected to be realized via consolidation of the entities

• Immediate free cash flow accretion(1)

• Enhanced liquidity for the combined entity

• Maintains strong balance sheet and low leverage profile of Contango

• Maintains simple capital structure comprised of bank debt and common equity

• Adds PUD inventory with low CAPEX requirement with opportunity for near term conversion to PDP


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. This exchange ratio implies 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. The combined company will be headquartered in Fort Worth, TX but will continue to maintain a presence in both the Houston and Oklahoma markets.

— Read on

Leave a Reply