UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 2017
LILIS ENERGY, INC.
(Exact name of registrant as specified in its charter)
Nevada | 001-35330 | 74-3231613 | ||
(State
or other jurisdiction
|
(Commission File Number) |
(IRS Employer
|
300 E. Sonterra Blvd., Suite No. 1220 | ||
San Antonio, TX | 78258 | |
(Address of Principal Executive Offices) | (Zip Code) |
(210) 999-5400
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01 | Entry into a Material Definitive Agreement. |
On November 10, 2017, Lilis Energy, Inc. (the “ Company ”) entered into a third amendment (the “ Amendment ”) to its existing second lien credit agreement (the “ Credit Agreement ”), dated April 26, 2017, as amended, by and among the Company, the Guarantors, Wilmington Trust, National Association, as administrative agent, and the lenders party thereto, including Värde Partners, Inc., as lead lender. The Amendment increased by $25.0 million the amount of delayed draw term loans available for borrowing under the Credit Agreement. As previously disclosed, in October 2017, the Company borrowed the full $45 million of delayed draw term loans available under the Credit Agreement prior to the Amendment. The additional $25.0 million of delayed draw term loans is undrawn as of November 14, 2017 and will be available for borrowing by the Company in one or more drawings of $5.0 million or more from time to time on or before February 28, 2019, subject to certain conditions. Proceeds of the additional loans may be used to fund oil and gas property acquisitions, subject to certain limitations, or drilling and completions costs or for other general corporate purposes.
The foregoing description of the terms of the Amendment is not complete and is qualified in its entirety by reference to the copy of the Amendment, which is filed as exhibit 10.1 to this Current Report on Form 8-K.
Item 2.01 | Completion of Acquisition or Disposition of Assets. |
As disclosed in the Company’s Current Report on Form 8-K filed on October 10, 2017, the Company entered into a lease acquisition agreement (the “ Acquisition Agreement ”), dated October 3, 2017 with KEW Drilling, a Delaware limited partnership (the “ Seller ”), pursuant to which the Company will initially acquire from Seller approximately 4,051 undeveloped net acres in Winkler County, Texas and is committed, subject to the terms and conditions of the Agreement, to acquire additional undeveloped oil and gas leases in Winkler County, Texas for an aggregate purchase price of up to $45,600,000 initially with a commitment for up to $47,000,000 for additional oil and gas leases pursuant to the terms set forth in the Acquisition Agreement (collectively, the “ Leases ”). Once the value of the additional Leases to be acquired exceeds the $47,000,000 aggregate purchase price threshold (calculated on a per-net-acre basis), the Company has the option, but not the obligation, to acquire any additional oil and gas leases that are acquired by Seller and meet the specifications set forth in the Acquisition Agreement.
On November 9, 2017, the Company closed on the initial settlement of approximately 3,200 net acres in Winkler County, Texas for approximately $35.8 million and expects to complete the close of the remaining net acreage in early December 2017.
Item 2.02 | Results of Operations and Financial Condition |
On November 14, 2017, the Company issued a press release announcing information regarding the Company’s leasehold activity, continued results of its drilling and completion operations and a general operations update. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
The information furnished under this Item 2.02, including the accompanying Exhibit 99.1, shall not be deemed to be “filed” for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or otherwise subject to the liabilities of such section. The information in this Item 2.02 shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such a filing.
Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 14, 2017 | LILIS ENERGY, INC. | |
By: | /s/ Joseph Daches | |
Executive Vice President, Chief Financial Officer and Treasurer |
Exhibit 10.1
AMENDMENT NO. 3 TO CREDIT AGREEMENT
This Amendment No. 3 to Credit Agreement (this “ Amendment ”) dated as of November 10, 2017 (the “ Effective Date ”) is among Lilis Energy, Inc. (the “ Borrower ”), certain subsidiaries of the Borrower party hereto (each, a “ Guarantor ” and collectively, the “ Guarantors ”), Wilmington Trust, National Association, as administrative agent (the “ Administrative Agent ”), Värde Partners, Inc., (“ Värde ”) in its capacity as the Lead Lender (as defined in the Credit Agreement (as defined below)) and the other Lenders (as defined below) party hereto.
INTRODUCTION
Whereas, the Borrower, the Guarantors, the Administrative Agent, Värde as the Lead Lender (as defined therein) and the other lenders party thereto from time to time (the “ Lenders ”) are parties to that certain Credit Agreement dated as of April 26, 2017 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”).
Whereas, the Borrower has requested that Administrative Agent and the Lenders amend the Credit Agreement in certain respects as set forth herein, and the Administrative Agent and the Lenders have agreed to the foregoing, on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Defined Terms; Other Definitional Provisions . As used in this Amendment, each of the terms defined in the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein. Each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly provided to the contrary. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Amendment, unless otherwise specified. The words “hereof”, “herein”, and “hereunder” and words of similar import when used in this Amendment shall refer to this Amendment as a whole and not to any particular provision of this Amendment. The term “including” means “including, without limitation”. Paragraph headings have been inserted in this Amendment as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Amendment and shall not be used in the interpretation of any provision of this Amendment.
Section 2. Amendments to the Credit Agreement . Subject to the satisfaction of the conditions set forth in Section 4 below, and in reliance on the representations and warranties contained in Section 3 below, the Credit Agreement is hereby amended as follows:
(a) Section 1.01 of the Credit Agreement is hereby amended by inserting the following definitions in the appropriate alphabetical order:
“ Amendment No. 3 Effective Date ” means November 10, 2017.
“ Delayed Draw Availability Amount ” means, as of any date, an amount equal to (x) $70,000,000, minus (y) the principal amount of any Delayed Draw Term Loans made prior to such date, plus (z) the amount of any Delayed Draw Term Loans incurred on the Amendment No. 1 Effective Date that have been mandatorily prepaid pursuant to Section 2.07(e) after the occurrence of a KEW Acquisition Prepayment Event but not subsequently reborrowed pursuant to Section 2.02(b).
(b) Section 1.01 of the Credit Agreement is hereby amended by amending and restating the definitions of “Delayed Draw Term Loan Commitment Amount” and “Delayed Draw Term Loan Commitment Percentage” in their entirety as set forth below:
“ Delayed Draw Term Loan Commitment Amount ” means, as to any Lender, the dollar amount, if any, set forth opposite such Lender’s name on Schedule 2.01 under the column “Delayed Draw Term Loan Commitment Amount” as of such date or as set forth in the Assignment and Assumption pursuant to which such Lender became party hereto.
“ Delayed Draw Term Loan Commitment Percentage ” means, as to any Lender, (i) on the Effective Date, the percentage, if any, set forth opposite such Lender’s name on Schedule 2.01 under the column “Delayed Draw Term Loan Commitment Percentage” as of such date and (ii) on any date following the Effective Date, the percentage equal to (a) the Delayed Draw Term Loan Commitment Amount of such Lender on such date, plus the principal amount of the Delayed Draw Term Loan held by such Lender on such date divided by (b) the aggregate Delayed Draw Term Loan Commitment Amounts of all Lenders on such date plus the aggregate principal amount of the Delayed Draw Term Loan on such date.
“ Pre-Approved Acquisition Letter ” means that certain letter agreement, dated as of November 10, 2017, from Borrower and acknowledged by the Lead Lender.
(c) Section 2.02(b) of the Credit Agreement is hereby amended by amending and restating such Section 2.02(b) in its entirety as set forth below:
(b) On the terms and subject to the conditions set forth herein, Lenders severally agree to make term loans (collectively, the “ Delayed Draw Term Loans ”) to the Borrower, during the Delayed Draw Term Loan Funding Period, in multiple draws (each a “ Delayed Term Loan Draw ”) up to an aggregate principal amount not to exceed the Delayed Draw Availability Amount as of such date. Each Lender’s obligation to fund a Delayed Term Loan Draw shall be limited to such Lender’s Delayed Draw Term Loan Commitment Percentage of such Delayed Term Loan Draw requested by the Borrower hereunder. No Lender shall have any obligation to fund any portion of the Delayed Draw Term Loans unless the proceeds of such Delayed Draw Term Loan are used for a Pre-Approved Acquisition, reasonable drilling and completion costs in the ordinary course of business of the Borrower and other general corporate purposes (solely with respect to the Delayed Draw Term Loans incurred on or after the Amendment No. 3 Effective Date) or such other uses as are satisfactory to the Lenders providing such Delayed Draw Term Loan, in their sole discretion. The Delayed Draw Term Loan Commitment shall terminate at the end of the Delayed Draw Term Loan Funding Period, if not earlier pursuant to the terms of this Agreement. The Borrower shall not have any right to reborrow any portion of the Delayed Draw Term Loans which is repaid or prepaid from time to time; provided that in the event of any mandatory prepayment of the Delayed Draw Term Loans incurred on the Amendment No. 1 Effective Date in part or in full after the occurrence of a KEW Acquisition Prepayment Event pursuant to Section 2.07(e), then the Borrower shall have the right to reborrow the full principal amount of Delayed Draw Term Loans that were incurred on the Amendment No. 1 Effective Date and subsequently mandatorily prepaid in accordance with Section 2.07(e). Delayed Term Loan Draws shall be made pursuant to a Borrowing Request to be delivered to the Administrative Agent pursuant to Section 2.03. Each such request for a Delayed Term Loan Draw shall be in a minimum amount of the lesser or (x) $5,000,000, and, if greater, in integral multiples of $1,000,000 thereon, and (y) the amount of the remaining Delayed Term Loan Draw Commitment as of such date.
(d) The last sentence of Section 11.02(b) of the Credit Agreement is hereby amended by amending and restating such sentence in its entirety as set forth below:
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Delayed Draw Term Loans incurred on the Amendment No. 1 Effective Date (other than any Delayed Draw Term Loans incurred on the Amendment No. 1 Effective Date which have been re-borrowed following a mandatory prepayment made pursuant to Section 2.07(e) after the occurrence of a KEW Acquisition Prepayment Event) shall not be convertible at the option of the Lenders during the Specified KEW Acquisition Period prior to the consummation of the KEW Acquisitions or Alternate Approved Acquisitions (it being understood and agreed that following the Specified KEW Acquisition Period, the Delayed Draw Term Loans incurred on the Amendment No. 1 Effective Date shall be convertible at the option of the Lenders).
(e) Schedule 2.01 of the Credit Agreement is hereby amended by amending and restating such Schedule 2.01 in its entirety as set forth on Annex I attached hereto.
Section 3. Representations and Warranties . Each Credit Party hereby represents and warrants that: (a) after giving effect to this Amendment, the representations and warranties contained in Article III of the Credit Agreement and in each other Loan Document are true and correct in all material respects, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects, on and as of the Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects, except for any representation and warranty that is qualified by materiality or reference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects, as of such earlier date; (b) after giving effect to this Amendment, no Default has occurred and is continuing; (c) the execution, delivery and performance of this Amendment are within the corporate or limited liability company power and authority of such Credit Party and have been duly authorized by appropriate corporate or limited liability company action and proceedings; (d) this Amendment constitutes the legal, valid, and binding obligation of such Credit Party enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are no governmental or other third party consents, licenses and approvals required in connection with the execution, delivery, performance, validity and enforceability of this Amendment; and (f) the Liens under the Loan Documents are valid and subsisting and secure the Credit Parties’ obligations under such Loan Documents.
Section 4. Conditions to Effectiveness . This Amendment shall become effective on the Effective Date and enforceable against the parties hereto upon the satisfaction of the following conditions precedent:
(a) the Administrative Agent and the Lead Lender shall have received this Amendment duly executed by the Borrower, the Guarantors, the Administrative Agent, the Lenders party hereto (which constitute all Lenders party to the Credit Agreement) and the Lead Lender;
(b) the Borrower shall have paid on or about the Effective Date all costs and expenses which are payable pursuant to Section 10.03 of the Credit Agreement and which have been invoiced no later than one Business Days prior to the date hereof; and
(c) the Administrative Agent and the Lead Lender shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of each of Bracewell LLP, counsel for the Credit Parties and applicable local counsel, covering such matters relating to the Credit Parties and this Amendment as the Lead Lender shall reasonably request.
Section 5. Acknowledgments and Agreements .
(a) The Borrower shall use commercially reasonable efforts to amend or supplement any effective registration statement (including, if necessary, by filing a new registration statement) providing for the registration of Common Stock issuable upon Conversion of the Loans if reasonably necessary, in the judgment of the Lead Lender, to register any additional shares of Common Stock with may be issued under any Delayed Draw Term Loans borrowed after the Amendment No. 3 Effective Date (other than any Delayed Draw Term Loans incurred on the Amendment No. 1 Effective Date which have been re-borrowed following a mandatory prepayment made pursuant to Section 2.07(e) after the occurrence of a KEW Acquisition Prepayment Event); provided, however, that the Borrower shall not be required to file any such amendment, supplement or new registration statement at any time prior to the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
(b) Each Credit Party acknowledges that on the date hereof, all outstanding Obligations are payable in accordance with their terms and each Credit Party waives any defense, offset, counterclaim or recoupment, in each case existing on the date hereof, with respect to such Obligations. Each Credit Party does hereby adopt, ratify, and confirm the Credit Agreement and acknowledges and agrees that the Credit Agreement is and remains in full force and effect, and each Credit Party acknowledges and agrees that its respective liabilities and obligations under the Credit Agreement are not impaired in any respect by this Amendment.
(c) This Amendment is a Loan Document for the purposes of the provisions of the other Loan Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Amendment shall be a Default or Event of Default, as applicable, under the Credit Agreement.
Section 6. Reaffirmation of Guaranty . Each Guarantor hereby ratifies, confirms, and acknowledges that its obligations under the Credit Agreement are in full force and effect and that each Guarantor continues to unconditionally and irrevocably, jointly and severally, guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of all of the Obligations, and its execution and delivery of this Amendment does not indicate or establish an approval or consent requirement by the Guarantors in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement or any of the other Loan Documents.
Section 7. Reaffirmation of Liens . Each Credit Party (a) is party to certain Security Documents securing and supporting the Obligations under the Loan Documents, (b) represents and warrants that it has no defenses to the enforcement of the Security Documents and that according to their terms the Security Documents will continue in full force and effect to secure the Obligations under the Loan Documents, as the same may be amended, supplemented, or otherwise modified, and (c) acknowledges, represents, and warrants that the liens and security interests created by the Security Documents are valid and subsisting and create an acceptable security interest in the collateral to secure the Obligations under the Loan Documents, as the same may be amended, supplemented, or otherwise modified.
Section 8. Counterparts . This Amendment may be signed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Transmission by facsimile or other electronic transmission of an executed counterpart of this Amendment shall be deemed to constitute due and sufficient delivery of such counterpart.
Section 9. Successors and Assigns . This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement.
Section 10. Invalidity . In the event that any one or more of the provisions contained in this Amendment shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Amendment.
Section 11. Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of New York. Section 10.09 of the Credit Agreement is hereby incorporated by reference herein mutatis mutandis.
Section 12. Instruction to Administrative Agent . The Lenders hereby (i) authorize and instruct the Administrative Agent to execute and deliver this Amendment and (ii) acknowledge and agree that the instruction set forth in this Section 12 constitutes an instruction from the Lenders under the Loan Documents, including Section 9.03 and Section 9.04 of the Credit Agreement.
Section 13. RELEASE . For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Credit Party hereby, for itself and its successors and assigns, fully and without reserve, releases, acquits, and forever discharges each Secured Party, its respective successors and assigns, officers, directors, employees, representatives, trustees, attorneys, agents and affiliates (collectively the “ Released Parties ” and individually a “ Released Party ”) from any and all actions, claims, demands, causes of action, judgments, executions, suits, debts, liabilities, costs, damages, expenses or other obligations of any kind and nature whatsoever, direct and/or indirect, at law or in equity, whether now existing or hereafter asserted, whether absolute or contingent, whether due or to become due, whether disputed or undisputed, whether known or unknown (INCLUDING, WITHOUT LIMITATION, ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITH RESPECT TO THE NEGLIGENCE OF ANY RELEASED PARTY) (collectively, the “ Released Claims ”), for or because of any matters or things occurring, existing or actions done, omitted to be done, or suffered to be done by any of the Released Parties, in each case, on or prior to the Effective Date and are in any way directly or indirectly arising out of or in any way connected to any of this Amendment, the Credit Agreement, any other Loan Document, or any of the transactions contemplated hereby or thereby (collectively, the “ Released Matters ”). Each Credit Party, by execution hereof, hereby acknowledges and agrees that the agreements in this Section 13 are intended to cover and be in full satisfaction for all or any alleged injuries or damages arising in connection with the Released Matters herein compromised and settled. Each Credit Party hereby further agrees that it will not sue any Released Party on the basis of any Released Claim released, remised and discharged by the Credit Parties pursuant to this Section 13 . In entering into this Amendment, each Credit Party consulted with, and has been represented by, legal counsel and expressly disclaim any reliance on any representations, acts or omissions by any of the Released Parties and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth herein do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity hereof. The provisions of this Section 13 shall survive the termination of this Amendment, the Credit Agreement and the other Loan Documents and payment in full of the Obligations.
Section 14. Entire Agreement . This Amendment, the Credit Agreement and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[The remainder of this page has been left blank intentionally.]
EXECUTED to be effective as of the date first above written.
BORROWER : | ||
LILIS ENERGY, INC. | ||
By: | /s/ Joseph C. Daches | |
Name: | Joseph C. Daches | |
Title: | Chief Financial Officer | |
GUARANTORS : | ||
BRUSHY RESOURCES, INC. | ||
HURRICANE RESOURCES LLC | ||
LILIS OPERATING COMPANY, LLC | ||
IMPETRO OPERATING, LLC | ||
IMPETRO RESOURCES, LLC | ||
By: | /s/ Joseph C. Daches | |
Name: | Joseph C. Daches | |
Title: | Chief Financial Officer |
ADMINISTRATIVE AGENT : | ||
WILMINGTON TRUST, NATIONAL ASSOCIATION, | ||
as Administrative Agent | ||
By: | /s/ Alisha Clendaniel | |
Name: | Alisha Clendaniel | |
Title: | Banking Officer | |
LEAD LENDER : | ||
V Ä rde Partners, Inc. | ||
By: | /s/ Markus Specks | |
Name: | Markus Specks | |
Title: | Managing Director |
SEVERALLY AND NOT JOINTLY FOR EACH ENTITY LISTED BELOW: | ||
By: | /s/ Markus Specks | |
Name: | Markus Specks | |
Title: | Managing Director | |
The VÄRDE Fund VI-A, L.P. | ||
By | Värde Investment Partners G.P., LLC, Its General Partner | |
By | Värde Partners, L.P., Its Managing Member | |
By | Värde Partners, Inc., Its General Partner | |
VÄRDE INVESTMENT PARTNERS, L.P. | ||
By | Värde Investment Partners G.P., LLC, Its General Partner | |
By | Värde Partners, L.P., Its Managing Member | |
By | Värde Partners, Inc., Its General Partner | |
THE VÄRDE FUND XI (MASTER), L.P. | ||
By | Värde Fund XI G.P., LLC, Its General Partner | |
By | Värde Partners, L.P., Its Managing Member | |
By | Värde Partners, Inc., Its General Partner | |
VÄRDE investment partners (offshore) master, L.p. | ||
By | Värde Investment Partners G.P., LLC, Its General Partner | |
By | Värde Partners, L.P., Its Managing Member | |
By | Värde Partners, Inc., Its General Partner | |
THE VÄRDE SKYWAY Master fund, L.P. | ||
B y | The Värde Skyway Fund G.P., LLC, Its General Partner | |
By | Värde Partners, L.P., Its Managing Member | |
By | Värde Partners, Inc., Its General Partner | |
THE VÄRDE FUND XII (mASTER), L.P. | ||
B y | The Värde Fund XII G.P., L.P., Its General Partner | |
By: | The Värde Fund XII UGP, LLC, its General Partner | |
By | Värde Partners, L.P., Its Managing Member | |
By | Värde Partners, Inc., Its General Partner |
ANNEX I
[Attached]
SCHEDULE 2.01
COMMITMENTS
Term Loan
Lender
|
Term Loan Commitment Amount | Term Loan Commitment Percentage |
The VÄRDE Fund VI-A, L.P. | $2,400,000.00 | 3.0% |
VÄRDE INVESTMENT PARTNERS, L.P. | $5,440,000.00 | 6.8% |
THE VÄRDE FUND XI (MASTER), L.P. | $33,280,000.00 | 41.6% |
VÄRDE investment partners (offshore) master, L.p.
|
$4,800,000.00 | 6.0% |
THE VÄRDE SKYWAY Master fund, L.P.
|
$10,400,000.00 | 13.0% |
THE VÄRDE FUND XII (mASTER), L.P.
|
$23,680,000.00 | 29.6% |
TOTAL: | $80,000,000.00 | 100% |
Lender
|
Delayed Draw Term Loan Commitment Amount | Delayed Draw Term Loan Commitment Percentage |
The VÄRDE Fund VI-A, L.P. | $2,100,000.00 | 3.0% |
VÄRDE INVESTMENT PARTNERS, L.P. | $4,760,000.00 | 6.8% |
THE VÄRDE FUND XI (MASTER), L.P. | $29,120,000.00 | 41.6% |
VÄRDE investment partners (offshore) master, L.p.
|
$4,200,000.00 | 6.0% |
THE VÄRDE SKYWAY Master fund, L.P.
|
$9,100,000.00 | 13.0% |
THE VÄRDE FUND XII (mASTER), L.P.
|
$20,720,000.00 | 29.6% |
TOTAL: | $70,000,000.00 | 100% |
Exhibit 99.1
LLEX:NYSE American
LILIS ENERGY PROVIDES THIRD QUARTER OPERATIONS AND CORPORATE UPDATE
· | Completed first round of recently announced acquisitions totaling ~4,100 net acres, bringing total net acreage to ~15,400, an increase of over 50% from the second quarter of 2017 |
· | The Wildhog #1H recorded an IP30 day rate of 839 BOE/D (83% Liquids) |
· | The Prizehog BWZ State Com #1H and Tiger #1H are on flow back producing hydrocarbons |
· | Lucid Energy Delaware, LLC. long-term gas gathering, processing, and purchase agreement is expected to tie in New Mexico production November 15, 2017 with Texas commencing in early December 2017, resolving transitory production curtailment issues completely in 2018 |
· | Production guidance of 5,000 – 5,300 BOE/D expected January 2018 |
· | Liquidity enhancements announced – funding of the Company through 2018 |
SAN ANTONIO, TEXAS – November 14, 2017 – Lilis Energy, Inc. (NYSE American: LLEX), an exploration and development company operating in the Permian Basin of West Texas, today announced a third quarter operations and corporate update.
“We are extremely pleased with the substantial progress Lilis has made in continuing to develop our pure play Delaware Basin growth story. Our well results continue to be among the best in the Delaware Basin; our acreage position is being further delineated, as evidenced by the results from our development program and we continue to expand our acreage position on an accretive basis, which now stands at ~15,400 net acres and growing,” said Ron Ormand, Executive Chairman. “With a comprehensive midstream solution in place and added liquidity, management believes the Company is well positioned to deliver continued growth in shareholder value.”
Leasehold Activity
§ | Added over 4,100 net contiguous / overlapping acres located in the core of the Delaware Basin |
§ | Surpassed 15,000 acreage goal |
§ | Approximately 15,400 net Delaware Basin acres |
§ | Acquisition pipeline remains very active with 1,000 – 1,500 net acres expected to be added in the near future |
§ | Added over 150 net potential locations to inventory |
§ | Over 900 net potential locations |
Lilis Energy continued its active leasing program in the third quarter by expanding its footprint through bolt-on acquisitions and organic leasing programs. The most significant acquisition, announced on October 10, 2017, which includes ~ 4,000 net acres and ~ 92% of this acreage overlaps our current gross acreage position. We completed our initial purchase of ~3,200 acres in this acquisition on November 9, 2017. The Company remains focused on making accretive acquisitions that enhance its current acreage position while providing extensive drilling inventories. Based on our current pipeline, management expect to add an additional 1,000 - 1,500 net acre in the near future.
“This quarter has far exceeded our internal expectations for leasehold acquisition as we were able to surpass our 2017 year end acreage guidance within the third quarter. The Company continues to remain focused on coring up our existing position, gaining additional operational control and expanding our core assets in the Delaware Basin,” said Seth Blackwell, Executive Vice President of Land and Business Development.
Financial & Liquidity Update
On November 10, 2017, the Company entered into definitive agreements with Värde Partners, Inc. and certain affiliated private funds to expand its $125 million second lien, convertible term loan by $25 million to total capacity of $150 million. The additional capacity was made available on the same terms and conditions as the existing second lien term loan. The Company also drew down an additional $15 million on its first lien term loan in October 2017. Net proceeds from the expansion of the second lien facility and draw down on the first lien term loan will be used to fund continued accretive leasehold acquisitions and general corporate purposes.
In October, Lilis initiated its active hedging program with swap transactions covering oil volumes between November 1, 2017 and June 30, 2018. Volumes underlying the hedge will average 525 barrels per day (bpd) during the 61 days ending December 31, 2017, and will average 415 bpd between January 1 and June 30, 2018. The swap price of $50.74 applies to all hedge volumes covered by the transaction. The Company expects to add hedges on an opportunistic basis in the future in order to manage risk and as market conditions warrant
“During the third quarter we have been able to further strengthen our balance sheet and liquidity in a cost effective manner. Our additional financing will allow us to take advantage of opportunities to further accretively expand our acreage position and support our drilling program through 2018. Värde Partners continues to be supportive of the continued growth and material enhancement of our liquidity position”, said Joe Daches, Chief Financial Officer of Lilis Energy.
Delaware Basin Well Results
Lilis has drilled and completed five operated horizontal Wolfcamp B wells all with IP rates exceeding initial internal projections and amongst the highest IP per 1,000 ft. in the Delaware Basin. Lilis is currently flowing back its sixth and seventh Wolfcamp B horizontals wells, the Prizehog BWZ State Com #1H and the Tiger #1H, which are expecting 24-hour IP in the next 30 days. Lilis is currently completing its eighth operated Wolfcamp B horizontal well, the Kudu #2H.
Production Update:
*BOE/D based on three-stream production to account for liquids rich gas uplift.
For the third quarter of 2017, Lilis Energy’s average daily-realized sales were 1,675 net BOEPD. Based on wellhead producing potential, we have estimated the producing potential from the field is ~2,750 net BOEPD (1) . This production level reflects the effects of substantial curtailment issues experienced with our current midstream gatherer and, to a lesser extent, downtime experienced tying in new producing wells in Southeast New Mexico. This is a transitory issue which will be resolved once the Lucid system in fully operational. The curtailment issues currently experienced will begin to be alleviated starting November 15, 2017, with the initial New Mexico production coming on line. Lucid Energy’s midstream system is expected to be in place in Texas by approximately December 15, 2017, and the Company expects to reach full production capabilities by mid-January 2018. Upon full installation, the Lucid system will provide a permanent solution to Lilis’s transitory curtailment issues. Thus, the Company expects to obtain 5,000 - 5,300 BOE/D by mid-January 2018.
Brennan Short, Chief Operations Officer, commented, “We are extremely pleased with the well results from our current drilling program and believe we have significantly de-risked the eastern portion of our acreage position with the Wildhog results. In addition, our agreement with Lucid Energy provides a permanent midstream solution to meet our current and future production requirements, and thus providing the ability to add significant value to the Company”.
Highlights of Lilis’s well results are as follows:
· | The Bison #1H IP30 rate of 2,144 BOE/D – 74% Liquids |
· | The Bison #1H IP60 rate of 1,576 BOE/D – 74% Liquids |
· | The Bison #1H IP90 rate of 1,429 BOE/D – 78% Liquids |
The Bison #1H was turned to sales on January 19, 2017 and had a 24-hour rate of 2,375 BOE/D (7 5 % liquids) or 344 BOE/D per 1,000 lateral ft.
· | The Grizzly #1H IP30 rate of 1,323 BOE/D – 63% Liquids |
· | The Grizzly #1H IP60 rate of 1,016 BOE/D – 63% Liquids |
· | The Grizzly #1H IP90 rate of 901 BOE/D – 67% Liquids |
The Grizzly #1H was turned to sales on February 9, 2017 and had a 24-hour rate of 1,666 BOE/D (6 5 % liquids) or 406 BOE/D per 1,000 lateral ft.
· | The Hippo #1H IP30 rate 1,506 BOE/D – 76% Liquids |
· | The Hippo #1H IP60 rate 1,292 BOE/D – 75% Liquids |
· | The Hippo #1H IP90 rate 1106 BOE/D – 75% Liquids |
The Hippo #1H was turned to sales on April 14, 2017 and had a 24-hour rate of 1,917 BOE/D (74% liquids) or 367 BOE/D per 1,000 lateral ft.
· | The Lion #1H IP30 rate 1264 BOE/D – 68% Liquids |
· | The Lion #1H IP60 rate 1023 BOE/D – 67% Liquids |
The Lion #1H was turned to sales on June 26, 2017 and had a 24-hour rate of 1,530 BOE/D (69% liquids) or 380 BOE/D per 1,000 lateral ft.
· | The Wildhog BWX State Com #1H IP30 rate 839 BOE/D – 83% Liquids |
The Wildhog BWX State Com #1H was turned to sales on August 18, 2017 and had a 24-hour rate of 997 BOE/D (86% liquids) or 219 BOE/D per 1,000 lateral ft.
(1) See Production Curtailment Overview section for detailed production figures
Completion Operations:
· | The Prizehog BWZ State Com #1H – Currently on well test producing hydrocarbons |
o | Expect to reach an 24-hour IP in the next 30 days |
o | Drilled to a total measured depth of 17,421 ft. Production casing has been run and cemented |
o | 23 Stages, 200 ft plug-to-plug spacing, 2103 lbs/ft sand, 4,580 ft treated lateral |
· | The Tiger #1H – Currently on well test |
o | Expect to reach an 24-hour IP in the next 45 days |
o | Drilled to a total measured depth of 16,542 ft. Production casing has been run and cemented |
o | 21 Stages, 200 ft plug-to-plug spacing, 2,056 lbs/ft sand, 4,115 ft treated lateral |
· | The Kudu #2H – Currently fracture stimulating the well |
o | Drilled to a total measured depth of 15,247 ft. Production casing has been run and cemented |
o | Planned for 24 Stages, 200 ft plug-to-plug spacing, 2,200 lbs/ft sand, 4,935 ft treated lateral |
o | Currently pumping stage 14 |
Drilling Operations:
· | The Grizzly #2H – Drilling ahead at total measured depth of 7,323 ft. |
· | The Lion #3H – Drilling ahead at total measured depth of 9,730 ft. |
The Company will spud three additional wells this year: Camel #1H mid-December 2017, Meerkat #1H mid-December 2017, and the AG Hill #1H early December 2017.
Lucid Gas Gathering, Gas Processing, and Purchase Agreement
During the third quarter of 2017, production was impacted by natural gas pipeline take-away limitations. The limitations were mainly due to gas gather compressor downtime, lack of sufficient gas treatment capabilities, and gathering line capacity issues. In response to these developments, the Company is implementing a substantially improved midstream solution through agreements with Lucid Energy, which will resolve our production capacity issues. Natural gas flare permits have also been secured to maximize oil production during the construction and transition time prior to becoming 100% operational with Lucid Energy. As a result of this temporary flaring when necessary, any casing head gas and NGL’s that will be flared will not be accounted for in production sales volumes during this transitional period.
On August 10, 2017, we entered into a long-term gas gathering, processing and purchase agreement with Lucid Energy Delaware, LLC, to support Lilis’s active drilling program in the Delaware Basin. Lucid will receive, gather and process Lilis’s committed gas production from certain production areas located in Lea County, New Mexico and in Loving and Winkler counties, Texas. This agreement will allow for superior take away capacity for our Delaware Basin assets. We expect our Southeast New Mexico properties dedicated to Lucid will be selling gas by November 15, 2017, with initial Texas production by December 15, 2017 and unconstrained field production across all of the Lilis properties by January 2018. As a result, we anticipate net production levels of ~5,000 – 5,300 BOE/D by mid-January 2018.
Production Curtailment Overview
Statement of Operations for Three Months Ending September 30, 2017
As reported in the Company’s Form 10-Q filed on November 14, 2017, Lilis’s reported total revenue was approximately $13.7 million for the nine months ended September 30, 2017 as compared to approximately $2.1 million for the nine months ended September 30, 2016, representing an increase of approximately $11.6 million. The higher revenues were primarily driven by an increase in liquid heavy production from the Company’s Delaware Basin properties.
Production costs were approximately $4.8 million for the nine months ended September 30, 2017, compared to approximately $1.0 million for the nine months ended September 30, 2016, an increase of approximately $3.8 million. Production costs per BOE increased to $12.41 for the nine months ended September 30, 2017 from $13.41 for the nine months ended June 30, 2016, a decrease of $1.00 per BOE, or -7%. The decrease in production costs per BOE was primarily due to increased production volumes associated with the producing wells in the Delaware Basin.
Statement of Operations for Nine Months Ended September 30, 2017
Description | September 30, 2017 | September 30, 2016 | Value incr (decr) | & Incr (decr) | ||||||||||||
Product Volumes: | ||||||||||||||||
Oil Sales (Bbl) | 243,369 | 44,711 | 198,658 | 444% | ||||||||||||
Natural Gas (MCFE)-volume | 574,485 | 183,337 | 391,148 | 213% | ||||||||||||
Product Sales (BOE) | 54,743 | 6,259 | 48,484 | 775% | ||||||||||||
BOE | 393,859 | 81,526 | 312,333 | 383% | ||||||||||||
BOE/D | 1,442.71 | 299 | 1,144 | 383% | ||||||||||||
Revenues: | ||||||||||||||||
Oil | $ | 11,040 | $ | 1,655 | $ | 9,385 | 567% | |||||||||
Natural Gas | 1,631 | 436 | 1,195 | 274% | ||||||||||||
Product Sales (BOE) | 1,108 | 89 | 1,019 | 1145% | ||||||||||||
Total Revenue | $ | 13,779 | $ | 2,180 | $ | 11,599 | 532% | |||||||||
Oil (Bbls)-average price | $ | 45.36 | $ | 37.03 | $ | 8.33 | 22% | |||||||||
Natural Gas (MCFE)-average price | $ | 2.84 | $ | 2.37 | $ | 0.47 | 20% | |||||||||
Product Sales (BOE) - average price | $ | 20.23 | $ | 14.24 | $ | 5.99 | 42% | |||||||||
Total Revenue/BOE | $ | 34.98 | $ | 26.74 | $ | 8.24 | 31% | |||||||||
LOE | $ | 4,178 | $ | 978 | $ | 3,200 | 327% | |||||||||
Production Tax | 709 | 115 | 594 | 517% | ||||||||||||
LOE & Production Tax | $ | 4,887 | $ | 1,093 | $ | 3,794 | 347% | |||||||||
LOE/BOE | $ | 12.41 | $ | 13.41 | $ | (1.00 | ) | -7% | ||||||||
Operating Income | $ | 8,892 | $ | 1,087 | $ | 7,805 | 718% |
About Lilis Energy, Inc.
Lilis Energy, Inc. is a San Antonio-based independent oil and gas exploration and production company that operates in the Permian’s Delaware Basin, considered amongst the leading resource plays in North America. Lilis’s total net acreage in the Permian Basin is over 15,000 acres. Lilis Energy's near-term E&P focus is to grow current reserves and production and pursue strategic acquisitions in its core areas. For more information, please visit www.lilisenergy.com.
Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These risks include, but are not limited to our ability to replicate the results described in this release for future wells; the ability to finance our continued exploration, drilling operations and working capital needs, all the other uncertainties, costs and risks involved in exploration and development activities; and the other risks identified in the Company’s Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission (the “SEC”). Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date hereof, and the Company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.
Forward-looking statements regarding expected production levels are based upon our estimates of the successful completion of drilled wells on schedule and the timely completion of construction and hook-up of the Lucid midstream system to provide additional take-away capacity
Actual sales production rates from our wells can vary considerably from tested initial production (IP) rates and are subject to natural decline rates over the life of the well.
Contact:
Wobbe Ploegsma
V.P. Finance & Capital Markets
210-999-5400, ext. 31