UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): March 20, 2018

 

 

TPG PACE ENERGY HOLDINGS CORP.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-38083   81-5365682

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

301 Commerce Street, Suite 3300

Fort Worth, Texas 76102

(address of principal executive offices)

(zip code)

(212) 405-8458

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  Written communication 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-commencements 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

Business Combination Agreements

On March 20, 2018, TPG Pace Energy Holdings Corp., a Delaware corporation (the “ Company ”), entered into the following agreements:

 

    a Contribution and Merger Agreement (the “ Eagle Ford Contribution Agreement ”) by and among the Company, TPG Pace Energy Parent LLC, a Delaware limited liability company and direct wholly owned subsidiary of the Company (“ Pace LLC ”), EnerVest Energy Institutional Fund XIV-A, L.P., a Delaware limited partnership (“ EV XIV-A ”), EnerVest Energy Institutional Fund XIV-WIC, L.P., a Delaware limited partnership (“ EV XIV-WIC ”), EnerVest Energy Institutional Fund XIV-2A, L.P., a Delaware limited partnership (“ EV XIV-2A ”), EnerVest Energy Institutional Fund XIV-3A, L.P., a Delaware limited partnership (“ EV XIV-3A ”), and EnerVest Energy Institutional Fund XIV-C, L.P., a Delaware limited partnership (“ EV XIV-C ” and, together with EV XIV-A, EV XIV-WIC, EV XIV-2A and EV XIV-3A, the “ Eagle Ford Contributors ”, and each an “ Eagle Ford Contributor ”), pursuant to which the Company will acquire all of the Eagle Ford Contributors’ collective rights, title and interest in certain oil and natural gas assets located primarily in the Karnes County portion of the Eagle Ford Shale in South Texas (the “ Eagle Ford Assets ”);

 

    a Purchase and Sale Agreement (the “ Austin Chalk Purchase Agreement ”) by and among the Pace LLC, EnerVest Energy Institutional Fund XI-A, L.P., a Delaware limited partnership (“ EV XI-A ”), EnerVest Energy Institutional Fund XI-WI, L.P., a Delaware limited partnership (“ EV XI-WI ”), EnerVest Holding, L.P., a Texas limited partnership (“ EV Holding ”) and EnerVest Wachovia Co-Investment Partnership, L.P., a Delaware limited partnership (“ EV Co-Invest ” and, together with EV XI-A, EV XI-WI and EV Holding, the “ Austin Chalk Sellers ”), pursuant to which the Company will acquire all of the Austin Chalk Sellers’ collective rights, title and interest in certain oil and natural gas assets located in the Giddings Field of the Austin Chalk (the “ Austin Chalk Assets ”); and

 

    a Membership Interest Purchase Agreement (the “ Ironwood MIPA ” and, together with the Eagle Ford Contribution Agreement and the Austin Chalk Purchase Agreement, the “ Business Combination Agreements ” and the transactions contemplated thereby, the “ business combination ”) by and among Pace LLC, EV XIV-A, EV XIV-WIC and EV XIV-C (collectively, the “ Ironwood Sellers ” and, together with the Eagle Ford Contributors and the Austin Chalk Sellers, the “ Sellers ”), pursuant to which the Company will acquire approximately 35% of the membership interests (the “ Ironwood Interests ” and together with the Eagle Ford Assets and the Austin Chalk Assets, the “ Acquired Assets ”) in Ironwood Eagle Ford Midstream, LLC, a Texas limited liability company (“ Ironwood ”), an Eagle Ford gathering system.

Pursuant to the Business Combination Agreements, the Company will contribute cash, shares of the Company’s Class B common stock, par value $0.0001 per share (the “ Class  B Common Stock ”), and, if the Eagle Ford Contributors make certain elections pursuant to the Eagle Ford Contribution Agreement as described therein, shares of Class A Common Stock, par value $0.0001 per share (the “ Class  A Common Stock ” and, together with the Class B Common Stock, the “ Stock ”), to Pace LLC in exchange for units representing membership interests in Pace LLC (the “ Pace Units ”). Following the closing of the business combination (the “ Closing ”), the Company will control Pace LLC as the sole managing member.

Pursuant to the Business Combination Agreements, at the Closing, the Sellers will receive aggregate consideration of approximately $2.42 billion, consisting of not less than approximately $950 million in cash and the remainder to be paid in Stock (based on a $10.00 per share price), subject to customary purchase price adjustments as further described in the Business Combination Agreements (including the reimbursement by the Company to the Eagle Ford Contributors of costs associated with a recent acquisition of assets that will be included in the Eagle Ford Assets). The Company may, in its sole discretion, elect to increase the cash consideration payable to the Eagle Ford Contributors (and thereby reducing the equity consideration). The Eagle Ford Contributors may elect to receive shares of Class A Common Stock and/or Class B Common Stock, and in the event that the Eagle Ford Contributors elect to receive shares of Class B Common Stock, they will also receive an equal number of Pace Units.

 

2


For a period following the Closing until December 31, 2021, the Eagle Ford Contributors will be entitled to receive an aggregate of up to 13,000,000 additional shares of Stock in earn-out consideration based on certain EBITDA and free cash flow or stock price thresholds (the “ Eagle Ford Earnout ”).

For a period of five years following the Closing, the Austin Chalk Sellers will be entitled to receive an aggregate of up to $47 million in cash earn-out payments based on certain net revenue thresholds.

Representations, Warranties and Covenants

Each of the Business Combination Agreements contains customary representations and warranties by the parties thereto, as more particularly set forth in the applicable Business Combination Agreement.

Each of the Business Combination Agreements also contains customary pre-closing covenants of the parties, including the obligation of the Sellers to own and (where applicable) operate their respective assets in the ordinary course consistent with past practice and to refrain from taking certain specified actions, subject to certain exceptions, without the prior written consent of the Company and/or Pace LLC. Additionally, the Sellers have agreed not to directly or indirectly solicit, negotiate or enter into any agreement with any other person relating to an acquisition of any of the applicable Acquired Assets. Similarly, the Company has agreed not to solicit, negotiate or enter into any agreement with respect to any acquisition of assets with a purchase price in excess of $200 million or an acquisition of all or substantially all of the assets or equity securities of the Company, in each case without the Eagle Ford Contributors’ prior written consent.

Conditions to the Parties’ Obligations to Consummate the Business Combination

Under the Business Combination Agreements, the obligations of the applicable parties to consummate the business combination are subject to a number of customary conditions, including, among others, as applicable, the following: (i) the absence of specified adverse laws or orders, (ii) if applicable, the expiration of the waiting period (or extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (iii) the representations and warranties of the other party being true and correct, subject to the materiality standards contained in the applicable Business Combination Agreement, (iv) material compliance by the other parties with their respective covenants, (v) the approval for listing on the NYSE of the shares of Class A Common Stock issuable to the Eagle Ford Contributors pursuant to the Eagle Ford Contribution Agreement, (vi) the approval of the business combination and certain changes to the certificate of incorporation of the Company (as further described in the Eagle Ford Contribution Agreement) by the Company’s stockholders, (vii) the Company having at least $610 million of Available Cash (as defined in the Eagle Ford Contribution Agreement) and (viii) the aggregate value of adjustments to the purchase price attributable to title defects, environmental defects, un-obtained consents to assignment, exercise of preferential purchase rights, and casualty losses not exceeding an amount equal to 20% of the applicable purchase price. The obligations of the Company and Pace LLC (but not the Eagle Ford Contributors) to consummate the transactions contemplated by the Eagle Ford Contribution Agreement are conditioned upon the closing of the transactions contemplated by the Austin Chalk Purchase Agreement. The obligations of Pace LLC (but not the Austin Chalk Sellers) to consummate the transactions contemplated by the Austin Chalk Purchase Agreement conditioned upon the closing of the transactions contemplated by the Eagle Ford Contribution Agreement. The obligations of the parties to consummate the transactions contemplated by the Ironwood MIPA are conditioned upon the closing of the transactions contemplated by the Eagle Ford Contribution Agreement.

Termination Rights

Each of the Business Combination Agreements contains certain customary termination rights, including, among others, the following: (i) if the closing of the applicable transaction is not consummated by October 31, 2018 (the “ End Date ”), subject to certain extensions; (ii) upon the applicable parties’ mutual written consent; (iii) if the consummation of the applicable transaction is prohibited by law; (iv) breach of a representation, warranty, covenant or other agreement by a party which has not been cured by the earlier of (x) 5 business days prior to the End Date or (y) 30 days following written notice from the other party of such breach; (v) in the case of the Eagle Ford Contribution Agreement, (x) by the Company if the Austin Chalk Purchase Agreement has been terminated in accordance with its terms or (y) by the Eagle Ford Contributors if the Board has changed its recommendation for the Company’s stockholders to approve the business combination, (vi) in the case of the Austin Chalk Purchase Agreement, (x) by Pace LLC if the Eagle Ford Contribution Agreement has been terminated in accordance with its terms or (vii) in the case of the Ironwood MIPA, by any party if the Eagle Ford Contribution Agreement has been terminated in accordance with its terms.

 

3


None of the parties to the Business Combination Agreements is required to pay a termination fee or reimburse any other party for its expenses as a result of a termination of the applicable Business Combination Agreement.

Indemnification

Under the Eagle Ford Contribution Agreement and the Austin Chalk Purchase Agreement, the Eagle Ford Contributors and the Austin Chalk Sellers, as applicable, will indemnify the Company for any losses relating to (i) a breach of any representation or warranty of the Eagle Ford Contributors or Austin Chalk Sellers, as applicable, other than fundamental representations and warranties and representations and warranties relating to tax matters, for a period of 12 months following Closing; (ii) breaches of fundamental representations and warranties of the Eagle Ford Contributors or Austin Chalk Sellers, as applicable, for a period of three years following Closing; (iii) breaches of representations and warranties of the Eagle Ford Contributors or Austin Chalk Sellers, as applicable, related to tax matters for a period equal to the applicable statute of limitations plus 60 days; (iv) breaches of any pre-Closing covenant of the Eagle Ford Contributors or Austin Chalk Sellers, as applicable, for a period of 12 months following Closing; (v) breaches of any post-Closing covenants of the Eagle Ford Contributors or Austin Chalk Sellers, as applicable; (vi) Specified Obligations (as defined in the Eagle Ford Contribution Agreement or Austin Chalk Purchase Agreement, as applicable) with respect to royalties for a period of two years following Closing; (vii) other Specified Obligations for a period of 12 months following Closing; and (viii) Retained Obligations (as defined in the Eagle Ford Contribution Agreement or Austin Chalk Purchase Agreement, as applicable). Additionally, the Company will indemnify the Eagle Ford Contributors or Austin Chalk Sellers, as applicable, for any losses relating to a breach of any of its representations, warranties or covenants and Assumed Obligations (as defined in the Eagle Ford Contribution Agreement or Austin Chalk Purchase Agreement, as applicable).

Under the Ironwood MIPA, the Ironwood Sellers will indemnify the Company for any losses relating to (i) a breach of any covenant or agreement of the Ironwood Sellers for a period of 12 months following Closing; (ii) a breach of any representation or warranty of the Ironwood Sellers for a period of 12 months following Closing; (iii) breaches of fundamental representations and warranties of the Ironwood Sellers for a period of three years following Closing; (iv) and Retained Taxes (as defined in the Ironwood MIPA) for which the Company is obligated to indemnify or make a contribution to Ironwood; (v) certain litigation matters described in Schedule 3.7 to the Ironwood MIPA; and (vi) any Indebtedness of Ironwood existing at any time from and after the Effective Time until the Execution Date (as such terms are defined in the Ironwood MIPA) in an amount greater than that set forth on Schedule 3.22 to the Ironwood MIPA, the amount for with the Ironwood Sellers will be responsible being equal to such excess Indebtedness multiplied by 0.35. Furthermore, for a period of 12 months following Closing, the Company will indemnify the Ironwood Sellers for any losses relating to (i) a breach of any of its representations, warranties, or covenants; and (ii) the Company’s ownership of the Units, regardless of whether such Liabilities arose prior to, on or after the Effective Time, or Ironwood’s ownership of the Midstream System, the Midstream System Interests or any other assets of the Midstream Business for Liabilities arising on or after Closing (as such terms are defined in the Ironwood MIPA).

The indemnification obligations of the Eagle Ford Contributors set forth above with respect to a breach of any non-fundamental representation or warranty are subject to a de minimis threshold of $100,000, an aggregate deductible equal to 1.5% of the consideration payable to the Eagle Ford Contributors and a cap equal to 15% of the consideration payable to the Eagle Ford Contributors. The indemnification obligations of the Austin Chalk Sellers set forth above with respect to a breach of any non-fundamental representation or warranty are subject to a de minimis threshold of $100,000, an aggregate deductible equal to 2% of the consideration payable to the Austin Chalk Sellers and a cap equal to 15% of the consideration payable to the Austin Chalk Sellers. The indemnification obligations of the Ironwood Sellers set forth above with respect to a breach of any non-fundamental representation or warranty are subject to a de minimis threshold of $100,000, an aggregate deductible equal to 2% of the consideration payable to the Ironwood Sellers and a cap equal to 15% of the consideration payable to the Ironwood Sellers.

 

4


Other Ancillary Agreements

The Business Combination Agreements contemplate the execution by the parties of various agreements at the Closing, including, among others, (i) a stockholder agreement, (ii) a registration rights agreement relating to the resale of the shares of Class A Common Stock issuable to any of the Sellers, (iii) a services agreement and (iv) a non-competition agreement.

Stockholder Agreement

Concurrently with Closing, the Company, TPG Pace Energy Sponsor, LLC, a Delaware limited liability company (“ TPG Sponsor ”), and the Eagle Ford Contributors will enter into a Stockholder Agreement (the “ Stockholder Agreement ”) which will govern certain rights and obligations following the Closing.

Under the Stockholder Agreement, the Eagle Ford Contributors will be entitled to nominate two directors for appointment to the Board of Directors of the Company (the “ Board ”) so long as they own 15% of the outstanding Stock, one of whom shall be independent, and one director so long as they own 2% of the outstanding Stock. TPG Sponsor will be entitled to nominate two directors for appointment to the Board so long as it owns 60% of the Stock that it owns at Closing, and one director so long as it owns 25% of the Stock that it owns at Closing. The remainder of the Board at Closing shall include Stephen Chazen, the Chief Executive Officer of the Company, and two independent directors mutually nominated by the Eagle Ford Contributors and TPG Sponsor. The Eagle Ford Contributors and TPG Sponsor will each be entitled to appoint one director to each committee of the Board (subject to applicable law and stock exchange rules). For so long as the Eagle Ford Contributors or TPG Sponsor, as applicable, have the right to nominate two directors to the Board, the Eagle Ford Contributors or TPG Sponsor, as applicable, will be subject to a customary “standstill.” The Stockholder Agreement will terminate in its entirety on December 31, 2022.

Services Agreement

Concurrently with the Closing, the Company and EnerVest Operating L.L.C. (“ EVOC ”) will enter into a Services Agreement (the “ Services Agreement ”) pursuant to which EVOC will provide the Company all day-to-day field level and back office operations and support for the operation and development of the Company’s assets, subject to certain exceptions. The Services Agreement will not be terminable by the Company for two years, subject to certain early termination rights. Following any termination of the Services Agreement, EVOC will provide transition services for a period of nine months, which may be reduced in certain instances. As consideration for the services to be provided under the Services Agreement, EVOC will be paid an annual net general and administrative fee from the Company of approximately $31 million, comprised of an approximate $24 million fixed per year fee and an approximate $7 million per year fee that is adjusted in accordance with industry standard inflationary measures. The general and administrative fee is subject to certain increases or decreases related to acquisitions and dispositions and/or failure to provide required services.

Non-Competition Agreement

Concurrently with the Closing, the Company and EnerVest Ltd. (“ EV Ltd. ”) will enter into a Non-Competition Agreement (the “ Non-Compete ) restricting EV Ltd. and certain of its affiliates from competing with

 

5


the Company in the Eagle Ford Shale (the “ Restricted Area ”) following the Closing until the later of the four year anniversary of the Closing and the date the Services Agreement is terminated. EV Ltd. will have the right to receive up to 4,000,000 shares of Class A Common Stock based on the achievement of certain stock price thresholds. The Non-Compete also provides for (i) certain co-investment rights for EV Ltd. and certain of its affiliates with respect future acquisitions by the Company in the Restricted Area, (ii) a right of first offer in favor of the Company on certain sales by EV Ltd. and its affiliates in the Restricted Area, (iii) a tag-along right for EV Ltd. and its affiliates on certain sales by the Company in the Restricted Area and (iv) the ability of the Company to drag-along EV Ltd. and its affiliates on certain sales by the Company in the Restricted Area.

Registration Rights Agreement

Concurrently with the Closing, the Company, TPG Sponsor, the Eagle Ford Contributors and the Company’s four independent directors, Arcilia Acosta, Edward Djerejian, Chad Leat and Dan F. Smith (collectively, the “ Holders ”), will enter into a registration rights agreement (the “ Registration Rights Agreement ”), pursuant to which the Company will be obligated, subject to the terms thereof and in the manner contemplated thereby, to register for resale under the Securities Act of 1933, as amended (the “ Securities Act ”), all or any portion of the shares of Class A Common Stock that the Holders hold as of the date of such agreement and that they may acquire thereafter, including upon conversion, exchange or redemption of any other security therefor. The Company has agreed to use its commercially reasonable efforts to obtain the effectiveness of a registration statement (i) with respect to the first demand by a Holder therefor, within six (6) months after the Closing, and (ii) with respect to subsequent demands by Holders therefor, upon, or as soon as practicable following, the filing thereof, and to keep it continuously effective until such date on which the shares covered by such registration statement are no longer registrable securities. Under the Registration Rights Agreement, Holders will also have “piggyback” registration rights exercisable at any time that allow them to include the shares of Class A Common Stock that they own in certain registrations initiated by the Company. The Holders also have customary rights to effect certain shelf take-downs, underwritten offerings and block trades. In the event that the sale of registered securities under a registration statement would require disclosure of certain material non-public information not otherwise required to be disclosed, the Company may postpone the effectiveness of the applicable registration statement or require the suspension of sales thereunder. No such blackout period may continue for more than sixty (60) consecutive calendar days or more than ninety (90) total calendar days, in each case during any twelve-month period.

Pursuant to the Registration Rights Agreement, certain of the Holders will agree not to sell, transfer or otherwise dispose of any securities of the Company (a) for a period of six months from the Closing and (b) for so long as the Registration Rights Agreement remains in effect with respect to such Holder, if such sale, transfer or distribution would constitute or result in a “change of control” under any of the Company’s debt facilities in place as of the Closing.

Subscription Agreements

In connection with its entry into the Business Combination Agreement, the Company entered into Subscription Agreements (the “ Subscription Agreements ”), each dated as of March 20, 2018, with certain qualified institutional buyers and accredited investors, including certain funds and accounts managed by Fidelity Management & Research Company, Davis Selected Advisers, L.P. and certain funds managed by Capital Research and Management Company, TPG Holdings III, L.P., an affiliate of TPG Sponsor (“ TPG Holdings ”), and Stephen Chazen, the Company’s President, Chief Executive Officer and Chairman (collectively, the “ Investors ”), pursuant to which, among other things, the Company agreed to issue and sell in a private placement an aggregate of 35,500,000 shares of Class A Common Stock to the Investors for aggregate consideration of approximately $355,000,000 (the “ Private Placement ”). The proceeds from the Private Placement will be used to fund a portion of the cash consideration required to effect the business combination. The Private Placement is conditioned upon the satisfaction or waiver of all conditions precedent to the closing of the transactions contemplated by the Eagle Ford Contribution Agreement and other customary conditions, and is expected to close concurrently with, the business combination.

Pursuant to the Subscription Agreements, the Investors will be entitled to certain registration rights, subject to customary black-out periods and other limitations as set forth therein. In addition, the Investors, other than TPG Holdings and Mr. Chazen, will be entitled to liquidated damages payable by the Company in certain circumstances, including in the event that (a) a registration statement for the shares of Class A Common Stock issued in the Private Placement has not been declared effective by the U.S. Securities and Exchange Commission (the “ SEC ”) within 90

 

6


days following the closing of the transactions contemplated by the Eagle Ford Contribution Agreement or 10 days following the date the SEC notifies the Company that the registration statement will not be reviewed or will not be subject to further review, whichever date is earlier, (b) following the effectiveness of the registration statement, the registration statement ceases to be effective or the Investors are not permitted to utilize the registration statement to resell their acquired shares of Class A Common Stock, subject to a special grace period for post-effective amendments or (c) after six months following the closing of the transactions contemplated by the Eagle Ford Contribution Agreement, the Investor Members who are not affiliates of the Company are unable to sell their acquired shares of Class A Common Stock without restriction under Rule 144 of the Securities Act as a result of the Company failing to file with the SEC required reports under Section 13 or Section 15(d) of the Exchange Act of 1934, as amended (the “ Exchange Act ”) (each such event referred to in clauses (a) through (c), a “ Registration Default ”). The Subscription Agreements provide that liquidated damages will be payable monthly by the Company during the time of a Registration Default in the amount of 0.5% of the purchase price paid by the applicable Investor for its acquired shares of Class A Common Stock, subject to a cap of 5.0%.

The foregoing description of the Subscription Agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the form of Subscription Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K (this “ Current Report ”) and is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities

The disclosure set forth above in Item 1.01 of this Current Report under “Business Combination Agreements” is incorporated by reference herein. Pursuant to the Business Combination Agreements (including the Eagle Ford Earnout) and the Non-Compete, the Company is required, subject to the conditions set forth therein, to issue certain shares of Stock to the applicable parties. The Stock to be issued will not be registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

The disclosure set forth above in Item 1.01 of this Current Report under “Subscription Agreements” is incorporated by reference herein. The shares of the Class A Common Stock to be issued pursuant to the Subscription Agreements will not be registered under the Securities Act, in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act.

 

Item 7.01 Regulation FD Disclosure

On March 20, 2018, the Company and the Sellers announced that they had entered into the Business Combination Agreements. A copy of the joint press release is furnished as Exhibit 99.1 hereto.

On March 20, 2018, the Company provided information regarding the proposed business combination in an investor presentation, a copy of which is furnished as Exhibit 99.2 hereto.

The information furnished in this Item 7.01 (including the exhibits) shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act or the Exchange Act.

 

Item 8.01 Other Events

Commitment Papers

On March 20, 2018, TPG Pace Energy Operating LLC, a Delaware limited liability company and indirect wholly owned subsidiary of the Company (“ Opco ”), entered into a commitment letter (the “ Debt Commitment Letter ”) with the lenders party thereto (collectively, the “ Commitment Parties ”), pursuant to which the Commitment Parties committed to make available to Opco in accordance with the terms of the Debt Commitment Letter, on the date of Closing, a senior secured reserve-based revolving credit facility in the aggregate principal amount of $1,000 million (the “ RBL Facility ”) and a senior unsecured increasing rate bridge loan facility in an aggregate principal amount of up to $500 million (less any proceeds received from the issuance of senior unsecured notes on or prior to the Closing Date) (the “ Senior Bridge Facility ”). The RBL Facility is expected to have availability of $385 million on the date of Closing and an initial borrowing base of $550 million. The proceeds of the borrowings under the RBL Facility and the Senior Bridge Facility and/or from the issuance of senior notes and/or securities (if applicable) will be used, together with the proceeds of the Private Placement and the cash in the trust account, to finance the cash portion of the consideration and the costs and the expenses of the business combination.

 

7


Waiver Agreement

In connection with the business combination, on March 20, 2018, the Company entered into the Waiver Agreement (the “ Waiver Agreement ”) with TPG Sponsor and certain other holders of the Company’s Class F Common Stock, par value $0.0001 per share (the “ Class  F Common Stock ”), pursuant to which TPG Sponsor and such other holders agreed to waive their rights to receive additional shares of Class A Common Stock upon conversion of the shares of Class F Common Stock in connection with the business combination pursuant to certain adjustments provided for in the Company’s Amended and Restated Certificate of Incorporation.

 

Item 9.01 Financial Statements and Exhibits

(d)    Exhibits. The following exhibits are filed with this Form 8-K:

 

Exhibit

    No.    

  

Description of Exhibits

10.1    Form of Subscription Agreement, dated as of March 20, 2018, by and between TPG Pace Energy Holdings Corp. and the subscriber named therein.
99.1    Press Release dated March 20, 2018.
99.2    Investor Presentation dated March 20, 2018.

Legend Information

Forward-Looking Statements

The information in this Current Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. All statements, other than statements of present or historical fact included in this Current Report, regarding the proposed business combination, the Company’s ability to consummate the business combination, the benefits of the transaction and the Company’s future financial performance following the business combination, as well as the Company’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward looking statements. When used in this Current Report, including any oral statements made in connection therewith, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Current Report. The Company

 

8


cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Company, incident to the development, production, fathering and sale of oil, natural gas and natural gas liquids. In addition, the Company cautions you that the forward-looking statements contained in this Current Report are subject to the following factors: (i) the occurrence of any event, change or other circumstances that could delay the business combination or give rise to the termination of the Business Combination Agreements; (ii) the outcome of any legal proceedings that may be instituted against the Company following announcement of the business combination; (iii) the inability to complete the business combination due to the failure to obtain approval of the stockholders of the Company, or other conditions to closing in the Business Combination Agreements; (iv) the risk that the proposed business combination disrupts current plans and operations of the Company as a result of the announcement and consummation of the business combination; (v) the Company’s ability to realize the anticipated benefits of the business combination, which may be affected by, among other things, competition and the ability of the Company to grow and manage growth profitably following the business combination; (vi) costs related to the business combination; (vii) changes in applicable laws or regulations; and (viii) the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors. Should one or more of the risks or uncertainties described in this Current report, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact the operations and projections discussed herein can be found in its periodic filings the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The Company’s SEC Filings are available publicly on the SEC’s website at www.sec.gov.

No Offer or Solicitation

This Current Report is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities pursuant to the proposed business combination or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

Important Information For Investors and Stockholders

In connection with the proposed business combination, the Company intends to file a proxy statement with the SEC. The definitive proxy statement and other relevant documents will be sent or given to the stockholders of the Company and will contain important information about the proposed business combination and related matters. The Company stockholders and other interested persons are advised to read, when available, the proxy statement in connection with the Company’s solicitation of proxies for the meeting of stockholders to be held to approve the business combination because the proxy statement will contain important information about the proposed business combination. When available, the definitive proxy statement will be mailed to the Company stockholders as of a record date to be established for voting on the business combination. Stockholders will also be able to obtain copies of the proxy statement, without charge, once available, at the SEC’s website at www.sec.gov . In addition, stockholders will be able to obtain free copies of the proxy statement by directing a request to: TPG Pace Energy Holdings Corp., 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102, email: media@mgyoil.com , Attn: Mike Gehrig.

Participants in the Solicitation

The Company and its directors and officers may be deemed participants in the solicitation of proxies of the Company’s stockholders in connection with the proposed business combination. The Company stockholders and other interested persons may obtain, without charge, more detailed information regarding the directors and officers of the Company in the Company’s Registration Statement on Form S-1 initially filed with the SEC on April 17, 2017. Additional information will be available in the definitive proxy statement when it becomes available.

 

9


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.

 

    TPG Pace Energy Holdings Corp.
Date: March 20, 2018     By:  

/s/ Stephen Chazen

    Name:   Stephen Chazen
    Title:   President and Chief Executive Officer

Exhibit 10.1

SUBSCRIPTION AGREEMENT

This SUBSCRIPTION AGREEMENT (this “ Subscription Agreement ”) is entered into this 20th day of March, 2018, by and among TPG Pace Energy Holdings Corp., a Delaware corporation (the “ Issuer ”), and [            ] (“ Subscriber ”).

WHEREAS, TPG Pace Energy Parent LLC, a Delaware limited liability company and a wholly owned subsidiary of the Issuer (“ TPGE Parent LLC ”), has entered into the Contribution and Merger Agreement, dated March 20, 2018 (as may be amended or supplemented from time to time, the “ Contribution Agreement ”), by and among the Issuer and TPGE Parent LLC, on the one part, and EnerVest Energy Institutional Fund XIV-A, L.P., a Delaware limited partnership (“ EV XIV-A ”), EnerVest Energy Institutional Fund XIV-WIC, L.P., a Delaware limited partnership (“ EV XIV-WIC ”), EnerVest Energy Institutional Fund XIV-2A, L.P., a Delaware limited partnership (“ EV XIV-2A ”), EnerVest Energy Institutional Fund XIV-3A, L.P., a Delaware limited partnership (“ EV XIV-3A ”), and EnerVest Energy Institutional Fund XIV-C, L.P., a Delaware limited partnership (“ EV XIV-C ” and, together with EV XIV-A, EV XIV-WIC, EV XIV-2A and EV XIV-3A, the “ Contributors ”), on the other part, pursuant to which TPGE Parent LLC will acquire certain oil and gas assets in the Eagle Ford Shale from the Contributors on the terms and subject to the conditions set forth therein (the “ Transaction ”);

WHEREAS, substantially contemporaneously with its entry into the Contribution Agreement, TPGE Parent LLC entered into (i) the Purchase and Sale Agreement, dated March 20, 2018 (as may be amended or supplemented from time to time, the “ Giddings PSA ”), by and among TPGE Parent LLC, on the one part, and EnerVest Energy Institutional Fund XI-A, L.P., a Delaware limited partnership (“ EV XI-A ”), EnerVest Energy Institutional Fund XI-WI, L.P., a Delaware limited partnership (“ EV XI-WI ” and, together with EV XI-A, the “ Fund Sellers ” and each a “ Fund Seller ”), EnerVest Wachovia Co-Investment Partnership, L.P., a Delaware limited partnership (the “ Co-Invest Seller ” and collectively with the Fund Sellers, the “ Giddings Sellers ”), on the other part, pursuant to which TPGE Parent LLC will acquire certain oil and gas assets in the Giddings Field of the Austin Chalk from the Giddings Sellers on the terms and subject to the conditions set forth therein (the “ Giddings Asset Purchase ”); and (ii) the Membership Interest Purchase Agreement, dated March 20, 2018 (as may be amended or supplemented from time to time, the “ Ironwood MIPA ” and, together with the Giddings PSA, the “ Related Transaction Agreements ”), by and among TPGE Parent LLC, on the one part, and EV XIV-A and EV XIV-WIC (together with EV XIV-A, the “ Ironwood Sellers ”), on the other part, pursuant to which TPGE Parent LLC will acquire from the Ironwood Sellers an approximate 35% membership interest in Ironwood Eagle Ford Midstream, LLC, a Texas limited liability company (the “ Ironwood Purchase ” and, together with the Giddings Asset Purchase, the “ Related Transactions ”);

WHEREAS, in connection with the Transaction, Subscriber desires to subscribe for and purchase from the Issuer that number of shares of the Issuer’s Class A common stock, par value $0.0001 per share (the “ Class  A Shares ”), set forth on the signature page hereto (the “ Acquired Shares ”) for a purchase price of $10.00 per share, or the aggregate purchase price set forth on the signature page hereto (the “ Purchase Price ”), and the Issuer desires to issue and sell to Subscriber the Acquired Shares in consideration of the payment of the Purchase Price by or on behalf of Subscriber to the Issuer on or prior to the Closing (as defined below); and


WHEREAS, in connection with the Transaction, certain other “accredited investors” (as such term is defined in Rule 501 under the Securities Act of 1933, as amended (the “ Securities Act ”)), have entered into subscription agreements with the Issuer substantially similar to this Subscription Agreement, pursuant to which such investors have agreed to purchase on the Closing Date [            ] Class A Shares, in the aggregate, at the Purchase Price (the “ Other Subscription Agreements ”).

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:

1.     Subscription . Subject to the terms and conditions hereof, Subscriber hereby agrees to subscribe for and purchase, and the Issuer hereby agrees to issue and sell to Subscriber, upon the payment of the Purchase Price, the Acquired Shares (such subscription and issuance, the “ Subscription ”).

2.     Closing .

a.    The closing of the Subscription contemplated hereby (the “ Closing ”) is contingent upon the substantially concurrent consummation of the Transaction and shall occur immediately prior thereto. Not less than five (5) business days prior to the scheduled closing date of the Transaction (the “ Closing Date ”), the Issuer shall provide written notice to Subscriber (the “ Closing Notice ”) of such Closing Date. On the Closing Date, the Issuer shall deliver to Subscriber (i) the Acquired Shares in certificated or book entry form (at Subscriber’s election), free and clear of any liens or other restrictions whatsoever (other than those arising under state or federal securities laws), in the name of Subscriber (or its nominee in accordance with its delivery instructions) or to a custodian designated by Subscriber, as applicable and (ii) a copy of the records of the Issuer’s transfer agent (the “ Transfer Agent ”) showing Subscriber as the owner of the Acquired Shares on and as of the Closing Date. Upon confirmation of receipt of the share certificate or records of the Transfer Agent, Subscriber shall deliver to the Issuer on the Closing Date the Purchase Price for the Acquired Shares by wire transfer of U.S. dollars in immediately available funds to the account specified by the Issuer in the Closing Notice. In the event the Transaction does not occur within one (1) business day of the Closing, the Issuer shall promptly (but not later than two (2) business days thereafter) return the Purchase Price to Subscriber, and any book entries or share certificates shall be deemed cancelled and any share certificates shall be promptly (but not later than two (2) business days thereafter) returned to the Issuer.

b.    The Closing shall be subject to the conditions that, on the Closing Date:

(i)    no suspension of the qualification of the Acquired Shares for offering or sale or trading in any jurisdiction, or initiation or threatening of any proceedings for any of such purposes, shall have occurred;

 

2


(ii)    all representations and warranties of the Issuer and Subscriber contained in this Subscription Agreement shall be true and correct in all material respects as of the Closing Date, and consummation of the Closing shall constitute a reaffirmation by each of the Issuer and Subscriber of each of the representations, warranties and agreements of each such party contained in this Subscription Agreement as of the Closing Date;

(iii)    the Issuer shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing;

(iv)    no governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise preventing or prohibiting consummation of the transactions contemplated hereby, and no governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such prevention or prohibition;

(v)    neither the Contribution Agreement nor the Related Transaction Agreements shall have been amended to materially adversely affect Subscriber; and

(vi)    all conditions precedent to the closing of the Transaction, including the approval of the Issuer’s shareholders, shall have been satisfied or waived (other than those conditions that may only be satisfied at the closing of the Transaction, but subject to satisfaction of such conditions as of the closing of the Transaction).

c.    At the Closing, the parties hereto shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the Subscription as contemplated by this Subscription Agreement.

3.     Issuer Representations and Warranties . The Issuer represents and warrants that:

a.    The Issuer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted and to enter into, deliver and perform its obligations under this Subscription Agreement.

b.    The Acquired Shares have been duly authorized and, when issued and delivered to Subscriber against full payment for the Acquired Shares in accordance with the terms of this Subscription Agreement and registered with the Transfer Agent, the Acquired Shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Issuer’s certificate of incorporation and bylaws or under the laws of the State of Delaware.

c.    This Subscription Agreement has been duly authorized, executed and delivered by the Issuer and is enforceable against it in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

 

3


d.    The execution, delivery and performance of this Subscription Agreement (including compliance by the Issuer with all of the provisions hereof), issuance and sale of the Acquired Shares and the consummation of the other transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Issuer pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Issuer is a party or by which the Issuer is bound or to which any of the property or assets of the Issuer is subject, which would reasonably be expected to have a material adverse effect on the business, properties, financial condition, stockholders’ equity or results of operations of the Issuer (a “ Material Adverse Effect ”) or materially affect the validity of the Acquired Shares or the legal authority of the Issuer to comply in all material respects with the terms of this Subscription Agreement; (ii) the organizational documents of the Issuer; or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Issuer or any of its properties that would reasonably be expected to have a Material Adverse Effect or materially affect the validity of the Acquired Shares or the legal authority of the Issuer to comply in all material respects with this Subscription Agreement.

e.    There are no securities or instruments issued by or to which the Issuer is a party containing anti-dilution or similar provisions that will be triggered by the issuance of (i) the Acquired Shares or (ii) the shares to be issued pursuant to any Other Subscription Agreement that have not been or will not be validly waived on or prior to the Closing Date.

f.    The Issuer is not in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of (i) the organizational documents of the Issuer, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, permit, franchise or license to which the Issuer is now a party or by which the Issuer’s properties or assets are bound or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Issuer or any of its properties, except, in the case of clauses (ii) and (iii), for defaults or violations that have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

g.    The Issuer is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance by the Issuer of this Subscription Agreement (including, without limitation, the issuance of the Acquired Shares), other than (i) the filing with the Securities and Exchange Commission (the “ Commission ”) of the Registration Statement (as defined below), (ii) filings required by applicable state securities laws, (iii) the filing of a Notice of Exempt Offering of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) the filings required in accordance with Section  8(n) of this Subscription Agreement; (v) those required by the New York Stock Exchange (the “ NYSE ”), including with respect to obtaining stockholder approval, and (vi) the failure of which to obtain would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

 

4


h.    The authorized capital stock of the Issuer consists of (i) 1,000,000 shares of preferred stock, par value $0.0001 per share (“ Preferred Stock ”), (ii) 200,000,000 Class A Shares and (iii) 20,000,000 shares of Class F common stock, par value $0.0001 per share (“ Class  F Shares ”). As of the date hereof: (i) no shares of Preferred Stock are issued and outstanding, (ii) 65,000,000 Class A Shares are issued and outstanding, (iii) 16,250,000 Class F Shares are issued and outstanding and (iv) 21,666,666.6667 redeemable purchase warrants and 10,000,000 private placement warrants are outstanding.

i.    The Issuer has not received any written communication since December 31, 2017, from a governmental entity that alleges that the Issuer is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect.

j.    The issued and outstanding Class A Shares are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and are listed for trading on the NYSE under the symbol “TPGE”. There is no suit, action, proceeding or investigation pending or, to the knowledge of the Issuer, threatened against the Issuer by the NYSE or the Commission with respect to any intention by such entity to deregister the Class A Shares or prohibit or terminate the listing of the Class A Shares on the NYSE. The Issuer has taken no action that is designed to terminate the registration of the Class A Shares under the Exchange Act.

k.    Assuming the accuracy of Subscriber’s representations and warranties set forth in Section  4 of this Subscription Agreement, no registration under the Securities Act is required for the offer and sale of the Acquired Shares by the Issuer to Subscriber.

l.    Neither the Issuer nor any person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) in connection with any offer or sale of the Acquired Shares.

m.    The Issuer has not entered into any side letter or similar agreement with any investor in connection with such investor’s direct or indirect investment in the Issuer other than (i) the Contribution Agreement and the Related Transaction Agreements and (ii) the Other Subscription Agreements relating to the issuance and sale by the Issuer of Class A Shares at the Purchase Price.

n.    The Issuer has made available to Subscriber (including via the Commission’s EDGAR system) a copy of each form, report, statement, schedule, prospectus, proxy, registration statement and other document, if any, filed by the Issuer with the Commission since its initial registration of the Class A Shares (the “ SEC Documents ”). None of the SEC Documents filed under the Exchange Act contained, when filed or, if amended, as of the date of such amendment with respect to those disclosures that are amended, any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided , that the Issuer makes no such representation or warranty with respect to the proxy statement to be filed by the Issuer with respect to the Transaction or any other

 

5


information relating to EnerVest, Ltd. or any of its affiliates included in any SEC Document or filed as an exhibit thereto. The Issuer has timely filed each report, statement, schedule, prospectus, and registration statement that the Issuer was required to file with the Commission since its inception. There are no material outstanding or unresolved comments in comment letters from the Commission Staff with respect to any of the SEC Documents.

o.    Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, there is no (i) Proceeding (as defined in the Contribution Agreement) pending, or, to the knowledge of the Issuer, threatened against the Issuer or (ii) judgment, decree, injunction, ruling or order of any governmental entity or arbitrator outstanding against the Issuer.

p.    The Issuer has not paid, and is not obligated to pay, any brokerage, finder’s or other fee or commission in connection with its issuance and sale of the Acquired Shares, including, for the avoidance of doubt, any fee or commission payable to any stockholder or affiliate of the Issuer.

4.     Subscriber Representations and Warranties . Subscriber represents and warrants that:

a.    Subscriber has been duly formed or incorporated and is validly existing in good standing under the laws of its jurisdiction of incorporation or formation, with power and authority to enter into, deliver and perform its obligations under this Subscription Agreement.

b.    This Subscription Agreement has been duly authorized, executed and delivered by Subscriber. This Subscription Agreement is enforceable against Subscriber in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

c.    The execution, delivery and performance by Subscriber of this Subscription Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Subscriber or any of its subsidiaries pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Subscriber or any of its subsidiaries is a party or by which Subscriber or any of its subsidiaries is bound or to which any of the property or assets of Subscriber or any of its subsidiaries is subject, which would reasonably be expected to have a material adverse effect on the business, properties, financial condition, stockholders’ equity or results of operations of Subscriber and any of its subsidiaries, taken as a whole (a “ Subscriber Material Adverse Effect ”), or materially affect the legal authority of Subscriber to comply in all material respects with the terms of this Subscription Agreement; (ii) the organizational documents of Subscriber; or (iii) any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Subscriber or any of its subsidiaries or any of their respective properties that would reasonably be expected to have a Subscriber Material Adverse Effect or materially affect the legal authority of Subscriber to comply in all material respects with this Subscription Agreement.

 

6


d.    Subscriber (i) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) or an institutional “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) satisfying the applicable requirements set forth on Schedule A , (ii) is acquiring the Acquired Shares only for its own account and not for the account of others, or if Subscriber is subscribing for the Acquired Shares as a fiduciary or agent for one or more investor accounts, each owner of such account is a qualified institutional buyer and Subscriber has full investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, and (iii) is not acquiring the Acquired Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act (and shall provide the requested information on Schedule A following the signature page hereto). Subscriber is not an entity formed for the specific purpose of acquiring the Acquired Shares.

e.    Subscriber understands that the Acquired Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Acquired Shares have not been registered under the Securities Act. Subscriber understands that the Acquired Shares may not be resold, transferred, pledged or otherwise disposed of by Subscriber absent an effective registration statement under the Securities Act, except (i) to the Issuer or a subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (iii) pursuant to Rule 144 under the Securities Act, provided that all of the applicable conditions thereof have been met or (iv) pursuant to another applicable exemption from the registration requirements of the Securities Act, and that any certificates or book-entry records representing the Acquired Shares shall contain a legend to such effect. Subscriber acknowledges that the Acquired Shares will not be eligible for resale pursuant to Rule 144A promulgated under the Securities Act. Subscriber understands and agrees that the Acquired Shares will be subject to transfer restrictions and, as a result of these transfer restrictions, Subscriber may not be able to readily resell the Acquired Shares and may be required to bear the financial risk of an investment in the Acquired Shares for an indefinite period of time. Subscriber understands that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Acquired Shares.

f.    Subscriber understands and agrees that Subscriber is purchasing the Acquired Shares directly from the Issuer. Subscriber further acknowledges that there have been no representations, warranties, covenants and agreements made to Subscriber by the Issuer or any of its officers or directors, expressly or by implication, other than those representations, warranties, covenants and agreements included in this Subscription Agreement.

g.    Subscriber represents and warrants that its acquisition and holding of the Acquired Shares will not constitute or result in a non-exempt prohibited transaction under section 406 of the Employee Retirement Income Security Act of 1974, as amended, section 4975 of the Internal Revenue Code of 1986, as amended (the “ Code ”), or any applicable similar law.

 

7


h.    In making its decision to purchase the Acquired Shares, Subscriber represents that it has relied solely upon independent investigation made by Subscriber. Subscriber acknowledges and agrees that Subscriber has received such information as Subscriber deems necessary in order to make an investment decision with respect to the Acquired Shares, including with respect to the Issuer, the Transaction and the Related Transactions. Subscriber represents and agrees that Subscriber and Subscriber’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as Subscriber and such Subscriber’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Acquired Shares.

i.    Subscriber became aware of this offering of the Acquired Shares solely by means of direct contact between Subscriber and the Issuer, and the Acquired Shares were offered to Subscriber solely by direct contact between Subscriber and the Issuer. Subscriber did not become aware of this offering of the Acquired Shares, nor were the Acquired Shares offered to Subscriber, by any other means. Subscriber acknowledges that the Issuer represents and warrants that the Acquired Shares (i) were not offered by any form of general solicitation or general advertising and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws.

j.    Subscriber acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Acquired Shares. Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Acquired Shares, and Subscriber has sought such accounting, legal and tax advice as Subscriber has considered necessary to make an informed investment decision.

k.    Alone, or together with any professional advisor(s), Subscriber represents and acknowledges that Subscriber has adequately analyzed and fully considered the risks of an investment in the Acquired Shares and determined that the Acquired Shares are a suitable investment for Subscriber and that Subscriber is able at this time and in the foreseeable future to bear the economic risk of a total loss of Subscriber’s investment in the Issuer. Subscriber acknowledges specifically that a possibility of total loss exists.

l.    Subscriber understands and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Acquired Shares or made any findings or determination as to the fairness of this investment.

m.    Subscriber represents and warrants that Subscriber is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons, the Executive Order 13599 List, the Foreign Sanctions Evaders List, or the Sectoral Sanctions Identification List, each of which is administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“ OFAC ”) (collectively “ OFAC Lists ”), (ii) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List; (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States, (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (v) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (collectively, a “ Prohibited Investor ”). Subscriber represents

 

8


that if it is a financial institution subject to the Bank Secrecy Act (31 U.S.C. section 5311 et seq.) (the “ BSA ”), as amended by the USA PATRIOT Act of 2001 (the “ PATRIOT Act ”), and its implementing regulations (collectively, the “ BSA/PATRIOT Act ”), that Subscriber maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. Subscriber also represents that, to the extent required, it maintains policies and procedures reasonably designed to ensure compliance with OFAC-administered sanctions programs, including for the screening of its investors against the OFAC Lists. Subscriber further represents and warrants that, to the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held by Subscriber and used to purchase the Acquired Shares were legally derived.

n.    If Subscriber is an employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “ Similar Laws ”), or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “ Plan ”) subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, Subscriber represents and warrants that (i) neither Issuer, nor any of its respective affiliates (the ” Transaction Parties ”) has acted as the Plan’s fiduciary, or has been relied on for advice, with respect to its decision to acquire and hold the Acquired Shares, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Acquired Shares; (ii) the decision to invest in the Acquired Shares has been made at the recommendation or direction of an “independent fiduciary” (“ Independent Fiduciary ”) within the meaning of US Code of Federal Regulations 29 C.F.R. section 2510.3 21(c), as amended from time to time (the “ Fiduciary Rule ”) who is (A) independent of the Transaction Parties; (B) is capable of evaluating investment risks independently, both in general and with respect to particular transactions and investment strategies (within the meaning of the Fiduciary Rule); (C) is a fiduciary (under ERISA and/or section 4975 of the Code) with respect to Subscriber’s investment in the Acquired Shares and is responsible for exercising independent judgment in evaluating the investment in the Acquired Shares; and (D) is aware of and acknowledges that (I) none of the Transaction Parties is undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the purchaser’s or transferee’s investment in the Acquired Shares, and (II) the Transaction Parties have a financial interest in the purchaser’s investment in the Acquired Shares on account of the fees and other remuneration they expect to receive in connection with transactions contemplated hereunder.

o.    Subscriber has, and at the Closing will have, sufficient funds to pay the Purchase Price pursuant to Section  2(a) .

 

9


5.     Registration Rights .

a.    The Issuer agrees that, within thirty (30) calendar days after the consummation of the Transaction (the “ Filing Date ”), the Issuer will file with the Commission (at the Issuer’s sole cost and expense) a registration statement registering the resale of the Acquired Shares (the “ Registration Statement ”), and the Issuer shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i) the 90th calendar day (or 120th calendar day if the Commission notifies the Issuer that it will “review” the Registration Statement) following the Closing and (ii) the 10th business day after the date the Issuer is notified (orally or in writing, whichever is earlier) by the Commission that the Registration Statement will not be “reviewed” or will not be subject to further review (such earlier date, the “ Effectiveness Date ”); provided, however , that the Issuer’s obligations to include the Acquired Shares in the Registration Statement are contingent upon Subscriber furnishing in writing to the Issuer such information regarding Subscriber, the securities of the Issuer held by Subscriber and the intended method of disposition of the Acquired Shares as shall be reasonably requested by the Issuer to effect the registration of the Acquired Shares, and Subscriber shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary of a selling stockholder in similar situations, including providing that the Issuer shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement during any customary blackout or similar period or as permitted hereunder. For purposes of clarification, any failure by the Issuer to file the Registration Statement by the Filing Date or to effect such Registration Statement by the Effectiveness Date shall not otherwise relieve the Issuer of its obligations to file or effect the Registration Statement as set forth above in this Section  5 .

b.    The Issuer further agrees that, in the event that (i) the Registration Statement has not been declared effective by the Commission by the Effectiveness Date, (ii) after such Registration Statement is declared effective by the Commission, (A) such Registration Statement ceases for any reason (including by reason of a stop order, or the Issuer’s failure to update the Registration Statement), to remain continuously effective as to all Acquired Shares for which it is required to be effective or (B) Subscriber is not permitted to utilize the Registration Statement to resell the Acquired Shares (in each case of (A) and (B), (x) other than within the time period(s) permitted by this Subscription Agreement and (y) excluding by reason of a post-effective amendment required in connection with the Issuer’s filing of an amendment thereto (a “ Special Grace Period ”) (which Special Grace Period shall not be treated as a Registration Default (as defined below)), or (iii) after the date six months following the Closing Date, and only in the event the Registration Statement is not effective or available to sell all Acquired Shares, the Issuer fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable), as a result of which Subscribers who are not affiliates of the Issuer are unable to sell the Acquired Shares without restriction under Rule 144 (or any successor thereto) (each such event referred to in clauses (i) through (iii), a “ Registration Default ” and, for purposes of such clauses, the date on which such Registration Default occurs, a “ Default Date ”), then in addition to any other rights Subscriber may have hereunder or under applicable law, on each such Default Date and on each monthly anniversary of each such Default Date (if the applicable Registration Default shall not have been cured by such date) until the applicable Registration Default is cured, the Issuer shall pay to each Subscriber an amount in cash, as partial liquidated damages and not as a penalty (“ Liquidated Damages ”), equal to 0.5% of the aggregate Purchase Price paid by Subscriber pursuant to this Subscription Agreement for any Acquired Shares held

 

10


by Subscriber on the Default Date; provided, however, that if Subscriber fails to provide the Issuer with any information requested by the Issuer that is required to be provided in such Registration Statement with respect to Subscriber as set forth herein, then, for purposes of this Section  5 , the Filing Date or Effectiveness Date, as applicable, for a Registration Statement with respect to Subscriber shall be extended until two (2) business days following the date of receipt by the Issuer of such required information from Subscriber; and in no event shall the Issuer be required hereunder to pay to Subscriber pursuant to this Subscription Agreement an aggregate amount that exceeds 5.0% of the aggregate Purchase Price paid by Subscriber for its Acquired Shares. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of a Registration Default, except in the case of the first Default Date. The Issuer shall deliver the cash payment to Subscriber with respect to any Liquidated Damages by the fifth business day after the date payable. If the Issuer fails to pay said cash payment to Subscriber in full by the fifth business day after the date payable, the Issuer will pay interest thereon at a rate of 5.0% per annum (or such lesser maximum amount that is permitted to be paid by applicable law, and calculated on the basis of a year consisting of 360 days) to such Subscriber, accruing daily from the date such Liquidated Damages are due until such amounts, plus all such interest thereon, are paid in full. Notwithstanding the foregoing, nothing shall preclude any Subscriber from pursuing or obtaining any available remedies at law, specific performance or other equitable relief with respect to this Section  5 in accordance with applicable law. The parties agree that notwithstanding anything to the contrary herein, no Liquidated Damages shall be payable to Subscriber with respect to any period during which all of such Subscriber’s Acquired Shares may be sold by Subscriber without volume or manner of sale restrictions under Rule 144 and the Issuer is in compliance with the current public information requirements under Rule 144(c)(1) (or Rule 144(i)(2), if applicable).

c.    In the case of the registration, qualification, exemption or compliance effected by the Issuer pursuant to this Subscription Agreement, the Issuer shall, upon reasonable request, inform Subscriber as to the status of such registration, qualification, exemption and compliance. At its expense the Issuer shall:

(i)    except for such times as the Issuer is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, use its commercially reasonable efforts to keep such registration, and any qualification, exemption or compliance under state securities laws which the Issuer determines to obtain, continuously effective with respect to Subscriber, and to keep the applicable Registration Statement or any subsequent shelf registration statement free of any material misstatements or omissions, until the earlier of the following: (i) Subscriber ceases to hold any Acquired Shares or (ii) the date all Acquired Shares held by Subscriber may be sold without restriction under Rule 144, including without limitation, any volume and manner of sale restrictions which may be applicable to affiliates under Rule 144 and without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable), and (iii) three years from the Effective Date of the Registration Statement. The period of time during which the Issuer is required hereunder to keep a Registration Statement effective is referred to herein as the “ Registration Period ”;

 

11


(ii)    advise Subscriber within five (5) business days:

(1)    when a Registration Statement or any amendment thereto has been filed with the Commission and when such Registration Statement or any post-effective amendment thereto has become effective;

(2)    of any request by the Commission for amendments or supplements to any Registration Statement or the prospectus included therein or for additional information;

(3)    of the issuance by the Commission of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose;

(4)    of the receipt by the Issuer of any notification with respect to the suspension of the qualification of the Acquired Shares included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(5)    subject to the provisions in this Subscription Agreement, of the occurrence of any event that requires the making of any changes in any Registration Statement or prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading.

Notwithstanding anything to the contrary set forth herein, the Issuer shall not, when so advising Subscriber of such events, provide Subscriber with any material, nonpublic information regarding the Issuer other than to the extent that providing notice to Subscriber of the occurrence of the events listed in (1) through (5) above constitutes material, nonpublic information regarding the Issuer;

(iii)    use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable;

(iv)    upon the occurrence of any event contemplated above, except for such times as the Issuer is permitted hereunder to suspend, and has suspended, the use of a prospectus forming part of a Registration Statement, the Issuer shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to such Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Acquired Shares included therein, such prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(v)    use its commercially reasonable efforts to cause all Acquired Shares to be listed on each securities exchange or market, if any, on which the Class A Shares issued by the Issuer have been listed; and

 

12


(vi)    use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Acquired Shares contemplated hereby and to enable Subscriber to sell the Acquired Shares under Rule 144.

d.    Notwithstanding anything to the contrary in this Subscription Agreement, the Issuer shall be entitled to delay or postpone the effectiveness of the Registration Statement, and from time to time to require Subscriber not to sell under the Registration Statement or to suspend the effectiveness thereof, if the negotiation or consummation of a transaction by the Issuer or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event the Issuer’s board of directors reasonably believes, upon the advice of legal counsel, would require additional disclosure by the Issuer in the Registration Statement of material information that the Issuer has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Issuer’s board of directors, upon the advice of legal counsel, to cause the Registration Statement to fail to comply with applicable disclosure requirements (each such circumstance, a “ Suspension Event ”); provided , however , that the Issuer may not delay or suspend the Registration Statement on more than two occasions or for more than sixty (60) consecutive calendar days, or more than ninety (90) total calendar days, in each case during any twelve-month period. Upon receipt of any written notice from the Issuer of the happening of any Suspension Event during the period that the Registration Statement is effective or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, Subscriber agrees that (i) it will immediately discontinue offers and sales of the Acquired Shares under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until Subscriber receives copies of a supplemental or amended prospectus (which the Issuer agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Issuer that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Issuer unless otherwise required by law or subpoena. If so directed by the Issuer, Subscriber will deliver to the Issuer or, in Subscriber’s sole discretion destroy, all copies of the prospectus covering the Acquired Shares in Subscriber’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Acquired Shares shall not apply (i) to the extent Subscriber is required to retain a copy of such prospectus (a) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (b) in accordance with a bona fide pre-existing document retention policy or (ii) to copies stored electronically on archival servers as a result of automatic data back-up.

e.    Subscriber may deliver written notice (including via email in accordance with Section  8(l) ) (an “ Opt-Out Notice ”) to the Issuer requesting that Subscriber not receive notices from the Issuer otherwise required by this Section  5 ; provided , however , that Subscriber may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from Subscriber (unless subsequently revoked), (i) the Issuer shall not deliver any such notices to Subscriber and Subscriber shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to Subscriber’s intended use of an effective Registration

 

13


Statement, Subscriber will notify the Issuer in writing at least two (2) business days in advance of such intended use, and if a notice of a Suspension Event was previously delivered (or would have been delivered but for the provisions of this Section  5(e) ) and the related suspension period remains in effect, the Issuer will so notify Subscriber, within one (1) business day of Subscriber’s notification to the Issuer, by delivering to Subscriber a copy of such previous notice of Suspension Event, and thereafter will provide Subscriber with the related notice of the conclusion of such Suspension Event immediately upon its availability.

6.     Termination . This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier to occur of (a) such date and time as the Contribution Agreement and each of the Related Transaction Agreements is terminated in accordance with its respective terms, (b) upon the mutual written agreement of each of the parties hereto to terminate this Subscription Agreement, (c) if any of the conditions to Closing set forth in Section  2 of this Subscription Agreement are not satisfied on or prior to the Closing and, as a result thereof, the transactions contemplated by this Subscription Agreement are not consummated at the Closing or (d) the End Date (as defined in the Contribution Agreement); provided , that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. The Issuer shall promptly notify Subscriber of the termination of the Contribution Agreement or either of the Related Transaction Agreements promptly after the termination of such agreement.

7.     Trust Account Waiver . Subscriber acknowledges that the Issuer is a blank check company with the powers and privileges to effect a merger, asset acquisition, reorganization or similar business combination involving the Issuer and one or more businesses or assets. Subscriber further acknowledges that, as described in the Issuer’s prospectus relating to its initial public offering dated May 4, 2017 (the “ Prospectus ”), available at www.sec.gov, substantially all of the Issuer’s assets consist of the cash proceeds of the Issuer’s initial public offering and private placements of its securities, and substantially all of those proceeds have been deposited in a trust account (the “ Trust Account ”) for the benefit of the Issuer, its public shareholders and the underwriters of the Issuer’s initial public offering. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Issuer to pay its tax obligations, if any, the cash in the Trust Account may be disbursed only for the purposes set forth in the Prospectus. For and in consideration of the Issuer entering into this Subscription Agreement, the receipt and sufficiency of which are hereby acknowledged, Subscriber, on behalf of itself and its representatives, hereby irrevocable waives any and all right, title and interest, or any claim of any kind they have or may have in the future arising out of this Subscription Agreement, in or to any monies held in the Trust Account, and agrees not to seek recourse against the Trust Account as a result of, or arising out of, this Subscription Agreement.

8.     Miscellaneous .

a.    Subscriber acknowledges that the Issuer and others will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Subscription Agreement. Prior to the Closing, Subscriber agrees to promptly notify the Issuer if any of the acknowledgments, understandings, agreements, representations and warranties set forth herein are no longer accurate in all material respects.

 

14


b.    Each of the Issuer and Subscriber is entitled to rely upon this Subscription Agreement and is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

c.    Neither this Subscription Agreement nor any rights that may accrue to Subscriber hereunder (other than the Acquired Shares acquired hereunder, if any) may be transferred or assigned. Neither this Subscription Agreement nor any rights that may accrue to the Issuer hereunder may be transferred or assigned.

d.    All the agreements, representations and warranties made by each party hereto in this Subscription Agreement shall survive the Closing.

e.    The Issuer may request from Subscriber such additional information as the Issuer may deem necessary to evaluate the eligibility of Subscriber to acquire the Acquired Shares, and Subscriber shall provide such information as may be reasonably requested, to the extent readily available and to the extent consistent with its internal policies and procedures.

f.    This Subscription Agreement may not be modified, waived or terminated except by an instrument in writing, signed by the party against whom enforcement of such modification, waiver, or termination is sought.

g.    This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.

h.    Except as otherwise provided herein, this Subscription Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.

i.    If any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.

j.    This Subscription Agreement may be executed in two (2) or more counterparts (including by electronic means), all of which shall be considered one and the same agreement and shall become effective when signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

k.    Subscriber shall pay all of its own expenses in connection with this Subscription Agreement and the transactions contemplated herein.

 

15


l.     Notices . Any notice or communication required or permitted hereunder shall be in writing and either delivered personally, emailed or telecopied, sent by overnight mail via a reputable overnight carrier, or sent by certified or registered mail, postage prepaid, and shall be deemed to be given and received (a) when so delivered personally, (b) upon receipt of an appropriate electronic answerback or confirmation when so delivered by telecopy (to such number specified below or another number or numbers as such person may subsequently designate by notice given hereunder), (c) when sent, with no mail undeliverable or other rejection notice, if sent by email, or (d) five (5) business days after the date of mailing to the address below or to such other address or addresses as such person may hereafter designate by notice given hereunder:

(i)    if to Subscriber, to such address or addresses set forth on the signature page hereto;

(ii)    if to the Issuer, to:

c/o TPG Pace Energy Holdings Corp.

301 Commerce St., Suite 3300

Fort Worth, TX 76102

Attn: General Counsel

Email: officeofgeneralcounsel@tpg.com

with a required copy to (which copy shall not constitute notice):

Vinson & Elkins L.L.P.

1001 Fannin Street, Suite 2500

Houston, TX 77002

Attention: Keith Fullenweider; Douglas E. McWilliams

Email: kfullenweider@velaw.com; dmcwilliams@velaw.com

m.    This Subscription Agreement, and any claim or cause of action hereunder based upon, arising out of or related to this Subscription Agreement (whether based on law, in equity, in contract, in tort or any other theory) or the negotiation, execution, performance or enforcement of this Subscription Agreement, shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the principles of conflicts of law thereof.

THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, THE SUPREME COURT OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS SUBSCRIPTION AGREEMENT AND THE DOCUMENTS REFERRED TO IN THIS SUBSCRIPTION AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH

 

16


DOCUMENT THAT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS SUBSCRIPTION AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH A NEW YORK STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 8(l) OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.

EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (II) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THE FOREGOING WAIVER; (III) SUCH PARTY MAKES THE FOREGOING WAIVER VOLUNTARILY AND (IV) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS SUBSCRIPTION AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 8(m) .

n.    The Issuer shall, by 9:00 a.m., New York City time, on the first (1st) business day immediately following the date of this Subscription Agreement, issue one or more press releases or file with the Commission a Current Report on Form 8-K (collectively, the “ Disclosure Document ”) disclosing all material terms of the transactions contemplated hereby, the Transaction, the Related Transactions and any other material, nonpublic information that the Issuer has provided to Subscriber at any time prior to the filing of the Disclosure Document. From and after the issuance of the Disclosure Document, to the Issuer’s knowledge, Subscriber shall not be in possession of any material, non-public information received from the Issuer or any of its officers, directors or employees. Notwithstanding anything in this Subscription Agreement to the contrary, the Issuer shall not publicly disclose the name of Subscriber or any of its affiliates, or include the name of Subscriber or any of its affiliates in any press release or in any filing with the Commission or any regulatory agency or trading market, without the prior written consent of Subscriber, except (i) as required by the federal securities law in connection with the Registration Statement, (ii) the filing of this Subscription Agreement with the Commission and in the related Current Report on Form 8-K in a manner acceptable to Subscriber, (iii) in a press

 

17


release or marketing materials of the Issuer in connection with the Transaction and the Related Transactions in a manner acceptable to Subscriber and (iv) to the extent such disclosure is required by law, at the request of the Staff of the Commission or regulatory agency or under the regulations of the NYSE, in which case the Issuer shall provide Subscriber with prior written notice of such disclosure permitted under this subclause (iv).

[Signature pages follow.]

 

18


IN WITNESS WHEREOF , each of the Issuer and Subscriber has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.

 

TPG PACE ENERGY HOLDINGS CORP.
By:      

 

Name:  
Title:  

Date:             , 2018

 

Signature Page to

Subscription Agreement


SUBSCRIBER:      
Signature of Subscriber:                              Signature of Joint Subscriber, if applicable:
By:  

 

       By:  

 

Name:          Name:  
Title:          Title:  
Date:             , 2018      
Name of Subscriber:       Name of Joint Subscriber, if applicable:

 

     

 

(Please print. Please indicate name and

capacity of person signing above)

     

(Please Print. Please indicate name and

capacity of person signing above)

 

     
Name in which securities are to be registered
(if different):
     
Email Address:      
If there are joint investors, please check one:      
☐ Joint Tenants with Rights of Survivorship      
Tenants-in-Common      
☐ Community Property      
Subscriber’s EIN:                               

Joint Subscriber’s EIN:

                        

Business Address-Street:       Mailing Address-Street (if different):

 

     

 

 

     

 

City, State, Zip:       City, State, Zip:
Attn:       Attn:

 

Signature Page to

Subscription Agreement


Telephone No.:                                                                  

  

Telephone No.:                                                                  

Facsimile No.:                                                                  

  

Facsimile No.:                                                                  

Aggregate Number of Acquired Shares subscribed for:

 

                                          ,

  

Aggregate Purchase Price: $                      .

You must pay the Purchase Price by wire transfer of United States dollars in immediately available funds to the account specified by the Issuer in the Closing Notice.

Number of Acquired Shares subscribed for and Aggregate Purchase Price as of             , 2018, accepted and agreed to as of this      day of             , 2018, by:

 

TPG PACE ENERGY HOLDINGS CORP.

By:

 

 

Name:

 

Title:

 
Signature of Subscriber:
[                              ]

By:

 

 

Name:

 

Title:

 

 

Signature Page to

Subscription Agreement


SCHEDULE A

ELIGIBILITY REPRESENTATIONS OF SUBSCRIBER

 

A. QUALIFIED INSTITUTIONAL BUYER STATUS
   (Please check the applicable subparagraphs):

 

  1. ☐ We are a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act (a “QIB”)).

 

  2. ☐ We are subscribing for the Acquired Shares as a fiduciary or agent for one or more investor accounts, and each owner of such account is a QIB.

*** OR ***

 

B. INSTITUTIONAL ACCREDITED INVESTOR STATUS
   (Please check the applicable subparagraphs):

 

  1. ☐ We are an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or an entity in which all of the equity holders are accredited investors within the meaning of Rule 501(a) under the Securities Act, and have marked and initialed the appropriate box on the following page indicating the provision under which we qualify as an “accredited investor.”

 

  2. ☐ We are not a natural person.

*** AND ***

 

C. AFFILIATE STATUS
   (Please check the applicable box)

 

   SUBSCRIBER:

 

  is:

 

  is not:

an “affiliate” (as defined in Rule 144 under the Securities Act) of the Issuer or acting on behalf of an affiliate of the Issuer.

This page should be completed by Subscriber

and constitutes a part of the Subscription Agreement.

 

Schedule A-1


Rule 501(a), in relevant part, states that an “accredited investor” shall mean any person who comes within any of the below listed categories, or who the issuer reasonably believes comes within any of the below listed categories, at the time of the sale of the securities to that person. Subscriber has indicated, by marking and initialing the appropriate box below, the provision(s) below which apply to Subscriber and under which Subscriber accordingly qualifies as an “accredited investor.”

☐ Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity;

☐ Any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934;

☐ Any insurance company as defined in section 2(a)(13) of the Securities Act;

☐ Any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act;

☐ Any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958;

☐ Any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000;

☐ Any employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

☐ Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;

☐ Any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; or

☐ Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in § 230.506(b)(2)(ii).

 

Schedule A-2

Exhibit 99.1

 

LOGO LOGO

TPG Pace Energy Holdings Announces $2.66 Billion Business Combination with EnerVest’s South Texas Division to Form Publicly Traded Magnolia Oil & Gas Corporation

Formation of Magnolia creates a large-scale, oil-weighted, pure-play South Texas independent oil and gas operator

Assets include top-tier positions in the Eagle Ford and Austin Chalk in the core of Karnes County and an extensive position in the Giddings Field, an emerging high-growth Austin Chalk play

TPGE Chairman and CEO Steve Chazen will lead Magnolia on a full-time basis and reunite with another Occidental Petroleum veteran, Christopher Stavros, who will become CFO

HOUSTON, March  20,  2018  –  TPG Pace Energy Holdings Corp. (“TPGE”) (NYSE: TPGE, TPGE.U, TPGE.WS), an energy-focused special purpose acquisition entity led by former Occidental Petroleum Corporation CEO Steve Chazen, today announced it has entered into definitive agreements with certain funds managed by EnerVest, Ltd (“EnerVest”) to acquire the oil and gas assets within EnerVest’s South Texas Division for approximately $2.66 billion in cash and stock. As part of the transaction, TPGE and EnerVest are partnering to create Magnolia Oil & Gas Corporation (“Magnolia”), a new company led by Chazen who will serve as Magnolia’s full-time Chairman, President and CEO. EnerVest will retain a significant ownership stake in Magnolia. The transaction is subject to approval by the TPGE shareholders and other customary closing conditions, and the new company will trade on the NYSE under a new ticker upon closing, which is expected to occur late in the second quarter of 2018.

The formation of Magnolia creates a large-scale, pure-play South Texas operator with top-tier Eagle Ford and Austin Chalk asset positions with more than 40,000 boe per day of production. Magnolia will acquire EnerVest’s approximately 360,000 total net acres in South Texas, which consists of approximately 14,000 net acres in one of the most prolific sections of Karnes County and 345,000 net acres in the emerging, high-growth potential Giddings Field. The acreage position is almost entirely held by production, and the production from the combined asset base is heavily weighted toward oil. We believe the combination of superior operating margins and attractive new well economics will allow Magnolia to deliver high-return, self-funded production growth and generate substantial free cash flow after drilling capital. In addition to Chazen’s leadership, Magnolia will benefit from the corporate support, experience and local knowledge of EnerVest’s South Texas team, which will continue to operate the assets following the closing of the transaction under a long-term services agreement with EnerVest.


TPG Pace Group and Chazen formed TPGE in early 2017 with the intent to build a large scale, focused oil and gas business with a meaningful production base, strong free cash flow and a disciplined financial return philosophy. Following its IPO in May 2017, TPGE began its search for attractive assets that would benefit from Chazen’s operating approach and succeed as a public company with low leverage. A veteran of the oil and gas sector, Chazen has an established track record with more than 25 years of experience implementing disciplined growth strategies and generating shareholder value in the public markets. Upon closing, Chazen will be joined by his long-time colleague and business partner, Christopher Stavros, who will serve as the company’s Chief Financial Officer. Most recently, Stavros served as CFO of Occidental Petroleum Corporation. Chazen and Stavros share the philosophy of generating attractive full-cycle returns while maintaining a strong balance sheet with low leverage.

“In creating Magnolia, we have a unique opportunity to build a new company anchored by what we consider to be some of the highest quality oil producing acreage in the country,” said Chazen. “We believe Magnolia’s acreage in Karnes County has some of the best economics in the United States and, when coupled with the upside in the Giddings Field, is a great fit with our criteria. Our objective is to maximize shareholder returns by generating steady production growth, strong pre-tax margins in excess of industry norms and significant free cash flow. Assuming moderate commodity prices, we plan to invest less than 60% of cash flow to fund a drilling program that consistently delivers more than 10% annual production growth. I look forward to leading this rigorous capital allocation process at Magnolia for the benefit of our shareholders and employees.”

“I have known Steve for more than 20 years and I cannot think of a better executive to lead Magnolia,” said EnerVest CEO and founder John B. Walker. “The playbook he perfected at OXY is a great match for the outstanding acreage we have assembled in South Texas over the last 10 years. All of us at EnerVest look forward to partnering with Steve as he builds Magnolia going forward.”

“We formed TPGE with Steve to build a differentiated oil and gas asset that was positioned for success in the public markets,” said Michael MacDougall, Senior Partner of TPG and Managing Partner for TPG Pace Energy. “Steve has a longstanding reputation for driving strong financial results and accountability, traits that are becoming more important to investors. This transaction reflects our philosophy of matching accomplished executives with great assets and the proper capital structure to maximize our value creation plan. Magnolia brings world-class executives, outstanding assets and now a blue-chip investor base together in a compelling manner, and we are proud to partner with Steve and the larger team at the start of this exciting journey.”

        ************

 

2


Magnolia Company Highlights 1

 

    High-quality, oil-weighted pure-play South Texas operator

 

    Approximately 40,000 boe per day of current net production with 31,000 boe per day in Karnes County and 9,000 boe per day in Giddings Field

 

    Total production base is 62% oil and 78% liquids

 

    Roughly 360,000 net acres, including 14,000 net acres in the core of Karnes County

 

    Industry leading all-in-cost and full cycle economics in Karnes County with break-evens in the low $30’s per barrel

 

    Estimated new well paybacks of less than one year in both Karnes County and Giddings Field

 

    Strong financial profile with low leverage, strong liquidity and substantial cash flow generation after capital requirements of the planned rig program

 

    Estimated 2018 EBITDA of $513 million and approximately $240 million of estimated 2018 free cash flow after capital investment 2

 

    Industry leading 10% free cash flow yield 3 . Very low leverage (0.6x 2018 estimated EBITDA) and more than $500 million of initial liquidity

Transaction Details

On March 20, 2018, TPGE entered into definitive agreements to acquire EnerVest’s South Texas Division for approximately $2.66 billion in cash and stock. 4 Upon the closing of the business combination, the company will be renamed Magnolia Oil & Gas Corporation. With an anticipated initial enterprise value of $2.66 billion and an estimated $513 million of EBITDA for 2018, the transaction is valued at approximately 5.0x 2018 estimated EBITDA. The company will largely be equity financed as TPGE anticipates $300 million of funded debt (0.6x 2018 estimated EBITDA) at closing alongside a $550 million undrawn credit facility. EnerVest will receive approximately $1.2 billion in cash at closing and will retain roughly 120 million shares of common stock.

In connection with the transaction, TPGE has entered into agreements to raise approximately $330 million through a private placement of roughly 33.0 million shares ($10.00/share) of Class A common stock. This placement was anchored by certain funds and accounts managed by Fidelity Management & Research Company, Davis Selected Advisers, L.P. and certain funds managed by Capital Research and Management Company and included several other leading institutional investors. In addition, Chazen and certain TPG executives will personally subscribe for an additional $25 million investment on the same terms. The private placement is expected to close concurrently with the transaction. The public float after giving effect to this private placement is expected to be approximately $1 billion. Assuming no redemptions of TPGE public shares, the EnerVest funds will own 51% of the issued and outstanding shares of common stock of Magnolia immediately following the closing, the TPGE public investors including the PIPE will own 43% and the remainder will be owned by TPG.

 

1   For additional information regarding the assumptions used with respect to the below company highlights please see the Investor Presentation available on Magnolia’s website.
2   TPGE defines free cash flow as EBITDA less capital expenditure.
3   TPGE defines free cash flow yield as EBITDA less capital less interest divided by market capitalization at $10 per share. Estimated 2018 projection.
4   The $2.66 billion enterprise value includes the effect of TPGE’s sponsor shares.

 

3


The transaction was unanimously approved by the board of TPGE and remains subject to the approval of TPGE shareholders and the satisfaction or waiver of other customary conditions. TPGE has secured financing commitments for the anticipated funded debt and RBL. After giving effect to any redemptions by the public shareholders of TPGE, the balance of the approximately $650 million in cash held in the TPGE trust account, together with approximately $350 million of private placement proceeds and the debt financing will be used to pay the seller’s cash consideration and closing costs. Following the consummation of the transaction, Magnolia’s ordinary shares will be listed on the NYSE.

Upon closing, Magnolia will maintain a seven person board, which will include Steve Chazen as Chairman, two appointees named by each of TPGE and EnerVest and two additional independent directors.

In connection with the transaction, EnerVest’s South Texas operating team will continue to operate the assets post-transaction under a long-term services agreement. Under the terms of this services agreement, EnerVest will provide more than 90 dedicated operating, technical and field level employees. Additionally, EnerVest will provide shared services for certain corporate functions under this agreement. Following the closing, EnerVest may earn up to an additional 17 million shares if certain operating and/or stock price targets are achieved. Please see the investor presentation for more detail.

###

Advisors

Credit Suisse Securities (USA) LLC acted as financial advisor to TPGE, Deutsche Bank Securities Inc. and Goldman, Sachs & Co. acted as capital markets advisors to TPGE; Vinson & Elkins L.L.P. acted as legal counsel to TPGE. Citigroup acted as financial advisor and capital markets advisor to EnerVest; Gibson, Dunn & Crutcher LLP acted as legal counsel to EnerVest.

Investor Webcast and Presentation Information

At 10:00 am EST on March 20, 2018, TPGE will be holding an investor conference call to discuss the transaction. For those who wish to participate, the domestic toll-free access number is (877) 389-1525 and the international toll-free access number is (614) 610-4601. Once connected with the operator, please provide the Conference ID number of 8783808 and request access to the Magnolia Transaction Announcement Investor Call.

A replay of the call will also be available from 1:00 pm EST on March 20, 2018 to 11:59 pm EST on March 27, 2018. To access the replay, the domestic toll-free access number is (866) 247-4222 and participants should provide the Conference ID number of 8783808 and request access to the Magnolia Transaction Announcement Investor Call.

 

4


About Magnolia Oil & Gas Corporation

Following completion of the transaction, Magnolia Oil & Gas Corporation will be a publicly traded oil and gas exploration and production company with South Texas operations in the core of the Eagle Ford. Magnolia will focus on generating value for shareholders through steady production growth and free cash flow. For more information, visit www.magnoliaoilgas.com .

About TPG Pace Group and TPG Pace Energy Holdings

TPG Pace Group is TPG’s dedicated permanent capital platform. Led by TPG partner Karl Peterson, the platform was created in 2015 with the objective of sponsoring special purpose acquisition companies and other permanent capital solutions for companies. TPG Pace Group has a long-term, patient, and highly flexible investor base, allowing it to seek compelling opportunities that will thrive in the public markets with its sponsorship. TPG Pace Group has sponsored three SPACs and has raised roughly $2 billion since 2015. The first of these vehicles was used to sponsor the public listing of Playa Hotels and Resorts in March of 2017 (NASDAQ: PLYA).

TPG Pace Holdings (NYSE: TPGH, TPGH.U, TPGH.WS) raised $450 million in its June 2017 IPO and is currently seeking targets for a business combination that are suited to generate strong returns in a public market environment while benefitting from the broader operational knowledge, resources and private equity heritage of its team and TPG. For more information, visit www.tpg.com/tpg-pace-holdings .

TPG Pace Energy Holdings Corp. is a $650 million special purpose acquisition company formed by TPG Pace Group and Occidental Petroleum Veteran Steve Chazen that went public on the NYSE in May of 2017. TPGE was formed with the intent to build a large scale, focused oil and gas business with a meaningful production base, strong free cash flow and a disciplined financial return philosophy. Following its IPO, TPGE began its search for attractive assets that would fit with Chazen’s operating approach and succeed as a public company with low leverage. For more information, visit www.tpg.com/pace-energy .

About EnerVest

Houston-based EnerVest, founded in 1992, acquires, develops and operates oil and gas fields in 14 states on behalf of its investors.

Forward-Looking Statements

The information in this press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included in this press release, regarding the proposed acquisition discussed herein, TPGE’s ability to consummate the transaction, the benefits of the transaction and Magnolia’s future financial performance following the transaction, as well as Magnolia’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward looking

 

5


statements. When used in this press release, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, TPGE and Magnolia disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this press release. TPGE cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of TPGE, incident to the development, production, gathering and sale of oil, natural gas and natural gas liquids. In addition, TPGE cautions you that the forward-looking statements contained in this press release are subject to the following factors: (i) the occurrence of any event, change or other circumstances that could delay the business combination or give rise to the termination of the agreements related thereto; (ii) the outcome of any legal proceedings that may be instituted against TPGE following announcement of the transactions; (iii) the inability to complete the business combination due to the failure to obtain approval of the shareholders of TPGE, or other conditions to closing in the transaction agreement; (iv) the risk that the proposed business combination disrupts TPGE’s current plans and operations as a result of the announcement of the transactions; (v) Magnolia’s ability to realize the anticipated benefits of the business combination, which may be affected by, among other things, competition and the ability of Magnolia to grow and manage growth profitably following the business combination; (vi) costs related to the business combination; (vii) changes in applicable laws or regulations; and (viii) the possibility that Magnolia may be adversely affected by other economic, business, and/or competitive factors. Should one or more of the risks or uncertainties described in this press release, or should underlying assumptions prove incorrect, actual results and plans could different materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact the operations and projections discussed herein can be found in TPGE’s periodic filings with the Securities and Exchange Commission (the “SEC”), including its Annual Report on Form 10-K for the fiscal year ended December 31, 2017. TPGE’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

No Offer or Solicitation

This press release is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities pursuant to the proposed business combination or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such

jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act.

 

6


Important Information for Investors and Shareholders

In connection with the proposed business combination, TPGE intends to file a proxy statement with the SEC. The definitive proxy statement and other relevant documents will be sent or given to the shareholders of TPGE and will contain important information about the proposed business combination and related matters. TPGE shareholders and other interested persons are advised to read, when available, the proxy statement in connection with TPGE’s solicitation of proxies for the meeting of shareholders to be held to approve the business combination because the proxy statement will contain important information about the proposed business combination. When available, the definitive proxy statement will be mailed to TPGE shareholders as of a record date to be established for voting on the business combination. Shareholders will also be able to obtain copies of the proxy statement, without charge, once available, at the SEC’s website at www.sec.gov . In addition, shareholders will be able to obtain free copies of the proxy statement by directing a request to: TPG Pace Energy Holdings Corp., 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102, email: media@mgyoil.com , Attn: Mike Gehrig. The information contained on, or that may be accessed through, the websites referenced in this press release is not incorporated by reference into, and is not a part of, this press release.

Participants in the Solicitation

TPGE, EnerVest and their respective directors and officers may be deemed participants in the solicitation of proxies of TPGE’s shareholders in connection with the proposed business combination. TPGE shareholders and other interested persons may obtain, without charge, more detailed information regarding the directors and officers of TPGE in TPGE’s Registration Statement on Form S-1 initially filed with the SEC on April 17, 2017. Additional information will be available in the definitive proxy statement when it becomes available.

For Magnolia Oil & Gas Corporation

Mike Gehrig

713 627-2223

media@mgyoil.com

For TPGE

Luke Barrett

415 743-1550

media@tpg.com

For EnerVest

Ron Whitmire

713 495-6525

Rwhitmire@enervest.net

 

7

SLIDE 1

Exhibit 99.2


SLIDE 2

Disclaimer FORWARD LOOKING STATEMENTS The information in this presentation and the oral statements made in connection therewith include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of present or historical fact included in this presentation, regarding TPG Pace Energy Holding Corp.’s (either as currently organized or as it may be reorganized in connection with the transactions contemplated in this presentation, “TPGE”) proposed acquisition of oil and gas assets from certain funds affiliated with EnerVest, Ltd. ( “EnerVest”), TPGE’s ability to consummate the transaction, the benefits of the transaction and TPGE’s future financial performance following the transaction, as well as TPGE’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward looking statements. When used in this presentation, including any oral statements made in connection therewith, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, TPGE disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation. TPGE cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of TPGE, incident to the development, production, gathering and sale of oil, natural gas and natural gas liquids. These risks include, but are not limited to, commodity price volatility, low prices for oil and/or natural gas, global economic conditions, inflation, increased operating costs, lack of availability of drilling and production equipment, supplies, services and qualified personnel, processing volumes and pipeline throughput, and certificates related to new technologies, geographical concentration of operations, environmental risks, weather risks, security risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating oil and natural gas reserves and in projecting future rates of production, reductions in cash flow, lack of access to capital, TPGE’s ability to satisfy future cash obligations, restrictions in existing or future debt agreements, the timing of development expenditures, managing growth and integration of acquisitions, failure to realize expected value creation from property acquisitions, the defects and limited control over non-operated properties. Should one or more of the risks or uncertainties described in this presentation and the oral statements made in connection therewith occur, or should underlying assumptions prove incorrect, actual results and plans could different materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact TPGE's operations and projections can be found in its periodic filings with the Securities and Exchange Commission (the "SEC"), including its Annual Report on Form 10-K for the fiscal year ended December 31, 2017. TPGE's SEC Filings are available publicly on the SEC"s website at www.sec.gov. RESERVE INFORMATION Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions could impact TPGE’s strategy and change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered. Estimated Ultimate Recoveries, or “EURs,” refers to estimates of the sum of total gross remaining proved reserves per well as of a given date and cumulative production prior to such given date for developed wells. These quantities do not necessarily constitute or represent reserves as defined by the SEC and are not intended to be representative of all anticipated future well results. USE OF PROJECTIONS This presentation contains projections for TPGE, including with respect to its EBITDA, net debt to EBITDA ratio, capital budget, free cash flow and operating margin as well as its production volumes. TPGE’s independent auditors have not audited, reviewed, compiled, or performed any procedures with respect to the projections for the purpose of their inclusion in this presentation, and accordingly, have not expressed an opinion or provided any other form of assurance with respect thereto for the purpose of this presentation. These projections are for illustrative purposes only and should not be relied upon as being necessary indicative of future results. In this presentation, certain of the above-mentioned projected information has been repeated (in each case, with an indication that the information is subject to the qualifications presented herein), for purposes of providing comparisons with historical data. Each of the assumptions and estimates underlying the projected information throughout this presentation are based on the data in Slides 18, 24-25. The assumptions and estimates underlying the projected information are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projected information. Even of our assumptions and estimates are correct, projections are inherently uncertain due to a number of factors outside our control. Accordingly, there can be no assurance that the projected results are indicative of the future performance of TPGE after completion of the transaction or that actual results will not differ materially from those presented in the projected information. Inclusions of the projected information in this presentation should not be regarded as a representation by any person that the results contained in the projected information will be achieved. USE OF NON-GAAP FINANCIAL MEASURES This presentation, including the “Magnolia Financial Projections” shown on slide 25 hereof, includes non-GAAP financial measures, including EBITDA, Adjusted EBITDAX and free cash flow of TPGE. TPGE believes EBITDA, Adjusted EBITDAX and free cash flow are useful because they allow TPGE to more effectively evaluate its operating performance and compare the results of its operations from period to period and against its peers without regard to financing methods or capital structure. TPGE does not consider these non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. The computations of EBITDA, Adjusted EBITDAX and free cash flow may not be comparable to other similarly titled measures of other companies. TPGE excludes certain items from net (loss) income in arriving at EBITDA and Adjusted EBITDAX because these amounts can vary substantially from company to company within its industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. EBITDA and Adjusted EBITDAX should not be considered as alternatives to, or more meaningful than, net income as determined in accordance with GAAP or as indicators of operating performance. Certain items excluded from EBITDA and Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of EBITDA or Adjusted EBITDAX. TPGE’s presentation of EBITDA and Adjusted EBITDAX should not be construed as an inference that its results will be unaffected by unusual or non-recurring terms. TPGE excludes capital expenditures from its cash flows from operations in arriving at its free cash flow in order to provide an understanding of certain factors and trends affecting its cash flows and liquidity. Free cash flow does not represent the residual cash flow available for discretionary expenditures. TPGE believes that free cash flow is useful to investors as a measure of the ability of its business to generate cash. INDUSTRY AND MARKET DATA This presentation has been prepared by TPGE and includes market data and other statistical information from sources believed by TPGE to be reliable, including independent industry publications, governmental publications or other published independent sources. Some data is also based on the good faith estimates of TPGE, which are derived from its review of internal sources as well as the independent sources described above. Although TPGE believes these sources are reliable, it has not independently verified the information and cannot guarantee its accuracy and completeness. TRADEMARKS AND TRADE NAMES TPGE and EnerVest own or have rights to various trademarks, service marks and trade names that they use in connection with the operation of their respective businesses. This presentation also contains trademarks, service marks and trade names of third parties, which are the property of their respective owners. The use or display of third parties’ trademarks, service marks, trade names or products in this presentation is not intended to, and does not imply, a relationship with TPGE or EnerVest, or an endorsement or sponsorship by or of TPGE or EnerVest. Solely for convenience, the trademarks, service marks and trade names referred to in this presentation may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that TPGE or EnerVest will not assert, to the fullest extent under applicable law, their rights or the right of the applicable licensor to these trademarks, service marks and trade names. NO OFFER OR SOLICITATION This presentation is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities pursuant to the proposed business combination or otherwise, nor shall there be any sale of securities in any jurisdiction in which the offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act. IMPORTANT INFORMATION FOR INVESTORS AND SHAREHOLDERS In connection with the proposed business combination, TPGE intends to file a proxy statement with the SEC. The definitive proxy statement and other relevant documents will be sent or given to the shareholders of TPGE and will contain important information about the proposed business combination and related matters. TPGE shareholders and other interested persons are advised to read, when available, the proxy statement in connection with TPGE’s solicitation of proxies for the meeting of shareholders to be held to approve the business combination because the proxy statement will contain important information about the proposed business combination. When available, the definitive proxy statement will be mailed to TPGE shareholders as of a record date to be established for voting on the business combination. Shareholders will also be able to obtain copies of the proxy statement, without charge, once available, at the SEC’s website at www.sec.gov. In addition, shareholders will be able to obtain free copies of the proxy statement by directing a request to: TPG Pace Energy Holdings Corp., 301 Commerce Street, Suite 3300, Fort Worth, Texas 76102, email: media@mgyoil.com, Attn: Mike Gehrig. PARTICIPANTS IN SOLICITATION TPGE, EnerVest and their respective directors and officers may be deemed participants in the solicitation of proxies of TPGE’s shareholders in connection with the proposed business combination. TPGE shareholders and other interested persons may obtain, without charge, more detailed information regarding the directors and officers of TPGE in TPGE’s Registration Statement on Form S-1 initially filed with the SEC on April 17, 2017. Additional information will be available in the definitive proxy statement when it becomes available.


SLIDE 3

Steve Chazen and TPG raised $650 million through the IPO of a special purpose acquisition company (“SPAC”) in May 2017, called TPG Pace Energy Holdings Corp. (“Pace Energy” or “TPGE”) Pace Energy was established to build a large scale, focused oil & gas business with a meaningful production base, strong free cash flow and a disciplined corporate philosophy Pace Energy has entered into an agreement with EnerVest to carve-out EnerVest’s Eagle Ford and Giddings assets (the “South Texas Division”) and create Magnolia Oil & Gas Corporation (“Magnolia”) Pace Energy expects to acquire the South Texas Division for ~$2.66 billion(1), which represents an attractive entry multiple of ~5.0x 2018 Debt Adj. EV / EBITDA and an ~10% 2018E free cash flow yield after capital requirements EnerVest’s existing owners will retain a significant ownership in Magnolia The transaction delivers on all criteria from the Steve Chazen playbook and is expected to create a large scale, pure-play Eagle Ford / Austin Chalk operator with a clean balance sheet In connection with the transaction, TPGE has raised a $355 million PIPE of common equity at $10/share, in a placement anchored by certain funds and accounts managed by Fidelity Management & Research Company, Davis Selected Advisers, L.P. and certain funds managed by Capital Research and Management Company and that included several other leading institutional investors, as well as a $25 million personal investment from Steve Chazen and certain TPG executives. The public float after giving effect to this private placement is expected to be approximately $1 billion. Steve Chazen will be the full-time Chairman, President and CEO; Chris Stavros, former CFO of Occidental Petroleum, will be joining as full-time CFO, and Magnolia will maintain a majority independent Board of Directors Under Steve Chazen’s leadership, Magnolia will optimize EnerVest’s South Texas Division to create a strong platform to create shareholder value Transaction Summary Note: See slide 25 (Financial Projections) for information regarding EBITDA and cash flow projections. (1) See slide 24 (Sources, Uses and Pro Forma Valuation) for purchase price details.


SLIDE 4

Introduction to Magnolia Oil & Gas TPGE has entered into an agreement with EnerVest to create Magnolia through the carve-out of its South Texas Division (Eagle Ford & Austin Chalk) for ~$2.66 billion(1) $650 million cash from IPO $355 million PIPE $300 million Senior Notes $1.2 billion retained EnerVest interest $500 million undrawn RBL at close The South Texas Division is being acquired at an attractive valuation of approximately 5.0x 2018 EBITDA(2) with an ~10% 2018E free cash flow yield in excess of capital requirements and significant running room for future growth Transaction Overview Steve Chazen and TPG formed entity to be a consolidation platform with a disciplined corporate return philosophy Raised $650 million in May 2017 IPO Leading private oil & gas company 5 geographic operating divisions with over 36,000 producing wells $7 billion of assets under management Senior Management Team South Texas Division Note: See slide 25 (Financial Projections) for information regarding EBITDA and cash flow projections. (1) See slide 24 (Sources, Uses and Pro Forma Valuation) for purchase price details. (2) Debt Adjusted Total Enterprise Value / 2018E EBITDA.


SLIDE 5

Acquisition Delivers on The Steve Chazen Playbook Steve Chazen Playbook Magnolia Core Karnes County acreage with some of the best economics in the U.S. Infrastructure in place / limited basin differential concerns Attractive realized prices with access to the Gulf Coast demand markets Highly economic wells with short payback periods, averaging less than 1-year ~10% 2018E free cash flow yield with excess cash flows of ~$241 million in 2018 after running a 2.7 rig program Targeting ~10% organic production growth Meaningful FCF utilized to grow production and portfolio of highly economic locations At close, will have minimal debt and projected liquidity of $500 million(1) Will strive to be an investment-grade rating type profile Projected 2018E debt / EBITDA under 1.0x Industry leading all-in-cost and full cycle economics (~$9/boe F&D costs, low LOE and SG&A and 50%+ full-cycle margins at $55/bbl oil) Benefit from premium LLS pricing vs WTI World class management in Steve Chazen and Chris Stavros, who will bring full-time leadership from Day 1 Existing EnerVest South Texas team will continue to operate the assets bringing a stellar track record of excellent well results and operating efficiency Build a large scale, focused business with sustainable competitive advantages Generate cash flow well in excess of capital needs Organic growth within cash flow Low leverage; investment grade style target Relentless focus on superior operating margins and returns Experienced management team with a track record of operational excellence Low cost resource optionality Large potential upside from re-emerging Giddings Austin Chalk Giddings is >99% HBP with highly attractive new well economics Large base of PDP allows to fund development within cash flow Note: See slide 25 (Financial Projections) for more information on 2018 rig program and EBITDA projections. See slide 18 (Illustrative Full Cycle Margins at Various Prices) for assumptions related to operating margins and F&D. (1) Assumes $500 million undrawn RBL facility.


SLIDE 6

High-quality, low-risk pure-play South Texas operator with a core Eagle Ford and Austin Chalk position Significant scale and PDP base generates material free cash flow, reduces development risk and increases optionality Core Karnes County Position Some of the most prolific acreage in Karnes County, representing the premier county in the Eagle Ford play Certain recent Karnes County Austin Chalk wells have outperformed even the best Eagle Ford and Permian Wolfcamp well results Giddings Field Discovered in 1920’s,commercial development began in the 1970’s originally targeting natural fractures in the Austin Chalk with open hole completions Now targeting prolific Austin Chalk zones using modern completions techniques Early results show some of the highest production wells to date in the play Top Tier Eagle Ford and Austin Chalk Asset Position ~359,000 Net Acres Position Targeting Two of the Top Oil Plays in the U.S. Entry into South Texas at an Attractive Price with Significant Running Room Industry Leading Breakevens ($/bbl WTI) Source: RSEG. Magnolia is in a well-delineated, low-risk position in the Karnes County Core with significant upside in the Giddings Field, a re-emerging premier oil play Source: IHS Performance Evaluator. Karnes Giddings Total Net Acres 14,070 345,000 359,070 January Production(1) (Mboe/d) 30.8 9.3 40.0 Karnes County Giddings Field (1) January estimated production based on accruals, Q4 2017 production of 38.8 Mboe/d.


SLIDE 7

Value Creation Plan: Multiple Drivers of Share Price Accretion Magnolia will focus on extracting money from oil rather than just extracting oil from the ground Compelling Value Proposition Overriding goal is to maximize shareholder returns We believe this can be achieved through a combination of: Steady production growth Robust free cash flow ($200MM+ per year(1)) Accretive acquisition pipeline Multiple expansion as Magnolia unlocks value from: Business plan execution and a corporate level returns-focused strategy Increased scale via organic and inorganic growth 1 2 3 4 Note: See slide 25 (Financial Projections) for information regarding cash flow projections. (1) Average of 2018E and 2019E free cash flow.


SLIDE 8

Industry Leading Fundamentals at a Discounted Purchase Multiple U.S. Independents <1.5x 2018E Leverage >8% Production CAGR (2017E-2019E) 2018E and 2019E FCF Positive Source: Company filings, FactSet consensus peer projections as of 3/16/2018. Note: U.S. Independents include: APA, APC, AR, BBG, CDEV, CHK, CLR, CNX, COG, COP, CPE, CRZO, CVE, CXO, DNR, DVN, ECA, ECR, EGN, EOG, EPE, EQT, FANG, GPOR, HES, HK, JAG, LPI, MRO, MTDR, MUR, NBL, NFX, OAS, OXY, PDCE, PE, PXD, QEP, REN, RRC, RSPP, SM, SN, SRCI, SWN, WLL, WPX, WRX, XEC, and XOG. Median and count figures do not include Magnolia. 2018E Leverage is debt adjusted to account for outspend defined as: EBITDA – interest expense – capital expenditures. Production CAGR based on 2017-2019 estimates. Note: see slide 25 (Financial Projections) for 2018E and 2019E forecast assumptions related to Magnolia. Number of companies: Median 2018E EV / EBITDA: 51 6.5x 16 6.9x 14 7.2x 6 8.9x CXO PXD EOG FANG COG OXY Magnolia


SLIDE 9

Magnolia Comparable Companies Source: Company filings, FactSet consensus peer projections as of 3/17/2018. Note: See slide 25 (Financial Projections) for 2018E forecast assumptions related to Magnolia. (1) Free Cash Flow Yield calculated as 2018E Free Cash Flow divided by equity market capitalization as of 3/17/2018. $241 $941 $578 $188 $18 $7 ($251) ($182) ($63) ($546) ($183) Total Debt / 2018E EBITDA 2018E Free Cash Flow Yield(1) 2018E Free Cash Flow ($MM) Magnolia will be in a class of its own from a cash flow generation perspective... …the lowest leverage in the peer group… …yet is priced in line with in-basin comps and meaningfully below the business model comps Debt Adj. TEV / 2018E EBITDA Legend Business Model Comps CLR CXO DVN FANG RSPP In-Basin Comps CRZO EPE SM SN WRD Magnolia


SLIDE 10

World-class acreage footprint located in the core of the Eagle Ford, substantially de-risked 14,070 net acres (28,886 gross acres), 65% operated, 88% HBP, 31 Mboe/d current production (73% oil, 86% liquids) EOG represents ~50% of non-operated interest Steady production growth while generating substantial free cash flow Full field development allows for operational efficiencies and improved performance Well known, repeatable acreage position targeting multiple benches and represents some of the best economics in North America Breakevens between $28 - $32 per barrel(1) Magnolia Eagle Ford Type Curve IP30/IP90: 400/285 boe/d / 1,000’ LL (88/85% Oil) Magnolia Austin Chalk Type Curve IP30/IP90: 465/400 boe/d / 1,000’ LL (80/77% Oil) Karnes County – Core Eagle Ford and World Class Austin Chalk Key Asset Highlights Premier Position in the Core of the Eagle Ford Robust Risked Inventory 2018E Development Assumptions Gross Locations Austin Chalk Eagle Ford Total Magnolia Operated 185 325 510 Non Operated 150 365 515 Total 335 690 1,025 Net Locations Austin Chalk Eagle Ford Total Magnolia Operated 145 190 335 EOG Non-Op 25 25 50 Other Non-Op 15 35 50 Total 185 250 435 (1) Source: RSEG. Gross Wells Completed Net Wells Completed Magnolia DUCs 17 15 Non-Op DUCs 20 7 Magnolia Operated 23 18 Non-Operated 18 5 Total 78 45 Source: IHS Performance Evaluator.


SLIDE 11

Karnes County has some of the Top Economics in North America Karnes has some of the highest U.S. IPs… Note: Magnolia type curves normalized to 5,000’ laterals. Projections based on flat $58 WTI and $2.75 Henry Hub pricing. Commodity percentage splits represent first 24 months of production. Source: RSEG, Delaware North Reeves Wolfcamp A curve. All payout figures include assumed 2-month spud to sales delay. Results in Karnes County are some the best in North America Karnes Eagle Ford and Austin Chalk type curves produce 216,000 and 330,000 barrels of oil, respectively, in their first 12 months of production supporting paybacks in less than 6 months Liquids heavy commodity mix with Eagle Ford wells producing 74% oil (86% liquids)(1) and Austin Chalk wells producing 63% oil (80% liquids)(1) …resulting in best in class paybacks 5-Month Payout(3) 6-Month Payout(3) 19-Month Payout(3) (2) …with significant early cumulative production… (2) (2) Commodity Split(1) Oil Liquids Magnolia LEF 74% 86% Magnolia AC 63% 80% RSEG WC 46% 73%


SLIDE 12

Giddings Field – Austin Chalk Redeveloping as an Emerging Play Giddings Asset Overview Emerging, high-growth asset with extensive inventory potential and significant development flexibility ~345,000+ net acres, 99%+ HBP and ~87% operated, 9.3 Mboe/d current production(1) (28% oil, 55% liquids) HBP nature of asset allows for systematic delineation and optimization of play while staying within asset cash flow Modern high-intensity completions have resulted in a step-change improvement in well performance The first four wells have had average IP30s of 1,597 boe/d and average IP60s of 1,771 boe/d At least 1,000 locations based on conservative spacing assumptions 1 rig program planned for 2018 and 2 rig program planned for 2019 Lease Map Selected Recent Well Results(3) With significant scale and HBP position, Giddings offers a unique opportunity to develop an emerging play while remaining within cash flow Estimated Well Payouts(2) (Months) Estimated January production based off accruals. Payout from first production. Recent Giddings area Austin Chalk well results with >30% oil cut. Source: IHS, EnerVest, Company Filings. Source: EnerVest. 1 3 4 5 2 6 7 8 9 1 7 3 4 5 8 9 2 6


SLIDE 13

Giddings – Early Results Indicate Large Development Potential Application of modern high intensity slickwater completions have unlocked significant reserves previously thought inaccessible Recent Giddings Results Magnolia Giddings Footprint Note: Giddings Results shown on a Gross Pre-Royalty Basis. Due to temporary midstream constraints, wells currently choked back Source: IHS Enerdeq.


SLIDE 14

High quality assets allow for two self sustaining operating areas Karnes County World class asset that generates substantial free cash flow Engine to fund inorganic growth via acquisitions or to accelerate drilling Giddings Emerging, high growth assets with substantial upside Impressive results to date by EnerVest and other surrounding operators Asset greater than 99% HBP and ~85% operated will allow Magnolia to control development pace and cash flow profile High margin asset and large PDP base will allow Magnolia to execute drilling program over the commodity price cycle Magnolia Asset Summary – Free Cash Flow Positive Assets Karnes 2018E Asset Cash Flow Profile(1) Giddings 2018E Asset Cash Flow Profile(1) Note: Projections based on flat $58 WTI and $2.75 Henry Hub pricing and include recent acquisition. See slide 25 (Financial Projections) for information regarding 2018E rig program, EBITDA, capital expenditures and cash flow projections. (1) All projections shown are at the asset level and do not include G&A or Workover/Other. ($ in millions) ($ in millions)


SLIDE 15

Magnolia to Partner with EnerVest to Operate Assets Note: EnerVest Organization and South Texas Division statistics are as of YE 2017. (1) 30-Day IP represents max month volumes. Includes data from active producing wells since January 2015. Excludes operators with less than 10 wells. (2) Defined as the sum of lease operating expense, gathering and transportation expense, and production taxes, as of 3Q17. EnerVest is the one of the largest operating companies in the U.S. with 36,000+ wells across 8 million acres and producing 930 MMcfe/d Karnes County Eagle Ford 30-Day IP(1) (Bopd) 1,165 employees 5 operating divisions ~975 MMcfe/d production as of March 2018 138,000 leases and 250,000 revenue checks annually Total EnerVest Organization Among the lowest cost operators in South Texas EnerVest operated Eagle Ford wells have among the highest IPs in Karnes County Currently operate ~1,200 wells in South Texas More than 1 million man hours without a Lost Time Accident (LTA) EnerVest South Texas Division (to be acquired by Magnolia) 35 29 154 54 43 76 340 103 48 # of Wells: South Texas Asset Level Operating Cost(2) ($/Boe) Source: PLS PetroScout. Source: Company Filings.


SLIDE 16

Production with Free Cash Flow Generation in 2018+ Note: Projections based on flat $58 WTI and $2.75 Henry Hub pricing and include recent acquisition. See slide 25 (Financial Projections) for information regarding rig program, online production, EBITDA generation and cash flow generation projections. Recent acquisition by EnerVest closed at end of February 2018 with a 2/1/2018 effective date. Free cash flow calculated as EBITDA – capex – cash interest – cash taxes. Assumes $300 million Senior Notes outstanding with 6.5% interest rate. Assumes $500 million undrawn RBL borrowing base. Significant Production Online Material Free Cash Flow Generation(2) Substantial EBITDA Generation Unique combination of production growth and strong free cash flow ($ in millions) ($ in millions) (Mboe/d) $602MM $787MM Liquidity:(3) Cumulative FCF 13% Organic Base Growth $262MM $344MM Capex: 12% Organic Base Growth Conservative Rig Program (Rigs) $10MM impact to Free Cash Flow for every $1 change in oil price (1) (1)


SLIDE 17

Focus on Maintaining High Full-Cycle Operating Margins Focus on full-cycle economics is a distinguishing characteristic compared to many public peers today Illustrative Full Cycle Margin Operations focused on producing best-in-class full-cycle operating margins (inclusive of development costs) Realized price benefits from selling oil at LLS pricing, limiting the differential risk present in other high-returning oil and gas plays Low acquisition cost per boe, paying for production while maintaining upside through Giddings ~$9/boe D&C development cost Operating costs track below that of core comps ~$8/boe including production taxes Focus on operating corporate G&A per unit at the low-end of the core comps ~$2.55/boe End result: At $58/bbl and $2.75/mcf, Magnolia is expected to generate ~53% full-cycle margins Note: Projections assume flat WTI and $2.75 Henry Hub gas prices. See slide 18 (Illustrative Full Cycle Margins at Various Prices) for assumptions related to operating margins.


SLIDE 18

Illustrative Full Cycle Margins at Various Prices Illustrative TPGE estimated F&D costs. F&D costs defined as estimated D&C well capex divided by estimated ultimate production. Illustrative TPGE estimated undeveloped purchase price allocation divided by estimated resource, subject to further diligence.


SLIDE 19

Effective Use of Cash to Maximize Shareholder Returns Robust Cumulative Free Cash Flow Note: Projections based on flat $58 WTI and $2.75 Henry Hub pricing and include recent acquisition. See slide 25 (Financial Projections) for 2018E and 2019E forecast assumptions. Potential Uses of Free Cash Flow With a targeted goal of always being free cash flow positive, Magnolia intends to be a prudent steward of shareholder’s capital Debt Reduction Accretive Acquisitions Share Repurchases ($ in millions)


SLIDE 20

Benefits of Focusing on South Texas Less competition ü Proven plays with significant remaining oil in place ü Favorable differentials and access to Gulf Coast markets ü Attractive cost of doing business in an oilfield-friendly regulatory environment ü Material consolidation opportunities Large number of private equity backed assets Multiple divisions of public companies ü Existing infrastructure and take away capacity ü


SLIDE 21

Large opportunity set of potential consolidation targets: An increasing number of public companies view South Texas assets as non-core and are not actively allocating capital to the region Several public companies are actively marketing their positions via publicly disclosed sales processes Large number of private equity backed companies with limited paths to monetization Source:1Derrick. South Texas – Primed for Consolidation


SLIDE 22

Magnolia – Summary Investment Highlights ~359,000 net acres across Karnes County and the Giddings Field of South Texas with multi-bench development and stacked pay Coveted position in Karnes Country core with industry leading breakevens between $28 - $32 per barrel(1) Emerging position in the Giddings Field with results that continue to improve and substantial running room Premier Platform Positioned for Success Positive Free Cash Flow and Peer Leading Margins Multiple Levers of Growth Strong Balance Sheet and Financial Flexibility Best-in-Class Management team One of the select upstream independents generating substantial free cash flow after capital expenditures ~10% 2018E free cash flow yield, with ~$241 million of free cash flow after capital needs in 2018 Liquids weighted portfolio with low F&D and LOE costs that yield full cycle cash margins in excess of 50% Steady organic growth through the drillbit while remaining well within cashflow Clean balance sheet and strong free cash flow enables Magnolia to be the natural acquirer Will actively pursue organic leasing and minerals purchases to improve economics Conservative net leverage of ~0.6x 2018E EBITDA expected at close Substantial liquidity of $500 million at closing(2) ~$426 million of free cash flow through 2019 while growing rig count Strong leadership through Steve Chazen, a world-class operator with 20+ years of experience at Occidental Petroleum Steve Chazen has a strong track record of disciplined operations and careful allocation of capital between organic growth, M&A and return of capital to investors Partnership with EnerVest, an industry-leading operator Note: Projections based on flat $58 WTI and $2.75 Henry Hub pricing and include recent acquisition. See slide 25 (Financial Projections) for 2018 and 2019 forecast assumptions. (1) Source: RSEG. (2) Assumes $500 million undrawn RBL borrowing base at closing.


SLIDE 23

Financial Appendix


SLIDE 24

Sources, Uses and Pro Forma Valuation Note: Projections based on flat $58 WTI and $2.75 Henry Hub pricing and include recent acquisition. Other outstanding instruments from TPGE.U IPO: 21.7 million warrants for 21.7 million shares at $11.50 per share; 10 million founder warrants for 10 million shares at $11.50 per share 13 million contingent shares for seller and 4 million EnerVest operating team incentive shares trigger between a mix of exceeding certain operational targets or stock price hurdles between $12.50 and $14.50 per share over 2.5 - 4 years. At close figures assume 1H of 2018E free cash flow of $131mm is used to reduce purchase price. Actual amount to be adjusted for interest income prior to close. $652.8 million held in trust as of 12/31/2018. Cash in trust account assumes no redemptions in connection with the business combination. Includes deferred underwriting fees from TPGE.U IPO. Opportunity to invest at an attractive entry alongside the seller who we expect to retain a vast majority of their stake given their belief in Steve Chazen’s ability to unlock value Post Transaction Ownership (Estimated)(1,2) Sources & Uses (Estimated) Pro Forma Valuation


SLIDE 25

Financial Projections Magnolia Financial Projections Commodity Prices: $58/bbl WTI $2.50/bbl LLS-WTI Differential $2.75/mcf Henry Hub 38% NGL realizations Development Pace: 1 current rig in Karnes, 2nd rig added June 2018 1 current rig in Giddings, 2nd rig added January 2019 Forecast includes impact of recent acquisition, with an effective date of February 1, 2018 Assumed $35 million of G&A in 2017 for comparability purposes and $42.5 million on an ongoing basis Assumes Senior Notes bear TPGE estimated 6.5% interest rate 2018 & 2019 Forecast Assumptions Note: 2017A and 4Q’17 Annualized are TPGE Estimates based off unaudited LOS statements and do not include the recent acquisition. EBITDA and free cash flow are non-GAAP financial measures that may not be comparable to other similarly titled measures of other companies. TPGE does not consider these non-GAAP measures in isolation or as an alternative to similar financial measures determined in accordance with GAAP. (1) Assumes $0 cash balance at close on 6/30/2018 with all free cash flow from 1H’18 used to reduce purchase price.


SLIDE 26

Anticipated Transaction Timeline Date Event March 20 Transaction Agreements Executed Transaction Announced April / May 2018 Preliminary Proxy Materials Filed with the SEC June 2018 Set Record Date for Shareholder Vote June 2018 Mail Final Proxy Materials to Shareholders Late June 2018 Hold Shareholder Vote and Close Transaction Note: Subject to SEC review timetable.


SLIDE 27

Appendix


SLIDE 28

Pro Forma Management Organization Combined organization will be managed by Steve Chazen leading strategy and capital allocation (drilling, M&A) and will be supported by EnerVest’s existing Operations Team Responsibilities / Corporate Functions Corporate Strategy Capital Allocation Drilling Plan Financial Reporting Controller / Treasury Financial Structure Chief Executive Officer Chief Financial Officer / Corp. Finance Staff Investor Relations General Counsel Business Development Land Department Entire South Texas Division Operations Technical Field Corporate / Back Office Support Management Services Agreement


SLIDE 29

Magnolia Plans to Execute with the Same Approach as Steve Did at OXY Steve Chazen established his track record as a full cycle money maker and disciplined acquirer Source: Capital IQ, company filings, OXY website. Note: Historical results of OXY are not necessarily indicative of the future performance of TPG Pace Energy. (1) Price performance and shareholder return from 2/18/99 (when Mr. Chazen became Chief Financial Officer of OXY) to 4/30/16 (when Mr. Chazen retired from OXY as Chief Executive Officer). Cumulative dividends includes OXY dividends to shareholders throughout time period and CRC shares received in November 2014 and March 2016 as part of spin-off; does not assume dividend reinvestment. (2) Reflect transactions by OXY between when Mr. Chazen joined OXY as Executive Vice President – Corporate Development on 5/1/94 and retired from OXY as Chief Executive Officer on 4/30/16. Steve Chazen’s Management Highlights(1) OXY Oil & Gas Production (Mboe/day) Built the largest upstream operating position in the Permian Basin prior to the current land grab Consistently made profitable investments across the full Oil & Gas value chain Ability to Spot Value “Ahead of the Pack” ~$40 billion of acquisitions(2) ~$20+ billion of divestitures(2) Strong Operator with Active Management to Optimize Portfolio Outperformed market across the cycle Substantial return of capital Consistent production growth while growing dividends Stock price generated 13.7x return to investors, 3.5x through dividends and 10.2x stock price performance, during Steve’s tenure as CFO and CEO(1) Outstanding Value Creation for Shareholders CAGR: 4% OXY Share Price Performance(1) Note: California Resources Corp. (CRC) was spun-off from OXY in November 2014.


SLIDE 30

Karnes County – Core Eagle Ford and Austin Chalk Eagle Ford Play Heat Map Karnes Overview Karnes Well Spacing Lower Eagle Ford Well Performance(1) Austin Chalk A Austin Chalk B Austin Chalk C Upper EF Lower EF 600’ Spacing 250’ Spacing (“wine racked”) Cum Oil per well per 1,000’ (bbls) Months 300’- 500’ Spacing 14,070 net acres (28,886 gross acres) 65% operated (86% WI in operated sections); 88% HBP 100% of the acreage is prospective for both Eagle Ford and Austin Chalk Current production: 31 Mboe/d (73% oil) 106 operated Hz wells in 4 different benches Plan to run 2 rigs starting in June 2018 AC A Test in 1Q’18 Source: IHS Performance Evaluator. Source: EnerVest. (1) Dataset contains all Lower Eagle Ford wells in which EnerVest has working interest. Avg. well result Avg. well result with less than 300’ spacing 2017 wells results Pre-2017 well results


SLIDE 31

Illustrative Fully Diluted Share Count (1) Assumes treasury share method for warrants. (2) 21.7 million public warrants issued as part of IPO with strike price of $11.50 and redemption price of $18.00. (3) 10 million sponsor warrants issued as part of IPO with strike price of $11.50. (4) Seller share count assumes 1H of 2018E free cash flow of $131 million is used to reduce purchase price. (5) Earn-out Shares Tranche 1 – Closing sales price equals or exceeds $12.50 for 10 trading days out of 20 consecutive Trading Days prior to 12/31/2020 or if Magnolia achieves 2018 EBITDA of $565MM and 2018 FCF of $275MM. If either condition is met, 4.5 million shares will vest immediately. (6) Earn-out Shares Tranche 2 – Closing sales price equals or exceeds $13.50 for 10 trading days out of 20 consecutive Trading Days prior to 6/30/2021 or if Magnolia achieves 2019 EBITDA of $600MM and 2019 FCF of $225MM. If either condition is met, 4.5 million shares will vest immediately. (7) Earn-out Shares Tranche 3 – Closing sales price equals or exceeds $14.50 for 10 trading days out of 20 consecutive Trading Days prior to 12/31/2021. If condition is met 4 million shares will vest immediately. (8) Non-Compete Tranche 1 – Closing sales price equals or exceeds $13.50 for 10 trading days out of 20 consecutive Trading Days within 4 years post closing. If the condition is met, 2 million shares are issued at the later of (i) 2.5 years after the Closing Date and (ii) the date the condition is met. (9) Non-Compete Tranche 2 – Closing sales price equals or exceeds $14.50 for 10 trading days out of 20 consecutive Trading Days within 4 years post closing. If the condition is met, 2 million shares are issued on the 4th anniversary of the Closing date. (10) Non-Compete Tranches 1 & 2 – Consideration is compensation in exchange for a non-compete in specified counties in South Texas. The non-compete is in place for the longer of 4 years or as long as EnerVest is sill providing contract services for Magnolia. A portion of the non-compete shares will be dedicated for the economic benefit of EnerVest employees dedicated to Magnolia.