Each one in plain English, with the numbers worked through for a shareholder.
24 Oct 2014business combination● Neutral
A Schedule 13E-3 was filed for the conversion, which is required because Sanchez-affiliated parties are on both sides of the deal. It mostly points back to the proxy statement/prospectus for details and shows the issuer renamed Sanchez Production Partners LLC. It states no special provision was made to give unaffiliated unitholders access to company files or paid counsel or appraisal services. Transaction value is given as $73,745,198, based on 29,322,146 units at $2.515.
Amendment No. 1 to the conversion registration statement, filed September 26, 2014. The terms described are the same as the original filing: one-for-one common unit conversion, Class A units to 2% of the new common units, Class Z unit cancelled, and Sanchez Oil & Gas affiliates becoming general partner and holder of incentive distribution rights. The special meeting date is still blank. Only the risk factor page reference (page 16 vs 15) and the document's page numbering visibly differ in the text provided.
Constellation Energy Partners LLC filed a registration statement to convert itself into a limited partnership called Sanchez Production Partners LP, under a plan dated August 25, 2014. Each common unit becomes one unit of the new partnership (29,322,146 units registered), Class A units become common units equal to 2% of the total, and the Class Z unit is cancelled. An affiliate of Sanchez Oil & Gas becomes general partner and another affiliate gets incentive distribution rights. Unitholders must vote to approve it. This formalises the Sanchez takeover of control that began with the 2014 shared services agreement.
The partnership handed its entire operation to SP Holdings, a Sanchez Oil & Gas affiliate, under a shared services agreement paying a quarterly fee based on asset value - the same external-management structure Sanchez Energy uses. The partnership no longer runs itself, and the manager is paid on size rather than returns.
9 Aug 2013director officer appointment● NeutralMajor
Sanchez Energy Partners I sold Texas and Louisiana oil and gas properties to the partnership for $20.1 million in cash, 4.7 million common units, 1.13 million Class A units and one non-voting-in-practice Class Z unit. As holder of 70% of the Class A units, it then replaced the two Class A managers with Antonio R. Sanchez III and Gary Wellinger.
The credit facility was refinanced with Société Générale as agent, again with a $350 million maximum commitment and a 2017 maturity. Put in place three months before the partnership changed hands.
The partnership replaced PricewaterhouseCoopers with KPMG as auditor, a cost-conscious change for a business a fraction of the size it had been a year earlier.
The Robinson's Bend sale closed at $63 million plus adjustments. The partnership is now a Cherokee Basin and Woodford gas producer with cash and a much smaller borrowing base, and no obvious reason for anyone to own it.
The lenders consented to the Robinson's Bend sale and released their security over it, with the borrowing base to be cut when it closed. Selling collateral shrinks the credit line - the cash raised does not stay available.
The partnership agreed to sell Robinson's Bend - the Alabama coalbed methane field it was built around - to Castleton Commodities for $63 million. Selling the founding asset is the clearest statement that the original business no longer worked at prevailing gas prices.
The performance grants made to executives two months earlier were cancelled by mutual agreement and replaced. Targets set in April 2012 had already become unreachable.
The four executives' employment agreements were amended and restated - a routine refresh, though the terms of retention matter more at a partnership whose units had just traded under $2.
Rather than keep fighting the $3.00 minimum, the partnership moved its listing from NYSE Arca to NYSE Amex, where the standard did not apply. A solution to the symptom.
The units closed at $1.96 against NYSE Arca's $3.00 minimum, having been below it for over thirty days. The exchange waived the requirement this time - the first listing problem in what became more than a decade of them.
The lenders extended the $350 million facility's maturity by a year to November 2013. Breathing room rather than new money, at a point when natural gas was heading below $3.
Unitholders approved a new incentive compensation plan, giving the partnership its own equity currency for the management team it had just hired directly.
The partnership consolidated its borrowings into a single $350 million reserve-based facility led by Royal Bank of Scotland, maturing in 2012. Reserve-based means the banks re-test the collateral twice a year - which is how a gas producer with falling prices loses its credit without missing a payment.
4 May 2009director officer appointment● NeutralMajor
The partnership signed direct employment agreements with its four senior executives - chief executive Stephen Brunner, finance chief Charles Ward, general counsel Lisa Mellencamp and controller Michael Hiney - through its own services subsidiary. With the sponsor's future uncertain, the partnership was making its management its own rather than borrowed.
The partnership reaffirmed its 2008 forecast and set out a 2009 plan, an attempt to steady unitholders after a quarter in which its sponsor's ownership had been thrown open and gas prices had collapsed.
The partnership's sponsor, Constellation Energy Group, agreed to be taken over by MidAmerican in the middle of the 2008 financial crisis, and had to publicly reaffirm that it would keep providing management services. When a managed partnership's manager is itself in play, its stability is no longer its own to guarantee.
The CoLa acquisition closed, funded by drawing on the credit facility. The partnership now holds coalbed methane in Alabama's Robinson's Bend field, gas in the Cherokee Basin, and this new Woodford position - all bought with borrowed money against a fixed distribution.
Then called Constellation Energy Partners, the partnership agreed to pay CoLa Resources about $53.4 million for interests in 83 non-operated Woodford Shale wells in Oklahoma, adding 13.1 billion cubic feet of proved producing gas reserves. A yield vehicle buying producing assets to support its distribution - the model it followed until gas prices broke it.
