History
Extraction Oil & Gas raised equity and debt to grow from its 2016 listing, filed for Chapter 11 in 2020, then merged into Civitas Resources in 2021.
2016-2017: Listing and a large share sale
Extraction Oil & Gas's securities were certified for listing by Nasdaq on 7 October 2016, clearing them to begin trading. Two months later, on 12 December, the company agreed to sell 25,041,095 new shares in a private deal at $18.25 each. The sale closed on 16 December and raised about $457 million before costs and about $442 million after commissions and expenses. The company had to file a resale registration within 30 days so the buyers could sell their shares. The same filing set out its 2017 hedges, which are contracts that fix future prices for part of its oil and gas output. They covered about 1,500 MBbls of oil in swaps at $43.84 a barrel, about 6,250 MBbls in collars (a price floor and ceiling) at $47.70 and $55.94, and about 25,420,000 MMBtu of gas in swaps at $3.06.
In August 2017 the company turned to debt. It issued $400.0 million of 7.375% senior unsecured notes due 2024 at par, guaranteed by its subsidiaries. Later that month it replaced its 2014 credit agreement with an amended and restated $1.5 billion facility from Wells Fargo and other lenders, with an initial borrowing base of $375 million, maturing in August 2022 unless earlier triggers applied. The triggers were tied to its 7.875% notes due 2021 and its OZ Preferred Equity not being refinanced, converted or extended by set dates.
2018-2019: Refinancing and a midstream arm
On 25 January 2018 Extraction issued $750 million of 5.625% senior notes due 2026 at par. A tender offer for the 7.875% notes due 2021 drew $500,574,000, or 91.0% of them, with a further $5,165,000 pending and any remainder to be redeemed on 17 February 2018. The filing does not say the new notes paid for the tender, but it removed the 2021 debt flagged in the credit agreement.
In March 2018 lenders agreed that Elevation Midstream, LLC could become an unrestricted subsidiary, outside the credit agreement's restrictions, and that certain assets could move to it. In July Elevation sold 150,000 preferred units to GSO EM Holdings LP for a $150.0 million liquidation preference with an 8% dividend. Elevation could require GSO to buy up to $350.0 million more over 28 months. This raised money at the midstream subsidiary rather than through Extraction's common stock. On 20 December 2018 the borrowing base was raised to $1.2 billion, though lender commitments stayed at $650 million.
The tone turned in late 2019. On 4 November the borrowing base was cut from $1.1 billion to $950 million and commitments were reduced from $1.0 billion to $950 million, with no reason given. On 17 December the company concluded its results for the September 2019 quarter and nine months could no longer be relied on. It had wrongly identified the end date of a revenue contract with an automatic renewal clause, so revenue and net income were overstated. It also found a material weakness in internal controls. No restated figures were given. Shares on issue fell from 171,666,485 at the end of 2018 to 137,657,922 at the end of 2019, a change the record does not explain.
2020: Chapter 11
On 30 March 2020 Nasdaq warned that the stock had closed below $1.00 for 30 straight business days, giving the company until 28 September to recover. It never got that far. On 14 June Extraction and certain subsidiaries filed for Chapter 11 in Delaware and signed a Restructuring Support Agreement with significant holders of its 2024 and 2026 senior notes. The plan would be either a sale or merger with a third party or a stand-alone restructuring. Under the stand-alone terms, noteholders and general unsecured creditors would get 97% of the new equity, and existing shareholders 1.5% plus half of two new warrant tranches. Existing shares would be cancelled.
Nasdaq said on 16 June that the stock would be delisted from 25 June. The company chose not to appeal, and shares were expected to move to the OTC Pink market. On 1 July the exchange filed to remove a class of its securities from listing.
On 23 December 2020 the court confirmed the Sixth Amended Plan of Reorganization. Common holders would receive a pro rata share of 1.5% of the new shares, the right to buy 1.5% of the new shares in a rights offering, and half of each warrant tranche, covering 15.0% of new common shares. Revolver lenders would join a new exit revolver of $1,000.0 million commitments with a $500.0 million initial borrowing base, or take term loans. Up to $250.0 million would come from the equity rights offering, with $200.0 million backstopped.
2021: Merger into Civitas
Extraction's securities were certified for listing on 20 January 2021, and the credit agreement with Wells Fargo as agent was dated the same day. Shares on issue at the end of 2021 were recorded as 25,840,663, a fall from 136,588,900 that is consistent with the cancellation of the old shares under the plan, though the beats do not state it.
On 9 May 2021 Extraction agreed a merger of equals with Bonanza Creek Energy (BCEI), with each Extraction share converting into 1.1711 BCEI shares and each side owning about 50%. On 6 June BCEI also agreed to acquire Crestone Peak, issuing 22,500,000 shares, conditional on the Extraction merger closing. That cut Extraction holders' stake to about 37%, level with BCEI holders, with Crestone Peak holders at about 26%. Kimmeridge, holding about 37.9% of Extraction, agreed to vote in favour. The joint proxy statement was filed on 28 September. At 22 October, stockholder litigation (two demand letters and four complaints) alleged proxy disclosure deficiencies; the company called it meritless, and its outcome is unresolved in the filings.
Both deals closed on 1 November 2021, and BCEI was renamed Civitas Resources (NYSE: CIVI). Extraction became a wholly owned subsidiary, and its stock stopped trading on Nasdaq before the open on 2 November. Each share converted into 1.1711 Civitas shares plus about 0.017225678 extra shares for BCEI dividends. Its warrants were replaced with Civitas warrants expiring in January 2025 and January 2026. On 12 November Extraction terminated the registration of a class of securities, ending its reporting obligation for them.
Written from the 24 story beats below (2016 to 12 Nov 2021), which come from the company's own announcements and filings.