Public Permian player Battalion Oil Corp. is being acquired by a private E&P after continuing to explore strategic alternatives.
Fury Resources Inc. will acquire all of Battalion’s outstanding common shares for $9.80 per share in cash, representing a total transaction value of approximately $450 million, the companies announced Dec. 15.
Battalion preferred stock held by Luminus Management LLC, Oaktree Capital Management LP and their affiliates will be rolled over in exchange for Fury preferred shares, or sold to Fury for cash. These rollover stockholders collectively own 61.61% of Battalion’s common stock.
Several of Battalion’s major shareholders have also agreed to reinvest proceeds from the sale into Fury’s ongoing business.
Fury is a private E&P focused on acquiring and developing Permian Basin oil and gas assets. The Fury team includes former members of Lilis Energy Inc.; former Lilis CEO Avi Mirman serves as Fury’s executive chairman.
“The acquisition of Battalion represents a return to the Delaware Basin for our team, which now includes Battalion's former CEO Richard Little,” Mirman said in a press release.
Mirman acknowledged the capital constraints that have previously hampered Battalion’s ability to develop its Delaware Basin asset base.
Battalion owns working interests in about 40,400 net acres in the Delaware Basin—primarily located in Pecos, Reeves, Ward and Winkler counties, Texas, according to regulatory filings. The company generated third quarter sales volumes of 12,717 boe/d.
As of the end of the third quarter, Battalion had $210.2 million in outstanding debt and total liquidity of $42.6 million, including cash and cash equivalents.
Battalion completed a $38 million preferred equity raise in September and received commitments to sell an additional $55 million in preferred equity in November.
Battalion had implemented a plan to reduce operating and capital costs to improve cash flow, including recently reducing headcount to align with planned drilling activity, the company disclosed in investor filings.
“With the benefit of a newly revived balance sheet, we believe we can leverage our deep knowledge of the basin and combined operational excellence to fully unlock the asset's potential,” Mirman said.
Houlihan Lokey Capital acted as financial adviser for Battalion, while Mayer Brown LLP is acting as legal counsel. Fury is represented by Jefferies LLC as financial adviser and K&L Gates LLP as legal counsel.
The transaction is expected to close in the first quarter of 2024, subject to Battalion stockholder approval and other customary closing conditions.