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Delaware | 1311 | 72-1235413 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Alan P. Baden Shelley A. Barber Vinson & Elkins L.L.P. 666 Fifth Avenue, 26th Floor New York, New York 10103 (212) 237-0000 | Gary W. Blackie President and Chief Executive Officer Bois d’Arc Energy, Inc. 600 Travis St., Suite 5200 Houston, Texas 77002 (713) 228-0438 | Jack E. Jacobsen Melissa M. Winchester Locke Lord Bissell & Liddell LLP 2200 Ross Avenue, Suite 2200 Dallas, Texas 75201 (214) 740-8000 |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Proposed Maximum | Proposed Maximum | |||||||||||
Title of Each Class of | Amount to be | Offering Price | Aggregate Offering | Amount of | ||||||||
Securities to be Registered(1) | Registered(2) | per Share | Price(3) | Registration Fee | ||||||||
Common stock, par value $0.01 per share | 11,317,057 | $64.67 | $731,874,077 | $28,763 | ||||||||
(1) | This registration statement also covers the associated preferred stock purchase rights (the “Rights”) issued pursuant the Rights Agreement dated as of October 15, 1998, between the registrant and Mellon Investor Services, LLC, as rights agent, as amended. Until the occurrence of certain events, the Rights will not be exercisable for or evidenced separately from the shares of common stock of the registrant. | |
(2) | Represents the maximum number of shares of the common stock of the registrant that may be issued to stockholders of Bois d’Arc Energy, Inc. (“Bois d’Arc”) pursuant to the merger described herein, giving effect to the exchange of outstanding options to acquire Bois d’Arc common stock for the merger consideration. | |
(3) | Pursuant to Rules 457(c) and 457(f) of the Securities Act of 1933, as amended, and estimated solely for purposes of calculating the registration fee, the proposed maximum aggregate offering price is based on the average of the high and low sales prices of the registrant’s common stock, as reported on the New York Stock Exchange on June 4, 2008, and computed based on the estimated maximum number of shares that may be exchanged for the common stock of the registrant being registered, including shares issuable upon an exchange for outstanding options to acquire Bois d’Arc common stock. |
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The information in this joint proxy statement/prospectus is not complete and may be changed. Stone Energy Corporation may not distribute or issue the shares of Stone Energy Corporation common stock being registered pursuant to this registration statement until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to distribute these securities and Stone Energy Corporation is not soliciting offers to receive these securities in any state where such offer or distribution is not permitted. |
David H. Welch | Gary W. Blackie | |
President and Chief Executive Officer | President and Chief Executive Officer | |
Stone Energy Corporation | Bois d’Arc Energy, Inc. |
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TO BE HELD ON , 2008
, 2008
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Stone Energy Corporation | Bois d’Arc Energy, Inc. | |
625 East Kaliste Saloom Rd. | 600 Travis Street, Suite 5200 | |
Lafayette, LA 70508 | Houston, Texas 77002 | |
Attention: General Counsel | Attention: Investor Relations | |
Telephone:(337) 237-0410 | Telephone: (713) 228-0438 | |
www.stoneenergy.com | www.boisdarcenergy.com |
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ANNEXES | ||||||||
Annex A — Agreement and Plan of Merger | ||||||||
Annex B — Opinion of Tudor, Pickering, Holt & Co. Securities, Inc. | ||||||||
Annex C — Opinion of Raymond James & Associates, Inc. | ||||||||
Letter from Ernst & Young LLP | ||||||||
Awareness Letter of Ernst & Young LLP | ||||||||
Consent of Ernst & Young LLP, Lafayette, Louisiana | ||||||||
Consent of Ernst & Young LLP, Houston, Texas | ||||||||
Consent of Netherland, Sewell & Associates, Inc. | ||||||||
Consent of Lee Keeling and Associates, Inc. | ||||||||
Consent of Tudor, Pickering, Holt & Co. Securities, Inc. | ||||||||
Consent of Raymond James & Associates, Inc. |
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Q: | What is the proposed transaction? | |
A: | Stone and Bois d’Arc have entered into a merger agreement, pursuant to which Bois d’Arc will merge with and into Merger Sub, with Merger Sub surviving the merger as a wholly owned subsidiary of Stone, which is referred to as the merger. | |
Q: | Why are Stone and Bois d’Arc proposing the merger? | |
A: | The boards of directors of Stone and Bois d’Arc believe that the merger will position the combined company as one of the largest independent Gulf of Mexico-focused exploration and production companies, with a solid production base, a strong portfolio for continued development of proved and probable reserves, and an extensive inventory of exploration opportunities. The boards of directors of Stone and Bois d’Arc also believe that the merger should be accretive to Stone’s stockholders during 2008 and 2009 with respect to earnings per share, reserves and production. To review the boards of directors’ reasons for the merger in greater detail, see “The Merger — Recommendation of the Stone Board of Directors and Its Reasons for the Merger” and “The Merger — Recommendation of the Bois d’Arc Board of Directors and Its Reasons for the Merger.” | |
Q: | Why am I receiving this joint proxy statement/prospectus? | |
A: | Stone stockholders are being asked to approve the issuance of additional shares of Stone common stock in the merger pursuant to the merger agreement. Under the Stone restated bylaws and the rules of the New York Stock Exchange, referred to as the NYSE, which govern Stone, approval of the issuance of additional shares of Stone common stock in the merger pursuant to the merger agreement requires the affirmative vote of the holders of a majority of the votes cast at the special meeting at which a majority of the outstanding shares of Stone common stock are present and entitled to vote. If a Stone stockholder attends but fails to vote, or if a Stone stockholder abstains, that stockholder will be considered present in determining the presence of a quorum, but will not constitute a vote cast and accordingly, will have no effect on the outcome of the vote. A broker will not be able to vote shares of Stone common stock held in “street name” unless the beneficial owner of those shares instructs such broker how to vote. Such broker non-votes will have no effect on the outcome of the vote. The approval by Stone stockholders of the issuance of additional shares of Stone common stock in the merger pursuant to the merger agreement is a condition to the completion of the merger. | |
Bois d’Arc stockholders are being asked to approve the merger agreement. Under the Nevada Revised Statutes, which govern Bois d’Arc, approval of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Bois d’Arc capital stock entitled to vote, provided that a quorum is present. Accordingly, if a Bois d’Arc stockholder fails to vote, or if a Bois d’Arc stockholder abstains, that will have the same effect as a vote against the approval of the merger agreement. A broker will not be able to vote shares of Bois d’Arc common stock held in “street name” unless the beneficial owner of those shares instructs such broker how to vote. Such broker non-votes will also have the effect of |
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a vote against the approval of the merger agreement. Approval of the merger agreement by Bois d’Arc stockholders is a condition to the completion of the merger. | ||
This joint proxy statement/prospectus contains important information about the proposed merger, the merger agreement and the special meetings, which information you should read carefully before voting. The enclosed voting materials allow you to cause your shares of Stone common stock or Bois d’Arc common stock to be voted without attending the Stone special meeting or the Bois d’Arc special meeting, as applicable, in person. | ||
Your vote is very important. You are encouraged to submit a proxy as soon as possible. | ||
Q: | What is the amount of cash and the number of shares of Stone common stock that Bois d’Arc stockholders will be entitled to receive for their shares of Bois d’Arc common stock? | |
A: | Under the merger agreement, Bois d’Arc stockholders will receive $13.65 in cash, without interest, and 0.165 shares of Stone common stock for each share of Bois d’Arc common stock. | |
Based on the number of outstanding shares of Bois d’Arc common stock on April 29, 2008, Stone will issue approximately 11.3 million shares of Stone common stock in the merger, representing approximately 29% of the shares of Stone common stock outstanding immediately prior to the merger, and will pay approximately $936 million in cash to Bois d’Arc stockholders in the merger pursuant to the merger agreement. | ||
Q: | What conditions are required to be fulfilled to complete the merger? | |
A: | Stone and Bois d’Arc are not required to complete the merger unless certain specified conditions are satisfied or waived. These conditions include approval by Stone stockholders of the issuance of the additional shares of Stone common stock to be issued in the merger pursuant to the merger agreement, approval by Bois d’Arc stockholders of the merger agreement, the effectiveness of theForm S-4 registration statement, of which this joint proxy statement/prospectus constitutes a part, relating to the additional shares of Stone common stock to be issued in the merger pursuant to the merger agreement, and expiration or termination of the waiting period under theHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. There can be no assurance that such conditions will be satisfied. For a more complete summary of the conditions that must be satisfied or waived prior to the effective time of the merger, see “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 69. | |
Q: | Are there risks associated with the merger that I should consider in deciding how to vote? | |
A: | Yes. You should carefully read the detailed description of the risks associated with the merger and the operations of Stone after the merger described in “Risk Factors” beginning on page 16. | |
Q: | What are the tax consequences of the merger? | |
A: | Stone and Bois d’Arc each expect the merger to qualify as a reorganization pursuant to section 368(a) of the Internal Revenue Code of 1986, as amended, referred to as the Internal Revenue Code. | |
Please review carefully the information under the caption “The Merger — Certain Material U.S. Federal Income Tax Consequences” beginning on page 60 for a description of certain material U.S. federal income tax consequences of the merger. The tax consequences to you will depend on your own situation. Please consult your tax advisors for a full understanding of the tax consequences of the merger to you. | ||
Q: | How will Stone finance the cash component of the merger consideration? | |
A: | On April 29, 2008, Stone, Bank of America, N.A. and Banc of America Securities LLC entered into a commitment letter and fee letter with respect to the financing of the merger and the related transactions. The commitment letter, which is subject to customary conditions, provides for a commitment of an aggregate of up to $700 million in financing under a three-year amended and restated revolving credit facility. Stone expects to finance the cash portion of the merger consideration, which is approximately $936 million (based on the number of outstanding shares of Bois d’Arc common stock on April 29, 2008), with its cash on hand and approximately $500 million to $600 million in borrowings under the amended and restated credit facility. |
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Stone expects also to use the credit facility to pay for estimated direct merger costs, to repay and retire certain indebtedness of Bois d’Arc, and for working capital purposes. See “Financing of the Merger” beginning on page 86. | ||
Q: | When do Stone and Bois d’Arc expect to complete the merger? | |
A: | Stone and Bois d’Arc are working to complete the merger as quickly as practicable. Stone and Bois d’Arc currently expect to complete the merger during the third quarter of 2008. However, neither Stone nor Bois d’Arc can predict the exact timing of the effective time of the merger because it is subject to certain conditions both within and beyond their respective control. See “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 69. | |
Q: | Are Bois d’Arc stockholders entitled to appraisal or dissenters’ rights? | |
A: | Bois d’Arc is organized under the laws of the State of Nevada. Under Nevada law, no holder of shares of Bois d’Arc common stock is entitled to appraisal or dissenter’s rights or similar rights to a court valuation of the fair value of its shares in connection with the merger because such shares are listed on the NYSE and such holder will be entitled to cash and shares of Stone common stock that will be listed on the NYSE. | |
Q: | How does the Stone board of directors recommend that Stone stockholders vote? | |
A: | The Stone board of directors has determined that the merger agreement is advisable and the transactions contemplated by the merger agreement, including the issuance of additional shares of Stone common stock in the merger, are in the best interests of the Stone stockholders and recommends that Stone stockholders vote FOR the proposal to approve the issuance of additional shares of Stone common stock in the merger pursuant to the merger agreement.For a more complete description of the recommendation of the Stone board of directors, see “The Merger — Recommendation of the Stone Board of Directors and Its Reasons for the Merger” beginning on page 39. | |
Q: | How does the Bois d’Arc board of directors recommend that Bois d’Arc stockholders vote? | |
A: | The Bois d’Arc board of directors has determined that the merger and other transactions contemplated by the merger agreement are fair to, and in the best interests of, the Bois d’Arc stockholders and recommends that Bois d’Arc stockholders vote FOR the proposal to approve the merger agreement.For a more complete description of the recommendation of the Bois d’Arc board of directors, see “The Merger — Recommendation of the Bois d’Arc Board of Directors and Its Reasons for the Merger” beginning on page 36. | |
Q: | Have Bois d’Arc’s principal stockholders agreed to vote in favor of the merger? | |
A: | Concurrently with the execution of the merger agreement, Stone entered into stockholder agreements with each of Comstock Resources, Inc., which is referred to as Comstock, Wayne and Gayle Laufer and Gary Blackie. As of such date, Comstock, Mr. and Mrs. Laufer and Mr. Blackie beneficially owned an aggregate of approximately 67% of the total issued and outstanding shares of Bois d’Arc common stock. During the term of the stockholder agreements, Comstock, Mr. and Mrs. Laufer and Mr. Blackie each agreed to vote their shares of Bois d’Arc common stock in favor of the merger and the approval of the merger agreement and against any transaction that would impede or delay the merger and granted Stone a proxy to vote their shares at any meeting of the stockholders of Bois d’Arc convened to consider such matters. Each of these Bois d’Arc stockholders also agreed not to violate the no-solicitation provisions of the merger agreement and to be bound by all of the restrictions and obligations of such provisions that are applicable to Bois d’Arc. | |
In addition, in its stockholder agreement, Comstock agreed to a one-yearlock-up with respect to any securities of Stone that it will own upon completion of the merger, including the shares of Stone common stock that it will receive in the merger. Comstock is expected to own about 14% of the total outstanding Stone common stock upon completion of the merger. Comstock also agreed to certain restrictions on transfer of any securities of Stone that it will own upon completion of the merger during the period beginning upon the expiration of the one-yearlock-up ending on the earlier of three years after the effective date of the |
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merger or such time as Comstock owns less than 5% of the outstanding voting securities of Stone. In addition, for the period beginning upon the effective date of the merger and until the earlier of three years after the effective date of the merger or such time as Comstock owns less than 5% of the outstanding voting securities of Stone, Comstock agreed not to acquire, agree to acquire or make any proposal to acquire any additional shares of Stone common stock or other securities or property of Stone or to enter into extraordinary transactions with Stone or seek to influence the management or control of Stone. In addition, Stone agreed to grant certain registration rights to Comstock. | ||
Q: | Do any of the directors and executive officers of Bois d’Arc have interests in the merger? | |
A: | In considering the recommendation of the Bois d’Arc board of directors with respect to the merger agreement, Bois d’Arc stockholders should be aware that certain of Bois d’Arc’s directors and executive officers have interests in the transactions contemplated by the merger agreement that may be different from, in addition to, or in conflict with, the interests of Bois d’Arc stockholders generally. These interests may include, among other things: | |
• Executive officers whose employment is terminated under certain circumstances after the effective time of the merger or who elect to terminate for any reason within six months thereafter will receive severance benefits. | ||
• Bois d’Arc restricted stock and stock options held by its directors and executive officers will become fully vested upon the effective time of the merger. | ||
• Upon the merger, all outstanding stock options will be cancelled and the holders will receive a payment based on the determination of the value of the option as described in “The Merger — Interests of the Directors and Officers of Bois d’Arc in the Merger — Stock Options and Restricted Stock.” | ||
• Certain of Bois d’Arc’s directors and executive officers are entitled to receive payments upon the effective time of the merger to make them “whole” for any excise tax liabilities arising from the accelerated vesting of their restricted stock and stock options. | ||
• All current and certain former directors and officers will be indemnified by Stone with respect to their acts or omissions prior to the effective time of the merger. | ||
In addition, concurrently with the execution of the merger agreement, certain key employees of Bois d’Arc, including Gary Blackie, Bois d’Arc’s President and Chief Executive Officer, entered into a participation agreement with Stone pursuant to which such employees agreed to identify and develop oil and gas prospects during the term of the agreement jointly with Stone through a newly formed entity to be wholly owned by such employees, with such agreement to be effective upon completion of the merger. Mr. Blackie and other employees intend to resign from Bois d’Arc upon completion of the merger and work for the new entity. See “The Merger — Interests of the Directors and Executive Officers of Bois d’Arc in the Merger — Participation Agreement.” | ||
The Bois d’Arc board of directors was aware of these interests and considered them, among other matters, in making its recommendation. See “The Merger — Recommendation of the Bois d’Arc Board of Directors and Its Reasons for the Merger.” | ||
Q: | When and where is the special meeting of the Stone stockholders? | |
A: | The Stone special meeting will take place on , 2008 at 10:00 a.m., Lafayette time, at 625 E. Kaliste Saloom Road, Lafayette, Louisiana 70508. | |
Q: | When and where is the special meeting of the Bois d’Arc stockholders? | |
A: | The Bois d’Arc special meeting will be held on , 2008 at 10:00 a.m., Houston time, at 600 Travis Street, Suite 5200, Houston, Texas 77002. |
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Q: | Who can attend and vote at the special meetings? | |
A: | All Stone stockholders of record as of the close of business on , 2008, the record date for the Stone special meeting, are entitled to receive notice of and to vote at the Stone special meeting. | |
All Bois d’Arc stockholders of record as of the close of business on , 2008, the record date for the Bois d’Arc special meeting, are entitled to receive notice of and to vote at the Bois d’Arc special meeting. | ||
Q: | How will Stone stockholders be affected by the merger and share issuance? | |
A: | After the merger, each Stone stockholder will have the same number of shares of Stone common stock that the stockholder held immediately prior to the merger. However, because Stone will be issuing new shares of Stone common stock to Bois d’Arc stockholders in the merger, each outstanding share of Stone common stock immediately prior to the merger will represent a smaller percentage of the aggregate number of shares of Stone common stock outstanding after the merger. As a result of the merger, each Stone stockholder will own shares in a larger company with more assets. | |
Q: | What do I need to do now? | |
A: | After you have carefully read this joint proxy statement/prospectus and the appendices hereto, please respond by completing, signing and dating your proxy card and returning it in the enclosed postage-paid envelope or by submitting your proxy by telephone or through the Internet as soon as possible so that your shares of Stone common stock or Bois d’Arc common stock will be represented and voted at the applicable special meeting. | |
Please refer to your proxy card or the information forwarded by your broker or other nominee to see which options are available to you. | ||
The Internet and telephone proxy submission procedures are designed to authenticate stockholders and to allow you to confirm that your instructions have been properly recorded. | ||
The method by which you submit a proxy will in no way limit your right to vote at the Stone special meeting or Bois d’Arc special meeting if you later decide to attend the meeting in person. If your shares of Stone common stock or Bois d’Arc common stock are held in the name of a broker or other nominee, you must obtain a proxy, executed in your favor, from the holder of record, to be able to vote at the applicable special meeting. | ||
All shares of Stone common stock entitled to vote and represented by properly completed proxies that are received prior to the Stone special meeting and not revoked will be voted at the Stone special meeting as instructed on the proxies.If you properly complete and sign your proxy card but do not indicate how your shares of Stone common stock should be voted on a matter, the shares of Stone common stock represented by your proxy will be voted as the Stone board of directors recommends and therefore FOR the issuance of additional shares of Stone common stock in the merger pursuant to the merger agreement. | ||
All shares of Bois d’Arc common stock entitled to vote and represented by properly completed proxies that are received prior to the Bois d’Arc special meeting and not revoked will be voted at the Bois d’Arc special meeting as instructed on the proxies.If you properly complete and sign your proxy card but do not indicate how your shares of Bois d’Arc common stock should be voted on a matter, the shares of Bois d’Arc common stock represented by your proxy will be voted as the Bois d’Arc board of directors recommends and therefore FOR the adoption of the merger agreement. | ||
Q: | If I am a Bois d’Arc stockholder, should I send in my stock certificates with my proxy card? | |
A: | No. PleaseDO NOTsend your Bois d’Arc stock certificates with your proxy card. Promptly after the effective time of the merger, the exchange agent will send a letter of transmittal to each person who was a Bois d’Arc stockholder at the effective time of the merger. This mailing will contain instructions on how |
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to surrender certificates formerly representing shares of Bois d’Arc common stock in exchange for the merger consideration the holder is entitled to receive under the merger agreement. | ||
Q: | Can I change my vote after I have delivered my proxy? | |
A: | Yes. You may change your vote at any time before your proxy is exercised at the Stone special meeting or the Bois d’Arc special meeting, as applicable. You can do this in any of the three following ways: | |
• by sending a written notice to the Secretary of Stone or Bois d’Arc, as applicable, in time to be received before the Stone special meeting or the Bois d’Arc special meeting, as applicable, stating that you would like to revoke your proxy; | ||
• by completing, signing and dating a later proxy card or by submitting a later proxy through the Internet or by telephone, in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or | ||
• if you are a holder of record, by attending the special meeting and voting in person. Simply attending the Stone special meeting or Bois d’Arc special meeting without voting will not revoke your proxy or change your vote. | ||
If your shares of Stone common stock or Bois d’Arc common stock are held in an account at a broker or other nominee and you desire to change your vote, you should contact such nominee. | ||
Q: | What should I do if I receive more than one set of voting materials for the Stone special meeting or the Bois d’Arc special meeting? | |
A: | You may receive more than one set of voting materials for the Stone special meeting or the Bois d’Arc special meeting, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares of Stone common stock or Bois d’Arc common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of Stone common stock or Bois d’Arc common stock. If you are a holder of record and your shares of Stone common stock or Bois d’Arc common stock are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive. | |
Q: | If my shares of Stone common stock or Bois d’Arc common stock are held in “street name” by my broker or other nominee, will such nominee vote my shares of Stone common stock or Bois d’Arc common stock for me? | |
A: | No. Without instructions from you, your broker will not be able to vote your shares. You must instruct your broker to vote your shares, following the directions your broker provides. In connection with the Stone special meeting, “broker non-votes” will be considered in determining the presence of a quorum, but will not constitute votes cast and, accordingly, will have no effect on the outcome of the Stone stockholder vote. In connection with the Bois d’Arc special meeting, “broker non-votes” will be considered in determining the presence of a quorum and will have the same effect as a vote AGAINST the approval of the merger agreement. You should therefore provide your broker or other nominee with instructions as to how to vote your shares of Stone common stock or Bois d’Arc common stock. | |
Q: | Who can answer my questions? | |
A: | If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this joint proxy statement/prospectus, the enclosed proxy card or voting instructions, you should contact the information agent: |
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• | Executive officers whose employment is terminated under certain circumstances after the effective time of the merger or who elect to terminate for any reason within six months thereafter will receive severance benefits. | |
• | Bois d’Arc restricted stock and stock options held by its directors and executive officers will become fully vested upon the effective time of the merger. | |
• | Upon the merger, all outstanding stock options will be cancelled and the holders will receive a payment based on the determination of the value of the option as described in “The Merger — Interests of the Directors and Officers of Bois d’Arc in the Merger — Stock Options and Restricted Stock.” | |
• | Certain of Bois d’Arc’s directors and executive officers are entitled to receive payments upon the effective time of the merger to make them “whole” for any excise tax liabilities arising from the accelerated vesting of their restricted stock and stock options. | |
• | All current and certain former directors and officers will be indemnified by Stone with respect to their acts or omissions prior to the effective time of the merger. |
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• | approval of the merger agreement by Bois d’Arc stockholders; | |
• | approval by Stone stockholders of the issuance of the additional shares of Stone common stock to be issued pursuant to the merger agreement; | |
• | the expiration or termination of the waiting period (and any extension thereof) applicable to the consummation of the merger under theHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, referred to as the HSR Act (which occured on June 6, 2008); | |
• | effectiveness of theForm S-4 registration statement, of which this joint proxy statement/prospectus constitutes a part, and the absence of a stop order or proceedings for such purpose pending before or threatened by the SEC; and | |
• | authorization for listing on the NYSE of the shares of Stone common stock issuable to the Bois d’Arc stockholders in the merger pursuant to the merger agreement, subject to official notice of issuance. |
• | to initiate, solicit or knowingly encourage or facilitate any inquiries regarding or the making or submission of any other acquisition proposal; | |
• | subject to certain exceptions, to disclose any non-public information or afford access to its properties, books or records to, or participate or engage in discussions or negotiations with, any third party that has made or is considering making such an acquisition proposal; or | |
• | to accept an acquisition proposal or enter into any agreement, including any letter of intent (other than a confidentiality agreement in certain circumstances), that provides for or relates to an acquisition proposal or that would require or cause it to terminate the merger agreement or fail to consummate the merger. |
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• | the board of directors of the party receiving the acquisition proposal has determined in good faith that: |
— | such acquisition proposal constitutes, or is reasonably likely to lead to, a superior proposal; | |
— | the failure to take such action would be inconsistent with its fiduciary duties to the applicable company and its stockholders; and | |
— | the third party making such acquisition proposal has the ability to consummate such proposal; and |
• | the party receiving such acquisition proposal has complied with the terms of the merger agreement relating to acquisition proposals. |
• | the failure to consummate the merger by December 31, 2008, provided that a party may not terminate upon occurrence of this event if such party’s failure to fulfill its obligations has caused or resulted in the merger not occurring before such time; | |
• | if, prior to obtaining the necessary stockholder vote, the board of directors of Stone or Bois d’Arc, as applicable, withdraws, amends or modifies its approval, recommendation or declaration of advisability of the merger agreement or recommends, adopts, approves or publicly proposes to recommend, adopt or approve any other acquisition proposal (an “adverse recommendation change”); | |
• | the failure to obtain the necessary stockholder approval; | |
• | the existence of a law or regulation prohibiting the merger, or the entry of a final and nonappealable government order which permanently restrains, enjoins or prohibits consummation of the merger; | |
• | a material breach of the other party’s representations, warranties or covenants that gives rise to a failure of certain conditions to closing or the representations and warranties of the other party are or become untrue, which untruth gives rise to a failure of certain conditions to closing (subject, in each case, to a30-day cure period, if the breach or untruth, as applicable, is capable of being cured); or | |
• | a material breach or failure to perform by the other party of any of its covenants or agreements contained in the merger agreement as described under “The Merger Agreement — Covenants — No Solicitation of Alternative Transactions.” |
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Year Ended December 31, 2007 | ||||||||||||
Stone | Bois d’Arc | Pro Forma | ||||||||||
Historical | Historical | Combined | ||||||||||
Operating revenue: | ||||||||||||
Oil production | $ | 424,205 | $ | 123,895 | $ | 548,100 | ||||||
Gas production | 329,047 | 231,565 | 560,612 | |||||||||
Total operating revenue | 753,252 | 355,460 | 1,108,712 | |||||||||
Operating expenses: | ||||||||||||
Lease operating expenses | 149,702 | 56,346 | 206,048 | |||||||||
Production taxes | 9,945 | 2,495 | 12,440 | |||||||||
Depreciation, depletion and amortization | 302,739 | 112,197 | 521,285 | |||||||||
Write-down of oil and gas properties | 8,164 | 344 | 8,164 | |||||||||
Exploration expense | — | 36,040 | — | |||||||||
Accretion expense | 17,620 | 3,088 | 20,708 | |||||||||
Salaries, general and administrative expenses | 33,584 | 12,179 | 45,763 | |||||||||
Incentive compensation expense | 5,117 | 2,690 | 7,807 | |||||||||
Derivative expenses, net | 666 | — | 666 | |||||||||
Total operating expenses | 527,537 | 225,379 | 822,881 | |||||||||
Gain on Rocky Mountain Region properties divestiture | 59,825 | — | 59,825 | |||||||||
Income from operations | 285,540 | 130,081 | 345,656 | |||||||||
Other (income) expenses: | ||||||||||||
Interest expense | 32,068 | 9,033 | 62,156 | |||||||||
Interest income | (12,135 | ) | (512 | ) | (12,647 | ) | ||||||
Other income, net | (5,657 | ) | (541 | ) | (6,198 | ) | ||||||
Early extinguishment of debt | 844 | — | 844 | |||||||||
Total other expenses, net | 15,120 | 7,980 | 44,155 | |||||||||
Income before taxes | 270,420 | 122,101 | 301,501 | |||||||||
Income tax provision (benefit): | ||||||||||||
Current | 95,579 | 13,717 | 109,296 | |||||||||
Deferred | (6,595 | ) | 29,714 | (8,738 | ) | |||||||
Total income taxes | 88,984 | 43,431 | 100,558 | |||||||||
Net income | $ | 181,436 | $ | 78,670 | $ | 200,943 | ||||||
Basic earnings per share | $ | 6.57 | $ | 1.20 | $ | 5.16 | ||||||
Diluted earnings per share | $ | 6.54 | $ | 1.17 | $ | 5.15 | ||||||
Average shares outstanding | 27,612 | 65,392 | 38,929 | |||||||||
Average shares outstanding assuming dilution | 27,723 | 67,224 | 39,040 |
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Three Months Ended March 31, 2008 | ||||||||||||
Stone | Bois d’Arc | Pro Forma | ||||||||||
Historical | Historical | Combined | ||||||||||
Operating revenue: | ||||||||||||
Oil production | $ | 122,707 | $ | 43,091 | $ | 165,798 | ||||||
Gas production | 80,526 | 70,175 | 150,701 | |||||||||
Total operating revenue | 203,233 | 113,266 | 316,499 | |||||||||
Operating expenses: | ||||||||||||
Lease operating expenses | 30,253 | 14,614 | 44,867 | |||||||||
Production taxes | 1,400 | 824 | 2,224 | |||||||||
Depreciation, depletion and amortization | 63,387 | 27,683 | 114,926 | |||||||||
Exploration expense | — | 6,417 | — | |||||||||
Accretion expense | 4,368 | 685 | 5,053 | |||||||||
Salaries, general and administrative expenses | 10,256 | 2,606 | 12,862 | |||||||||
Incentive compensation expense | 1,018 | 569 | 1,587 | |||||||||
Derivative expenses, net | 259 | — | 259 | |||||||||
Total operating expenses | 110,941 | 53,398 | 181,778 | |||||||||
Income from operations | 92,292 | 59,868 | 134,721 | |||||||||
Other (income) expenses: | ||||||||||||
Interest expense | 3,859 | 1,363 | 9,269 | |||||||||
Interest income | (4,914 | ) | (83 | ) | (4,997 | ) | ||||||
Other income, net | (1,041 | ) | (135 | ) | (1,176 | ) | ||||||
Total other (income) expenses, net | (2,096 | ) | 1,145 | 3,096 | ||||||||
Income before taxes | 94,388 | 58,723 | 131,625 | |||||||||
Income tax provision: | ||||||||||||
Current | 13,950 | 10,282 | 24,232 | |||||||||
Deferred | 18,196 | 10,292 | 20,968 | |||||||||
Total income taxes | 32,146 | 20,574 | 45,200 | |||||||||
Net income | $ | 62,242 | $ | 38,149 | $ | 86,425 | ||||||
Basic earnings per share | $ | 2.24 | $ | 0.58 | $ | 2.21 | ||||||
Diluted earnings per share | $ | 2.22 | $ | 0.56 | $ | 2.19 | ||||||
Average shares outstanding | 27,819 | 65,782 | 39,136 | |||||||||
Average shares outstanding assuming dilution | 28,060 | 67,587 | 39,377 |
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Stone | Bois d’Arc | Pro Forma | ||||||||||
Historical | Historical | Combined | ||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 517,033 | $ | 13,965 | $ | 96,998 | ||||||
Accounts receivable | 153,944 | 48,466 | 202,410 | |||||||||
Fair value of hedging contracts | 306 | — | 306 | |||||||||
Deferred tax asset | 18,296 | — | 18,296 | |||||||||
Other current assets | 494 | 4,097 | 4,591 | |||||||||
Total current assets | 690,073 | 66,528 | 322,601 | |||||||||
Oil and gas properties — United States — full cost method of accounting: | ||||||||||||
Proved, net of accumulated depletion | 949,432 | 893,557 | 2,417,676 | |||||||||
Unevaluated | 194,476 | 21,194 | 549,232 | |||||||||
Oil and gas properties — China — full cost method of accounting: | ||||||||||||
Unevaluated, net of accumulated depletion | 30,328 | — | 30,328 | |||||||||
Building and land, net | 5,653 | — | 5,653 | |||||||||
Fixed assets, net | 5,277 | 2,761 | 8,038 | |||||||||
Other assets, net | 23,443 | 2,764 | 35,207 | |||||||||
Fair value of hedging contracts | 3,222 | — | 3,222 | |||||||||
Goodwill | — | — | 472,350 | |||||||||
Total assets | $ | 1,901,904 | $ | 986,804 | $ | 3,844,307 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable to vendors | $ | 95,582 | $ | 32,822 | $ | 128,404 | ||||||
Undistributed oil and gas proceeds | 31,852 | 9,295 | 41,147 | |||||||||
Fair value of hedging contracts | 27,188 | — | 27,188 | |||||||||
Asset retirement obligations | 46,353 | — | 46,353 | |||||||||
Current income taxes payable | 13,950 | 10,154 | 24,104 | |||||||||
Other current liabilities | 11,353 | 681 | 12,034 | |||||||||
Total current liabilities | 226,278 | 52,952 | 279,230 | |||||||||
Long-term debt | 400,000 | 56,000 | 993,988 | |||||||||
Deferred taxes | 114,155 | 191,191 | 624,135 | |||||||||
Asset retirement obligations | 201,722 | 45,608 | 245,938 | |||||||||
Other long-term liabilities | 8,003 | — | 8,003 | |||||||||
Total liabilities | 950,158 | 345,751 | 2,151,294 | |||||||||
Common stock | 279 | 664 | 392 | |||||||||
Treasury stock | (860 | ) | — | (860 | ) | |||||||
Additional paid-in capital | 522,863 | 504,970 | 1,264,017 | |||||||||
Retained earnings | 444,486 | 135,419 | 444,486 | |||||||||
Accumulated other comprehensive loss | (15,022 | ) | — | (15,022 | ) | |||||||
Total stockholders’ equity | 951,746 | 641,053 | 1,693,013 | |||||||||
Total liabilities and stockholders’ equity | $ | 1,901,904 | $ | 986,804 | $ | 3,844,307 | ||||||
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As of December 31, | ||||
Estimated Proved Reserves | 2007 | |||
Oil (MBbls) | 31,586 | |||
Natural gas (MMcf) | 213,083 | |||
Equivalents (MMcfe) | 402,598 |
As of December 31, | ||||
Estimated Proved Reserves | 2007 | |||
Oil (MBbls) | 24,632 | |||
Natural gas (MMcf) | 250,134 | |||
Equivalents (MMcfe) | 397,926 |
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Bois d’Arc | ||||||||||||||||
Stone | Bois d’Arc | Pro Forma | Stone Pro | |||||||||||||
Historical | Historical | Equivalents(2) | Forma(3) | |||||||||||||
For the year ended December 31, 2007 (per share): | ||||||||||||||||
Net income: | ||||||||||||||||
Basic | $ | 6.57 | $ | 1.20 | $ | 0.85 | $ | 5.16 | ||||||||
Diluted | 6.54 | 1.17 | 0.85 | 5.15 | ||||||||||||
Dividends declared | — | — | — | — | ||||||||||||
For the three months ended March 31, 2008 (per share): | ||||||||||||||||
Net income: | ||||||||||||||||
Basic | 2.24 | 0.58 | 0.36 | 2.21 | ||||||||||||
Diluted | 2.22 | 0.56 | 0.36 | 2.19 | ||||||||||||
Dividends declared | — | — | — | — | ||||||||||||
As of March 31, 2008 (per share): | ||||||||||||||||
Book value at period end(1) | 33.43 | 9.65 | 7.02 | 42.55 |
(1) | Book value per share is computed by dividing stockholders’ equity by the number of shares of common stock at the end of such period. | |
(2) | Bois d’Arc equivalent pro forma combined per share amounts are calculated by multiplying the pro forma combined per share amounts by an exchange ratio of 0.165 shares of Stone common stock that would be exchanged for each share of Bois d’Arc common stock pursuant to the merger. | |
(3) | The pro forma combined net income per share is calculated by dividing the pro forma net income by the pro forma weighted average number of shares outstanding during the period. |
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MARKET PRICE DATA AND DIVIDEND INFORMATION
Stone | Bois d’Arc | |||||||||||||||||||
Common Stock | Common Stock | |||||||||||||||||||
Calendar Year | High | Low | High | Low | ||||||||||||||||
2005 | First Quarter | $ | 52.21 | $ | 41.16 | n/a | n/a | |||||||||||||
Second Quarter | 51.93 | 40.51 | $ | 15.61 | $ | 11.50 | ||||||||||||||
Third Quarter | 62.50 | 48.98 | 17.72 | 13.40 | ||||||||||||||||
Fourth Quarter | 61.75 | 42.00 | 18.00 | 13.58 | ||||||||||||||||
2006 | First Quarter | 51.40 | 38.55 | 19.94 | 13.75 | |||||||||||||||
Second Quarter | 51.50 | 40.12 | 18.89 | 13.78 | ||||||||||||||||
Third Quarter | 48.25 | 39.64 | 17.13 | 14.41 | ||||||||||||||||
Fourth Quarter | 40.19 | 34.71 | 16.76 | 14.10 | ||||||||||||||||
2007 | First Quarter | 35.35 | 26.92 | 15.65 | 12.49 | |||||||||||||||
Second Quarter | 35.60 | 29.03 | 17.94 | 13.01 | ||||||||||||||||
Third Quarter | 40.43 | 27.43 | 20.06 | 15.35 | ||||||||||||||||
Fourth Quarter | 48.53 | 38.59 | 23.64 | 17.88 | ||||||||||||||||
2008 | First Quarter | 55.89 | 39.14 | 22.86 | 17.38 | |||||||||||||||
Second Quarter (as of June 5, 2008) | 73.96 | 52.20 | 27.21 | 21.27 |
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• | market reaction to the announcement of the merger and market assessment of its likelihood of being consummated; | |
• | changes in oil or natural gas prices; | |
• | changes in the respective businesses, operations and prospects of Stone and Bois d’Arc, including Stone’s and Bois d’Arc’s ability to meet earnings estimates; | |
• | governmental or litigation developments or regulatory considerations affecting Stone or Bois d’Arc or the industry generally; and | |
• | general business, market, industry or economic conditions. |
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• | difficulties in the integration of the operations and personnel of the acquired company; | |
• | diversion of management’s attention away from other business concerns; and | |
• | the assumption of any undisclosed or other potential liabilities of the acquired company. |
• | Executive officers whose employment is terminated under certain circumstances after the effective time of the merger or who elect to terminate for any reason within six months thereafter will receive severance benefits. | |
• | Bois d’Arc restricted stock and stock options held by its directors and executive officers will become fully vested upon the effective time of the merger. | |
• | Upon the merger, all outstanding stock options will be cancelled and the holders will receive a payment based on the determination of the value of the option as described in “The Merger — Interests of the Directors and Officers of Bois d’Arc in the Merger — Stock Options and Restricted Stock.” | |
• | Certain of Bois d’Arc’s directors and executive officers are entitled to receive payments upon the effective time of the merger to make them “whole” for any excise tax liabilities arising from the accelerated vesting of their restricted stock and stock options. | |
• | All current and certain former directors and officers will be indemnified by Stone with respect to their acts or omissions prior to the effective time of the merger. |
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• | incurring additional debt; | |
• | paying dividends on stock, redeeming stock or redeeming subordinated debt; | |
• | making investments; | |
• | creating liens on its assets; | |
• | selling assets; | |
• | guaranteeing other indebtedness; | |
• | entering into agreements that restrict dividends from its subsidiary to itself; | |
• | merging, consolidating or transferring all or substantially all of its assets; and | |
• | entering into transactions with affiliates. |
• | making it more difficult for Stone to satisfy its obligations under the indentures or other debt and increasing the risk that Stone may default on its debt obligations; | |
• | requiring Stone to dedicate a substantial portion of its cash flow from operating activities to required payments on debt, thereby reducing the availability of cash flow for working capital, capital expenditures and other general business activities; | |
• | limiting Stone’s ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and other general business activities; | |
• | limiting Stone’s flexibility in planning for, or reacting to, changes in its business and the industry in which it operates; | |
• | detracting from its ability to successfully withstand a downturn in its business or the economy generally; | |
• | placing Stone at a competitive disadvantage against other less leveraged competitors; and | |
• | making Stone vulnerable to increases in interest rates, because debt under its credit facility is at a variable rate. |
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• | estimates of oil and gas reserves; | |
• | estimates of future oil and natural gas production, including estimates of any increases in oil and gas production; | |
• | planned capital expenditures and the availability of capital resources to fund capital expenditures; | |
• | the various risks and other factors considered by the respective boards of Stone and Bois d’Arc as described under “The Merger — Recommendation of the Stone Board of Directors and Its Reasons for the Merger” and under “The Merger — Recommendation of the Bois d’Arc Board of Directors and Its Reasons for the Merger;” | |
• | the amount and timing of any synergies expected to result from the merger; | |
• | outlook on oil and gas prices; | |
• | the impact of political and regulatory developments; | |
• | future and pro forma financial condition or results of operations and future revenues and expenses; and | |
• | business strategy and other plans and objectives for future operations. |
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• | the ability to consummate the merger; | |
• | difficulties and delays in obtaining regulatory approvals for the merger; | |
• | difficulties and delays in achieving synergies and cost savings; and | |
• | potential difficulties in meeting conditions set forth in the merger agreement. |
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• | Internet. Stone stockholders may submit a proxy over the Internet by going to the website listed on their proxy card. Once at the website, they should follow the instructions to submit a proxy. | |
• | Telephone. Stone stockholders may submit a proxy using the toll-free number listed on their proxy card. Easy-to-follow voice prompts will help Stone stockholders and confirm that their submission instructions have been followed. |
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• | Mail. Stone stockholders may submit a proxy by signing, dating and returning their proxy card in the preaddressed, postage-paid envelope provided. |
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• | Internet. Bois d’Arc stockholders may submit a proxy over the Internet by going to the website listed on their proxy card. Once at the website, they should follow the instructions to submit a proxy. | |
• | Telephone. Bois d’Arc stockholders may submit a proxy using the toll-free number listed on their proxy card. Easy-to-follow voice prompts will help Bois d’Arc stockholders and confirm that their submission instructions have been followed. | |
• | Mail. Bois d’Arc stockholders may submit a proxy by signing, dating and returning their proxy card in the preaddressed, postage-paid envelope provided. |
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• | Stone management updated the board of directors on the terms of the proposed transaction and the results of the due diligence process; | |
• | Representatives of Vinson & Elkins reviewed the terms of the proposed merger agreement, the stockholder agreements and the participation agreement and advised the board of directors of its fiduciary obligations when considering a strategic business combination with Bois d’Arc; and | |
• | TudorPickeringHolt rendered an oral opinion (as subsequently confirmed in writing in an opinion dated April 29, 2008) that as of that date and based on and subject to the assumptions made, procedures followed, matters considered and limitations of review set forth in the opinion, the aggregate merger consideration to be paid by Stone in the merger was fair from a financial point of view to Stone (see “ — Opinion of Stone’s Financial Advisor”). |
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• | the oral opinion delivered by TudorPickeringHolt on April 29, 2008 (as subsequently confirmed in writing in an opinion dated April 29, 2008) that, as of that date and subject to the assumptions made, procedures followed, matters considered and limitations of review set forth in the opinion, the aggregate merger consideration to be paid by Stone in the merger was fair from a financial point of view to Stone; | |
• | that the merger should be accretive to Stone’s stockholders during 2008 and 2009 with respect to earnings per share, reserves and production; | |
• | that the combined company will be positioned as one of the largest independent Gulf of Mexico-focused exploration and production companies, which may allow it to participate in larger scale exploratory and development drilling projects and acquisition opportunities than would be available to Stone on a stand-alone basis and could reduce volatility related to large-scale deepwater projects; | |
• | that the merger would increase Stone’s estimated proved reserves by over 85% and increase its average daily production by over 60%; | |
• | that the reserve life of the combined company will be one year longer than the reserve life of Stone on a stand-alone basis; | |
• | that Bois d’Arc has a strong portfolio for continued development of proved and probable reserves; | |
• | that all of Bois d’Arc’s proved reserves and production are located in the offshore Gulf of Mexico, which should facilitate the integration of the Stone and Bois d’Arc businesses and allow for synergies in operations; | |
• | that Stone’s existing knowledge and experience with respect to similar offshore Gulf of Mexico reservoirs should be applicable to Bois d’Arc’s assets; | |
• | that the combined company will be significantly larger than Stone is now and, as a result, should have greater exploration and production strengths, should have greater liquidity in the market for its securities and should be able to consider future strategic opportunities that might not otherwise be possible; | |
• | that the combined company should benefit from the prospect development efforts of key members of Bois d’Arc’s management team pursuant to the participation agreement; | |
• | the terms of the merger agreement and the structure of the transaction, including the conditions to each party’s obligation to complete the merger; | |
• | that the merger agreement requires Bois d’Arc to pay a termination fee of $55 million if the merger agreement is terminated in accordance with certain provisions of the merger agreement; | |
• | the ability of Stone and Bois d’Arc to complete the merger, including their ability to obtain the necessary regulatory approvals and their obligations to attempt to obtain those approvals; | |
• | the terms of the commitment letter from Bank of America, N.A. to finance, in part, the cash portion of the merger consideration; and |
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• | that the structure of the merger will constitute a reorganization under section 368(a) of the Internal Revenue Code, with the stock component of the merger consideration being tax deferred. |
• | information concerning the financial condition, results of operations, prospects and businesses of Stone and Bois d’Arc, including the respective companies’ estimated reserves, production volumes, cash flows from operations, recent performance of common stock and ratio of Stone’s common stock price to Bois d’Arc’s common stock price over various periods, as well as current industry, economic and market conditions; | |
• | the net asset value per share of the common stock of both Stone and Bois d’Arc; and | |
• | the results of business, legal and financial due diligence of Bois d’Arc conducted by Stone’s management and legal advisors. |
• | that there are significant risks inherent in combining and integrating two companies, including that the companies may not be successfully integrated, and that successful integration of the companies will require the dedication of significant management resources, which will temporarily detract attention from the day-to-day businesses of the combined company; | |
• | the effects on net asset value, cash flows from operations and other financial measures under various modeling assumptions, and the uncertainties in timing with respect to some anticipated benefits of the merger; | |
• | the risk of changes in oil and gas prices from those used to evaluate the merger, which may not be mitigated by hedging; | |
• | that Stone’s internal estimates of Bois d’Arc’s proved reserves at year end were lower than Bois d’ Arc’s estimates; | |
• | that the percentage of the combined company’s proved reserves attributable to the “proved undeveloped” category will increase from 20% to 28%; | |
• | the risk that the proved undeveloped, probable and possible reserves of Bois d’Arc may never be converted to proved developed reserves; | |
• | the risks inherent in owning properties located in the Gulf of Mexico, including the risks of future hurricanes that could damage or destroy the acquired properties; | |
• | the increased level of indebtedness of the combined company as a result of Stone’s financing of a portion of the merger consideration; | |
• | that the merger agreement imposes limitations on Stone’s ability to solicit offers for the acquisition of Stone as well as the possibility that Stone could be required to pay a termination fee of $55 million in certain circumstances; | |
• | that the capital requirements necessary to achieve the expected growth of the combined company’s businesses will be significant, and there can be no assurance that the combined company will be able to fund all of its capital requirements from operating cash flows, and the fact that the combined company would have substantially more total long-term debt than Stone on a stand-alone basis; |
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• | that the merger might not be completed as a result of a failure to satisfy the conditions contained in the merger agreement; and | |
• | other matters described under the caption “Risk Factors.” |
• | the $13.65 in cash and 0.165 shares of Stone common stock to be paid to the Bois d’Arc stockholders for each share of Bois d’Arc common stock as consideration in the merger, which, as of April 29, 2008, had a market value of $24.85 and represented a 16% premium to the closing price of Bois d’Arc as of March 31, 2008 (four weeks prior to April 29, 2008), and a 14% premium to the closing price of Bois d’Arc as of March 3, 2008 (eight weeks prior to April 29, 2008), but a 4% discount to the Bois d’Arc closing price on April 29, 2008; and | |
• | that the merger is the result of an active sale process in which Bois d’Arc, through Scotia Waterous and Raymond James, had initial contact with approximately 130 parties. |
• | the fact that, as of April 29, 2008, approximately 55% of the merger consideration to be received by the Bois d’Arc stockholders will be cash; | |
• | the fact that the stock component of the merger consideration will be tax deferred; | |
• | the financial and other terms and conditions of the merger agreement and the fact that such terms and conditions were the product of arm’s-length negotiations between the parties; | |
• | the board’s belief that the merger is more favorable to the Bois d’Arc stockholders than any other alternative reasonably available to the company and the Bois d’Arc stockholders, including the |
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alternative of remaining a stand-alone, independent company, as well as the risks and uncertainties associated with those alternatives; |
• | the financial presentations (including the assumptions and methodologies underlying the analysis in connection therewith) and the fairness opinion by Raymond James that, as of April 29, 2008, the merger consideration is fair to the Bois d’Arc stockholders from a financial point of view; | |
• | historical and current information concerning each of Bois d’Arc’s and Stone’s business, financial performance and condition, operations, technology, management and competitive position, including the pending litigation against Stone; and current industry, economic and market conditions, including Bois d’Arc’s prospects if it were to remain an independent company; | |
• | the terms of the merger agreement, including without limitation: |
- | the limited number and nature of the conditions to Stone’s and its subsidiary’s obligation to consummate the merger and the limited risk of non-satisfaction of such conditions (including, in particular, the absence of any financing condition); | |
- | the provisions of the merger agreement that allow the board, under certain limited circumstances if required to comply with its fiduciary duties under applicable law, to change its recommendation that the Bois d’Arc stockholders vote in favor of the approval of the merger agreement; | |
- | the provisions of the merger agreement that allow the company, under certain limited circumstances if required by the board to comply with its fiduciary duties under applicable law, to furnish information to and enter into discussions with third parties; | |
- | the provisions of the merger agreement that provide the board the ability to terminate the merger agreement in order to accept a financially superior proposal (subject to certain conditions contained in the merger agreement, including the payment to Stone of a $55.0 million termination fee); | |
- | the provisions of the merger agreement providing that Bois d’Arc would be entitled to receive a $55.0 million termination fee in the event Stone terminated the merger agreement in certain circumstances; |
• | the conclusion of the board that the $55.0 million termination fee payable to Stone (and the circumstances when such fee is payable), in the event that the merger agreement is terminated under certain circumstances, was reasonable in light of the benefits of the merger and the sale process conducted by Bois d’Arc with the assistance of Scotia Waterous and Raymond James; | |
• | the advice received by the Bois d’Arc board from Scotia Waterous and Raymond James, as financial advisors, and Locke Lord, as legal advisor, each of which has extensive experience in transactions similar to the merger; and | |
• | the fact that the completion of the merger requires the approval of the holders of a majority of Bois d’Arc’s common stock entitled to vote and outstanding as of the Bois d’Arc record date and present at the special meeting. |
• | the risk that the merger might not be completed in a timely manner or at all; | |
• | the fact that, upon completion of the merger, Bois d’Arc will no longer exist as an independent, publicly traded company and the Bois d’Arc stockholders will only participate in the future earnings or growth of Stone and will therefore only indirectly benefit from any appreciation in the value of Bois d’Arc; | |
• | the restrictions on the conduct of Bois d’Arc’s business prior to the completion of the merger, requiring Bois d’Arc to conduct its business only in the ordinary course, subject to specific limitations, which may delay or prevent Bois d’Arc from undertaking drilling opportunities that may arise pending completion of the merger; and |
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• | the restrictions on Bois d’Arc’s ability to solicit or engage in discussions or negotiations with a third party regarding specified transactions involving Bois d’Arc and the requirement that Bois d’Arc pay Stone a $55.0 million termination fee in order for the board to accept a superior proposal. |
• | the merger agreement; | |
• | annual reports to stockholders and annual reports on Form10-K of Stone for the five years ended December 31, 2007; | |
• | annual reports to stockholders and annual reports on Form10-K of Bois d’Arc for the three years ended December 31, 2007; | |
• | certain interim reports to stockholders and quarterly reports onForm 10-Q of Stone and Bois d’Arc; | |
• | certain other communications from Stone and Bois d’Arc to their respective stockholders; | |
• | the estimated proved, probable and possible reserve report for Stone effective December 31, 2007, prepared by Netherland, Sewell & Associates, Inc., an independent engineering firm; | |
• | the estimated proved reserve report for Bois d’Arc effective December 31, 2007, prepared by Lee Keeling and Associates, Inc., an independent engineering firm; |
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• | the estimated proved and probable reserves of Bois d’Arc as of December 31, 2007, as estimated by Stone; | |
• | certain financial and estimated reserve and production information and forecasts for Stone and Bois d’Arc prepared by the management of Stone (the “Forecasts”); | |
• | certain publicly available research analyst reports with respect to the future financial performance of Stone and Bois d’Arc, which TudorPickeringHolt discussed with the senior management of Stone; and | |
• | a commitment letter from Bank of America, N.A. for a senior secured revolving credit facility with an initial borrowing base of $700,000,000. |
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• | Contango Oil & Gas Co./ Undisclosed Sellers | |
• | Korea National Oil Corporation and Samsung Corporation/ Taylor Energy Company LLC | |
• | Mariner Energy, Inc. / StatoilHydro ASA | |
• | Petsec Energy Ltd. / LLOG Exploration Co. | |
• | McMoRan Exploration Co. / Newfield Exploration Co. | |
• | Energy XXI (Bermuda) Limited/ Pogo Producing Co. | |
• | Itochu Corp. / Range Resources Corp. | |
• | Coldren Resources LP / Noble Energy Incorporated | |
• | Apache Corp. / BP plc | |
• | Merit Energy Corp. / The Houston Exploration Company | |
• | Cal Dive International, Inc. / Remington Oil and Gas Corporation | |
• | W&T Offshore, Inc. / Kerr-McGee Corp. | |
• | Norsk Hydro ASA / Spinnaker Exploration Co. | |
• | Mariner Energy, Inc. / Forest Oil Corporation |
• | the transaction value (defined as the equity purchase price plus assumed net debt obligations, if any) over proved reserves; and | |
• | the transaction value over daily production. |
Transaction Value/ | Transaction Value/ | |||||||
Proved Reserves | Daily Production | |||||||
(Mcfe) | (Mcfe/d) | |||||||
High | $ | 6.90 | $ | 17,797 | ||||
Median | 3.87 | 7,640 | ||||||
Low | 3.17 | 3,574 | ||||||
Merger Consideration | $ | 5.19 | $ | 15,051 |
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• | ATP Oil & Gas Corporation | |
• | Callon Petroleum Company | |
• | Energy Partners, Ltd. | |
• | Energy XXI (Bermuda) Limited | |
• | Mariner Energy, Inc. | |
• | McMoRan Exploration Co. | |
• | Stone Energy Corporation | |
• | W&T Offshore, Inc. |
• | Enterprise value / proved reserves | |
• | Enterprise value / daily production | |
• | Enterprise value / estimated 2008 EBITDAX using Wall Street equity research consensus estimates | |
• | Enterprise value / estimated 2008 EBITDAX using estimates provided by Stone management adjusted for Wall Street research consensus commodity price estimates |
2008 EBITDAX | Proved | Daily | ||||||||||||||
Consensus | Management | Reserves | Production | |||||||||||||
Estimates | Estimates | (Mcfe) | (Mcfe/d) | |||||||||||||
High | 5.0 | x | 5.0 | x | $ | 8.35 | $ | 13,547 | ||||||||
Median | 3.9 | x | 3.9 | x | 4.37 | 10,071 | ||||||||||
Low | 3.1 | x | 3.1 | x | 3.10 | 6,942 | ||||||||||
Merger Consideration | 5.2 | x | 4.2 | x | $ | 5.19 | $ | 15,051 |
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Year | Gas (per MMbtu) | Oil (per Bbl) | ||||||
2008 | $ | 10.43 | $ | 109.85 | ||||
2009 | 10.30 | 109.13 | ||||||
2010 | 9.59 | 106.49 | ||||||
2011 | 9.38 | 105.65 | ||||||
2012 | 9.27 | 105.50 | ||||||
Thereafter (Tail Price) | 7.00 | 70.00 |
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• | reviewed the draft merger agreement, including the financial terms and conditions; | |
• | reviewed Annual Reports onForm 10-K and related audited financial statements of Bois d’Arc and Stone as of and for the years ended December 31, 2005, December 31, 2006 and December 31, 2007 and certain interim reports onForm 10-Q of Bois d’Arc and Stone for such years, and Bois d’Arc’s preliminary unaudited financial statements for the period ended March 31, 2008; | |
• | reviewed certain estimates of Bois d’Arc’s and Stone’s oil and gas reserves, including estimates of proved reserves prepared by the independent engineering firms of each of Bois d’Arc and Stone as of December 31, 2007; | |
• | reviewed other Bois d’Arc and Stone financial and operating information requested fromand/or provided by Bois d’Arc and Stone; | |
• | reviewed certain other publicly available business and financial information on Bois d’Arc and Stone; | |
• | discussed with members of the senior management of each of Bois d’Arc and Stone past and current business, operations, financial information and prospects and information relating to the aforementioned and any other matters which Raymond James has deemed relevant to Raymond James’s inquiry; | |
• | compared the financial terms of the draft merger agreement with financial terms of other transactions that Raymond James deemed to be relevant; | |
• | reviewed the historical market prices and trading history of Bois d’Arc and Stone; | |
• | discussed the current and projected operations and prospects of Bois d’Arc and Stone with management; | |
• | compared financial and stock market information for Bois d’Arc and Stone with similar information for comparable companies with publicly traded equity securities; | |
• | considered the responses received from the efforts of Bois d’Arc and its advisors to secure indications of interest and definitive proposals from third parties; and | |
• | performed other such analyses, and considered such other information and factors, as Raymond James considered relevant and appropriate. |
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Price per | Implied | |||||||
Share | Premium/(Discount) | |||||||
Merger Consideration Value | $ | 24.99 | — | |||||
Bois d’Arc Closing Stock Price as of April 28, 2008 | $ | 27.02 | (8 | )% | ||||
4 Weeks (20 trading days) Prior to and Including April 28, 2008 | $ | 22.13 | 13 | % | ||||
8 Weeks (40 trading days) Prior to and Including April 28, 2008 | $ | 21.77 | 15 | % | ||||
52 Week Low Bois d’Arc Stock Price | $ | 14.97 | 67 | % | ||||
52 Week High Bois d’Arc Stock Price | $ | 27.02 | (8 | )% | ||||
Bois d’Arc Closing Stock Price as of June 5, 2007 | $ | 17.24 | 45 | % | ||||
4 Weeks (20 trading days) Prior to and Including June 5, 2007 | $ | 16.24 | 54 | % | ||||
8 Weeks (40 trading days) Prior to and Including June 5, 2007 | $ | 13.82 | 81 | % | ||||
1 Year Prior to and Including June 5, 2007 | $ | 15.96 | 57 | % | ||||
52 Week Low Bois d’Arc Stock Price Prior to June 5, 2007 | $ | 12.70 | 97 | % | ||||
52 Week High Bois d’Arc Stock Price Prior to June 5, 2007 | $ | 17.30 | 44 | % |
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• | ATP Oil & Gas Corporation | |
• | Energy XXI (Bermuda) Limited | |
• | Energy Partners, Ltd. | |
• | Mariner Energy, Inc. | |
• | McMoRan Exploration Co. | |
• | Stone Energy Corporation | |
• | W&T Offshore, Inc. |
Enterprise Value | ||||||||||||||||
EBITDAX | Proved Reserves | Daily Production | ||||||||||||||
CY08E | CY09E | (Mcfe) | (Mcfe/d) | |||||||||||||
High | 3.9 | x | 3.7 | x | $ | 5.22 | $ | 11,021 | ||||||||
Median | 3.6 | x | 3.3 | x | 4.75 | 10,019 | ||||||||||
Low | 3.2 | x | 3.0 | x | 4.27 | 9,017 | ||||||||||
Merger Consideration | 4.0 | x | 3.6 | x | $ | 4.47 | $ | 15,289 |
Enterprise Value | ||||||||||||||||
EBITDAX | Proved Reserves | Daily Production | ||||||||||||||
CY08E | CY09E | (Mcfe) | (Mcfe/d) | |||||||||||||
High | $ | 24.33 | $ | 25.40 | $ | 29.37 | $ | 17.76 | ||||||||
Median | 22.03 | 23.00 | 26.61 | 16.06 | ||||||||||||
Low | 19.74 | 20.61 | 23.86 | 14.36 | ||||||||||||
Merger Consideration | $ | 24.99 | $ | 24.99 | $ | 24.99 | $ | 24.99 |
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Acquirer | Target | |
Saratoga Resources Inc. | Harvest Oil and Gas LLC | |
Energy XXI (Bermuda) Limited | Marlin Texas LP | |
Helix Energy Solutions Group Inc. | Remington Oil & Gas Corp. | |
Norsk Hydro ASA | Spinnaker Exploration Co. | |
Woodside Petroleum Ltd | Gryphon Exploration Co. |
Enterprise Value/ | Enterprise Value / | Proved Reserves | Daily Production | |||||||||||||
Proved Reserves | Daily Production | Implied Equity | Implied Equity | |||||||||||||
(Mcfe) | (Mcfe/d) | Price per Share | Price per Share | |||||||||||||
High | $ | 4.50 | $ | 14,265 | $ | 25.20 | $ | 23.26 | ||||||||
Median | 4.10 | 12,968 | 22.83 | 21.06 | ||||||||||||
Low | 3.69 | 11,671 | 20.45 | 18.86 | ||||||||||||
Merger Consideration | $ | 4.47 | $ | 15,289 | $ | 24.99 | $ | 24.99 |
Acquirer | Target Assets | |
CIECO Energy | Callon Petroleum Co. | |
Mariner Energy Inc. | StatoilHydro ASA | |
W&T Offshore Inc. | Apache Corp. | |
Petsec Energy Ltd | LLOG Exploration Co. | |
McMoran Exploration Co. | Newfield Exploration Co. | |
Eni SpA | Dominion Resources Inc. | |
Energy XXI (Bermuda) Limited | Pogo Producing Co. | |
Itochu Corp. | Range Resources Corp. | |
Callon Petroleum Co. | BP plc | |
Phoenix Exploration Co. | Cabot Oil & Gas Corp. | |
Coldren Resources LP | Noble Energy Incorporated | |
Mitsui Oil and affiliated companies | Pogo Producing Co. | |
Apache Corp. | BP plc | |
Merit Energy Corp. | The Houston Exploration Co. | |
W&T Offshore Inc. | Kerr-McGee Corp. | |
Mariner Energy Inc. | Forest Oil Corp. | |
Energy Resources Technology GOM Inc., Helix Energy Solutions Group Inc. | Murphy Oil Corp. | |
StatoilHydro ASA | EnCana Corp. | |
Nippon Oil Corp. | Devon Energy Corp. |
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Enterprise Value/ | Enterprise Value / | Proved Reserves | Daily Production | |||||||||||||
Proved Reserves | Daily Production | Implied Equity | Implied Equity | |||||||||||||
(Mcfe) | (Mcfe/d) | Price per Share | Price per Share | |||||||||||||
High | $ | 3.82 | $ | 7,178 | $ | 21.23 | $ | 11.24 | ||||||||
Median | 3.47 | 6,525 | 19.21 | 10.13 | ||||||||||||
Low | 3.13 | 5,873 | 17.20 | 9.03 | ||||||||||||
Merger Consideration | $ | 4.47 | $ | 15,289 | $ | 24.99 | $ | 24.99 |
Escalation | ||||||||||||||||||||||||||||||||||||||||
NYMEX Strip | 2008E | 2009E | 2010E | 2011E | 2012E | 2013E | 2014E | 2015E | 2016E | Thereafter | ||||||||||||||||||||||||||||||
Natural Gas (Mcf) | $ | 11.22 | $ | 10.58 | $ | 9.78 | $ | 9.50 | $ | 9.39 | $ | 9.31 | $ | 9.29 | $ | 9.34 | $ | 9.42 | 0 | % | ||||||||||||||||||||
Oil (Bbl) | $ | 116.53 | $ | 111.66 | $ | 108.57 | $ | 107.54 | $ | 107.31 | $ | 107.41 | $ | 108.04 | $ | 108.43 | $ | 109.01 | 0 | % |
Escalation | ||||||||||||
I/B/E/S | 2008E | 2009E | Thereafter | |||||||||
Natural Gas (Mcf) | $ | 8.47 | $ | 8.37 | 0 | % | ||||||
Oil (Bbl) | $ | 92.09 | $ | 88.43 | 0 | % |
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Bois d’Arc | ||||
Equity Value/ | ||||
per Share | ||||
NYMEX Strip Pricing | ||||
High | $ | 25.24 | ||
Mid-point | 23.96 | |||
Low | 22.69 | |||
I/B/E/S Consensus Pricing | ||||
High | $ | 18.94 | ||
Mid-point | 17.93 | |||
Low | 16.92 | |||
Merger Consideration | $ | 24.99 |
Transaction Premium | ||||||||||||
1-Day | 1-Week | 4-Weeks | ||||||||||
High | 26.4 | % | 27.5 | % | 30.9 | % | ||||||
Median | 24.0 | % | 25.0 | % | 28.1 | % | ||||||
Low | 21.6 | % | 22.5 | % | 25.3 | % | ||||||
Merger consideration | $ | 24.99 | $ | 24.99 | $ | 24.99 | ||||||
Bois d’Arc closing stock price per share | $ | 27.02 | $ | 26.37 | $ | 22.13 | ||||||
Implied Transaction premium (discount) | (7.5 | )% | (5.2 | )% | 12.9 | % |
Transaction Premium | ||||||||||||
1-Day | 1-Week | 4-Weeks | ||||||||||
High | 25.8 | % | 28.2 | % | 31.8 | % | ||||||
Median | 23.5 | % | 25.7 | % | 29.0 | % | ||||||
Low | 21.1 | % | 23.1 | % | 26.1 | % | ||||||
Merger consideration | $ | 24.99 | $ | 24.99 | $ | 24.99 | ||||||
Bois d’Arc closing stock price per share | $ | 17.24 | $ | 17.30 | $ | 16.24 | ||||||
Implied Transaction premium (discount) | 45.0 | % | 44.5 | % | 53.9 | % |
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Implied Equity Price per Share | ||||||||||||
1-Day | 1-Week | 4-Weeks | ||||||||||
High | $ | 34.15 | $ | 33.62 | $ | 28.98 | ||||||
Median | 33.50 | 32.96 | 28.36 | |||||||||
Low | 32.85 | 32.30 | 27.73 | |||||||||
Merger consideration | $ | 24.99 | $ | 24.99 | $ | 24.99 |
Implied Equity Price per Share | ||||||||||||
1-Day | 1-Week | 4-Weeks | ||||||||||
High | $ | 21.69 | $ | 22.18 | $ | 21.41 | ||||||
Median | 21.29 | 21.74 | 20.94 | |||||||||
Low | 20.88 | 21.29 | 20.47 | |||||||||
Merger consideration | $ | 24.99 | $ | 24.99 | $ | 24.99 |
Bois d’Arc | Stone | |||||||
12/31/07 Proved Reserves | 51 | % | 49 | % | ||||
CY07 Average Daily Production | 34 | % | 66 | % | ||||
CY07 Revenues | 32 | % | 68 | % | ||||
CY07 EBITDAX | 34 | % | 66 | % | ||||
CY08E Average Daily Production | 40 | % | 60 | % | ||||
CY08E EBITDAX | 40 | % | 60 | % | ||||
CY09E Average Daily Production | 43 | % | 57 | % | ||||
CY09E EBITDAX | 42 | % | 58 | % | ||||
Enterprise value | 50 | % | 50 | % |
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Price per | ||||
Share | ||||
Stone Closing Stock Price as of April 28, 2008 | $ | 68.74 | ||
4 Weeks (20 trading days) Prior to and Including April 28, 2008 | $ | 53.80 | ||
8 Weeks (40 trading days) Prior to and Including April 28, 2008 | $ | 51.85 | ||
52 Week Low Stone Stock Price | $ | 28.41 | ||
52 Week High Stone Stock Price | $ | 68.74 | ||
Stone Closing Stock Price as of June 5, 2007 | $ | 33.44 | ||
4 Weeks (20 trading days) Prior to and Including June 5, 2007 | $ | 31.23 | ||
8 Weeks (40 trading days) Prior to and Including June 5, 2007 | $ | 30.16 | ||
1 Year Prior to and Including June 5, 2007 | $ | 49.10 | ||
52 Week Low Stone Stock Price Prior to June 5, 2007 | $ | 27.37 | ||
52 Week High Stone Stock Price Prior to June 5, 2007 | $ | 48.95 |
• | ATP Oil & Gas Corporation | |
• | Bois d’Arc Energy, Inc. | |
• | Energy XXI (Bermuda) Limited | |
• | Energy Partners, Ltd. | |
• | Mariner Energy, Inc. | |
• | McMoRan Exploration Co. | |
• | W&T Offshore, Inc. |
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Enterprise Value/ | ||||||||||||||||
EBITDAX | Proved | Daily | ||||||||||||||
CY08E | CY09E | Reserves | Production | |||||||||||||
(Mcfe) | (Mcfe/d) | |||||||||||||||
High | 4.4 | x | 4.0 | x | $ | 5.22 | $ | 11,161 | ||||||||
Median | 4.0 | x | 3.7 | x | 4.75 | 10,146 | ||||||||||
Low | 3.6 | x | 3.3 | x | 4.27 | 9,132 |
Enterprise Value/ | ||||||||||||||||
EBITDAX | Proved | Daily | ||||||||||||||
CY08E | CY09E | Reserves | Production | |||||||||||||
(Mcfe) | (Mcfe/d) | |||||||||||||||
High | $ | 104.98 | $ | 100.22 | $ | 73.32 | $ | 81.50 | ||||||||
Median | 95.74 | 91.41 | 66.96 | 74.39 | ||||||||||||
Low | 86.50 | 82.60 | 60.60 | 67.29 |
Escalation | ||||||||||||||||||||||||||||||||||||||||
NYMEX Strip | 2008E | 2009E | 2010E | 2011E | 2012E | 2013E | 2014E | 2015E | 2016E | Thereafter | ||||||||||||||||||||||||||||||
Natural Gas (Mcf) | $ | 11.22 | $ | 10.58 | $ | 9.78 | $ | 9.50 | $ | 9.39 | $ | 9.31 | $ | 9.29 | $ | 9.34 | $ | 9.42 | 0 | % | ||||||||||||||||||||
Oil (Bbl) | $ | 116.53 | $ | 111.66 | $ | 108.57 | $ | 107.54 | $ | 107.31 | $ | 107.41 | $ | 108.04 | $ | 108.43 | $ | 109.01 | 0 | % |
Escalation | ||||||||||||
I/B/E/S | 2008E | 2009E | Thereafter | |||||||||
Natural Gas (Mcf) | $ | 8.47 | $ | 8.37 | 0 | % | ||||||
Oil (Bbl) | $ | 92.09 | $ | 88.43 | 0 | % |
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Stone | ||||
Equity Value | ||||
per Share | ||||
NYMEX Strip Pricing | ||||
High | $ | 69.99 | ||
Mid-point | 67.39 | |||
Low | 64.79 | |||
I/B/E/S Consensus Pricing | ||||
High | $ | 54.48 | ||
Mid-point | 52.50 | |||
Low | 50.51 |
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• | not to sell, transfer, pledge (other than a bona fide pledge to a financial institution or brokerage firm), assign or otherwise dispose or enter into any contract to sell, transfer, pledge, assign or otherwise dispose of any of their shares of Bois d’Arc common stock or any interest therein; | |
• | not to grant any proxy, power of attorney or enter into any voting agreement or other voting arrangement with respect to their shares of Bois d’Arc common stock; | |
• | not to acquire or agree to acquire any additional securities or property of Bois d’Arc, Stone or any of their subsidiaries; | |
• | not to propose to enter into any merger, recapitalization or other business combination with respect to Bois d’Arc, Stone or any of their subsidiaries, including making any acquisition proposal for such stockholder’s own account; and | |
• | to be bound by all of the restrictions and obligations of the no-solicitation provisions contained in the merger agreement that are applicable to Bois d’Arc. |
• | pursuant to an underwritten offering; or | |
• | resulting in a bona fide pledge of any voting securities of Stone to a financial institution or brokerage firm, provided that such pledge does not materially affect Comstock’s ability to perform its obligations under its stockholder agreement. |
• | that Comstock reasonably believes (based upon a review of reports filed under Sections 13(d) and 13(e) of the Exchange Act) will not result in the transferee holding more than 5% of the outstanding voting securities of Stone; | |
• | that Comstock reasonably believes (based upon a review of reports filed under Sections 13(d) and 13(e) of the Exchange Act) will not result in the transferee holding more than 10% of the outstanding voting securities of Stone and that the transferee is acquiring such securities in the ordinary course of business and not with the purpose or effect of changing or influencing the control of Stone; | |
• | in connection with a business combination approved by Stoneand/or its security holders; | |
• | pursuant to a tender or exchange offer for voting securities of Stone by any person other than Comstock or its affiliates that is not opposed by Stone’s board of directors; | |
• | resulting in a bona fide pledge of any voting securities of Stone to a financial institution or brokerage firm (provided, that such pledge does not materially affect Comstock’s ability to perform its obligations under the stockholder agreement); or | |
• | upon the liquidation or dissolution of Stone or other transfer that is effected by operation of law. |
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• | an individual citizen or resident of the United States; | |
• | a corporation or other entity taxable as a corporation created in or organized under the laws of the United States or any political subdivision thereof; | |
• | an estate the income of which is subject to U.S. federal income tax without regard to its source; or | |
• | a trust, if a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of the substantial decisions of such trust. |
• | a foreign person or entity; | |
• | a tax-exempt organization, financial institution, mutual fund, dealer or broker in securities or insurance company; | |
• | a trader who elects to mark its securities to market for U.S. federal income tax purposes; | |
• | a person who holds shares of Bois d’Arc common stock as part of an integrated investment such as a straddle, hedge, constructive sale, conversion transaction or other risk reduction transaction; | |
• | a person who holds shares of Bois d’Arc common stock in an individual retirement or other tax-deferred account; | |
• | a United States person whose functional currency is not the U.S. dollar; | |
• | an individual who received shares of Bois d’Arc common stock, or who acquires shares of Stone common stock, pursuant to the exercise of employee stock options or otherwise as compensation or in connection with the performance of services; |
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• | a partnership or other flow-through entity (including an S corporation or a limited liability company treated as a partnership for U.S. federal income tax purposes) and persons who hold an interest in such entities; or | |
• | a person subject to the alternative minimum tax. |
• | a Bois d’Arc stockholder generally will recognize capital gain (but not loss) in the merger. Any such gain recognized will equal thelesserof (1) the excess, if any, of (a) the sum of the amount of cash (excluding any cash received instead of a fractional share) and the fair market value of the shares of Stone common stock received in the merger (plus any fractional share for which cash is received in lieu thereof) over (b) its adjusted tax basis in the shares of Bois d’Arc common stock exchanged or (2) the amount of cash received in the merger (excluding cash received instead of a fractional share, as discussed below). For this purpose, Bois d’Arc stockholders must calculate gain or loss separately for each identifiable block (that is, stock acquired at the same time for the same price) of shares of |
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Bois d’Arc common stock they exchange. The amount of any gain recognized in the merger by such stockholder may be treated as a dividend (as discussed in the last bullet point below). |
• | the aggregate tax basis of any shares of Stone common stock received by a Bois d’Arc stockholder in the merger (before reduction for the basis in any fractional share of Stone common stock) will be the same as the aggregate tax basis of the Bois d’Arc common stock exchanged in the merger, decreased by the amount of cash received (excluding any cash received in lieu of a fractional share) and increased by the amount of gain or dividend income recognized in the merger (excluding any gain recognized as a result of cash received in lieu of a fractional share). | |
• | the holding period of any shares of Stone common stock a Bois d’Arc stockholder receives in the merger generally will include the holding period of the shares of Bois d’Arc common stock it exchanged for such shares of Stone common stock. | |
• | if a Bois d’Arc stockholder has differing bases or holding periods in respect of its shares of Bois d’Arc common stock, it should consult its tax advisor prior to the exchange with regard to identifying the bases or holding periods of the particular shares of Stone common stock received in the merger. | |
• | because Stone will not issue any fractional shares of Stone common stock in the merger, if any Bois d’Arc stockholder exchanges shares of Bois d’Arc common stock in the merger and would otherwise have received a fraction of a share of Stone common stock, such stockholder will receive cash for that fractional share. Any cash received in lieu of a fractional share of Stone common stock should be treated as received in an exchange of that fractional share for cash. The amount of any capital gain or loss attributable to the deemed sale will be equal to the amount of cash received with respect to the fractional interest less the ratable portion of the tax basis of the shares of Bois d’Arc common stock surrendered that is allocated to the fractional interest. The deductibility of capital losses is subject to certain limitations. | |
• | any capital gain recognized by an individual stockholder of Bois d’Arc generally will be subject to U.S. federal income tax at a maximum 15% rate if such individual’s holding period in the shares of Bois d’Arc common stock is more than one year on the date of completion of the merger. Any amount received in the merger by such individual stockholder that is treated as a dividend (as discussed in the following bullet point) generally will be subject to U.S. federal income tax at a maximum 15% rate. | |
• | it is possible that some or all of the cash received by a Bois d’Arc stockholder in the merger will be treated as a dividend giving rise to ordinary income rather than as stock disposition proceeds giving rise to capital gain. In general, the appropriate tax treatment will depend upon whether and to what extent the exchange reduces the Bois d’Arc stockholder’s percentage stock ownership (including stock that is either actually owned or deemed owned under constructive ownership rules) of Stone, which is determined by treating the Bois d’Arc stockholder as if it first exchanged all of its shares of Bois d’Arc common stock solely for shares of Stone common stock and then Stone immediately redeemed all or a portion of the shares of Stone common stock in exchange for the cash actually received by the stockholder. Gain recognized in the deemed redemption generally will be treated as a dividend to the extent of the stockholder’s ratable share of undistributed earnings and profits of Bois d’Arc if the deemed redemption does not result in a “meaningful reduction” in the stockholder’s actual and deemed stock ownership of Stone. In making this determination, each Bois d’Arc stockholder will, under the constructive ownership rules, be deemed to own not only the stock actually owned, but also stock that is owned by certain related persons and entities or that the stockholder or such persons or entities have the right to acquire pursuant to an option. The IRS has ruled that a stockholder in a publicly held corporation whose relative stock interest is minimal and who exercises no control with respect to corporate affairs is generally considered to have a “meaningful reduction” if that stockholder has any reduction in its percentage stock ownership under the above analysis. Thus, any stockholder in this situation generally should recognize capital gain. These rules are complex and dependent upon the specific factual circumstances particular to each holder. Each Bois d’Arc stockholder should consult its tax advisor as to the application of these rules to its particular facts. |
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• | corporate existence, good standing and qualification to conduct business; | |
• | capitalization, including ownership of subsidiary capital stock and the absence of restrictions or encumbrances with respect to capital stock of any subsidiary; | |
• | corporate power and authorization to enter into and carry out the obligations under the merger agreement and the enforceability of the merger agreement; | |
• | absence of any conflict or violation of organizational documents, third party agreements or law or regulation as a result of entering into and carrying out the obligations of the merger agreement; | |
• | governmental, third party and regulatory approvals or consents required to complete the merger; | |
• | filings and reports with the SEC and financial information; | |
• | oil and gas matters; | |
• | absence of certain changes, events or circumstances; | |
• | absence of undisclosed liabilities; | |
• | accuracy of the information supplied for inclusion in this joint proxy statement/prospectus; | |
• | employee benefit plans and ERISA; | |
• | litigation and compliance with laws; | |
• | intellectual property; | |
• | material contracts; | |
• | tax matters; | |
• | environmental matters; | |
• | oil and gas properties and other assets; | |
• | insurance; | |
• | labor matters and employees; | |
• | transactions with affiliates; |
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• | derivative and hedging transactions; | |
• | natural gas regulation; | |
• | disclosure controls and procedures; | |
• | investment company status; | |
• | required vote by stockholders; | |
• | recommendations of merger by boards of directors and opinions of financial advisors; | |
• | fees payable to brokers in connection with the merger; | |
• | reorganization; and | |
• | no other representations or warranties. |
• | changes to economic, political or business conditions affecting the domestic energy markets generally, except, in each case, to the extent any such changes or effects materially disproportionately affect such party; | |
• | the occurrence of natural disasters of any type, including, without limitation, earthquakes and tsunamis but not including tropical cyclones (including hurricanes, tropical storms and tropical depressions); | |
• | changes in market prices, both domestically and globally, for any carbon-based energy product and any write-down for accounting purposes of oil and gas reserves as a result of a “ceiling test” or property impairment to the extent but only to the extent such write-down or property impairment is directly attributable to changes in market prices of oil or gas (but not any change resulting from a default under any agreement or arrangement as a result of such write-down or property impairment); | |
• | the announcement or pendency of the merger agreement and the transactions contemplated thereby, compliance with the terms thereof or the disclosure of the fact that Stone is the prospective owner of Bois d’Arc, including any litigation arising from any of the foregoing; | |
• | the existence or occurrence of war, acts of war, terrorism or similar hostilities; | |
• | changes in laws of general applicability or interpretations thereof by courts or governmental entities; or | |
• | changes in the market price of either Stone common stock or Bois d’Arc common stock (but not any change underlying such changes in price to the extent such change would otherwise constitute a material adverse effect relating to Stone or Bois d’Arc, as the case may be). |
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• | approval by Bois d’Arc stockholders of the merger agreement; | |
• | approval by Stone stockholders of the issuance of Stone common stock pursuant to the merger agreement; | |
• | absence of any statute, rule, order, decree or regulation, and of any action taken by any court or other governmental entity, which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the merger or makes the consummation of the merger illegal; | |
• | expiration or termination of the waiting period (and any extension thereof) applicable to the consummation of the merger under the HSR Act (which occured on June 6, 2008); | |
• | effectiveness of theS-4 registration statement, of which this joint proxy statement/prospectus constitutes a part, and absence of any stop order or proceedings for such purpose pending before or threatened by the SEC; and | |
• | authorization for listing on the NYSE of shares of Stone common stock issuable to the stockholders of Bois d’Arc pursuant to the merger agreement, subject to official notice of issuance. |
• | Stone’s and Merger Sub’s representations and warranties set forth in the merger agreement (without giving effect to any limitation as to “materiality” or “material adverse effect” set forth therein) shall be true and correct at and as of the closing date of the merger, as if made at and as of the closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations to be true and correct (without giving effect to any limitation as to “materiality” or “material adverse effect” set forth therein) individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a material adverse effect on Stone; and Bois d’Arc shall have received an officers’ certificate from Stone to this effect; | |
• | the performance or compliance in all material respects by Stone and Merger Sub of each of their respective obligations contained in the merger agreement; and Bois d’Arc shall have received an officers’ certificate from Stone to this effect; | |
• | absence of any suit, action or proceeding by any court or other governmental entity seeking to (1) prohibit or limit in any material respect the ownership or operation by any of the parties to the merger agreement or any of their respective affiliates of a substantial portion of Bois d’Arc and its subsidiaries, taken as a whole, or require any such person to dispose of or hold separate any material portion of the business or assets of Bois d’Arc and its subsidiaries, taken as a whole, as a result of the merger or any of the other transactions contemplated by the merger agreement, or (2) restrain, preclude, enjoin or prohibit the merger or any of the other transactions contemplated by the merger agreement; and | |
• | the receipt by Bois d’Arc of an opinion of its counsel, dated the closing date of the merger, to the effect that the merger will qualify as a reorganization under section 368(a) of the Internal Revenue Code and that Bois d’Arc and Stone will each be a “party to the reorganization” within the meaning of section 368 of the Internal Revenue Code. |
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• | Bois d’Arc’s representations and warranties set forth in the merger agreement shall be true and correct (without giving effect to any limitations as to “materiality” or “material adverse effect” set forth therein) both at and as of the closing date of the merger, as if made at and as of the closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be true and correct (without giving effect to any limitations as to “materiality or material adverse effect”) individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a material adverse effect on Bois d’Arc; and Stone shall have received an officers’ certificate from Bois d’Arc to this effect; | |
• | the performance or compliance in all material respects by Bois d’Arc of each of its obligations contained in the merger agreement; and Stone shall have received an officers’ certificate from Bois d’Arc to this effect; | |
• | absence of any suit, action or proceeding by any court or other governmental entity seeking to (1) prohibit or limit in any material respect the ownership or operation by any of the parties to the merger agreement or any of their respective affiliates of a substantial portion of the business or assets of Bois d’Arc and its subsidiaries, taken as a whole, or to require any person to dispose of or hold separate any material portion of the business or assets of Bois d’Arc and its subsidiaries, taken as a whole, as a result of the merger or any of the other transactions contemplated by the merger agreement, or (2) restrain, preclude, enjoin or prohibit the merger or any of the other transactions contemplated by the merger agreement; and | |
• | the receipt by Stone of an opinion of its counsel, dated the closing date of the merger, to the effect that the merger will qualify as a reorganization under section 368(a) of the Internal Revenue Code and that Bois d’Arc and Stone will each be a “party to the reorganization” within the meaning of section 368 of the Internal Revenue Code. |
• | conduct the business of Bois d’Arc and its subsidiaries only in and not take any action except in the ordinary course of business consistent with past practices; | |
• | use its reasonable best efforts to preserve intact its business organization and goodwill and the business organization and goodwill of its subsidiaries; | |
• | use its reasonable best efforts to keep available the services of the current officers and key employees of Bois d’Arc and its subsidiaries and preserve and maintain existing relationships with customers, suppliers, officers, employees and creditors and with other persons with which Bois d’Arc has significant business relationships; | |
• | deliver promptly to Stone updates on the operations of Bois d’Arc at least monthly; and | |
• | maintain all insurance policies and replacement insurance policies having substantially similar coverages as the insurance policies described in the Bois d’Arc disclosure letter. |
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• | enter into any new line of business, incur or commit to any capital expenditures, or any obligations or liabilities in connection with any capital expenditures in excess of $2 million per obligation other than capital expenditures and obligations or liabilities incurred or committed to prior to the date of the merger agreement or incurred or committed to as may be reasonably required to conduct emergency operations on any well, pipeline or other facility; | |
• | amend its articles of incorporation or bylaws or similar organizational documents; | |
• | declare, set aside or pay any dividend or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock or other equity interests, except that Bois d’Arc may permit any direct or indirect wholly owned subsidiary to pay dividends; | |
• | adjust, split, combine, subdivide or reclassify any capital stock or other equity interests or issue, grant, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or of any other such securities or agreements of Bois d’Arc or any of its subsidiaries, other than issuances (1) of shares of Bois d’Arc common stock pursuant to the Bois d’Arc stock options or restricted stock unit awards outstanding on the date of the merger agreement, or (2) by a wholly owned subsidiary of Bois d’Arc of such subsidiary’s capital stock or other equity interests to Bois d’Arc or any other wholly owned subsidiary of Bois d’Arc, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock or any other securities or agreements of the type described above; | |
• | grant any increase in the compensation (including base salary and target bonus) or benefits payable to any officer or director of Bois d’Arc or any of its subsidiaries; | |
• | except in connection with promotions on a basis consistent with past practices, grant any increase in the compensation or benefits payable to any employee who is not an officer of Bois d’Arc or any of its subsidiaries, or to any director of Bois d’Arc or its subsidiaries; | |
• | except as required to comply with applicable law or any agreement in existence on the date of the merger agreement or as expressly provided in the merger agreement, adopt, enter into, amend or otherwise increase, or accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under any collective bargaining, bonus, profit sharing, thrift, incentive compensation, deferred compensation, severance, termination, change in control, retention, hospitalization or other medical, life, disability, insurance or other welfare, profit sharing, stock option, stock appreciation right, restricted stock or other equity based, pension, retirement or other employee compensation or benefit plan, program agreement or arrangement; | |
• | enter into or amend any employment or consulting agreement or, except in accordance with existing contracts or agreements, grant any severance or termination pay to any officer, director or employee of Bois d’Arc or any of its subsidiaries other than made for purposes of complying with section 409A of the Internal Revenue Code; | |
• | change its methods of accounting in effect at December 31, 2007, except in accordance with changes in U.S. GAAP and applicable law as concurred with by Bois d’Arc’s independent auditors; | |
• | acquire or agree to acquire any person or other business organization, division or business by merger, consolidation, purchase of an equity interest or portion of assets, or by any other manner, or (other than in the ordinary course of business consistent with past practice) acquire any assets; | |
• | sell, lease, farmout, exchange, transfer, assign or otherwise dispose of, or agree or commit to sell, lease, farmout, exchange, transfer, assign or otherwise dispose of, any of its assets except for the sale of hydrocarbons in the ordinary course of business consistent with past practice; |
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• | mortgage, pledge, hypothecate, grant any security interest in, or otherwise subject any of its assets to any liens, subject to limited exceptions; | |
• | except for taxes, pay, discharge or satisfy any claims (including claims of stockholders), liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), except for the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities or obligations reflected or reserved against in Bois d’Arc’s balance sheet as of December 31, 2007 or liabilities or obligations in accordance with the terms of agreements in effect on the date of the merger agreement or entered into after the date of the merger agreement in the ordinary course of business consistent with past practice and not in violation of the merger agreement, or compromise, settle, grant any waiver or release relating to any litigation, other than settlements covered by insurance or where the amount paid or to be paid does not exceed $1.0 million for any individual claim or series of related claims or $1.0 million in the aggregate; | |
• | engage in any transaction (except pursuant to agreements in effect at the time of the merger agreement or as disclosed in Bois d’Arc’s disclosure letter), or enter into any agreement, arrangement, or understanding, directly or indirectly, with any of Bois d’Arc’s affiliates (not including any employees of Bois d’Arc or any of its subsidiaries, other than the directors and executive officers thereof); | |
• | change any material tax method of accounting, make or change any material tax election, authorize or undertake any indemnities for taxes, extend any period for assessment of any tax, file any request for ruling or determination, amend any material tax return, or settle or compromise any material tax liability, except where such action would not have a material effect on the tax position of Bois d’Arc and its subsidiaries taken as a whole; | |
• | take any action that would reasonably be expected to result in (1) any of the conditions to the merger not being satisfied, (2) a material adverse effect on Bois d’Arc or (3) materially impair or delay consummation of the merger or the other transactions contemplated by the merger agreement; | |
• | adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Bois d’Arc or any of its subsidiaries (other than the merger) or any agreement relating to an acquisition proposal (except certain confidentiality agreements); | |
• | incur or assume any indebtedness, except for indebtedness incurred and letters of credit issued under Bois d’Arc’s credit agreement, in the ordinary course of business; | |
• | modify any material indebtedness or other liability to increase Bois d’Arc’s (or any of its subsidiaries’) obligations with respect to such indebtedness; | |
• | assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person (other than a wholly owned subsidiary of Bois d’Arc); | |
• | make any loans, advances or capital contributions to, or investments in, any other person (other than to wholly owned subsidiaries of Bois d’Arc, or by wholly owned subsidiaries to Bois d’Arc); | |
• | enter into any contract, commitment or transaction, except in the ordinary course of business and consistent with past practice, and in no event exceeding $2.0 million in the aggregate, except as otherwise permitted under the merger agreement; | |
• | enter into any agreement, understanding or commitment that materially limits Bois d’Arc’s or any of Bois d’Arc’s affiliates’ or that would limit the combined company’s or any of the combined company’s affiliates’ ability to compete in or conduct any line of business or compete with any person or in any geographic area or during any period of time; | |
• | enter into any material joint venture, partnership or other similar arrangement or materially amend or modify in an adverse manner the terms of (or waive any material rights under) any existing material |
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joint venture, partnership or other similar arrangement (other than any such action between its wholly owned subsidiaries); |
• | terminate any material contract to which it is a party or waive or assign any of its rights or claims in a manner that is materially adverse to Bois d’Arc or, except in the ordinary course of business consistent with past practice, modify or amend in any material respect any material contract; | |
• | make, enter into or assume any derivative transaction or enter into any agreement to sell hydrocarbons other than in the ordinary course of business at market pricing; | |
• | modify any existing agreement or enter into any new agreement with Bois d’Arc’s financial advisors or similar consultants; or | |
• | enter into or publicly announce an intention to enter into an agreement, contract, commitment or arrangement to take any of the prohibited actions described above. |
• | declare, set aside, make or pay any dividend or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock or other equity interests (except for wholly owned subsidiaries of Stone); | |
• | permit any of its subsidiaries to (i) adjust, split, combine, subdivide or reclassify any capital stock or other equity interests or issue, grant, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or of any other such securities or agreements of Stone or any of its subsidiaries, other than issuances (1) of shares of Stone common stock pursuant to the Stone options outstanding on the date of the merger agreement or (2) by a wholly owned subsidiary of Stone of such subsidiary’s capital stock or other equity interests to Stone or any other wholly owned subsidiary of Stone; or (ii) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or any other securities or agreements of the type described in clause (i) above, other than purchases of shares of Stone common stock pursuant to Stone’s previously announced stock repurchase program; | |
• | change its methods of accounting in effect at December 31, 2007, except changes in accordance with GAAP or applicable law as concurred with by Stone’s independent auditors; | |
• | amend its certificate of incorporation or bylaws in a manner that adversely affects the terms of the Stone common stock; | |
• | acquire ownership or become a “beneficial owner” for the purposes of Section 78.414 of the Nevada Revised Statutes of any shares of any voting securities of Bois d’Arc, other than shares so owned as of |
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the date of the merger agreement or any shares beneficially owned as a result of Stone and Merger Sub entering into the stockholder agreements or acquired pursuant to the merger agreement; |
• | take any action that would reasonably be expected to (1) result in any of the conditions to the merger not being satisfied, (2) result in a material adverse effect on Stone or (3) materially impair or delay consummation of the merger or the other transactions contemplated by the merger agreement; | |
• | adopt or enter into or permit any of its subsidiaries to adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Stone or any of its subsidiaries (other than the merger) or any agreement relating to an acquisition proposal (except certain confidentiality agreements); | |
• | change any material tax method of accounting, make or change any material tax election, authorize or undertake any indemnities for taxes, extend any period for assessment of any tax, file any request for ruling or determination, amend any material return, or settle or compromise any material tax liability, except where such action would not have a material effect on the tax position of Stone and its subsidiaries taken as a whole; and | |
• | enter into an agreement, contract, commitment or arrangement to take any of the prohibited actions described above. |
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• | directly or indirectly initiate, solicit or knowingly encourage or facilitate (including by way of furnishing non-public information) any inquiries regarding or the making or submission of any proposal that constitutes, or may reasonably be expected to lead to, any acquisition proposal (as defined below); | |
• | participate or engage in any discussions or negotiations with, or disclose any non-public information relating to itself or any of its subsidiaries, or afford access to its or its subsidiaries’ properties, books or |
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records to any person that has made or that it knows or has reason to believe is contemplating making an acquisition proposal; or |
• | accept an acquisition proposal or enter into any agreement, including any letter of intent (other than a confidentiality agreement in certain circumstances that contains specified terms), that (1) provides for, constitutes or relates to any acquisition proposal or (2) requires or causes either Bois d’Arc or Stone to respectively abandon, terminate or fail to consummate the merger or the other transactions contemplated by the merger agreement. |
• | the acquisition proposal was not initiated, solicited, knowingly encouraged or facilitated by that party, its subsidiaries, or any of its officers or directors, investment bankers, attorneys, accountants, financial advisors, agents or other representatives after the date of the merger agreement; | |
• | the board of directors of the party that received the acquisition proposal determines in good faith, after consultation with its financial advisors and outside legal counsel, that such acquisition proposal constitutes or is reasonably likely to lead to a superior proposal (as defined below); | |
• | the board of directors of the party that received the acquisition proposal determines in good faith (after consultation with its outside legal counsel) that failure to take such action would be inconsistent with its fiduciary duties to the applicable company and its stockholders under applicable law; | |
• | the board of directors of the party that received the acquisition proposal determines in good faith, after consultation with its financial advisors and outside legal counsel, that the person making such acquisition proposal is reasonably expected to have the ability to consummate such acquisition proposal; and | |
• | before the party receiving the acquisition proposal provides any information to the person making the acquisition proposal, such person enters into a confidentiality agreement on specified terms with the party that received the acquisition proposal. |
• | to promptly advise the other party in writing of the receipt of any acquisition proposal or any request for information received from any person that has made or that it reasonably believes may be contemplating an acquisition proposal, or any inquiry, discussions or negotiations with respect to any acquisition proposal, the material terms and conditions of any request, acquisition proposal, inquiry, discussions or negotiations, and the identity of the person or group making any request or acquisition proposal or with whom any discussions or negotiations are taking place; | |
• | to provide the other party any non-public information concerning it provided to any other person or group in connection with any acquisition proposal that was not previously provided to the other party and copies of any written materials received from that person or group; | |
• | to keep the other party fully and promptly informed of the status of any acquisition proposals (including the identity of the parties involved and price and any material changes to any terms and conditions); and | |
• | not to release any third party from or waive any provisions of any confidentiality agreement related to any potential acquisition proposal or any standstill agreement. |
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• | in the case of clause (1) above, that the Bois d’Arc board of directors intends to make such adverse recommendation change and containing the material facts and information constituting the basis for such determination by the Bois d’Arc board of directors that the failure to make an adverse recommendation change would be inconsistent with its fiduciary duties to Bois d’Arc and its stockholders. During such five business day period, Bois d’Arc agrees, at the request of Stone, to negotiate in good faith with Stone with respect to any changes or modifications to the merger agreement that would allow the Bois d’Arc board of directors not to make such adverse recommendation change consistent with its fiduciary duties; provided that a determination by the Bois d’Arc board of directors in good faith, after consultation with its outside legal counsel and financial advisors, that, after taking into account any such changes or modifications, the failure to make a company adverse recommendation change would be inconsistent with its fiduciary duties to Bois d’Arc and its stockholders will not require a new notice of change or a new five business day notice period, and | |
• | in the case of clause (2) above, that such acquisition proposal with respect to Bois d’Arc constitutes a superior proposal, that the Bois d’Arc board of directors intends to make such company adverse recommendation change and containing all required information, together with copies of any written offer or proposal in respect of such superior proposal unless previously provided and a summary of the terms and conditions of such proposal. During such five business day period, Bois d’Arc agrees, at the request of Stone, to negotiate in good faith with Stone with respect to any revised offer from Stone in respect of the terms of the transactions contemplated by this agreement. In making a determination that such acquisition proposal with respect to Bois d’Arc constitutes a superior proposal and that the failure to make an adverse recommendation change would be inconsistent with its fiduciary duties to Bois d’Arc and its stockholders, the Bois d’Arc board of directors shall take into account any changes or modifications to the terms of the merger agreement proposed by Stone; provided that a determination by the Bois d’Arc board of directors in good faith, after consultation with its outside legal counsel and financial advisors, that, after taking into account any such changes or modifications, such acquisition proposal with respect to Bois d’Arc continues to constitute a superior proposal and the failure to make a company adverse recommendation change would be inconsistent with its fiduciary duties to Bois d’Arc and its stockholders will not require a new notice of change or a new five business day notice period. |
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• | in the case of clause (1) above, that the Stone board of directors intends to make such adverse recommendation change and containing the material facts and information constituting the basis for such determination by the Stone board of directors that the failure to make an adverse recommendation change would be inconsistent with its fiduciary duties to Stone and its stockholders. During such five business day period, Stone agrees, at the request of Bois d’Arc, to negotiate in good faith with Bois d’Arc with respect to any changes or modifications to the merger agreement that would allow the Stone board of directors not to make such adverse recommendation change consistent with its fiduciary duties; provided that a determination by the Stone board of directors in good faith, after consultation with its outside legal counsel and financial advisors, that, after taking into account any such changes or modifications, the failure to make a company adverse recommendation change would be inconsistent with its fiduciary duties to Stone and its stockholders will not require a new notice of change or a new five business day notice period, and | |
• | in the case of clause (2) above, that such acquisition proposal with respect to Stone constitutes a superior proposal, that the Stone board of directors intends to make such company adverse recommendation change and containing all required information, together with copies of any written offer or proposal in respect of such superior proposal unless previously provided and a summary of the terms and conditions of such proposal. During such five business day period, Stone agrees, at the request of Bois d’Arc, to negotiate in good faith with Bois d’Arc with respect to any revised offer from Stone in respect of the terms of the transactions contemplated by this agreement. In making a determination that such acquisition proposal with respect to Stone constitutes a superior proposal and that the failure to make an adverse recommendation change would be inconsistent with its fiduciary duties to Stone and its stockholders, the Stone board of directors shall take into account any changes or modifications to the terms of the merger agreement proposed by Bois d’Arc; provided that a determination by the Stone board of directors in good faith, after consultation with its outside legal counsel and financial advisors, that, after taking into account any such changes or modifications, such acquisition proposal with respect to Stone continues to constitute a superior proposal and the failure to make a company adverse recommendation change would be inconsistent with its fiduciary duties to Stone and its stockholders will not require a new notice of change or a new five business day notice period. |
• | direct or indirect acquisition or purchase of a business or assets that generates or constitutes 25% or more of the net revenues, net income or the assets (based on book value or fair market value thereof) of such party and its subsidiaries, taken as a whole; | |
• | direct or indirect acquisition or purchase of 25% or more of any class of equity securities or capital stock of such party or any of its subsidiaries whose business generates or constitutes 25% or more of the net revenues, net income or assets of such party and its subsidiaries, taken as a whole; or | |
• | merger, consolidation, restructuring, transfer of assets or other business combination, sale of shares of capital stock, tender offer, exchange offer, recapitalization, stock repurchase program or other similar transaction that, if consummated, would result in any person beneficially owning 25% or more of any class of equity securities of such party or any of its subsidiaries whose business generates or constitutes 25% or more of the net revenues, net income or assets (based on book value or fair market value thereof) of such party and its subsidiaries, taken as a whole. |
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• | any bona fide written acquisition proposal that was not initiated, solicited, knowingly facilitated or encouraged by such party or any of its subsidiaries or any of their respective representatives in violation of the merger agreement, made by a third party to acquire, directly or indirectly, 50% or more of the equity securities of such party or 50% or more of the assets of such party and its subsidiaries, taken as a whole, pursuant to a tender offer, exchange offer, merger, share exchange, asset purchase or other business combination; and | |
• | the terms of such proposal, as determined by the majority of the board of directors of such party (after consultation with its financial advisors and outside legal counsel) in good faith, (1) would result in a transaction that, if consummated, is more favorable to the stockholders of such party (in their capacity as stockholders), than the merger, taking into account all the terms and conditions of such proposal and the merger agreement (including any changes to the terms of the merger agreement offered by the other party in response to such proposal or otherwise), and (2) is reasonably capable of being completed on the terms proposed, taking into account all financial, regulatory, legal and other aspects of such proposal. |
• | withdraw or publicly propose to withdraw (or amend or modify in a manner adverse to the other party) its approval, recommendation or declaration of advisability of the merger agreement, the merger or the other transactions contemplated by the merger agreement; or | |
• | recommend, adopt or approve or propose publicly to recommend, adopt or approve any acquisition proposal. |
• | by mutual written consent of Stone and Bois d’Arc; | |
• | by either Stone or Bois d’Arc if: |
• | the merger is not completed on or before December 31, 2008, unless the failure of the party seeking to terminate the merger agreement to fulfill any material obligation under the merger agreement has been the cause of, or resulted in the failure of the merger to have been completed on or before this date; | |
• | any court or other governmental entity having jurisdiction over any party to the merger agreement has issued a statute, rule, order, decree or regulation or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the merger or making the merger illegal and such statute, rule, order, decree, regulation or other action has become final and nonappealable, provided that the right to terminate the merger agreement pursuant to this provision may not be exercised by a party whose failure to fulfill any material obligations under the merger agreement has been the cause of or resulted in such action or who is then in material breach of its obligations described above under “— Covenants — Further Action; Commercially Reasonable Efforts;” | |
• | prior to obtaining the required vote of the Bois d’Arc stockholders, the Bois d’Arc board of directors makes an adverse recommendation change; |
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• | prior to obtaining the required vote of the Stone stockholders, the Stone board of directors makes an adverse recommendation change; | |
• | the Bois d’Arc stockholders fail to approve the merger agreement by the requisite vote; | |
• | the Stone stockholders fail to approve the issuance of additional shares of Stone common stock pursuant to the merger; | |
• | there has been a breach of or failure to perform in any material respect any of the representations, warranties, covenants or agreements set forth in the merger agreement on the part of Bois d’Arc, on the one hand, or Stone, on the other hand, which breach or failure to perform would give rise to the failure of the conditions to closing related to accuracy of the representations and warranties and performance of the covenants in the merger agreement, and which is incapable of being cured before December 31, 2008, or has not been cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party; | |
• | the representations and warranties of Bois d’Arc, on the one hand, or Stone, on the other hand, are or become untrue, which untruth would give rise to the failure of the condition to closing related to accuracy of the representations and warranties in the merger agreement, and which is incapable of being cured before December 31, 2008 or has not been cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party; |
• | by Stone if Bois d’Arc has breached or failed to perform in any material respect any of its covenants or other agreements as described under “— Covenants — No Solicitation of Alternative Transactions;” or | |
• | by Bois d’Arc if Stone has breached or failed to perform in any material respect any of its covenants or other agreements as described under “— Covenants — No Solicitation of Alternative Transactions.” |
• | the merger agreement is terminated by either Stone or Bois d’Arc because prior to obtaining the required vote of the Bois d’Arc stockholders, the Bois d’Arc board of directors makes an adverse recommendation change; or | |
• | the merger agreement is terminated by either Stone or Bois d’Arc for failure to close the merger on or before December 31, 2008, or because the Bois d’Arc stockholders failed to approve the merger agreement by the required vote, and |
• | prior to such termination, an acquisition proposal with respect to Bois d’Arc has been publicly proposed by any person (other than by Stone or any of its respective affiliates) or any person publicly has announced its intention (whether or not conditional) to make such acquisition proposal or such intention has otherwise become known to Bois d’Arc’s stockholders generally, and | |
• | within 365 days after termination of the merger agreement, Bois d’Arc or any of its subsidiaries enters into any definitive agreement providing for an acquisition proposal or an acquisition proposal is consummated. |
• | the merger agreement is terminated by either Stone or Bois d’Arc because prior to obtaining the required vote of the Stone stockholders, the Stone board of directors makes an adverse recommendation change; or |
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• | the merger agreement is terminated by either Stone or Bois d’Arc for failure to close the merger on or before December 31, 2008, or because the Stone stockholders failed to approve the issuance of the shares of Stone common stock, and |
• | prior to such termination, an acquisition proposal with respect to Stone has been publicly proposed by any person (other than by Bois d’Arc or any of its respective affiliates) or any person publicly has announced its intention (whether or not conditional) to make such acquisition proposal or such intention has otherwise become known to Stone’s stockholders generally, and | |
• | within 365 days after termination of the merger agreement, Stone or any of its subsidiaries enters into any definitive agreement providing for an acquisition proposal or an acquisition proposal is consummated. |
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• | prior to the stockholder becoming an interested stockholder, the board of directors of the corporation approved the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; | |
• | the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (excluding shares held by directors who are also officers and shares held by certain employee stock plans) in which such stockholder became an interested stockholder; or | |
• | the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least 662/3% of the outstanding voting stock which is not owned by the interested stockholder. |
• | whose original articles of incorporation expressly elect not to be governed by these anti-takeover provisions of Nevada law; | |
• | which does not, as of the date that a person first becomes an interested stockholder, have a class of voting shares registered with the SEC under Section 12 of the Securities Act, unless the articles of incorporation provide otherwise; | |
• | whose articles of incorporation were amended to provide that the corporation is subject to the above provisions and which did not have a class of voting shares registered with the SEC under Section 12 of the Securities Act on the effective date of such amendment,; or | |
• | that amends its articles of incorporation, approved by a majority of the disinterested shares, to expressly elect not to be governed by the anti-takeover provisions of Nevada law. |
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Stone SEC Filings (File No. 001-12074) | Period and/or Date Filed | |
Annual Report onForm 10-K | Fiscal year ended December 31, 2007 | |
Definitive Proxy Statement on Schedule 14A | Filed on March 28, 2008 | |
Quarterly Report onForm 10-Q | Quarter ended March 31, 2008 | |
Current Reports onForm 8-K | Filed on January 17, 2008, February 19, 2008, March 1, 2008, May 6, 2008 and May 21, 2008 | |
Description of Stone’s capital stock contained in Stone’s registration statement onForm S-3 | Filed on April 17, 2002, as amended by Stone’s registration statement on Form S-3 filed on November 27, 2002 |
Bois d’Arc SEC Filings (File No. 001-32494) | Period and/or Date Filed | |
Annual Report onForm 10-K, as amended | Fiscal year ended December 31, 2007 | |
Quarterly Report onForm 10-Q | Quarter ended March 31, 2008 | |
Current Reports onForm 8-K | Filed on January 8, 2008, January 22, 2008, January 31, 2008, February 29, 2008, May 1, 2008 and May 8, 2008 |
Stone Energy Corporation 625 East Kaliste Saloom Rd. Lafayette, LA 70508 (337) 237-0410 | Bois d’Arc Energy, Inc. 600 Travis Street, Suite 5200 Houston, Texas 77002 (713) 228-0438 |
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http://www.sec.gov/divisions/corpfin/forms/regsx.htm#gas.
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Pro Forma | ||||||||||||||||
Stone | Bois d’Arc | Adjustments | Pro Forma | |||||||||||||
Historical | Historical(1) | (Note 3) | Combined | |||||||||||||
(In thousands of dollars) | ||||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 517,033 | $ | 13,965 | $ | (434,000 | )(a) | $ | 96,998 | |||||||
Accounts receivable | 153,944 | 48,466 | — | 202,410 | ||||||||||||
Fair value of hedging contracts | 306 | — | — | 306 | ||||||||||||
Deferred tax asset | 18,296 | — | — | 18,296 | ||||||||||||
Other current assets | 494 | 4,097 | — | 4,591 | ||||||||||||
Total current assets | 690,073 | 66,528 | (434,000 | ) | 322,601 | |||||||||||
Oil and gas properties — United States — full cost method of accounting: | �� | |||||||||||||||
Proved, net of accumulated depletion | 949,432 | 893,557 | 574,687 | (a) | 2,417,676 | |||||||||||
Unevaluated | 194,476 | 21,194 | 333,562 | (a) | 549,232 | |||||||||||
Oil and gas properties — China — full cost method of accounting: | ||||||||||||||||
Unevaluated, net of accumulated depletion | 30,328 | — | — | 30,328 | ||||||||||||
Building and land, net | 5,653 | — | — | 5,653 | ||||||||||||
Fixed assets, net | 5,277 | 2,761 | — | 8,038 | ||||||||||||
Other assets, net | 23,443 | 2,764 | 9,000 | (a) | 35,207 | |||||||||||
Fair value of hedging contracts | 3,222 | — | — | 3,222 | ||||||||||||
Goodwill | — | — | 472,350 | (a) | 472,350 | |||||||||||
Total assets | $ | 1,901,904 | $ | 986,804 | $ | 955,599 | $ | 3,844,307 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable to vendors | $ | 95,582 | $ | 32,822 | $ | — | $ | 128,404 | ||||||||
Undistributed oil and gas proceeds | 31,852 | 9,295 | — | 41,147 | ||||||||||||
Fair value of hedging contracts | 27,188 | — | — | 27,188 | ||||||||||||
Asset retirement obligations | 46,353 | — | — | 46,353 | ||||||||||||
Current income taxes payable | 13,950 | 10,154 | — | 24,104 | ||||||||||||
Other current liabilities | 11,353 | 681 | — | 12,034 | ||||||||||||
Total current liabilities | 226,278 | 52,952 | — | 279,230 | ||||||||||||
Long-term debt | 400,000 | 56,000 | 537,988 | (a) | 993,988 | |||||||||||
Deferred taxes | 114,155 | 191,191 | 318,789 | (a) | 624,135 | |||||||||||
Asset retirement obligations | 201,722 | 45,608 | (1,392 | )(a) | 245,938 | |||||||||||
Other long-term liabilities | 8,003 | — | — | 8,003 | ||||||||||||
Total liabilities | 950,158 | 345,751 | 855,385 | 2,151,294 | ||||||||||||
Common stock | 279 | 664 | 113 | (a) | 392 | |||||||||||
(664 | )(a) | |||||||||||||||
Treasury stock | (860 | ) | — | — | (860 | ) | ||||||||||
Additional paid-in capital | 522,863 | 504,970 | 741,154 | (a) | 1,264,017 | |||||||||||
(504,970 | )(a) | |||||||||||||||
Retained earnings | 444,486 | 135,419 | (135,419 | )(a) | 444,486 | |||||||||||
Accumulated other comprehensive loss | (15,022 | ) | — | — | (15,022 | ) | ||||||||||
Total stockholders’ equity | 951,746 | 641,053 | 100,214 | 1,693,013 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 1,901,904 | $ | 986,804 | $ | 955,599 | $ | 3,844,307 | ||||||||
(1) | Amounts presented herein are consistent with those presented in the Bois d’Arc Quarterly Report onForm 10-Q as of March 31, 2008; however, certain amounts have been reclassified to conform with Stone’s presentation. The Bois d’Arc historical balances are presented using the successful efforts method of accounting. |
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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2008
Pro Forma | ||||||||||||||||
Stone | Bois d’Arc | Adjustments | Pro Forma | |||||||||||||
Historical | Historical(1) | (Note 3) | Combined | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Operating revenue: | ||||||||||||||||
Oil production | $ | 122,707 | $ | 43,091 | $ | — | $ | 165,798 | ||||||||
Gas production | 80,526 | 70,175 | — | 150,701 | ||||||||||||
Total operating revenue | 203,233 | 113,266 | — | 316,499 | ||||||||||||
Operating expenses: | ||||||||||||||||
Lease operating expenses | 30,253 | 14,614 | — | 44,867 | ||||||||||||
Production taxes | 1,400 | 824 | — | 2,224 | ||||||||||||
Depreciation, depletion and amortization | 63,387 | 27,683 | 23,856 | (b) | 114,926 | |||||||||||
Exploration expense | — | 6,417 | (6,417 | )(d) | — | |||||||||||
Accretion expense | 4,368 | 685 | — | 5,053 | ||||||||||||
Salaries, general and administrative expenses | 10,256 | 2,606 | — | 12,862 | ||||||||||||
Incentive compensation expense | 1,018 | 569 | — | 1,587 | ||||||||||||
Derivative expenses, net | 259 | — | — | 259 | ||||||||||||
Total operating expenses | 110,941 | 53,398 | 17,439 | 181,778 | ||||||||||||
Income (loss) from operations | 92,292 | 59,868 | (17,439 | ) | 134,721 | |||||||||||
Other (income) expenses: | ||||||||||||||||
Interest expense | 3,859 | 1,363 | 4,047 | (e) | 9,269 | |||||||||||
Interest income | (4,914 | ) | (83 | ) | — | (4,997 | ) | |||||||||
Other income, net | (1,041 | ) | (135 | ) | — | (1,176 | ) | |||||||||
Total other (income) expenses, net | (2,096 | ) | 1,145 | 4,047 | 3,096 | |||||||||||
Income (loss) before taxes | 94,388 | 58,723 | (21,486 | ) | 131,625 | |||||||||||
Income tax provision: | ||||||||||||||||
Current | 13,950 | 10,282 | — | 24,232 | ||||||||||||
Deferred | 18,196 | 10,292 | (7,520 | )(f) | 20,968 | |||||||||||
Total income taxes | 32,146 | 20,574 | (7,520 | ) | 45,200 | |||||||||||
Net income (loss) | $ | 62,242 | $ | 38,149 | $ | (13,966 | ) | $ | 86,425 | |||||||
Basic earnings per share | $ | 2.24 | $ | 2.21 | ||||||||||||
Diluted earnings per share | $ | 2.22 | $ | 2.19 | ||||||||||||
Average shares outstanding | 27,819 | 11,317 | (g) | 39,136 | ||||||||||||
Average shares outstanding assuming dilution | 28,060 | 11,317 | (g) | 39,377 |
(1) | Amounts presented herein are consistent with those presented in the Bois d’Arc Quarterly Report onForm 10-Q for the quarter ended March 31, 2008; however, certain amounts have been reclassified to conform with Stone’s presentation. The Bois d’Arc historical results are presented using the successful efforts method of accounting. |
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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2007
Pro Forma | ||||||||||||||||
Stone | Bois d’Arc | Adjustments | Pro Forma | |||||||||||||
Historical | Historical(1) | (Note 3) | Combined | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Operating revenue: | ||||||||||||||||
Oil production | $ | 424,205 | $ | 123,895 | $ | — | $ | 548,100 | ||||||||
Gas production | 329,047 | 231,565 | — | 560,612 | ||||||||||||
Total operating revenue | 753,252 | 355,460 | — | 1,108,712 | ||||||||||||
Operating expenses: | ||||||||||||||||
Lease operating expenses | 149,702 | 56,346 | — | 206,048 | ||||||||||||
Production taxes | 9,945 | 2,495 | — | 12,440 | ||||||||||||
Depreciation, depletion and amortization | 302,739 | 112,197 | 106,349 | (b) | 521,285 | |||||||||||
Write-down of oil and gas properties | 8,164 | 344 | (344 | )(c) | 8,164 | |||||||||||
Exploration expense | — | 36,040 | (36,040 | )(d) | — | |||||||||||
Accretion expense | 17,620 | 3,088 | — | 20,708 | ||||||||||||
Salaries, general and administrative expenses | 33,584 | 12,179 | — | 45,763 | ||||||||||||
Incentive compensation expense | 5,117 | 2,690 | — | 7,807 | ||||||||||||
Derivative expenses, net | 666 | — | — | 666 | ||||||||||||
Total operating expenses | 527,537 | 225,379 | 69,965 | 822,881 | ||||||||||||
Gain on Rocky Mountain Region properties divestiture | 59,825 | — | — | 59,825 | ||||||||||||
Income (loss) from operations | 285,540 | 130,081 | (69,965 | ) | 345,656 | |||||||||||
Other (income) expenses: | ||||||||||||||||
Interest expense | 32,068 | 9,033 | 21,055 | (e) | 62,156 | |||||||||||
Interest income | (12,135 | ) | (512 | ) | — | (12,647 | ) | |||||||||
Other income, net | (5,657 | ) | (541 | ) | — | (6,198 | ) | |||||||||
Early extinguishment of debt | 844 | — | — | 844 | ||||||||||||
Total other expenses, net | 15,120 | 7,980 | 21,055 | 44,155 | ||||||||||||
Income (loss) before taxes | 270,420 | 122,101 | (91,020 | ) | 301,501 | |||||||||||
Income tax provision (benefit): | ||||||||||||||||
Current | 95,579 | 13,717 | — | 109,296 | ||||||||||||
Deferred | (6,595 | ) | 29,714 | (31,857 | )(f) | (8,738 | ) | |||||||||
Total income taxes | 88,984 | 43,431 | (31,857 | ) | 100,558 | |||||||||||
Net income (loss) | $ | 181,436 | $ | 78,670 | $ | (59,163 | ) | $ | 200,943 | |||||||
Basic earnings per share | $ | 6.57 | $ | 5.16 | ||||||||||||
Diluted earnings per share | $ | 6.54 | $ | 5.15 | ||||||||||||
Average shares outstanding | 27,612 | 11,317 | (g) | 38,929 | ||||||||||||
Average shares outstanding assuming dilution | 27,723 | 11,317 | (g) | 39,040 |
(1) | Amounts presented herein are consistent with those presented in the Bois d’Arc Annual Report onForm 10-K for the year ended December 31, 2007; however, certain amounts have been reclassified to conform with Stone’s presentation. The Bois d’Arc historical results are presented using the successful efforts method of accounting. |
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Note 1 — | Basis of Presentation |
Note 2 — | Method of Accounting for the Merger |
Note 3 — | Combined Pro Forma Adjustments |
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(In thousands) | ||||
Fair value of Bois d’Arc’s net assets: | ||||
Net working capital | $ | 13,576 | ||
Proved oil and gas properties | 1,468,244 | |||
Unproved oil and gas properties | 354,756 | |||
Fixed and other assets | 5,525 | |||
Goodwill | 472,350 | |||
Deferred tax liability | (509,980 | ) | ||
Asset retirement obligations | (44,216 | ) | ||
Fair value of net assets | $ | 1,760,255 | ||
(In thousands) | ||||
Consideration to be paid for Bois d’Arc’s net assets: | ||||
Cash consideration to be paid | $ | 936,229 | ||
Stone common stock to be issued | 741,267 | |||
Aggregate purchase consideration issuable to Bois d’Arc stockholders | 1,677,496 | |||
Plus: | ||||
Estimated direct merger costs and change in control payments to be incurred* | 26,759 | |||
Assumption and repayment of Bois d’Arc bank debt | 56,000 | |||
Total purchase price | $ | 1,760,255 | ||
* | Estimated direct merger costs include legal and accounting fees, printing fees, investment banking expenses and other merger-related costs. | |
(b) | To adjust depreciation, depletion and amortization expense for the additional basis allocated to proved oil and gas properties acquired and accounted for using the full cost method of accounting as if both companies had been combined as of January 1, 2007. | |
(c) | To reverse the write-down of oil and gas properties recorded by Bois d’Arc under the successful efforts method of accounting. Stone follows the full cost method of accounting under which cost centers are represented by entire countries, while under successful efforts, cost centers are represented by fields, or some reasonable aggregation of fields with common production facilities or geological structural features. | |
(d) | To reverse the expensing of exploration costs recorded by Bois d’Arc under the successful efforts method of accounting. Under the successful efforts method of accounting, exploratory costs associated with unsuccessful exploratory wells are expensed, while under full cost accounting, such costs are capitalized. Assuming the companies had been combined as of January 1, 2007, under full cost accounting, no expensing of exploratory costs would have been required. | |
(e) | To record interest expense (including amortization of deferred financing costs related to the merger) associated with $594 million of borrowings under our new credit facility to fund the acquisition (see Note 5). A hypothetical 0.125% increase in Stone’s estimated interest rate used to determine pro forma interest expense would increase pro forma interest expense by approximately $75,000 for the three months ended March 31, 2008 and approximately $0.3 million for the year ended December 31, 2007. | |
(f) | To reflect the income tax effects of the pro forma adjustments at an estimated effective tax rate of 35%. |
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(g) | To adjust Stone’s weighted average basic and diluted common shares outstanding during the three months ended March 31, 2008 and the year ended December 31, 2007 based on 11.3 million shares of Stone common stock to be issued, as described in Note 2 above. |
Note 4 — | Goodwill |
Note 5 — | Merger Financing |
(In thousands) | ||||
Cash to be expended in the merger: | ||||
Merger consideration to Bois d’Arc stockholders | $ | 936,229 | ||
Repayment of Bois d’Arc bank debt | 56,000 | |||
Estimated merger expenses | 26,759 | |||
Financing cost of credit facility | 9,000 | |||
Total cash expended | $ | 1,027,988 | ||
Financing of cash expended in the merger: | ||||
Borrowings under credit facility | $ | 593,988 | ||
Use of existing cash on hand | 434,000 | |||
Total financing of cash expended | $ | 1,027,988 | ||
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Note 6 — | Supplementary Pro Forma Information for Oil and Gas Producing Activities |
Pro Forma | ||||||||||||
Stone | Bois d’Arc | Combined | ||||||||||
(In thousands) | ||||||||||||
Acquisition costs, net of sales of unevaluated properties | $ | 18,730 | $ | 8,913 | $ | 27,643 | ||||||
Development costs | 154,507 | 102,661 | 257,168 | |||||||||
Exploratory costs | 10,966 | 96,219 | (a) | 107,185 | ||||||||
Subtotal | 184,203 | 207,793 | 391,996 | |||||||||
Capitalized salaries, general and administrative costs and interest, net of fees and reimbursements | 36,178 | — | 36,178 | |||||||||
Total costs incurred | $ | 220,381 | $ | 207,793 | $ | 428,174 | ||||||
(a) | Includes $36,040 of expensed exploratory costs. |
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Stone | Bois d’Arc(a) | Pro Forma Combined | ||||||||||||||||||||||||||||||||||
Oil and | Oil and | Oil and | ||||||||||||||||||||||||||||||||||
Natural | Natural | Natural | Natural | Natural | Natural | |||||||||||||||||||||||||||||||
Oil | Gas | Gas | Oil | Gas | Gas | Oil | Gas | Gas | ||||||||||||||||||||||||||||
(MBbls) | (MMcf) | (MMcfe) | (MBbls) | (MMcf) | (MMcfe) | (MBbls) | (MMcf) | (MMcfe) | ||||||||||||||||||||||||||||
Total estimated proved reserves: | ||||||||||||||||||||||||||||||||||||
Balance at January 1, 2007 | 41,360 | 342,782 | 590,942 | 20,425 | 221,463 | 344,013 | 61,785 | 564,245 | 934,955 | |||||||||||||||||||||||||||
Revisions of previous estimates | 4,584 | 27,183 | 54,688 | (1,405 | ) | 25,266 | 16,836 | 3,179 | 52,449 | 71,524 | ||||||||||||||||||||||||||
Extensions, discoveries and other additions | 1,635 | 20,765 | 30,573 | 1,485 | 29,587 | 38,497 | 3,120 | 50,352 | 69,070 | |||||||||||||||||||||||||||
Sales of reserves in place | (9,905 | ) | (132,559 | ) | (191,988 | ) | — | — | — | (9,905 | ) | (132,559 | ) | (191,988 | ) | |||||||||||||||||||||
Improved recovery | — | — | — | 5,798 | 6,004 | 40,792 | 5,798 | 6,004 | 40,792 | |||||||||||||||||||||||||||
Production | (6,088 | ) | (45,088 | ) | (81,617 | ) | (1,671 | ) | (32,186 | ) | (42,212 | ) | (7,759 | ) | (77,274 | ) | (123,829 | ) | ||||||||||||||||||
Balance at December 31, 2007 | 31,586 | 213,083 | 402,598 | 24,632 | 250,134 | 397,926 | 56,218 | 463,217 | 800,524 | |||||||||||||||||||||||||||
Estimated proved developed reserves at December 31, 2007 | 25,172 | 171,815 | 322,846 | 17,390 | 189,249 | 293,589 | 42,562 | 361,064 | 616,435 | |||||||||||||||||||||||||||
Pro Forma | ||||||||||||
Stone | Bois d’Arc(a) | Combined | ||||||||||
(In thousands) | ||||||||||||
Future cash inflows | $ | 4,538,017 | $ | 4,146,589 | $ | 8,684,606 | ||||||
Future production costs | (915,166 | ) | (591,581 | ) | (1,506,747 | ) | ||||||
Future development costs | (842,040 | ) | (340,846 | ) | (1,182,886 | ) | ||||||
Future income taxes | (734,139 | ) | (596,511 | ) | (1,330,650 | ) | ||||||
Future net cash flows | 2,046,672 | 2,617,651 | 4,664,323 | |||||||||
10% annual discount | (525,083 | ) | (836,362 | ) | (1,361,445 | ) | ||||||
Standardized measure of discounted future net cash flows | $ | 1,521,589 | $ | 1,781,289 | $ | 3,302,878 | ||||||
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Pro Forma | ||||||||||||
Stone | Bois d’Arc(a) | Combined | ||||||||||
(In thousands) | ||||||||||||
Standardized measure of discounted future net cash flows relating to proved oil and gas reserves, at beginning of year | $ | 1,248,830 | $ | 1,081,011 | $ | 2,329,841 | ||||||
Changes resulting from: | ||||||||||||
Sales and transfers of oil and gas produced, net of production costs | (593,605 | ) | (296,619 | ) | (890,224 | ) | ||||||
Changes in price, net of future production costs | 857,529 | 563,281 | 1,420,810 | |||||||||
Extensions, discoveries, and improved recovery net of future production and development costs | 114,729 | 476,080 | 590,809 | |||||||||
Changes in estimated future development costs, net of development costs incurred during the period | (25,223 | ) | (12,911 | ) | (38,134 | ) | ||||||
Revisions of quantity estimates | 363,783 | 102,373 | 466,156 | |||||||||
Accretion of discount | 142,605 | 131,712 | 274,317 | |||||||||
Net change in income taxes | (338,336 | ) | (179,150 | ) | (517,486 | ) | ||||||
Sales of reserves in-place | (202,648 | ) | — | (202,648 | ) | |||||||
Changes in production rates due to timing and other | (46,075 | ) | (84,488 | ) | (130,563 | ) | ||||||
Net increase in standardized measure | 272,759 | 700,278 | 973,037 | |||||||||
Standardized measure of discounted future net cash flows relating to proved oil and gas reserves, at end of year | $ | 1,521,589 | $ | 1,781,289 | $ | 3,302,878 | ||||||
(a) | The reserve information disclosed is based on estimates by Bois d’Arc’s independent petroleum consultants at December 31, 2007. Stone and its independent petroleum consultants have not completed a comprehensive review of the Bois d’Arc reserves. Stone’s preliminary review of Bois d’Arc’s estimated proved reserves indicated estimated oil and natural gas reserve volumes of 335,000 MMcfe at December 31, 2007. |
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ARTICLE I THE MERGER | ||||||||
1.1 | The Merger | A-1 | ||||||
1.2 | Effective Time of the Merger | A-1 | ||||||
1.3 | Closing | A-1 | ||||||
1.4 | Certificate of Formation | A-2 | ||||||
1.5 | Limited Liability Company Agreement | A-2 | ||||||
1.6 | Directors and Officers | A-2 | ||||||
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE COMPANY AND MERGER SUB; EXCHANGE OF CERTIFICATES | ||||||||
2.1 | Effect of the Merger | A-2 | ||||||
2.2 | No Dissenters’ Rights | A-3 | ||||||
2.3 | Treatment of Stock Options; Restricted Stock | A-3 | ||||||
2.4 | Exchange of Certificates | A-4 | ||||||
2.5 | Stock Transfer Books | A-6 | ||||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | ||||||||
3.1 | Organization | A-6 | ||||||
3.2 | Capitalization | A-7 | ||||||
3.3 | Authorization; Validity of Agreement | A-8 | ||||||
3.4 | No Violations; Consents and Approvals | A-8 | ||||||
3.5 | SEC Reports and Financial Statements | A-9 | ||||||
3.6 | Oil and Gas | A-10 | ||||||
3.7 | Absence of Certain Changes | A-12 | ||||||
3.8 | Absence of Undisclosed Liabilities | A-13 | ||||||
3.9 | Disclosure Documents | A-13 | ||||||
3.10 | Employee Benefit Plans; ERISA | A-13 | ||||||
3.11 | Litigation; Compliance with Law | A-14 | ||||||
3.12 | Intellectual Property | A-15 | ||||||
3.13 | Material Contracts | A-16 | ||||||
3.14 | Taxes | A-17 | ||||||
3.15 | Environmental Matters | A-19 | ||||||
3.16 | Company Assets | A-19 | ||||||
3.17 | Insurance | A-19 | ||||||
3.18 | Labor Matters; Employees | A-20 | ||||||
3.19 | Affiliate Transactions | A-20 | ||||||
3.20 | Derivative Transactions and Hedging | A-21 | ||||||
3.21 | Natural Gas Act | A-21 | ||||||
3.22 | Disclosure Controls and Procedures | A-21 | ||||||
3.23 | Investment Company | A-21 | ||||||
3.24 | No Rights Agreement | A-21 | ||||||
3.25 | Takeover Laws | A-21 | ||||||
3.26 | Required Vote by Company Stockholders | A-21 | ||||||
3.27 | Recommendation of Company Board of Directors; Opinion of Financial Advisor | A-22 | ||||||
3.28 | Brokers | A-22 | ||||||
3.29 | Reorganization | A-22 | ||||||
3.30 | No Other Representations or Warranties | A-22 |
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB | ||||||||
4.1 | Organization | A-22 | ||||||
4.2 | Capitalization | A-23 | ||||||
4.3 | Authorization; Validity of Agreement | A-24 | ||||||
4.4 | No Violations; Consents and Approvals | A-24 | ||||||
4.5 | SEC Reports and Financial Statements | A-25 | ||||||
4.6 | Oil and Gas Reserves | A-26 | ||||||
4.7 | Absence of Certain Changes | A-27 | ||||||
4.8 | Absence of Undisclosed Liabilities | A-28 | ||||||
4.9 | Disclosure Documents | A-28 | ||||||
4.10 | Employee Benefit Plans; ERISA | A-28 | ||||||
4.11 | Litigation; Compliance with Law | A-29 | ||||||
4.12 | Intellectual Property | A-30 | ||||||
4.13 | Material Contracts | A-31 | ||||||
4.14 | Taxes | A-32 | ||||||
4.15 | Environmental Matters | A-33 | ||||||
4.16 | Parent Assets | A-34 | ||||||
4.17 | Insurance | A-34 | ||||||
4.18 | Labor Matters; Employees | A-34 | ||||||
4.19 | Affiliate Transactions | A-35 | ||||||
4.20 | Derivative Transactions and Hedging | A-35 | ||||||
4.21 | Natural Gas Act | A-35 | ||||||
4.22 | Disclosure Controls and Procedures | A-35 | ||||||
4.23 | Investment Company | A-36 | ||||||
4.24 | Rights Agreement | A-36 | ||||||
4.25 | Recommendation of Parent Board of Directors; Opinion of Financial Advisor | A-36 | ||||||
4.26 | Required Vote by Parent Stockholders | A-36 | ||||||
4.27 | Stockholder Agreements | A-36 | ||||||
4.28 | Brokers | A-36 | ||||||
4.29 | Reorganization | A-36 | ||||||
4.30 | No Other Representations or Warranties | A-36 | ||||||
ARTICLE V COVENANTS | ||||||||
5.1 | Interim Operations of the Company | A-37 | ||||||
5.2 | Interim Operations of Parent | A-40 | ||||||
5.3 | Acquisition Proposals | A-41 | ||||||
5.4 | Access to Information and Properties | A-46 | ||||||
5.5 | Further Action; Commercially Reasonable Efforts | A-47 | ||||||
5.6 | Proxy Statement;S-4; Company Special Meeting; Parent Special Meeting | A-47 | ||||||
5.7 | Notification of Certain Matters | A-49 | ||||||
5.8 | Directors’ and Officers’ Insurance and Indemnification | A-49 | ||||||
5.9 | Publicity | A-49 | ||||||
5.10 | Stock Exchange Listing | A-49 | ||||||
5.11 | Employee Benefits | A-49 | ||||||
5.12 | Certain Tax Matters | A-50 | ||||||
5.13 | Section 16 Matters | A-51 |
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ARTICLE VI CONDITIONS | ||||||||
6.1 | Conditions to Each Party’s Obligation to Effect the Merger | A-51 | ||||||
6.2 | Conditions to the Obligation of the Company to Effect the Merger | A-52 | ||||||
6.3 | Conditions to Obligations of Parent and Merger Sub to Effect the Merger | A-52 | ||||||
ARTICLE VII TERMINATION | ||||||||
7.1 | Termination | A-53 | ||||||
7.2 | Effect of Termination | A-54 | ||||||
ARTICLE VIII MISCELLANEOUS | ||||||||
8.1 | Fees and Expenses | A-55 | ||||||
8.2 | Amendment; Waiver | A-56 | ||||||
8.3 | Survival | A-56 | ||||||
8.4 | Notices | A-56 | ||||||
8.5 | Rules of Construction and Interpretation; Definitions | A-57 | ||||||
8.6 | Headings; Schedules | A-60 | ||||||
8.7 | Counterparts | A-60 | ||||||
8.8 | Entire Agreement | A-60 | ||||||
8.9 | Severability | A-61 | ||||||
8.10 | Governing Law | A-61 | ||||||
8.11 | Assignment | A-61 | ||||||
8.12 | Parties in Interest | A-61 | ||||||
8.13 | Specific Performance | A-61 | ||||||
8.14 | Jurisdiction | A-61 |
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Acceptable Confidentiality Agreement | 78 | |||
Acquisition Agreement | 57 | |||
Acquisition Proposal | 62 | |||
Advisers Act | 29 | |||
Agreement | 1 | |||
Antitrust Division | 64 | |||
Articles of Merger | 1 | |||
Business Day | 79 | |||
Certificate | 3 | |||
Certificate of Merger | 1 | |||
Claim | 79 | |||
Cleanup | 79 | |||
Closing | 2 | |||
Closing Date | 2 | |||
Code | 1 | |||
Committee | 4 | |||
Company | 1 | |||
Company Adverse Recommendation Change | 57 | |||
Company Assets | 27 | |||
Company Balance Sheet | 13 | |||
Company Benefit Plans | 18 | |||
Company Board | 11 | |||
Company Common Stock | 3 | |||
Company Credit Agreement | 11 | |||
Company Disclosure Letter | 9 | |||
Company Employee | 68 | |||
Company Employee Agreement | 18 | |||
Company ERISA Affiliate | 18 | |||
Company IP Rights | 22 | |||
Company Leased Real Property | 79 | |||
Company Leases | 79 | |||
Company Material Contract | 23 | |||
Company Notice of Change | 58 | |||
Company Oil and Gas Agreements | 15 | |||
Company Option | 4 | |||
Company Owned Real Property | 79 | |||
Company Permits | 21 | |||
Company Preferred Stock | 10 | |||
Company Real Property | 79 | |||
Company Required Vote | 29 | |||
Company Reserve Report | 14 | |||
Company Restricted Stock | 5 | |||
Company SEC Documents | 13 | |||
Company Special Meeting | 66 | |||
Company Termination Fee | 74 | |||
Confidentiality Agreements | 63 | |||
D&O | 67 | |||
Delaware Secretary of State | 1 | |||
Derivative Transaction | 79 | |||
DLLCA | 1 | |||
Effective Time | 2 | |||
Employment and Withholding Taxes | 79 | |||
Environmental Claim | 80 | |||
Environmental Laws | 80 | |||
ERISA | 18 | |||
Exchange Act | 13 | |||
Exchange Agent | 5 | |||
Exchange Fund | 5 | |||
FERC | 29 | |||
FTC | 64 | |||
GAAP | 14 | |||
Governmental Entity | 12 | |||
Hazardous Material | 80 | |||
HSR Act | 12 | |||
Hydrocarbons | 15 | |||
Intellectual Property | 21 | |||
Interim Company Reserve Report | 65 | |||
Investment Company Act | 29 | |||
knowledge | 80 | |||
Laws | 12 | |||
Liens | 80 | |||
Litigation | 81 | |||
mass layoff | 28 | |||
Material Adverse Effect | 81 | |||
Merger | 1 | |||
Merger Consideration | 3 | |||
Merger Sub | 1 | |||
Nevada Secretary of State | 2 | |||
NGA | 29 | |||
NRS | 1 | |||
Oil and Gas Interests | 15 | |||
Option Amount | 4 | |||
Option Amount Cash Percentage | 4 | |||
Option Amount Stock Percentage | 4 | |||
Parent | 1 | |||
Parent Adverse Recommendation Change | 60 | |||
Parent Assets | 46 | |||
Parent Balance Sheet | 35 |
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Parent Benefit Plans | 39 | |||
Parent Board | 49 | |||
Parent Common Stock | 3 | |||
Parent Credit Agreement | 32 | |||
Parent Disclosure Letter | 30 | |||
Parent Employee Agreement | 39 | |||
Parent ERISA Affiliate | 39 | |||
Parent IP Rights | 42 | |||
Parent Leased Real Property | 81 | |||
Parent Leases | 81 | |||
Parent Material Contract | 43 | |||
Parent Notice of Change | 61 | |||
Parent Oil and Gas Agreements | 36 | |||
Parent Owned Real Property | 81 | |||
Parent Permits | 41 | |||
Parent Preferred Stock | 31 | |||
Parent Proposal | 49 | |||
Parent Real Property | 82 | |||
Parent Required Vote | 49 | |||
Parent Reserve Report | 35 | |||
Parent Rights | 32 | |||
Parent Rights Agreement | 32 | |||
Parent SEC Documents | 34 | |||
Parent Special Meeting | 66 | |||
Parent Stock Options | 32 | |||
Parent Termination Fee | 74 | |||
Per Share Cash Consideration | 3 | |||
Per Share Stock Consideration | 3 | |||
Permitted Liens | 82 | |||
Person | 82 | |||
plant closing | 28 | |||
Proxy Statement | 18 | |||
Registered Company IP | 22 | |||
Registered Parent IP | 42 | |||
Release | 82 | |||
Representatives | 56 | |||
Return | 82 | |||
S-4 | 18 | |||
Sarbanes-Oxley Act | 13 | |||
SEC | 13 | |||
Section 2.3 Parent Common Stock Value | 4 | |||
Securities Act | 10 | |||
Stock Plan | 4 | |||
Stockholder Agreements | 50 | |||
Subsidiary | 82 | |||
Superior Proposal | 62 | |||
Surviving Entity | 1 | |||
Tax | 82 | |||
Termination Date | 72 | |||
WARN Act | 28 |
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Attention: | Jack E. Jacobsen |
Attention: | Alan P. Baden |
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By: | /s/ David H. Welch |
Title: | President and Chief Executive Officer |
By: | /s/ David H. Welch |
Title: | President and Chief Executive Officer |
By: | /s/ Gary W. Blackie |
Title: | Chief Executive Officer and President |
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Attention: | Mr. David H. Welch President, Chief Executive Officer and Director |
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SECURITIES, INC.
By: | /s/ Maynard Holt |
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1. | reviewed the draft Agreement, including the financial terms and conditions; | |
2. | reviewed Annual Reports onForm 10-K and related audited financial statements of the Company and Stone Energy as of and for the years ended December 31, 2005, December 31, 2006 and December 31, 2007 and certain interim reports onForm 10-Q of the Company and Stone Energy for such years, and the Company’s preliminary unaudited financial statements for the period ended March 31, 2008; | |
3. | reviewed certain estimates of the Company’s and Stone Energy’s oil and gas reserves, including estimates of proved reserves prepared by the independent engineering firms of each of the Company and Stone Energy as of December 31, 2007; | |
4. | reviewed other Company and Stone Energy financial and operating information requested fromand/or provided by the Company and Stone Energy; | |
5. | reviewed certain other publicly available business and financial information on the Company and Stone Energy; | |
6. | discussed with members of the senior management of each of the Company and Stone Energy past and current business, operations, financial information and prospects and information relating to the aforementioned and any other matters which we have deemed relevant to our inquiry; | |
7. | compared the financial terms of the Merger with financial terms of other transactions that we deemed to be relevant; | |
8. | reviewed the historical market prices and trading history of the Company and Stone Energy; | |
9. | discussed the current and projected operations and prospects of the Company and Stone Energy with management; | |
10. | compared financial and stock market information for the Company and Stone Energy with similar information for comparable companies with publicly traded equity securities; |
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11. | considered the responses received from the efforts of the Company and its advisors to secure indications of interest and definitive proposals from third parties; and | |
12. | performed other such analyses, and considered such other information and factors, as we considered relevant and appropriate. |
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Item 20. | Indemnification of Directors and Officers |
Item 21. | Exhibits |
2 | .1 | Agreement and Plan of Merger, dated as of April 30, 2008, by and among the Registrant, Stone Energy Corporation, Stone Energy Offshore, L.L.C. and Bois d’Arc Energy, Inc. (included as Annex A to the joint proxy statement/prospectus in Part I of this Registration Statement). | ||
2 | .2 | Stockholder Agreement, dated as of April 30, 2008, by and among Stone Energy Corporation and Comstock Resources, Inc., incorporated herein by reference to Exhibit 2.2 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008 (FileNo. 001-12074). | ||
2 | .3 | Stockholder Agreement, dated as of April 30, 2008, by and among Stone Energy Corporation and Wayne and Gayle Laufer, incorporated herein by reference to Exhibit 2.3 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008 (FileNo. 001-12074). | ||
2 | .4 | Stockholder Agreement, dated as of April 30, 2008, by and among Stone Energy Corporation and Gary Blackie, incorporated herein by reference to Exhibit 2.4 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008 (FileNo. 001-12074). | ||
2 | .5 | Participation Agreement, dated as of April 30, 2008, among Stone Energy Corporation, Gary W. Blackie, William E. Holman, and Gregory T. Martin, incorporated herein by reference to Exhibit 2.5 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008(File No. 001-12074). | ||
4 | .1 | Amendment No. 4 to Rights Agreement, dated as of April 30, 2008, between Stone Energy Corporation and Mellon Investor Services LLC, as rights agent, incorporated herein by reference to Exhibit 4.1 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008(File No. 001-12074). | ||
4 | .2* | Commitment Letter dated April 30, 2008, by and among Stone Energy Corporation, Bank of America, N.A. and Banc of America Securities LLC. | ||
5 | .1* | Opinion of Vinson & Elkins L.L.P. as to the legality of the securities. | ||
8 | .1* | Tax Opinion of Vinson & Elkins L.L.P. | ||
8 | .2* | Tax Opinion of Locke Lord Bissell & Liddell LLP. |
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15 | .1** | Letter from Ernst & Young LLP (New Orleans, Louisiana) dated June 3, 2008, regarding unaudited interim financial information. | ||
15 | .2** | Letter from Ernst & Young LLP (Dallas, Texas) dated June 3, 2008, regarding unaudited interim financial information. | ||
23 | .1** | Consent of Ernst & Young LLP, New Orleans, Louisiana. | ||
23 | .2** | Consent of Ernst & Young LLP, Dallas, Texas. | ||
23 | .3* | Consent of Vinson & Elkins L.L.P. (included in opinion filed as Exhibit 5.1). | ||
23 | .4* | Consent of Vinson & Elkins L.L.P. (to be included in opinion filed as Exhibit 8.1). | ||
23 | .5* | Consent of Locke Lord Bissell & Liddell LLP (to be included in opinion filed as Exhibit 8.2). | ||
23 | .6** | Consent of Netherland, Sewell & Associates, Inc. | ||
23 | .7** | Consent of Lee Keeling and Associates, Inc. | ||
24 | .1 | Powers of Attorney (included on the signature page). | ||
99 | .1* | Form of Proxy for Holders of Stone Common Stock. | ||
99 | .2* | Form of Proxy for Holders of Bois d’Arc Common Stock. | ||
99 | .3** | Consent of Tudor, Pickering, Holt & Co. Securities, Inc. | ||
99 | .4** | Consent of Raymond James & Associates, Inc. |
* | To be filed by amendment. | |
** | Filed herewith. |
Item 22. | Undertakings |
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By: | /s/ Andrew L. Gates, III |
Title: | Senior Vice President, General Counsel and Secretary |
Signature | Title | Date | ||||
/s/ David H. Welch | President and Chief Executive Officer and Director (Principal Executive Officer) | June 6, 2008 | ||||
/s/ Kenneth H. Beer | Senior Vice President and Chief Financial Officer (Principal Financial Officer) | June 6, 2008 | ||||
/s/ J. Kent Pierret | Senior Vice President, Chief Accounting Officer and Treasurer (Principal Accounting Officer) | June 6, 2008 | ||||
/s/ David R. Voelker | Director | June 6, 2008 | ||||
/s/ Kay G. Priestly | Director | June 6, 2008 | ||||
/s/ Donald E. Powell | Director | June 6, 2008 | ||||
/s/ George R. Christmas | Director | June 6, 2008 |
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Signature | Title | Date | ||||
/s/ B.J. Duplantis | Director | June 6, 2008 | ||||
/s/ John P. Laborde | Director | June 6, 2008 | ||||
/s/ Richard A. Pattarozzi | Director | June 6, 2008 | ||||
/s/ Robert A. Bernhard | Director | June 6, 2008 |
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2 | .1 | Agreement and Plan of Merger, dated as of April 30, 2008, by and among the Registrant, Stone Energy Corporation, Stone Energy Offshore, L.L.C. and Bois d’Arc Energy, Inc. (included as Annex A to the joint proxy statement/prospectus in Part I of this Registration Statement). | ||
2 | .2 | Stockholder Agreement, dated as of April 30, 2008, by and among Stone Energy Corporation and Comstock Resources, Inc., incorporated herein by reference to Exhibit 2.2 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008 (FileNo. 001-12074). | ||
2 | .3 | Stockholder Agreement, dated as of April 30, 2008, by and among Stone Energy Corporation and Wayne and Gayle Laufer, incorporated herein by reference to Exhibit 2.3 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008 (FileNo. 001-12074). | ||
2 | .4 | Stockholder Agreement, dated as of April 30, 2008, by and among Stone Energy Corporation and Gary Blackie, incorporated herein by reference to Exhibit 2.4 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008 (FileNo. 001-12074). | ||
2 | .5 | Participation Agreement, dated as of April 30, 2008, among Stone Energy Corporation, Gary W. Blackie, William E. Holman, and Gregory T. Martin, incorporated herein by reference to Exhibit 2.5 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008(File No. 001-12074). | ||
4 | .1 | Amendment No. 4 to Rights Agreement, dated as of April 30, 2008, between Stone Energy Corporation and Mellon Investor Services LLC, as rights agent, incorporated herein by reference to Exhibit 4.1 to Stone Energy Corporation’s Current Report onForm 8-K dated April 30, 2008(File No. 001-12074). | ||
4 | .2* | Commitment Letter dated April 30, 2008, by and among Stone Energy Corporation, Bank of America, N.A. and Banc of America Securities LLC. | ||
5 | .1* | Opinion of Vinson & Elkins L.L.P. as to the legality of the securities. | ||
8 | .1* | Tax Opinion of Vinson & Elkins L.L.P. | ||
8 | .2* | Tax Opinion of Locke Lord Bissell & Liddell LLP. | ||
15 | .1** | Letter from Ernst & Young LLP (New Orleans, Louisiana) dated June 3, 2008, regarding unaudited interim financial information. | ||
15 | .2** | Letter from Ernst & Young LLP (Dallas, Texas) dated June 3, 2008, regarding unaudited interim financial information. | ||
23 | .1** | Consent of Ernst & Young LLP, New Orleans, Louisiana. | ||
23 | .2** | Consent of Ernst & Young LLP, Dallas, Texas. | ||
23 | .3* | Consent of Vinson & Elkins L.L.P. (included in opinion filed as Exhibit 5.1). | ||
23 | .4* | Consent of Vinson & Elkins L.L.P. (to be included in opinion filed as Exhibit 8.1). | ||
23 | .5* | Consent of Locke Lord Bissell & Liddell LLP (to be included in opinion filed as Exhibit 8.2). | ||
23 | .6** | Consent of Netherland, Sewell & Associates, Inc. | ||
23 | .7** | Consent of Lee Keeling and Associates, Inc. | ||
24 | .1 | Powers of Attorney (included on the signature page). | ||
99 | .1* | Form of Proxy for Holders of Stone Common Stock. | ||
99 | .2* | Form of Proxy for Holders of Bois d’Arc Common Stock. | ||
99 | .3** | Consent of Tudor, Pickering, Holt & Co. Securities, Inc. | ||
99 | .4** | Consent of Raymond James & Associates, Inc. |
* | To be filed by amendment. | |
** | Filed herewith. |