Roan Resources Inc. – which was split off from bankrupt Linn Energy – said Tuesday that it agreed to be acquired by Warburg Pincus-backed Citizen Energy Operating for $1 billion.
The price includes Roan’s funded net debt of $780 million at the end of September.
Latham & Watkins represented Citizen with a Houston-based corporate team led by partner Ryan Maierson with associates Ryan Lynch, Samantha Seley, Clayton Heery, Drew Tengler-West, Ashlyn Royall and Hillarie James.
Houston partner Tim Fenn and associates Jim Cole and Michael Rowe advised on tax matters and Houston partner Catherine Ozdogan and associates Matthew Jones, Benjamin Gelfand, Jack Traylor and Brian Flynn assisted on finance issues. Attorneys in the firm’s New York, Chicago and Washington, D.C., offices pitched in on derivatives, environmental, benefits and compensation and antitrust matters.
Vinson & Elkins assisted Oklahoma City-based Roan with a team led by Houston partners Steve Gill and Alan Beck with corporate associates McCall Grimes, Andrew Schulte, Alex Lewis, Andrianna Frinzi, Farah Chranya and Layton Suchma.
Sean Becker, Stephen Jacobson, Dario Mendoza, Christie Alcalá, Gina Hancock and Mary Daniel Morgan helped with labor and employee matters, Lina Dimachkieh and Neil Clausen on tax, Guy Gribov, Brittany Simington and Jason Blackmer on finance, Matt Dobbins on environmental and Sarah Mitchell on insurance. Antitrust matters were handled by an attorney in the firm’s Washington, D.C., office.
Kirkland & Ellis partners Adam Larson and Kim Hicks represented Warburg.
Citi and Jefferies were financial advisors to Roan, including Stephen Trauber, Serge Tismen and Muhammad Laghari from Citi and Pete Bowden, Ralph Eads, Guy Oliphint, Greg Chitty and Victor Sinn from Jefferies. BofA Merrill Lynch was Citizen’s financial advisor, including Brad Hutchinson, who joined the investment bank in 2015 from Barclays.
Roan stockholders will receive $1.52 in cash for each of their shares. The offer represents a premium of 24% over the compay’s closing price Monday.
The parties expect to close the deal in the fourth quarter of this year or the first quarter of next year if it clears Roan stockholders and regulators.
Debt financing for the transaction is being provided by JPMorgan Chase Bank, BMO Harris Bank, the Toronto Dominion Bank (New York branch) and BofA Merrill Lynch. Equity financing will be provided by investment funds affiliated with Warburg Pincus and Citizen Energy.
Roan executive chairman Joseph A. Mills said in a statement that the transaction is the culmination of the board’s review of strategic alternatives to maximize value for stockholders, including a process during which it engaged with a “considerable” number of counterparties.
“Ultimately, the board unanimously determined that an all-cash transaction with Citizen Energy is in the best interests of our stockholders and the company and will deliver value to our stockholders at a premium to our recent share price,” he said.
Roan Resources was formed in 2017 as a joint venture between Linn and JVL Advisors-backed Citizen Energy II to develop 140,000 acres in Oklahoma (JVL being an oil and gas asset manager run by former Morgan Stanley banker John Lovoi). It went public last year.
Roan appointed Rick Gideon as CEO effective immediately. Gideon previously was senior VP of U.S. operations at Devon Energy Corp. for four years and general manager of the Mid-Continent region and drilling and completions at HighMount Exploration & Production for six years. Before that, Gideon held senior positions at Linn and Dominion Energy Inc.
“We are very pleased to bring Rick onboard to see the company through the closing process,” Mills said. “His leadership and focus will be important during the transition of the business.”
Roan said it elected to temporarily cut its drilling and development activity and suspend all completion activity to allow Gideon time to assess the company’s operations plan. Road said investors shouldn’t rely on the company’s financial projections on its last quarterly investor call.
The company is focused on the development, exploration and acquisition of unconventional oil and natural gas reserves in the Merge, Scoop and Stack plays of the Anadarko Basin in Oklahoma.