Pure Acquisition Corp. (“Pure”) (NASDAQ: PACQ, PACQU, PACQW), an
oil and gas exploration and production focused special purpose
acquisition entity, today announced that it has amended its
business combination agreement (the “HPK Business Combination
Agreement”) with, among others, HighPeak Energy, Inc. (“HighPeak
Energy” or the “Company”) and certain affiliates of HighPeak Energy
Partners, LP (the “HighPeak Funds”) to finalize the merger
consideration for those Pure stockholders who participate in the
business combination.
Each Pure stockholder who participates in the
HighPeak Energy business combination will receive the following
consideration:
- One share of HighPeak Energy common stock; plus
- A cash payment equal to the amount, if any, by which the
per-share redemption value of Pure’s Class A common stock exceeds
$10.00 per share at the closing of the business combination and
which is estimated to be approximately $0.63 per share; plus
- One contingent value right (“CVR”) at the closing of the
business combination in exchange for each share of Pure Class A
common stock; plus
- One full warrant to purchase HighPeak Energy common stock for
$11.50 per share.
Pure also announced that it has received written
commitments and subscriptions for 5,000,000 shares of HighPeak
Energy common stock in exchange for $50 million through its forward
purchase agreement. For each $10 invested, the forward
purchaser will receive:
- One share of HighPeak Energy common stock; plus
- One CVR; plus
- One full warrant to purchase HighPeak Energy common stock for
$11.50 per share.
Pure expects to finalize additional forward
purchase commitments and subscriptions prior to the closing of the
business combination.
Jack Hightower, HighPeak Energy’s Chairman and CEO
commented, “We are excited to be finalizing our business
combination with the HighPeak Funds and expect the closing will
take place during the third week of August. With the interest
our Pure stockholders have expressed in participating in the
business combination, our $50 million of forward purchase
commitments and our anticipated success raising additional
investment through forward purchases, we expect HighPeak Energy to
be well capitalized with a strong balance sheet at the closing of
our business combination.”
Each full warrant received by the Pure stockholder
who participates in the HighPeak Energy business combination and
each full warrant received by forward purchase participants entitle
the holder to purchase one share of HighPeak Energy common stock at
a price of $11.50 per share and will expire five (5) years after
the closing of the business combination. The warrants are not
redeemable by the Company and are expected to trade on either the
Nasdaq Global Market (“Nasdaq”) or the New York Stock Exchange
(“NYSE”). The warrants may be exercised for cash or on a
cashless basis at the discretion of the holder.
The CVRs are contractual rights to receive a
contingent payment in the form of additional shares of HighPeak
Energy common stock. The CVRs provide significant valuation
protection if the trading price of HighPeak Energy’s common stock
is below the price that would provide the CVR holder with a 10%
preferred simple annual return based on $10.00 per share at the
closing of the business combination, subject to a floor downside
per-share price of $4.00 at the CVR maturity date of two years
which can be extended an additional six months by the HighPeak
Funds. HighPeak Energy intends to list the CVRs on either the
Nasdaq or the NYSE. The HighPeak Funds will deposit 2.125
shares of HighPeak Energy common stock per CVR in escrow to secure
the downside protection and preferred return for Pure stockholders
who participate in the HighPeak Energy business
combination.
Michael L. Hollis, HighPeak Energy’s President,
said “With the stabilization of oil prices around $40 per barrel,
we began turning most of our wells back on to production in late
July and expect to be producing at or near pre shut down levels
within the next few weeks.”
Business Combination
Pursuant to the HPK Business Combination Agreement,
HighPeak Energy will acquire, in exchange for 75,000,000 shares, as
adjusted in accordance with the HPK Business Combination Agreement,
of HighPeak Energy common stock, all of the outstanding interests
in HPK Energy, LP (“HPK”), which holds certain rights, title and
interests in oil and natural gas assets.
The closing of the business combination is subject
to the requisite approval of Pure’s stockholders and the
satisfaction of customary conditions. The business combination is
expected to close in the third quarter of 2020. The description of
the business combination contained herein is only a summary and is
qualified in its entirety by reference to the HPK Business
Combination Agreement relating thereto. Upon completion of the
business combination, HighPeak Energy intends to list its common
stock for trading on either the Nasdaq or the NYSE under the symbol
“HPK”.” Pure’s securities are expected to be delisted from the
Nasdaq Capital Market at closing of the business combination
concurrently with the listing for trading of HighPeak Energy’s
securities on either the NYSE or the Nasdaq.
About Pure Acquisition Corp.
Pure is a blank check company formed in Delaware on
November 13, 2017 for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses. Pure’s
units were listed for trading on the Nasdaq under the symbol
“PACQU” on April 13, 2018. On May 29, 2018, Pure’s Class A common
stock and warrants began trading on the Nasdaq under the symbols
“PACQ” and “PACQW,” respectively.
About HighPeak Energy
HighPeak Energy is an independent oil and natural
gas company engaged in the acquisition, development and production
of oil, natural gas and NGL reserves. HighPeak Energy’s assets,
after giving effect to the potential business combination, will be
primarily located in Howard County, Texas, which lies within
the northeastern part of the oil-rich Midland Basin. HighPeak
Energy is led by its Chairman and CEO, Jack Hightower, an industry
veteran with over 49 years of experience in the oil and natural gas
industry, primarily in the Permian Basin managing multiple
E&P platforms and generating strong returns despite
industry cycles by consistently applying a disciplined,
risk-adjusted approach designed to balance capital preservation
with value creation. HighPeak Energy’s objective is to maximize
returns by generating rapid production growth initially followed by
steady production growth with strong margins and cash flow.
HighPeak Energy also intends to generate attractive full cycle
returns on capital employed.
About HighPeak Funds
The HighPeak Funds are entities affiliated with
HighPeak Energy Partners, LP, with operations in Howard County,
Texas, lying in the northeastern part of the oil-rich Midland
Basin.
Forward-Looking Statements
The information included herein and in any oral
statements made in connection herewith include “forward-looking
statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of present or
historical fact included herein, regarding the proposed merger of
Pure Acquisition Merger Sub, Inc. (“MergerSub”) into Pure and the
proposed contribution of the partnership interests in HPK to
HighPeak Energy, HighPeak Energy’s and Pure’s ability to consummate
the transaction, including raising an adequate amount of equity and
debt financing, the benefits of the transaction and HighPeak
Energy’s future financial performance following the transaction, as
well as HighPeak Energy’s and Pure’s strategy, future operations,
financial position, estimated revenues, and losses, projected
costs, prospects, plans and objectives of management are forward
looking statements. When used herein, including any oral statements
made in connection herewith, the words “could,” “should,” “will,”
“may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,”
“project,” the negative of such terms and other similar expressions
are intended to identify forward-looking statements, although not
all forward-looking statements contain such identifying words.
These forward-looking statements are based on management’s current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events. Except as otherwise required by applicable law,
HighPeak Energy and Pure disclaim any duty to update any
forward-looking statements, all of which are expressly qualified by
the statements in this section, to reflect events or circumstances
after the date hereof. HighPeak Energy and Pure caution you that
these forward-looking statements are subject to all of the risks
and uncertainties, most of which are difficult to predict and many
of which are beyond the control of HighPeak Energy and Pure,
incident to the development, production, gathering and sale of oil,
natural gas and natural gas liquids. These risks include, but are
not limited to, commodity price volatility, low prices for oil
and/or natural gas, developments in the global economy as well as
the public health crisis related to the coronavirus (COVID-19)
pandemic and resulting significant negative effects to the global
economy, disrupted global supply chains and significant volatility
and disruption of financial and commodity markets, inflation,
increased operating costs, lack of availability of drilling and
production equipment, supplies, services and qualified personnel,
certificates related to new technologies, geographical
concentration of operations, environmental risks, weather risks,
security risks, drilling and other operating risks, regulatory
changes, the uncertainty inherent in estimating oil and natural gas
reserves and in projecting future rates of production, reductions
in cash flow, lack of access to capital, HighPeak Energy’s ability
to satisfy future cash obligations, restrictions in existing or
future debt agreements, the timing of development expenditures,
managing growth and integration of acquisitions, failure to realize
expected value creation from property acquisitions, title defects
and limited control over non-operated properties. Should one or
more of the risks or uncertainties described herein and in any oral
statements made in connection therewith occur, or should underlying
assumptions prove incorrect, actual results and plans could differ
materially from those expressed in any forward-looking statements.
Additional information concerning these and other factors that may
impact HighPeak Energy’s and Pure’s expectations and projections
can be found in Pure’s periodic filings with the U.S. Securities
and Exchange Commission (the “SEC”), including Pure’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2019. Pure’s
SEC filings are available publicly on the SEC’s website at
www.sec.gov.
No Offer or Solicitation
This communication is for informational purposes
only and shall not constitute an offer to sell or the solicitation
of an offer to buy any securities pursuant to the proposed
transaction or otherwise, nor shall there be any sale of securities
in any jurisdiction in which the offer, solicitation or sale would
be unlawful prior to the registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act.
Additional Information about the
Transaction and Where to Find It
HighPeak Energy filed an amended registration
statement on Form S-4, including a prospectus of HighPeak Energy
and a proxy statement of the Company with the SEC. Additionally,
HighPeak Energy and Pure will file other relevant materials with
the SEC in connection with the proposed merger of MergerSub into
Pure and the proposed contribution of the partnership interests in
HPK to HighPeak Energy. The materials to be filed by HighPeak
Energy and Pure with the SEC may be obtained free of charge at the
SEC’s website at www.sec.gov. Investors and security holders of
Pure are urged to read the proxy statement/prospectus and the other
relevant materials when they become available before making any
voting or investment decision with respect to the proposed business
combination because they will contain important information about
the business combination and the parties to the business
combination.
Participants in Solicitation
HighPeak Energy and Pure and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies of Pure’s stockholders in connection
with the proposed business combination. Investors and security
holders may obtain more detailed information regarding the names,
affiliations and interests of certain of Pure’s executive officers
and directors in the solicitation by reading Pure’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2019, and the
proxy statement/prospectus and other relevant materials filed with
the SEC in connection with the business combination. Information
concerning the interests of HighPeak Energy’s and Pure’s
participants in the solicitation, which may, in some cases, be
different than those of their stockholders generally, will be set
forth in the proxy statement/prospectus relating to the business
combination when it becomes available.
Contact:
IR@highpeakenergy.com
(817) 850-9200
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