Chaparral to become a publicly traded company Companies to conduct
investor conference call on Wednesday, October 14 at 11:00 a.m. ET
OKLAHOMA CITY and NEW YORK, Oct. 12 /PRNewswire-FirstCall/ --
Chaparral Energy, Inc. ("Chaparral" or "the Company"), a
privately-owned SEC reporting, independent oil and gas exploration
and production company, and United Refining Energy Corp. ("URX"), a
publicly held special purpose acquisition company (NYSE Amex:
Units: URX.U, Common Stock: URX, Warrants: URX.WS) jointly
announced today that they have entered into an agreement through
which Chaparral and URX will merge. The proposed transaction is
expected to close no later than December 11, 2009. The combined
company will be named Chaparral Energy, Inc. and will continue to
trade on the NYSE Amex until approval of a planned application to
transfer listing to the NYSE, where the symbol "CPR" has been
reserved. The proposed transaction is valued at approximately $1.8
billion. URX is a special purpose acquisition company (SPAC) formed
in December 2007 for the purpose of acquiring through a merger,
capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more
businesses or assets in the energy industry. It has approximately
$452 million in trust as of September 30, 2009. Since its founding
in 1988, Chaparral has developed a substantial asset base of
long-lived oil and gas properties, with a large inventory of
low-risk exploitation opportunities, as well as near-term,
high-potential drilling projects. As of June 30, 2009, Chaparral's
proved reserves were 146 million barrels of oil equivalent, 62% of
which is oil, and its average daily production for the first half
of 2009 was 21,000 barrels of oil equivalent per day. Since 2003,
management has increased Chaparral's reserves and production by
approximately 21% per year. Chaparral has achieved this growth
primarily by acquiring and enhancing properties in its core areas
of the Mid-Continent and the Permian Basin, as well as in the Gulf
Coast, the Ark-La-Tex region, North Texas and the Rocky Mountains.
The Company plans to continue to pursue a growth strategy through a
mix of development drilling, acquisitions, operating improvements,
enhanced oil recovery projects (EOR) and select exploration
projects. Chaparral strives to control its operating costs and
minimizes commodity price risk through a hedging program. Chaparral
has several EOR projects under way using CO2 injection and has
identified candidates for EOR development from its portfolio of
properties, thereby offering the potential for substantial reserve
and production growth. The senior management of Chaparral,
including Mark A. Fischer, its Co-founder, Chairman and CEO; Joseph
O. Evans, CFO; and Robert W. Kelly II, Senior Vice President and
General Counsel, will continue to lead Chaparral. John A.
Catsimatidis, URX's current CEO and Chairman, will become Executive
Chairman of the Board of Directors of the combined company. "I
believe the proposed merger with Chaparral is a great deal for URX
shareholders. We have spent almost two years looking for the right
target for our SPAC, and I believe this is the best opportunity
that we have considered. Chaparral's management team has
demonstrated the ability to find lucrative oil and gas properties
at prices that have resulted in superior returns on investment.
With the additional capital provided by the proposed merger, I
believe Chaparral will be even more successful. I am pleased to
present this business opportunity to the URX shareholders for
approval." "This merger with URX will allow us to achieve our
strategic goal of becoming a publicly traded company on one of the
major stock exchanges," said Fischer. "This merger will give
Chaparral access to capital we need to exploit our large inventory
of drilling and development opportunities and to significantly step
up our EOR program." Chaparral expects 2009 production to be
approximately 7.6 million barrels of oil equivalent and 2010
production to be approximately 9.9 million barrels of oil
equivalent, a 30% increase over 2009. The 2010 estimates were
prepared on a well-specific basis and based on capital expenditures
of approximately $410 million. At current strip prices, Chaparral's
2010 EBITDA estimate would be approximately $335 million. Its 2010
capital expenditures will be funded through discretionary cash
flow, anticipated to be around $250 million, and additional
liquidity provided by the combination with URX. Assuming a combined
company stock price of approximately $10 per share, total
enterprise value would be $1.8 billion, implying a multiple of 2010
estimated EBITDA of 5.3x. Terms of the Proposed Transaction Upon
closing of the proposed transaction, Chaparral shareholders will
exchange their entire equity stake in Chaparral for 58 million
shares in the combined company. They will also be entitled to 20
million additional contingent shares, 5 million of which will be
issued but subject to forfeiture. The contingent shares include 15
million shares that will be earned if the combined company achieves
certain specific stock price targets, representing approximately
25% annual share price growth within a three-year period and 5
million shares that will be earned if the combined company achieves
an EBITDA target of $600 million within a five-year period. Upon
closing of the proposed transaction, shares held by the URX Sponsor
will be restructured into 5.6 million shares in the combined
company and 5.6 million contingent shares subject to forfeiture
under the same terms as the Chaparral contingent shares. Assuming
24% of the URX public shareholders elect to redeem their shares for
cash, and 50% of the URX warrants are redeemed for cash at $0.50
per warrant, upon closing of the proposed transaction Chaparral
will receive approximately $300 million in cash. The cash will be
used to reduce the amount outstanding under Chaparral's revolving
senior secured credit facility, as well as for working capital and
general corporate purposes. Pro forma for the proposed transaction,
Chaparral will have total debt to projected 2010 EBITDA ratio of
2.6x and total debt to proved reserves ratio of $6.02 per barrel of
oil equivalent (using June 30, 2009 reserve estimates). Based on
these assumptions, at closing the combined company will have a
total of approximately 98 million shares outstanding, excluding all
contingent shares and warrants. Chaparral shareholders will own 59%
of the combined company, URX shareholders will own 35% and the URX
Sponsor will own 6%. Consummation of the proposed transaction is
subject to URX shareholder approval, URX warrantholder approval of
a proposed warrantholder amendment, the refinancing of Chaparral's
existing revolving senior secured credit facility, receipt of a
minimum of $250 million of cash from URX upon closing, (taking into
account the redemption rate and the proposed transaction related
expenses), and other customary closing conditions. URX will file a
proxy statement with the U.S. Securities and Exchange Commission in
connection with a special meeting of its stockholders to seek
approval for the proposed transaction, as well as certain other
matters in connection with the proposed transaction. The proxy
statement will also be mailed to warrantholders of URX in
connection with a special meeting of its warrantholders to seek
approval of an amendment to the Warrant Agreement which governs the
terms of the warrants. Additional information regarding URX,
Chaparral, the proposed transaction and related matters will be
available on a Form 8-K to be filed by URX and a Form 8-K to be
filed by Chaparral. Copies can be obtained without charge at the
Securities and Exchange Commission's website at
http://www.sec.gov/. Advisors and Counsel Deutsche Bank Securities
Inc. and Maxim Group LLC are acting as financial advisors to URX in
connection with the proposed transaction. New Century Capital
Partners, Inc. provided a fairness opinion to URX in connection
with the proposed transaction. URX's legal counsel is Ellenoff
Grossman & Schole LLP. Morgan Stanley & Co. Incorporated is
acting as financial advisor to Chaparral in connection with the
proposed transaction. Chaparral's legal counsel is McAfee &
Taft, a professional corporation. Conference Call URX and Chaparral
management will conduct a conference call to discuss the proposed
transaction on Wednesday, October 14, 2009 at 11:00 am ET. To
participate in the call, dial 480-629-9724 at least 10 minutes
prior to commencement and ask for the URX-Chaparral conference
call. A replay will be available beginning approximately two hours
after the call ends and will be accessible until October 28, 2009.
To access the replay, dial (303) 590-3030 and enter the pass code
4171986 #. The conference call will also be webcast live over the
Internet at http://www.chaparralenergy.com/. To listen to the live
call on the Web, please visit Chaparral's website at least 10
minutes prior to commencement to register and download any
necessary audio software. An archive will be available shortly
after the call. For more information, please contact Donna Washburn
at DRG&E at (713) 529-6600 or e-mail . About United Refining
Energy Corp. URX is a special purpose acquisition company formed in
2007 for the purpose of acquiring through a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses or assets
in the energy industry. URX's initial public offering of units was
consummated on December 11, 2007, raising net proceeds of
approximately $464 million (which includes the proceeds of a
private placement of 15,600,000 warrants for $15,600,000 to its
sponsor), of which $449 million was placed in a trust account
immediately following the IPO. Each unit is composed of one share
of URX common stock and one warrant with an exercise price of
$7.00. As of September 30, 2009, URX held approximately $452
million (or approximately $10.05 per share) in a trust account
maintained by an independent trustee, which will be released upon
the consummation of the proposed transaction. For more information
on URX please refer to SEC filings. About Chaparral Energy, Inc.
Chaparral is an independent oil and natural gas exploitation and
production company headquartered in Oklahoma City, Oklahoma. Since
its inception in 1988, Chaparral has increased reserves and
production primarily by acquiring and enhancing properties in its
core areas of the Mid-Continent and the Permian Basin. Beginning in
2000, Chaparral expanded its geographic focus to include additional
areas of Gulf Coast, Ark-La-Tex, North Texas and the Rocky
Mountains. For more information on Chaparral please visit
http://www.chaparralenergy.com/. Forward-Looking Statements This
press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
regarding URX, Chaparral and URX's business after completion of the
proposed transactions. Forward-looking statements are statements
that are not historical facts. Such forward-looking statements,
which are based upon the current beliefs and expectations of the
management of URX and Chaparral, are subject to risks and
uncertainties, which could cause actual results to differ from the
forward-looking statements. The following factors, among others,
could cause actual results to differ from those set forth in the
forward-looking statements: the Company's ability to complete its
initial business combination within the specified time limits;
officers and directors allocating their time to other businesses or
potentially having conflicts of interest with the Company's
business or in approving the proposed transaction; success in
retaining or recruiting, or changes required in, the Company's
officers, key employees or directors following the proposed
transaction; the Company's revenues and operating performance;
changes in overall economic conditions; anticipated business
development activities of the Company following the proposed
transaction, general economic conditions, as well as other relevant
risks detailed in URX's and Chaparral's filings with the Securities
and Exchange Commission. The information set forth herein should be
read in light of such risks. Neither URX nor Chaparral assumes any
obligation to update the information contained in this release.
Non-GAAP Information This release makes reference to EBITDA which
is defined as earnings before interest; taxes, depreciation and
amortization, which is not a measure of financial performance
recognized by accounting principles generally accepted in the
United States, or GAAP. Our management uses this non-GAAP measure
in its analysis of performance and believes the presentation of
EBITDA provides useful information regarding our ability to service
debt and fund capital expenditures, and to help our investors
understand our operating performance and make it easier to compare
our results with those of other companies that have different
financing, capital and tax structures. EBITDA should not be
considered in isolation from or as a substitute for net income, as
an indication of operating performance or cash flows from operating
activities or as a measure of liquidity. EBITDA as we calculate it
may not be comparable to EBITDA measures reported by other
companies. In addition, EBITDA does not represent funds available
for discretionary use. Additional Information and Where to Find It
This press release is being made pursuant to and in compliance with
Rules 145, 165 and 425 of the Securities Act of 1933, as amended,
and does not constitute an offer of any securities for sale or a
solicitation of an offer to buy any securities. URX, Chaparral and
their respective directors and officers may be deemed to be
participants in the solicitation of proxies for the special
meetings of URX's stockholders and warrantholders to be held to
approve the proposed transactions described herein. The
underwriters of URX's initial public offering may provide
assistance to URX, Chaparral and their respective directors and
executive officers, and may be deemed to be participants in the
solicitation of proxies. A substantial portion of the underwriters'
fees relating to URX's initial public offering were deferred
pending stockholder approval of URX's initial business combination,
and stockholders are advised that the underwriters have a financial
interest in the successful outcome of the proxy solicitation. In
connection with the proposed transaction, URX will file with the
Securities and Exchange Commission a preliminary proxy statement
and a definitive proxy statement. URX's stockholders and
warrantholders are advised to read, when available, the proxy
statement and other documents filed with the Securities and
Exchange Commission in connection with the solicitation of proxies
for the special meetings because these documents will contain
important information. The definitive proxy statement will be
mailed to URX's stockholders and warrantholders as of a record date
to be established for voting. URX's stockholders and warrantholders
will also be able to obtain a copy of the proxy statement, without
charge, by directing a request to: United Refining Energy Corp.,
823 Eleventh Avenue, New York, NY 10019. The preliminary proxy
statement and definitive proxy statement, once available, can also
be obtained, without charge, at the Securities and Exchange
Commission's website at http://www.sec.gov/. Contacts: United
Refining Energy Corp. Investor inquiries: Julie Currie 212-484-9150
or 212-956-5803 Media inquiries: Gerald McKelvey Rubenstein
Associates, Inc. 212-843-8013 Chaparral Energy, Inc. Investor
inquiries: Joe Evans, CFO 405-478-8770 Media inquiries: Lisa
Elliott DRG&E 713-529-6600 DATASOURCE: Chaparral Energy, Inc.;
United Refining Energy Corp. CONTACT: Investors, Julie Currie of
United Refining Energy Corp., +1-212-484-9150, +1-212-956-5803, ;
or Joe Evans, CFO of Chaparral Energy, Inc., +1-405-478-8770, ; or
Media, Gerald McKelvey of Rubenstein Associates, Inc.,
+1-212-843-8013, for United Refining Energy Corp.; or Lisa Elliott
of DRG&E, +1-713-529-6600, , for Chaparral Energy, Inc. Web
Site: http://www.chaparralenergy.com/
Copyright