Resolute Energy — Merger or Acquisition (February 2019)
26 slides from Resolute Energy's merger presentation, Feb 6, 2019
Slide 1: Cautionary statements
Cautionary statements Page 2 Cautionary Statement Regarding Forward-Looking Information Statements in this presentation, other than statements of historical fact, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchan
Slide 2: Resolute representatives
Resolute representatives Joe Citarrella, Independent Director (representing 10% stockholder) Wilkie Colyer, Independent Director (representing 8% stockholder) Rob Raymond, Independent Director (representing 2% stockholder) Rick Betz, Chief Executive Officer & Director Ted Gazulis, Executive Vice Pre
Slide 3: Transaction overview and highlights
Transaction overview and highlights Resolute/Cimarex merger announced November 19, 2018 60% stock and 40% cash1 0.2366 shares of Cimarex stock and $14.00 cash per Resolute share, assuming full proration Transaction will be considered tax free reorganization2 Represented a 15% premium to Resolute’s p
Slide 4: Compelling strategic rationale for Cimarex merger
Compelling strategic rationale for Cimarex merger Page 5 $ $ ROR REN XEC Combination of two top tier Delaware Basin acreage positions with complementary operations Scale and credit profile of combined company significantly de-risks standalone Resolute business model Cimarex technical advances can be
Slide 5: Resolute benefits from combined company scale
Resolute benefits from combined company scale Diversified asset base: Delaware Basin and Mid Continent Cimarex’s extensive operational experience augments Resolute knowledge base Similar disciplined, returns-driven approach to investment decisions Opportunity to optimize well spacing and lateral len
Slide 6: Resolute and Cimarex assets are among the most productive in the Delaware Basin
100% 80% 60% 40% 20% 0% 250,000 200,000 150,000 100,000 50,000 0 Average cum 180 Boe (norm. 7,500’ lateral length) 53% A F D E C B G H XEC I REN % Oil 180 day average production per well (Boe) Resolute and Cimarex assets are among the most productive in the Delaware Basin Combination with Cimarex en
Slide 7: Financial strength improves dramatically post-merger
Financial strength improves dramatically post-merger Combined market cap of approximately $8 billion1 Investment grade balance sheet with combined net debt/2019E EBITDA2 of 0.8x Larger stockholder base with significant trading liquidity Average $125 million of daily trading value in 2017-2018 Cimare
Slide 8: Merger results from thorough strategic review process
Merger results from thorough strategic review process Strategic review process started in May 2018 following settlement with Monarch, consistent with input from large stockholders Full Board, including stockholder representatives, directed a strategic process which included an evaluation of a broad
Slide 9: Thorough sales process provided market test
Thorough sales process provided market test Resolute conducted a rigorous, broad outreach process in line with recent upstream mergers and including all likely counterparties in the opinion of Board and its advisors Thirteen total companies were contacted to assess interest Five companies that expre
Slide 10: Recent merger timelines: pre-announcement
Recent merger timelines: pre-announcement Page 11 Rigorous process consistent with recent transactions Note: Table includes the following transactions (no particular order) – CXO/RSPP, FANG/EGN, EQT/RICE, NBL/CWEI, NBL/ROSE, and RRC/MRD 16 2 6 14 7 9 1 2 2 2 1 4 9 2 13 1
Slide 11: Transaction negotiated at time of relative strength
Transaction negotiated at time of relative strength For twelve months prior to announcement on November 19, 2018: Resolute common stock outperformed both peers and Cimarex Resolute shares experienced higher relative volatility but remained in an elevated trading range Page 12 Note: Market data per F
Slide 12: Resolute shares have traded well in a volatile market
Resolute shares have traded well in a volatile market Subsequent to announcement on November 19, 2018: Resolute common stock has outperformed both peers and Cimarex Positive market reaction to merger demonstrated by relative strength of Cimarex and Resolute stock on day of announcement Cash componen
Slide 13: Updated transaction value
Updated transaction value Page 14 As of January 31, 2019 Estimates based on current Wall Street Consensus per FactSet as of January 31, 2019 1 1 1 1 1 1 1 1
Slide 14: Relative price comparison: pre-announcement
Deal priced at 90% of Resolute 52-week high Cimarex shares at 69% of 52-week high Relative price comparison: pre-announcement Page 15 Note: Market data per FactSet as of November 16, 2018 Companies 1-5 are Permian-focused operators 52-week stock price range on day before announcement Percent of 52-w
Slide 15: Resolute / Cimarex historical exchange ratio
Resolute / Cimarex historical exchange ratio Transaction exchange ratio approximates three year peak Page 16 Note: Market data per FactSet as of November 16, 2018 More Favorable for Resolute Less Favorable for Resolute Announcement date: November 19, 2018 Three year average ratio: 0.2387 (pre-announ
Slide 16: Analysts supportive of transaction
Analysts supportive of transaction Page 17 “XEC’s Delaware Basin results are among the most prolific in the industry in terms of initial production rates, with high initial oil yields offsetting the impact of a higher gas mix. One of the company’s key competitive advantages is its “blocky” acreage p
Slide 17: Transaction clearly aligned with views of largest stockholders
Transaction clearly aligned with views of largest stockholders Page 18 As of the date of such letters “We therefore ask that Resolute’s Board immediately launch a formal process with the goal of selling or merging the Company with another Delaware Basin operator before year end ” 13D filer #1 9.7% s
Slide 18: Transaction timeline
Transaction timeline Cimarex advised of “no review” by SEC and transaction was granted early termination of Hart-Scott-Rodino review period Relevant dates Record date for vote was January 18, 2019 Form S-4 was effective on January 30, 2019 Definitive proxy statement/prospectus was mailed on January
Slide 19: Certain risks relating to Resolute if merger voted down
Certain risks relating to Resolute if merger voted down Would be required to quickly refinance $600 million in high yield debt Slowdown in operational activity since merger announcement would need to be reversed Ability to retain key employees would be challenging Premium in Resolute stock relative
Slide 20: Compelling strategic rationale for Cimarex merger
Compelling strategic rationale for Cimarex merger Page 21 $ $ ROR REN XEC Combination of two top tier Delaware Basin acreage positions with complementary operations Scale and credit profile of combined company significantly de-risks standalone Resolute business model Cimarex technical advances can b
Slide 21: Compelling strategic rationale for Cimarex merger
Compelling strategic rationale for Cimarex merger Combination of two top tier Delaware Basin acreage positions with complementary operations Scale and credit profile of combined company significantly de-risks standalone Resolute business model Cimarex technical advances can be applied to further imp
Slide 22: Resolute director representatives
Resolute director representatives Joseph Citarrella Joseph Citarrella is a Managing Principal at Monarch Alternative Capital LP (“Monarch”). In addition to his investment responsibilities at Monarch, Mr. Citarrella has served since August 2017 as non-executive Chairman of the Board of Vanguard Natur
Slide 23: Resolute management representatives
Resolute management representatives Richard F. Betz Richard F. Betz has been Chief Executive Officer and a member of the Board since January 2017 and prior to that was Executive Vice President and Chief Operating Officer of Resolute from March 2012 through December 2016, Senior Vice President, Strat
Slide 24: Cimarex standalone net acreage
Cimarex standalone net acreage 259,000 total net acres 31,384 net acres in Lea County 61,853 net acres in Reeves County 100,000+ net acres in Culberson/White City Page 25 Delaware Basin
Slide 25: Cimarex total net acreage: Mid-Continent
Cimarex total net acreage 326,000 total net acres 116,500 net acres in Meramec 135,625 net undeveloped acres in Woodford Page 26 Mid-Continent
Slide 26: Cimarex total net acreage: Mid-Continent
Cimarex total net acreage | Mid-Continent 326,000 total net acres = 116,500 net acres in Meramec = 135,625 net undeveloped acres in Woodford Te aL] — tesenecetve - —— |—— Woodford outline
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