DEFM14A: Chord Energy to Acquire Enerplus in Strategic Business Combination

Chord Energy Corporation will acquire Enerplus Corporation, creating a combined company with a strong presence in the Williston Basin.

Summary

• Chord Energy Corporation has agreed to acquire Enerplus Corporation in a strategic business combination.
• Chord, through its subsidiary Spark Acquisition ULC, will acquire all outstanding Enerplus common shares.
• Enerplus shareholders will receive 0.10125 of a Chord common share and $1.84 in cash for each Enerplus common share held.
• Chord stockholders will own approximately 67% and Enerplus shareholders will own approximately 33% of the combined company on a fully diluted basis.
• A special meeting of Chord stockholders will be held on May 14, 2024, to vote on the issuance of Chord common stock and a charter amendment to increase the number of authorized shares.
• The Chord board of directors unanimously recommends that stockholders vote FOR the stock issuance proposal, the charter amendment proposal, and the adjournment proposal.
• The transaction is expected to close by mid-year 2024, subject to stockholder and regulatory approvals.

Sentiment

Score: 8

Explanation: The document is generally positive, outlining the strategic benefits of the merger and the board's strong recommendation for approval. However, it also acknowledges potential risks and uncertainties.

Positives

• The combined company is expected to benefit from increased scale, a larger inventory of drilling locations, and enhanced financial strength.
• The transaction is anticipated to be accretive to key financial metrics such as cash flow per share and free cash flow per share.
• The combined company is expected to generate significant free cash flow, with plans to distribute 75% of it to shareholders.
• The increased market capitalization of the combined company may lead to greater investor interest and trading liquidity.

Negatives

• Chord stockholders will have a reduced ownership percentage in the combined company.
• The exchange ratio is fixed and will not be adjusted for changes in the stock prices of Chord or Enerplus.
• The arrangement agreement subjects Chord to restrictions on its business activities prior to closing.
• The arrangement may result in a loss of management personnel and other key employees.

Risks

• The arrangement agreement may be terminated, and the arrangement may not be completed.
• Chord stockholders may not approve the stock issuance proposal.
• The parties may not be able to satisfy the conditions to the completion of the arrangement.
• The combined company may fail to realize anticipated synergies or other benefits.
• Regulatory Approvals of the transaction may not be obtained.

Future Outlook

The arrangement is expected to close by mid-year 2024, subject to customary closing conditions, including regulatory and shareholder approvals. The combined company anticipates significant synergies and increased free cash flow.

Management Comments

• The Chord board of directors has unanimously determined that it is advisable and in the best interests of Chord and its stockholders to consummate the arrangement with Enerplus.
• The Chord board of directors unanimously recommends that you vote FOR each of the proposals described above.
• I strongly support the proposed arrangement of Chord with Enerplus and the Charter Amendment and join with our board of directors in unanimously recommending that you vote FOR each of the proposals described in this proxy statement.

Industry Context

This announcement reflects a trend of consolidation in the oil and gas industry, as companies seek to increase scale, improve efficiency, and enhance their competitive position in a volatile market.

Comparison to Industry Standards

• The transaction is similar to other recent mergers in the oil and gas sector, such as the Chevron-PDC Energy merger and the ExxonMobil-Pioneer Natural Resources merger, which aimed to consolidate assets and achieve synergies.
• The implied premium offered to Enerplus shareholders is within the range of premiums observed in comparable transactions.
• The combined company's focus on the Williston Basin aligns with industry trends of concentrating operations in core areas to maximize returns.

Management Changes

Stakeholder Impact

• Chord stockholders will see their ownership diluted to approximately 67% of the combined company.
• Enerplus shareholders will receive a combination of Chord stock and cash for their shares.
• Employees of both companies may experience uncertainty regarding their roles and responsibilities in the combined organization.
• Customers and suppliers of both companies may be affected by the integration of operations and potential changes in business relationships.

Next Steps

• Chord stockholders to vote on the stock issuance proposal, charter amendment proposal, and adjournment proposal at the special meeting on May 14, 2024.
• Enerplus shareholders to vote on the arrangement resolution at a separate meeting.
• Obtain regulatory approvals, including those required under the HSR Act and the Investment Canada Act.
• Seek final approval from the Court of Kings Bench of Alberta.
• Complete the transaction and integrate the operations of Chord and Enerplus.

Key Dates

Keywords

Enerplus, Chord Energy, acquisition, merger, stock issuance, shareholders, Williston Basin, oil and gas, proxy statement, arrangement