Lilis Energy Inc. (NASDAQ: LLEX) said April 26 it closed $140 million of new financings to fuel the San Antonio-based company’s continued expansion in the Permian Basin.
The financings, earmarked for Permian leasing activity and acquisitions, include a $125 million convertible loan from global investment adviser Vӓrde Partners Inc. and additional $15 million in incremental loans under Lilis’ first lien credit facility.
Lilis CEO Avi Mirman said the company aims to use the capital to build on its A&D momentum. The company recently surpassed its June goal of assembling a 10,000-net-acre position in the core of the Delaware—and for a fraction of the cost of typical Permian deals.
“Our goals are to continue our rapid growth through the drillbit, aggressive leasing and accretive acquisitions,” Mirman said in a statement. “This financing gets us the dry powder we need to accelerate our efforts.”
Some of the funding will also repay about $38 million of the company’s debt as well as support general corporate expenses.
Lilis Energy first entered the Permian through a merger with a distressed Delaware Basin-focused E&P in June 2016. Despite the trend of blockbuster Permian A&D activity, the company has opted for smaller, bite-sized deals to build its position in the prolific basin.
RELATED: How Lilis Energy Beat The Price Of Permian Cool
For example, Lilis Energy purchased about 640 gross acres in October from a company in bankruptcy for about $3 million—less than $5,000 per acre, excluding production.
The same day, Lilis’ next-door neighbor Silver Hill Energy Partners LLC was purchased by RSP Permian Inc. (NYSE: RSPP) for about $2.4 billion—roughly $47,000 per acre.
“That was a massive win for us,” Mirman told Hart Energy in February. “Overnight, Lilis’ purchase of 640 acres recognized a $20 million uplift in value for us based on the Silver Hill acquisition metrics.”
The financing from Vӓrde includes about $125 million that is convertible into a share or equity position in Lilis at $5.50 per share—roughly a dollar more than Lilis’ current trading price.
Värde’s loan initially gives the firm one observer seat on Lilis’ board of directors. If Värde converts its loan to equity, it could have up to two board seats, based on its proportionate holdings in the company.
Lilis said it also redeemed or converted all outstanding shares of its preferred stock concurrently with the closing of the loan.
In addition, Lilis Energy said its common stock was approved for listing on the NYSE MKT and will begin trading under its current symbol on May 9.
KES 7 Capital Inc. was Lilis’ adviser for the new first lien credit facility financing. Bracewell LLP was legal adviser to Lilis and Kirkland & Ellis LLP was Värde's legal advisor for its loan.
Emily Patsy can be reached at epatsy@hartenergy.com.
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