Elliott Management has proposed to acquire US-based crude oil and natural gas exploration and production company QEP Resources for $2.07bn in an all-cash deal.
The hedge fund has offered to buy each of the shares in QEP Resources at $8.75, which represents a premium of 44% to the stock’s closing stock price on 4 January, 2019.
The oil and gas company operates in two regions in the US – Southern Region, which primarily includes Texas and Louisiana, and the Northern Region, where it is focused mainly on North Dakota. Currently, QEP Resources is taking part in the Permian Basin in Texas, the Williston Basin in North Dakota, and the Haynesville Shale natural gas play in Louisiana.
In 2017, the Colorado-based company’s total production was 53.1MMboe, out of which 6.1MMbbl came from the Permian Basin. The company declared its year-end 2017 proved reserves at 684.7MMboe. Its Q3 2018 production was reported to be 14,400.0Mboe.
In its takeover proposal, Elliott Management said: “We have done a comprehensive amount of public work to understand QEP’s business, and we believe the quality of QEP’s assets demonstrates a clear focus on only core-of-the-core positions in premium basins.
“But despite the promise of its premium assets, QEP as a public-company investment has not worked, and its stock continues to trade well below its intrinsic value.
“We believe that a sale of the Company pursuant to the Proposal gives shareholders a direct path to realizing a compelling premium for their shares with far greater certainty than if QEP were to remain a publicly traded company.”
QEP Resources said that its board of directors plan to review the proposal and will carefully look into it in the context of the best interests of all of its shareholders, taking into account the other alternatives and present market conditions.
The proposal is conditional on the completion of QEP Resources’ $735m sale of Haynesville gas assets sale as announced in November 2018. However, it will not be conditioned on the completion of the company’s $1.725bn Williston asset sale, which was announced in early November 2018, said Elliott Management.