Item 1.01. Entry into a Material Definitive Agreement.
Registration Rights Agreement
The information set forth in Item 2.01 below with respect to the Registration Rights Agreement, as defined in Item 2.01, is incorporated by reference into this Item 1.01.
Amendment to TXO Partners, L.P. Credit Agreement
On August 30, 2024, TXO Partners, L.P. (the “Partnership”) entered into the Amendment No. 4 and Borrowing Base Agreement (the “Fourth Amendment”), by and among the Partnership, as borrower (in such capacity, the “Borrower”), the guarantors party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as the administrative agent (the “Agent”), which amended the Credit Agreement, dated as of November 1, 2021, by and among the Borrower, the guarantors party thereto, certain commercial banks party thereto as lenders from time to time (the “Lenders”), and the Agent (as amended, the “TXO Credit Agreement”).
The Fourth Amendment (a) increases available aggregate commitments under the TXO Credit Agreement from $165.0 million to $275.0 million, (b) extends the maturity date of the TXO Credit Agreement to August 30, 2028, and (c) joins certain new Lenders to the TXO Credit Agreement.
The foregoing description of the Fourth Amendment is not complete and is qualified in its entirety by reference to the full text of the Fourth Amendment, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On August 30, 2024, the Partnership and Morningstar Operating LLC, a Delaware limited liability company and wholly-owned subsidiary of the Partnership (“Morningstar” and together with the Partnership, the “Purchaser Parties”), completed the acquisition (the “EMEP Acquisition”) of certain producing oil and gas assets located in the Williston Basin of Montana and North Dakota from EMEP Acquisitions, LLC, a Delaware limited liability company (“EMEP”) and VR4-ELM, LP, a Texas limited partnership (“Vendera” and together with EMEP, the “EMEP Sellers”) under the previously reported Purchase and Sale Agreement, dated as of June 25, 2024, by and among the Purchaser Parties and the EMEP Sellers (the “Purchase and Sale Agreement”). The total consideration for the EMEP Acquisition consisted of $241.8 million in cash (the “EMEP Cash Consideration”) and 2,500,000 common units representing limited partner interests in the Partnership (the “EMEP Equity Consideration”), subject to customary purchase price adjustments. The EMEP Cash Consideration for the EMEP Acquisition was funded through (i) $141.3 million in net proceeds from the issuance of 7,475,000 common units representing limited partner interests in the Partnership and (ii) borrowings under the Partnership’s revolving credit facility.
In connection with the closing of the EMEP Acquisition, on August 30, 2024, the Partnership and the EMEP Sellers entered into a registration rights agreement (the “Registration Rights Agreement”) pursuant to which the Partnership will register under the Securities Act of 1933, as amended, the resale of the EMEP Equity Consideration. The Registration Rights Agreement provides for certain additional underwritten demand rights and “piggy-back” registration rights, subject to certain requirements and conditions.
The foregoing description of the Registration Rights Agreement is not complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement, which is attached as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 above under the heading “Amendment to TXO Partners, L.P. Credit Agreement” is incorporated by reference into this Item 2.03.
