Chaparral Energy going public after 20 years of privacy

Journal Record, The (Oklahoma City), Jul 16, 2008 by Jerry Shottenkirk

Chaparral Energy's two decades as a private company will come to an end later this year when its reverse merger with Edge Petroleum of Houston is finalized.

Pending regulatory approval and approval of Edge shareholders, the combined company will have the Chaparral Energy name and will be traded under the ticker symbol "CPR" on the New York Stock Exchange.

It was an all-stock transaction and Chaparral shareholders will own 86 percent of the outstanding stock and Edge stockholders will own 14 percent. Edge stockholders will receive 0.2511 shares of Chaparral common stock for every share of Edge common stock they own. Edge had approximately 28.7 million common shares and 2.9 million preferred shares it disclosed in a recent regulatory filing.

"This transaction represents a milestone in Chaparral's long and successful 20-year existence as a private company and we look forward to the opportunities available to us as a public entity," said Mark Fischer, Chaparral's CEO, president and co-founder. "We are extremely excited about this transaction as it allows us to achieve two of our corporate strategic initiatives of increasing our production and cash flow and also accessing the public equity markets."

Fischer, who will continue to lead the company, owns 42 percent of Chaparral; his brother, Charles, and a group from Canada own 26 percent; and Chesapeake Energy owns 32 percent after buying into the company in 2006.

Edge Petroleum shares closed Tuesday at $5.53, up 84 cents, or 17.91 percent, on Nasdaq. Its shares had been down 21 percent in 2008 and 64 percent over the past 12 months.

Edge, which had market capitalization of $158.4 million at the close of trading Tuesday, listed reserves of 163.5 billion cubic feet equivalent, including 116.6 billion cubic feet of natural gas, 4.8 million barrels of natural gas liquids and 3 million barrels of oil entering this year.

The combined company will have proved reserves of 1.15 trillion cubic feet equivalent and their total production for the first quarter of the year was about 172 million cubic feet equivalent per day. The production is spread out to 66 percent in the Mid- Continent region, 17 percent on the Gulf Coast, 10 percent in the Permian Basin and 7 percent in other areas.

Chaparral received a JP Morgan-led financed credit facility to be between $825 million and $1 billion.

"This is good for the Chaparral since it had considered going public for several years," said Bob Rader of Capital West Securities. "This is a big deal and Chaparral showed it is big enough to make this deal and go public on the New York Stock Exchange. With one public and one private company, it will combine to do all the filing and it takes time to integrate everything."