01—Abstract
Summary
Summary of the 8-K/A filed June 13, 2024. Cited figures are marked; the original filing is the authoritative source.
APA Corporation filed this Form 8-K/A amendment on June 13, 2024 to provide the financial statements and pro forma financial information required by Item 9.01 for its acquisition of Callon Petroleum Company, which closed on April 1, 2024 under the Agreement and Plan of Merger dated January 3, 2024.
In the merger, Astro Comet Merger Sub Corp. merged into Callon, with Callon surviving. Callon stockholders received 1.0425 shares of APA common stock for each eligible Callon share. The filing states that the pro forma information is presented for informational purposes only and does not project future results.
The filing's pro forma combined statement of operations for the year ended December 31, 2023 shows pro forma total revenues of $10,578 milliona (APA historical $8,279 million; Callon as adjusted $2,299 million) and pro forma net income attributable to common stock of $4,021 million, or $10.63 per diluted share. The preliminary purchase price allocation sets total consideration transferred at $2,440 million, consisting of $2,394 million of APA common stock issued (69 million shares at a closing price of $34.53) plus other items. Fair value of oil and gas properties acquired is $4,503 million, and assumed long-term debt is $2,113 million.
The purchase price allocation is preliminary and APA expects to finalize it no later than one year from April 1, 2024. On a pro forma basis, the combined company's total proved reserves at December 31, 2023 are presented as 1,240,990 thousand barrels of oil equivalent, and the pro forma standardized measure of discounted future net cash flows is $15,474 millionb.
Pro forma financing reflects a new $1.5 billionc senior unsecured delayed-draw term loan with a weighted average interest rate of 7.1%, which APA states will mature in three years. Transaction costs of approximately $114 million are included as nonrecurring adjustments.
02—Key points
Key Highlights
- Acquisition of Callon Petroleum Company closed April 1, 2024; Callon stockholders received 1.0425 shares of APA common stock per eligible share
- Preliminary total consideration transferred of $2,440 million, including $2,394 million in APA common stock (69 million shares at $34.53)
- Preliminary purchase price allocation includes $4,503 million of oil and gas properties and $2,113 million of assumed long-term debt
- Pro forma 2023 total revenues of $10,578 million and pro forma net income attributable to common stock of $4,021 million ($10.63 diluted EPS)
- Pro forma combined total proved reserves of 1,240,990 thousand barrels of oil equivalent at December 31, 2023
- Pro forma standardized measure of discounted future net cash flows of $15,474 million at December 31, 2023
- New $1.5 billion senior unsecured delayed-draw term loan with a pro forma weighted average interest rate of 7.1%, maturing in three years
03—Questions
Frequently Asked Questions
What was the exchange ratio for Callon shareholders in the merger?
Each eligible share of Callon common stock was converted into the right to receive 1.0425 shares of APA common stock, with cash paid in lieu of fractional shares.
How was the acquisition accounted for?
The merger is accounted for as a business combination under the acquisition method, with APA identified as the accounting acquirer. The purchase price allocation is preliminary and may change materially, and APA expects to finalize it no later than one year from April 1, 2024.
What is the total consideration APA paid for Callon?
The filing reports total consideration transferred of $2,440 million, consisting primarily of $2,394 million in fair value of APA common stock issued, plus $20 million of APA equity awards issued for Callon awards and $26 million of other consideration.
How is the merger financed and what debt was added?
Callon's senior notes and credit facility were extinguished. APA issued a new $1.5 billion senior unsecured delayed-draw term loan, and the remaining debt was assumed to be repaid using APA's existing credit facility and cash. The pro forma interest expense assumes a 7.1% weighted average rate on the new term loan and 6.6% on the existing credit facility.
Are the pro forma figures a forecast of future results?
No. The filing states that the pro forma information is for informational purposes only, does not represent actual results had the companies combined earlier, and does not project future results. It also excludes projected synergies and integration costs.
04—Continue