On February 25, 2019, Ring Energy, Inc. (the “Company” or “Buyer”) entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Wishbone Energy Partners, LLC (“WEP”), Wishbone Texas Operating Company LLC (“WTOC”) and WB WaterWorks, LLC (“WBWW,” and together with WEP and WTOC, “Sellers”), to acquire Sellers’ North Central Basin Platform assets consisting of approximately 37,206 net acres located primarily in southwest Yoakum County, Texas and eastern Lea County, New Mexico (the “Assets”) for aggregate consideration of $300 million, comprised of $270 million cash and $30 million of common stock of the Company (the “Acquisition”), subject to customary adjustments, including adjustments based on title and environmental due diligence, under the Purchase Agreement. The Acquisition is expected to close early in the second quarter of 2019 and will have an effective date of November 1, 2018.

 

The Company intends to finance the Acquisition with borrowings under an Amended and Restated Senior Secured Revolving Credit Facility (“Amended and Restated Senior Credit Facility”) that amends and restates the Company’s existing Senior Secured Revolving Credit Facility (“Existing Senior Credit Facility”). Concurrent with the signing of the Purchase Agreement, the Company signed a commitment letter with SunTrust Bank and SunTrust Robinson Humphrey (the “Lead Arranger” and, together with SunTrust Bank, “SunTrust”) relating to the Amended and Restated Senior Credit Facility, pursuant to which SunTrust Bank has committed to increase the maximum facility amount to $1 billion, increase the borrowing base to $425 million, extend the maturity date and make other modifications to the terms of the Existing Senior Credit Facility (the “Commitment Letter”). The Commitment Letter provides that the financing would be funded at the closing of the Acquisition and secured by a first lien with substantially the same collateral requirements as the Existing Senior Credit Facility. Management expects the financing to have substantially the same covenants as the Existing Senior Credit Facility and a five-year term.