| |
70.00 |
|
|
3,041,976 |
|
0.5866 |
|
|
41.0620 |
|
|
41.0588 |
|
In order to receive timely delivery of the documents in
advance of your special meeting of stockholders, your request should be received no later than May 4, 2005.
TABLE OF CONTENTS
i
Assuming
a hypothetical Average Noble Energy Common Stock Value of $61.54, which was the closing price of Noble Energy common stock on December 15, 2004, the day prior to the
announcement of the proposed merger, the merger would have a value of approximately $37.88 per share of Patina common stock. Assuming a hypothetical Average Noble Energy Common Stock Value of $68.95,
which was the closing price of Noble Energy common stock on April 11, 2005, the last business day prior to the date of this document, the merger would have a value of approximately $40.66 per
share of Patina common stock. Assuming a hypothetical Average Noble Energy Common
65
Stock
Value of $68.2020 based on the volume-weighted average of the trading sale prices per share of Noble Energy common stock during the 10 consecutive trading days ended three calendar days prior to
the date of mailing of this joint proxy statement/prospectus, the merger would have a value of approximately $40.38 per share of Patina common stock.
The
actual value of the cash consideration or number of shares of Noble Energy common stock that you will receive for each share of Patina common stock you hold may differ from the
hypothetical amounts shown in this example because the actual amounts will be determined after the effective time of the merger based on a formula set forth in the merger agreement and described in
this document.
No
assurance can be given that the current fair market value of Noble Energy common stock will be equivalent to the fair market value of Noble Energy common stock on the date that the
merger consideration is received by a Patina stockholder or at any other time. The actual fair market value of the Noble Energy common stock received by Patina stockholders depends upon the fair
market value of Noble Energy common stock upon receipt, which may be higher or lower than the Average Noble Energy Common Stock Value or the market price of Noble Energy common stock on the date the
merger was announced, on the date that this document is mailed to Patina's stockholders, on the date a Patina stockholder makes an election with respect to the merger consideration or on the date of
the special meeting of Patina stockholders.
If,
between the date of the merger agreement and the effective time, the shares of Noble Energy common stock are changed into a different number or class of shares by reason of
reclassification, split-up, combination, exchange of shares or similar readjustment, or a stock dividend is declared with a record date within that period, appropriate adjustments will be
made to the per share cash consideration and the per share stock consideration.
No
fractional shares of Noble Energy common stock will be issued to any holder of Patina common stock in connection with the merger. For each fractional share that would otherwise be
issued, Noble Energy will pay cash in an amount equal to the fraction multiplied by the average of the closing sale prices of Noble Energy common stock on the NYSE for the five trading days
immediately preceding the date on which the merger occurs. No interest will be paid or accrued on cash payable in lieu of fractional shares of Noble Energy common stock.
Conversion of Shares; Exchange of Certificates; Elections as to Form of Consideration; Allocations
The conversion of Patina common stock into the right to receive the merger consideration will occur automatically at the effective time of the merger. As soon as
reasonably practicable after the effective time of the merger, Wachovia Bank, N.A., as exchange agent, will exchange certificates formerly representing shares of Patina common stock for merger
consideration to be received in the merger pursuant to the terms of the merger agreement.
Election Procedure
Subject to the allocation mechanism described below, each Patina stockholder may elect to receive with respect to his or her shares of Patina common stock, all
cash, all Noble Energy common stock or a combination of cash and Noble Energy common stock.
Cash Election Shares. Stockholders who elect to receive cash for some or all of their shares will receive the per share cash
consideration in respect of that portion of such holder's shares of Patina common stock equal to such holder's cash election, subject to the allocation mechanism described below. In our discussion we
refer to the shares for which cash elections have been made as "cash election shares."
Stock Election Shares. Stockholders who elect to receive Noble Energy common stock for some or all of their shares will
receive the per share stock consideration in respect of that portion of such
66
holder's
shares of Patina common stock equal to such holder's stock election, subject to the allocation mechanism described below. In our discussion we refer to the shares for which stock elections
have been made as "stock election shares."
No Election Shares. Stockholders who indicate that they have no preference as to whether they receive cash or Noble Energy
common stock, and stockholders who do not make a valid election, will be deemed to have made "no election." Stockholders who are deemed to have made no election will receive the per share stock
consideration unless there is an oversubscription of the stock consideration, in which case they may receive the per share cash consideration for some or all their shares of Patina common stock. In
our discussion we refer to the shares held by stockholders who have made no election as "no election shares." See "—Allocation" beginning on page 69 of this document.
For
example, assuming a Patina stockholder holds 100 shares of Patina stock (and that the Average Noble Energy Common Stock Value is $61.54), if such stockholder made:
- •
- an all cash election, he or she would receive approximately $3,788 in cash;
- •
- an all stock election, he or she would receive 61 shares of Noble Energy common stock (and cash in lieu of fractional
shares); and
- •
- an election for a combination of cash and stock, he or she would receive approximately $37.88 for each cash election share
and approximately 0.6156 shares of Noble Energy common stock for each stock election share. Assuming 50 cash election shares and 50 stock election shares, the Patina stockholder would receive
approximately $1,894 in cash, 30 shares of Noble Energy common stock and cash in lieu of fractional shares.
The
actual allocation of cash and stock would be subject in each case to the allocation procedures described under the heading "—Allocation" beginning on page 69 of this document.
A fixed number of shares of Noble Energy common stock will be issued and a fixed amount of cash paid in the merger. Accordingly, there is no assurance that a
holder of Patina common stock will receive the form of consideration that the holder elects with respect to any or all shares of Patina common stock held by that holder. If the elections result in an
oversubscription with respect to shares of Patina common stock which would otherwise receive either the per share stock consideration or the per share cash consideration, the procedures for allocating
Noble Energy common stock and cash described below under "—Allocation" will be followed by the exchange agent.
Election Form. Together with this joint proxy statement/prospectus, each Patina stockholder received an election form and
other appropriate and customary transmittal materials. Each election form allows the holder to specify (1) the number of shares with respect to which the holder elects to receive the per share
stock consideration, (2) the number of shares with respect to which the holder elects to receive the per share cash consideration or (3) that the holder makes no election. Noble Energy
will also make available forms of election to persons who become holders of Patina common stock subsequent to the record date for the Patina special meeting up until the close of business on the
business day prior to the election deadline.
Holders
of Patina common stock who wish to elect the type of merger consideration they will receive in the merger should carefully review and follow the instructions set forth in the
election form. Shares of Patina common stock as to which the holder has not made a valid election prior to the election deadline, which is 5:00 p.m., Houston, Texas time, on May 10,
2005, will be deemed no election shares.
To make an election, a holder of Patina common stock must submit a properly completed election form so that it is actually received by the exchange agent at or
prior to the election deadline in accordance with the instructions on the election form. An election form will be properly completed only if accompanied by certificates representing all shares of
Patina common stock covered by the election
67
form (or appropriate evidence as to the loss, theft or destruction of such certificate, appropriate evidence as to the ownership of that certificate by the claimant, and appropriate and customary
indemnification). If a stockholder cannot deliver his or her stock certificates to the exchange agent by the election deadline, a stockholder may deliver a notice of guaranteed
delivery promising to deliver his or her stock certificates, as described in the election form, so long as (1) the guarantee of delivery is from a firm which is a member of the NYSE or another
registered national securities exchange or a commercial bank or trust company having an office in the United States and (2) the actual stock certificates are in fact delivered to the exchange
agent by the time set forth in the guarantee of delivery. If you own shares of Patina common stock in "street name" by your broker or other nominee and you wish to make an election, you should seek
instructions from the broker or other nominee holding your shares concerning how to make your election.
An
election may be revoked or changed by the person submitting the election form prior to the election deadline. In the event of a revocation of an election, the exchange agent will,
upon receiving a
written request from the holder of Patina common stock making a revocation, return the certificates of Patina common stock submitted by that holder, and that holder will be deemed to have made no
election. The exchange agent will have reasonable discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in the
election forms, and any good faith decisions of the exchange agent regarding these matters will be binding and conclusive. Neither Noble Energy nor the exchange agent will be
under any obligation to notify any person of any defects in an election form. If you instructed a broker to submit an election for your shares, you must follow your broker's
directions for changing those instructions.
Shares
of Patina common stock as to which the holder has not made a valid election prior to the election deadline, including as a result of revocation, will be deemed no election shares.
If it is determined that any purported cash election or stock election was not properly made, the purported election will be deemed to be of no force or effect and the holder making the purported
election will be deemed not to have made an election for these purposes, unless a proper election is subsequently made on a timely basis.
If
you hold shares of Patina common stock through the Patina Oil & Gas Corporation Profit Sharing and 401(k) Plan, you may elect to receive, with respect to the shares of Patina
common stock allocated to your plan account, all cash, all Noble Energy common stock or a combination of cash and Noble Energy common stock, subject to the allocation mechanism described below. You
will receive instructions from the trustee of the plan as to how to make elections with respect to shares allocated to your plan account. If you own shares through the plan and do not make a valid
election, the plan trustee will make elections with respect to the shares in accordance with the terms of the plan. If you hold shares of Patina common stock through Patina's Amended and Restated
Deferred Compensation Plan for Select Employees, the trustee of such plan will make elections with respect to all shares held by the plan in the manner directed by Patina. You will not be permitted to
instruct the trustee with respect to what elections to make for these shares.
Letter Of Transmittal
Soon after the effective time of the merger, the exchange agent will send a letter of transmittal to each person who was a Patina stockholder at the effective
time of the merger who has not previously and properly surrendered certificates representing shares of Patina common stock to the exchange agent. This mailing will contain instructions on how to
surrender certificates formerly representing shares of Patina common stock (if these certificates have not already been surrendered) in exchange for the merger consideration the holder is entitled to
receive under the merger agreement.
68
If
certificates formerly representing shares of Patina common stock are presented for transfer after the effective time of the merger, they will be exchanged for the merger consideration
into which the shares of Patina common stock formerly represented by that certificate shall have been converted.
If
a certificate formerly representing shares of Patina common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the merger
agreement upon receipt of appropriate evidence as to that loss, theft or destruction, appropriate evidence as to the ownership of that certificate by the claimant, and appropriate and customary
indemnification.
Allocation
A fixed number of shares of Noble Energy common stock will be issued and a fixed amount of cash paid in the merger in each case subject to upward adjustment in
the event that any shares of Patina common stock are issued in accordance with the merger agreement pursuant to Patina stock options or Patina warrants or otherwise. Accordingly, there is no assurance
that you will receive the form or combination of consideration that you elect with respect to any or all shares of Patina common stock you hold. If the elections of all of the Patina stockholders
result in an oversubscription of the pool of cash or Noble Energy common stock, the exchange agent will allocate between cash and Noble Energy common stock in the manner described below.
Oversubscription of the Cash Consideration. If the aggregate cash amount that would be paid upon the conversion in the merger
of the cash election shares is more than the total cash amount, then:
- •
- all
stock election shares and no election shares will be converted into the right to receive the per share stock consideration;
- •
- the
exchange agent will then select from among the cash election shares, by a pro rata selection process, a sufficient number of shares such that the aggregate cash amount
that will be paid in the merger equals as closely as practicable the total cash amount;
- •
- all
cash election shares selected by the exchange agent through the pro rata selection process described above will be converted into the right to receive the per share
stock consideration; and
- •
- the
cash election shares that have not been selected by the exchange agent to be converted into the per share stock consideration will be converted into the right to receive
the per share cash consideration.
Oversubscription of the Stock Consideration. If the aggregate cash amount that would be paid upon the conversion in the
merger of the cash election shares is less than the total cash amount, then:
- •
- all
cash election shares will be converted into the right to receive the per share cash consideration;
- •
- the
exchange agent will then select from among the non-electing shares and then, if necessary, from among the stock election shares, by a pro rata selection
process, a sufficient number of shares such that the aggregate cash amount that will be paid in the merger equals as closely as practicable the total cash amount;
- •
- all
no election and stock election shares selected by the exchange agent through the pro rata selection process described above will be converted into the right to receive
the per share cash consideration; and
- •
- the
stock election shares and any no election shares that have not been selected by the exchange agent to be converted into the per share cash consideration will be
converted into the right to receive the per share stock consideration.
69
The
allocation described above will be computed by the exchange agent within 10 days after the election deadline, unless the merger has not been completed, in which case the
allocation will be completed as soon as practicable after the effective time of the merger. The exchange agent will use an equitable pro rata allocation process to be mutually determined by Patina and
Noble Energy.
Because the United States federal income tax consequences of receiving cash or Noble Energy common stock, or both cash and Noble Energy common stock, will differ,
Patina stockholders are urged to read carefully the information set forth under the heading "—Material United States Federal Income Tax Consequences" and to consult their tax advisors for
a full understanding of the merger's tax consequences to them. In addition, because the stock consideration can fluctuate in value from the determination made during the valuation period, the economic
value per share received by Patina stockholders who receive the stock consideration may, as the date of receipt by them, be more or less than the amount of cash consideration per share received by
Patina stockholders who receive cash consideration.
Dividends and Distributions
Until you surrender your Patina stock certificates for exchange, any dividends or other distributions declared after the effective time with respect to Noble
Energy common stock into which any of your shares may have been converted will accrue, but will not be paid. When you surrender your certificates, Noble Energy will pay any unpaid dividends or other
distributions, without interest. After the effective time, there will be no transfers on the stock transfer books of Patina of any shares of Patina common stock.
Withholding
Each of Noble Energy, the surviving corporation and the exchange agent will be entitled to deduct and withhold from the merger consideration payable to any Patina
stockholder the amounts it is required to deduct and withhold under the Internal Revenue Code or any state, local or foreign tax law. Withheld amounts will be treated for all purposes of the merger as
having been paid to the stockholders from whom they were withheld.
Treatment of Options
Pursuant to their terms and the Patina stock option plans, all options to acquire Patina common stock that are outstanding prior to the merger will automatically
become vested and exercisable prior to the merger. Each outstanding option to acquire Patina common stock granted under Patina's stock option plans that is outstanding and unexercised immediately
prior to the effective time of the merger will be converted automatically at the effective time of the merger into an option to purchase Noble Energy common stock and will continue to be governed by
the terms of the Patina stock plan and related agreement under which it was granted, except that:
- •
- the
number of shares of Noble Energy common stock subject to the new Noble Energy stock option will be equal to the product of the number of shares of Patina common stock
subject to the Patina stock option and the exchange ratio (determined as described above under the heading "—Merger Consideration"), rounded up or down to the nearest whole share;
- •
- the
exercise price per share of Noble Energy common stock subject to the new Noble Energy stock option will be equal to the exercise price per share of Patina common stock
under the Patina stock option divided by the exchange ratio, rounded up or down to the nearest whole cent; and
70
- •
- the
new Noble Energy stock option will not terminate if the holder thereof ceases to be a director, officer, employee or consultant of Noble Energy or any of its
subsidiaries, unless the Patina stock option was issued after December 8, 2004, in which case the new Noble Energy stock option will terminate immediately upon termination of the holder's
employment or retention for "cause" or, otherwise, 60 days after the holder ceases to be a director, officer, employee or consultant of Noble Energy or any of its subsidiaries.
In
any event, stock options that are intended to be incentive stock options under the Internal Revenue Code will be adjusted in the manner prescribed by the Internal Revenue Code.
Treatment of Warrants
Noble Energy is required to assume upon the effective time of the merger all warrants to acquire Patina common stock that are outstanding prior to the merger, by
executing supplemental agreements with the holders of the warrants. Upon the closing of the merger, each such warrant will be exercisable for the kind and amount of securities and other assets that
would have been received in the merger by a holder of the number of shares of Patina common stock purchasable under such warrant, assuming such shares were no election shares and received the kind and
amount of securities and other assets received by a majority of the no election shares, as provided in the warrant, and will continue to be governed by the original terms of the warrant.
Treatment of Restricted Stock
Each outstanding award of restricted Patina common stock made to employees and directors of Patina will become vested prior to the effective time of the merger,
and those vested shares will be treated in the merger in the same manner as other shares of Patina common stock (as described above under the heading "—Merger Consideration").
Effective Time
The merger will be completed when we file a certificate of merger with the Secretary of State of the State of Delaware.
Subject
to satisfaction of the other conditions to the merger, we anticipate that the closing of the merger will occur within five business days after the approval of the merger by the
requisite votes of the Patina and Noble Energy stockholders. However, the effective time of the merger could be delayed if there is a delay in satisfying any conditions to the merger. There can be no
assurances as to whether, or when, Noble Energy and Patina will obtain the required approvals or complete the merger. If the merger is not completed on or before August 31, 2005, either Noble
Energy or Patina may terminate the merger agreement, unless the failure to complete the merger by that date is due to the failure of the party seeking to terminate the merger agreement to fulfill any
material obligations under the merger agreement or a material breach of the merger agreement by such party. See "—Conditions to the Completion of the Merger" immediately below.
Conditions to the Completion of the Merger
The completion of the merger is subject to various conditions. While it is anticipated that all of these conditions will be satisfied, there can be no assurance
as to whether or when all of the conditions will be satisfied or, where permissible, waived.
71
Conditions to Each Party's Obligations
Each party's obligation to complete the merger is subject to the satisfaction or waiver of the following conditions:
- •
- adoption
and approval by Patina's stockholders of the merger agreement and the merger;
- •
- approval
by Noble Energy's stockholders of the issuance of Noble Energy shares in the merger;
- •
- approval
by the NYSE of listing of the shares of Noble Energy common stock to be issued in the merger, subject to official notice of issuance;
- •
- other
than the filing of the certificate of merger in accordance with the DGCL, the receipt of all authorizations, consents and approvals of all governmental entities
required to be obtained prior to consummation of the merger, except for such authorizations, consents and approvals the failure of which to be obtained individually or in the aggregate has not had,
and would not be reasonably likely to have or result in, a material adverse effect on any party to the merger agreement;
- •
- effectiveness
of the registration statement, of which this joint proxy statement/prospectus constitutes a part, and absence of any stop order or proceedings for such purpose
pending before or threatened by the SEC; and
- •
- absence
of any statute, rule, order, decree or regulation, and of any action taken by any court or other governmental entity of competent jurisdiction, which temporarily,
preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the merger or makes the merger illegal.
Additional Conditions to Patina's Obligations
The obligation of Patina to complete the merger is subject to the satisfaction or waiver of the following conditions:
- •
- accuracy
of Noble Energy's and Merger Sub's representations and warranties contained in the merger agreement both at and as of the date of the merger agreement and at and as
of the closing date of the merger, as if made at and as of the closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except where, in
the case of all representations and warranties except those regarding Noble Energy's capitalization, corporate power and authority, validity of the merger agreement and SEC reports, the failure to be
accurate individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a material adverse effect on Noble Energy;
- •
- the
performance in all material respects by Noble Energy and Merger Sub of their respective obligations contained in the merger agreement;
- •
- absence
of any suit, action or proceeding by any court or other governmental entity seeking to restrain, preclude, enjoin or prohibit the merger or any of the other
transactions contemplated by the merger agreement; and
- •
- the
receipt by Patina of an opinion of its counsel, dated as of the date this joint proxy statement/prospectus is filed and as of the closing date of the merger, to the
effect that the merger will be treated as a reorganization under Section 368(a) of the Internal Revenue Code and that each party to the merger agreement will be a "party to the reorganization"
within the meaning of Section 368 of the Internal Revenue Code.
72
Additional Conditions to Noble Energy's Obligations
The obligations of Noble Energy and Merger Sub to complete the merger are subject to the satisfaction or waiver of the following conditions:
- •
- accuracy
of Patina's representations and warranties contained in the merger agreement both at and as of the date of the merger agreement and at and as of the closing date of
the merger, as if made at and as of the closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except where, in the case of all
representations and
warranties except those regarding Patina's capitalization, corporate power and authority, validity of the merger agreement and SEC reports, the failure to be accurate individually or in the aggregate
has not had, and would not be reasonably likely to have or result in, a material adverse effect on Patina;
- •
- the
performance in all material respects by Patina of its obligations contained in the merger agreement;
- •
- absence
of any suit, action or proceeding by any court or other governmental entity seeking to (1) restrain, preclude, enjoin or prohibit the merger or any of the
other transactions contemplated by the merger agreement, or (2) prohibit or limit in any material respect the ownership or operation of any of the parties to the merger agreement or any of
their respective affiliates of a substantial portion of the business or assets of Patina and its subsidiaries, taken as a whole, or to require any person to dispose of or hold separate any material
portion of the business or assets of Patina and its subsidiaries, taken as a whole, as a result of the merger or any of the other transactions contemplated by the merger agreement;
- •
- the
receipt by Noble Energy of an opinion of its counsel, dated as of the date this joint proxy statement/prospectus is filed and as of the closing date of the merger, to
the effect that the merger will be treated as a reorganization under Section 368(a) of the Internal Revenue Code and that each party to the merger agreement will be a "party to the
reorganization" within the meaning of Section 368 of the Internal Revenue Code;
- •
- the
number of dissenting shares not exceeding 15% of the outstanding shares of Patina's common stock; and
- •
- receipt
of all material consents and approvals of any person that Patina or any of its subsidiaries are required to obtain in connection with the consummation of the merger,
including consents and approvals from parties to loans, contracts, leases or other agreements, except for such consents and approvals the failure of which to be obtained individually or in the
aggregate would not be reasonably likely to have or result in a material adverse effect on Patina.
Representations and Warranties
The merger agreement contains representations and warranties made by each of the parties regarding aspects of their respective businesses, financial condition and
structure, as well as other facts pertinent to the merger. Each of Patina on the one hand and Noble Energy and Merger Sub, on the other hand, has made representations and warranties to the other in
the merger agreement with respect to the following subject matters:
- •
- corporate
existence, good standing and qualification to conduct business;
- •
- capitalization,
including ownership of subsidiary capital stock and the absence of restrictions or encumbrances with respect to capital stock of any subsidiary;
- •
- corporate
power and authorization to enter into and carry out the obligations of the merger agreement and the enforceability of the merger agreement;
73
- •
- absence
of any conflict or violation of organizational documents, third party agreements or law or regulation as a result of entering into and carrying out the obligations
of the merger agreement;
- •
- governmental,
third party and regulatory approvals or consents required to complete the merger;
- •
- filings
and reports with the SEC, and financial information;
- •
- absence
of certain changes, events or circumstances;
- •
- absence
of undisclosed liabilities;
- •
- accuracy
of the information supplied for inclusion in this joint proxy statement/prospectus;
- •
- employee
benefit plans;
- •
- litigation,
government orders, judgments and decrees;
- •
- compliance
with laws;
- •
- intellectual
property;
- •
- material
contracts;
- •
- tax
matters;
- •
- environmental
matters;
- •
- real
property and operating equipment;
- •
- insurance;
- •
- labor
and employment matters;
- •
- transactions
with affiliates;
- •
- derivative
and hedging transactions;
- •
- disclosure
controls and procedures;
- •
- oil
and gas reserves, assets and operations;
- •
- investment
company status;
- •
- recommendations
of merger by boards of directors;
- •
- receipt
of fairness opinions;
- •
- required
vote;
- •
- fees
payable to brokers in connection with the merger; and
- •
- no
other representations or warranties.
Noble
Energy and Merger Sub also have made representations and warranties to Patina with respect to the interim operations of Merger Sub and Noble Energy's financing of the merger.
Patina also has made representations and warranties to Noble Energy with respect to Patina's existing rights agreement.
The
representations and warranties contained in the merger agreement will not survive beyond the effective time of the merger.
74
Conduct of Business Pending the Merger
Operations of Patina
Patina has agreed that it will, and will cause its subsidiaries to, during the period from the date of the merger agreement until the effective time of the merger
or the date, if any, on which the merger agreement is terminated, except as expressly contemplated or permitted by the merger agreement, required by applicable law, or agreed to in writing by Noble
Energy:
- •
- conduct
the business of Patina and its subsidiaries only in the ordinary course consistent with past practice;
- •
- use
its reasonable best efforts to preserve intact its business organization and goodwill and the business organization and goodwill of its subsidiaries; and
- •
- use
its reasonable best efforts to keep available the services of its current officers and employees and preserve and maintain existing relations with customers, suppliers,
officers, employees and creditors.
Patina
has also agreed that it will not, and will not permit any of its subsidiaries to, during the period from the date of the merger agreement until the effective time of the merger or
the date, if any, on which the merger agreement is terminated, except as expressly contemplated or permitted by the merger agreement, required by applicable law, or agreed to in writing by Noble
Energy:
- •
- enter
into any new line of business, incur or commit to any capital expenditures, or any obligations or liabilities in connection with any capital expenditures during
calendar year 2004 other than capital expenditures and obligations or liabilities incurred or committed to in an amount not greater in the aggregate than, and during the same time period set forth in,
Patina's current capital budget approved by the board of directors of Patina in February 2004 and October 2004, or incur or commit to any capital expenditures, or any obligations or
liabilities in connection with any capital expenditures during calendar year 2005 other than capital expenditures and obligations or liabilities incurred or committed to in an amount not greater in
the aggregate than, and during the same time period set forth in, Patina's total capital budget for calendar year 2005 approved by the board of directors of Patina in December 2004;
- •
- amend
its certificate of incorporation or bylaws or similar organizational documents;
- •
- declare,
set aside or pay any dividend (other than, in the case of the Patina, regular quarterly dividends consistent with past practice and in no event exceeding $0.06 per
share per quarter) or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock, except that Patina may permit any direct or indirect
wholly-owned subsidiary to do any of the foregoing;
- •
- adjust,
split, combine or reclassify any capital stock or issue, grant, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or of any other such securities or agreements of Patina or
any of its subsidiaries, other than issuances by Patina (1) of options and common stock to employees and directors of Patina in the ordinary course of Patina's annual compensation procedures,
consistent with past practice (not to exceed 1.7 million shares in the aggregate), (2) of options to new hires or promoted employees in the ordinary course of business consistent with
past practice (not to exceed 150,000 shares in the aggregate), (3) pursuant to Patina warrants and options (outstanding as of December 15, 2004, or issued thereafter in accordance with
the merger agreement), or (4) pursuant to the Patina rights or Patina rights agreement in effect on the date of the merger agreement;
75
- •
- except
as required pursuant to the terms of the Patina benefit plans in effect on the date of the merger agreement, redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock or any other securities or agreements of the type described in the preceding paragraph;
- •
- except
as required pursuant to the terms of the Patina benefit plans in effect on the date of the merger agreement, grant any increase in the compensation or benefits
payable or to become payable by Patina or any of its subsidiaries to any former or current director, officer or employee of Patina or any of its subsidiaries, except for any such increases in the
ordinary course of Patina's annual compensation procedures, consistent with past practice;
- •
- except
as required pursuant to the terms of the Patina benefit plans in effect on the date of the merger agreement, adopt, enter into, amend or otherwise increase, or
accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under, any Patina benefit plan (other than entry into employment agreements with
new hires in the ordinary course of business consistent with past practice; provided that such employment agreement shall be terminable at will, without penalty (other than severance obligations that
accrue under Patina's amended and restated change in control plan as in effect on the date of the merger agreement) to Patina or any of its subsidiaries);
- •
- grant
any severance or termination pay to any officer, director or employee of Patina or any of its subsidiaries (other than grants to new hires in the ordinary course
consistent with past practice pursuant to Patina's amended and restated change in control plan);
- •
- change
its methods of accounting in effect as of the date of the merger agreement, except in accordance with changes in U.S. generally accepted accounting principles
("GAAP") as concurred to by Patina's independent auditors;
- •
- acquire
any business organization, division or business by merger, consolidation, purchase of an equity interest or assets, or by any other manner, or acquire any assets
(other than in the ordinary course of business consistent with past practice or pursuant to agreements in effect on the date of the merger agreement);
- •
- sell,
lease, exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange, transfer or otherwise dispose of, any material assets (other than the sale of
inventory and hydrocarbons in the ordinary course of business consistent with past practice or the sale of any assets pursuant to agreements in effect on the date of the merger agreement);
- •
- mortgage,
pledge, hypothecate, grant any security interest in, or otherwise subject any of its assets to any liens, subject to limited exceptions;
- •
- pay,
discharge or satisfy any claims (including claims of stockholders), liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
where such payment, discharge or satisfaction would require any payment except for the payment, discharge or satisfaction of liabilities or obligations in accordance with the terms of agreements in
effect on the date of the merger agreement or entered into after the date of the merger agreement in the ordinary course of business consistent with past practice, and except for any payments,
discharges or settlements that do not exceed $500,000 individually or $2.5 million in the aggregate;
- •
- compromise,
settle or grant any waiver or release relating to any litigation, other than settlements or compromises of litigation where the amount paid or to be paid does
not exceed $500,000 individually or $2.5 million in the aggregate;
76
- •
- engage
in any transaction with (except pursuant to agreements in effect at the time of the merger agreement), or enter into any agreement, arrangement, or understanding
with, directly or indirectly, any of Patina's affiliates (not including any employees of Patina or any of its subsidiaries, other than the directors and executive officers thereof);
- •
- make
or change any material tax election, amend any tax return in any material respect or settle or compromise any material tax liability;
- •
- take
any action that would, or could reasonably be expected to, result in any of its representations and warranties set forth in the merger agreement becoming untrue in a
manner that would give rise to the failure of the closing condition relating to the satisfaction of the representations and warranties of Patina (see "—Conditions to the Completion of the
Merger");
- •
- adopt
or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Patina or any
of its subsidiaries (other than the merger or with respect to an inactive wholly-owned subsidiary of Patina) or any agreement relating to an acquisition proposal;
- •
- incur
or assume any long-term debt or incur or assume any short-term indebtedness (except for short-term indebtedness in the ordinary
course of business consistent with past practice and in no event exceeding $30.0 million in the aggregate);
- •
- modify
the terms of any indebtedness to increase Patina's obligations with respect to such indebtedness;
- •
- assume,
guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person, except in the
ordinary course of business consistent with past practice and in no event exceeding $500,000 in the aggregate;
- •
- make
any loans, advances or capital contributions to, or investments in, any other person (other than to wholly-owned subsidiaries of Patina, or by wholly-owned subsidiaries
to Patina, or customary loans or advances to employees in accordance with past practice and in no event exceeding $500,000 in the aggregate);
- •
- enter
into any material commitment or transaction, except in the ordinary course of business consistent with past practice;
- •
- enter
into any agreement, understanding or commitment that materially restrains, limits or impedes Patina's or any of its subsidiaries' ability to compete with or conduct
any business or line of business, including geographic limitations on Patina's or any of its subsidiaries' activities;
- •
- modify
or amend in any material respect, or terminate, any material contract to which it is a party or waive in any material respect or assign any of its material rights or
claims, except in the ordinary course of business consistent with past practice;
- •
- fail
to maintain in full force and effect the existing insurance policies covering Patina or its subsidiaries or their respective properties, assets and businesses or
comparable replacement policies, except to the extent such policies cease to be available on commercially reasonable terms; or
- •
- enter
into an agreement, contract, commitment or arrangement to take any of the prohibited actions described above.
In
addition, Patina has agreed that it shall not, nor shall it permit any of its subsidiaries to, enter into any transaction or take any other action that would be reasonably likely to
have a material adverse impact on, or materially delay, the consummation of the transactions contemplated by the merger agreement.
77
Operations of Noble Energy
Noble Energy has agreed that it will, and will cause its subsidiaries to, conduct the business of Noble Energy and its subsidiaries only in the ordinary course
consistent with past practice during the period from the date of the merger agreement until the effective time of the merger or the date, if any, on which the merger agreement is terminated, except as
contemplated or permitted by the merger agreement, required by applicable law, or agreed to in writing by Patina.
Noble
Energy has also agreed that it will not, and will not permit any of its subsidiaries to, during the period from the date of the merger agreement until the effective time of the
merger or the date, if any, on which the merger agreement is terminated, except as expressly contemplated or permitted by the merger agreement, required by applicable law, or agreed to in writing by
Patina:
- •
- (1)
declare, set aside or pay any extraordinary or special dividend or other distribution (other than in the case of any wholly-owned subsidiary of Noble Energy), whether
payable in cash, stock or any other property or right, with respect to its capital stock; provided, however, that Noble Energy may increase the quarterly cash dividend on Noble Energy common stock or
(2) engage in any spin-off or split-off without receiving fair consideration (as determined in the good faith judgment of Noble Energy);
- •
- change
its methods of accounting in effect as of the date of the merger agreement, except in accordance with changes in GAAP as concurred to by Noble Energy's independent
auditors;
- •
- take
any action that would, or could reasonably be expected to, result in any of its representations and warranties set forth in the merger agreement becoming untrue in a
manner that would give rise to the failure of the closing condition relating to the satisfaction of the representations and warranties of Noble Energy (see "—Conditions to the Completion
of the Merger");
- •
- enter
into any new line of business, except as may reasonably relate to Noble Energy's existing businesses;
- •
- solely
in the case of Noble Energy, amend its certificate of incorporation or bylaws or similar organizational documents in a manner that adversely affects the terms of
Noble Energy common stock or adopt or enter into a plan of complete or partial liquidation or dissolution; or
- •
- enter
into an agreement, contract, commitment or arrangement to do any of the foregoing.
In
addition, Noble Energy has agreed that it will not, nor will it permit any of its subsidiaries to, enter into any transaction or take any other action (including any amendment of
Noble Energy's certificate of incorporation) that would be reasonably likely to have a material adverse impact on, or materially delay, the consummation of the transactions contemplated by the merger
agreement.
Reasonable Best Efforts to Obtain Required Stockholder Vote
Each of Patina and Noble Energy will promptly and duly call, give notice of, convene and hold a meeting of its stockholders to be held as soon as is reasonably
practicable after the date on which the registration statement of which this document is part becomes effective. In the case of Patina stockholders, the purpose of voting will be to adopt the merger
agreement and approve the merger and the other transactions contemplated by the merger agreement. In the case of Noble Energy stockholders, the purpose of voting will be to approve of the issuance of
shares of common stock under the merger. Each of Patina and Noble Energy will, through its board of directors, use its reasonable best efforts to obtain the approval of its respective stockholders in
respect of the foregoing. Notwithstanding any adverse recommendation, change or similar circumstance, nothing in the merger agreement is intended to relieve the parties of their respective obligations
to hold a meeting of their stockholders for the approval required to complete the merger.
78
No Solicitation of Alternative Transactions
The merger agreement provides, subject to limited exceptions described below, that each of Patina and Noble Energy will not, and will cause its subsidiaries and
representatives not to:
- •
- directly
or indirectly initiate, solicit, knowingly encourage or facilitate (including by way of furnishing information), or take any other action designed to facilitate or
encourage any inquiries or the making of any proposal that constitutes, or is reasonably likely to lead to, any acquisition proposal (as defined below);
- •
- participate
or engage in any discussions or negotiations with, disclose any non-public information relating to itself or any of its subsidiaries, or afford
access to its properties, books or records to any person that has made or is contemplating making an acquisition proposal; or
- •
- accept
or enter into any agreement that (1) constitutes, relates to, or could reasonably be expected to lead to any acquisition proposal or (2) requires,
intends to cause or could reasonably be expected to cause either Patina or Noble Energy to respectively abandon, terminate or fail to consummate the merger.
The
merger agreement permits Patina and Noble Energy to take and disclose to their respective stockholders a position with respect to an acquisition proposal from a third party to the
extent required under applicable federal securities laws. If either Patina or Noble Energy receives a bona fide unsolicited written acquisition proposal at any time prior to obtaining, in the case of
Patina, the required Patina stockholder vote adopting the merger agreement and approving the merger and the other transactions contemplated by the merger agreement, or in the case of Noble Energy, the
Noble Energy stockholder vote approving the issuance of Noble Energy common stock in the merger, then that party and its respective board of directors may participate and engage in negotiations with,
furnish non-public information to, and afford access to its properties, books or records to, the third party making the acquisition proposal if:
- •
- the
acquisition proposal was not solicited, initiated, knowingly encouraged or facilitated by that party, its subsidiaries, or any of its officers or directors, investment
bankers, attorneys, accountants, financial advisors, agents or other representatives;
- •
- the
proposal constitutes, or the board of directors of the party that received the acquisition proposal determines in good faith, after consultation with its financial
advisors and outside legal counsel, that such acquisition proposal could reasonably be expected to lead to a superior proposal (as defined below); and
- •
- the
person making the acquisition proposal has entered into a confidentiality agreement on specified terms with the party that received the acquisition proposal.
Patina's Ability to Make an Adverse Recommendation Change in Response to a Superior Proposal
At any time prior to obtaining the required Patina stockholder vote adopting the merger agreement and approving the merger and the other transactions contemplated
by the merger agreement, and subject to Patina's compliance at all times with the non-solicitation provisions described above, and with its obligation to submit the merger agreement to the
Patina stockholders for adoption at the special meeting, the board of directors of Patina may make an adverse recommendation change (as defined below) in response to a superior proposal if:
- •
- four
business days before making such change, Patina provides written notice to Noble Energy (a "notice of superior proposal") that:
- •
- advises
Noble Energy that the board of directors of Patina or any of its committees has received a superior proposal;
79
- •
- specifies
the material terms and conditions of the superior proposal; and
- •
- identifies
the person or group making such superior proposal; and
- •
- in
the event that Noble Energy proposes any alternative transaction during such four business day period, the board of directors of Patina determines in good faith, after
consultation with its financial advisors and outside legal counsel, that such alternative transaction is not at least as favorable to Patina and its stockholders from a financial point of view as the
superior proposal, taking into account all financial, legal and regulatory terms and conditions of the alternative transaction proposed by Noble Energy.
Patina
has also agreed to:
- •
- advise
Noble Energy in writing of any request for information or any acquisition proposal received from any person, or any inquiry, discussions or negotiations with respect
to any acquisition proposal, the terms and conditions of any request, acquisition proposal, inquiry, discussions or negotiations, and the identity of the person or group making any request or
acquisition proposal or with whom any discussions or negotiations are taking place;
- •
- provide
Noble Energy any non-public information concerning Patina provided to any other person or group in connection with any acquisition proposal that was not
previously provided to Noble Energy and copies of any written materials received from that person or group;
- •
- keep
Noble Energy fully informed of the status of any acquisition proposals (including any changes to any terms and conditions); and
- •
- not
release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which Patina is a party.
Patina's Ability to Make an Adverse Recommendation Change other than in Response to a Superior Proposal
At any time prior to obtaining the required Patina stockholder vote adopting the merger agreement and approving the merger and the other transactions contemplated
by the merger agreement, and subject to Patina's compliance at all times with the non-solicitation provisions described above, and with its obligations to submit the merger agreement to
the Patina stockholders for adoption at the special meeting, the board of directors of Patina may make an adverse recommendation change if the board of directors of Patina:
- •
- provides
written notice to Noble Energy (a "notice of change") that:
- •
- advises
Noble Energy that the board of directors of Patina is contemplating making an adverse recommendation change; and
- •
- specifies
the material facts and information constituting the basis for such contemplated determination; and
- •
- determines
in good faith:
- •
- after
consultation with its outside legal counsel and any other advisor it chooses to consult, that the failure to make an adverse recommendation change is inconsistent with
its fiduciary duties to the stockholders of Patina; and
- •
- that
the reasons for making the adverse recommendation change are independent of any pending acquisition proposal;
- •
- provided,
however, that:
- •
- the
board of directors of Patina may not make such an adverse recommendation change until the third business day after receipt by Noble Energy of a notice of change; and
80
- •
- during
the three business day period, Patina will, at the request of Noble Energy, negotiate in good faith with respect to any changes to the merger agreement which would
allow the board of directors of Patina to not make the adverse recommendation change consistent with its fiduciary duties.
Noble Energy's Ability to Make an Adverse Recommendation Change in Response to a Superior Proposal
At any time prior to obtaining the required Noble Energy stockholder vote approving the issuance of Noble Energy common stock in the merger, and subject to Noble
Energy's compliance at all times with the non-solicitation provisions described above, and with its obligations to submit the issuance of Noble Energy common stock in the merger to the
Noble Energy stockholders for approval at the special meeting, the board of directors of Noble Energy may make an adverse recommendation change in response to a superior proposal if:
- •
- four
business days before making such change, Noble Energy provides a notice of superior proposal to Patina that:
- •
- advises
Patina that the board of directors of Noble Energy or any of its committees has received a superior proposal;
- •
- specifies
the material terms and conditions of the superior proposal; and
- •
- identifies
the person or group making such superior proposal; and
- •
- in
the event that Patina proposes any alternative transaction, during such four business day period, the board of directors of Noble Energy determines in good faith, after
consultation with its financial advisors and outside legal counsel, that such alternative transaction is not at least as favorable to Noble Energy and its stockholders from a financial point of view
as the superior proposal, taking into account all financial, legal and regulatory terms and conditions of the alternative transaction proposed by Patina.
Noble
Energy has also agreed to:
- •
- advise
Patina in writing of any request for information or any acquisition proposal received from any person, or any inquiry, discussions or negotiations with respect to any
acquisition proposal, the terms and conditions of any request, acquisition proposal, inquiry, discussions or negotiations, and the identity of the person or group making any request or acquisition
proposal or with whom any discussions or negotiations are taking place;
- •
- provide
Patina any non-public information concerning Noble Energy provided to any other person or group in connection with any acquisition proposal that was not
previously provided to Patina and copies of any written materials received from that person or group;
- •
- keep
Patina fully informed of the status of any acquisition proposals (including any changes to any terms and conditions); and
- •
- not
release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which Noble Energy is a party.
Noble Energy's Ability to Make an Adverse Recommendation Change Other Than in Response to a Superior Proposal
At any time prior to obtaining the required Noble Energy stockholder vote approving the issuance of Noble Energy common stock in the merger, and subject to Noble
Energy's compliance at all times with the non-solicitation provisions described above, and with its obligation to submit the issuance of Noble Energy common stock in the merger to the
Noble Energy stockholders for approval at the
81
special
meeting, the board of directors of Noble Energy may make an adverse recommendation change if the board of directors of Noble Energy:
- •
- provides
a notice of change to Patina that:
- •
- advises
Patina that the board of directors of Noble Energy is contemplating making an adverse recommendation change; and
- •
- specifies
the material facts and information constituting the basis for such contemplated determination; and
- •
- determines
in good faith:
- •
- after
consultation with its outside legal counsel and any other advisor it chooses to consult, that the failure to make an adverse recommendation change is inconsistent with
its fiduciary duties to the stockholders of Noble Energy; and
- •
- that
the reasons for making the adverse recommendation change are independent of any pending acquisition proposal;
- •
- provided,
however, that:
- •
- the
board of directors of Noble Energy may not make such an adverse recommendation change until the third business day after receipt of a notice of change by Patina; and
- •
- during
the three business day period, Noble Energy will, at the request of Patina, negotiate in good faith with respect to any changes to the merger agreement which would
allow the board of directors of Noble Energy to not make the adverse recommendation change consistent with its fiduciary duties.
Acquisition Proposal. For purposes of the merger agreement, the term "acquisition proposal" means, with respect to Patina or
Noble Energy, any bona fide proposal for the:
- •
- direct
or indirect acquisition or purchase of a business or assets that constitutes 10% or more of the net revenues, net income or the assets (based on fair market value) of
such party and its subsidiaries, taken as a whole;
- •
- direct
or indirect acquisition or purchase of 10% or more of any class of equity securities or capital stock of such party or any of its subsidiaries whose business
constitutes 10% or more of the net revenues, net income or assets of such party and its subsidiaries, taken as a whole; or
- •
- merger,
consolidation, restructuring, transfer of assets or other business combination, sale of shares of capital stock, tender offer, exchange offer, recapitalization,
stock repurchase program or other similar transaction that if consummated would result in any person beneficially owning 10% or more of any class of equity securities of such party or any of its
subsidiaries whose business constitutes 10% or more of the net revenues, net income or assets of such party and its subsidiaries, taken as a whole, other than the transactions contemplated by the
merger agreement.
The
parties have agreed that, with respect to Noble Energy, the term "acquisition proposal" will not include any acquisition or disposition of any assets or businesses, or any interest therein, in
either case
in exchange for cash, securities, producing properties or other assets, in any single transaction or series of related transactions, where the aggregate value of the consideration paid or received, as
the case may be, by Noble Energy and its subsidiaries, in respect thereof, does not exceed $70.0 million per transaction or series of related transactions.
Superior Proposal. For purposes of the merger agreement, the term "superior proposal" means, with respect to Patina or Noble
Energy, any bona fide written acquisition proposal, made by a third
82
party
to purchase, directly or indirectly, 50% or more of the assets of such party or 50% or more of the outstanding equity securities of such party pursuant to a tender offer, exchange offer or
merger on terms that a majority of the board of directors of such party determines in good faith to be superior to such party and its stockholders (in their capacity as stockholders) from a financial
point of view as compared to the transactions contemplated by the merger agreement and to any alternative transaction or changes to the terms of the merger agreement proposed by any other party to the
merger agreement (after the board of directors of such party consults with its financial advisors and takes into account all financial, legal and regulatory terms and conditions of the acquisition
proposal and the merger agreement, including any changes to the terms of the merger agreement offered by any other party to the merger agreement in response to the superior proposal, including any
conditions to and expected timing of consummation, and any risks of non-consummation, of the acquisition proposal).
Adverse Recommendation Change. For purposes of the merger agreement, the term "adverse recommendation change" means, with
respect to Patina or Noble Energy, a direct or indirect action or public proposal made by its board of directors or a committee of its board of directors to:
- •
- withdraw
(or amend or modify in a manner adverse to the other party) its approval, recommendation or declaration of advisability of the merger agreement, the merger or the
other transactions contemplated by the merger agreement; or
- •
- recommend,
adopt or approve any acquisition proposal.
Termination of the Merger Agreement
General
The merger agreement may be terminated by written notice at any time prior to the effective time of the merger in any of the following ways:
- •
- by
mutual written consent of Noble Energy and Patina;
- •
- by
either Noble Energy or Patina:
- •
- if
the merger is not completed on or before August 31, 2005, unless the failure of the closing to occur by this date is due to the failure of the party seeking to
terminate the merger agreement to fulfill any material obligation under the merger agreement or a material breach of the merger agreement by such party;
- •
- if
any court or other governmental entity shall have issued a statute, rule, order, decree or regulation or taken any other action (which Noble Energy and Patina will use
their reasonable best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the merger or making the merger illegal and such statute, rule,
order, decree, regulation or other action has become final and nonappealable, provided that the terminating party is not in breach of its obligation to use reasonable best efforts to complete the
merger;
- •
- if
the Patina stockholders fail to adopt the merger agreement by the requisite vote, provided that this right to terminate is not available to Patina if it has breached any
of its obligations relating to non-solicitation of offers described above under "—No Solicitation of Alternative Transactions" or breached any of its obligations relating to
completing this
joint proxy statement/prospectus and convening a stockholders meeting described above under "—Reasonable Best Efforts to Obtain Required Stockholder Vote";
83
- •
- if
there has been a material breach of or any inaccuracy in any of the representations or warranties set forth in the merger agreement on the part of any of the other
parties, which breach has not been cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party, or which breach, by its nature,
cannot be cured prior to August 31, 2005 (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger
agreement); provided, however, that no party will have the right to terminate the merger agreement for the foregoing purposes unless the breach of representation or warranty, together with all other
such breaches, would entitle the party receiving such representation not to consummate the transactions contemplated by the merger agreement;
- •
- if
there has been a material breach of any of the covenants or agreements set forth in the merger agreement on the part of any of the other parties, which breach has not
been cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party, or which breach, by its nature, cannot be cured prior to
August 31, 2005 (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement); or
- •
- if
the Noble Energy stockholders fail to approve the issuance of Noble Energy shares pursuant to the merger; provided that this right to terminate is not available to Noble
Energy if it has breached any of its obligations relating to non-solicitation of offers described above under "—No Solicitation of Alternative Transactions" or breached any of
its obligations relating to completing this joint proxy statement/prospectus and convening a stockholders meeting described above under "—Reasonable Best Efforts to Obtain Required
Stockholder Vote";
- •
- by
Noble Energy if, prior to obtaining the required vote of the Patina stockholders adopting the merger agreement and approving the merger and the other transactions
contemplated by the merger agreement:
- •
- Patina
or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or approved or
recommended, or, in the case of a committee, proposed to the Patina board of directors to approve or recommend, an
acquisition proposal (as defined above under "—No Solicitation of Alternative Transactions");
- •
- Patina
or its board of directors or any committee thereof has resolved to do any of the foregoing; or
- •
- an
adverse recommendation change has occurred with respect to Patina (whether or not in response to a superior proposal) or the Patina board of directors or any committee
thereof has resolved to make such an adverse recommendation change; or
- •
- by
Patina if, prior to obtaining the required vote of the Noble Energy stockholders approving the issuance of the Noble Energy shares pursuant to the merger:
- •
- Noble
Energy or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or,
approved or recommended, or, in the case of a committee, proposed to the Noble Energy board of directors to approve or recommend, an acquisition proposal;
- •
- Noble
Energy or its board of directors or any of its committees has resolved to do any of the foregoing; or
84
- •
- an
adverse recommendation change has occurred with respect to Noble Energy (whether or not in response to a superior proposal) or the Noble Energy board of directors or any
committee thereof has resolved to make such an adverse recommendation change.
Termination Fees and Expenses
Except for the termination fee set forth in the merger agreement and as described below, all costs and expenses incurred in connection with the merger agreement
and the transactions contemplated thereby shall be paid by the party incurring such costs or expenses.
Patina
must pay Noble a termination fee of $100 million if:
- •
- the
merger agreement is terminated by Noble Energy due to an adverse recommendation change by Patina in response to a superior proposal; or
- •
- an
acquisition proposal with respect to Patina has been proposed by any person (other than by Noble Energy, Merger Sub or any of their respective affiliates) or any person
has publicly announced its intention (whether or not conditional) to make such acquisition proposal and such acquisition proposal or such intention has otherwise become publicly known to Patina's
stockholders generally; and
- •
- thereafter
the merger agreement is terminated (1) by either Noble Energy or Patina for failure to close the merger on or before August 31, 2005 or because the
Patina stockholders failed to adopt the merger agreement by the required vote, or (2) by Noble Energy because:
- •
- Patina
or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or, approved or
recommended, or, in the case of a committee, proposed to the Patina board of directors to approve or recommend, an acquisition proposal;
- •
- Patina
or its board of directors or any committees thereof has resolved to do any of the foregoing; or
- •
- an
adverse recommendation change has occurred with respect to Patina for any reason other than a superior proposal or the Patina board of directors or any committee thereof
has resolved to make such an adverse recommendation change; and
- •
- within
12 months after termination of the merger agreement, Patina or any of its subsidiaries enters into any definitive agreement providing for an "acquisition
proposal" (as described above under "—No Solicitation of Alternative Transactions", except that all references to "10%" therein are deemed to be references to "40%" for the purposes of the
provision described in this paragraph), or an acquisition proposal with respect to Patina or any of its subsidiaries is consummated.
Patina
must pay an expense payment of $6.0 million to Noble if:
- •
- Noble
Energy terminates the merger agreement due to an adverse recommendation change (or a Patina board committee resolution to make such an adverse recommendation change)
by Patina for any reason other than a superior proposal; and
- •
- prior
to such termination no acquisition proposal with respect to Patina has been proposed by any person (other than any acquisition proposal proposed by Noble Energy or
Merger Sub or any of their respective affiliates) and no person has publicly announced its intention (whether or not conditional) to make such acquisition proposal and no such acquisition proposal or
intention has otherwise become publicly known to Patina's stockholders generally.
85
In
addition, if:
- •
- within
three business days of notification by Patina to Noble Energy of the occurrence of an adverse recommendation change with respect to Patina for any reason other than a
superior proposal (or a resolution to make such an adverse recommendation change), Noble Energy terminates the merger agreement because of such change or resolution; and
- •
- within
three business days of such termination, Noble Energy terminates some or all of the hedging transactions entered into by Noble Energy prior to December 15,
2004 in connection with the transactions contemplated by the merger agreement ("pre-announcement hedges"),
then
Patina would be required to reimburse Noble Energy for up to $45.0 million of hedging losses on pre-announcement hedges covering the years 2006 through 2008 based
on actual losses realized during the three days following the termination.
Noble
Energy must pay Patina a termination fee of $100 million if:
- •
- the
merger agreement is terminated by Patina due to an adverse recommendation change by Noble Energy in response to a superior proposal; or
- •
- an
acquisition proposal with respect to Noble Energy has been proposed by any person or any person has publicly announced its intention (whether or not conditional) to make
such acquisition proposal and such acquisition proposal or such intention has otherwise become publicly known to Noble Energy's stockholders generally; and
- •
- thereafter
the merger agreement is terminated (1) by either Noble Energy or Patina for failure to close the merger on or before August 31, 2005 or because the
Noble Energy stockholders failed to approve the issuance of the Noble Energy shares, or (2) by Patina because:
- •
- Noble
Energy or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or,
approved or recommended, or, in the case of a committee, proposed to the Noble Energy board of directors to approve or recommend, an acquisition proposal;
- •
- Noble
Energy or its board of directors or any committees thereof has resolved to do any of the foregoing; or
- •
- an
adverse recommendation change has occurred with respect to Noble Energy for any reason other than a superior proposal or the Noble Energy board of directors or any
committee thereof has resolved to make such an adverse recommendation change; and
- •
- within
12 months after termination of the merger agreement, Noble Energy or any of its subsidiaries enters into any definitive agreement providing for an "acquisition
proposal" (as described above under "—No Solicitation of Alternative Transactions", except that all references to "10%" therein are deemed to be references to "40%" for the purposes of the
provision described in this paragraph), or an acquisition proposal with respect to Noble Energy or any of its subsidiaries is consummated.
Noble
Energy must pay an expense payment of $6.0 million to Patina if:
- •
- Patina
terminates the merger agreement due to an adverse recommendation change (or a Noble Energy board committee resolution to make such an adverse recommendation change)
by Noble Energy for any reason other than a superior proposal; and
- •
- prior
to such termination no acquisition proposal with respect to Noble Energy has been proposed by any person and no person has publicly announced its intention (whether or
not
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Effect of Termination
In the event of the termination of the merger agreement as described above, written notice must be given by the terminating party to the other parties specifying
the provision of the merger agreement pursuant to which such termination is made, and except as described in this paragraph, the merger agreement shall become null and void after the expiration of any
applicable period following such notice. In the event of the termination of the merger agreement, there will be no liability on the part of Noble Energy, Merger Sub or Patina, except as described
above under "—Termination Fees and Expenses" above and except with respect to the requirement to comply with the
confidentiality agreement; provided that no party will be relieved from any liability or obligation with respect to any willful breach of the merger agreement.
Material United States Federal Income Tax Consequences
The following is a summary of the material U.S. federal income tax consequences of the merger to Patina stockholders who are U.S. persons. This summary is based
on provisions of the Internal Revenue Code, Treasury Regulations promulgated thereunder, and administrative and judicial interpretations of the Internal Revenue Code, all as in effect as of the date
of this joint proxy statement/prospectus, and all of which are subject to change, possibly with retroactive effect. This summary assumes that Patina stockholders hold their shares as capital assets
and does not address all aspects of U.S. federal income taxation that may be applicable to Patina stockholders in light of their particular circumstances or to Patina stockholders subject to special
treatment under U.S. federal income tax law, such as:
- •
- entities
treated as partnerships for U.S. federal income tax purposes or Patina stockholders that hold their shares through entities treated as partnerships for U.S. federal
income tax purposes;
- •
- certain
U.S. expatriates;
- •
- persons
that hold Patina common stock as part of a straddle, appreciated financial position, hedge, synthetic security, conversion transaction or other integrated
investment;
- •
- persons
whose functional currency is not the U.S. dollar;
- •
- persons
who acquired Patina common stock through the exercise of employee stock options or otherwise as compensation;
- •
- persons
subject to the U.S. alternative minimum tax;
- •
- mutual
funds;
- •
- financial
institutions;
- •
- insurance
companies;
- •
- tax-exempt
entities;
- •
- dealers
in securities or foreign currencies; and
- •
- traders
in securities that mark-to-market.
Furthermore,
this summary does not address any aspect of state, local or foreign laws, or any federal laws other than those pertaining to income taxation.
For
purposes of this discussion, a "U.S. person" means (1) a citizen or individual resident of the U.S., (2) a corporation or other entity taxable as a corporation created
or organized under the laws of the U.S. or any of its political subdivisions, (3) a trust if (A) a U.S. court is able to exercise primary
87
supervision
over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) the trust has made a valid election
under the applicable Treasury regulations to be treated as a U.S. person, or (4) an estate, the income of which is subject to U.S. federal income taxation regardless of its source.
General U.S. Federal Income Tax Considerations of the Merger to Patina Stockholders
The obligation of Patina to consummate the merger is conditioned on its receipt of an opinion of Cravath, dated as of the closing date of the merger, to the
effect that, on the basis of the facts, assumptions, representations and covenants set forth or referred to therein, for U.S. federal income tax purposes, the merger will qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code and that Noble Energy, Merger Sub and Patina will each be "a party to the reorganization" within the meaning of
Section 368 of the Internal Revenue Code. In addition, the obligation of Noble Energy to consummate the merger is conditioned on its receipt of an opinion of Skadden, Arps, dated as of the
closing date of the merger, to the effect that, on the basis of the facts, assumptions, representations and covenants set forth or referred to therein, for U.S. federal income tax purposes, the merger
will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that Noble Energy, Merger Sub and Patina will each be "a party to the reorganization"
within the meaning of Section 368 of the Internal Revenue Code. None of the opinions referred to in this paragraph or the opinions stated below will be binding on the Internal Revenue Service
or the courts, and no rulings will be sought from the Internal Revenue Service regarding the tax treatment of the merger. Accordingly, there can be no certainty that the Internal Revenue Service will
not challenge the conclusions set forth in any of the opinions stated or referred to herein or that a court would not sustain such a challenge.
In
addition, in connection with the filing of the registration statement of which this document forms a part, Cravath and Skadden, Arps have delivered to Patina and Noble Energy,
respectively, their opinions that, for U.S. federal income tax purposes, the merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code and that Noble Energy,
Merger Sub and Patina will each be "a party to the reorganization" within the meaning of Section 368 of the Internal Revenue Code. Such opinions and the opinions set forth below have been
rendered on the basis of certain assumptions, including assumptions regarding the absence of changes in existing facts and that the merger will be completed in accordance with this joint proxy
statement/prospectus and the merger agreement. These opinions and the opinions set forth below also have been rendered on the basis of certain representations and covenants, including those contained
in officers' certificates of Patina and Noble Energy, all of which must be true and accurate in all respects as of the effective date of the registration statement and must continue to be true and
accurate in all respects as of the effective time of the merger. If any of those assumptions or representations are inaccurate, incomplete or untrue or any of the covenants are breached, the
conclusions contained in the opinions referred to in this paragraph or stated below could be affected.
The
discussion set forth below, subject to the limitations and qualifications set forth herein, constitutes the opinion of Cravath and of Skadden, Arps as to the material U.S. federal
income tax consequences of the merger to a Patina stockholder:
- •
- If
a Patina stockholder exchanges all of his or her shares of Patina common stock solely for shares of Noble Energy common stock in the merger, that Patina stockholder will
not recognize (i.e., take into account for income tax purposes) gain or loss, except for any gain or loss recognized with respect to cash received instead of a fractional share of Noble Energy common
stock.
- •
- If
a Patina stockholder exchanges his or her shares of Patina common stock solely for cash in the merger, that Patina stockholder generally will recognize (i.e., take into
account for income tax purposes) capital gain or loss equal to the difference between the amount of cash received
88
and
its tax basis in the Patina common stock. (If, however, the Patina stockholder owns shares of Noble Energy common stock actually or constructively after the merger, the stockholder might be
subject to dividend treatment. See "—Possible Treatment of Cash as a Dividend" immediately below.)
- •
- If
a Patina stockholder exchanges his or her shares of Patina common stock for a combination of Noble Energy common stock and cash, that Patina stockholder will generally
recognize (i.e., take into account for income tax purposes) capital gain (but not loss). Any such gain recognized will equal the lesser of: (1) the amount of cash received by the stockholder in
the merger (excluding cash received instead of a fractional share, as discussed below) and (2) the excess, if any, of (a) the sum of the amount of cash (excluding any cash received
instead of a fractional share) and the fair market value of the Noble Energy common stock received by the stockholder in the merger over (b) that stockholder's adjusted tax basis in the Patina
common stock exchanged by the stockholder in the merger. For this purpose, a Patina stockholder must calculate gain or loss separately for each identifiable block of Patina common stock exchanged by
the stockholder in the merger. Except as discussed under "—Possible Treatment of Cash as a Dividend," any gain recognized by a Patina stockholder in the merger generally will constitute
capital gain.
- •
- The
aggregate tax basis of the shares of Noble Energy common stock received by a Patina stockholder in exchange for Patina common stock pursuant to the merger (before
reduction for the basis in any fractional share of Noble Energy common stock for which cash is received) will be the same as the aggregate tax basis of the stockholder's Patina common stock, decreased
by the amount of cash received by the stockholder in the merger (excluding any cash received instead of a fractional share) and increased by the amount of gain or dividend income recognized by the
stockholder in the merger (excluding any gain recognized as a result of cash received instead of a fractional share).
- •
- The
holding period of the shares of Noble Energy common stock received by a Patina stockholder in the merger generally will include the holding period of the stockholder's
Patina common stock exchanged for Noble Energy common stock.
- •
- If
a Patina stockholder has differing bases or holding periods in respect of his or her shares of Patina common stock, such stockholder should consult his or her tax advisor
prior to the exchange with regard to identifying the bases or holding periods of the particular shares of Noble Energy common stock received in the merger.
Possible Treatment of Cash as a Dividend
There are certain circumstances, generally involving a Patina stockholder who is also a substantial holder of Noble Energy common stock, in which all or part of
the gain recognized by such stockholder would be treated as a dividend rather than as capital gain.
Each
Patina stockholder should consult his or her tax advisor about the possibility that all or a portion of any cash received in exchange for Patina common stock will be treated as a
dividend, based on the stockholder's specific circumstances.
Cash Received Instead of a Fractional Share
Noble Energy will not issue any fractional shares of Noble Energy common stock in the merger. Rather, each holder of Patina common stock exchanged in the merger
who otherwise would have received a fraction of a share of Noble Energy common stock will receive cash. A Patina stockholder who receives cash instead of a fractional share of Noble Energy common
stock generally will recognize capital gain or loss based on the difference between the amount of the cash received and the tax basis that the stockholder would have had in such fractional share.
89
Capital Gain and Dividend Income of Individuals
Capital gain recognized by an individual holder of Patina common stock in connection with the merger will be subject to a maximum U.S. federal income tax rate of
15% if the individual's holding period for the Patina common stock is more than one year at the effective time of the merger. The deductibility of capital losses is subject to limitations. Any
dividend income recognized in the merger by individual Patina stockholders generally will be subject to tax at a maximum rate of 15%.
Reporting Requirements
Patina stockholders receiving Noble Energy common stock in the merger must file a statement with their U.S. federal income tax returns setting forth their
tax basis in the Patina common stock exchanged in the merger and the fair market value of the Noble Energy common stock and the amount of any cash received in the merger. In addition, Patina
stockholders will be required to retain permanent records of these facts relating to the merger.
Backup Withholding
Certain noncorporate holders of Patina common stock may be subject to backup withholding, at applicable federal rates, on amounts received pursuant to the merger.
Backup withholding will not apply, however, to a Patina stockholder who (1) provides a correct taxpayer identification number or (2) comes within certain exempt categories and, in each
case, complies with applicable certification requirements. If a Patina stockholder does not provide Noble Energy (or the exchange agent) with his or her correct taxpayer identification number, the
stockholder may be subject to penalties imposed by the Internal Revenue Service. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the
stockholder's U.S. federal income tax liability, provided that the stockholder furnishes certain required information to the Internal Revenue Service.
The
summary of material U.S. federal income tax consequences set forth above is intended to provide only a general summary of the merger and is not intended to be a complete analysis or
description of all potential U.S. federal income tax consequences of the merger. In addition, the summary does not address tax consequences that may vary with, or are contingent on, individual
circumstances. Moreover, the summary does not address any non-income tax or any foreign, state, local or other tax consequences of the merger. Accordingly, each
Patina stockholder is strongly urged to consult his or her tax advisor to determine the particular federal, state, local or foreign income, reporting or other tax consequences of the merger to that
stockholder.
Extension, Waiver and Amendment of the Merger Agreement
Extension and Waiver
At any time prior to the effective time of the merger, Noble Energy, Merger Sub and Patina may, to the extent legally allowed:
- •
- extend
the time for the performance of any of the obligations or other acts of the other parties under the merger agreement;
- •
- waive
any inaccuracies in the other parties' representations and warranties contained in the merger agreement or in any document, certificate or writing delivered pursuant
the merger agreement by the other parties; and
- •
- waive
the other parties' compliance with any of its agreements contained in the merger agreement.
90
Any
such waiver or extension is subject to the following conditions:
- •
- any
agreement allowing an extension or waiver must be set forth in a written instrument signed on behalf of the party allowing the extension or waiver;
- •
- any
waiver will only waive the respective matter described in the writing and will not impair the rights of the party granting the waiver in any other respect or at any
other time;
- •
- neither
any waiver by any party to the merger agreement, nor the failure by any party to enforce any provisions of the merger agreement or to exercise any rights will be
construed as a
waiver of any other breach or default, or as a waiver of any such provisions, rights or privileges under the merger agreement; and
- •
- the
rights and remedies provided under the merger agreement are cumulative and none is exclusive of any other, or of any rights or remedies that any party may otherwise
have.
Amendment
Subject to compliance with applicable law, Noble Energy, Merger Sub and Patina may amend the merger agreement at any time before or after adoption of the merger
agreement by Patina stockholders. However, after any adoption of the merger agreement by Patina stockholders there may not be, without their further approval, any amendment of the merger agreement
that:
- •
- changes
the merger consideration to be received by the Patina stockholders in the merger;
- •
- changes
any term of the certificate of incorporation of Merger Sub; or
- •
- adversely
affects the holders of any shares of Patina capital stock.
Employee Benefit Plans and Existing Agreements
The merger agreement provides that during the period from the closing date of the merger to the six month anniversary thereof, Noble Energy will, and will cause
its subsidiaries to, continue to provide to each person who is employed by Patina or any of its subsidiaries immediately prior to the effective time of the merger, compensation (including base salary
and incentive and bonus opportunities, but excluding equity-based compensation) and benefits (including vacation, paid time-off and severance) that are not materially less favorable in the
aggregate than those provided to the Patina employees by Patina and its subsidiaries immediately prior to the effective time of the merger.
The
service of each Patina employee with Patina or its subsidiaries (or any predecessor employer) prior to the effective time of the merger will be treated as service with Noble Energy
and its subsidiaries for purposes of each employee benefit plan of Noble Energy (including vacation, paid time-off and severance plans) in which such Patina employee is eligible to
participate after the effective time of the merger, including for purposes of eligibility, vesting and benefit levels and accruals (other than defined benefit pension plan accruals).
Following
the effective time of the merger, for purposes of each employee benefit plan of Noble Energy in which any Patina employee or his or her eligible dependents is eligible to
participate, Noble Energy has agreed to, and has agreed to cause its subsidiaries to, (1) waive any pre-existing condition, exclusion, actively-at-work
requirement or waiting period to the extent such condition, exclusion, requirement or waiting period was satisfied or waived under the comparable employee benefit plan of Patina as of the effective
time of the merger (or, if later, the date on which the employee transitions to the Noble benefit plan) and (2) provide full credit for any co-payments, deductibles or similar
payments made or incurred prior to the effective time of the merger for the plan year in which the effective time date of the merger (or the applicable plan transition date) occurs.
91
Noble
Energy has agreed to, and has agreed to cause its subsidiaries to, honor, in accordance with its terms, each employee benefit plan of Patina and all obligations thereunder,
including any rights or benefits arising as a result of the transactions contemplated by the merger agreement (either alone or in combination with any other event).
The
parties agreed that, prior to the effective time of the merger, Patina will be entitled to amend and modify its Amended and Restated Deferred Compensation Plan for Select Employees
and its 2005 Deferred Compensation Plan for Select Employees, in each case, solely to the extent necessary to comply with Section 409A of the Internal Revenue Code and any rules, regulations or
other guidance promulgated thereunder by any governmental entity.
Following
the effective time of the merger, Noble Energy has agreed not to, and has agreed not to permit any of its subsidiaries or any of its or their respective officers or employees
to, take any action (including the waiver of any term or condition of either of Patina's deferred compensation plans discussed in the preceding paragraph) that results, or would be reasonably likely
to result, in the imposition of any tax or interest penalty under Section 409A of the Internal Revenue Code on any current or former participant in either of Patina's deferred compensation
plans, including any "material modification" (within the meaning of Section 885(d)(2)(B) of the American Jobs Creation Act of 2004) of Patina's Amended and Restated Deferred Compensation Plan
for Select Employees with respect to amounts deferred in taxable years beginning before January 1, 2005.
Noble
Energy has agreed to, and has agreed to cause its subsidiaries and its and their respective officers and employees to, take all actions (including any amendment or modification of
either of Patina's deferred compensation plans) following the effective time necessary to ensure that each deferred compensation plan complies, by its terms and in its operation, with any rules,
regulations or other guidance promulgated under Section 409A of the Internal Revenue Code by any governmental entity after the date of the merger agreemeATINA OIL & GAS CORPORATION",DN="1",CHK=285313,FOLIO='i',FILE='DISK020:[05HOU4.05HOU1024]BI1024A.;32',USER='MTRAN',CD='12-APR-2005;16:29' -->
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Solicitation of Proxies |
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Participants in Patina's Benefit Plans |
INFORMATION ABOUT NOBLE ENERGY |
INFORMATION ABOUT PATINA |
THE MERGER |
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Transaction Structure |
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Source of Funds for Cash Portion of Merger Consideration |
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Background of the Merger |
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Noble Energy's Reasons for the Merger; Recommendation of the Stock Issuance in the
Merger by the Noble Energy Board of Directors |
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Patina's Reasons for the Merger; Recommendation of the Merger by the Patina
Board of Directors |
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Prior to the effective time of the merger, Noble Energy and Patina, and their respective boards of directors, have agreed to use their reasonable best efforts to take all actions to
cause any dispositions of Patina common stock (including derivative securities with respect to Patina common stock) or acquisitions of Noble Energy common stock (including derivative securities with
respect to Noble Energy common stock) resulting from the transactions contemplated hereby by each individual who is subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") to be exempt from Section 16(b) of the Exchange Act under Rule 16b-3 promulgated under the Exchange Act.
The
merger agreement acknowledges that it contains no requirement that Noble Energy or any of its affiliates continue to employ any Patina employee for any length of time following the
closing date of the merger. Subject to certain restrictions described above with respect to the Patina deferred compensation plans, the merger agreement does not prevent Noble Energy or its affiliates
from terminating, or modifying the terms of employment of, any Patina employee following the closing date of the merger or terminating or modifying to any extent any employee benefit plan of Patina or
any other employee benefit plan, program, agreement or arrangement that Noble Energy or its affiliates may establish or maintain; provided, however, that to the extent that, and for so long as, a
Patina employee remains employed by Noble Energy or any of its subsidiaries during the six month period following the effective time of the merger, the compensation and benefits payable to such
employee during such period will be subject to the provision described in the first paragraph under "—Employee Benefit Plans and Existing Agreements." In addition, Patina has a change in
control plan pursuant to which certain severance payments must be made upon an employee's termination without cause. See "—Financial Interests of Patina's Directors and Executive Officers
in the Merger—Change in Control Plan".
Prior
to the effective time of the merger, Patina will amend the rabbi trust maintained in connection with Patina's deferred compensation plans to provide that, as of the effective time
of the merger, the shares of Noble Energy common stock in such rabbi trust issued in exchange for shares of Patina common stock pursuant to the merger will be subject to the claims of Noble Energy's
creditors, in addition to the claims of Patina's creditors, and any shares of Noble Energy common stock not transferred to the surviving corporation's employees will revert to Noble Energy on
termination of such rabbi trust.
NYSE Listing of Noble Energy Common Stock; Delisting and Deregistration of Patina Common Stock
It is a condition to completion of the merger that the shares of Noble Energy common stock issuable in the merger be authorized for listing on the NYSE, subject
to official notice of issuance. If the merger is
completed, Patina common stock will cease to be listed on the NYSE and Patina's shares will be deregistered under the Exchange Act.
Expenses
The merger agreement provides that each of Noble Energy and Patina will pay its own costs and expenses in connection with the transactions contemplated by the
merger agreement, except as described above in "—Termination of the Merger Agreement—Termination Fees and Expenses."
Dividends
The merger agreement provides that, prior to the effective time:
- •
- Patina
or any of its subsidiaries may not declare, set aside or pay any dividend (other than, in the case of the Patina, regular quarterly dividends consistent with past
practice and in no event exceeding $0.06 per share per quarter) or other distribution, whether payable in cash, stock or
93
any
other property or right, with respect to its capital stock, except that Patina may permit any direct or indirect wholly-owned subsidiary to do any of the foregoingVALIGN="TOP">
Opinion of Noble Energy's Financial Advisor |
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Opinion of Patina's Financial Advisor |
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Merger Consideration |
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Conversion of Shares; Exchange of Certificates; Elections as to Form of Consideration; Allocations |
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Treatment of Options |
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Treatment of Warrants |
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Treatment of Restricted Stock |
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Effective Time |
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Conditions to the Completion of the Merger |
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Representations and Warranties |
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Conduct of Business Pending the Merger |
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Reasonable Best Efforts to Obtain Required Stockholder Vote |
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No Solicitation of Alternative Transactions |
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Termination of the Merger Agreement |
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Material United States Federal Income Tax Consequences |
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Extension, Waiver and Amendment of the Merger Agreement |
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Employee Benefit Plans and Existing Agreements |
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NYSE Listing of Noble Energy Common Stock; Delisting and Deregistration of Patina Common Stock |
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Expenses |
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Dividends |
- •
- Noble
Energy or any of its subsidiaries may not (1) declare, set aside or pay any extraordinary or special dividend or other distribution (other than in the case of
any wholly-owned subsidiary of Noble Energy), whether payable in cash, stock or any other property or right, with respect to its capital stock; provided, however, that Noble Energy may increase the
quarterly cash dividend on Noble Energy common stock or (2) engage in any spin-off or split-off without receiving fair consideration (as determined in the good faith
judgment of Noble Energy).
Appraisal Rights
Shares of Patina common stock outstanding immediately prior to the effective time of the merger and held by a holder who has not voted in favor of, or consented
in writing to, the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and who has delivered a written demand for appraisal of
such shares in accordance with Section 262 of the DGCL will not be converted into the right to receive the merger consideration, unless and until the dissenting holder fails to perfect or
effectively withdraws or otherwise loses his or her right to appraisal and payment under the DGCL. If, after the effective time of the merger, a dissenting stockholder fails to perfect or effectively
withdraws or loses his or her right to appraisal, his or her shares of Patina common stock will be treated as if they had been converted as of the effective time of the merger into the right to
receive the merger consideration without interest or dividends thereon.
Regulatory Filings and Approvals Required to Complete the Merger
The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (the "HSR Act"), which prevents
transactions subject to its requirements from being consummated until the required notification forms and attachments are furnished to the Antitrust Division of the Department of Justice and the
Federal Trade Commission and certain waiting periods expire or are terminated. Noble Energy was granted its request for early termination of the waiting period with the Department of Justice and the
Federal Trade Commission on February 4, 2005. No further action under the HSR Act need be taken if the merger is completed within one year of early termination of the waiting period.
The
Department of Justice or the Federal Trade Commission, however, are not legally precluded from challenging the merger on antitrust grounds either before or after expiration of the
HSR Act waiting period. Accordingly, at any time before or after the effective time of the merger, either the Department of Justice or the Federal Trade Commission could bring an action under the
antitrust laws, including an injunction action, if deemed necessary to protect competition in any relevant market. Moreover, at any time before or after the effective time of the merger,
notwithstanding that the applicable waiting period may have expired or been terminated, any state or private party could challenge the merger under the antitrust laws, although a private plaintiff
would need to establish that it had the requisite antitrust standing. There can be no assurance that a governmental or private challenge to the merger will not be made or that, if a challenge is made,
the parties would prevail.
We
are not aware of any other material governmental or regulatory approval required for the completion of the merger, other than compliance with the applicable corporate law of the State
of Delaware.
Hedging Activities
In connection with the announcement of the merger agreement, in order to reduce the price sensitivity associated with future oil and gas prices, Noble Energy
entered into additional financial
94
derivative
transactions ("hedges") using its own production that was available to be hedged. The natural gas hedges totaled 130 million British thermal units ("MMBTU") per day starting in
May 2005 through December 2005 and 170 MMBTUs per day for 2006 through 2008. The crude oil hedges totaled 13,100 barrels of oil per day starting in May 2005 through
December 2005 and approximately 16,700 barrels of oil per day for 2006 through 2008. These hedges consist of fixed price swaps that average $6.167 per MMBTU for natural gas and $39.30 per
barrel of oil. Prior to the closing of the merger, Noble Energy may enter into additional financial derivative transactions using its existing production.
The
merger agreement provides that if Noble Energy terminates the merger agreement within three business days of receiving notification that the Patina board of directors has made an
adverse recommendation change, or resolved to make such a change (in either case for any reason other than a superior proposal), Patina would be required to reimburse Noble Energy for up to
$45.0 million of actual losses realized by Noble Energy with respect to certain hedges for the years 2006 through 2008. In addition, pursuant to the merger agreement, prior to the closing of
the merger, Patina has agreed to terminate its existing hedge positions.
For
additional information regarding Noble Energy's hedges, including hedging not connected with the announcement of the merger agreement, please see Noble Energy's previous SEC filings.
Accounting Treatment
The merger will be accounted for as a "purchase," as that term is used under GAAP, for accounting and financial reporting purposes. Patina will be treated as the
acquired corporation for accounting and financial reporting purposes. Patina's assets, liabilities and other items will be adjusted to their estimated fair value on the closing date of the merger and
combined with the historical book values of the assets and liabilities of Noble Energy. Applicable income tax effects of these adjustments will be included as a component of the combined company's
deferred tax asset or liability. The difference between the estimated fair value of the assets (including separately identifiable intangible assets, such as core deposit intangibles), liabilities and
other items (adjusted as discussed above) and the purchase
price will be recorded as goodwill. Financial statements of Noble Energy issued after the merger will reflect the values and will not be restated retroactively to reflect the historical financ SIZE=0> |
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Appraisal Rights |
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Annex A |
Agreement and Plan of Merger, dated as of December 15, 2004, by and among Noble Energy, Inc., Noble Energy Production, Inc. and Patina Oil & Gas Corporation |
| Annex B |
Opinion of J.P. Morgan Securities Inc. |
| Annex C |
Opinion of Petrie Parkman & Co., Inc. |
| Annex D |
Section 262 of the Delaware General Corporation Law |
iii
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES FOR THE SPECIAL MEETINGS
- Q:
- Why is my vote important?
- A:
- Under the Delaware General Corporation Law (the "DGCL"), which governs Patina, the merger agreement must be adopted by the holders of a majority
of the outstanding shares of Patina common stock entitled to vote. Accordingly, if a Patina stockholder fails to vote, or if a Patina stockholder abstains, that will have the same effect as a vote
against adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement.
Under
the rules of the NYSE, the issuance of Noble Energy common stock in the merger requires the affirmative vote of a majority of the shares voted at the Noble Energy special meeting so long as the
shares voted represent over 50% of the shares entitled to vote. Accordingly, assuming that a quorum is present and that the total votes cast at the Noble Energy special meeting is more than 50% of all
Noble Energy common stock entitled to vote at the special meeting, the failure of a Noble Energy stockholder to vote or a decision by a Noble Energy stockholder to abstain will have no effect in
determining whether the stock issuance is approved.
In
addition, under the DGCL, which also governs Noble Energy, the proposed amendment to Noble Energy's certificate of incorporation must be approved by the holders of a majority of the outstanding
shares of Noble Energy common stock entitled to vote. Accordingly, if a Noble Energy stockholder fails to vote, or if a Noble Energy stockholder abstains, that will have the same effect as a vote
against approval of the amendment to the certificate of incorporation. Approval of the amendment to Noble Energy's certificate of incorporation is not a condition to Noble Energy's or Patina's
obligation to complete the merger.
- Q:
Financial Interests of Patina's Directors and Executive Officers in the Merger
In considering the recommendations of the Patina board of directors with respect to the merger agreement, you should be aware that Patina's directors and
executive officers have financial and other interests in the merger in addition to their interests as stockholders of Patina. The Patina board of directors was aware of these additional interests and
considered them, among other matters, in reaching its decision to approve the merger agreement and to recommend that Patina stockholders vote to adopt the merger agreement and approve the merger and
the other transactions contemplated by the merger agreement.
Board of Directors
The merger agreement provides that Noble Energy will increase the size of its board of directors by two members and that, following the merger, Noble Energy will
appoint Thomas J. Edelman and Jeffrey L. Berenson, who are currently members of the Patina board of directors, to fill the vacancies created by such increase. Noble Energy has also agreed to recommend
that Mr. Edelman and Mr. Berenson be elected to the Noble Energy board of directors at the first annual meeting of Noble Energy stockholders following the merger.
95
Stock Options
Pursuant to their terms and the Patina stock option plans, all options to acquire Patina common stock, including stock options held by directors and executive
officers of Patina, that are outstanding prior to the merger will automatically become vested and exercisable. The merger agreement provides that each stock option that is outstanding and unexercised
immediately prior to the effective time of the merger will be converted into an option to acquire shares of Noble Energy common stock. For a more complete description of the terms of the new Noble
Energy stock options, see above under the heading "—Treatment of Options."
The
following table sets forth, as of April 7, 2005, the number of shares of Patina common stock subject to vested and unvested stock options held by Patina's directors and
executive officers and the estimated value of of those stock options based on the closing price of Patina of $40.83 per share on April 7, 2005:
Name
|
|
Title
|
|
Number of
Shares Subject
to Unvested
Options
|
|
Estimated Value of Unvested Options
|
|
Number of
Shares
Subject to
Vested
Options
|
|
Estimated Value of Vested Options
|
| Thomas J. Edelman |
|
Chairman, Chief Executive Officer, President and Chairman of the Board |
|
586,002 |
|
$ |
8,241,994 |
|
1,181,180 |
|
$ |
36,011,257 |
| Jay W. Decker |
|
Former President and Director, resigned December 22, 2004 |
|
219,002 |
|
$ |
4,850,864 |
|
— |
|
$ |
— |
| David J. Kornder |
|
Executive Vice President, Chief Financial Officer, and Director |
|
268,002 |
|
$ |
3,946,874 |
|
403,506 |
|
$ |
11,841,390 |
| Andrew M. Ashby |
|
Senior Vice President — Operations |
|
137,602 |
|
$ |
1,469,831 |
|
83,677 |
|
$ |
2,209,148 |
| Ted D. Brown |
|
Senior Vice President — Operations |
|
90,700 |
|
$ |
511,596 |
|
— |
|
$ |
— |
D>What do I need to do now?
A:After you have carefully read this joint proxy statement/prospectus, please respond by completing, signing and dating your proxy card and returning it in the
enclosed postage-paid envelope or, if available, by submitting your proxy or voting instruction by telephone or through the Internet as soon as possible so that your shares will be
represented and voted at your special meeting.
Q:What do I do if I want to change my vote after I have delivered my proxy card?
A:You
may change your vote at any time before your proxy is voted at your special meeting. You can do this in any of the three following ways:
- •
- by
sending a written notice to the Secretary of Noble Energy or Patina, as appropriate, in time to be received before your special meeting stating that you would like to
revoke your proxy;
- •
- by
completing, signing and dating another proxy card and returning it by mail in time to be received before your special meeting or, if you submitted your proxy through the
Internet or by telephone, you can change your vote by submitting a proxy card at a later date, in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or
- •
- if
you are a holder of record, by attending the special meeting and voting in person.
If
your shares are held in an account at a broker or other nominee, you should contact your broker or other nominee to change your vote.
- Q:
- If I am a Patina stockholder, should I send in my stock certificates with my proxy card?
- A:
- No.
Please DO NOT send your Patina stock certificates with your proxy card. Rather, prior to the election deadline of 5:00 p.m., Houston, Texas time, on May 10, 2005, you
should send your Patina common stock certificates to the exchange agent, together with your completed, signed election form. If your shares are held in "street name" by your broker or other nominee
you should follow your broker's or other nominee's instructions for making an election with respect to your shares.
1
- Q:
- What is the amount of cash and/or the number of shares of Noble Energy common stock that I will receive for my shares of Patina common
stock?
- A:
- The
actual amount of cash or number of shares of Noble Energy common stock that you will receive for each share of Patina common stock you hold cannot be determined until after the
effective time of the merger. Those amounts will be determined based on a formula set forth in the merger agreement and described in this document. The per share consideration will be equal to the
aggregate value of all Noble Energy common stock and cash being issued in the merger divided by the total number of shares of Patina common stock outstanding immediately prior to the effective time of
the merger. The value of the Noble Energy common stock for these purposes (the "Average Noble Energy Common Stock Value") will be the volume-weighted average of the trading sale prices per share of
Noble Energy common stock as reported on the New York Stock Exchange (the "NYSE") during the 10 consecutive trading day period during which the shares of Noble Energy common stock are traded on the
NYSE ending three calendar days before the effective time of the merger or if such calendar day is not a trading day, then ending on the trading day immediately preceding such calendar day. There is a
table on pages 6 and 65 that sets forth the per share cash consideration and the per share stock consideration that would be received by Patina stockholders based on a range of hypothetical
Average Noble Energy Common Stock Values.
- Q:
- Is the value of the per share consideration that I receive expected to be substantially equivalent regardless of which election I make?
- A:
- Yes.
The formula that will be used to calculate the per share consideration is designed to substantially equalize the value of the consideration to be received for each share of Patina
common stock in the merger at the time the calculation is made, regardless of whether you elect to receive cash, stock, or a combination of cash and stock, or do not make an election, for your Patina
shares.
- Q:
- If I am a Patina stockholder, when must I elect the type of merger consideration that I prefer to receive?
- A:
- Holders
of Patina common stock who wish to elect the type of merger consideration they prefer to receive in the merger should carefully review and follow the instructions set forth in
the election form provided to Patina stockholders together with this joint proxy statement/prospectus. These instructions require that a properly completed and signed election form be received by the
exchange agent by the election deadline, which is 5:00 p.m., Houston, Texas time, on May 10, 2005. If a Patina stockholder does not submit a properly completed and signed election form
to the exchange agent by the election deadline, then such stockholder will have no control over the type of merger consideration such stockholder may receive, and, consequently, may receive only cash,
only Noble Energy common stock, or a combination of cash and Noble Energy common stock in the merger.
- Q:
- If I am a Patina stockholder, can I change my election after I submit my certificates?
- A:
- You
can revoke your election and submit new election materials prior to the election deadline. You may do so by submitting a written notice to the exchange agent that is received prior
to the election deadline at the following address:
Wachovia
Bank, N.A.
NC 1153
1525 West W.T. Harris Blvd., 3C3
Charlotte, North Carolina 28262-8522
The
revocation must specify the account name and such other information as the exchange agent may request; revocations may not be made in part. New elections must be submitted in accordance
2
with
the election procedures described in this joint proxy statement/prospectus. If you instructed a broker to submit an election for your shares, you must follow your broker's directions for changing
those instructions.
- Q:
- If my shares are held in "street name" by my broker or other nominee, will my broker or other nominee vote my shares for me?
- A:
- Your
broker will NOT vote your shares held in "street name" unless you instruct your broker how to vote. In the case of Patina stockholders, such failure to vote will have the same
effect as a vote "AGAINST" adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement, and in the case of Noble Energy stockholders,
such failure to vote will have the same effect as a vote "AGAINST" approval of the proposal to amend Noble Energy's certificate of incorporation. You should therefore provide your broker or other
nominee with instructions as to how to vote your shares.
- Q:
- Do I have dissenters' rights?
- A:
- Under
the DGCL, if the merger is completed, holders of Patina common stock who do not vote in favor of, or consent in writing to, the adoption of the merger agreement and approval of
the merger and the other transactions contemplated by the merger agreement will have the right to seek appraisal of the fair value of their shares, but only if they submit a written demand for such an
appraisal prior to the vote on the merger agreement and they comply with the other Delaware law procedures and requirements explained in the accompanying joint proxy statement/prospectus.
- Q:
- Who can I call with questions about the special meetings or the merger?
- A:
- If you have any questions about the merger or how to submit your proxy or voting instruction card, or if you need additional copies of this document or the
enclosed proxy card or voting instruction card, you should contact:
- •
- if
you are a Noble Energy stockholder:
3
SUMMARY
This brief summary highlights selected information from this joint proxy statement/prospectus. It does not contain all of the information that may be important to
you. You should carefully read this entire document and the other documents to which this joint proxy statement/prospectus refers you to fully understand the merger. See "Where You Can Find More
Information" on page 131. Each item in this summary refers to the page where that subject is discussed in more detail.
Information about Noble Energy and Patina (Pages 30 and 32)
Noble Energy, Inc.
100 Glenborough Drive
Suite 100
Houston, Texas 77067-3610
(281) 872-3100
Noble
Energy, formerly known as Noble Affiliates, Inc., is a Delaware corporation that has been publicly traded on the New York Stock Exchange since 1980. Noble Energy, directly
or through its subsidiaries or various arrangements with other companies, explores for, develops and produces crude oil and natural gas. Exploration activities include geophysical and geological
evaluation and exploratory drilling on properties for which the company has exploration rights. Noble Energy has exploration, exploitation and production operations domestically and internationally.
The domestic areas consist of: offshore in the Gulf of Mexico and California; the Gulf Coast Region (Louisiana and Texas); the Mid-continent Region (Oklahoma and Kansas); and the Rocky
Mountain Region (Colorado, Montana, Nevada and Wyoming). The international areas of operations include Argentina, China, Ecuador, Equatorial Guinea, the Mediterranean Sea (Israel), and the North Sea
(the Netherlands and the United Kingdom).
Patina Oil & Gas Corporation
1625 Broadway
Suite 2000
Denver, Colorado 80202
(303) 389-3600
Patina,
a Delaware corporation that has been publicly traded on the New York Stock Exchange since 1996, is an independent energy company engaged in the acquisition, development and
exploitation of oil and natural gas properties within the continental United States. Patina's properties and oil and gas reserves are principally located in relatively long-lived fields
with well-established production histories. The properties are primarily concentrated in the Wattenberg Field of Colorado's Denver-Julesburg Basin, the Mid-continent region of western
Oklahoma and the Texas Panhandle, and the San Juan Basin in New Mexico.
The Merger
Patina Will Merge With and Into a Subsidiary of Noble Energy (Page 33)
We propose a merger of Patina with and into Merger Sub, a subsidiary of Noble Energy. Merger Sub will survive the merger as a wholly-owned subsidiary of Noble
Energy. We have attached the merger agreement to this joint proxy statement/prospectus as Annex A. Please read the merger agreement carefully. It is the legal document that governs the merger. Subject
to satisfaction of the other conditions to the merger, we anticipate that the closing of the merger will occur within five business days after the approval of the merger by the requisite votes of the
Patina and Noble Energy stockholders.
4
$
381,965 |
| Robert J. Clark |
|
Director |
|
24,692 |
|
$ |
568,085 |
|
45,312 |
|
$ |
1,420,623 |
| Elizabeth K. Lanier |
|
Director |
|
24,692 |
|
$ |
568,085 |
|
45,312 |
|
$ |
1,420,623 |
| Alexander P. Lynch |
|
Director |
|
24,692 |
|
$ |
568,085 |
|
45,312 |
|
$ |
1,420,623 |
| Paul M. Rady |
|
Director |
|
24,692 |
|
$ |
568,085 |
|
45,312 |
|
$ |
1,384,839 |
| Jon R. Whitney |
|
Director |
|
12,750 |
|
$ |
181,800 |
|
2,250 |
|
$ |
32,850 |
Restricted Stock
Pursuant to their terms, all shares of restricted Patina common stock held by Patina's directors and executive officers that are outstanding but unvested prior to
the merger will become fully vested. In the merger, these shares will be treated in the same manner as other shares of Patina common stock (as described above under the heading "—Merger
Consideration").
96
The
following table sets forth, as of April 7, 2005, the number of shares of unvested restricted Patina common stock held by Patina's directors and executive officers and the
estimated value of such shares based on the closing price of Patina of $40.83 per share on April 7, 2005:
Name
|
|
Title
|
|
Unvested Shares of
Restricted Stock Held
|
|
Estimated Value of Unvested Restricted Shares
|
| Thomas J. Edelman |
|
Chairman, Chief Executive Officer, President and Chairman of the Board |
|
7,000 |
|
$ |
285,810 |
| Jay W. Decker |
|
Former President and Director, resigned December 22, 2004 |
|
5,250 |
|
$ |
214,358 |
| David J. Kornder |
|
Executive Vice President, Chief Financial Officer, and Director |
|
4,200 |
|
$ |
171,486 |
| Andrew M. Ashby |
|
Senior Vice President — Operations |
|
2,100 |
|
$ |
85,743 |
| Ted D. Brown |
|
Senior Vice President — Operations |
|
Patina Stockholders Will Receive Cash and/or Shares of Noble Energy Common Stock in the Merger Depending on Their Election and Any Adjustment (Pages 62 and 66)
The merger agreement provides that at the effective time of the merger, each outstanding share of Patina common stock will be converted into the right to receive
either a number of shares of Noble Energy common stock or an amount of cash, subject to the election and allocation procedures
described in this document. The actual amount of cash or number of shares of Noble Energy common stock that you will receive for each share of Patina common stock you hold cannot be determined until
after the effective time of the merger. Those amounts will be determined based on a formula set forth in the merger agreement and described under the heading "The Merger—Merger
Consideration" beginning on page 62 of this document. The formula is designed to substantially equalize the value of the consideration to be received for each share of Patina common stock, at
the time the calculation is made, regardless of whether you elect to receive cash, stock or a combination of cash and stock, or make no election. This equalization mechanism was deemed to be desirable
because the value of the Noble Energy common stock will fluctuate. The value of the merger consideration to be received with respect to each share of Patina common stock will be equal to $14.80 plus
approximately $0.375 per $1.00 of Average Noble Energy Common Stock Value.
The
formula is also designed to fix the amount of cash and the number of shares of Noble Energy common stock to be paid and issued, respectively, in the merger (in each case subject to
upward adjustment up to a maximum of approximately 30.7 million shares and $1.2 billion in cash, in the event that any shares of Patina common stock are issued in accordance with the
merger agreement pursuant to the exercise of Patina stock options or Patina warrants or otherwise). Because the amount of cash and the number of shares of Noble Energy common stock to be paid and
issued, respectively, in the merger are fixed, the percentage of shares of Patina common stock that will be exchanged for Noble Energy common stock and the percentage that will be exchanged for cash
will depend upon the Average Noble Energy Common Stock Value. The greater the Average Noble Energy Common Stock Value, the greater the percentage of shares of Patina common stock that will be
exchanged for shares of Noble Energy common stock and the lesser the Average Noble Energy Common Stock Value, the greater the percentage of shares of Patina common stock that will be exchanged for
cash.
For
example, if the Average Noble Energy Common Stock Value is $59.18, a Patina stockholder electing to receive stock would receive 0.62521 shares of Noble Energy common stock per share
of Patina common stock having a value, based on such Average Noble Energy Common Stock Value, of $37.00 per share, and a Patina stockholder electing to receive cash would receive $37.00 in cash per
share of Patina common stock, subject in each case to the allocation procedures described under the heading "The Merger—Conversion of Shares; Exchange of Certificates; Elections as to Form
of Consideration; Allocations—Allocation" beginning on page 69 of this document. Based on that average price, 40% of the outstanding shares of Patina common stock would be exchanged
for cash, and 60% would be exchanged for Noble Energy common stock.
The
following table sets forth, based on various hypothetical Average Noble Energy Common Stock Values, the per share cash consideration and the per share stock consideration, as well as
the value of such stock consideration based on the hypothetical Average Noble Energy Common Stock Values. The table also shows the percentage of outstanding shares of Patina common stock that would be
converted into Noble Energy common stock and cash based on such Average Noble Energy Common Stock Values. The table is based on the assumption that no Patina options or Patina warrants have been
exercised following the date of this joint proxy statement/prospectus and prior to the closing of the merger, that no additional shares of Patina common stock are otherwise issued following the date
of this joint proxy statement/prospectus and that the number of exchangeable shares of Patina common stock is 74,088,249 (the number of shares of Patina common stock outstanding on April 7,
2005). To the extent that the number of shares of Patina common stock outstanding increases in accordance with the merger agreement (whether as a result of the exercise of Patina options or Patina
warrants or otherwise), the number of exchangeable shares will increase and the aggregate transaction value will
increase, but there will be no change in the per share stock consideration or per share cash consideration. Each additional exchangeable share of Patina common stock will increase the aggregate
transaction value by 0.375126 shares of Noble Energy common stock and $14.80 in cash.
5
Average
Noble
Energy
Common
Stock
Value
|
|
|
|
|
|
|
|
|
|
Percentage of Outstanding Shares of Patina Common Stock to Receive
|
|
| |
|
|
Per Share Stock
Consideration
(Shares of
Noble Energy
Common Stock)
|
|
|
|
|
|
| |
Transaction
Value
(in 000s)
|
|
Value of Per Share Stock
Consideration
|
|
Per Share
Cash
ConsiderationSIZE=2>12,000
| |
$ |
489,960 |
| Barton R. Brookman |
|
Vice President — Operations |
|
1,400 |
|
$ |
57,162 |
| Marianne N. Hallinan |
|
Vice President Human Resources and
Associate General Counsel |
|
— |
|
|
— |
| James A. Lillo |
|
Vice President — Acquisitions |
|
1,400 |
|
$ |
57,162 |
| Scott J. Reasoner |
|
Vice President — Operations |
|
— |
|
|
— |
| Terry L. Ruby |
|
Vice President — Land |
|
1,400 |
|
$ |
57,162 |
| Donald R. Shaw |
|
Vice President — Asset Development |
|
— |
|
|
— |
| David W. Siple |
|
Vice President — Land |
|
1,400 |
|
$ |
57,162 |
| Michael N. Stefanoudakis |
|
Vice President and General Counsel |
|
— |
|
|
— |
| Michael J. Wendling |
|
Vice President — Reservoir Engineering |
|
— |
|
|
— |
| Charles E. Bayless |
|
Director |
|
2,000 |
|
$ |
81,660 |
| Jeffrey L. Berenson |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Robert J. Clark |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Elizabeth K. Lanier |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Alexander P. Lynch |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Paul M. Rady |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Jon R. Whitney |
|
Director
| |
Stock
Consideration
|
|
Cash
Consideration
|
|
| $ |
75.00 |
|
$ |
3,180,938 |
|
0.5725 |
|
$ |
42.9375 |
|
$ |
42.9345 |
|
65.5 |
% |
34.5 |
% |
| |
74.50 |
|
|
3,167,042 |
|
0.5738 |
|
|
42.7481 |
|
|
42.7469 |
|
65.4 |
|
34.6 |
|
| |
74.00 |
|
|
3,153,146 |
|
0.5751 |
|
|
42.5574 |
|
|
42.5593 |
|
65.2 |
|
34.8 |
|
| |
73.50 |
|
|
3,139,250 |
|
0.5765 |
|
|
42.3728 |
|
|
42.3718 |
|
65.1 |
|
34.9 |
|
| |
73.00 |
|
|
3,125,353 |
|
0.5779 |
|
|
42.1867 |
|
|
42.1842 |
|
64.9 |
|
35.1 |
|
| |
72.50 |
|
|
3,111,457 |
|
0.5793 |
|
|
41.9993 |
|
|
41.9966 |
|
64.8 |
|
35.2 |
|
| |
72.00 |
|
|
3,097,561 |
|
0.5807 |
|
|
41.8104 |
|
|
41.8091 |
|
64.6 |
|
35.4 |
|
| |
71.50 |
|
|
3,083,665 |
|
0.5821 |
|
|
41.6202 |
|
|
41.6215 |
| |
2,000 |
|
$ |
81,660 |
Employment Agreement with Mr. Edelman
Thomas J. Edelman, Patina's Chairman, President and Chief Executive Officer, is party to an employment agreement with Patina. The agreement provides that, upon a
change in control of Patina, all of Mr. Edelman's stock options and other stock-based awards and all his unvested rights under other Patina employee benefit plans will automatically vest. In
addition, the agreement provides that if Mr. Edelman's employment with Patina terminates for any reason within 12 months after a change in control, Mr. Edelman will receive all
accrued salary and unpaid bonus (including a partial year bonus for 2005). In addition, Mr. Edelman will receive a cash severance payment equal to two and one-half times the sum of
(1) Mr. Edelman's base salary for 2004, (2) the bonus paid to Mr. Edelman in 2004 plus the full amount payable to Mr. Edelman under Patina's Long Term Incentive
Program for Chief Executive Officer, (3) 100% of the contribution Patina would have made to Mr. Edelman's 401(k) account for the year in which Mr. Edelman's employment was
terminated, and (4) 100% of the matching deferral under Patina's deferred compensation plan for the year in which Mr. Edelman's employment was terminated, assuming Mr. Edelman
deferred the maximum amount pursuant to such plans. Mr. Edelman will be entitled to the continuation for 24 months of medical, disability and life insurance benefits. Mr. Edelman
will also be entitled to a tax gross-up payment in the event he is subject to excise taxes under Sections 280G and 4999 of the Internal Revenue Code on amounts payable to him. The approval
of the merger by Patina stockholders will constitute a change in control under the agreement. Mr. Edelman will not continue his employment with Patina after the effective time of the merger,
and so he will be entitled to the severance payment and other benefits provided in the agreement. Mr. Edelman will receive an aggregate severance payment under the agreement as a result of the
merger of approximately $11,500,000.
97
Change in Control Plan
Patina has a change in control plan in which all of Patina's executive officers (other than Mr. Edelman) and other employees participate. The plan provides
that, upon a change in control, all the executive officers' stock options and other stock-based awards and all the executive officers' unvested rights under other Patina employee benefit plans will
automatically vest. In addition, each executive officer will receive a cash severance payment in the event that his or her employment is terminated without "cause" within one year of a change in
control or if he or she resigns after a "material change" that occurs within one year of a change in control. The amount of the severance payment for any executive officer is generally equal to the
sum of 200% of the executive officer's base compensation for 2004, 100% of the executive officer's accrued but unpaid bonus (including a pro rated partial year bonus for 2005) and 150% of the annual
bonus actually paid to the executive officer in 2004 in respect of Patina's 2003 fiscal year. Under the plan, "cause" includes acts of dishonesty constituting a felony and willful malfeasance or
misconduct; and "material change" includes a change in status, position or responsibilities other than a promotion and a reduction in base compensation or certain benefits. The approval of the merger
by Patina stockholders will constitute a change in control under the plan. The executive officers of Patina would be entitled to receive aggregate severance payments of approximately
$7.6 million, plus pro rated partial year bonuses for 2005, if the change in control plan were triggered with respect to all Patina executive officers.
Consulting Agreements
Noble Energy has agreed to enter into consulting agreements with each of Mr. Edelman and David J. Kornder, Patina's Executive Vice President, Chief
Financial Officer and Secretary. Pursuant to the proposed consulting agreements, Mr. Edelman and Mr. Kornder will serve as consultants to the combined company for a period of
12 months following the merger, in exchange for monthly retainers of $50,000 and $35,000, respectively.
Separation and Consulting Agreement
Patina has entered into a separation and consulting agreement with Jay W. Decker, Patina's former President and director. Pursuant to this agreement,
Mr. Decker resigned as President and director of Patina effective December 22, 2004 and agreed to serve as a consultant to Patina from such date until the later of
(1) June 30, 2005 and (2) 90 days after the effective time of the merger, in consideration of a monthly retainer of $50,000. In addition, pursuant to the agreement,
Mr. Decker's stock options and restricted stock awards will continue to vest in accordance with their existing vesting schedule (subject to acceleration on closing of the merger) and
Mr. Decker will receive a payment of approximately $2.9 million, the amount he would have received under Patina's change in control plan had he continued as President, if the merger is
completed on or before December 31, 2005.
Continuing Employment with Noble Energy
Subject to completion of the merger, Noble Energy has offered continuing employment following the merger to each of Andrew Ashby, Ted Brown, Scott Reasoner,
Donald Shaw and David Siple, which offers have been accepted. These individuals will receive base salary and annual bonus opportunities that are substantially similar to those currently provided by
Patina, and they will participate in Noble Energy's short- and long-term incentive plans and other employee benefit plans and programs in which similarly situated management employees of Noble Energy
participate. Each of these individuals will also be paid certain nonrecurring payments by Noble Energy during their first year of employment with Noble Energy, the total amount of which will be
roughly equal to the cash benefits to which the individual would have been entitled under the Patina's change in control plan had the individual's employment been terminated without "cause" (as
described above, "—Change in Control Plan").
98
Deferred Compensation Plan
Patina maintains two deferred compensaONT> |
64.4 |
|
35.6 |
|
| |
71.00 |
|
|
3,069,769 |
|
0.5836 |
|
|
41.4356 |
|
|
41.4339 |
|
64.3 |
|
35.7 |
|
| |
70.50 |
|
|
3,055,872 |
|
0.5851 |
|
|
41.2496 |
|
|
41.2464 |
|
64.1 |
|
35.9 |
|
| |
70.00 |
|
|
3,041,976 |
|
0.5866 |
|
|
41.0620 |
|
|
41.0588 |
|
64.0 |
|
36.0 |
|
| |
69.50 |
|
|
3,028,080 |
|
0.5881 |
|
|
40.8730 |
|
|
40.8713 |
|
63.8 |
|
36.2 |
|
| |
69.00 |
|
|
3,014,184 |
|
0.5896 |
|
|
40.6824 |
|
|
40.6837 |
|
63.6 |
|
36.4 |
|
| |
68.50 |
|
|
3,000,287 |
|
0.5912 |
|
|
40.4972 |
|
|
40.4961 |
|
63.5 |
|
36.5 |
|
| |
68.00 |
|
|
2,986,391 |
|
0.5928 |
|
|
40.3104 |
|
|
40.3086 |
|
63.3 |
|
36.7 |
|
| |
67.50 |
|
|
2,972,495 |
|
0.5944 |
|
|
40.1220 |
|
|
40.1210 |
|
63.1 |
The
merger agreement provides that Noble Energy will take certain actions, and refrain from taking certain actions, with respect to the deferred compensation plans regarding compliance
with Section 409A of the Internal Revenue Code, and that Noble Energy will indemnify and hold harmless the participants in the plans, including Patina's executive officers, on an after-tax
basis from any tax or interest penalty imposed under Section 409A as a result of a failure by Noble Energy to comply with those obligations. These provisions of the merger agreement are further
described above under the heading "—Employee Benefit Plans and Existing Agreements."
Indemnification and Insurance
The merger agreement provides that, after the effective time of the merger, Noble Energy will indemnify, defend and hold harmless the present and former officers,
directors, employees and agents of Patina and its subsidiaries in such capacities to the fullest extent that Patina or its subsidiaries would have been required to do so in accordance with the
provisions of each indemnification or similar agreement between Patina or any of its subsidiaries and any such individual, in each case against any losses, damages, expenses or liabilities resulting
from any claim, liability, loss, damage, cost or expense, asserted against, or incurred by, any such individual that is based on the fact that such individual is or was a director, officer, employee
or agent of Patina or its subsidiaries and arising out of actions or omissions or alleged actions or omissions occurring at or prior to the effective time of the merger. Noble Energy will also take
all necessary actions to ensure that its director's and officer's liability insurance continues to cover Messrs. Edelman and Berenson and each officer and director of Patina, in each case so
long as they remain employed or retained by Noble Energy or any affiliate of Noble Energy (including the surviving corporation) as an officer or director and, to the extent Noble Energy's current
directors' and officers' liability insurance policy covers consultants, as a consultant, on terms that are no less favorable than those enjoyed by Noble Energy's other directors and officers.
In
addition, the merger agreement provides that prior to the closing of the merger, Patina will purchase, and after the effective time of the merger the surviving corporation will
maintain, directors' and officers' liability insurance covering, for a period of six years after the effective time of the merger, the directors and officers of Patina and its subsidiaries who are
currently covered by Patina's existing directors' and officers' liability insurance with respect to claims arising from facts or events that occurred before the effective time of the merger, on terms
and conditions no less favorable to such directors and officers than those in effect on December 15, 2004; provided, however, that the aggregate annual premiums for such insurance at any time
during such period may not exceed 175% of the per annum rate of premium currently paid by Patina and its subsidiaries for such insurance on December 15, 2004. Patina and Noble Energy have
agreed that, in the event that such insurance cannot be obtained for 175% of the per annum rate of premium currently paid by Patina, Noble Energy will nonetheless be obligated to provide such
directors' and officers' liability insurance as may be obtained for such sum.
99
Restrictions on Resales by Affiliates
Shares of Noble Energy common stock to be issued to Patina stockholders in the merger have been registered under the Securities Act, as amended, and may be traded
freely and without restriction by those stockholders not deemed to be affiliates (as that term is defined under the Securities Act) of Patina. Any subsequent transfer of shares, however, by any person
who is an affiliate of Patina at the
time the merger is submitted for a vote of the Patina stockholders will, under existing law, require either:
- •
- the
further registration under the Securities Act of the Noble Energy common stock to be transferred;
- •
- compliance
with Rule 145 promulgated under the Securities Act, which permits limited sales under certain circumstances; or
- •
- the
availability of another exemption from registration.
An
"affiliate" of Patina is a person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, Patina. These
restrictions are expected to apply to the directors and executive officers of Patina and the holders of 10% or more of the outstanding Patina common stock. The same restrictions apply to the spouses
and certain relatives of those persons and any trusts, estates, corporations or other entities in which those persons have a 10% or greater beneficial or equity interest. Noble Energy will give stop
transfer instructions to the transfer agent with respect to the shares of Noble Energy common stock to be received by persons subject to these restrictions, and the certificates for their shares will
be appropriately legended.
100
PROPOSED AMENDMENT TO NOBLE ENERGY'S CERTIFICATE OF INCORPORATION
Noble Energy presently is authorized to issue 104 million shares of capital stock, divided into 100 million shares of Noble Energy common stock and
4.0 > |
36.9 |
|
| |
67.00 |
|
|
2,958,599 |
|
0.5960 |
|
|
39.9320 |
|
|
39.9334 |
|
62.9 |
|
37.1 |
|
| |
66.50 |
|
|
2,944,703 |
|
0.5977 |
|
|
39.7471 |
|
|
39.7459 |
|
62.8 |
|
37.2 |
|
| |
66.00 |
|
|
2,930,806 |
|
0.5994 |
|
|
39.5604 |
|
|
39.5583 |
|
62.6 |
|
37.4 |
|
| |
65.50 |
|
|
2,916,910 |
|
0.6011 |
|
|
39.3721 |
|
|
39.3708 |
|
62.4 |
|
37.6 |
|
| |
65.00 |
|
|
2,903,014 |
|
0.6028 |
|
|
39.1820 |
|
|
39.1832 |
|
62.2 |
|
37.8 |
|
| |
64.50 |
|
|
2,889,118 |
|
0.6046 |
|
|
38.9967 |
|
|
38.9956 |
|
62.0 |
|
38.0 |
|
| |
64.00 |
|
|
2,875,222 |
|
0.6064 |
|
|
38.8096 |
|
|
38.8081 |
|
61.9 |
|
38.1 |
|
| |
63.50 |
|
|
2,861,325 |
|
0.6082 |
|
|
38.6207 |
|
|
38.6205 |
|
61.7 |
|
38.3 |
The
Noble Energy board of directors has approved an amendment to Noble Energy's certificate of incorporation to increase the number of authorized shares of Noble Energy common stock from
100 million to 250 million. Noble Energy has a sufficient number of authorized shares under Noble Energy's certificate of incorporation to complete the merger. Therefore, approval of the
amendment to increase the number of authorized shares of common stock is not a condition to the merger.
The
Noble Energy board of directors believes that an increase is advisable and in the best interests of Noble Energy and Noble Energy stockholders. Following the merger, in the event
that the amendment to Noble Energy's certificate of incorporation is not approved, Noble Energy will have approximately 13.0 million authorized and unissued shares of Noble Energy common stock, which
amount includes those unissued shares of Noble Energy common stock reserved for issuance in respect of awards that have been or are authorized to be made under Noble Energy's Stock based Compensation
Plans and existing Patina options that will convert into Noble Energy options under the terms of the merger agreement. The Noble Energy board of directors believes that an increase in authorized
shares of Noble Energy common stock to 250 million will give Noble Energy greater flexibility in the future by allowing Noble Energy the latitude to declare stock dividends or stock splits, to
use its common stock to acquire other assets (for example, the merger) or to issue its common stock for other corporate purposes, including stock dividends, raising additional capital, issuance
pursuant to employee and director stock plans and possible future acquisitions. There are no current plans, understandings or arrangements for issuing a material number of additional shares of Noble
Energy common stock from the additional shares proposed to be authorized pursuant to the amendment.
The
issuance of shares of Noble Energy common stock, including the additional shares that would be authorized if the proposed amendment is adopted, may dilute the present equity
ownership position of current holders of Noble Energy common stock and may be made without stockholder approval, unless otherwise required by applicable laws or stock exchange regulations. The
amendment might also have the effect of discouraging an attempt by another person or entity through the acquisition of a substantial number of shares of Noble Energy common stock, to acquire control
of Noble Energy with a view to consummating a merger, sale of all or any part of Noble Energy's assets, or a similar transaction, because the issuance of new shares could be used to dilute the stock
ownership of such person or entity.
All
shares of Noble Energy common stock, including those now authorized and those that would be authorized by the proposed amendment to Noble Energy's certificate of incorporation, are
equal in rank and have the same voting, dividend and liquidation rights. Holders of Noble Energy common stock do not have preemptive rights.
101
Pursuant
to Noble Energy's rights plan, one series A junior participating preferred stock purchase right will be issued with each share of Noble Energy common stock. See
"Description of Noble Energy Capital Stock—Rights Agreement" below.
The Noble Energy board of directors unanimously recommends that Noble Energy stockholders vote "FOR" approval of the amendment to Noble Energy's certificate of
incorporation.
To
effect the increase in authorized shares of Noble Energy common stock, it is proposed that the first sentence of Article Fourth of Noble Energy's Restated Certificate of Incorporation
be amended to read in its entirety as follows:
"The
total number of shares of all classes of stock which the Corporation shall have authority to issue is 254,000,000 shares, consisting of (1) 4,000,000 shares of Preferred Stock, $1.00 par
value ("Preferred Stock"), and (2) 250,000,000 shares of Common Stock, $3.331/3 par value ("Common Stock")."
The
affirmative vote of the holders of a majority of the outstanding shares of Noble Energy common stock is required to approve the amendment to Noble Energy's certificate of
incorporation. Unless a contrary choice is specified, proxies solicited by the Noble Energy board of directors will be voted for the amendment.
102
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information and explanatory notes present how the combined financial statements of Noble Energy and
Patina may have appeared had the businesses actually been combined as of December 31, 2004 (with respect to the balance sheet information using currently available fair value information) or as
of January 1, 2004 (with respect to statements of operations information). The unaudited pro forma condensed combined financial information shows the impact of the merger of Noble Energy and
Patina on the companies' respective historical financial positions and results of operations under the purchase method of accounting with Noble Energy treated as the acquirer. Under this method of
accounting, the assets and liabilities of Patina will be recorded by Noble Energy at their estimated fair values as of the date the merger is completed. The unaudited pro forma condensed combined
financialTD>
|
| |
63.00 |
|
|
2,847,429 |
|
0.6100 |
|
|
38.4300 |
|
|
38.4329 |
|
61.5 |
|
38.5 |
|
| |
62.50 |
|
|
2,833,533 |
|
0.6119 |
|
|
38.2438 |
|
|
38.2454 |
|
61.3 |
|
38.7 |
|
| |
62.00 |
|
|
2,819,637 |
|
0.6138 |
|
|
38.0556 |
|
|
38.0578 |
|
61.1 |
|
38.9 |
|
| |
61.50 |
|
|
2,805,740 |
|
0.6158 |
|
|
37.8717 |
|
|
37.8702 |
|
60.9 |
|
39.1 |
|
| |
61.00 |
|
|
2,791,844 |
|
0.6177 |
|
|
37.6797 |
|
|
37.6827 |
|
60.7 |
|
39.3 |
|
| |
60.50 |
|
|
2,777,948 |
|
0.6198 |
|
|
37.4979 |
|
|
37.4951 |
|
60.5 |
|
39.5 |
|
| |
60.00 |
|
|
2,764,052 |
|
0.6218 |
|
|
37.3080 |
|
|
37.3076 |
|
60.3 |
|
39.7 |
|
| |
59.50 |
|
|
2,750,156 |
|
0.6239 |
|
|
37.1221 |
|
|
37.1200 |
|
60.1 |
|
39.9 |
|
| |
The
merger agreement was announced on December 16, 2004 and provides for Noble Energy to issue approximately 27.3 million shares of common stock and $1.1 billion in
cash consideration to Patina common stockholders (in each case subject to upward adjustment in the event that any shares of Patina common stock are issued in accordance with the merger agreement
pursuant to the exercise of Patina stock options or Patina warrants or otherwise). The unaudited pro forma condensed combined financial information has been derived from and should be read together
with the historical consolidated financial statements and the related notes of both Noble Energy and Patina, which are incorporated in this document by reference.
The
unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the
companies actually been combined and had the impact of possible revenue enhancements, expense efficiencies, asset dispositions and share repurchases, among other factors, been considered. In addition,
as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial information, the allocation of the purchase price reflected in the pro forma condensed
combined financial information is subject to adjustment and may vary from the actual purchase price allocation that will be recorded upon the effective time of the merger.
103
Noble Energy, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2004
(Amounts in thousands)
|
|
Noble
Energy
|
|
Patina
|
|
Adjustments
|
|
Pro
Forma
Combined
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cash and cash equivalents |
|
$ |
179,794 |
|
$ |
3,024 |
|
$ |
(3,024 |
)(a) |
$ |
179,794 |
|
| |
Accounts receivable — trade, net |
|
|
407,349 |
|
|
83,444 |
|
|
— |
|
|
490,793 |
|
| |
Derivative financial instruments |
|
|
28,733 |
|
|
7,256 |
|
|
(7,256 |
)(a) |
|
28,733 |
|
| |
Materials and supplies inventories |
|
|
12,109 |
|
|
13,592 |
|
|
— |
59.00
|
|
2,736,259 |
|
0.6260 |
|
|
36.9340 |
|
|
36.9324 |
|
59.9 |
|
40.1 |
|
| |
58.50 |
|
|
2,722,363 |
|
0.6281 |
|
|
36.7439 |
|
|
36.7449 |
|
59.7 |
|
40.3 |
|
| |
58.00 |
|
|
2,708,467 |
|
0.6303 |
|
|
36.5574 |
|
|
36.5573 |
|
59.5 |
|
40.5 |
|
Assuming a hypothetical Average Noble Energy Common Stock Value of $61.54, which was the closing price of Noble Energy common stock on
December 15, 2004, the day prior to the announcement of the proposed merger, the merger would have a value of approximately $37.88 per share of Patina common stock. Assuming a hypothetical
Average Noble Energy Common Stock Value of $68.95, which was the closing price of Noble Energy common stock on April 11, 2005, the last business day prior to the date of this document, the
merger would have a value of approximately $40.66 per share of Patina common stock. Assuming a hypothetical Average Noble Energy Common Stock Value of $68.2020 based on the volume-weighted average of
the trading sale prices per share of Noble Energy common stock during the 10 consecutive trading days ended three calendar days before the mailing of this joint proxy statement/prospectus, the merger
would have a value of approximately $40.38 per share of Patina common stock.
The
actual value of the cash consideration or number of shares of Noble Energy common stock that you will receive for each share of Patina common stock you hold may differ from the
hypothetical amounts shown in this example because the actual amounts will be determined after the effective time of the merger based on a formula set forth in the merger agreement and described in
this document.
6
No assurance can be given that the current fair market value of Noble Energy common stock will be equivalent to the fair market value of Noble Energy common stock
on the date that the merger consideration is received by a Patina stockholder or at any other time. The actual fair market value of the Noble Energy common stock received by Patina stockholders will
depend upon the market price of Noble Energy common stock upon receipt, which may be higher or lower than the Average Noble Energy Common Stock Value or the market price of Noble Energy common stock
on the date the merger was announced, on the date this document is mailed to Patina stockholders, on the date a Patina stockholder makes an election with respect to the merger consideration, or on the
date of the special meeting of Patina stockholders.
If You Are a Patina Stockholder, You May Receive a Different Form or Combination of Merger Consideration Than What You Elect (Page 66)
You may elect to receive cash, shares of Noble Energy common stock or a combination of cash and Noble Energy common stock in exchange for your shares of Patina
common stock. However, since Noble Energy is issuing a fixed number of shares of Noble Energy common stock and paying a fixed amount of cash (in each case subject to upward adjustment in the event
that any shares of Patina common stock are issued in accordance with the merger agreement pursuant to the exercise of Patina stock options or Patina warrants or otherwise), you cannot be certain of
receiving the form or combination of consideration that you elect with respect to all of your shares of Patina common stock. If the elections result in an oversubscription of the pool of cash or Noble
Energy common stock, certain procedures for allocating cash and Noble Energy common stock will be followed by the exchange agent. See "The Merger—Conversion of Shares; Exchange of
Certificates; Elections as to Form of Consideration; Allocations—Allocation" beginning on page 69 of this document.
In Order To Make an Election, Patina Stockholders Must Properly Complete and Deliver the Election Form (Page 66)
If you are a Patina stockholder, you have received together with this joint proxy statement/prospectus an election form with instructions for making cash and
stock elections. You must properly complete and deliver to the exchange agent your election form along with your stock certificates (or a properly completed notice of guaranteed delivery). Do not send
your stock certificates or election form with your proxy card.
Election
forms and stock certificates (or a properly completed notice of guaranteed delivery) must be received by the exchange agent by the election deadline, which is 5:00 p.m.,
Houston, Texas time, on May 10, 2005. Once you tender your stock certificates to the exchange agent, you may not transfer yoTD WIDTH="2%"> |
|
25,701 |
|
| |
Income taxes receivable |
|
|
— |
|
|
7,137 |
|
|
— |
|
|
7,137 |
|
| |
Deferred taxes |
|
|
13,039 |
|
|
54,817 |
|
|
25,144 |
(a) |
|
93,000 |
|
| |
Other current assets |
|
|
28,278 |
|
|
11,950 |
|
|
(11,950 |
)(a) |
|
28,278 |
|
| |
Probable insurance claims |
|
|
65,000 |
|
|
— |
|
|
— |
|
|
65,000 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Current Assets |
|
|
734,302 |
|
|
181,220 |
|
|
2,914 |
|
|
918,436 |
|
| |
|
|
|
|
|
|
|
|
|
| Property, Plant and Equipment, at cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Proved properties |
|
|
4,142,078 |
|
|
1,884,003 |
|
|
370,597 |
(a) |
|
6,396,678 |
|
| |
Unproved properties |
|
|
150,483 |
|
|
9,066 |
|
|
1,012,734 |
(a) |
|
1,172,283 |
|
| |
Other PP&E |
If
you fail to submit a properly completed election form, together with your stock certificates (or a properly completed notice of guaranteed delivery), prior to the election deadline,
you will be deemed not to have made an election. As a holder making no election, you will be paid value per share equivalent to the amount paid per share to holders making elections, but you may be
paid all in cash, all in Noble Energy common stock, or in part cash and in part Noble Energy common stock, depending on the remaining pool of cash and Noble Energy common stock available for paying
merger consideration after honoring the cash elections and stock elections that other Patina stockholders have made.
If
you own shares of Patina common stock in "street name" through a broker or other nominee and you wish to make an election, you should seek instructions from the broker or other
nominee holding your shares concerning how to make your election.
If
the merger agreement is not adopted and the merger and the other transactions contemplated by the merger agreement are not approved by Patina stockholders, or the stock issuance is
not
7
approved
by Noble Energy stockholders, stock certificates will be returned by the exchange agent by first class mail or through book-entry transfer (in the case of shares of Patina common
stock delivered in book-entry form to the exchange agent).
The Special Meetings and Voting
Noble Energy Stockholder Meeting (Page 24)
The Noble Energy special meeting will be held in Houston on May 11, 2005 at 9:30 a.m., local time. At the special meeting, you will be asked:
- 1.
- to
approve the issuance of Noble Energy common stock in the merger;
- 2.
- to
approve an amendment to the certificate of incorporation of Noble Energy to increase the number of authorized shares of Noble Energy common stock from 100 million shares to
250 million shares; and
- 3.
- to
transact any other business as may properly be brought before the special meeting or any adjournment or postponement of the special meeting.
You
can vote at the Noble Energy special meeting if you owned Noble Energy common stock at the close of business on March 31, 2005. On that date, there were
59,237,440 shares of Noble Energy common stock outstanding and entitled to vote, approximately 0.16% of which were owned and entitled to be voted by Noble Energy directors and executive
officers and their affiliates. You can cast one vote for each share of Noble Energy common stock you owned on that date. In order to approve the issuance of Noble Energy common stock in connection
with the merger, a greater number of votes cast in favor of the proposal than the number of votes cast opposing the proposal is required, so long as the total number of votes cast on the proposal
represents over 50% of the shares entitled to vote. In order to approve the amendment to the certificate of incorporation, the holders of a majority of the outstanding shares of Noble Energy common
stock entitled to vote must vote in favor of doing so.
Patina Stockholder Meeting (Page 27)
The Patina special meeting will be held in Denver on May 11, 2005 at 8:30 a.m., local time. At the special meeting, you will be asked:
- 1.
- to
adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement; and
- 2.
- to
transact any other business as may properly be brought before the special meeting or any adjournment or postponement of the special meeting.
You
can vote at the Patina special meeting if you owned Patina common stock at the close of business on March 31, 2005. On that date, there were 74,054,609 shares of Patina
common stock outstanding and entitled to vote, approximately 6.4% of which were owned and entitled to be voted by Patina directors and executive officers and their affiliates. You can cast one vote
for each share of Patina common stock you owned on that date. In order to adopt the merger agreement and approve the merger and the
other transactions contemplated by the merger agreement, the holders of a majority of the outstanding shares of Patina common stock entitled to vote must vote in favor of doing so.
Comparative Market Price and Dividend Information
Comparative Market Price Information (Page 116)
Noble Energy common stock trades on the NYSE under the symbol "NBL," and Patina common stock trades on the NYSE under the symbol "POG."
The
following table lists the closing prices of Noble Energy common stock and Patina common stock on December 15, 2004, the last trading day before we announced the merger, and on
April 8, 2005, the last practicable date prior to distribution of this document. The following table also presents
8
the
equivalent pro forma prices for Patina common stock on those dates, as determined by multiplying the closing prices of Noble Energy common stock on those dates by 0.6156 and 0.5921, each
representing the fraction of a share of Noble Energy common stock that Patina stockholders electing to receive Noble Energy common stock would receive in the merger for each share of Patina common
stock, based on (1) a hypothetical Average Noble Energy Common Stock Value of $61.54, which was the closing price of Noble Energy common stock on December 15, 2004, the day prior to the
announcement of the proposed merger and (2) a hypothetical Average Noble Energy Common Stock Value of $68.2020 based on the volume-weighted average of the trading sale prices per share of Noble
> |
|
56,707 |
|
|
18,622 |
|
|
(8,681 |
)(a) |
|
66,648 |
|
| |
Less: accumulated depreciation, depletion and amortization |
|
|
(2,016,318 |
) |
|
(690,075 |
) |
|
690,075 |
(a) |
|
(2,016,318 |
) |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total property, plant and equipment, net |
|
|
2,332,950 |
|
|
1,221,616 |
|
|
2,064,725 |
|
|
5,619,291 |
|
| |
|
|
|
|
|
|
|
|
|
| Investment in Unconsolidated Subsidiaries |
|
|
231,795 |
|
|
— |
|
|
— |
|
|
231,795 |
|
| Other Assets |
|
|
144,124 |
|
|
26,203 |
|
|
29,810 |
(a) |
|
200,137 |
|
| Goodwill |
|
|
— |
|
|
— |
|
|
1,103,159 |
(a) |
|
1,103,159 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Assets |
|
$ |
3,443,171 |
|
$ |
1,429,039 |
|
$ |
3,200,608 |
|
$ |
8,072,818 |
|
| |
|
|
|
|
|
|
|
|
|
| Liabilities and Shareholders' Equity |
|
|
|
|
|
Noble Energy
Common Stock
|
|
Patina Oil & Gas
Corporation
Common Stock
|
|
Patina Oil & Gas
Corporation
Equivalent
Per Share
|
| December 15, 2004 |
|
$ |
61.54 |
|
$ |
31.92 |
|
$ |
37.88 |
| April 8, 2005 |
|
|
68.55 |
|
|
40.21 |
|
|
40.38 |
The
market prices of both Noble Energy common stock and Patina common stock will fluctuate prior to the merger. You should obtain current stock price quotations for Noble Energy common
stock and Patina common stock. You can get these quotations from a newspaper, on the Internet or by calling your broker.
Dividend Policy of Noble Energy (Page 117)
The holders of Noble Energy common stock receive dividends if and when declared by the Noble Energy board of directors out of legally available funds. Noble
Energy declared a dividend of $0.05 per share of common stock for each quarter of 2004. Following the completion of the merger, Noble Energy expects to continue paying quarterly cash dividends on a
basis consistent with past practice. However, the declaration and payment of dividends will depend upon business conditions, operating results and capital requirements, and consideration by the Noble
Energy board of directors of other relevant factors.
Matters to Be Considered in Deciding How to Vote
Noble Energy's Financial Advisor Has Provided an Opinion to the Noble Energy Board of Directors as to the Fairness of the Merger Consideration, from a Financial Point of View,
to Noble Energy (Page 42)
In connection with the merger, Noble Energy retained J.P. Morgan Securities Inc. ("JPMorgan") as its financial advisor. In deciding to approve the
merger agreement, the Noble Energy board of directors considered the oral opinion of JPMorgan provided to the Noble Energy board of directors on December 15, 2004 (as subsequently confirmed in
writing in an opinion dated December 15, 2004), that, as of the date of the opinion and based upon and subject to the assumptions made, procedures followed, matters considered and limitations
of review described in its opinion, the aggregate merger consideration to be paid by Noble Energy pursuant to the merger was fair from a financial point of view to Noble Energy.
The
full text of the written opinion of JPMorgan, dated December 15, 2004, which sets forth, among other things, the assumptions made, procedures followed, matters considered and
limitations on the review undertaken by JPMorgan in connection with the opinion, is attached to this document as Annex B. JPMorgan provided its opinion for the information and assistance of the Noble
Energy board of directors in connection with its consideration of the transaction contemplated by the merger agreement. The JPMorgan opinion is not a recommendation as to how any stockholder should
vote or act with respect to any matters relating to the proposed merger.
9
Patina's Financial Advisor Has Provided an Opinion to the Patina Board of Directors as to the Fairness of the Merger Consideration, from a Financial Point of View, to Patina's
Stockholders (Page 49)
In connection with the merger, Patina retained Petrie Parkman & Co., Inc. ("Petrie Parkman") as its financial advisor. In deciding to approve the merger
agreement, the Patina board of directors considered the oral opinion of Petrie Parkman provided to the Patina board of directors on December 15, 2004, and subsequently confirmed in writing,
that, as of the date of the opinion and based upon and subject to the matters set forth in its opinion, the merger consideration to be received by holders of Patina common stock (other than Noble
Energy, Merger Sub or Patina) in the merger was fair, from a financial point of view, to such holders.
The
full text of the written opinion of Petrie Parkman, dated December 15, 2004, which sets forth, among other things, the assumptions made, procedures followed, matters
considered, and qualifications and limitations of the review undertaken by Petrie Parkman in rendering its opinion, is attached to this document as Annex C. Petrie Parkman provided its opinion for the
information and assistance of the
Patina board of directors in connection with its consideration of the transaction contemplated by the merger agreement. The Petrie Parkman opinion is not a recommendation as to how any Patina
stockholder should vote on the merger.
The Merger Generally Will Be Tax-Free to Holders of Patina Common Stock to the Extent They Receive Noble Energy Common Stock (Page 87)
Based on the opinions of Cravath, Swaine & Moore LLP ("Cravath"), outside counsel to Patina, and Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden,
Arps"), outside counsel to Noble Energy, we expect that the material United States federal income tax consequences of the merger to Patina stockholders will be as follows:
- •
- If
you exchange Patina common stock solely for cash in the merger, you generally should recognize capital gain or loss equal to the difference betweeD>
| |
|
|
|
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Accounts payable — trade |
|
$ |
431,521 |
|
$ |
105,822 |
|
$ |
— |
|
$ |
537,343 |
|
| |
Derivative financial instruments |
|
|
50,304 |
|
|
151,512 |
|
|
(151,512 |
)(a) |
|
50,304 |
|
| |
Asset retirement obligation |
|
|
79,568 |
|
|
— |
|
|
— |
|
|
79,568 |
|
| |
Interest payable |
|
|
11,439 |
|
|
— |
|
|
— |
|
|
11,439 |
|
| |
Other current liabilities |
|
|
27,320 |
|
|
28,135 |
|
|
— |
|
|
55,455 |
|
| |
Income taxes — current |
|
|
64,852 |
|
|
— |
|
|
— |
|
|
64,852 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Current Liabilities |
|
|
665,004 |
|
|
285,469 |
|
|
(151,512 |
) |
|
798,961 |
|
| |
|
|
|
|
|
|
|
|
|
Patina Directors and Executive Officers Have Interests in the Merger that are in Addition to their Interests as Stockholders (Page 95)
In considering the recommendation of the Patina board of directors with respect to the adoption of the merger agreement and the approval of the merger and the
other transactions contemplated by the merger agreement, Patina stockholders should be aware that certain executive officers and directors
10
of
Patina have interests in the merger that are in addition to the interests of other stockholders of Patina generally. For more information on these interests, see page 95.
Boards of Directors' Recommendations to Stockholders (Page 37)
The Noble Energy board of directors believes that the merger and the amendment to Noble Energy's certificate of incorporation are fair to and in the best
interests of the Noble Energy stockholders, and recommends that Noble Energy stockholders vote "FOR" the approval of the issuance of Noble Energy common stock in the merger and "FOR" approval of the
amendment to Noble Energy's certificate of incorporation.
The
Patina board of directors believes that the merger is fair to and in the best interests of the Patina stockholders, and recommends that Patina stockholders vote "FOR" the adoption of
the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement.
To
review the background and reasons for the merger in greater detail see "The Merger—Background of the Merger" beginning on page 34 of this document, and to review
certain risks related to the merger, see "Risk Factors" beginning on page 18 of this document, "The Merger—Noble Energy's Reasons for the Merger; Recommendation of the Stock
Issuance in the Merger by the Noble Energy Board of Directors" beginning on page 37 of this document and "The Merger—Patina's Reasons for the Merger; Recommendation of the Merger by
the Patina Board of Directors" beginning on page 39 of this document.
Board of Directors After the Merger (Page 95)
After the merger, the board of directors of the combined company will have seven members, consisting of the five current members of Noble Energy's board of
directors and two current members of the Patina board of directors.
The Merger is Expected to Occur in the Second Quarter of 2005 (Page 71)
The merger will occur after all the conditions to its completion have been satisfied or, if permissible, waived. Currently, we anticipate that the merger will
occur in the second quarter of 2005. However, we cannot assure you when or if the merger will occur. If the merger has not been completed on or before August 31, 2005, either Noble Energy or
Patina may terminate the merger agreement unless the failure to complete the merger by that date is due to the failure of the party seeking to terminate the merger agreement to fulfill any material
obligations under the merger agreement or a material breach of the merger agreement by such party.
Hedging Activities in Connection with the Merger (Page 94)
In connection with the announcement of the merger agreement, in order to reduce the price sensitivity associated with future oil and gas prices, Noble Energy
entered into additional financial derivative transactions ("hedges") using its own production that was available to be hedged. The natural gas hedges totaled 130 million British thermal units
("MMBTU") per day starting in May 2005 through December 2005 and 170 MMBTUs per day for 2006 through 2008. The crude oil hedges totaled 13,100 barrels of oil per day starting in
May 2005 through December 2005 and approximately 16,700 barrels of oil per day for 2006 through 2008. These hedges consist of fixed price swaps that average $6.167 per MMBTU for natural
gas and $39.30 per barrel of oil. Prior to the closing of the merger, Noble Energy may enter into additional financial derivative transactions using its existing production.
The
merger agreement provides that if Noble Energy terminates the merger agreement within three business days of receiving notification that the Patina board of directors has made an
adverse recommendation change, or resolved to make such a change (in either case for any reason other than a
11
superior
proposal), Patina would be required to reimburse Noble Energy for up to $45.0 million of actual losses realized by Noble Energy with respect to certain hedges for the years 2006
through 2008. In addition, pursuant to the merger agreement, prior to the closing of the merger, Patina has agreed to terminate its existing hedge positions.
For
additional information regarding Noble Energy's hedges, including h#CCEEFF" VALIGN="BOTTOM">
Deferred Income Taxes |
|
|
183,351 |
|
|
203,473 |
|
|
725,143 |
(a) |
|
1,111,967 |
|
| Deferred Compensation Liability |
|
|
— |
|
|
103,634 |
|
|
(123 |
)(a) |
|
103,511 |
|
| Asset Retirement Obligation |
|
|
175,415 |
|
|
31,461 |
|
|
— |
|
|
206,876 |
|
| Other Noncurrent Liabilities |
|
|
79,157 |
|
|
97,183 |
|
|
(66,167 |
)(a) |
|
110,173 |
|
| Long-Term Debt |
|
|
880,256 |
|
|
297,000 |
|
|
1,334,392 |
(a) |
|
2,511,648 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Liabilities |
|
|
1,983,183 |
|
|
1,018,220 |
|
|
1,841,733 |
|
|
4,843,136 |
|
| |
|
|
|
|
|
|
|
|
|
| Shareholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Common stock |
|
|
208,576 |
|
|
728 |
|
|
90,349 |
(a) |
|
299,653 |
|
| |
Capital in excess of par value |
|
|
500,034 |
|
|
207,017 |
|
|
1,519,098 |
edging not connected with the announcement of the merger agreement, please see Noble Energy's previous SEC filings.
See "Where You Can Find More Information" on page 131.
Completion of the Merger is Subject to Customary Conditions (Page 71)
The completion of the merger is subject to a number of customary conditions being met, including the adoption by Patina stockholders of the merger agreement and
approval by Patina stockholders of the merger and the other transactions completed by the merger agreement, the approval by Noble Energy stockholders of the issuance of Noble Energy common stock in
the merger and the approvals of regulatory agencies.
Where
the law permits, a party to the merger agreement could elect to waive a condition to its obligation to complete the merger, even if that condition has not been satisfied. We cannot
be certain when (or if) the conditions to the merger will be satisfied or waived or that the merger will be completed.
Termination of the Merger Agreement; Fees Payable (Page 83)
We may terminate the merger agreement by mutual written consent at any time. Either of us also may terminate the merger agreement if:
- •
- the
merger is not completed on or before August 31, 2005 (although this termination right is not available to a party whose failure to fulfill any material
obligations under, or material breach of, the merger agreement resulted in the failure to complete the merger by that date);
- •
- a
court or other governmental entity of competent jurisdiction issues a final nonappealable order having the effect of permanently enjoining or otherwise prohibiting the
merger;
- •
- the
stockholders of Patina do not adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement at the Patina
stockholders' meeting;
- •
- the
stockholders of Noble Energy do not approve the issuance of Noble Energy common stock in the merger at the Noble Energy stockholders' meeting;
- •
- the
other party is in breach of its representations, warranties, covenants or agreements set forth in the merger agreement and the breach rises to a level that would excuse
the terminating party's obligation to complete the merger and is not cured in 30 days or cannot be cured by August 31, 2005; or
- •
- the
other party's board of directors adversely changes its recommendation that its stockholders vote "FOR" adoption of the merger agreement and approval of the merger and
the other transactions contemplated by the merger agreement (in the case of Patina) or the issuance of Noble Energy shares in the merger (in the case of Noble Energy).
The
merger agreement provides that in limited circumstances described more fully beginning on page 83 of this document, if there occurs a change in Patina's or Noble Energy's
recommendation that its stockholders adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement (in the case of Patina), or approve the issuance
of shares of Noble Energy common stock (in the case of Noble Energy), or if the merger agreement is otherwise terminated after either Noble Energy or Patina shall have received a third party
acquisition proposal and such party enters into an agreement with respect to that proposal within 12 months of termination of the merger agreement then such party will be required to pay a
termination fee of $100 million to the other party. The effect of these termination fees could be to discourage other companies from
12
seeking
to acquire or merge with Patina or Noble Energy prior to completion of the merger, and could cause Patina or Noble Energy to reject any acquisition proposal from a third party which does not
take into account the termination fee. In addition, if Noble Energy terminates the merger agreement within three business days of receiving notification that the Patina board of directors has made an
adverse recommendation change, or resolved to make such a change (in either case for any reason other than a superior proposal), Patina would be required to reimburse Noble Energy for up to
$45.0 million of actual losses realized with respect to certain hedging transactions terminated by Noble Energy during the three business days following such termination of the merger
agreement.
We May Amend the Terms of the Merger and Waive Rights Under the Merger Agreement (Page 90)
We may jointly amend the terms of the merger agreement, and either party may waive its right to require the other party to adhere to any of those terms, to the
extent legally permissible. However, after the Patina stockholders adopt the merger agreement, they must approve any amendment or waiver that reduces or changes the form of the consideration that will
be received by them, changes any term of the certificate of incorporation of Merger Sub or adversely affects the Patina stockholders.
Appraisal Rights (Page 94)
Shares of Patina common stock outstanding immediately prior to the effective time of the merger and held by a holder who has not voted in favor of, or consented
in writing to, the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and who has delivered a written demand for appraisal of
such shares in accordance with Section 262 of the DGCL will not be converted into the right to receive the merger consideration, unless and until the dissenting holder fails to perfect or
effectively withdraws or otherwise loses his or her right to appraisal and payment under the DGCL. If, after the effective time of the merger, a dissenting stockholder fails to perfect or effectively
withdraws or loses his or her right to appraisal, his or her shares of Patina common stock will be treated as if they had been converted as of the effective
time of the merger into the right to receive the merger consideration without interest or dividends thereon.
Regulatory Matters (Page 94)
United States antitrust laws prohibit Noble Energy and Patina from completing the merger until after they have furnished certain information and materials to the
Antitrust Division of the Department of Justice and the Federal Trade Commission and a required waiting period has ended. Noble Energy was granted early termination of the waiting period by the
Department of Justice and the ; (a) |
|
2,226,149 |
|
| |
Treasury stock |
|
|
(75,956 |
) |
|
(6,945 |
) |
|
(40,553 |
)(a) |
|
(123,454 |
) |
| |
Deferred compensation |
|
|
(1,671 |
) |
|
(1,011 |
) |
|
1,011 |
(a) |
|
(1,671 |
) |
| |
Retained earnings |
|
|
843,792 |
|
|
341,492 |
|
|
(341,492 |
)(a) |
|
843,792 |
|
| |
Accumulated other comprehensive loss |
|
|
(14,787 |
) |
|
(130,462 |
) |
|
130,462 |
(a) |
|
(14,787 |
) |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
1,459,988 |
|
|
410,819 |
|
|
1,358,875 |
|
|
3,229,682 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Liabilities and Shareholders' Equity |
|
$ |
3,443,171 |
|
$ |
1,429,039 |
|
$ |
3,200,608 |
|
$ |
8,072,818 |
|
| |
|
|
|
|
|
|
|
|
|
See
accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
104
Noble Energy, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2004
(Amounts in thousands except per share)
|
|
Noble Energy
|
|
Patina
|
Noble Energy will Account for the Merger Using the "Purchase" Method (Page 95)
Noble Energy will account for the merger as a purchase for financial reporting purposes.
Comparison of the Rights of Patina Stockholders and Noble Energy Stockholders (Page 120)
Patina stockholders who do not receive solely cash consideration in the merger will become Noble Energy stockholders upon the effective time of the merger, and
their rights as such will be governed by Noble Energy's certificate of incorporation and bylaws. See "Comparison of Rights of Holders of Noble Energy Common Stock and Patina Common Stock" beginning on
page 120 for a description of the material differences between the rights of Noble Energy stockholders and Patina stockholders.
13
NOBLE ENERGY, INC.
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
Set forth below are highlights from Noble Energy's consolidated financial data as of and for the years ended December 31, 2000 through 2004. This
information should be read together with Noble Energy's consolidated financial statements and related notes included in Noble Energy's Annual Report on Form 10-K for the year ended
December 31, 2004, which is incorporated by reference in this document and from which this information is derived.
Selected Historical Financial Data of Noble Energy, Inc.
|
|
Year Ended December 31,
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2001
|
|
2000
|
|
|
|
(thousands of dollars, except per share amounts)
|
|
| Statement of Operations Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
1,351,176 |
|
$ |
1,005,950 |
|
$ |
701,332 |
|
$ |
794,588 |
|
$ |
729,168 |
|
| Costs and Expenses |
|
|
835,135 |
|
|
864,311 |
|
|
673,436 |
|
|
644,458 |
|
|
513,579 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Income before taxes |
|
|
516,041 |
|
|
1TH>
| Adjustments
|
|
Pro Forma Combined
|
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Oil and gas sales and royalties |
|
$ |
1,174,199 |
|
$ |
544,815 |
|
$ |
17,795 |
(b) |
$ |
1,736,809 |
|
| |
Gathering, marketing and processing |
|
|
49,250 |
|
|
— |
|
|
— |
|
|
49,250 |
|
| |
Electricity sales |
|
|
58,627 |
|
|
— |
|
|
— |
|
|
58,627 |
|
| |
Income from unconsolidated subsidiaries |
|
|
69,100 |
|
|
— |
|
|
— |
|
|
69,100 |
|
| |
Other revenues |
|
|
— |
|
|
16,186 |
|
|
(16,186 |
)(e) |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total revenues |
|
|
1,351,176 |
|
|
561,001 |
|
|
1,609 |
|
|
1,913,786 |
|
| |
|
|
|
|
|
|
|
|
|
| Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Oil and gas operations |
|
|
|
|
27,896 |
|
|
150,130 |
|
|
215,589 |
|
| Income tax provision |
|
|
202,191 |
|
|
51,747 |
|
|
19,801 |
|
|
64,967 |
|
|
78,523 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Income from continuing operations |
|
|
313,850 |
|
|
89,892 |
|
|
8,095 |
|
|
85,163 |
|
|
137,066 |
|
| Discontinued operations, net of tax |
|
|
14,860 |
|
|
(6,061 |
) |
|
9,557 |
|
|
48,412 |
|
|
54,531 |
|
| Cumulative effect of change in accounting principle, net of tax |
|
|
— |
|
|
(5,839 |
) |
|
— |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
328,710 |
|
$ |
77,992 |
|
$ |
17,652 |
|
$ |
133,575 |
|
$ |
191,597 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Basic earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income from continuing operations |
158,695 |
|
|
71,596 |
|
|
— |
|
|
230,291 |
|
| |
Production taxes and transportation |
|
|
46,575 |
|
|
46,034 |
|
|
17,795 |
(b) |
|
110,404 |
|
| |
Oil and gas exploration |
|
|
117,001 |
|
|
2,058 |
|
|
— |
|
|
119,059 |
|
| |
Gathering, marketing and processing |
|
|
37,699 |
|
|
— |
|
|
— |
|
|
37,699 |
|
| |
Electricity generation |
|
|
47,788 |
|
|
— |
|
|
— |
|
|
47,788 |
|
| |
Depreciation, depletion and amortization |
|
|
308,855 |
|
|
126,849 |
|
|
42,350 |
(c) |
|
478,054 |
|
| |
Impairment of operating assets |
|
|
9,885 |
|
|
— |
|
|
— |
|
|
9,885 |
|
| |
Selling, general and administrative |
|
|
59,091 |
|
|
26,390 |
|
|
— |
|
|
85,481 |
|
| |
Deferred compensation adjustment |
|
|
— |
|
|
31,722 |
|
|
— |
|
|
31,722 |
|
| |
Accretion of asset retirement obligation |
|
|
9,352 |
|
|
— |
|
|
1,499 |
(c) |
|
10,851 |
|
$ |
5.39 |
|
$ |
1.58 |
|
$ |
0.14 |
|
$ |
1.51 |
|
$ |
2.45 |
|
| |
Discontinued operations, net of tax |
|
|
0.25 |
|
|
(0.11 |
) |
|
0.17 |
|
|
0.85 |
|
|
0.97 |
|
| |
Cumulative effect, net of tax |
|
|
— |
|
|
(0.10 |
) |
|
— |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
5.64 |
|
$ |
1.37 |
|
$ |
0.31 |
|
$ |
2.36 |
|
$ |
3.42 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income from continuing operations |
|
$ |
5.30 |
|
$ |
1.56 |
|
$ |
0.14 |
|
$ |
1.49 |
|
$ |
2.42 |
|
| |
Discontinued operations, net of tax |
|
|
0.25 |
|
|
(0.10 |
) |
|
0.17 |
|
|
0.84 |
|
|
0.96 |
|
| |
Cumulative effect, net of tax (1) |
|
|
— |
|
|
SIZE=2>
| |
Loss on involuntary conversion of assets |
|
|
1,000 |
|
|
— |
|
|
— |
|
|
1,000 |
|
| |
Interest expense |
|
|
48,227 |
|
|
12,563 |
|
|
45,305 |
(d) |
|
106,095 |
|
| |
Other expense (income), net |
|
|
(9,033 |
) |
|
301 |
|
|
(16,186 |
)(e) |
|
(24,918 |
) |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Costs and Expenses |
|
|
835,135 |
|
|
317,513 |
|
|
90,763 |
|
|
1,243,411 |
|
| |
|
|
|
|
|
|
|
|
|
| Income Before Taxes |
|
|
516,041 |
|
|
243,488 |
|
|
(89,154 |
) |
|
670,375 |
|
| Income Tax Provision (Benefit) |
|
|
202,191 |
|
|
92,525 |
|
|
(34,959 |
)(f) |
|
259,757 |
|
| |
|
|
|
|
|
|
|
|
|
| Income From Continuing Operations |
|
$ |
313,850 |
|
$ |
150,963 |
|
$ |
(54,195 |
) |
$ |
410,618 |
|
| |
|
|
|
|
|
|
|
|
|
| Income From Continuing Operations Per Share
| (0.10 |
) |
|
— |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
5.55 |
|
$ |
1.36 |
|
$ |
0.31 |
|
$ |
2.33 |
|
$ |
3.38 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
58,275 |
|
|
56,964 |
|
|
57,196 |
|
|
56,549 |
|
|
55,999 |
|
| |
Diluted |
|
|
59,226 |
|
|
57,539 |
|
|
57,763 |
|
|
57,303 |
|
|
56,755 |
|
Cash dividends per common share |
|
$ |
0.20 |
|
$ |
0.17 |
|
$ |
0.16 |
|
$ |
0.16 |
|
$ |
0.16 |
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment, net |
|
$ |
2,332,950 |
|
$ |
2,099,741 |
|
$ |
2,139,785 |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
$ |
5.39 |
|
|
|
|
|
|
|
$ |
4.85 |
|
| |
Diluted |
|
$ |
5.30 |
|
|
|
|
|
|
|
$ |
4.69 |
|
| Weighted Average Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
58,275 |
|
|
|
|
|
26,366 |
(g) |
|
84,641 |
|
| |
Diluted |
|
|
59,226 |
|
|
|
|
|
28,291 |
(g) |
|
87,517 |
|
See
accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
105
NOBLE ENERGY, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
As of and For the Year Ended December 31, 2004
Note 1 Basis of Presentation
The accompanying unaudited pro forma condensed combined balance sheet of Noble Energy as of December 31, 2004 has been prepared to give effect to the
merger as if it had occurred on December 31, 2004.
The
accompanying unaudited pro forma condensed combined statement of operations of Noble Energy for the year ended December 31, 2004 has been prepared to give effect to the merger
as if the merger had occurred on January 1, 2004.
Noble
Energy and Patina both use the successful efforts method of accounting for their oil and gas producing activities.
Noble
Energy will account for the merger using the purchase method of accounting for business combinations. Under the purchase method of accounting, Noble Energy is deemed to be the
acquirer for accounting purposes based on a number of factors determined in accordance with GAAP. The purchase method of accounting requires that Patina assets acquired and liabilities assumed by
Noble Energy be recorded at their estimated fair values.
Note 2 Pro Forma Adjustments Related to the Merger
The unaudited pro forma condensed combined balance sheet includes the following adjustments:
- (a)
- These
adjustments reflect the elimination of the components of Patina's historical stockholders' equity, the purchase price paid by Noble Energy and adjustments to the historical book
values of Patina's assets and liabilities as of December 31, 2004 to their estimated fair values, in accordance with purchase accounting. The following table represents the preliminary
allocation of the total purchase price of Patina to the assets acquired and the liabilities assumed based on the preliminary estimates of fair value.
| 1,953,211 |
|
$ |
1,485,123 |
|
Total assets |
|
$ |
3,443,171 |
|
$ |
2,842,649 |
|
$ |
2,730,015 |
|
$ |
2,604,255 |
|
$ |
2,002,819 |
|
Long-term obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Long-term debt, net of current portion |
|
|
880,256 |
|
|
776,021 |
|
|
977,116 |
|
|
961,118 |
|
|
648,567 |
|
| |
Deferred income taxes |
|
|
183,351 |
|
|
163,146 |
|
|
201,939 |
|
|
176,259 |
|
|
117,048 |
|
| |
Asset retirement obligations |
|
|
175,415 |
|
|
101,804 |
|
|
— |
|
|
— |
|
|
— |
|
| |
Other noncurrent liabilities |
|
|
79,157 |
|
|
80,176 |
|
|
69,820 |
|
|
75,629 |
|
|
61,639 |
|
| Shareholders' equity |
|
|
1,459,988 |
|
|
1,073,573 |
|
|
1,009,386 |
|
|
1,010,198 |
|
|
849,682 |
|
| Ratio of debt-to-book capital (2) |
|
|
0.38 |
|
|
0.46 |
|
|
0.50 |
|
|
0.50 |
|
|
0.44 |
|
|
|
|
(in thousands,
except stock price)
|
|
| |
Shares of Noble Energy common stock to be issued to Patina |
|
|
27,323 |
(i) |
| |
Average Noble Energy common stock price |
|
$ |
60.36 |
(i) |
| |
|
|
|
|
| |
Fair value of common stock to be issued |
|
$ |
1,649,118 |
|
| |
Cash consideration paid to Patina stockholders |
|
|
1,078,049 |
(i) |
| |
Plus: estimated cash consideration paid to Patina warrant holders |
|
|
8,894 |
(ii) |
| |
Plus: estimated Noble Energy merger costs |
|
|
17,500 |
(iii) |
| |
Plus: estimated fair value of Patina employee stock options and warrants |
|
|
168,074 |
(iv) |
| |
|
|
|
|
| |
Total Purchase Price |
|
|
2,921,635 |
OLOR="White" VALIGN="BOTTOM">
|
Other Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by operating activities |
|
$ |
708,186 |
|
|
602,770 |
|
$ |
506,955 |
|
$ |
628,154 |
|
$ |
562,578 |
|
| Net cash provided by (used in) investing activities |
|
|
(588,101 |
) |
|
(444,802 |
) |
|
(577,528 |
) |
|
(871,705 |
) |
|
(569,319 |
) |
| Net cash provided by (used in) financing activities |
|
|
(2,665 |
) |
|
(111,036 |
) |
|
12,778 |
|
|
293,636 |
|
|
26,968 |
|
| Interest expense, net |
|
|
48,227 |
|
|
46,977 |
|
|
47,709 |
|
|
38,007 |
|
|
31,642 |
|
- (1)
- Cumulative
effect of change in accounting principle for 2003 relates to the adoption of SFAS No. 143, Asset Retirement Obligations, on January 1, 2003.
- (2)
- Defined
as Noble Energy's total debt divided by total debt plus its equity.
14
PATINA OIL & GAS CORPORATION
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
Set forth below are highlights from Patina's consolidated financial data as of and for the years ended December 31, 2000 through 2004. This information
should be read together with Patina's consolidated financial statements and related notes included in Patina's Annual Report on Form 10-K for the year ended December 31,
2004, which is incorporated by reference in this document and from which this information is derived.
Selected Historical Financial Data of Patina Oil & Gas Corporation
|
|
Year Ended December 31,
|
|
|
|
2004
|
|
2003
|
|
2002
|
|
2001
|
|
2000
|
|
| &nbs
|
| |
Plus: liabilities assumed by Noble Energy |
|
|
|
|
| |
|
Current liabilities |
|
|
133,957 |
|
| |
Fair value of long-term debt, net of cash acquired |
|
|
526,949 |
(v) |
| |
Asset retirement obligations |
|
|
31,461 |
|
| |
Other non-current liabilities |
|
|
31,016 |
|
| |
Deferred compensation liability (see Note 3) |
|
|
103,511 |
|
| |
Deferred income taxes |
|
|
928,616 |
|
| |
|
|
|
|
| |
Total Purchase Price Plus Liabilities Assumed |
|
$ |
4,677,145 |
|
| |
|
|
|
|
106
|
|
|
(in thousands)
|
|
| |
Fair Value of Patina Assets: |
|
|
|
|
| |
Current assets |
|
$ |
184,134 |
|
| |
Proved oil and gas properties |
|
|
2,254,600 |
|
| |
Unproved oil and gas properties |
|
|
1,021,800 |
|
| |
Other non-current assets |
|
|
65,954 |
|
| |
Treasury stock held in deferred compensation plan (see Note 3) |
|
|
47,498 |
|
| |
Goodwill |
|
|
1,103,159 |
(vi) |
| |
|
|
|
|
| |
Total Fair Value of Patina Assets |
|
$ |
4,677,145 |
|
| |
|
|
|
|
- (i)
- Under
the terms of the merger agreement, total consideration for the shares of Patina is fixed at approximately $1p;
|
(thousands of dollars, except per share amounts)
|
|
| Statement of Operations Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
561,001 |
|
$ |
406,717 |
|
$ |
222,407 |
|
$ |
214,173 |
|
$ |
150,342 |
|
| Costs and Expenses |
|
|
317,513 |
|
|
255,896 |
|
|
133,529 |
|
|
116,881 |
|
|
94,963 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Income before taxes |
|
|
243,488 |
|
|
150,821 |
|
|
88,878 |
|
|
97,292 |
|
|
55,379 |
|
| Income tax provision |
|
|
92,525 |
|
|
57,312 |
|
|
31,171 |
|
|
35,025 |
|
|
12,953 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Income from continuing operations |
|
|
150,963 |
|
|
93,509 |
|
|
57,707 |
|
|
62,267 |
|
|
42,426 |
|
| Discontinued operations, net of tax |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Cumulative effect of change in accounting principle, net of tax |
|
(ii)In
accordance with the terms of the Patina warrants, upon closing of the merger, all of the warrants outstanding will be exercisable for the consideration that would have been
received in the merger by a holder of the number of shares of Patina common stock purchasable under such warrants, assuming such shares were no election shares and received the consideration received
by a majority of the no election shares. For purposes of preparing the unaudited pro forma condensed combined financial statements, we have assumed that (x) all 1.0 million Patina
warrants are outstanding as of the closing of the merger and (y) the warrants will become exercisable for 60% Noble Energy common stock and 40% cash. After applying the exchange ratio based on
an estimated average Noble Energy common stock price of $60.36, the warrants would be exercisable for approximately 375,095 shares of Noble Energy common stock and $8.9 million in cash.
(iii)The
total purchase price includes $17.5 million of estimated merger costs to be incurred by Noble Energy. These costs include investment banking expenses, legal and
accounting fees, printing expenses and other merger related costs. These costs have been added to long-term debt in the unaudited pro forma condensed combined balance sheet.
(iv)All
Patina stock options and, to the extent not paid in cash, Patina warrants will be converted in the merger into Noble Energy stock options and Noble Energy warrants. The fair
values of the Patina options and Patina warrants outstanding at December 31, 2004 were estimated using Black-Scholes valuation assumptions, including expected life, volatility, risk free
interest rates and the expected dividend yield.
107
- (v)
- The
fair value of long-term debt, net of cash acquired, was estimated as follows (in 000's):
| Patina debt balance, December 31, 2004 |
|
$ |
297,000 |
|
| Termination of hedges—current |
|
|
144,256 |
(1) |
| Termination of hedges—non current |
|
|
66,167 |
(1) |
| Return of third party margin deposits |
|
|
(11,950 |
)(1) |
| Estimated merger costs |
|
|
12,500 |
|
| Estimated employee benefit plan costs |
|
|
22,000 |
|
| Less cash acquired |
|
|
(3,024 |
) |
| |
|
|
|
| Total |
|
$ |
526,949 |
|
| |
|
|
|
- (1)
- These
adjustments assume the settlement, net of third party margin deposits, of Patina's hedging instruments on December 31, 2004, (pursuant to the merger agreement, at the
request of Noble Energy the hedges will be terminated prior to closing). These settlements result in the recognition of a current deferred tax asset as a result of the realized losses on the
settlements.
- (vi)
- The
preliminary allocation of purchase price includes approximately $1.1 billion of goodwill. Approximately $700 million results from deferred income tax liabilities
recorded to goodwill due to the excess of book basis over tax basis. The significant factors that contributed to the recognition of goodwill include, but are not limited to, economies of scale in
connection with our existing domestic operations, and the ability to acquire an established business with an assembled workforce with technological and operational expertise in tight gas sand
formations. In July 2001, the Financial Accounting Standards Board issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets. As
a result of these two pronouncements, goodwill recorded in connection with businIDTH="2%">
|
— |
|
|
2,613 |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
150,963 |
|
$ |
90,896 |
|
$ |
57,707 |
|
$ |
62,267 |
|
$ |
42,426 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income from continuing operations |
|
$ |
2.15 |
|
$ |
1.37 |
|
$ |
0.88 |
|
$ |
1.00 |
|
$ |
0.75 |
|
| |
Discontinued operations, net of tax |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
Cumulative effect, net of tax |
|
|
— |
|
|
(0.04 |
) |
|
— |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
2.15 |
|
$ |
1.33 |
|
$ |
0.88 |
|
$ |
1.00 |
The
purchase price allocation is preliminary and is subject to change due to several factors, including, but not limited to: (1) changes in the fair values of Patina's assets and
liabilities as of the effective time of the merger; (2) the actual merger costs incurred; (3) the number of Patina shares, warrants, stock options and restricted stock outstanding at the
closing date of the merger, and (4) changes in Noble Energy valuation estimates that may be made between now and the time the purchase price allocation is finalized. These changes will not be
known until after the closing date of the merger.
The
unaudited pro forma condensed combined statements of operations include the following adjustments:
- (b)
- This
adjustment reclassifies Patina's historical gathering, processing, and marketing costs and transportation expenses to conform with Noble Energy's presentation.
108
- (c)
- These
adjustments increase Patina's historical depletion expense associated with oil and gas properties based on the pro forma allocation of purchase price and reclassify accretion
expense of the asset retirement obligation to conform with Noble Energy's presentation.
- (d)
- This
adjustment increases interest expense for the effect of the additional debt assumed from the merger and the amounts borrowed under Noble Energy's new five year credit facility
and the amortization of the related debt issuance costs. The interest rate used in the calculation of interest expense is based on an expected interest rate of 3.51%. A 1/8 percentage
point change in the interest rate would result in an adjustment to pro forma income from continuing operations of approximately $2.0 million for the year ended December 31, 2004. See
Note 5.
- (e)
- This
adjustment reclassifies Patina's historical other revenue amounts to conform with Noble Energy's presentation.
- (f)
- This
adjustment records the income tax impact of the depletion expense and the interest expense pro forma adjustments at an effective income tax rate of 37.3% and adjusts Patina's
historical tax provisions to the combined effective tax rate.
- (g)
- These
adjustments reflect Noble Energy's weighted average basic and diluted common shares outstanding during the year ended December 31, 2004 based on the estimated Noble
Energy common stock to be issued in the merger. See Note 4.
Note 3 Deferred Compensation Plan
These pro forma adjustments represent the assumption of Patina's existing deferred compensation plan by Noble Energy. The assets of the deferred compensation plan
are held in a rabbi trust and are comprised of mutual fund investments and Patina common stock. The unaudited pro forma condensed combined balance sheet adjustments assume that the shares of Patina
common stock held in the rabbi trust will be allocated 60% in Noble Energy common stock and 40% in cash, with the cash received by the rabbi trust used to purchase additional mutual fund investments.
The pro forma deferred compensation liability and treasury stock amount represent the fair value of the deferred compensation liability and treasury stock based on a Noble Energy stock price of $60.36
(see Note 2).
109
Note 4 Weighted Average Common Shares Outstanding
Unaudited pro forma condensed combined income from continuing operations per share for the periods presented below has been calculated based on the weighted
average number of shares outstanding as follows:
|
|
Year ended
December 31, 2004
|
|
|
(in thousands)
|
| Basic: |
|
|
| Noble Energy weighted average common shares outstanding |
|
58,275 |
| Patina basic shares outstanding adjusted for the merger (i) |
|
26,366 |
| |
|
|
| Pro forma weighted average Noble Energy shares outstanding |
|
84,641 |
| |
|
|
Diluted: |
|
|
| Noble Energy weighted average common shares outstanding |
|
59,226 |
| Patina diluted shares outstanding adjusted for the merger (i) |
|
28,291 |
| |
|
$ |
0.75 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Income from continuing operations |
|
$ |
2.05 |
|
$ |
1.32 |
|
$ |
0.84 |
|
$ |
0.93 |
|
$ |
0.61 |
|
| |
Discontinued operations, net of tax |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
Cumulative effect, net of tax (1) |
|
|
— |
|
|
(0.04 |
) |
|
— |
|
|
— |
|
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
$ |
2.05 |
|
$ |
1.28 |
|
$ |
0.84 |
|
$ |
0.93 |
|
$ |
0.61 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
70,234 |
|
|
68,170 |
&nb> |
|
| Pro forma weighted average Noble Energy shares outstanding |
|
87,517 |
| |
|
|
- (i)
- The
Patina weighted average basic and diluted shares outstanding have been adjusted to give effect to the exchange of Patina common stock for Noble Energy common stock, the vesting of
restricted stock, the exchange of the Patina options, and the exchange of the Patina warrants which are not paid in cash.
Note 5 Merger Financing
Noble Energy has executed a commitment letter with JPMorgan Chase Bank under which JPMorgan Chase Bank has agreed to advance up to $1.3 billion to Noble
Energy. These funds, along with capacity available under its two existing $400 million credit facilities, will be utilized to fund the cash portion and to repay a portion of liabilities assumed
in the merger. It is expected that JPMorgan Chase Bank will syndicate a part of the $1.3 billion credit facility to a group of financial institutions. This facility will be a senior unsecured
revolving credit facility with a five-year term and with other terms and conditions similar to Noble Energy's two existing $400 million credit facilities. It is expected that the loan will bear
interest at a rate per annum equal to the London Interbank Offered Rate (2.76% per annum as of March 7, 2005) plus 60 basis points. In addition, there is a facility fee for the loan
equal to 15 basis points. Noble Energy will incur approximately $2.5 million of debt issuance costs associated with the $1.3 billion commitment agreement.
110
Note 6 Unaudited Supplemental Pro Forma Combined Information Related to Oil and Gas Activities
The following unaudited supplemental pro forma combined information for oil and gas producing activities is presented pursuant to the disclosure requirements of
Statement of Financial Accounting Standards No. 69 "Disclosures About Oil and Gas Producing Activities."
Pro Forma Combined Reserve Quantity Information
The following table sets forth the changes in net reserve quantities of oil and NGLs combined, gas and total proved reserves for Noble Energy, Patina and on a Pro
Forma Combined basis for the year ended December 31, 2004:
|
|
Noble Energy
|
|
Patina
|
|
Pro Forma Combined
|
|
|
|
Oil
MBbls
|
|
Gas
MMcf
|
|
MBOE
|
|
Oil
MBbls
|
|
Gas
MMcf
|
|
MBOE
|
|
Oil
MBbls
|
|
Gas
MMcf
|
|
MBOE
|
|
| Total Proved Reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| UNITED STATES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
42,304 |
|
558,058 |
|
135,314 |
|
81,947 |
|
|
65,933 |
|
|
62,392 |
|
|
52,325 |
|
| |
Diluted |
|
|
73,473 |
|
|
71,062 |
|
|
68,970 |
|
|
67,290 |
|
|
68,433 |
|
Cash dividends per common share |
|
$ |
0.210 |
|
$ |
0.124 |
|
$ |
0.080 |
|
$ |
0.054 |
|
$ |
0.032 |
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Property, plant and equipment, net |
|
$ |
1,221,616 |
|
$ |
1,077,181 |
|
$ |
644,365 |
|
$ |
380,772 |
|
$ |
357,386 |
|
Total Assets |
|
$ |
1,429,039 |
|
$ |
1,196,291 |
|
$ |
719,090 |
|
$ |
455,524 |
|
$ |
422,578 |
|
Long-term obligations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Long-term debt, net of current portion |
|
|
297,000 |
|
|
416,000 |
|
|
200,000 |
|
|
77,000 |
|
|
177,000 |
|
| |
Deferred income taxes |
|
|
203,473 |
|
|
154,480 |
|
|
96,569 |
|
|
39,355 |
| 1,024,334
|
252,669 |
|
124,251 |
|
1,582,392 |
|
387,983 |
|
| Revisions of previous estimates |
|
976 |
|
(7,452 |
) |
(266 |
) |
267 |
|
(31,999 |
) |
(5,066 |
) |
1,243 |
|
(39,451 |
) |
(5,332 |
) |
| Extensions, discoveries & other additions |
|
16,760 |
|
74,277 |
|
29,140 |
|
12,324 |
|
178,401 |
|
42,058 |
|
29,084 |
|
252,678 |
|
71,198 |
|
| Production |
|
(8,073 |
) |
(89,458 |
) |
(22,983 |
) |
(6,606 |
) |
(78,290 |
) |
(19,654 |
) |
(14,679 |
) |
(167,748 |
) |
(42,637 |
) |
| Sales of minerals in place |
|
(2,190 |
) |
(30,127 |
) |
(7,211 |
) |
(816 |
) |
(18,033 |
) |
(3,822 |
) |
(3,006 |
) |
(48,160 |
) |
(11,033 |
) |
| Purchases of minerals in place |
|
5,289 |
|
14,437 |
|
7,695 |
|
1,169 |
|
14,882 |
|
3,649 |
|
6,458 |
|
29,319 |
|
11,344 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
55,066 |
|
519,735 |
|
141,689 |
|
88,285 |
|
1,089,295 |
|
269,834 |
|
143,351 |
|
1,6>
| |
12,953 |
|
| |
Asset retirement obligation |
|
|
31,461 |
|
|
27,594 |
|
|
— |
|
|
— |
|
|
— |
|
| |
Other noncurrent liabilities |
|
|
200,817 |
|
|
125,161 |
|
|
54,869 |
|
|
44,530 |
|
|
41,607 |
|
| Shareholders' equity |
|
|
410,819 |
|
|
330,512 |
|
|
298,580 |
|
|
249,574 |
|
|
160,151 |
|
| Ratio to debt-to-book capital (2) |
|
|
0.42 |
|
|
0.56 |
|
|
0.40 |
|
|
0.24 |
|
|
0.52 |
|
Other Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by operating activities |
|
$ |
396,569 |
|
$ |
271,825 |
|
$ |
152,157 |
|
$ |
172,777 |
|
$ |
109,384 |
|
| Net cash provided by (used in) investing activities |
|
|
(258,641 |
) |
|
(470,881 |
) |
|
(282,392 |
) |
|
(82,357 |
) |
|
(86,134 |
) |
| Net cash provided by (used in) financing activities |
|
|
(135,449 |
) |
|
197,681 |
|
|
131,905 |
|
|
(92,823 |
) |
|
(21,223 |
) |
| Interest expense, net |
|
|
12,563 |
|
|
411,523 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARGENTINA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
8,921 |
|
2,448 |
|
9,329 |
|
— |
|
— |
|
— |
|
8,921 |
|
2,448 |
|
9,329 |
|
| Revisions of previous estimates |
|
1,995 |
|
(937 |
) |
1,839 |
|
— |
|
— |
|
— |
|
1,995 |
|
(937 |
) |
1,839 |
|
| Extensions, discoveries & other additions |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Production |
|
(1,085 |
) |
(142 |
) |
(1,109 |
) |
— |
|
— |
|
— |
|
(1,085 |
) |
(142 |
) |
(1,109 |
) |
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
|
8,817 |
|
|
2,299 |
|
|
7,016 |
|
|
10,012 |
|
- (1)
- Cumulative
effect of change in accounting principle for 2003 relates to the adoption of SFAS No. 143, Asset Retirement Obligations, on January 1, 2003.
- (2)
- Defined
as Patina's total debt divided by total debt plus its equity.
15
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The following table shows information about Noble Energy's financial condition and results of operations, including per share data and financial ratios, on a pro
forma basis after giving effect to the merger. This information is called pro forma financial information in this document. The table sets forth the information as if the merger had become effective
on December 31, 2004 (using currently available fair value information), with respect to balance sheet data, and January 1, 2004, with respect to statement of operations data. This
unaudited pro forma financial information assumes that the merger is accounted for using the purchase method of accounting and represents a current estimate based on available information of the
combined company's results of operations. The unaudited pro forma financial information includes adjustments to record the assets and liabilities of Patina at their estimated fair values and is
subject to further adjustment as additional information becomes available and as additional analyses are performed. The merger agreement was announced on December 16, 2004 and provides for
Noble Energy to issue approximately 27.3 million shares of common stock and $1.1 billion in cash consideration to Patina common stockholders (in each case subject to upward adjustment in
the event that any shares of Patina common stock are issued in accordance with the merger agreement pursuant to the exercise of Patina stock options or Patina warrants or otherwise). This table should
be read together with, and is qualified in its entirety by, the historical financial statements, including the notes thereto, of Noble Energy and Patina incorporated by reference in this joint proxy
statement/prospectus and the more detailed unaudited pro forma condensed combined financial information, including the notes thereto, appearing under "Unaudited Pro Forma Condensed Combined Financial
Information" beginning on page 103.
The
unaudited pro forma financial information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the
impact of possible revenue enhancements, expense efficiencies, asset dispositions and share repurchases, among other factors that may result as a consequence of the merger and, accordingly, does not
attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the combined company would have been had the companies been combined during these
periods.
Selected Unaudited Pro Forma Condensed Combined Financial Data
|
|
As of December 31, 2004
|
|
|
(in millions)
|
| Pro Forma Balance Sheet Data |
|
|
|
Total Assets |
|
$ |
8,073 |
Long-term Debt |
|
$ |
2,512 |
Shareholders' Equity |
|
$ |
3,230 |
|
|
For the Year
Ended
December 31, 2004
|
|
|
(in millions, except per share data)
|
| Pro Forma Statement of Operations Data |
|
|
|
Revenues |
|
$ |
1,914 |
Income From Continuing Operations |
|
$ |
411 |
Income From Continuing Operations Per Share: |
|
|
|
"1%">
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
9,831 |
|
1,369 |
|
10,059 |
|
— |
|
— |
|
— |
|
9,831 |
|
1,369 |
|
10,059 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHINA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
10,336 |
|
— |
|
10,336 |
|
— |
|
— |
|
— |
|
10,336 |
|
— |
|
10,336 |
|
| Revisions of previous estimates |
|
(1,438 |
) |
— |
|
(1,438 |
) |
— |
|
— |
|
— |
|
(1,438 |
) |
— |
|
(1,438 |
) |
| Extensions, discoveries & other additions |
|
3,024 |
|
— |
|
3,024 |
|
—
| |
Basic |
|
$ |
4.85 |
| |
Diluted |
|
$ |
4.69 |
16
Comparative Per Share Data
The following table sets forth certain historical per share data of Noble Energy and Patina and per share data on an unaudited pro forma combined basis after
giving effect to the merger:
|
|
For the Year
Ended
December 31, 2004
|
| Noble Energy Historical Per Share Data: |
|
|
|
Income From Continuing Operations |
|
|
|
| |
Basic (a) |
|
$ |
5.39 |
| |
Diluted (b) |
|
$ |
5.30 |
| Cash dividends |
|
$ |
0.20 |
| Book value (c) |
|
$ |
24.34 |
Patina Historical Per Share Data: |
|
|
|
Income From Continuing Operations |
|
|
|
| |
Basic (a) |
|
$ |
2.15 |
| |
Diluted (b) |
|
$ |
2.05 |
| Cash dividends |
|
$ |
0.21 |
| Book value (c) |
|
$ |
5.56 |
Pro Forma Combined Company Per Share Data: |
|
|
|
Income From Continuing Operations |
|
|
|
| |
Basic (d) |
|
$ |
4.85 |
| |
Diluted (d) |
|
$ |
4.69 |
| Cash dividends |
|
$ |
0.20 |
| Book value (e) |
|
$ |
36.20 |
- (a)
- Based
on weighted average number of shares of common stock outstanding for Noble Energy and Patina for such period.
- (b)
- Based
on the weighted average number of shares of common stock outstanding plus the potential dilution that would occur if interests in securities (options, warrants and other
convertible securities) were exercised and converted into common stock of Noble Energy or Patina for such period.
- (c)
- Computed
by dividing shareholders' equity by the number of shares of common stock at the end of such period plus the dilutive effect of interests in securities (options, warrants and
other convertible securities).
- (d)
- Based
on the pro forma combined income from continuing operations from the "Unaudited Pro Forma Condensed Combined Financial Information" beginning on page 103 of this document which
gives effect to the merger under the purchase method of accounting.
-
| |
— |
|
— |
|
3,024 |
|
— |
|
3,024 |
|
|
| Production |
|
(1,421 |
) |
— |
|
(1,421 |
) |
— |
|
— |
|
— |
|
(1,421 |
) |
— |
|
(1,421 |
) |
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
10,501 |
|
— |
|
10,501 |
|
— |
|
— |
|
— |
|
10,501 |
|
— |
|
10,501 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ECUADOR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)Computed
by dividing shareholders' equity by the number of outstanding shares of Noble Energy common stock at the end of such period, adjusted to include the estimated number of
shares of Noble Energy common stock to be issued in the merger plus the dilutive effect of interests in securities (options, warrants and other convertible securities) at the end of such period.
17
RISK FACTORS
In addition to the other information contained in or incorporated by reference into this document including, without limitation, Noble Energy's Annual Report on
Form 10-K for the fiscal year ended December 31, 2004, and Patina's Annual Report on Form 10-K for the fiscal year ended December 31, 2004, you
should carefully consider the following risk factors in deciding whether to vote to approve the stock issuance or adopt the merger agreement and approve the merger and the other transactions
contemplated by the merger agreement, as the case may be.
We may not be able to successfully integrate the businesses of Noble Energy and Patina following the merger.
The success of the merger depends in large part upon our ability to integrate our organizations, operations, systems and personnel. The integration of two
previously independent companies is a challenging, time-consuming and costly process. Noble Energy and Patina have operated and, until the effective time of the merger, will continue to
operate, independently. It is possible that the integration process could result in the loss of key employees, the disruption of each company's ongoing businesses or inconsistencies in standards,
controls, procedures and policies that adversely affect our ability to maintain relationships with suppliers, customers and employees or to achieve the anticipated benefits of the merger. In addition,
successful integration of the companies will require the dedication of significant management resources, which will temporarily detract attention from the day-to-day businesses
of the combined company. If we are not able to integrate our organizations, operations, systems and personnel in a timely and efficient manner, the anticipated benefits of the merger may not be
realized fully or at all or may take longer to realize than expected.
The costs of the merger could adversely affect the combined company's operating results.
Noble Energy and Patina estimate the total merger-related costs, exclusive of employee benefit costs, to be approximately $30.0 million, primarily
consisting of investment banking, legal and accounting fees and financial printing and other related charges. The foregoing estimate is preliminary and is subject to change. In addition, the combined
company will incur certain expenses in connection with the integration of Noble Energy's and Patina's businesses.
Patina's directors and executive officers have interests in the merger in addition to those of the Patina stockholders.
In considering the recommendations of the Patina board of directors with respect to the merger agreement, you should be aware that Patina's directors and
executive officers have financial and other interests in the merger in addition to their interests as Patina stockholders. The receipt of compensation or other benefits in connection with the merger
(including severance payments and the accelerated vesting of stock options, restricted stock and deferred compensation) may have influenced these directors and executive officers in making their
recommendations to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement. You should consider these interests in connection with your vote
on the merger, including whether these interests may have influenced these directors and executive officers to recommend or support the merger. For a detailed description of the interests of the
directors and executive officers of Patina, see "The Merger—Financial Interests of Patina's Directors and Executive Officers in the Merger" beginning on page 95 of this document.
18
Failure to complete the merger or delays in completing the merger could negatively impact Noble Energy's and Patina's stock prices and future business and operations.
If the merger is not completed for any reason, Noble Energy and Patina may be subject to a number of material risks, including the following:
- •
- the
individual companies will not realize the benefits expected from the merger, including a potentially enhanced financial and competitive position;
- •
- under
certain circumstances, Noble Energy or Patina may be required to pay the other a termination fee of $100 million or reimburse the other for up to
$6.0 million in merger related expenses;
- •
- under
certain circumstances, Patina may be required to reimburse Noble Energy for up to $45.0 million of actual losses realized by Noble Energy with respect to
certain oil and gas hedges;
- •
- the
price of Noble Energy common stock or Patina common stock may decline to the extent that the current market price of the common stock reflects a market assumption that
the merger will be completed; and
- •
- some
costs relating to the merger, such as certain investment banking fees and legal and accounting fees, must be paid even if the merger is not completed.
In
addition, current and prospective employees of Noble Energy and Patina may experience uncertainty about their future roles with the companies until after the merger is completed or if
the merger is not completed. This may adversely affect the ability of Noble Energy and Patina to attract and retain key personnel.
Because the market price of Noble Energy common stock will fluctuate, Patina stockholders cannot be sure of the value of the merger consideration they will receive.
Upon the effective time of the merger, each share of Patina common stock will be converted into the right to receive m>
|
|
|
| Balance at January 1, 2004 |
|
— |
|
79,298 |
|
13,216 |
|
— |
|
— |
|
— |
|
— |
|
79,298 |
|
13,216 |
|
| Revisions of previous estimates |
|
— |
|
(27,398 |
) |
(4,566 |
) |
— |
|
— |
|
— |
|
— |
|
(27,398 |
) |
(4,566 |
) |
| Extensions, discoveries & other additions |
|
— |
|
75,081 |
|
12,514 |
|
— |
|
— |
|
— |
|
— |
|
75,081 |
|
12,514 |
|
| Production |
|
— |
|
(7,640 |
) |
(1,273 |
) |
— |
|
— |
|
— |
|
— |
|
(7,640 |
) |
(1,273 |
) |
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
erger consideration consisting of shares of
Noble Energy common stock or cash, pursuant to the terms of the merger agreement. The value of the merger consideration to be received by Patina stockholders will be based on the volume-weighted
average of the trading sale prices per share of Noble Energy common stock during the 10 consecutive trading day valuation period ending on the third calendar day prior to the effective time of the
merger. This average price may vary from the market price of Noble Energy common stock on the date the merger was announced, on the date that this document is mailed to Patina stockholders, on the
date a Patina stockholder makes an election with respect to the merger consideration or on the date of the special meeting of Patina stockholders. Because Noble Energy is issuing a fixed amount of
shares as part of the merger consideration (in each case subject to upward adjustment in the event that any shares of Patina common stock are issued in accordance with the merger agreement pursuant to
the exercise of Patina stock options or Patina warrants or otherwise), and because the provisions of the merger agreement operate to substantially equalize the value of the consideration to be
received for each share of Patina common stock at the time the calculation is made, any change in the price of Noble Energy common stock prior to the effective time of the merger will affect the value
of the merger consideration that you will receive upon the effective time of the merger, regardless of whether you elect to receive cash, stock or a combination of cash and stock, or do not make an
election. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in oil and natural gas prices, changes in our respective businesses,
operations and prospects, and regulatory considerations. Many of these factors are beyond our control.
19
Accordingly,
at the time of the Patina special meeting, Patina stockholders will not know or be able to calculate the amount of any cash consideration they would receive with respect to
each share of Patina common stock or the exchange ratio used to determine the number of any shares of Noble Energy common stock they would receive with respect to each share of Patina common stock
upon the effective time of the merger.
Following announcement of the merger, each of Moody's Investors Service and Standard & Poor's announced it was changing its outlook with respect to Noble Energy's credit rating
to negative. Changes in Noble Energy's credit ratings could adversely affect the costs and expenses of the combined company.
Immediately prior to the announcement of the merger, Noble Energy's senior unsecured debt ratings were Baa 2 from Moody's Investors Service and BBB from
Standard & Poor's. After the announcement of the merger agreement, Moody's Investors Service affirmed Noble Energy's Baa 2 rating, but changed
its outlook to negative from stable, and Standard & Poor's maintained Noble Energy's BBB rating but placed Noble Energy on CreditWatch with negative implications, in each case pending further review.
Any downgrade in the credit ratings of Noble Energy could result in increased borrowing costs, require Noble Energy to provide additional financial assurances for certain marketing commodity
derivative transactions and affect Noble Energy's ability to access the capital markets. This in turn could adversely affect the combined company's results of operations and financial condition.
The market price of the shares of Noble Energy common stock and the results of operations of Noble Energy after the merger may be affected by factors different from those
affecting Patina or Noble Energy currently.
The businesses of Noble Energy and Patina differ in some respects and, accordingly, the results of operations of the combined company and the market price of the
combined company's shares of common stock may be affected by factors different from those currently affecting the independent results of operations and market prices of each of Noble Energy or Patina.
For a discussion of the businesses of Noble Energy and Patina and of certain factors to consider in connection with those businesses, see the documents incorporated by reference in this document and
referred to under "Where You Can Find More Information" beginning on page 131 of this document.
Noble Energy stockholders will be diluted by the merger.
The merger will dilute the ownership position of the current stockholders of Noble Energy. Based on the number of shares of Patina common stock outstanding as of
April 7, 2005, Noble Energy would issue to Patina stockholders approximately 27,792,428 shares of Noble Energy common stock in the merger (subject to upward adjustment in the event that
any shares of Patina common stock are issued in accordance with the merger agreement pursuant to the exercise of Patina stock options or Patina warrants or otherwise). As a result, Noble Energy
stockholders and Patina stockholders would hold approximately 68% and 32%, respectively, of the combined company's common stock outstanding after the completion of the merger.
Patina stockholders may receive a form or combination of consideration different from what they elect.
While each Patina stockholder may elect to receive all cash, all Noble Energy common stock or a combination of cash and Noble Energy common stock in the merger,
the pools of cash and Noble Energy common stock available for all Patina stockholders will be fixed amounts (in each case subject to upward adjustment in the event that any shares of Patina common
stock are issued in accordance with the merger agreement pursuant to the exercise of Patina stock options or Patina warrants or otherwise). Accordingly, depending on the elections made by other Patina
stockholders, if you elect to receive all cash in the merger, you may receive a portion of your consideration in Noble Energy
20
common
stock and if you elect to receive all Noble Energy common stock in the merger, you may receive a portion of your consideration in cash. If you elect to receive a combination of cash and Noble
Energy common stock in the merger, you may receive cash and Noble Energy common stock in a proportion different from what you elected. If a Patina stockholder does not submit a properly completed and
signed election form to the exchange agent by the election deadline, then such stockholder will have no control over the type of merger consideration such stockholder may receive, and, consequently,
may receive only cash, only Noble Energy common stock, or a combination of cash and Noble Energy common stock in the merger.
If you tender shares of Patina common stock to make an election, you will not be able to sell those shares unless you revoke your ele |
— |
|
119,341 |
|
19,891 |
|
— |
|
— |
|
— |
|
— |
|
119,341 |
|
19,891 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111
EQUATORIAL GUINEA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
113,198 |
|
537,998 |
|
202,864 |
|
— |
|
— |
|
— |
|
113,198 |
|
537,998 |
|
202,864 |
|
| Revisions of previous estimates |
|
(777 |
) |
(4,130 |
) |
(1,465 |
) |
— |
|
— |
|
— |
|
(777 |
) |
(4,130 |
) |
(1,465 |
) |
| Extensions, discoveries & other additions |
|
— |
|
400,288 |
|
66,715 |
|
— |
|
— |
|
— |
|
— |
|
400,288 |
|
66,715 |
|
| Production
If you are a Patina stockholder and want to make a cash or stock election, you must deliver your stock certificates (or follow the procedures for guaranteed
delivery) and a properly completed and signed election form to the exchange agent. The deadline for doing this is 5:00 p.m., Houston, Texas time, on May 10, 2005. You will not be able to
sell any shares of Patina common stock that you have delivered unless you revoke your election before the deadline by providing written notice to the exchange agent. If you do not revoke your
election, you will not be able to liquidate your investment in Patina common stock for any reason until you receive cash or Noble Energy common stock in the merger. In the time between delivery of
your shares and the closing of the merger, the market price of Patina or Noble Energy common stock may decrease, and you might otherwise want to sell your shares of Patina to gain access to cash, make
other investments, or reduce the potential for a decrease in the value of your investment.
If the merger is completed, the date that you will receive your merger consideration is uncertain.
If the merger is completed, the date that you will receive your merger consideration depends on the completion date of the merger, which is uncertain. While we
expect to complete the merger in the second quarter of 2005, the completion date of the merger might be later than expected due to unforeseen events.
If Noble Energy or Patina fails to obtain all required consents and approvals, third parties may terminate or alter existing contracts.
Noble Energy's obligation to consummate the merger is conditioned, among other things, upon receipt of all material consents and approvals that Patina is required
to obtain in connection with the merger, except for such consents and approvals the failure of which to be obtained individually or in the aggregate would not be reasonably likely to have or result in
a material adverse effect on Patina. Certain agreements between Patina and its suppliers, customers or other business partners may require the consent or approval of these other parties in connection
with the merger. Noble Energy and Patina have agreed to use reasonable best efforts to secure any necessary consents and approvals. However, we cannot assure you that Noble Energy and/or Patina will
be able to obtain all the necessary consents and approvals. If these consents and approvals are not obtained and Noble Energy elects to waive the closing condition relating to receipt of material
consents, the failure to have obtained such consents or approvals could have a material adverse effect on the business of the combined company after the merger.
21
FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus, including information included or incorporated by reference in this document, contains certain forward-looking statements
with respect to the financial condition, results of operations, plans, objectives, intentions, future performance and business of each of Noble Energy and Patina and other statements that are not
historical facts, as well as certain information relating to the merger, including, without limitation:
- •
- statements
relating to the benefits of the merger, including the cost savings and accretion to reported earnings estimated to result from the merger;
- •
- statements
relating to revenues of the combined company after the merger; and
- •
- statements
preceded by, followed by or that include the words "believes," "anticipates," "plans," "predicts," "expects," "envisions," "hopes," "estimates," "intends,"
"will," "continue," "may," "potential," "should," "confident," "could" or similar expressions.
These
forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among
others, the factors discussed under "Risk Factors" beginning on page 18 of this document, as well as the following factors:
- •
- the
possibility that the companies may be unable to obtain stockholder or regulatory approvals required for the merger;
- •
- the
possibility that problems may arise in successfully integrating the businesses of the two companies;
- •
- the
possibility that the merger may involve unexpected costs;
- •
- the
possibility that the combined company may be unable to achieve cost-cutting synergies;
- •
- the
possibility that the businesses may suffer as a result of uncertainty surrounding the merger;
- •
- the
possibility that the industry may be subject to future regulatory or legislative actions;
- •
- the
volatility in commodity prices for oil and gas;
- •
- the
presence or recoverability of estimated oil and gas reserves;
- •
- the
ability to replace oil and gas reserves;
- •
- environmental
risks;
- •
- drilling
and operating risks;
- •
- exploration
and development risks;
- •
- competition;
- •
- the
ability of the combined company's management to execute its plans to meet its goals;
- •
- general
economic conditions, whether internationally, nationally or in the regional and local market areas in which Noble Energy and Patina are doing business, may be less
favorable than expected; and
- •
- other
TD>
| |
(3,691 |
) |
(16,747 |
) |
(6,482 |
) |
— |
|
— |
|
— |
|
(3,691 |
) |
(16,747 |
) |
(6,482 |
) |
|
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
108,730 |
|
917,409 |
|
261,632 |
|
— |
|
— |
|
— |
|
108,730 |
|
917,409 |
|
261,632 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ISRAEL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
— |
|
450,307 |
|
75,051 |
|
—
Additional
factors that could cause actual results to differ materially from those expressed in the forward looking statements are discussed in reports filed with the SEC by Noble Energy
and Patina. See "Where You Can Find More Information" beginning on page 131 of this document.
22
Forward-looking
statements speak only as of the date of this joint proxy statement/prospectus or the date of any document incorporated by reference in this document. All subsequent
written and oral forward-looking statements concerning the merger or other matters addressed in this joint proxy statement/prospectus and attributable to Noble Energy or Patina or any person acting on
their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, neither
Noble Energy nor Patina undertakes any obligation to update forward-looking statements to reflect events or circumstances after the date of this joint proxy statement/prospectus or to reflect the
occurrence of unanticipated events.
23
NOBLE ENERGY SPECIAL MEETING
General
This joint proxy statement/prospectus is being furnished to Noble Energy stockholders in connection with the solicitation of proxies by the Noble Energy board of
directors to be used at the special meeting of stockholders to be held at 100 Glenborough Drive, Suite 100, Houston, Texas, on May 11, 2005 at 9:30 a.m., local time, and at any
adjournment or postponement of that meeting. This joint proxy
statement/prospectus and the enclosed form of proxy are being sent to Noble Energy stockholders on or about April 13, 2005.
Record Date and Voting
The Noble Energy board of directors has fixed the close of business on March 31, 2005 as the record date for determining the holders of shares of Noble
Energy common stock entitled to receive notice of and to vote at the Noble Energy special meeting and any adjournments or postponements thereof. Only holders of record of shares of Noble Energy common
stock at the close of business on that date will be entitled to vote at the Noble Energy special meeting and at any adjournment or postponement of that meeting. At the close of business on the record
date, there were 59,237,440 shares of Noble Energy common stock outstanding, held by approximately 900 holders of record.
Each
holder of shares of Noble Energy common stock outstanding on the record date will be entitled to one vote for each share held of record upon each matter properly submitted at the
Noble Energy special meeting and at any adjournment or postponement thereof. In order for Noble Energy to satisfy its quorum requirements, the holders of at least a majority of the total number of
outstanding shares of Noble Energy common stock entitled to vote at the meeting must be present. You will be deemed to be present if you attend the meeting or if you submit a proxy card (including
through the Internet or telephone) that is received at or prior to the meeting (and not revoked).
If
your proxy card is properly executed and received by Noble Energy in time to be voted at the Noble Energy special meeting, the shares represented by your proxy card (including those
given through the Internet or by telephone) will be voted in accordance with the instructions that you mark on your proxy card. If you execute your proxy but do not provide Noble Energy with any
instructions, your shares will be voted "FOR" the approval of the stock issuance and "FOR" the approval of the amendment to Noble Energy's certificate of incorporation. If your shares are held in
"street name" by your broker or other nominee and you do not provide that holder with instructions on how to vote your shares, your broker or other nominee will not be permitted to vote your shares.
The
only matters that we expect to be presented at the Noble Energy special meeting are the approval of the issuance of Noble Energy common stock in the merger and the approval of the
amendment to Noble Energy's certificate of incorporation to increase the number of authorized shares of Noble Energy common stock. If any other matters properly come before the Noble Energy special
meeting, the persons named in the proxy card will vote the shares represented by all properly executed proxies on such matters in the manner determined by a majority of the members of the Noble Energy
board of directors.
Quorum; Vote Required
The approval of the issuance of Noble Energy common stock in the merger requires the affirmative vote of a majority of the shares voted, so long as the shares
voted represent over 50% of the shares entitled to vote. If you vote in person or by proxy at the Noble Energy special meeting, you will be counted for purposes of determining whether there is a
quorum at the meeting. Shares of Noble Energy common stock present in person or by proxy at the Noble Energy special meeting that are
24
entitled
to vote but are not voted and broker non-votes will be counted for the purpose of determining whether there is a quorum for the transaction of business at the Noble Energy special
meeting. A broker non-vote occurs when a bank, broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have
discretionary voting power for that particular item and has not received instructions from the beneficial owner.
The
required vote of Noble Energy stockholders on the stock issuance is based upon the number of shares that are actually voted. Accordingly, assuming a quorum is present and the total
votes cast a> |
|
— |
|
— |
|
— |
|
450,307 |
|
75,051 |
|
| Revisions of previous estimates |
|
— |
|
(15,441 |
) |
(2,574 |
) |
— |
|
— |
|
— |
|
— |
|
(15,441 |
) |
(2,574 |
) |
| Extensions, discoveries & other additions |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Production |
|
— |
|
(17,573 |
) |
(2,929 |
) |
— |
|
— |
|
— |
|
— |
|
(17,573 |
) |
(2,929 |
) |
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
— |
|
417,293 |
|
69,548 |
|
— |
|
— |
|
— |
|
Revocability of Proxies
The presence of a stockholder at the Noble Energy special meeting will not automatically revoke that stockholder's proxy. However, a stockholder may revoke a
proxy at any time prior to its exercise by:
- •
- submitting
a written revocation prior to the special meeting to Arnold J. Johnson, Vice President, General Counsel and Secretary, Noble Energy, Inc., 100 Glenborough
Drive, Suite 100, Houston, Texas, 77067-3610;
- •
- submitting
another proxy prior to the special meeting by telephone, via the Internet or by mail that is dated later than the original proxy; or
- •
- attending
the Noble Energy special meeting and voting in person.
If
your shares are held of record by a broker or other nominee, you must follow the instructions on the form you receive from your broker or other nominee with respect to changing or
revoking your proxy.
Voting Electronically or by Telephone
Noble Energy stockholders of record and many stockholders who hold their shares through a broker or other nominee will have the option to submit their proxy cards
or voting instruction cards electronically through the Internet or by telephone. Please note that there are separate arrangements
25
for
using the Internet and telephone depending on whether your shares are registered in Noble Energy's stock records in your name or in the name of a broker or other nominee. If you hold your shares
through a broker or other nominee, you should check your proxy card or voting instruction card forwarded by your broker or other nominee to see which voting options are available.
Noble
Energy stockholders of record may submit their proxies:
- •
- through
the Internet by visiting a website established for that purpose at http://proxy.georgeson.com and following the instructions; or
- •
- by
telephone by calling the toll-free number 1-800-482-9730 in the United States and Canada on a touch-tone phone and
following the recorded instructions.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers and employees of Noble Energy may solicit proxies for the special meeting from Noble Energy stockholders
personally or by telephone and other electronic means without additional remuneration for soliciting such proxies. We will provide persons, firms, banks and corporations holding shares in their names
or in the names of nominees, which in either case are beneficially owned by others, proxy material for transmittal to such beneficial owners and will reimburse such record owners for their expenses in
taking such actions. We have also made arrangements with Georgeson Shareholder Communications, Inc. to assist us in soliciting proxies and have agreed to pay them $12,500, plus reasonable
expenses, for these services. Noble Energy and
Patina will equally share the expenses incurred in connection with the printing and mailing of this document.
Participants in Noble Energy's Thrift and Profit Sharing Plan
Participants in the Noble Energy Thrift and Profit Sharing Plan (the "Profit Sharing Plan") will receive cards from the trustee of the Profit Sharing Plan with
voting instructions concerning the voting of shares of Noble Energy common stock held in the plan. The Profit Sharing Plan's related trust agreement (the "Trust Agreement") provides that the trustee
will vote shares of Noble Energy common stock allocated to participants' accounts as instructed by participants. The Trust Agreement further provides that, except as otherwise required by law, the
trustee (a) will vote unallocated shares in the same proportion as directed by participants with respect to allocated shares, and (b) will not vote shares of Noble Energy common stock
for which it has received no direction from the participant.
26
— |
|
417,293 |
|
69,548 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORTH SEA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
8,460 |
|
13,811 |
|
10,762 |
|
— |
|
— |
|
— |
|
8,460 |
|
13,811 |
|
10,762 |
|
| Revisions of previous estimates |
|
1,037 |
|
1,552 |
|
1,296 |
|
— |
|
— |
|
— |
|
1,037 |
|
1,552 |
|
1,296 |
|
| Extensions, discoveries & other additions |
|
4,414 |
|
685 |
|
4,528 |
|
— |
|
— |
|
— |
|
4,414 |
|
685 |
|
4,528 |
|
| Production |
|
(2,459 |
) |
(4,130 |
) |
(3,147 |
) |
— |
|
— |
|
— |
|
(2,459 |
) |
(4,130 |
) |
(3,147 |
) |
| Sales of minerals in place |
|
(2,116 |
) |
(204 |
) |
(2,150 |
) |
— |
|
— |
|
— |
|
(2,116 |
) |
(204 |
) |
(2,150 |
) |
PATINA SPECIAL MEETING
General
This joint proxy statement/prospectus is being furnished to Patina stockholders in connection with the solicitation of proxies by the Patina board of directors to
be used at the special meeting of stockholders to be held on May 11, 2005 at 8:30 a.m., local time, at Adam's Mark Hotel, 1550 Court Pl., Denver, Colorado 80202, and at any
adjournment or postponement of that meeting. This joint proxy statement/prospectus and the enclosed form of proxy are being sent to Patina stockholders on or about April 13, 2005.
Record Date and Voting
The Patina board of directors has fixed the close of business on March 31, 2005 as the record date for determining the holders of shares of Patina common
stock entitled to receive notice of and to vote at the special meeting and any adjournment or postponement thereof. Only holders of record of shares of Patina common stock at the close of business on
that date will be entitled to vote at the special meeting and at any adjournment or postponement of that meeting. At the close of business on the record date, there were 74,054,609 shares of
Patina common stock outstanding, held by approximately 120 holders of record.
Each
holder of shares of Patina common stock outstanding on the record date will be entitled to one vote for each share held of record upon each matter properly submitted at the special
meeting and at any adjournment or postponement thereof. In order for Patina to satisfy its quorum requirements, the holders of at least a majority of the total number of outstanding shares of Patina
common stock entitled to vote at the meeting must be present. You will be deemed to be present if you attend the meeting or if you submit a proxy card (including through the Internet or telephone)
that is received at or prior to the meeting (and not revoked).
If
your proxy card is properly executed and received by Patina in time to be voted at the special meeting, the shares represented by your proxy card (including those given through the
Internet or by telephone) will be voted in accordance with the instructions that you mark on your proxy card. If you execute your proxy but do not provide Patina with any instructions, your shares
will be voted "FOR" the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement. If your shares are held in "street name" by your
broker or other nominee and you do not provide that holder with instructions on how to vote your shares, your broker or other nominee will not be permitted to vote your shares, which will have the
same effect as a vote against the merger.
The
only matters that we expect to be presented at the special meeting are the adoption of the merger agreement and the approval of the merger and the other transactions contemplated by
the merger agreement. If any other matters properly come before the special meeting, the persons named in the proxy card will vote the shares represented by all properly executed proxies on such
matters in the manner determined by a majority of the members of the Patina board of directors.
Quorum; Vote Required
Adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of the
holders of a majority of the outstanding shares of Patina common stock. If you vote in person or by proxy at the special meeting, you will be counted for purposes of determining whether there is a
quorum at the special meeting. Shares of Patina common stock present in person or by proxy at the special meeting that are entitled to vote but are not voted and broker non-votes will be
counted for the purpose of determining whether there is a quorum for the transaction of business at the special meeting. A broker non-vote occurs
27
when
a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular item and
has not received instructions from the beneficial owner.
The
required vote of Patina stockholders on the merger is based upon the number of outstanding shares of Patina common stock, and not the number of shares that are actually voted.
Accordingly, the failure to submit a proxy card or to vote in person at the special meeting, or a decision by a Patina stockholder to abstain from voting, will have the same effect as an "AGAINST"
vote with respect to this matter.
As
of the record date:
- •
- Patina
directors and executive officers and their affiliates owned and were entitled to vote approximately 4.7 million shares of Patina common stock, representing
approximately 6.4% of the outstanding shares of Patina common stock; and
- •
- Noble
Energy directors and executive officers and their affiliates did not own and were not entitled to vote any shares of Patina common stock.
We
currently expect that Patina's directors and executive officers will vote their shares "FOR" adoption of the merger agreement and approval of the merger and the other transactions
contemplated by the merger agreement, although none of them has entered into any agreement obligating them to do so.
Revocability of Proxies
The presence of a stockholder at the special meeting will not automatically revoke that stockholder's proxy. However, a stockholder may revoke a proxy at any time
prior to its exercise by:
- •
- submitting
a written revocation prior to the special meeting to David J. Kornder, Executive Vice President, Chief Financial Officer and Secretary, Patina Oil & Gas
Corporation, 1625 Broadway, Suite 2000, Denver, Colorado 80202;
- •
- submitting
another proxy prior to the special meeting by telephone, via the Internet F" VALIGN="BOTTOM">
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
9,336 |
|
11,714 |
|
11,289 |
|
— |
|
— |
|
— |
|
9,336 |
|
11,714 |
|
11,289 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
183,219 |
|
1,641,920 |
|
456,872 |
|
81,947 |
|
1,024,334 |
|
252,669 |
|
265,166 |
|
2,666,254 |
|
709,541 |
|
| Revisions of previous estimates |
|
1,793 |
|
(53,806 |
) |
(7,174 |
) |
267 |
|
(31,999 |
) |
(5,066 |
) |
2,060 |
|
(85,805 |
) |
(12,240 |
) |
| Extensions, discoveries & other additions |
|
24,198 |
|
550,331 |
|
115,921
•attending
the special meeting and voting in person.
If
your shares are held of record by a broker or other nominee, you must follow the instructions on the form you receive from your broker or other nominee with respect to changing or
revoking your proxy.
Voting Electronically or by Telephone
Patina stockholders of record and many stockholders who hold their shares through a broker or other nominee will have the option to submit their proxy cards or
voting instruction cards electronically through the Internet or by telephone. Please note that there are separate arrangements for using the Internet and telephone depending on whether your shares are
registered in Patina's stock records in your name or in the name of a broker or other nominee. If you hold your shares through a broker or
other nominee, you should check your proxy card or voting instruction card forwarded by your broker or other nominee to see which voting options are available.
Patina
stockholders of record may submit their proxies:
- •
- through
the Internet by visiting a website established for that purpose at http://proxy.georgeson.com and following the instructions; or
28
- •
- by
telephone by calling the toll-free number 1-800-732-6583 in the United States and Canada on a touch-tone phone and
following the recorded instructions.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers and employees of Patina may solicit proxies for the special meeting from Patina stockholders personally
or by telephone and other electronic means without additional remuneration for soliciting such proxies. We also will provide persons, firms, banks and corporations holding shares in their names or in
the names of nominees, which in either case are beneficially owned by others, proxy material for transmittal to such beneficial owners and will reimburse such record owners for their expenses in
taking such actions. We have also made arrangements with Georgeson Shareholder Communications, Inc. to assist us in soliciting proxies and have agreed to pay them $12,500, plus reasonable
expenses, for these services. Patina and Noble Energy will equally share the expenses incurred in connection with the printing and mailing of this document.
Participants in Patina's Benefit Plans
If you hold shares of Patina common stock through the Patina Oil & Gas Corporation Profit Sharing and 401(k) Plan, the trustee of such plan will vote all
shares held by the plan, though you, as a participant, may direct the trustee regarding how to vote shares allocated to your plan account. You will receive voting instructions from the trustee of the
plan as to how to exercise pass-through voting rights under the plan. If you own shares through the plan and do not vote, the plan trustee will vote the shares in accordance with the terms
of the plan. If you hold shares of Patina common stock through Patina's Amended and Restated Deferred Compensation Plan for Select Employees or Patina's 2005 Deferred Compensation Plan for Select
Employees, the trustee of such plans will vote all shares held by the plans in the manner directed by Patina. You will not be permitted to instruct the trustee how to vote these shares.
29
INFORMATION ABOUT NOBLE ENERGY
Noble Energy, formerly known as Noble Affiliates, Inc., is a Delaware corporation that has been publicly traded on the New York Stock Exchange since 1980.
Noble Energy has been engaged, directly or through its subsidiaries, in the exploration, production and marketing of crude oil and natural gas since 1932, when Noble Energy's predecessor, Samedan Oil
Corporation ("Samedan"), was organized. Noble Energy was organized in 1969 under the name "Noble Affiliates, Inc." and was Samedan's parent entity until Samedan was merged into Noble Energy at
year-end 2002. Noble Energy is noted for its innovative methods of marketing its international gas reserves through projects such as its methanol plant in Equatorial Guinea and its
gas-to-power project in Ecuador.
Noble
Energy, directly or through its subsidiaries or various arrangements with other companies, explores for, develops and produces crude oil and natural gas. Exploration activities
include geophysical and geological evaluation and exploratory drilling on properties for which the company has exploration rights. Noble Energy has exploration, exploitation and production operations
domestically and internationally. The domestic areas consist of: offshore in the Gulf of Mexico; the Gulf Coast Region (Louisiana and Texas); the Mid-continent Region (Oklahoma and
Kansas); and the Rocky Mountain Region (Colorado, Montana, Nevada and Wyoming). The international areas of operations include Argentina, China, Ecuador, Equatorial Guinea, the Mediterranean Sea
(Israel) and the North Sea (the Netherlands and the United Kingdom).
Domestic Offshore. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and
natural gas properties in the Gulf of Mexico (Texas, Louisiana, Mississippi and Alabama) and California since 1968. Noble Energy has shifted its domestic offshore exploration focus to the Gulf of
Mexico deepwater areas, and away from the Gulf of Mexico's conventional shallow shelf, in order to take advantage of potentially larger prospect sizes. Our current offshore production is derived from
157 gross wells operated by us and 175 gross wells operated by others. At December 31, 2004, we held offshore federal leases covering 704,329 gross developed acres and 749,167 gross undeveloped
acres on which we currenNT> |
|
12,324 |
|
178,401 |
|
42,058 |
|
36,522 |
|
728,732 |
|
157,979 |
|
| Production |
|
(16,729 |
) |
(135,690 |
) |
(39,344 |
) |
(6,606 |
) |
(78,290 |
) |
(19,654 |
) |
(23,335 |
) |
(213,980 |
) |
(58,998 |
) |
| Sales of minerals in place |
|
(4,306 |
) |
(30,331 |
) |
(9,361 |
) |
(816 |
) |
(18,033 |
) |
(3,822 |
) |
(5,122 |
) |
(48,364 |
) |
(13,183 |
) |
| Purchases of minerals in place |
|
5,289 |
|
14,437 |
|
7,695 |
|
1,169 |
|
14,882 |
|
3,649 |
|
6,458 |
|
29,319 |
|
11,344 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
193,464 |
|
1,986,861 |
|
524,609 |
|
88,285 |
|
1,089,295 |
|
269,834 |
|
281,749 |
|
3,076,156 |
|
794,443 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Onshore. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and
natural gas properties in three regions since the 1930s. The Gulf Coast Region covers onshore Louisiana and Texas. The Mid-continent Region covers Oklahoma and Kansas. Properties in the
Rocky Mountain Region are located in Colorado, Montana, Nevada, Wyoming and California. Our current onshore production is derived from 1,396 gross wells operated by us and 511
gross wells operated by others. At December 31, 2004, we held 645,275 gross developed acres and 352,664 gross undeveloped acres onshore on which we may conduct future exploration activities.
Argentina. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas
properties in Argentina since 1996. Our producing properties are located in southern Argentina in the El Tordillo field, which is characterized by secondary recovery crude oil production. At
December 31, 2004, we held 113,325 gross developed acres and 2,341,884 gross undeveloped acres in Argentina on which we may conduct future exploration activities.
China. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas
properties in China since 1996. We have a concession offshore China in the southern portion of Bohai Bay. At December 31, 2004, we held 7,413 gross developed acres and no gross undeveloped
acres in China.
Ecuador. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas
properties in Ecuador since 1996. We are currently utilizing the gas in the Amistad gas field (offshore Ecuador), which was discovered in the 1970s, to generate electricity through our 100%-owned
natural gas-fired power plant, located near the city of Machala. With a current
30
generating
capacity of 130 megawatts of electricity, additional capital investment for combined cycle to the power plant could ultimately increase capacity to generate 300 megawatts of electricity
into the Ecuadorian power grid. The concession covers 12,355 gross developed acres and 851,771 gross undeveloped acres encompassing the Amistad field on which we may conduct future exploration
activities.
Equatorial Guinea. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and
natural gas properties offshore Equatorial Guinea (West Africa) since 1990. Production is from the Alba field, which produces natural gas and condensate. The majority of the natural gas production is
sold to a methanol plant, which began production in the second quarter of 2001. The methanol plant has a contract through 2026 to purchase natural gas from the Alba field. The plant is owned by
Atlantic Methanol Production Company LLC, in which we own a 45% interest through our ownership of Atlantic Methanol Capital Company.
At
December 31, 2004, Noble Energy held 45,203 gross developed acres and 1,112,841 gross undeveloped acres offshore Equatorial Guinea on which we may conduct future exploration
activities.
Israel. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas
properties in the Mediterranean Sea, offshore Israel, since 1998. We own a 47% interest in three licenses and two leases. At December 31, 2004, we held 123,552 gross developed acres and 292,572
gross undeveloped acres located about 20 miles offshore Israel in water depths ranging from 700 feet to 5,000 feet. Noble Energy and its partners announced, on December 24, 2003, the
commencement of production of natural gas from its Mari-B field. Sales of natural gas to Israel Electric Corporation began in February 2004 under a definitive agreement executed in
June 2002. In September 2004, Noble Energy entered into a separate agreement to provide natural gas for use in the Bazan Refinery located in Ashdod, Israel. Sales to Bazan are expected
to commence during the third quarter of 2005.
North Sea. Noble Energy has been actively engaged in exploration, exploitation and development of crude oil and natural gas
properties in the North Sea (the Netherlands and the United Kingdom) since 1996. At December 31, 2004, we held 42,723 gross developed acres and 540,310 gross undeveloped acres on which we may
conduct future exploration activities.
31
INFORMATION ABOUT PATINA
Patina, a Delaware corporation publicly traded on the New York Stock Exchange since 1996, is an independent energy company engaged in the acquisition, development
and exploitation of oil and natural gas properties within the continental United States. Patina's properties and oil and gas reserves are principally located in relatively long-lived
fields with well-established production histories. The properties are concentrated primarily in the Wattenberg Field of Colorado's Denver-Julesburg Basin, the Mid-continent
region of western Oklahoma and the Texas Panhandle, and the San Juan Basin in New Mexico.
Wattenberg. Patina's reserves are primarily concentrated in the Wattenberg Field, which is located in the D-J
Basin of north central Colorado. The field is located approximately 35 miles northeast of Denver. Wattenberg contains multiple productive formations, including the Codell, Niobrara and
J-Sand. Patina's current Wattenberg activities are primarily focused on refracing or trifracing existing Codell wells, the development of J-Sand reserves through drilling new
wells or deepening within existing wellbores and refracing or recompleting the Niobrara formation within existing Codell wells. A refrac consists of the restimulation of a producing formation within
an existing wellbore to enhance production and add incremental reserves. At December 31, 2004, Patina had an inventory of over 4,500 proven development projects in Wattenberg.
Mid-continent. &>
|
|
|
|
|
| United States |
|
32,390 |
|
430,513 |
|
104,142 |
|
65,455 |
|
767,603 |
|
193,389 |
|
97,845 |
|
1,198,116 |
|
297,531 |
|
| Argentina |
|
7,539 |
|
1,118 |
|
7,725 |
|
— |
|
— |
|
— |
|
7,539 |
|
1,118 |
|
7,725 |
|
| China |
|
10,501 |
|
— |
|
10,501 |
|
— |
|
— |
|
— |
|
10,501 |
|
— |
|
10,501 |
|
| Ecuador |
|
— |
|
119,341 |
|
19,891 |
|
— |
|
— |
|
— |
|
— |
|
119,341 |
|
19,891 |
|
| Equatiorial Guinea |
|
108,730 |
|
447,347 |
|
183,288 |
|
— |
|
— |
|
— |
|
108,730 |
|
447,347 |
|
183,288 |
|
| Israel |
|
— |
|
360,428 |
|
60,071 |
|
— |
|
— |
|
— |
|
— |
|
360,428 |
|
60,071 |
|
| North Sea |
|
9,336 |
|
11,714 |
|
11,289 |
|
— |
|
— |
|
— |
|
9,336 |
|
11,714 |
|
11,289 |
San Juan. Patina established a presence in the San Juan Basin in 2003. The San Juan Basin is located in northwestern New
Mexico and southwestern Colorado and is believed to contain the second largest deposit of natural gas reserves in North America. Patina's assets consist of two relatively large consolidated acreage
blocks in the northwestern and eastern parts of the San Juan Basin, with scattered acreage in the south-central portion, all in New Mexico. In each of these areas, natural gas is being produced from
multiple reservoirs within one or more of the main gas producing formations. Most of the gas is produced from the Dakota Sandstone, the Mesaverde Group, the Pictured Cliffs Sandstone and from coals in
the Fruitland formation. At December 31, 2004, Patina had approximately 150 proven development projects in inventory in the San Juan Basin. The inventory is primarily comprised of approximately
75 drilling locations or deepening projects and 75 recompletion opportunities.
Central and Other. Patina owns various interests in oil and gas properties located primarily in central Kansas and the
Illinois Basin and minor interests in Louisiana and Texas. At December 31, 2004, Patina had approximately 50 proven development projects in inventory in the Central Region. The inventory is
primarily comprised of approximately 40 drilling locations or deepening projects and 10 recompletion opportunities.
32
THE MERGER
The following description of the material information about the merger, including the summary of the material terms and provisions of the merger agreement and the
descriptions of the opinions of the parties' financial advisors, is qualified in its entirety by reference to the more detailed annexes to this joint proxy statement/prospectus. We urge you to read
all of the annexes to this joint proxy statement/prospectus in their entirety.
The merger agreement has been included to provide you with information regarding its terms. It is not intended to provide any factual, business or operational
information about us. Such information can be found elsewhere in this joint proxy statement/prospectus and in the other public filings each of us makes with the SEC, which are available without charge
at www.sec.gov.
The merger agreement contains representations and warranties we made to each other. The assertions embodied in those representations and
warranties are qualified by information in confidential disclosure letters that we have exchanged in connection with signing the merger agreement. While we do not believe that they contain information
securities laws require us to publicly disclose other than information that has already been so disclosed, the disclosure letters do contain information that modifies, quantifies and creates
exceptions to the representations and warranties set forth in the attached merger agreement. Accordingly, you should not rely on the representations and warranties as characterizations of the actual
state of facts, since they are modified in important part by the underlying disclosure letters. These disclosure letters contain information that has been included in Noble Energy's and Patina's prior
public disclosures, as well as potential additional non-public information. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of
the merger agreement, which subsequent information may or may not be fully reflected in the our public disclosures.
Transaction Structure
The Noble Energy board of directors and the Patina board of directors each has approved the merger agreement, which provides for the merger of Patina with and
into Merger Sub, which will survive the merger as a wholly-owned subsidiary of Noble Energy. We expect to complete the merger in the second quarter of 2005. Each share of Noble Energy
common stock issued and outstanding at the effective time of the merger will remain issued and outstanding as one share of common stock of Noble Energy, and each share of Patina common stock issued
and outstanding at the effective time of the merger will be converted into the right to receive either cash or Noble Energy common stock, as described below. See "—Merger Consideration."
Merger
Sub's certificate of incorporation will be the certificate of incorporation and the Merger Sub's bylaws will be the bylaws of the surviving corporation after the effective time of
the merger. At the effective time of the merger, the Noble Energy board of directors will be expanded by two members, and these vacancies will be filled by Thomas J. Edelman and Jeffrey L. Berenson,
who are currently members of the board of directors of Patina.
Source of Funds for Cash Portion of Merger Consideration
Noble Energy intends to pay the cash portion of the merger consideration to the Patina stockholders and to repay indebtedness under Patina's existing credit
facility from funds available to Noble Energy at closing. Noble Energy currently intends these funds to be comprised of funds available under existing credit lines combined with the proceeds from a
committed bank credit facility underwritten by JPMorgan. The credit facility is a $1.3 billion reducing revolving facility that has a five-year maturity. There are no mandatory
reductions to the commitment through year three. During year four, the commitment reduces by 5.0% per quarter and during year five, by 20% per quarter.
33
Noble
Energy anticipates that the covenants and other general terms of the new facility will be substantially sNT> |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
168,496 |
|
1,370,461 |
|
396,907 |
|
65,455 |
|
767,603 |
|
193,389 |
|
233,951 |
|
2,138,064 |
|
590,296 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112
Pro Forma Combined Standardized Measure of Discounted Future Net Cash Flows
The following tables set forth the standardized measure of discounted future net cash flows relating to proved oil and gas reserves of Noble Energy, Patina and on
a Pro Forma Combined basis as of December 31, 2004, as well as changes therein for the year then ended for Noble Energy, Patina and on a Pro Forma Combined basis:
|
|
Noble Energy
|
|
Patina
|
|
Pro Forma
Combined
|
|
|
|
($ in millions)
|
|
| UNITED STATES |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
5,429 |
|
$ |
9,773 |
|
$ |
15,202 |
|
| Future production costs |
|
|
(1,135 |
) |
|
(2,471 |
) |
|
(3,606 |
) |
| Future development costs |
|
|
(364 |
) |
|
(1,126 |
) |
|
(1,490 |
) |
| Future income tax expense |
|
|
(1,219 |
) |
|
(2,021 |
) |
|
(3,240 |
) |
| |
Background of the Merger
Noble Energy's management and board of directors have discussed from time to time the benefits of acquiring oil and gas reserves and exploration and development
prospects through merger or acquisition. For a number of years, Patina's board of directors and management considered the strategic and financial benefits of a sale or a business combination with a
larger company. During that period, Patina's management met with a variety of parties regarding such transactions. The discussions generally arose in response to indications of interest received by
Patina and ranged widely in their degree of seriousness.
At
a special board meeting held on March 4, 2004, Noble Energy's management presented to the Noble Energy board various strategic alternatives. JPMorgan had assisted management in
the assessment of some of these alternatives, which included the consideration of acquiring additional U.S. onshore producing assets or potentially acquiring an entire company that concentrated in the
U.S. onshore. Several potential candidate companies were discussed, including Patina.
During
the period from April through June of 2004, Noble Energy continued to evaluate the merits of acquiring a U.S. onshore company to strengthen its domestic asset portfolio and to
provide more balance between its domestic and international businesses.
In
June of 2004, Noble Energy authorized JPMorgan to approach Patina to determine whether Patina may have an interest in discussing a potential strategic business combination
transaction.
On
June 30, 2004, a representative of JPMorgan spoke with Thomas J. Edelman, Patina's Chairman and Chief Executive Officer, and arranged a meeting for July 8, 2004. At the
meeting, JPMorgan's representatives asked Mr. Edelman whether Patina would be willing to discuss a strategic transaction with Noble Energy. Mr. Edelman reiterated Patina's longstanding
and publicly disclosed willingness to discuss the sale of Patina or a merger with any interested party it considered responsible and financially capable. Given Noble Energy's reputation, he indicated
that Patina would welcome such a discussion. Following the meeting with JPMorgan, Mr. Edelman informed Patina's board of directors of the approach and conversations regarding the proposed
transaction.
On
July 15, 2004, Charles D. Davidson, Noble Energy's Chairman, President and Chief Executive Officer, flew to New York to meet Mr. Edelman. They discussed the status of
their companies, their corporate objectives, the possibility of a merger of Noble Energy and Patina and the potential strategic, commercial and financial benefits of such a transaction. In addition,
they had preliminary discussions regarding some of the structural and other issues that would have to be addressed in connection with a potential transaction, including the identity of the surviving
company, the need for Patina's stockholders to receive a material premium for their shares and the type and mix of consideration to be paid in a transaction.
On
July 27, 2004, at a meeting of Noble Energy's board of directors, management informed the board of the results of the meeting between Mr. Edelman and
Mr. Davidson, and the board and management discussed the merits of continuing discussions between the two companies.
To
facilitate the exchange of non-public information and further explore a business combination, Noble Energy and Patina entered into a confidentiality agreement on
August 9, 2004. Thereafter, the companies exchanged detailed information relating to their businesses, assets and operations.
On
August 24, 2004, Mr. Davidson informed Mr. Edelman that Noble Energy had substantially completed its initial due diligence review and that Noble Energy remained
interested in continuing
34
discussions
regarding a possible transaction. Messrs. Davidson and Edelman agreed that each company would continue with its due diligence process.
Over
the next several months, management, technical staff, engineers and certain advisors of each of Noble Energy and Patina exchanged significant due diligence materials and conducted
extensive due diligence reviews of the businesses, operations and assets of the other party.
On
September 14, 2004, a regularly scheduled meeting of Patina's board of directors was held in Denver. At the meeting, Mr. Edelman described the status of the Noble Energy
discussions. Representatives of Petrie Parkman presented an overview of the international energy market, Petrie Parkman's views on oil and gas prices, the merger and acquisition market for independent
oil and gas companies as well as an assessment of Noble Energy's core operations and senior management. Petrie Parkman reviewed its assessment of the two companies' market positions, its preliminary
views on the benefits of the potential transaction and its views of financial aspects of the potential transaction. After extensive discussion, Patina's board of directors authorized
Mr. Edelman to continue discussions with Noble Energy.
On
September 20, 2004, at a special telephonic meeting of the Noble Energy board, representatives of management and JPMorgan further discussed with the board the merits of a
combination of Noble Energy and Patina. After that discussion, Noble Energy's board of directors authorized Mr. Davidson to continue discussions with Patina.
On
September 21, 2004, Mr. Davidson and Mr. Edelman met to discuss the proposed transaction. At the meeting, Mr. Davidson reconfirmed Noble Energy's strong
interest in pursuing a transaction in which Noble Energy would be the acquiror and Noble Energy's desire that the consideration be a combination of 60% stock and 40% cash. Subsequent to that meeting,
representatives of Petrie Parkman and JPMorgan discussed by telephone various financial and operational matters relating to the transaction.
On
October 15, 2004, at a special telephonic meeting of the Noble Energy board, representatives of management and JPMorgan reviewed the status of discussions with Patina and
provided updated analyses of the merits of a strategic combination of the two companies. During that meeting the board authorized Mr. Davidson to continue discussions with Patina.
&n> |
|
|
|
|
|
|
| Future net cash flows |
|
|
2,711 |
|
|
4,155 |
|
|
6,866 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(1,104 |
) |
|
(2,056 |
) |
|
(3,160 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
1,607 |
|
$ |
2,099 |
|
$ |
3,706 |
|
| |
|
|
|
|
|
|
|
EQUATORIAL GUINEA |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
4,358 |
|
$ |
— |
|
$ |
4,358 |
|
| Future production costs |
|
|
(490 |
) |
|
— |
|
|
(490 |
) |
| Future development costs |
|
|
(83 |
) |
|
— |
|
|
(83 |
) |
| Future income tax expense |
|
|
(1,704 |
) |
|
— |
|
|
(1,704 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
2,081 |
|
|
— |
|
|
2,081 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(1,079 |
) |
|
— |
|
|
(1,079 |
) |
| |
|
|
|
|
On
October 19, 2004, Patina's management provided its board of directors with a telephonic update on the status of the discussions with Noble Energy. Various issues relating to
the transaction were discussed.
On
November 17, 2004, Skadden, Arps delivered a draft merger agreement to Cravath. Thereafter, the management and certain advisors of each company commenced review and negotiation
of the legal and economic terms of the merger agreement.
On
November 22, 2004, the Patina board of directors met in New York to discuss the proposed business combination. At the meeting, members of Patina's management reviewed the
results of the due diligence process to date with specific emphasis on the geopolitical and energy market factors which might adversely impact the value of Noble Energy's operations in Equatorial
Guinea, Israel and Ecuador. Representatives of Petrie Parkman presented updated overviews and analyses of the proposed business combination. Representatives of Cravath reviewed the fiduciary duties of
the Patina directors in connection with the potential transaction. After discussion, Patina's board of directors again authorized management to continue negotiations.
35
On
November 23, 2004, Mr. Edelman and Mr. Davidson discussed certain business and organizational issues relating to the proposed business combination and agreed to
hold a general meeting in New York.
On
November 29, 2004, members of management of Noble Energy and Patina, with the assistance of their respective financial and legal advisors, met in New York to discuss and
negotiate the terms of the proposed business combination. On December 1, 2004, a representative of Petrie Parkman met with Mr. Davidson in his Houston office to further discuss the
status and economic terms of the proposed transaction. The following day, Messrs. Edelman and Davidson held further discussions on price and other terms. Based on a series of issues raised by
Mr. Davidson, Mr. Edelman and Patina's management prepared certain supplemental information for submission to Mr. Davidson and Noble Energy's board of directors. The information
was submitted to Mr. Davidson on December 6, 2004.
On
December 7, 2004, Noble Energy's board of directors met with management and representatives of JPMorgan to discuss the proposed business combination. During that meeting,
members of Noble Energy's management reviewed the results of the due diligence process to date, and JPMorgan presented an updated financial analysis of the proposed business combination.
Subsequent
to the conclusion of Noble Energy's board of directors meeting on December 7, 2004, Messrs. Edelman and Davidson spoke and agreed to continue negotiations the
following day. Thereafter, representatives of Noble Energy and Patina and their respective legal advisors continued to negotiate the terms of the merger agreement.
On
December 10, 2004, Patina's board of directors held its regular quarterly meeting in New York. Following a brief session dedicated to general corporate matters, the discussion
turned to the proposed business combination and representatives of Petrie Parkman and Cravath joined the meeting. At the meeting, Petrie Parkman presented updated overviews and analyses of the
proposed business combination. Mr. Davidson joined the meeting for lunch and presented an overview of Noble Energy and his views of the strategic rationale for the proposed business
combination. After lunch, Mr. Davidson left the meeting. The Patina board of directors again discussed their views of the transaction and supported Mr. Edelman's plan and proposed
timetable for proceeding to reach a final agreement.
From
December 10 through December 15, 2004, representatives of Noble Energy and Patina and their respective legal advisors finalized the terms of the merger agreement and
completed their due diligence.
On
December 15, 2004, Patina's board of directors again met telephonically to consider the final terms of the proposed business combination between Noble Energy and Patina. Prior
to the meeting, Patina's board of directors was provided with a substantially final draft of the merger agreement and other materials related to the proposed transaction. At the meeting:
- •
- Patina's
management updated the board of directors on the terms of the proposed transaction and the results of due diligence;
- •
- Representatives
of Cravath reviewed the terms of the proposed merger agreement; and
- •
- Representatives
of Petrie Parkman rendered an oral opinion, subsequently confirmed by delivery of its written opinion dated December 15, 2004, that as of such date,
and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be received by the holders of Patina common stock (other than Noble Energy, Merger Sub or
Patina) was fair, from a financial point of view, to such holders (see "—Opinion of Patina's Financial Advisor").
Following
discussions, Patina's board of directors approved and declared advisable, with two directors absent from the voting, the merger agreement, the merger and the other transactions
36
contemplated
by the merger agreement and unanimously resolved to recommend that Patina's stockholders vote to adopt the merger agreement and approve the merger and the other transactions contemplated
by the merger agreement.
On
December 15, 2004, the Noble Energy board of directors held a special meeting by teleconference to consider the strategic business combination between Noble Energy and Patina.
Prior to the meeting, the board of directors was provided with a substantially final draft of the merger agreement and other materials related to the proposed transaction. At the meeting:
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
1,002 |
|
$ |
— |
|
$ |
1,002 |
|
| |
|
|
|
|
|
|
|
ECUADOR |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
377 |
|
$ |
— |
|
$ |
377 |
|
| Future production costs |
|
|
(42 |
) |
|
— |
|
|
(42 |
) |
| Future development costs |
|
|
(16 |
) |
|
— |
|
|
(16 |
) |
| Future income tax expense |
|
|
(129 |
) |
|
— |
|
|
(129 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
190 |
|
|
— |
|
|
190 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(82 |
) |
|
— |
|
|
(82 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
108 |
|
$ |
— |
|
$ |
108 |
|
| |
|
|
|
|
|
|
|
ISRAEL |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
Energy management updated the board of directors on the terms of the proposed transaction and the results of the due diligence process;
•Representatives
of Skadden, Arps reviewed the terms of the proposed merger agreement and advised the board of directors of its fiduciary obligations when considering a
strategic business combination with Patina; and
•JPMorgan
rendered an oral opinion (as subsequently confirmed in writing in an opinion dated December 15, 2004) that as of that date and based on and subject to the
assumptions made, procedures followed, matters considered and limitations of review set forth in the opinion, the aggregate merger consideration to be paid by Noble Energy in the merger was fair from
a financial point of view to Noble Energy (see "—Opinion of Noble Energy's Financial Advisor").
Following
discussions, the Noble Energy board of directors unanimously approved the merger agreement, the merger, the other transactions contemplated by the merger agreement and the
issuance of Noble Energy common stock in connection with the merger and resolved to recommend the approval by Noble Energy's stockholders of the issuance of Noble Energy common stock in connection
with the merger.
The
definitive merger agreement was executed on behalf of Patina, Noble Energy and Merger Sub, effective as of December 15, 2004. Before the open of the market on
December 16, 2004, the parties issued a joint press release announcing the execution of the merger agreement.
Noble Energy's Reasons for the Merger; Recommendation of the Stock Issuance in the Merger by the Noble Energy Board of Directors
The Noble Energy board of directors has determined that the merger is fair to, and in the best interests of, Noble Energy and its stockholders. In deciding to
approve the merger agreement and to recommend that Noble Energy's stockholders vote to approve the issuance of Noble Energy common stock in connection with the merger, the Noble Energy board of
directors consulted with Noble Energy's management and legal and financial advisors and considered several factors, including:
- •
- the
oral opinion delivered by JPMorgan on December 15, 2004 (as subsequently confirmed in writing in an opinion dated December 15, 2004) that, as of that date
and based on and subject to the assumptions made, procedures followed, matters considered and limitations of review set forth in the opinion, the aggregate merger consideration to be paid by Noble
Energy in the merger was fair from a financial point of view to Noble Energy;
- •
- the
terms of the merger agreement and the structure of the transaction, including the conditions to each company's obligation to complete the merger;
- •
- the
fact that the merger agreement requires Patina to pay a termination fee of $100 million if the merger agreement is terminated in accordance with certain
provisions of the merger agreement;
- •
- the
ability of Noble Energy and Patina to complete the merger, including their ability to obtain the necessary regulatory approvals and their obligations to attempt to
obtain those approvals;
37
- •
- the
terms of the commitment letter with JPMorgan Chase Bank, NA ("JPMorgan Chase Bank") to finance the cash portion of the merger consideration;
- •
- the
fact that the merger would establish new core areas for Noble Energy in the Rocky Mountain and Mid-continent regions;
- •
- the
fact that the merger would increase Noble Energy's proved reserves and production by over 50%, increase onshore domestic reserves from 15% to 45% and lengthen Noble
Energy's domestic reserve life;
- •
- the
fact that Patina's long-lived oil and gas reserves provide a significant inventory of low-risk opportunities, consisting of approximately 10,000
low-risk onshore projects that will balance Noble Energy's existing portfolio;
- •
- an
oil and gas hedging program to help support the economics of the merger;
- •
- the
expectation that Noble Energy will benefit from Patina's extensive tight gas sands technological and operational expertise that it gained in connection with the
development of its Wattenberg field, particularly with respect to the development of Noble Energy's existing Rocky Mountain assets; and
- •
- the
fact that the combined company will be significantly larger than Noble Energy is now and, as a result, should have greater exploration and production strengths, should
have greater liquidity in the market for its securities and should be able to consider future strategic opportunities that might not otherwise be possible.
Each
of these factors favored Noble Energy's board of directors conclusion that the merger is advisable and in the best interests of Noble Energy and its stockholders. The board of
directors relied on the Noble Energy and Patina management teams to provide accurate and complete financial information, projections and assumptions as the starting point for its analysis.
The
Noble Energy board of directors considered a number of additional factors concerning the merger agreement and the transactions contemplated by the merger agreement, including the
merger. These factors included:
- •
- information
concerning the financial condition, results of operations, prospects and businesses of Noble Energy and Patina, including the respective companies' reserves,
production volumes, cash flows from operations, recent performance of common stock and the ratio of Noble Energy's common stock price to Patina's common stock price over various periods, as well as
current industry, economic and market conditions;
- •
- the
net asset value per share of the common stock of both Patina and Noble Energy; and
<
|
$ |
1,089 |
|
$ |
— |
|
$ |
1,089 |
|
| Future production costs |
|
|
(133 |
) |
|
— |
|
|
(133 |
) |
| Future development costs |
|
|
(88 |
) |
|
— |
|
|
(88 |
) |
| Future income tax expense |
|
|
(264 |
) |
|
— |
|
|
(264 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
604 |
|
|
— |
|
|
604 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(249 |
) |
|
— |
|
|
(249 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
355 |
|
$ |
— |
|
$ |
355 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
113
NORTH SEA |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
439 |
|
$ |
— |
|
$ |
439 |
|
| Future production costs |
|
|
(153 |
) |
|
—BR>
•the
results of business, legal and financial due diligence investigations of Patina conducted by Noble Energy's management and legal advisors.
Noble
Energy's board of directors also considered a variety of risks and other potentially negative factors concerning the merger agreement and the transactions contemplated by the
merger agreement, including the merger. These factors included:
- •
- the
fact that there are significant risks inherent in combining and integrating two companies, including that the companies may not be successfully integrated, and that
successful integration of the companies will require the dedication of significant management resources, which will temporarily detract attention from the day-to-day businesses
of the combined company;
- •
- the
fact that a large portion of the total merger consideration is expected to be allocated to Patina's unproved resources, and there is always uncertainty in successfully
converting such resources into proved reserves;
38
- •
- the
effects on net asset value, cash flows from operations and other financial measures under various modeling assumptions, and the uncertainties in timing with respect to
some anticipated benefits of the merger;
- •
- the
risk of changes in oil and gas prices from those used to evaluate the merger;
- •
- the
increased level of indebtedness of the combined company as a result of Noble Energy's financing of the merger;
- •
- the
fact that the merger agreement imposes limitations on Noble Energy's ability to solicit offers for the acquisition of Noble Energy as well as the possibility that Noble
Energy could be required to pay a termination fee of $100 million in certain circumstances;
- •
- the
fact that Noble Energy entered into certain hedging transactions in connection with the expected consummation of the merger and it is possible that, if Noble Energy
terminates such hedges, it could realize actual losses in excess of the $45.0 million reimbursement limit that Patina would be required to reimburse Noble Energy in certain circumstances upon
termination of the merger agreement.
- •
- the
fact that the capital requirements necessary to achieve the expected growth of the combined company's businesses will be significant, and there can be no assurance that
the combined company will be able to fund all of its capital requirements from operating cash flows, and the fact that the combined company would have substantially more total long-term
debt than Noble Energy on a stand-alone basis;
- •
- the
fact that the merger might not be completed as a result of a failure to satisfy the conditions contained in the merger agreement; and
- •
- other
matters described under the caption "Risk Factors."
This
discussion of the information and factors considered by the Noble Energy board of directors in reaching its conclusions and recommendations includes all of the material factors
considered by the board but is not intended to be exhaustive. In view of the wide variety of factors considered by the Noble Energy board of directors in evaluating the merger agreement and the
transactions contemplated by it, including the merger, and the complexity of these matters, the Noble Energy board of directors did not find it practicable to, and did not attempt to, quantify, rank
or otherwise assign relative weight to those factors. In addition, different members of the Noble Energy board of directors may have given different weight to different factors.
It
should be noted that this explanation of the reasoning of the Noble Energy board of directors and all other information presented in this section is forward-looking in nature and,
therefore, should be read in light of the factors discussed under the heading "Forward-Looking Statements" beginning on page 22 of this document.
The
Noble Energy board of directors determined that the merger, the merger agreement and the other transactions contemplated by the merger agreement are in the best interests of Noble
Energy and its stockholders. Accordingly, the Noble Energy board of directors approved and adopted the merger agreement and recommends that Noble Energy stockholders vote "FOR" approval of the
issuance of Noble Energy common stock in the merger.
Patina's Reasons for the Merger; Recommendation of the Merger by the Patina Board of Directors
Patina's board of directors has determined that the merger is fair to, and in the best interests of, Patina and its stockholders. In deciding to approve the
merger agreement and to recommend that
39
Patina's
stockholders vote to approve the merger, Patina's board consulted with Patina's management and legal and financial advisors and considered a variety of factors, including:
- •
- the
opinion of Petrie Parkman delivered orally on December 15, 2004 and subsequently confirmed in writing that, as of such date, and based on and subject to the
matters set forth therein, the merger consideration to be received by holders of Patina common stock (other than Noble Energy, Merger Sub or Patina) was fair, from a financial point of view, to such
holders;
- •
- the
merger consideration represented a premium of 18.7% above the closing price of Patina's common stock on the day of the board's approval;
- •
- the
combined company will be significantly larger than P
|
|
|
(153 |
) |
| Future development costs |
|
|
(23 |
) |
|
— |
|
|
(23 |
) |
| Future income tax expense |
|
|
(109 |
) |
|
— |
|
|
(109 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
154 |
|
|
— |
|
|
154 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(33 |
) |
|
— |
|
|
(33 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
121 |
|
$ |
— |
|
$ |
121 |
|
| |
|
|
|
|
|
|
|
OTHER INTERNATIONAL |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
662 |
|
$ |
— |
|
$ |
662 |
|
| Future production costs |
|
|
(310 |
) |
|
— |
|
|
(310 |
) |
| Future development costs |
|
|
(33 |
) |
|
— |
|
|
(33 |
) |
| Future income tax expense |
|
|
(93 |
) |
|
— |
|
|
(93 |
) |
| |
|
|
|
|
|
|
|
•the
combined company's larger market capitalization should enhance its stock's liquidity, and the combined company's more geographically diverse asset base, together with
the combination of Patina's inventory of relatively low risk and predictable projects with Noble Energy's higher risk but higher impact projects, will diversify the risk profile of the combined
company; all of which could cause the combined company's common stock to enjoy a better trading multiple;
•the
transaction affords Patina stockholders the opportunity to retain a substantial interest in Patina's long-lived onshore domestic assets while providing them
access to an interest in Noble Energy's high-impact international and deepwater Gulf of Mexico projects;
•the
combined company can access the more favorable financing opportunities implicit in Noble Energy's investment grade debt rating;
•for
Patina to continue to grow rapidly at a time when attractive opportunities at reasonable prices are becoming harder to find, it might need to expand into new areas,
including offshore and internationally, with all of the risks associated with such an expansion;
•Patina's
board of directors' confidence in the ability of Noble Energy's chief executive officer to lead the combined company and continue to enhance stockholder value;
•two
members of Patina's board of directors, including Patina's chief executive officer, will be joining the board of the combined company;
•subject
to proration, Patina's stockholders may elect to receive cash or stock in the transaction thereby having the opportunity to choose between participation in the
combined company or liquidity;
•holders
of Patina common stock who dissent from the merger will have appraisal rights under Delaware law providing stockholders who dispute the fairness of the merger an
opportunity to have a court determine the fair value of their shares;
•the
terms of the merger agreement and the structure of the transaction, including the conditions to each company's obligations to complete the merger;
•the
ability of Noble Energy and Patina to complete the merger, including their ability to obtain the necessary regulatory approvals and their obligations to attempt to
obtain those approvals;
•the
fact that the merger agreement imposes limitations on the ability of Noble Energy to solicit offers for the acquisition of Noble Energy as well as the possibility that
Noble Energy could be required to pay a termination fee of $100 million in certain circumstances; and
•the
terms of the merger agreement permit Patina's board of directors to change or withdraw its recommendation of the merger to Patina's stockholders if, among other reasons,
the board
40
Each
of these factors supported Patina's board of directors' conclusion that the merger is advisable and in the best interests of Patina and its stockholders. In reaching its
conclusions, Patina's board relied on Patina's and Noble Energy's managements to provide accurate and complete financial information, projections and assumptions as the starting point for its
analysis.
The
Patina board of directors considered a number of additional factors concerning the merger agreement and the transactions contemplated by the merger agreement, including:
- •
- information
concerning the financial condition, results of operations, prospects and businesses of Noble Energy and Patina, including the respective companies' reserves,
production volumes, cash flows from operations, recent performance of common stock and the ratio of Noble Energy's common stock price to Patina's common stock price over various periods, as well as
current industry, economic and market conditions;
- •
- assessments
of the net asset value per share of the common stock of both Noble Energy and Patina; and
- •
- the
results of business, legal and financial due diligence investigations of Noble Energy conducted by Patina's management and advisors.
The
Patina board of directors also considered a variety of risks and other potentially negative factors concerning the merger agreement and the transactions contemplated by the merger
agreement including:
- •
- the
significant risks and expenses inherent in combining and successfully integrating two companies, including the need for significant management resources which will
temporarily detract attention from the day-to-day business of the combined company;
- •
- the
size of the premium represented by the merger consideration relative to the pre-announcement value of Patina's common stock might be reduced or eliminated by a decline
in Noble Energy's common stock price through the time the merger is consummated;
- •
- the
geopolitical risks and other risks associated with conducting international oil and gas operations specifically in Ecuador, Equatorial Guinea and Israel;
- •
- oil
and gas prices will change from those used to evaluate the merger;
- •
- the
combined company would have approximately $2.5 billion of indebtedness immediately following the merger, assuming the merger were to close on December 31,
2004;
SIZE=2>Future net cash flows |
|
|
226 |
|
|
— |
|
|
226 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(77 |
) |
|
— |
|
|
(77 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
149 |
|
$ |
— |
|
$ |
149 |
|
| |
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
12,354 |
|
$ |
9,773 |
|
$ |
22,127 |
|
| Future production costs |
|
|
(2,263 |
) |
|
(2,471 |
) |
|
(4,734 |
) |
| Future development costs |
|
|
(607 |
) |
|
(1,126 |
) |
|
(1,733 |
) |
| Future income tax expense |
|
|
(3,518 |
) |
|
(2,021 |
) |
|
(5,539 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
5,966 |
|
|
4,155 |
|
|
10,121 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(2,624 |
) |
|
(2,056 |
) |
|
(4,680 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
3,342 |
41
- •
- certain
management stockholders may have interests that are different from those of the remaining stockholders as described under "—Financial Interests of
Patina's Directors and Executive Officers in the Merger;"
- •
- approximately
40% of the consideration to be received by Patina's stockholders will be cash and the future participation of such stockholders in the benefits associated with
higher energy prices, if they occur, would be diminished; and
- •
- other
matters described under the caption "Risk Factors."
The
foregoing discussion of the factors considered by the Patina board of directors is not intended to be exhaustive, but rather, includes all material factors considered by the Patina
board. In reaching its decision, the Patina board did not quantify or assign any relative weights to the factors considered, and individual directors may have given different weights to different
factors. The Patina board considered all these factors as a whole, and overall considered them to be favorable to, and to support, its determination.
It
should be noted that this explanation of the Patina board of directors' reasoning and all other information presented in this section is forward-looking in nature and, therefore,
should be read along with the factors discussed under the heading "Forward-Looking Statements" beginning on page 22 of this document.
For
the reasons set forth above, the Patina board of directors has approved the merger agreement, the merger and the other transactions contemplated by the merger agreement and
recommends that Patina's stockholders vote "FOR" the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement.
Opinion of Noble Energy's Financial Advisor
Noble Energy retained JPMorgan as its financial advisor in connection with the merger and to render an opinion to the Noble Energy board of directors as to the
fairness, from a financial point of view, to Noble Energy of the aggregate merger consideration to be paid by Noble Energy in the proposed merger. JPMorgan was selected by the Noble Energy board of
directors based on JPMorgan's qualifications, reputation and experience in the valuation of businesses and securities in connection with mergers and acquisitions, in general, and oil and gas
transactions in particular. JPMorgan rendered its oral opinion to the Noble Energy board of directors on December 15, 2004 (as subsequently confirmed in writing in an opinion dated
December 15, 2004) that, as of that date, the aggregate consideration to be paid by Noble Energy with respect to the merger was fair, from a financial point of view, to Noble Energy. The amount
of the merger consideration was determined through arm's length negotiations between Noble Energy and Patina.
The
full text of JPMorgan's opinion describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken by JPMorgan. The opinion is attached
as Annex B and is incorporated by reference in this joint proxy statement/prospectus. JPMorgan's opinion is directed only to the fairness, from a financial point of view, to Noble Energy, of the
aggregate merger consideration to be paid with respect to the merger and does not address any other aspect of the merger or any related transaction. The opinion does not address the relative merits of
the merger as compared to other business strategies or transactions that might be available with respect to Noble Energy or the underlying business decision of Noble Energy to engage in the merger.
The opinion does not constitute a recommendation to any stockholder as to how to vote or act with respect to any matters relating to the proposed merger. Noble Energy did not provide specific
instructions to, or place any limitations on, JPMorgan with respect to the procedures to be followed or factors to be considered by it in performing its analyses or providing its opinion. You are
urged to read this opinion carefully in
42
its
entirety. The summary of JPMorgan's opinion below is qualified in its entirety by reference to the full text of JPMorgan's opinion.
In
furnishing its opinion, JPMorgan did not admit that it is an expert within the meaning of the term "expert" as used in the Securities Act of 1933, as amended (the "Securities Act"),
nor did it admit that its opinion constitutes a report or valuation within the meaning of the Securities Act.
In
connection with its review of the proposed merger, and in arriving at its opinion, JPMorgan, among other things:
- •
- reviewed
a draft of the merger agreement dated December 15, 2004;
- •
- reviewed
certain publicly available business and financial information concerning Noble Energy and Patina and the industries in which they operate;
- •
- compared
the proposed financial terms of the merger with the publicly available 2%">
|
$ |
2,099 |
|
$ |
5,441 |
|
| |
|
|
|
|
|
|
|
114
Sources of Changes in Standardized Measure of Discounted Future Net Cash Flows
The principal changes in the aggregate standardized measure of discounted future net cash flows attributable to the proved oil and gas reserves of Noble Energy,
Patina and Pro Forma Combined for the year ended December 31, 2004 are as follows:
|
|
Noble Energy
|
|
Patina
|
|
Pro Forma
Combined
|
|
|
|
($ in millions)
|
|
| Standandized measure of discounted future net cash flows at the beginning of the year |
|
$ |
2,512 |
|
$ |
1,781 |
|
$ |
4,293 |
|
| Extensions, discoveries and improved recovery, less related costs |
|
|
839 |
|
|
435 |
|
|
1,274 |
|
| Revisions of previous quantity estimates |
|
|
(70 |
) |
|
(209 |
) |
|
(279 |
) |
| Changes in estimated future development costs |
|
|
99 |
|
|
(55 |
) |
|
44 |
|
| Purchases (sales) of minerals in place |
|
|
12 |
|
|
7 |
|
|
19 |
|
| Net changes in prices and production costs |
|
|
861 |
|
|
362 |
|
|
1,223 |
|
| Accretion of discount |
|
|
406 |
|
|
270 |
|
|
676 |
|
| Sales of oil and gas produced, net of production costs |
|
|
(1,014 |
) |
|
(427 |
) |
|
(1,441 |
) |
| Development costs incurred during the period |
|
|
92 |
|
|
125 |
financial terms of certain transactions involving companies JPMorgan deemed relevant and the
consideration received for such companies;
•compared
the financial and operating performance of Noble Energy and Patina with publicly available information concerning certain other companies JPMorgan deemed relevant
and reviewed the current and historical market prices of Noble Energy common stock and Patina common stock and certain publicly traded securities of such other companies;
•reviewed
certain internal financial analyses and forecasts prepared by the managements of Noble Energy and Patina relating to their respective businesses, as well as the
estimated amount and timing of cost savings and related expenses and synergies expected to result from the merger ("Synergies") supplied by the managements of Noble Energy and Patina, respectively;
•reviewed
oil and gas reserve reports for Noble Energy and Patina prepared by the managements of Noble Energy and Patina, respectively, and audited by independent petroleum
engineers (the "Reserve Reports"); and
•performed
such other financial studies and analyses and considered such other information as JPMorgan deemed appropriate for the purposes of its opinion.
In
addition, JPMorgan held discussions with certain members of the management of Noble Energy and Patina with respect to certain aspects of the proposed merger, the past and current
business operations of Noble Energy and Patina, the financial condition and future prospects and operations of Noble Energy and Patina, the effects of the proposed merger on the financial condition
and future prospects of Noble Energy and certain other matters JPMorgan believed necessary or appropriate to its inquiry.
In
giving its opinion, JPMorgan relied upon and assumed, without independent verification, the accuracy and completeness of all information that was publicly available or was furnished
to it by Noble Energy and Patina or otherwise reviewed by it, and JPMorgan did not assume any responsibility or liability therefor. JPMorgan did not conduct any valuation or appraisal of any assets or
liabilities, nor were any such valuations or appraisals provided to JPMorgan, other than the Reserve Reports.
In
relying on financial analyses and forecasts provided to JPMorgan, including the Synergies, JPMorgan assumed that they had been reasonably prepared based on assumptions reflecting the
best currently available estimates and judgments by management as to the expected future results of operations and financial condition of Noble Energy and Patina to which such analyses or forecasts
related. In relying on the Reserve Reports, JPMorgan assumed that they had been reasonably prepared by the managements of Noble Energy and Patina, respectively, based on assumptions reflecting the
best currently available estimates and judgments by the respective managements. JPMorgan assumed that the merger would qualify as a tax-free reorganization for United States federal income
tax purposes
43
and
that the other transactions contemplated by the merger agreement would be consummated as described in the merger agreement. JPMorgan relied as to all legal matters relevant to rendering its
opinion upon the advice of counsel. JPMorgan also assumed that the definitive merger agreement would not differ in any material respects from the draft thereof furnished to it. JPMorgan further
assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the merger would be obtained without any adverse effect on Noble Energy or Patina
or on the contemplated benefits of the merger. For the purposes of its opinion, JPMorgan calculated the consideration payable in the merger based upon the fully diluted number of shares of Patina
common stock outstanding as reflected in Section 3.2(a) of the merger agreement.
JPMorgan's
opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to it as of, the date of its opinion. It should be
understood that subsequent developments may affect JPMorgan's opinion and JPMorgan does not have any obligation to update, revise or reaffirm its opinion. JPMorgan expressed no opinion as to the price
at which the Noble Energy common stock or the Patina common stock will trade at any future time.
Summary of Financial Analyses of Noble Energy's Financial Advisor
In connection with rendering its opinion to the Noble Energy board of directors, JPMorgan performed a variety of financial and comparative analyses, including
those described below. The preparation of a fairness opinion is a complex process and involves various judgments and determinations as to the most appropriate and relevant assumptions and financial
analyses and the application of these methods to the particular circumstances involved. Fairness opinions are therefore not necessarily susceptible to partial analysis or summary description.
Accordingly,
JPMorgan believes that the analyses it performed and the summary set forth below must be considered as a whole and that selecting portions of its analyses and factors, or
focusing on information in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes
underlying the analyses performed by JPMorgan in connection with its opinion. In arriving at its opinion, JPMorgan did not attribute any particular weight to any analyses or factors considered by it
and did not form an opinion
as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, JPMorgan arrived at its ultimate opinion based on
the results of all analyses undertaken by it and assessed as a whole, and believes that the totality of the factors considered and analyses it performed in connection with its opinion operated
collectively to support its determination as to the fairness of the merger consideration from a financial point of view.
In
performing its analysis, JPMorgan considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Noble Energy and
Patina. The analyses performed by JPMorgan are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by the analyses.
The analyses were prepared solely as part of JPMorgan's analysis of the fairness, from a financial point of view, to Noble Energy of the merger consideration. Additionally, the analyses performed by
JPMorgan relating to the values of businesses do not purport to |
|
217 |
|
| Net changes in income taxes |
|
|
(380 |
) |
|
(126 |
) |
|
(506 |
) |
| Changes in timing of estimated future production and other |
|
|
(15 |
) |
|
(64 |
) |
|
(79 |
) |
| |
|
|
|
|
|
|
|
| Standandized measure of discounted future net cash flows at the end of the year |
|
$ |
3,342 |
|
$ |
2,099 |
|
$ |
5,441 |
|
| |
|
|
|
|
|
|
|
115
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
Noble Energy
Noble Energy common stock is listed on the NYSE and traded under the symbol "NBL." The following table sets forth, for the calendar quarters indicated, the high
and low reported trading prices per share of Noble Energy common stock on the NYSE and the cash dividends declared per share of Noble Energy common stock.
|
|
Noble Energy Common Stock
|
|
|
High
|
|
Low
|
|
Dividend
|
| Quarter Ended |
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
| March 31 |
|
$ |
38.62 |
|
$ |
33.07 |
|
$ |
0.04 |
| June 30 |
|
|
40.77 |
|
|
32.33 |
|
|
0.04 |
| September 30 |
|
|
40.00 |
|
|
35.37 |
|
|
0.04 |
| December 31 |
|
|
45.99 |
|
|
37.48 |
|
JPMorgan's
opinion and financial analyses were only one of many factors considered by the Noble Energy board of directors in its evaluation of the merger and should not be viewed as
determinative of the views of the Noble Energy board of directors or management with respect to the merger or the merger consideration.
The
following is a summary of the material financial analyses performed by JPMorgan in connection with providing its oral opinion to the Noble Energy board of directors on
December 15, 2004. Some of the summaries of the financial analyses include information presented in tabular
44
format. To fully understand the financial analyses, the tables should be read together with the text of each summary. Considering the data set forth in the tables without considering the narrative
description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial
analyses.
Historical exchange ratio analysis. JPMorgan carried out a historical exchange ratio analysis to examine how the ratio of the
respective Noble Energy and Patina share prices had changed over the course of the previous 24 months. JPMorgan calculated the exchange ratio by dividing Patina's closing share price by Noble
Energy's closing share price on a daily basis.
JPMorgan
calculated average exchange ratios for particular time periods ending December 14, 2004.
|
|
Average exchange ratio
|
| Current |
|
0.517x |
| One week |
|
0.516x |
| 1-month |
|
0.518x |
| 3-month |
|
0.508x |
| 6-month |
|
0.527x |
| 12-month |
|
0.541x |
| 24-month |
|
0.487x |
Source:
Tradeline
Based
on JPMorgan's exchange ratio analysis, the exchange ratio varied from a 24-month low of 0.325x to a 24-month high of 0.623x. JPMorgan noted that, based on the closing
price of Noble Energy common stock on December 14, 2004 of $60.43, the merger exchange ratio of 0.62521x is slightly above the 24-month range.
Precedent corporate transaction analysis. Using publicly available information, JPMorgan examined selected precedent
corporate transactions. JPMorgan calculated the purchase price in the selected transactions as a multiple of one-year forward cash flow for the target in each selected transaction.
JPMorgan also calculated the transaction value in the selected transactions as multiples of one-year forward EBITDAX (defined as earnings before interest, taxes, depreciation,
amortization, and exploration expense) and current proved reserves and last 12 months production as of the latest fiscal year for the target in each selected transaction. In performing its
analyses, JPMorgan considered management estimates for Patina adjusted for cash flow and EBITDAX to reflect First Call consensus estimates for commodity prices. Proved reserves for Patina were based
on the latest fiscal year, adjusted for publicly announced asset acquisitions and dispositions that occurred during 2004. Production for Patina was based on actual results and Patina management
estimates for full year 2004.
Among
other factors, JPMorgan noted that the merger and acquisition transaction environment varies over time because of macroeconomic conditions such as fluctuations in interest rates,
commodity prices, equity markets and macroeconomic conditions such as industry results and growth expectations.
The
precedent transactions examined with respect to Patina's valuation were as follows: Petro-Canada/Prima Energy Corporation, Pioneer Natural Resources Company/Evergreen
Resources, Inc., EnCana Corporation/Tom Brown, Inc., Kerr-McGee Corporation/Westport Resources Corporation and Kerr-McGee Corporation/HS Resources, Inc.
JPMorgan
reviewed the multiples obtained from these transactions and applied its judgment to estimate valuation multiple reference ranges for Patina. JPMorgan noted that none of the
selected precedent transactions is either identical or directly comparable to the proposed transaction and that any analysis of selected precedent transactions necessarily involves complex
considerations and
45
judgments
concerning financial and operating characteristics and other factors that could affect the acquisition values of the companies concerned.
The
table below includes reference multiple ranges selected by JPMorgan based on a review of the comparable transaction multiples.
|
|
| 0.05 |
2004
|
|
|
|
|
|
|
|
|
|
| March 31 |
|
$ |
48.47 |
|
$ |
42.65 |
|
$ |
0.05 |
| June 30 |
|
|
52.06 |
|
|
43.61 |
|
|
0.05 |
| September 30 |
|
|
58.82 |
|
|
48.79 |
|
|
0.05 |
| December 31 |
|
|
64.60 |
|
|
56.62 |
|
|
0.05 |
2005
|
|
|
|
|
|
|
|
|
|
| March 31 |
|
$ |
70.05 |
|
$ |
55.56 |
|
|
0.05 |
| June 30 (through April 11, 2005) |
|
$ |
71.60 |
|
$ |
67.74 |
|
|
N/A |
Patina
Patina common stock is listed on the NYSE and traded under the symbol "POG." The following table sets forth, for the calendar quarters indicated, the high and low
reported trading prices per share of Patina common stock on the NYSE and the cash dividends declared per share of Patina common stock. All per-share and dividend amounts have been adjusted
to reflect the five-for-four stock split in June, 2003 and the two-for-one stock split in March, 2004.
|
|
Patina Common Stock
|
|
|
|
High
|
|
Low
|
|
Dividend
|
|
| Quarter Ended |
|
|
|
|
|
|
|
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
| March 31 |
|
$ |
13.95 |
|
$ |
11.92 |
|
$ |
0.02 |
4 |
| June 30 |
|
|
16.72 |
Reference range
| |
Equity value/share
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
| Equity value/2005E cash flow |
|
|
6.5 |
x |
|
7.0 |
x |
$ |
36.21 |
|
$ |
38.99 |
| Firm value/2005E EBITDAX |
|
|
6.5 |
x |
|
7.5 |
x |
|
39.58 |
|
|
46.29 |
| Firm value/Proved reserves (mcfe) |
|
|
$2.00 |
|
|
$2.25 |
|
|
36.11 |
|
|
41.14 |
| Firm value/Production (mcfe/d) |
|
$ |
10,000 |
|
$ |
11,000 |
|
|
38.19 |
|
|
42.42 |
Based
on the precedent corporate transaction analysis, the equity value per share of Patina common stock varied from a low of $36.11 to a high of $46.29. JPMorgan noted that, based on
the closing price of Noble Energy common stock on December 14, 2004 of $60.43, the proposed merger consideration of $37.47 per share falls within this range of calculated values.
Public market comparables analysis. JPMorgan compared financial, operating and stock market data of Patina to corresponding
data of the following publicly traded companies in the oil and gas exploration and production industry: XTO Energy Inc., Chesapeake Energy Corporation, EOG Resources, Inc., Western Gas
Resources, Inc., Quicksilver Resources Inc., Southwestern Energy Company, Range Resources Corporation, and Magnum Hunter Resources, Inc. JPMorgan also compared financial,
operating and stock market data of Noble Energy to corresponding data of the following publicly traded companies in the oil and gas exploration and production industry: Anadarko Petroleum Corporation,
Apache Corporation, Unocal Corporation, Kerr-McGee Corporation, Pioneer Natural Resources Company, and Pogo Producing Company.
JPMorgan
noted that none of the selected companies is either identical or directly comparable to Noble Energy or Patina and that any analysis of selected companies necessarily involves
complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading of the selected companies. JPMorgan reviewed multiples of
estimated cash flow and EBITDAX, and proved reserves obtained from these groups of companies and applied its judgment to estimate valuation multiple reference ranges for each of Noble Energy and
Patina. JPMorgan considered management estimates for each of Noble Energy and Patina adjusted for cash flow and EBITDAX to reflect First Call consensus estimates for commodity prices. Proved reserves
for each of Noble Energy and Patina were based on the latest fiscal year, adjusted for publicly announced asset acquisitions and dispositions that occurred during 2004.
Noble Energy
|
|
Reference range
|
|
Equity value/share
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
| Equity value/2005E cash flow |
|
|
4.0 |
x |
|
4.5 |
x |
$ |
55.86 |
|
$ |
62.84 |
|
12.83 |
|
|
0.03 |
|
| September 30 |
|
|
19.00 |
|
|
14.21 |
|
|
0.03 |
|
| December 31 |
|
|
25.38 |
|
|
18.23 |
|
|
0.04 |
|
2004
|
|
|
|
|
|
|
|
|
|
|
| March 31 |
|
$ |
26.79 |
|
$ |
20.76 |
|
$ |
0.05 |
|
| June 30 |
|
|
30.96 |
|
|
24.62 |
|
|
0.05 |
|
| September 30 |
|
|
31.68 |
|
|
24.76 |
|
|
0.05 |
|
| December 31 |
|
|
37.56 |
|
|
28.02 |
|
|
0.06 |
|
2005
|
|
|
|
|
|
|
|
|
|
|
| March 31 |
|
$ |
41.00 |
|
$ |
35.04 |
|
|
0.06 |
|
| June 30 (through April 11, 2005) |
|
$ |
41.47 |
|
$ |
39.92 |
|
|
N/A |
|
116
Noble Energy Future Dividend Policy
The holders of Noble Energy common stock receive dividends if and when declared by the Noble Energy board of directors out of legally available funds. For each
quarter of 2004, Noble Energy paid a cash dividend of $0.05 per share of common stock. Following the effective time of the merger, Noble Energy expects to continue paying quarterly cash dividends on a
basis consistent with past practice. However, the declaration and payment of dividends will depend upon business conditions, operating results, capital and reserve requirements and the Noble Energy
board of directors' consideration of other relevant factors.
117
DESCRIPTTR BGCOLOR="White" VALIGN="TOP">
| Firm value/2005E EBITDAX |
|
|
4.0 |
x |
|
4.5 |
x |
|
55.82 |
|
|
64.35 |
| Firm value/Proved reserves (mcfe) |
|
$ |
1.40 |
|
$ |
1.60 |
|
|
50.94 |
|
|
60.00 |
46
Patina
|
|
Reference range
|
|
Equity value/share
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
| Equity value/2005E cash flow |
|
|
5.25 |
x |
|
5.75 |
x |
$ |
29.24 |
|
$ |
32.03 |
| Firm value/2005E EBITDAX |
|
|
6.0 |
x |
|
6.5 |
x |
|
36.22 |
|
|
39.58 |
| Firm value/Proved reserves (mcfe) |
|
$ |
1.85 |
|
$ |
2.25 |
|
|
33.10 |
|
|
41.14 |
By
applying the above multiples to the indicated financial and operational metrics, JPMorgan calculated implied equity values per share for each of Noble Energy and Patina. Based on the
public market comparables analysis for Patina, the equity value per share ranged from a low of $29.24 to a high of $41.14. JPMorgan noted that, based on the closing price of Noble Energy common stock
on December 14, 2004 of $60.43, the proposed merger consideration of $37.47 per share falls within this range of calculated values.
JPMorgan
then used these equity values per share for each of Noble Energy and Patina to determine a range of implied exchange ratios. The low end of the implied exchange ratio range is
calculated by taking the lowest calculated value for Patina and dividing it by the highest calculated value for Noble Energy. The high end of the implied exchange ratio range is calculated by dividing
the highest calculated value for Patina by the lowest calculated value for Noble Energy. The resulting implied exchange ratio varied from a low of 0.454x to a high of 0.807x. JPMorgan noted that,
based on the closing price of Noble Energy common stock on December 14, 2004 of $60.43, the merger exchange ratio of 0.62521x falls within this range.
Net asset valuation analysis. JPMorgan conducted an after-tax net asset valuation analysis of each of Noble
Energy and Patina to estimate the net asset value per share for each company. JPMorgan performed its analysis based on a variety of data sources provided by the management of each respective company
and certain other publicly available information. JPMorgan relied on the respective reserve reports and economic models provided by the respective managements to generate the estimated cash flows for
each respective company. For Patina, JPMorgan calculated net asset valuation under two different scenarios: "Management Base Case" and "Management Sensitivity Case". The Management Base Case was
provided by Patina management and adjusted by Noble Energy management. The Management Sensitivity Case was provided by Noble Energy management with the intent to estimate value implications from
potential delays in drilling, development and recovery of Patina's reserves. JPMorgan also considered other assets and liabilities including other tangible assets, hedging losses and working capital.
For
Patina, JPMorgan used discount rates ranging from 7% to 9% to estimate a range of present values for the future pre-tax cash flows generated by its reserve reports and
economic models. JPMorgan added the book value of Patina's other tangible assets, as proION OF NOBLE ENERGY CAPITAL STOCK
General
The authorized capital stock of Noble Energy consists of 100 million shares of Noble Energy common stock, par value $3.331/3 per share, and
4.0 million shares of Noble Energy preferred stock, par value $1.00 per share, 630,000 shares of which have been designated Series A junior participating preferred stock. As of the
record date, 59,237,440 shares of Noble Energy common stock were outstanding, and no
shares of Noble Energy preferred stock were outstanding. As of the record date, 30,731,539 shares of Noble Energy common stock were reserved for issuance to Patina stockholders in accordance
with the merger agreement and 5,356,477 shares of Noble Energy common stock were available for delivery in the future in respect of awards that have been or are authorized to be made under
Noble Energy's stock based compensation plans.
The
following summary of the terms of the capital stock of Noble Energy is not intended to be complete and is subject in all respects to the applicable provisions of the DGCL, and is
qualified by reference to the certificate of incorporation and bylaws of Noble Energy. To obtain copies of these documents, see "Where You Can Find More Information" beginning on page 131 of this
document.
Common Stock
The outstanding shares of Noble Energy common stock are fully paid and nonassessable. Holders of Noble Energy common stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the stockholders. Holders of Noble Energy common stock do not have pre-emptive rights and are not entitled to cumulative voting rights
with respect to the election of directors. The Noble Energy common stock is neither redeemable nor convertible into other securities, and there are no sinking fund provisions.
Subject
to the preferences applicable to any shares of Noble Energy preferred stock outstanding at the time, holders of Noble Energy common stock are entitled to dividends when and as
declared by the Noble Energy board of directors from legally available funds and are entitled, in the event of liquidation, to share ratably in all assets remaining after payment of liabilities.
Preferred Stock
No shares of preferred stock are outstanding. The board of directors of Noble Energy may, without further action by the stockholders of Noble Energy, issue one or
more series of Noble Energy preferred stock and fix the rights and preferences of those shares, including the dividend rights, dividend rates, conversion rights, exchange rights, voting rights, terms
of redemption, redemption price or prices, liquidation preferences, the number of shares constituting any series and the designation of such series.
Rights Agreement
Each share of Noble Energy common stock has attached to it one right issued pursuant to a rights agreement, dated August 27, 1997, between Noble Energy and
Liberty Bank and Trust Company of Oklahoma City, N.A., as rights agent, as amended on December 8, 1998.
Each
right entitles the registered holder to purchase from Noble Energy one one-hundredth of a share of Series A junior participating preferred stock, par value $1.00
per share, at a price of $150.00 per one one-hundredth of a share of participating preferred stock, subject to adjustment. The rights are not exercisable until the distribution date, which
is the earlier to occur of:
- •
- 10
days following a public announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 15% or more of the outstanding shares
of Noble Energy common stock, or
118
- •
- 10
business days (or such later date as may be determined by action of the Noble Energy board of directors prior to such time as any person or group of affiliated or
associated persons acquires 15% of more of the outstanding shares of Noble Energy common stock) following the commencement of, or first public announcement of an intention to commence, a tender offer
or exchange offer the consummation of which would result in the beneficial ownership by a person or group of affiliated or associated persons of 15% or more of the outstanding shares of Noble Energy
common stock.
The
rights will expire on September 8, 2007, unless such date is extended or unless the rights are earlier redeemed or exchanged by Noble Energy.
Preferred
shares purchased upon the exercise of the rights will not be subject to redemption by Noble Energy. Each preferred share will be entitled to a minimum preferential quarterly
dividend payment of $0.01 per share but will be entitled to an aggregate dividend of 100 multiplied times the dividend declared per common share. In the event of liquidation, the holder of the
preferred shares will be entitled to a minimum preferential liquidation payment of $1.00 per share but will be entitled to an aggregate payment of 100 multiplied times the payment made per common
share. Each preferred share
will have 100 votes, voting together with the shares of Noble Energy common stock. In the event of any merger, consolidation or other transaction in which shares of Noble Energy common stock are
exchanged, each preferred share will be entitled to receive 100 multiplied times the amount received per common share.
The
rights agreement provides that, in the event that any person or group of affiliated or associated persons has acquired beneficial ownership of 15% or more of the outstanding shares
of Noble Energy common stock, proper provision shall be made so that each holder of a right, other than rights beneficially owned by the person (or any purported transferee thereof) who has acquired
15% or more of the outstanding shares of Noble Energy common stock (which will thereafter be null and void and nontransferable), will thereafter have the right to receive upon exercise that number of
shares of Noble Energy common stock having a market value of two times the exercise price of the right. The rights agreement also provides that, in the event that Noble Energy is acquired in a merger
or other business combination transaction or 50% or more of its consolidated assets or earning power are sold after a person or group of affiliated or associated persons has acquired beneficial
ownership of 15% or more of the outstanding shares of Noble Energy common stock, proper provision will be made so that each holder of a right other than rights beneficially owned by the person (or any
purported transferee thereof) who has acquired beneficial ownership of 15% or more ojected by Patina management as of December 31, 2004. JPMorgan then deducted the present value estimates
of the future costs of cash taxes (including benefit from Patina's existing net operating loss position), general and administrative expenses, and hedging losses from existing derivatives contracts
using discount rates ranging from 7% to 9%. JPMorgan then deducted the net debt and added the working capital (excluding cash) and divided by Patina's fully diluted shares outstanding (estimated to be
76.4 million shares as of December 14, 2004 (calculated by using the treasury stock method for options and warrants), including restricted shares). As a result of the calculations
described above, JPMorgan estimated the net asset value of Patina under the Management Base Case to range from approximately $2.6 billion to $3.0 billion or $33.62 to $39.01 per share.
Based on Noble Energy management's guidance for projected annual Synergies, JPMorgan also calculated a range of present values of future after-tax Synergies at $0.71 to $0.79 per share.
Increased for potential Synergies, JPMorgan estimated the net asset value of Patina under the Management Base Case to range from $34.33 to $39.80 per
47
share.
Under the Management Sensitivity Case, JPMorgan estimated the net asset value of Patina to range from $2.4 to $2.8 billion or $31.69 to $37.10 per share excluding Synergies, or $32.35 to
$37.84 per share including Synergies. JPMorgan noted that, based on the closing price of Noble Energy common stock on December 14, 2004 of $60.43, the proposed merger consideration of $37.47
per share is slightly above the range of calculated values under the Management Sensitivity Case excluding Synergies and falls within the range of calculated values under the Management Sensitivity
Case including Synergies, the Management Base Case including Synergies and the Management Base Case excluding Synergies.
For
Noble Energy, JPMorgan used discount rates ranging from 8% to 10% for domestic, UK and Netherlands assets and 13% to 15% for other international assets to estimate a range of present
values for the future pre-tax cash flows generated by its reserve reports and economic models. JPMorgan deducted the present value estimates of the future costs of cash taxes, general and
administrative expenses, and derivatives contracts using the same discount rate ranges. JPMorgan then deducted the net debt and added the working capital (excluding cash) and divided by Noble Energy's
fully diluted shares outstanding (estimated to be 60.1 million shares as of December 14, 2004 (calculated by using the treasury stock method for options and warrants)). As a result of
the calculations described above, JPMorgan estimated the net asset value of Noble Energy to range from approximately $3.4 billion to $3.8 billion or $56.49 to $63.06 per share.
JPMorgan
then used these respective net asset value ranges to estimate a range of implied exchange ratios. The low end of the implied exchange ratio range is calculated by taking the low
end of Patina's net asset value per share range under the two different cases and dividing them by the high end of Noble Energy's net asset value per share range. The high end of the implied exchange
ratio range is calculated by dividing the high end of Patina's net asset value per share range under the two different cases by the low end of Noble Energy's net asset value per share range. The
resulting implied exchange ratio ranges are equal to 0.533x-0.691x for the Management Base Case and 0.503x-0.657x for the Management Sensitivity Case. JPMorgan noted that,
based on the
closing price of Noble Energy common stock on December 14, 2004 of $60.43, the merger exchange ratio of 0.62521x falls within both of these ranges.
Merger consequences
In its review of the transaction, JPMorgan considered the financial impact of the transaction to Noble Energy. JPMorgan analyzed the proposed transaction with
Patina and the projected pro forma cash flow per share impact under a variety of scenarios as compared to Noble Energy's current standalone operating cash flow per share statistics. JPMorgan also
analyzed the pro forma projected balance sheet and credit statistics at the estimated transaction closing date as compared to Noble Energy's current balance sheet and credit statistics. In performing
its analysis, JPMorgan considered three financial cases with respect to Patina's contribution: (1) the Management Base Case, based on Patina and Noble Energy management's estimates from Reserve
Reports, (2) the Management Sensitivity Case, based on Patina management's estimates from Reserve Reports as adjusted by Noble Energy management to estimate value implications from potential
delays in drilling, development and recovery of Patina's reserves and (3) the "Street Case", adjusted by Noble Energy management. All three cases have been adjusted by JPMorgan to reflect the
First Call consensus pricing for commodity prices and further adjusted to account for Noble Energy's planned hedging of 75% of Patina's projected production at then-current NYMEX commodity
strip prices. JPMorgan also assumed that Patina's then-outstanding hedges would be removed by Patina immediately prior to closing. In performing its analysis, JPMorgan relied on
information provided by the management of Noble Energy and Patina, respectively, to make the appropriate pro forma merger adjustments for expected Synergies. The merger consequences analysis assumed a
March 31, 2005 transaction completion date for illustrative purposes and showed that the merger was accretive to Noble Energy's estimated earnings and cash flow per share in each of the cases.
48
Miscellaneous
JPMorgan has acted as financial advisor to Noble Energy with respect to the proposed merger. Under the terms of its engagement, Noble Energy has agreed to pay
JPMorgan customary compensation for its financial advisory services in connection with the proposed merger, a substantial portion of which is payable upon the consummation of the merger. Noble Energy
has also agreed to reimburse JPMorgan for the reasonable fees of its counsel and other professional advisors, and to indemnify JPMorgan against liabilities, including liabilities under the federal
securities laws, relating to or arising out of its engagement as financial advisor to Noble Energy.
JPMorgan,
as part of its investment banking services, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic
transactions, corporate restructurings, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes.
&nbf the outstanding shares of Noble Energy common stock will thereafter have the right to receive, upon the exercise
thereof at the then current exercise price of the right, that number of shares of common stock of the acquiring company which, at the time of such transaction, will have a market value of two times
the exercise price of the right.
At
any time after any person or group of affiliated or associated persons acquires 15% or more of the outstanding shares of Noble Energy common stock and prior to the acquisition by such
person or group of 50% or more of the then outstanding shares of Noble Energy common stock, the Noble Energy board of directors may exchange the rights (other than rights owned by such person or group
which will have become null and void and nontransferable), in whole or in part, at an exchange ratio of one share of Noble Energy common stock, or one one-hundredth of a preferred share
(or of a share of a class or series of the Noble Energy preferred stock having equivalent rights, preferences and privileges), per right (subject to adjustment).
At
any time prior to the close of business on the 10th day following a public announcement that a person or group of affiliated or associate persons has acquired beneficial ownership of
15% or more of the outstanding shares of Noble Energy common stock, a majority of the Noble Energy board of directors may redeem the rights in whole, but not in part, at a price of $.01 per right.
Subject
to certain restrictions, the terms of the rights may be amended by the Noble Energy board of directors without the consent of the holders of the rights (including an amendment to
lower the 15% threshold, with certain limitations).
119
COMPARISON OF RIGHTS OF HOLDERS OF NOBLE ENERGY COMMON STOCK AND PATINA COMMON STOCK
After the effective time of the merger, to the extent Patina stockholders receive Noble Energy common stock in the merger, the rights of former stockholders of
Patina will be determined by reference to the Noble Energy certificate of incorporation and bylaws and the DGCL. The material differences between the rights of holders of Patina common stock and the
rights of holders of Noble Energy common stock, resulting from the differences in their governing documents are summarized below.
The
following summary does not purport to be a complete statement of the rights of holders of Noble Energy common stock under the Noble Energy certificate of incorporation and the Noble
Energy bylaws or the rights of the holders of Patina common stock, under the Patina certificate of incorporation and the Patina bylaws, or a complete description of the specific provisions referred to
below. This summary contains a list of the material differences but is not meant to be relied upon as an exhaustive list or a detailed description of the provisions discussed and is qualified in its
entirety by reference to the governing corporate instruments of Noble Energy and Patina, to which the holders of Patina common stock are referred. Copies of the governing corporate instruments of
Noble Energy and Patina are available, without charge, to any person, including any beneficial owner to whom this joint proxy statement/prospectus is delivered, by following the instructions listed
under "Where You Can Find More Information" beginning on page 131 of this document.
Corporate Governance
Noble Energy. The rights of Noble Energy stockholders are governed by the DGCL, the Noble Energy certificate of incorporation and the Noble
Energy bylaws.
Patina. The rights of Patina stockholders are governed by the DGCL, the Patina certificate of incorporation and the Patina bylaws.
Authorized Capital Stock
Noble Energy. The authorized capital stock of Noble Energy currently consists of 104 million shares of capital stock, comprised of
(1) 100 million shares of Noble Energy common stock, par value $3.331/3 per share and (2) 4.0 million shares of Noble Energy preferred stock, par value $1.00
per share, 630,000 shares of which have been designated Series A junior participating preferred stock. Noble Energy is also proposing that its stockholders approve an amendment to its
certificate of incorporation to increase Noble Energy's authorized common stock from 100 million shares to 250 million shares, but the merger is not conditioned on approval of this
amendment.
Patina. The authorized capital stock of Patina consists of 255 million shares of capital stock, comprised of
(1) 250 million shares of common stock, par value $.01 per share and (2) 5.0 million shares of preferred stock, par value $.01 per share, of which 25,000 shares are
designated Series A Junior Participating Preferred Stock, par value $.01 per share.
Number and Election of Board of Directors
Noble Energy. The Noble Energy bylaws provide that the board of directors of Noble Energy shall have not less than three nor more than 15
members. The Noble Energy bylaws provide that the number of regular directors is determined either by resolution of the board of directors or by the stockholders at Noble Energy's annual meeting. The
Noble Energy board of directors currently has five members. Pursuant to the merger agreement, upon consummation of the merger, Noble Energy's board of directors will be expanded to include two members
of the existing Patina board of directors.
120
Patina. The Patina bylaws provide that the number of directors that shall constitute the board of directors of Patina is to be determined
from time to time by a resolution of the board of directors of Patina; provided that the board of directors of Patina may not decrease the number of directors if such decrease would shorten the term
of any incumbent Patina director. The Patina board of directors currently has nine members.
Vacancies and Newly Created Directorships
Noble Energy. Noble Energy's bylaws state that any vacancies and newly created directorships resulting from any increase in the authorized
number of regular directors may be filled by a majorsp; JPMorgan
and its affiliates have provided, from time to time, (1) certain investment banking and commercial banking services to Noble Energy, including acting as joint bookrunning
manager in connection with Noble Energy's $200 million senior notes offering in March 2004 and acting as lead arranger and administrative agent on $800 million of combined credit
facilities and (2) certain commercial banking services to Patina, in each case for customary compensation. Specifically, JPMorgan Chase Bank, an affiliate of JPMorgan, is agent bank and a
lender under credit facilities of each of Noble Energy and Patina and receives fees for the rendering of such services. In addition, JPMorgan currently provides commodity trading services to Noble
Energy for customary compensation. JPMorgan and its affiliates are also providing financing and commodity hedging services to Noble Energy in connection with the proposed merger for customary fees. In
the ordinary course of its business, JPMorgan and its affiliates may actively trade the debt and equity securities of Noble Energy or Patina for its own account or for the account of JPMorgan's
customers and, accordingly, JPMorgan or its affiliates may at any time hold long or short positions in such securities. JPMorgan also provides research coverage for Noble Energy. Alexander P. Lynch, a
Managing Director of JPMorgan, is a member of the Patina board of directors.
Opinion of Patina's Financial Advisor
Patina engaged Petrie Parkman as its financial advisor as of September 14, 2004 in connection with a possible merger or business combination involving
Patina. On December 15, 2004, Petrie Parkman rendered to the Patina board of directors its oral opinion, and subsequently confirmed in writing that, as of December 15, 2004, and based
upon and subject to the matters set forth therein, the merger consideration to be received by the holders of Patina common stock (other than Noble Energy, Merger Sub or Patina) in the merger was fair,
from a financial point of view, to such holders. Petrie Parkman has consented to the inclusion of its opinion as Annex C to this proxy statement/prospectus.
The
full text of the Petrie Parkman opinion, dated December 15, 2004, which sets forth, among other things, the assumptions made, procedures followed, matters considered, and
qualifications and limitations of the review undertaken by Petrie Parkman in rendering its opinion is attached as Annex C to this proxy statement/prospectus and is incorporated in this document
by reference. The summary of the Petrie Parkman opinion set forth in this document is qualified in its entirety by reference to the full text of the opinion. Patina stockholders are urged to read the
Petrie Parkman opinion carefully and in its entirety.
Petrie
Parkman's opinion was provided to the Patina board of directors for its use and benefit in connection with its consideration of the merger and relates solely to the fairness from
a financial point of view of the merger consideration to be received by the holders of Patina common stock (other than Noble Energy, Merger Sub or Patina) in the merger. The Petrie Parkman opinion
does not constitute a recommendation to any holder of Patina common stock as to how such holder should vote on the
49
merger.
Petrie Parkman's opinion does not address the relative merits of the merger as compared to any alternative business transaction or strategic alternative that might be available to Patina, nor
does it address the underlying business decision of Patina to engage in the merger. Petrie Parkman was not asked to solicit other proposals for a transaction with Patina. Petrie Parkman's opinion and
its presentation to the Patina board of directors were among many factors taken into consideration by the Patina board of directors in approving the merger agreement and making its recommendation
regarding the merger.
In
arriving at its opinion, Petrie Parkman, among other things:
- •
- reviewed
certain publicly available business and financial information relating to Patina and Noble Energy, including (1) Annual Reports on
Form 10-K and related audited
financial statements for the fiscal years ended December 31, 2001, December 31, 2002 and December 31, 2003 and (2) the Quarterly Reports on Form 10-Q and
related unaudited financial statements for the fiscal quarter ended September 30, 2004;
- •
- reviewed
certain estimates of Patina's oil and gas reserves, including (1) internal estimates of proved reserves prepared by the management and staff of Patina and
audited by the independent engineering firm of Netherland, Sewell as of December 31, 2003, (2) estimates of proved and non-proved reserves prepared by the management and
staff of Patina as of July 1, 2004, and (3) estimates of projected proved and non-proved reserves prepared by the management and staff of Patina as of January 1, 2005;
- •
- reviewed
certain estimates of Noble Energy's oil and gas reserves, including (1) internal estimates of proved reserves prepared by the management and staff of Noble
Energy and audited by Netherland, Sewell as of December 31, 2003, (2) estimates of proved reserves prepared by Netherland, Sewell as of December 31, 2003 for proved reserves
located in Equatorial Guinea, and (3) estimates of proved and non-proved reserves prepared by the management and staff of Noble Energy as of July 1, 2004;
- •
- analyzed
certain historical and projected financial and operating data of Patina and Noble Energy prepared by the management and staff of Patina and Noble Energy,
respectively;
- •
- discussed
the current operations and prospects of Noble Energy with the managements and staffs of Patina and Noble Energy, and discussed the current operations and prospects
of Patina with the management and staff of Patina;
- •
- discussed
the political and other risks associated with certain oil and gas assets of Noble Energy located in certain countries other than the United States with consultants
retained by Patina;
- •
- reviewed
the historical market prices and trading history of Patina common stock and Noble Energy common stock;
- •
- compared
recent stock market capitalization indicators for Patina and Noble Energy with recent stock market capitalization indicators for certain other publicly-traded
independeity of the regular directors then in office, though less than a quorum, or by a sole remaining regular director, and the directors so chosen shall
hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no Noble Energy directors in office, then an election of
regular directors may be held in the manner provided by statute. The Noble Energy bylaws provide that if, at the time of filling any vacancy or any newly created directorship, the regular directors
then in office shall constitute less than a majority of the whole board of directors (as constituted immediately prior to any such increase), then the Delaware Court of Chancery may, upon application
of any stockholder or stockholders holding at least 10% of the total number of Noble Energy shares then outstanding, summarily order an election to be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the directors then in office.
Patina. Patina's bylaws state that any vacancies and newly created directorships resulting from any increase in the authorized number of
directors elected by all of the Patina stockholders having the right to vote as a single class may be filled by the affirmative vote of a majority of the Patina directors then in office (even if less
than a quorum), or by a sole remaining director. If there are no Patina directors in office, an election may be held in a manner provided by statute. If the Patina certificate of incorporation
entitles the holders of any class or classes of stock or series thereof to elect one or more Patina directors, then vacancies and newly created directorships of such class or classes or series may be
filled by a majority of the Patina directors elected by such class or classes or series thereof then in office.
Nominations by Stockholders
Noble Energy. The Noble Energy bylaws provide that any Noble Energy stockholder entitled to vote for the election of Noble Energy directors
at a meeting (i.e., any stockholder of record) may nominate persons for election as directors of Noble Energy only if written notice of such stockholder's intent to make such nomination is given,
either by personal delivery or by United States mail, postage prepaid, to the Secretary of Noble Energy not later than:
- •
- with
respect to an election to be held at an annual meeting of stockholders, 90 days in advance of such meeting; and
- •
- with
respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business on the seventh day following the date on
which notice of such meeting is first given to stockholders.
Patina. The Patina bylaws provide that nominations of persons for election to the Patina board of directors may be made at a meeting of
Patina stockholders by or at the direction of the Patina board of directors, or by any Patina stockholder who is a holder of record at the time of the nomination, is entitled to vote for the election
of directors at the meeting and who complies with certain notice provisions including:
- •
- in
the case of an election to be held at an annual meeting, delivery of notice to the Secretary of Patina not less than 120 days prior to the anniversary date of the
immediately preceding annual meeting; and
121
- •
- in
the case of an election to be held at a special meeting, delivery of notice not later than the close of business on the 10th day following the day on which notice of the
date of the special meeting was mailed to stockholders or public disclosure of the date was made, whichever occurs first.
The
Patina bylaws also provide that in the event that the number of Patina directors to be elected at the next annual meeting is increased by virtue of an increase in the size of the
board of directors of Patina and either all of the nominees or the size of the increased Patina board is not publicly disclosed by Patina at least 100 days prior to the first anniversary of the
preceding year's annual meeting, notice with respect to a nomination of a Patina director shall be considered timely, but only with respect to nominees to fill the newly created positions, if received
not later than the close of business on the 10th day following the first day on which all the nominees or the size of the Patina board has been announced.
Annual Meetings of Stockholders
Noble Energy. The Noble Energy bylaws provide that the annual meeting of Noble Energy stockholders is to be held on the fourth Tuesday of
April if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 a.m. or at such other date and time as shall be designated from time
to time by the board of directors of Noble Energy and stated in the notice of the meeting, at which they shall elect by a plurality vote a board of directors of Noble Energy, and transact such other
business as may properly be brought before the meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than 10 nor more than 60 days before the date of the meeting. Noble Energy stockholders are permitted under the Noble Energy bylaws to bring business before the annual meeting
of Noble Energy stockholders, provided that the business is legally proper, all applicable regulatory requirements have been complied with, and the stockholder delivers written notice to the Secretary
of Noble Energy not less than 120 calendar days prior to the anniversary date of the immediately preceding annual meeting.
Patina. The Patina bylaws provide that the annual meeting of the stockholders for the election of directors and for the transaction of such
other business as may properly come before the meeting is to be held on such date and at such time as the board of directors of Patina shall fix and set forth in the notice of the meeting, which date
shall be within 13 months subsequent to the most recent annual meeting. Patina stockholders are permitted to make proposals provided that, in addition to any other applicable requirements, a
stockholder's notice is delivered to or mailed and received at the principal executive offices of Patina not less than 120 days prior to the anniversary date of the immediately preceding annual
meeting.
Special Meetings of Stockholders
Noble Energy. The bylaws of Noble Energy provide that special meetings of the stockholders, for any purpose or purposes, may be called by
the prnt energy companies;
- •
- compared
the financial terms of the merger with the financial terms of other transactions deemed to be relevant;
- •
- participated
in certain discussions and negotiations among the representatives of Patina, Noble Energy and their respective financial and legal advisors;
- •
- reviewed
a draft of the merger agreement dated December 15, 2004; and
- •
- reviewed
such other financial studies and analyses and performed such other investigations and took into account such other matters as it deemed necessary or appropriate.
50
In
connection with its opinion, Petrie Parkman assumed and relied upon, without assuming any responsibility for, or independently verifying, the accuracy and completeness of all
information supplied or otherwise made available by Patina and Noble Energy. Petrie Parkman further relied upon the assurances of representatives of the management of Patina and Noble Energy that they
were unaware of any facts that would make the information provided incomplete or misleading in any material respect. With respect to projected financial and operating data, Petrie Parkman assumed that
they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the managements and staffs of Patina and Noble Energy, respectively, relating to the
future financial and operational performance of each company. With respect to the estimates of oil and gas reserves, Petrie Parkman assumed that they had been reasonably prepared on bases reflecting
the best available estimates and judgments of the managements and staffs of Patina and Noble Energy (and Netherland, Sewell, as applicable) relating to the oil and gas properties of Patina and Noble
Energy, respectively. Petrie Parkman did not make an independent evaluation or appraisal of the assets or liabilities of Patina or Noble Energy, nor, except for the estimates of oil and gas reserves
referred to above, had Petrie Parkman been furnished with any such evaluations or appraisals. In addition, Petrie Parkman did not assume any obligation to conduct, nor did it conduct, any physical
inspection of the properties or facilities of Patina or Noble Energy. Petrie Parkman also assumed that the final form of the merger agreement would be substantially similar to the last draft reviewed,
and that the merger would be
consummated in accordance with the terms of the merger agreement without waiver of any of the conditions precedent to the merger contained in the merger agreement.
Petrie
Parkman's opinion was rendered on the basis of conditions in the securities markets and the oil and gas markets prevailing as of the date of its opinion and the conditions and
prospects, financial and otherwise, of Patina and Noble Energy as they were represented to Petrie Parkman as of the date of its opinion or as they were reflected in the materials and discussions
described above.
The
following is a summary of the financial analyses performed by Petrie Parkman in connection with the preparation of its opinion dated December 15, 2004 and presented to the
Patina board of directors on that date.
This
summary includes information presented in tabular format. In order to fully understand these financial analyses, the tables must be read together with the text accompanying each
summary. The tables alone do not constitute a complete description of these financial analyses. Considering the data set forth in the tables without considering the full narrative description of these
analyses, including the methodologies and assumptions underlying these analyses, could create a misleading or incomplete view of these financial analyses performed by Petrie Parkman.
Implied Premium Analysis
Petrie Parkman calculated the premiums implied by comparing the $37.00 per share of implied merger consideration offered by Noble Energy to the historical trading
prices of Patina common stock
51
for
specified periods between December 7, 2001 to December 7, 2004 and calculated the following results:
Period
|
|
Average
Market Price
|
|
$37.00 Merger
Consideration
Premium
|
|
| Last Price (December 7, 2004) |
|
$ |
30.71 |
|
20.5 |
% |
1 Week Prior |
|
$ |
31.53 |
|
17.3 |
% |
| 4 Weeks Prior |
|
$ |
31.14 |
|
18.8 |
% |
| 3 Months Prior |
|
$ |
29.72 |
|
24.5 |
% |
| 6 Months Prior |
|
$ |
29.08 |
&nesident and shall be called by the president or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of Noble Energy issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Written notice of a special
meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than 10 nor more than 60 days before the date of the meeting
to each stockholder entitled to vote at such meeting.
Patina. The Patina bylaws provide that special meetings of the stockholders may only be called by the chairman of the board, the president,
a majority of the board of directors, or a majority of the executive committee. Written notice of a special meeting stating the place, date and hour of the
122
meeting
and the purpose or purposes for which the meeting is called shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such
meeting.
Stockholder Action by Written Consent
Noble Energy. The Noble Energy bylaws provide that any action by written consent shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be
delivered to Noble Energy by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of Noble Energy having custody of the book in which proceedings of
meetings of stockholders are recorded.
Patina. The Patina bylaws provide that actions that are required or permitted to be taken at a stockholder meeting may be taken, subject to
compliance with the requirements of the NYSE, without a meeting if consented to in writing by the holders of outstanding stock having not less than the minimum number of votes that would be necessary
to take such action at a meeting at which the holders of all shares entitled to vote thereon were present and voted and such consent(s) shall be delivered to Patina pursuant to the DGCL.
Quorum of the Stockholders, Vote Required, Adjournment
Noble Energy. The Noble Energy bylaws provide that the holders of a majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the
certificate of incorporation. Where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall
constitute a quorum entitled to take action with respect to that vote on that matter. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented.
Patina. The Patina bylaws provide that a majority of the shares issued and outstanding and entitled to vote at any meeting of the
stockholders, present in person or by proxy, shall constitute a quorum. In all matters other than the election of directors and amendment of the Patina bylaws or except as otherwise provided in the
Patina charter or the Patina bylaws, the affirmative vote of the majority of shares present in person or by proxy at such meeting and entitled to vote on the subject matter is the act of the
stockholders. If there is a quorum present when a meeting convenes, the stockholders present may
continue to transact business until adjournment, notwithstanding the withdrawal of sufficient stockholders or proxies to reduce the total number of voting shares below a quorum. The chairman of a
meeting or the holders of a majority of shares, present in person or by proxy and entitled to vote thereat, whether or not a quorum is present, shall have the power to adjourn such meeting.
Power to Amend the Certificate of Incorporation
Noble Energy. The Noble Energy certificate of incorporation provides that it may be altered, changed or repealed in the manner prescribed
by statute. The DGCL provides for amendment by holders of a majority of the outstanding stock entitled to vote on the amendment.
Patina. The Patina certificate of incorporation provides that Patina has the right, subject to express provisions or restrictions contained
in the Patina charter or the Patina bylaws, to amend the Patina certificate of incorporation in the manner prescribed by law.
123
Power to Amend the Bylaws
Noble Energy. The Noble Energy bylaws may be altered, amended or repealed or new Noble Energy bylaws may be adopted by the stockholders or
by the board of directors of Noble Energy, when such power is conferred upon the board of directors by the Noble Energy certificate of incorporation, at any regular meeting of the stockholders or of
the board of directors or at any special meeting of the stockholders or of the board of directors if notice of the amendment is contained in the notice of the special meeting.
Patina. The Patina bylaws may be amended by the Patina stockholders by an affirmative vote of two-thirds of the shares issued
and outstanding and entitled to vote at any meeting of the stockholders. In addition, the board of directors of Patina is authorized to adopt, amend or repeal the Patina bylaws without stockholder
approval.
124
EXECUTIVE COMPENSATION
Summary Compensation Table
The
following table sets forth certain summary infbsp; |
27.2 |
% |
| 1 Year Prior |
|
$ |
27.34 |
|
35.3 |
% |
| 3 Years Prior |
|
$ |
17.86 |
|
107.1 |
% |
High Price |
|
$ |
33.40 |
|
10.8 |
% |
| Low Price |
|
$ |
8.00 |
|
362.7 |
% |
Historical Stock Trading Ratio Analysis
Petrie Parkman analyzed the historical ratios of the closing prices of Patina common stock divided by the corresponding closing prices of Noble Energy common
stock for the period from December 7, 2001
to December 7, 2004. Petrie Parkman noted the proposed merger exchange ratio of 0.62521 was higher than the average historical trading ratio of 0.4223 during such period.
Discounted Cash Flow Analysis
Petrie Parkman conducted a discounted cash flow analysis for the purpose of determining equity reference value ranges per share of Patina and Noble Energy common
stock. Petrie Parkman calculated the net present value of estimates of future after-tax cash flows of Patina's and Noble Energy's oil and gas reserve assets based on the proved and
non-proved reserve estimates for Patina and for Noble Energy referred to above and for non-reserve assets utilizing information provided by Patina and Noble Energy.
Petrie
Parkman evaluated five scenarios in which the principal variables were oil and gas prices. The five pricing scenarios—Pricing Case I, Pricing Case II, Pricing Case
III, Strip Pricing Case Escalated, and Strip Pricing Case Flat—were based on benchmarks for spot sales of West Texas Intermediate crude oil and for spot sales of Henry Hub gas. The Strip
Pricing Cases were based upon the average of oil and gas futures contract prices quoted on the New York Mercantile Exchange. Benchmark prices for cases I, II and III were projected to be $30.00,
$33.00 and $36.00 per barrel of oil and $4.50, $5.00 and $5.50 per million British thermal units for gas, respectively, in 2006 and were escalated annually starting in 2007 at the rate of 3%. All
pricing cases for the fiscal year ended 2005 were based on forward strip pricing as of December 7, 2004. The Strip Pricing Case Escalated was escalated annually following the year 2009 for oil
and gas at the rate of 3%. Petrie Parkman applied appropriate quality, transportation, contract and index adjustments to these benchmarks.
Applying
various after-tax discount rates, ranging from 7.0% to 35.0% depending on reserve category, to the after-tax cash flows, assuming a
carry-over of existing tax positions, adjusting for other
52
assets
and liabilities, long-term debt and net working capital for Patina and Noble Energy, Petrie Parkman calculated the following equity reference value ranges for each pricing case:
|
|
Pricing
Case I
|
|
Pricing
Case II
|
|
Pricing
Case III
|
|
Strip Pricing
Case
(Escalated)
|
|
Strip Pricing
Case
(Flat)
|
| Patina Equity Reference Value Range per Share |
|
$21.93-$26.10 |
|
$26.17-$31.05 |
|
$30.40-$36.00 |
|
$28.14-$33.06 |
|
$25.14-$29.08 |
Noble Energy Equity Reference Value Range per Share |
|
$41.03-$50.04 |
|
$48.22-$58.85 |
|
$55.50-$67.65 |
|
$53.61-$64.65 |
|
$50.00-$59.47 |
These per share equity reference value ranges were then used to derive the implied exchange ratio ranges shown in the table below. The low end of
the implied exchange ratio range is calculated by dividing the low end of the Patina equity reference value range by the high end of the Noble Energy equity reference value range. The high end of the
implied exchange ratio range is calculated by dividing the high end of the Patina equity reference value range by the low end of the Noble Energy equity reference value raormation concerning the compensation awarded to, earned by or paid to the Chief Executive Officer of Noble Energy and each of the four
most-highly compensated executive officers of Noble Energy other than the Chief Executive Officer (collectively, the "named executive officers") for the years indicated.
|
|
Annual Compensation
|
|
Long Term Compensation
|
|
|
|
|
|
|
|
|
|
|
|
Other
Annual
Compen-
sation
($)
|
|
Awards
|
|
Payouts
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Compen-
sation
($)
|
|
Name and
Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)
|
|
Number of
Stock
Options(1)
|
|
Shares of
Restricted
Stock(2)
|
|
Performance
Unit
Payouts
|
|
Charles D. Davidson
President and Chief Executive Officer |
|
2004
2003
2002 |
|
741,667
700,000
597,914 |
|
1,320,000
560,000
196,000 |
|
4,100
4,100
4,106 |
|
43,290
75,000
77,000 |
|
11,160 |
|
0 |
|
220,470
145,046
92,220 |
(3)
|
Susan M. Cunningham
Senior Vice President — Exploration |
|
2004
2003
2002 |
|
310,417
300,000
279,582 |
|
347,200
148,000
73,400 |
|
136
136
141 |
|
8,547
25,000
27,000 |
|
2,203 |
|
0 |
|
3,460
198
313 |
(3)
|
James L. McElvany
Senior Vice President |
|
2004
2003
2002 |
|
301,667
270,553
239,582 |
|
311,800
131,000
63,200 |
|
136
136
3,359 |
|
8,120
25,000
27,000 |
|
2,093 |
|
0 |
|
102,519
76,233
55,591 |
(3)
|
William A. Poillion, Jr.
Senior Vice President — Production and Drilling |
|
2004
2003
2002 |
|
298,333
290,136
278,332 |
|
277,200
130,000
67,500 |
|
4,356
4,356
4,361 |
|
|
|
Pricing
Case I
|
|
Pricing
Case II
|
|
Pricing
Case III
|
|
Strip Pricing
Case
(Escalated)
|
|
Strip Pricing
Case
(Flat)
|
| Implied Exchange Ratio Range |
|
0.43834-
0.63607 |
|
0.44471-
0.64393 |
|
0.44942-
0.64874 |
|
0.43524-
0.61679 |
|
0.42280-
0.58159 |
Petrie Parkman noted the proposed exchange ratio of 0.62521 and the implied merger consideration of $37.00 per Patina share were supported by its analysis.
Property Transactions Analysis
Petrie Parkman reviewed selected publicly available information for 46 oil and gas property transactions and proprietary information for one oil and gas property
transaction announced between January 2002 and December 2004 in the Rocky Mountain, Mid-continent, San Juan and Central/Other regions of the United States for Patina and 70
oil and gas property transactions and proprietary information for three oil and gas property transactions announced between January 2002 and December 2004 in the Deepwater Gulf of
Mexico, Gulf of Mexico Shelf, Gulf Coast, Rockies, Mid-continent, and nine oil and gas property transactions between January 2001 and December 2004 in Africa for Noble
Energy. Based on a review of the purchase price multiples of proved reserves for the acquired assets in each transaction, Petrie Parkman selected appropriate benchmark multiples for Patina's and Noble
Energy's corresponding proved reserve figures to yield enterprise reference value ranges for Patina's and Noble Energy's proved reserves. The number of transactions per region and the maximum, mean,
median and minimum implied multiples for these transactions are set forth in the following tables together with certain benchmark multiples chosen by Petrie Parkman based on a review of these implied
multiples.
For
this analysis, references to oil and gas "equivalents" are for purposes of comparing quantities of oil with quantities of gas or to express these different commodities in a common
unit. The term "Mcf" means thousand cubic feet. The term "Bbl" means barrel. In calculating Mcf and Bbl equivalents, Petrie Parkman used a generally recognized standard in which one Bbl is equal to
six Mcf. The term "Mcfe" means thousand cubic feet equivalent.
53
Petrie
Parkman determined that the following property transactions were relevant to an evaluation of Patina:
|
|
Rockies
|
|
Mid-continent
|
|
San Juan
|
|
Central / Other
|
| Number of Transactions |
|
17 |
|
11 |
|
8 |
|
11 |
| Purchase Price of Reserves/Proved Reserves ($/Mcfe) |
|
|
|
|
|
|
|
|
| |
Maximum |
|
$1.99 |
|
$1.63 |
|
$1.89 |
|
$1.67 |
| |
Mean |
|
$1.12 |
|
$1.41 |
|
$1.34 |
|
$1.17 |
| |
Median |
|
$1.11 |
|
$1.47 |
|
$1.29 |
|
$1.18 |
| |
8,262
25,000
27,000 |
|
2,130 |
|
0 |
|
132,912
104,937
82,382 |
(3)
|
David L. Stover
Senior Vice President, Domestic Division and Business Development |
|
2004
2003
2002 |
|
254,583
225,417
8,958 |
|
283,800
92,000
1,210 |
|
136
136
0 |
|
6,436
20,000
7,500 |
|
1,659 |
|
0 |
|
24,756
15,089
0 |
(3)
|
- (1)
- Options
represent the right to purchase shares of common stock at a fixed price per share. Options will vest ratably over three years in equal installments (33.33%) on the first,
second and third anniversaries of the date of grant. The vesting of the options will accelerate in the event of a change in control of Noble Energy. Vesting of these options is not contingent on any
performance criteria, although none of the options may be exercised before the first anniversary (absent a change in control of Noble Energy) or after the tenth anniversary of the date of grant.
- (2)
- Consists
of restricted shares of Noble Energy's common stock issued pursuant to the 1992 Stock Option and Restricted Stock Plan, as amended. The restricted shares are subject to a
three-year restricted period, which commences on the date of grant. Vesting of the restricted stock at the end of the restricted period is dependent upon Noble Energy's achievement of
total shareholder return that meets or exceeds the comparable total shareholder return of at least 25% of certain identified peer group companies. In addition, the lapse of restrictions on restricted
shares will accelerate in the event of a change in control of Noble Energy. The grantee has the right to receive dividends or distributions on the shares of restricted stock, although such dividends
or distributions are subject to the same restrictions as the shares of restricted stock.
- (3)
- Consists
of contributions by Noble Energy to a defined contribution plan, nonqualified contribution plan and payment by Noble Energy of term life insurance premiums as follows:
Mr. Davidson—$11,556/$208,914/$0; Mrs. Cunningham—$3,252/$0/$208; Mr. McElvany—$9,044/$93,475/$0; Mr. Poillion,
Jr.—$8,961/$121,918/$2,033; Mr. Stover—11,812/$12,790/$154.
125
Option Grants in 2004
The
following table sets forth certain information with respect to options to purchase common stock granted during the year ended December 31, 2004 to each of the named executive
officers.
|
|
Individual Grants
|
|
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term
|
|
|
Number of Shares of Securities Underlying Options Granted(1)
|
|
|
|
|
|
|
|
|
% of Total
Options
Granted to
Employees
in 2004
|
|
|
|
|
|
|
Exercise
or Base
Price
($/sh)
|
|
|
|
|
Expiration Date
|
Name
|
|
5%($)(2)
|
|
10%($)(3)
|
| Charles D. Davidson |
|
43,290 |
|
14.9 |
% |
44.465 |
|
2/1/14 |
|
1,210,605 |
|
3,067,746 |
Minimum
| |
$0.58 |
|
$0.82 |
|
$0.83 |
|
$0.50 |
| Selected Benchmark Multiples ($/Mcfe) |
|
$1.35-$1.75 |
|
$1.30-$1.65 |
|
$1.40-$1.70 |
|
$1.00-$1.25 |
Petrie
Parkman determined that the following property transactions were relevant to an evaluation of Noble Energy:
|
|
U.S. Onshore
|
|
Gulf of Mexico
Deepwater
|
|
Gulf of Mexico
Shelf
|
|
Africa
|
| Number of Transactions |
|
57 |
|
5 |
|
11 |
|
9 |
| Purchase Price of Reserves/Proved Reserves ($/Mcfe) |
|
|
|
|
|
|
|
|
| |
Maximum |
|
$2.72 |
|
$1.94 |
|
$3.13 |
|
$2.66 |
| |
Mean |
|
$1.28 |
|
$1.42 |
|
$2.08 |
|
$1.06 |
| |
Median |
|
$1.25 |
|
$1.47 |
|
$1.96 |
|
$0.89 |
| |
Minimum |
|
$0.52 |
|
$0.52 |
|
$1.17 |
|
$0.55 |
| Selected Benchmark Multiples ($/Mcfe) |
|
$1.50-$1.90 |
|
$1.50-$1.75 |
|
$1.85-$2.15 |
|
$0.70-$0.90 |
Petrie
Parkman multiplied the benchmark multiples set forth above by Patina's and Noble Energy's proved reserve figures and, after adjusting for other assets and liabilities, determined
enterprise reference value ranges for Patina of $2,449 million to $3,147 million and for Noble Energy of $3,809 million to $4,663 million. Petrie Parkman adjusted the
enterprise reference value ranges for long-term debt and net working capital for each company and divided by the diluted number of shares of common stock outstanding, to calculate per
share equity reference value ranges for Patina of $28.24 to $37.37 and Noble Energy of $50.59 to $64.72.
These
per share equity reference value ranges were then used to derive an implied exchange ratio range of 0.43626 to 0.73879. The low end of the implied exchange ratio range is
calculated by dividing the low end of the Patina equity reference value range by the high end of the Noble Energy equity reference value range. The high end of the implied exchange ratio range is
calculated by dividing the high end of the Patina equity reference value range by the low end of the Noble Energy equity reference value range. Petrie Parkman noted the proposed exchange ratio of
0.62521 and the implied merger consideration of $37.00 per Patina share were supported by its analysis.
Company Transaction Analysis
Petrie Parkman reviewed selected publicly available information on 10 company acquisition transactions and offers for control that Petrie Parkman deemed
appropriate for Patina and 11 company acquisition transactions and offers for control that Petrie Parkman deemed appropriate for Noble Energy, involving companies in the oil and gas exTOP">
| Susan M. Cunningham |
|
8,547 |
|
2.9 |
% |
44.465 |
|
2/1/14 |
|
239,017 |
|
605,683 |
| James L. McElvany |
|
8,120 |
|
2.8 |
% |
44.465 |
|
2/1/14 |
|
227,076 |
|
575,423 |
| William A. Poillion, Jr. |
|
8,262 |
|
2.8 |
% |
44.465 |
|
2/1/14 |
|
231,047 |
|
585,487 |
| David L. Stover |
|
6,436 |
|
2.2 |
% |
44.465 |
|
2/1/14 |
|
179,982 |
|
456,087 |
- (1)
- Options
represent the right to purchase shares of common stock at $44.465 per share. The options will vest ratably over three years in equal installments (33.33%) on the first, second
and third anniversaries of the date of grant.
- (2)
- Reflects
an assumed appreciated market price per share of common stock of $72.43.
- (3)
- Reflects
an assumed appreciated market price per share of common stock of $115.33.
Aggregated Option Exercises in 2004 and 12/31/04 Option Values
The
following table sets forth certain information with respect to the exercise of options to purchase common stock during the year ended December 31, 2004, and the unexercised
options held at December 31, 2004 and the value thereof, by each of the named executive officers.
|
|
|
|
|
|
Number of Securities Underlying Unexercised
Options at
December 31, 2004
(number of shares)
|
|
|
|
|
|
|
|
|
|
|
Value of Unexercised
In-the-Money Options at December 31, 2004 ($)
|
Name
|
|
Shares
Acquired
on Exercise
|
|
Value
Realized($)
|
| |
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
| Charles D. Davidson |
|
— |
|
— |
|
216,333 |
|
118,957 |
|
5,157,002 |
|
2,796,535 |
| Susan M. Cunningham |
|
— |
|
— |
|
46,333 |
Using
publicly available information, Petrie Parkman calculated purchase price of equity multiples of the latest 12 months ("LTM"), current year's and next year's estimated
discretionary cash flow and
54
total
investment, which Petrie Parkman defined for the purposes of this analysis as purchase price of equity plus net obligations assumed, multiples of LTM, current year's and next year's estimated
earnings before interest, taxes, depreciation, depletion and amortization and exploration expense ("EBITDX") and the standardized measure of future net cash flows ("SEC Value") for the target company
in each transaction. In each case, estimated discretionary cash flow and EBITDX were based on First Call consensus projections and research analyst projections, and SEC Value was based on the target
company's public disclosures. Petrie Parkman also calculated the implied purchase price of reserves, which Petrie Parkman defined for the purposes of this analysis as total investment less undeveloped
acreage value and other assets at book value.
Petrie
Parkman determined that the following company acquisition transactions were relevant to an evaluation of Patina:
Acquirer or Bidder for Control
|
|
Target
|
|
Date of Announcement
|
| Petro-Canada |
|
Prima Energy Corporation |
|
June 9, 2004 |
| Pioneer Natural Resources Company |
|
Evergreen Resources, Inc. |
|
May 4, 2004 |
| EnCana Corporation |
|
Tom Brown, Inc. |
|
April 15, 2004 |
| Kerr-McGee Corporation |
|
Westport Resources Corporation |
|
April 7, 2004 |
| Devon Energy Corporation |
|
Ocean Energy, Inc. |
|
February 24, 2003 |
| Unocal Corporation |
|
Pure Resources, Inc. |
|
August 20, 2002 |
| Dominion Resources, Inc. |
|
Louis Dreyfus Natural Gas Corp. |
|
September 10, 2001 |
| Devon Energy Corporation |
|
Mitchell Energy & Development Corp. |
|
August 14, 2001 |
| Kerr-McGee Corporation |
|
HS Resources, Inc. |
|
May 14, 2001 |
| Williams Companies, Inc. |
|
Barrett Resources Corporation |
|
May 7, 2001 |
The
maximum, mean, median and minimum implied multiples in these transactions are set forth below. The table below also includes benchmark multiple ranges selected by Petrie Parkman
based on a review of the implied multiples in the selected transactions.
|
|
Implied Multiples in Selected Transactions
|
|
Patina
Selected
Benchmark
Ranges
|
|
|
Maximum
|
&nbTH="1%">
| 34,214 |
|
Mean
| |
Median
|
|
Minimum
|
| Purchase Price/LTM Discretionary Cash Flow |
|
12.2x |
|
7.3x |
|
6.7x |
|
3.8x |
|
6.0 – 8.0x |
| Purchase Price/Current Year's Estimated Discretionary Cash Flow |
|
10.2x |
|
1,137,818 |
|
843,962 |
| James L. McElvany |
|
2,121 |
|
56,928 |
|
126,906 |
|
33,787 |
|
3,678,178 |
|
836,620 |
| William A. Poillion, Jr. |
|
81,621 |
|
1,407,761 |
|
126,696 |
|
33,929 |
|
4,152,925 |
|
839,062 |
| David L. Stover |
|
— |
|
— |
|
11,667 |
|
22,269 |
|
281,917 |
|
512,575 |
126
Long Term Incentive Grants in 2004
The
following table sets forth certain information with respect to performance units granted during the year ended December 31, 2004 to each of the named executive officers.
Performance units will be paid in cash based upon the Noble Energy's attainment of specific predetermined multi-year performance targets established by the Compensation Committee. At the
end of the performance period ending December 31, 2006, cash payouts will be determined based on the achievement of these targets.
|
|
|
|
% of Total Performance Units Granted to Employees in 2004
|
|
|
|
Estimated Payout at Maturity
|
|
|
Number of Performance Units Granted(1)
|
|
|
Name
|
|
Performance Period
|
|
Minimum Payout
|
|
Target
Payout @ $1 per Unit
|
|
Maximum
Payout @ $2 per Unit
|
| Charles D. Davidson |
|
1,033,200 |
|
14.9 |
% |
Jan. 1, 2004–Dec. 31, 2006 |
|
$ |
0 |
|
$ |
1,033,200 |
|
$ |
2,066,400 |
| Susan M. Cunningham |
|
204,000 |
|
2.9 |
|
Jan. 1, 2004–Dec. 31, 2006 |
|
|
0 |
|
|
204,000 |
|
|
408,000 |
| James L. McElvany |
|
193,800 |
|
2.8 |
|
Jan. 1, 2004–Dec. 31, 2006 |
|
|
0 |
|
|
193,800 |
|
|
387,600 | RIGHT">6.3x
|
5.3x |
|
4.0x |
|
5.5 – 6.5x |
| Purchase Price/Next Year's Estimated Discretionary Cash Flow |
|
10.3x |
|
6.4x |
|
5.5x |
|
4.4x |
|
6.0 – 7.0x |
| Total Investment/LTM EBITDX |
|
14.6x |
|
7.9x |
|
7.0x |
|
4.2x |
|
7.0 – 8.5x |
| Total Investment/Current Year's Estimated EBITDX |
|
10.1x |
|
6.5x |
|
5.9x |
|
4.0x |
|
6.0 – 7.0x |
| Total Investment/Next Year's Estimated EBITDX |
|
8.7x |
|
6.4x |
|
5.7x |
|
4.8x |
|
6.0 – 7.0x |
| Implied Purchase Price of Reserves/Proved Reserves ($/Mcfe) |
|
$3.32 |
|
$1.65 |
|
$1.39 |
|
$1.16 |
|
$1.50 – $2.00 |
| Total Investment/SEC Value |
|
2.6x |
|
1.3x |
|
1.3x |
|
0.6x |
|
1.3 – 1.6x |
Petrie
Parkman applied the benchmark multiples to Patina's September 30, 2004 LTM, current year's and next year's estimated discretionary cash flow and EBITDX, SEC Value and
proved reserves and adjusted for long-term debt and net working capital, where appropriate, to determine enterprise reference value ranges for Patina.
55
Petrie
Parkman also performed a premium analysis for the same universe of company acquisition transactions and offers for control, which compared the offer price per target company share
with the target company's share price measured one day, 30 days and 60 days prior to the public announcement of the transaction or offer for control. The maximum, mean, median and
minimum premiums (which Petrie Parkman defined for the purposes of this analysis as excess of offer price over target company's stock price stated as a percentage above the target company's stock
price), together with benchmark premium ranges selected by Petrie Parkman based on a review of the implied premiums for these periods, were as follows:
|
|
Implied Premiums in Selected Transactions
|
|
|
|
|
Patina
Selected
Benchmark Ranges
|
|
|
Maximum
|
|
Mean
|
|
Median
|
|
Minimum
|
| One Day Prior |
|
32.3 |
% |
14.7 |
% |
16.4 |
% |
-3.2 |
% |
10% – 25% |
|
|
| William A. Poillion, Jr. |
|
197,200 |
|
2.8 |
|
Jan. 1, 2004–Dec. 31, 2006 |
|
|
0 |
|
|
197,200 |
|
|
394,400 |
| David L. Stover |
|
153,600 |
|
2.2 |
|
Jan. 1, 2004–Dec. 31, 2006 |
|
|
0 |
|
|
153,600 |
|
|
307,200 |
- (1)
- Performance
units will be paid in cash in the second quarter of 2007. The amount per unit is dependent upon: (a) debt-adjusted compound annual growth rates in
reserves and production calculated over a three-year measurement period commencing on January 1, 2004 and ending on December 31, 2006, and (b) total shareholder return
relative to a predetermined peer group over the same three-year measurement period.
Pension Plan Table
The
defined benefit plans of Noble Energy that cover its executive officers provide the benefits shown below. The estimates assume that benefits are received in the form of a
ten-year certain and life annuity.
|
|
Estimated Annual Benefits Upon Retirement at Age 65
After Completion of the Following Years of Service
|
60 Month Average
Annual Compensation
|
| |
15
|
|
20
|
|
25
|
|
30
|
|
35
|
| $ 100,000 |
|
$ |
30,000 |
|
$ |
40,000 |
|
$ |
40,000 |
|
$ |
45,557 |
|
$ |
45,557 |
| 150,000 |
|
|
45,000 |
|
|
60,000 |
|
|
60,000 |
|
|
71,807 |
|
|
71,807 |
| 200,000 |
|
|
60,000 |
|
|
80,000 |
|
|
81,715 |
|
|
98,057 |
|
|
98,057 |
| 300,000 |
|
|
90,000 |
|
|
120,000 |
|
|
125,465 |
|
|
150,557 |
|
|
150,557 |
| 400,000 |
|
|
120,000 |
|
|
30 Days Prior |
|
46.7 |
% |
24.5 |
% |
22.4 |
% |
6.8 |
% |
15% – 30% |
| 60 Days Prior |
|
49.7 |
% |
21.0 |
% |
18.5 |
% |
-2.5 |
% |
15% – 30% |
Petrie
Parkman applied the range of benchmark premiums to the corresponding stock prices of Patina for the periods of one day, 30 days and 60 days prior to
December 7, 2004 and adjusted for long-term debt and net working capital to determine enterprise reference value ranges for Patina.
Petrie
Parkman determined from the enterprise reference value ranges implied by these multiples a composite reference value range for Patina of $2,600 million to
$3,300 million. After deducting long-term debt and net working capital from the enterprise reference value range and dividing by the diluted number of shares of common stock
outstanding, the resulting equity reference value range was $29.03 to $38.19.
Petrie
Parkman determined that the following company acquisition transactions were relevant to an evaluation of Noble Energy:
Acquirer or Bidder for Control
|
|
Target
|
|
Date of Announcement
|
| Pioneer Natural Resources Company |
|
Evergreen Resources, Inc. |
|
May 4, 2004 |
| EnCana Corporation |
|
Tom Brown, Inc. |
|
April 15, 2004 |
| Kerr-McGee Corporation |
|
Westport Resources Corporation |
|
April 7, 2004 |
| Devon Energy Corporation |
|
Ocean Energy, Inc. |
|
February 24, 2003 |
| Unocal Corporation |
|
Pure Resources, Inc. |
|
August 20, 2002 |
| Dominion Resources, Inc. |
|
Louis Dreyfus Natural Gas Corp. |
|
September 10, 2001 |
| Devon Energy Corporation |
|
Mitchell Energy & Development Corp. |
|
August 14, 2001 |
| Amerada Hess Corporation |
|
Triton Energy Limited |
|
July 10, 2001 |
| Conoco Inc. |
|
Gulf Canada Resources Limited |
|
May 29, 2001 |
| Kerr-McGee Corporation |
|
HS Resources, Inc. |
|
May 14, 2001 |
| Williams Companies, Inc. |
|
Barrett Resources Corporation |
|
May 7, 2001 |
56
The
maximum, mean, median and minimum implied multiples in these transactions are set forth below. The table below also includes benchmark multiple ranges selected by Petrie Parkman
based on a review of the implied multiples in the selected transactions.
|
|
|
|
|
|
|
|
|
|
Noble
Energy
Selected
Benchmark
Ranges
|
|
160,000
| |
|
169,215 |
|
|
203,057 |
|
|
203,057 |
|
| 600,000 |
|
|
180,000 |
|
|
240,000 |
|
|
256,715 |
|
|
308,057 |
|
|
308,057 |
| 800,000 |
|
|
240,000 |
|
|
320,000 |
|
|
344,215 |
|
|
413,057 |
|
|
413,057 |
| 1,000,000 |
|
|
300,000 |
|
|
400,000 |
|
|
431,715 |
|
|
518,057 |
|
|
518,057 |
| 1,300,000 |
|
|
390,000 |
|
|
520,000 |
|
|
562,965 |
|
|
675,557 |
|
|
675,557 |
| 1,400,000 |
|
|
420,000 |
|
|
560,000 |
|
|
606,715 |
|
|
728,057 |
|
|
728,057 |
| 1,500,000 |
|
|
450,000 |
|
|
600,000 |
|
|
650,465 |
|
|
780,557 |
|
|
780,557 |
Upon
vesting, the amount of retirement benefit depends on an employee's final average monthly compensation, age and the number of years of credited service (maximum of 30). Final average
monthly compensation is defined generally to mean the participant's average monthly rate of compensation from Noble Energy for the 60 consecutive months prior to retirement that give the highest
average monthly rate of compensation for the participant. Compensation covered by the defined benefit plans is defined (with certain exceptions) to mean the compensation actually paid to a participant
as reported on the participant's federal income tax withholding statement for the applicable calendar year. Accordingly, the amounts reported in the Summary Compensation Table included
127
elsewhere
in this joint proxy statement/prospectus under the section "Annual Compensation" approximate covered compensation for 2004. The amount of benefit shown in the above table is not subject to
any deductions for social security or any other offset amounts.
Under
Noble Energy's qualified defined benefit plan and applicable Internal Revenue Code provisions, as of January 1, 2004, the amount of compensation that can be taken into
account under Noble Energy's qualified defined benefit plan was $205,000 and the maximum annual benefit increased to $165,000. The benefits that accrue in excess of these limitations are paid pursuant
to Noble Energy's nonqualified defined benefit plan.
As
of December 31, 2004, the named executive officers had the following approximate number of yea SIZE=1>
| Implied Multiples in Selected Transactions
|
|
|
Maximum
|
|
Mean
|
|
Median
|
|
Minimum
|
| Purchase Price/LTM Discretionary Cash Flow |
|
14.3x |
|
7.3x |
|
5.8x |
|
3.8x |
|
4.5 – 5.5x |
| Purchase Price/Current Year's Estimated Discretionary Cash Flow |
|
10.4x |
|
6.1x |
|
5.2x |
|
3.8x |
|
4.0 – 5.0x |
| Purchase Price/Next Year's Estimated Discretionary Cash Flow |
|
9.2x |
|
6.0x |
|
5.2x |
|
4.0x |
|
4.5 – 5.0x |
Total Investment/LTM EBITDX |
|
14.6x |
|
8.0x |
|
6.6x |
|
4.2x |
|
5.5 – 6.5x |
| Total Investment/Current Year's Estimated EBITDX |
|
10.1x |
|
6.4x |
|
5.9x |
|
4.0x |
|
5.0 – 6.0x |
| Total Investment/Next Year's Estimated EBITDX |
|
8.7x |
|
6.2x |
|
5.6x |
|
4.8x |
|
5.0 – 6.0x |
| Implied Purchase Price of Reserves/Proved Reserves ($/Mcfe) |
|
$2.29 |
|
$1.42 |
|
$1.39 |
|
$0.82 |
|
$1.40 – $1.65 |
| Total Investment/SEC Value |
|
1.9x |
|
1.3x |
|
1.3x |
|
0.6x |
|
1.3 – 1.6x |
Petrie
Parkman applied the benchmark multiples to Noble Energy's September 30, 2004 LTM, current year's and next year's estimated discretionary cash flow and EBITDX, SEC Value and
proved reserves and adjusted for long-term debt and net working capital, where appropriate, to determine enterprise reference value ranges for Noble Energy.
Petrie
Parkman also performed a premium analysis for the same universe of company acquisition transactions and offers for control, which compared the offer price per target company share
with the target company's share price measured one day, 30 days and 60 days prior to the public announcement of the transaction or offer for control. The maximum, mean, median and
minimum premiums (which Petrie Parkman defined for the purposes of this analysis as excess of offer price over target company's stock price stated as a percentage above the target company's stock
price), together with benchmark premium ranges selected by Petrie Parkman based on a review of the implied premiums, for these periods were as follows:
|
|
Implied Premiums in Selected Transactions
|
|
Noble
Energy
Selected
Benchmark Ranges
Under
Noble Energy's nonqualified Deferred Compensation Plan, the named executive officers are eligible to defer portions of the salary and bonus reflected on the Summary Compensation
Table above, and to receive certain matching contributions that would have been made to Noble Energy's qualified 401(k) plan if the plan had not been subject to Internal Revenue Code compensation and
contribution limitations. The matching contributions and interest earnings credited to the Deferred Compensation Plan accounts of the named executive officers are reflected in the All Other
Compensation column of the Summary Compensation Table above.
Compensation of Directors
Directors
who are not officers of Noble Energy or any of its subsidiaries receive an annual retainer of $37,500 and a fee of $1,000 for each Board of Directors or committee meeting
attended. With the exception of the Audit Committee, the chair of each committee, if not also an employee or officer of Noble Energy, receives an additional annual fee of $5,000. The chair of the
Governance Committee, Mr. Cawley, has elected to waive the chair's fee. The chair of the Audit Committee receives an additional $15,000 annual retainer. The position of "Lead Independent Director,"
which is filled by a non-employee director, receives an additional annual retainer fee of $20,000. Noble Energy also reimburses directors for travel, lodging and related expenses they incur in
attending Board of Directors and committee meetings.
Non-employee
directors are entitled to the benefit of Noble Energy's Non-Employee Director Fee Deferral Plan. Under the terms of this plan, non-employee directors may, during a specified
period of time each year, elect to have all or any portion of their director fees deferred for future payment by Noble Energy. The plan originally provided that the deferral could be in the form of a
dollar amount and/or in the form of phantom stock units. In 2003 the phantom stock units provision was removed from the deferral plan.
Change of Control Agreements
Davidson Change of Control Agreement.
Noble Energy's change of control agreement with Mr. Davidson includes provisions regarding the severance package that Mr. Davidson may be entitled
to if he is terminated within 24 months after a change of control of Noble Energy. A change of control for purposes of Mr. Davidson's agreement will be deemed to have occurred if any of
the following conditions occur:
- •
- individuals
who constituted the Board of Directors at the time of Mr. Davidson's employment (the "Incumbent Board") cease to constitute at least 51% of the Board,
provided that any person whose election was approved by a vote of at least a majority of the directors of the Incumbent Board will be considered a member of the Incumbent Board; or
128
- •
- the
stockholders of Noble Energy approve a reorganization, merger or consolidation whereby the persons who were stockholders immediately prior to the reorganization, merger
or consolidation do not immediately thereafter own at least 51% of the voting shares of the new entity; or
- •
- the
stockholders of Noble Energy approve a liquidation or dissolution of Noble Energy or a sale of all or substantially all of Noble Energy's assets to a
non-related party; or
- •
- a
new person or entity becomes the owner of at least 25% of the outstanding common stock or voting power in Noble Energy.
If
Noble Energy terminates Mr. Davidson for cause, incapacity due to physical or mental illness, or death, Noble Energy has no further obligation to Mr. Davidson. A
termination for cause, upon the occurrence of certain actions or circumstances enumerated in the change of control agreement, may only be made by the affirmative vote of a majority of the members of
the Board of Directors.
If
Noble Energy terminates Mr. Davidson for any other reason within 24 months after a change of control of Noble Energy, then Noble Energy shall pay or provide the
following to Mr. Davidson:
- •
- all
unpaid salary, expenses, compensation and benefits;
- •
- a
lump sum of 2.99 times his annual cash compensation (made up of annual salary and bonus);
- •
- an
amount equal to his pro-rata target bonus for the then-current year;
- •
- life,
disability, medical and dental insurance benefits, upon his written request, for 36 months or such shorter period until Mr. Davidson obtains
substantially equivalent coverage from a subsequent employer;
- •
- his
Noble Energy stock options; and
- •
- reimbursement
for reasonable fees up to $15,000 for out-placement employment services.
The
above amounts will have a gross-up payment applied to them to offset fully the effect of any federal excise tax.
Change of Control Agreements for Other Officers.
As of the date of this joint proxy statement/prospectus, each executive officer of Noble Energy has a change of control agreement similar to Mr. Davidson's
as described above. These change of control agreements generally incorporate the same terms and conditions as Mr. Davidson's agreement, except a different multiplier is used in the executive
officers' agreements. This multiplier affects two provisions of the agreement: (i) the lump sum payment that will be made upon termination and (ii) the provision of insurance benefits.
For example, the multiplier in Mr. Davidson's agreement is 2.99, so he will receive a lump sum of 2.99 times his annual cash compensation and up to 36 months of benefits (2.99 times
12 months) if he is terminated under certain change of control circumstances that are described above. The multiplier for the executive officers (other than Mr. Davidson) ranges from 2.0
to 2.5. Thus, each exeONT>
|
|
|
Maximum
|
|
Mean
|
|
Median
|
|
Minimum
|
| One Day Prior |
|
50.5% |
|
21.2% |
|
23.8% |
|
-3.2% |
|
15% – 25% |
| 30 Days Prior |
|
46.7% |
|
28.9% |
|
32.4% |
|
6.8% |
|
15% – 30% |
| 60 Days Prior |
|
81.7% |
|
30.6% |
|
23.5% |
|
-2.5% |
|
10% – 20% |
Petrie
Parkman applied the range of benchmark premiums to the corresponding stock prices of Noble Energy for the periods of one day, 30 days and 60 days prior to
December 7, 2004 and adjusted for long-term debt and net working capital to determine enterprise reference value ranges for Noble Energy.
Petrie
Parkman determined from the enterprise reference value ranges implied by these multiples a composite reference value range for Noble Energy of $4,400 million to
$5,000 million. After deducting long-term debt and net working capital from the enterprise reference value range and dividing by the diluted number of shares of common stock
outstanding, the resulting equity reference value range was $60.15 to $70.08.
57
The per share equity reference value ranges for Patina and Noble Energy were then used to derive an implied exchange ratio range of 0.41427 to 0.63500. The low end of the implied
exchange ratio range is calculated by dividing the low end of the Patina equity reference value range by the high end of the Noble Energy equity reference value range. The high end of the implied
exchange ratio range is calculated by dividing the high end of the Patina equity reference value range by the low end of the Noble Energy equity reference value range. Petrie Parkman noted the
proposed exchange ratio of 0.62521 and the implied merger consideration of $37.00 per Patina share were supported by its analysis.
Capital Market Comparison
Using publicly available information, Petrie Parkman calculated market capitalization multiples of LTM, 2004 and 2005 estimated discretionary cash flow for eight
publicly traded companies for Patina and six publicly traded companies for Noble Energy. Petrie Parkman also calculated enterprise value multiples of LTM operating cash flow, LTM, 2004 and 2005
estimated EBITDX, proved reserves, and SEC Value for both companies. In each case, estimated discretionary cash flow and EBITDX was based on First Call consensus projections and research analyst
projections. Petrie Parkman defined market value for purposes of this analysis as the market value of common equity as of December 7, 2004. Petrie Parkman obtained the enterprise value of each
company by adding the sum of its long-term and short-term debt to the sum of the market value of its common equity, the market value of its preferred stock (or, if not publicly
traded, liquidation or book value) and the book value of its minority interest in other companies and subtracting net working capital.
Petrie
Parkman determined that the following companies were relevant to an evaluation of Patina based on Petrie Parkman's view of the comparability of the operating and financial
characteristics of these companies to those of Patina:
| • |
Cabot Oil & Gas Corporation |
|
• |
Pioneer Natural Resources Company |
| • |
Chesapeake Energy Corporation |
|
• |
Quicksilver Resources, Inc. |
| • |
EOG Resources, Inc. |
|
• |
Range Resources Corporation |
| • |
Forest Oil Corporation |
|
• |
XTO Energy, Inc. |
The
maximum, mean, median and minimum multiples for the eight companies are set forth below. The table also includes benchmark multiple ranges selected by Petrie Parkman based on a
review of the comparable company multiples.
|
Compensation Committee Interlocks and Insider Participation
Michael
A. Cawley is President and Chief Executive Officer of The Samuel Roberts Noble Foundation, Inc. and a trustee of the Foundation. During 2004, Noble Energy paid approximately
$157,916 to the Foundation, principally relating to reimbursement of expenses for Noble Energy's use of an aircraft owned by the Foundation. Noble Energy received payments from the Foundation of
approximately $7,397 for the Foundation's use of Noble Energy's aircraft.
129
LEGAL MATTERS
The validity of the Noble Energy common stock to be issued in connection with the merger has been passed upon for Noble Energy by Skadden, Arps, Slate,
Meagher & Flom LLP. Skadden, Arps, Slate, Meagher & Flom LLP and Cravath, Swaine & Moore LLP have delivered their opinions to Noble Energy and Patina, respectively, as to
certain United States federal income tax matters.
EXPERTS
The consolidated financial statements of Noble Energy and its subsidiaries as of December 31, 2004 and 2003 included in Noble Energy's Annual Report on
Form 10-K for each of the years in the three-year period ended December 31, 2004 and management's assessment of the effectiveness of internal control over financial reporting
as of December 31, 2004 have been incorporated by reference herein, in reliance on the reports of KPMG LLP, an independent registered public accounting firm, incorporated by reference herein,
and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31, 2004 consolidated financial statements refers to a change in accounting for
asset retirement obligations.
The
2002 and 2003 financial statements of Atlantic Methanol Production Company, LLC, Noble Energy's unconsolidated subsidiary, appearing in Noble Energy's Annual Report
(Form 10-K) for the year ended December 31, 2004, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The
2004 financial statements of Atlantic Methanol Production Company, LLC, Noble Energy's unconsolidated subsidiary, appearing in Noble Energy's Annual Report (Form 10-K) for the
year ended December 31, 2004, have been audited by UHY Mann Frankfort Stein & Lipp CPA's LLP independent registered public accounting firm, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
The
financial statements and management's report on the effectiveness of internal control over financial reporting incorporated in this prospectus by reference from the Patina Oil & Gas
Corporation Annual Report on Form 10-K for the year ended December 31, 2004 have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in
their reports (which reports (1) express an unqualified opinion on the financial statements and include an explanatory paragraph referring to a change in Patina Oil & Gas Corporation's accounting for
asset retirement obligations, (2) express an unqualified opinion on management's assessment regarding the effectiveness of internal control over financial reporting, and (3) express an unqualified
opinion on the effectiveness of internal control over financial reporting), which are incorporated herein by reference, and have been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
Estimated
quantities of Patina's oil and gas reserves and the net present value of such reserves as of December 31, 2004 set forth or incorporated by reference in this joint proxy
statement/prospectus are based upon reserve reports prepared by Netherland, Sewell & Associates, Inc., an independent reservoir engineering firm.
130
NOBLE ENERGY 2005 ANNUAL STOCKHOLDER MEETING AND STOCKHOLDER PROPOSALS
Noble Energy will hold its annual meeting of stockholders on April 26, 2005. In order to be eligible for inclusion in Noble Energy's proxy statement for
such meeting, any proposal of a stockholder must have been received by Noble Energy at its corporate offices in Houston, Texas by November 24, 2004 and must have complied with SEC regulations.
PATINA 2005 ANNUAL STOCKHOLDER MEETING AND STOCKHOLDER PROPOSALS
Patina will hold a 2005 annual meeting of stockholders only if the merger has not already been completed. If such a meeting is held, in order to be eligible for
inclusion in Patina's proxy statement for such meeting, any proposal of a stockholder must have been received by Patina at its corporate offices in Denver, Colorado by December 23, 2004 and
must have complied with SEC regulations.
WHERE YOU CAN FIND MORE INFORMATION
Noble Energy has filed with the SEC a registration statement under the Securities Act that registers the distribution to Patina stockholders of the shares of
Noble Energy common stock to be issued in connection with the merger. The registration statement, including the attached exhibits anDTH="41%" ALIGN="LEFT">
|
|
Comparable Company Multiples
|
|
|
Measure
|
|
Patina
Selected
Benchmark Ranges
|
| |
Maximum
|
|
Mean
|
|
Median
|
|
Minimum
|
Market Value/LTM Discretionary
Cash Flow |
|
21.4x |
|
7.3x |
|
5.5x |
|
3.6x |
|
5.5 – 7.0x |
Market Value/2004 Estimated Discretionary
Cash Flow |
|
19.2x |
|
6.6x |
|
5.2x |
|
3.2x |
|
5.5 – 6.5x |
Market Value/2005 Estimated Discretionary
Cash Flow |
|
11.4x |
|
5.1x |
|
4.7x |
|
2.8x |
|
5.0 – 6.0x |
Enterprise Value/LTM Operating Cash Flow |
|
19.4x |
|
7.8x |
|
5.9x |
|
4.8x |
|
6.0 – 7.0x |
| Enterprise Value/LTM EBITDX |
|
21.8x |
|
8.7x |
|
6.3x |
|
5.0x |
|
6.0 – 7.5x |
| Enterprise Value/2004 Estimated EBITDX |
|
19.6x |
|
7.8x |
|
5.8x |
|
4.8x |
|
6.0 – 7.0x |
| Enterprise Value/2005 Estimated EBITDX |
|
11.8x |
|
5.8x |
|
5.1x |
|
3.9x |
|
5.5 – 6.5x |
| Enterprise Value/Proved Reserves ($/Mcfe) |
|
$2.28 |
|
$1.90 |
|
$1.98 |
|
$1.25 |
|
$1.80 – $2.00 |
| Enterprise Value/SEC Value |
|
2.4x |
|
1.6x |
|
1.4x |
|
1.2x |
|
1.5 – 1.7x |
58
Petrie
Parkman applied the benchmark multiples to Patina's September 30, 2004 LTM discretionary cash flow, operating cash flow and EBITDX, current year's and next year's estimated
discretionary cash flow and EBITDX, SEC Value and proved reserves and adjusted for long-term dd schedules, contains additional relevant information about Noble
Energy and Noble Energy common stock. The rules and regulations of the SEC allow us to omit certain information included in the registration statement from this joint proxy statement/prospectus.
Noble
Energy and Patina also file reports, proxy statements and other information with the SEC under the Exchange Act. You may read and copy this information at the Public Reference Room
of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the SEC's Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy statements and other information about issuers, like Noble Energy and Patina,
who file electronically with the SEC. The address of that site is http://www.sec.gov.
You
can also inspect reports, proxy statements and other information about Noble Energy and Patina at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
The
SEC allows Noble Energy and Patina to "incorporate by reference" information into this joint proxy statement/prospectus. This means that Noble Energy and Patina can disclose
important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be a part of this joint proxy
statement/prospectus, except for any information that is superseded by information that is included directly in this joint proxy statement/prospectus or in other later-filed documents that are
incorporated by reference. Information furnished under Item 2.02 or Item 7.01 of Noble Energy's or Patina's current reports on Form 8-K is not incorporated by reference in this
joint proxy statement/prospectus and registration statement. The information incorporated by reference contains important information about our companies and their financial condition.
The
following documents filed with the SEC by Noble Energy and Patina are incorporated by reference into this joint proxy statement/prospectus.
Noble Energy filings with the SEC
- •
- Annual
Report on Form 10-K for the year ended December 31, 2004;
- •
- Current
Reports on Form 8-K filed on January 27, 2005, February 7, 2005, February 8, 2005, February 22, 2005, and
April 8, 2005; and
131
- •
- The
description of Noble Energy's common stock set forth in Noble Energy's registration statements filed pursuant to Section 12 of the Exchange Act, including any
amendment or report filed for the purpose of updating such description.
Patina filings with the SEC
- •
- Annual
Report on Form 10-K for the year ended December 31, 2004;
- •
- Current
Reports on Form 8-K filed on February 9, 2005 and February 24, 2005; and
- •
- The
description of Patina's common stock set forth in Patina's registration statements filed pursuant to Section 12 of the Exchange Act, including any amendment or
report filed for purposes of updating any such description.
All
documents and reports filed by Noble Energy and Patina with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act between the date of this joint
proxy
statement/prospectus and the date of our meetings are incorporated by reference into this joint proxy statement/prospectus. These documents include periodic reports, such as annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K (excluding information furnished under Items 2.02 or 7.01), as well
as proxy statements.
Noble
Energy has supplied all information contained or incorporated by reference in this joint proxy statement/prospectus relating to Noble Energy, as well as all pro forma financial
information, and Patina has supplied all relevant information relating to Patina.
Documents
incorporated by reference are available from the companies without charge, excluding any exhibits to those documents, unless the exhibit is specifically incorporated by
reference as an exhibit in this joint proxy statement/prospectus. You can obtain documents incorporated by reference in this joint proxy statement/prospectus by requesting them in writing or by
telephone from the appropriate company at the following addresses:
Noble Energy, Inc.
100 Glenborough Drive
Suite 100
Houston, Texas 77067-3610
(281) 872-3100
Attention: Arnold J. Johnson |
|
Patina Oil & Gas Corporation
1625 Broadway
Suite 2000
Denver, Colorado 80202
(303) 389-3600
Attention: David J. Kornder |
If
you would like to request documents, please make sure your request is received by May 4, 2005, to receive them before our meetings. If you request any incorporated documents
from Noble Energy or Patina, the appropriate company will mail them to you by first class mail, or another equally prompt means, within one business day after your request is received.
We
have not authorized anyone to give any information or make any representation about the merger or the companies that is different from, or in addition to, that contained in this joint
proxy statement/prospectus or in any of the materials that have been incorporated into this joint proxy statement/prospectus. Therefore, if anyone distributes this type of information, you should not
rely upon it. If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this joint proxy statement/prospectus or the
solicitation of proxies is unlawful, or you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this joint proxy statement/prospectus does not extend
to you. The information contained in this joint proxy statement/prospectus speaks only as of the date of this joint proxy statement/prospectus unless the information specifically indebt and net working capital, where appropriate, to determine enterprise reference value ranges for Patina.
Petrie
Parkman determined from the enterprise reference value ranges implied by these multiples a composite reference value range for Patina of $2,500 million to
$3,000 million. After deducting long-term debt and net working capital from the enterprise reference value range and dividing by the diluted number of shares of common stock
outstanding, the resulting equity reference value range was $26.93 to $33.48.
Petrie
Parkman determined that the following companies were relevant to an evaluation of Noble Energy based upon Petrie Parkman's view of the comparability of the operating and financial
characteristics of these companies to those of Noble Energy:
| • |
EOG Resources, Inc. |
|
• |
Pioneer Natural Resources Company |
| • |
Newfield Exploration Company |
|
• |
Pogo Producing Company |
| • |
Nexen Inc. |
|
• |
Unocal Corporation |
The
maximum, mean, median and minimum multiples for the six companies are set forth below. The table also includes benchmark multiple ranges selected by Petrie Parkman based on a review
of the comparable company multiples.
|
|
Comparable Company Multiples
|
|
Noble
Energy
Selected
Benchmark Ranges
|
Measure
|
| |
Maximum
|
|
Mean
|
|
Median
|
|
Minimum
|
| Market Value/LTM Discretionary Cash Flow |
|
5.9x |
|
4.4x |
|
4.3x |
|
3.6x |
|
4.0 – 5.0x |
Market Value/2004 Estimated Discretionary
Cash Flow |
|
5.5x |
|
4.2x |
|
3.8x |
|
3.4x |
|
4.0 – 5.0x |
Market Value/2005 Estimated Discretionary
Cash Flow |
|
5.0x |
|
4.0x |
|
3.6x |
|
3.5x |
|
3.5 – 4.5x |
Enterprise Value/LTM Operating Cash Flow |
|
5.9x |
|
4.5x |
|
4.5x |
|
3.0x |
|
4.5 – 5.5x |
| Enterprise Value/LTM EBITDX |
|
6.4x |
|
4.9x |
|
4.9x |
|
3.2x |
|
4.5 – 5.5x |
Enterprise Value/2004 Estimated EBITDX |
|
5.8x |
|
4.6x |
|
4.5x |
|
3.3x |
|
4.5 – 5.5x |
| Enterprise Value/2005 Estimated EBITDX |
|
5.2x |
|
4.1x |
132
Annex A
The merger agreement has been included to provide you with information regarding its terms. It is not intended to provide any factual, business or operational information about
us. Such information can be found elsewhere in this joint proxy statement/prospectus and in the other public filings each of us makes with the SEC, which are available without charge at www.sec.gov.
The merger agreement contains representations and warranties we made to each other. The assertions embodied in those representations and warranties are qualified by information
in confidential disclosure letters that we have exchanged in connection with signing the merger agreement. While we do not believe that they contain information securities laws require us to publicly
disclose other than information that has already been so disclosed, the disclosure letters do contain information that modifies, quantifies and creates exceptions to the representations and warranties
set forth in the attached merger agreement. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts, since they are modified in
important part by the underlying disclosure letters. These disclosure letters contain information that has been included in Noble Energy's and Patina's prior public disclosures, as well as potential
additional non-public information. Moreover, information concerning the subject matter of the representations and warranties may have changed since the date of the merger agreement, which subsequent
information may or may not be fully reflected in the our public disclosures.
AGREEMENT AND PLAN OF MERGER
by and among
NOBLE ENERGY, INC.
NOBLE ENERGY PRODUCTION, INC.
and
PATINA OIL & GAS CORPORATION
dated as of
December 15, 2004
TABLE OF CONTENTS
|
|
|
|
Page
|
| ARTICLE I THE MERGER |
|
A-1 |
| Section 1.1 |
|
The Merger |
|
A-1 |
| Section 1.2 |
|
Effective Time |
|
A-1 |
| Section 1.3 |
|
Closing |
|
A-1 |
| Section 1.4 |
|
Certificate of Incorporation; Bylaws |
|
A-2 |
| Section 1.5 |
|
Directors and Officers of the Surviving Corporation and Certain Subsidiaries |
|
A-2 |
| Section 1.6 |
|
Effect on Capital Stock |
|
A-2 |
| Section 1.7 |
|
Election Procedures |
|
A-4 |
| Section 1.8 |
|
Stock Options and Warrants |
|
A-5 |
| Section 1.9 |
|
Dissenting Shares |
|
A-6 |
| ARTICLE II EXCHANGE OF CERTIFICATES |
|
A-7 |
| Section 2.1 |
|
Exchange of Certificates |
|
A-7 |
| Section 2.2 |
|
Stock Transfer Books |
|
|
3.9x |
|
3.2x |
|
4.0 – 4.5x |
| Enterprise Value/Proved Reserves ($/Mcfe) |
|
$2.53 |
|
$1.83 |
|
$1.81 |
|
$1.25 |
|
$1.50 – $1.80 |
| Enterprise Value/SEC Value |
|
1.7x |
|
1.5x |
|
1.5x |
|
1.3x |
|
1.4 – 1.6x |
Petrie
Parkman applied the benchmark multiples to Noble Energy's September 30, 2004 LTM discretionary cash flow, operating cash flow and EBITDX, current year's and next year's
estimated discretionary cash flow and EBITDX, SEC Value and proved reserves and adjusted for long-term debt and net working capital, where appropriate, to determine enterprise reference value ranges
for Noble Energy.
Petrie
Parkman determined from the enterprise reference value ranges implied by these multiples a composite reference value range for Noble Energy of $4,200 million to
$4,900 million. After deducting long-term debt and net working capital from the enterprise reference value range and dividing by the diluted number of shares of common stock
outstanding, the resulting equity reference value range was $56.50 to $68.08.
The
per share equity reference value ranges for Patina and Noble Energy were then used to derive an implied exchange ratio range of 0.39560 to 0.59254. The low end of the implied
exchange ratio
59
range
is calculated by dividing the low end of the Patina equity reference value range by the high end of the Noble Energy equity reference value range. The high end of the implied exchange ratio
range is calculated by dividing the high end of the Patina equity reference value range by the low end of the Noble Energy equity reference value range. Petrie Parkman noted the proposed exchange
ratio of 0.62521 and the implied merger consideration of $37.00 per Patina share were supported by its analysis.
Going Concern Analysis
Petrie Parkman projected the potential financial performance of Patina and Noble Energy, without giving effect to the proposed merger, for the five year period
beginning on January 1, 2005 using Pricing Cases I, II, III and the Strip Pricing Escalated Case referred to in the subsection entitled "Discounted Cash Flow Analysis" above. Petrie Parkman
prepared these projections using financial, operating and reserve projections prepared and/or provided by Patina's and Noble Energy's respective managements and staffs and certain assumptions based
upon discussions with the managements of Patina and Noble Energy regarding Patina's and Noble Energy's potential future operating and financial performance, respectively.
For
Patina, Petrie Parkman analyzed two cases of operating projections, Case I and Case II, in which the principal variables were assumptions regarding the finding and development costs
related to projected reserve additions and related production and levels of capital spending on exploration activities. Petrie Parkman calculated a range of terminal equity values by applying
different terminal multiples to projected 2009 discretionary cash flow and applying after-tax discount rates of 11.0% to 13.0% to the terminal equity values.
From
the equity reference values implied by this analysis, Petrie Parkman determined composite per share equity reference value ranges for Patina of $30.00 to $36.00 and $34.00 to $40.00
for Case I and Case II, respectively.
For
Noble Energy, Petrie Parkman analyzed two cases of operating projections, Case I and Case II, in which the principal variables were assumptions regarding the finding and development
costs related to projected reserve additions and related production and levels of capital spending on exploration activities. Petrie Parkman calculated a range of terminal equity values by applying
different terminal multiples to projected 2009 discretionary cash flow and applying after-tax discount rates of 12.5% to 15.0% to the terminal equity values.
From
the equity reference values implied by this analysis, Petrie Parkman determined composite per share equity reference value ranges for Noble Energy of $54.00 to $61.00 and $65.00 to
$74.00 for Case I and Case II, respectively.
The
per share equity reference value ranges for Patina and Noble Energy were then used to derive implied exchange ratios ranging from 0.49180 to 0.66667 and 0.45946 to 0.61538 for Case I
and Case II, respectively. The low end of the implied exchange ratio range is calculated by dividing the low end of the Patina equity reference value range by the high end of the Noble Energy equity
reference value range. The high end of the implied exchange ratio range is calculated by dividing the high end of the Patina equity reference value range by the low end of the Noble Energy equity
reference value range. Petrie Parkman noted the proposed exchange ratio of 0.62521 and the implied merger consideration of $37.00 per Patina share were supported by its analysis.
Pro Forma Analysis
Petrie Parkman analyzed the pro forma financial effects of the proposed merger as of December 31, 2004 and for the fiscal years ended 2004 and 2005 using
two financial cases: (1) First Call and research analyst projections, and (2) internal projections prepared by the managements of Patina and Noble Energy. In its analysis, Petrie Parkman
assumed Patina's existing hedges would be
60
settled
for cash at December 31, 2004, and that incremental hedges for 2005 were put in place. For purposes of its analysis, Petrie Parkman assumed $15.0 million of pre-tax
synergies in 2004 and 2005. This analysis indicated that the merger would be dilutive to Noble Energy's 2004 estimated earnings and discretionary cash flow and accretive to Noble Energy's 2005
estimated earnings and discretionary cash flow in each case. This analysis also indicated that the merger would result in a slightly higher debt to total book capitalization ratio than for Noble
Energy on a stand-alone basis.
The
description set forth above constitutes a summary of the analyses employed and factors considered by Petrie Parkman in rendering its opinion to the Patina board of directors. Petrie
Parkman believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all analyses and factors, could create an incomplete view of the
process underlying its opinion. The preparation of a fairness opinion is a complex, analytical process involving various determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances and is not necessarily susceptible to partial analysis or summary description. In arriving at its opinion, Petrie Parkman
did not attribute any particular weight to any analysis considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis. Any estimates resulting from the
analyses are not necessarily indicative of actual values, which may be significantly more or less favorable than as set forth in this document. In addition, analyses based on forecasts of future
results are not necessarily indicative of future results, which may be significantly more or less favorable than suggested by these
analyses. Estimates of reference values of companies do not purport to be appraisals or necessarily reflect the prices at which companies may actually be sold. Because the estimates are inherently
subject to uncertainty and based upon numerous factors or events beyond the control of the parties and Petrie Parkman, Petrie Parkman cannot assure that the estimates will prove to be accurate.
No
company used in the analyses of other publicly traded companies nor any transaction used in the analyses of comparable transactions is identical to Patina, Noble Energy or the
proposed merger. Accordingly, these analyses must take into account differences in the financial and operating characteristics of the selected publicly traded companies and differences in the
structure and timing of the selected transactions and other factors that would affect the public trading values and acquisition values of the companies considered.
Pursuant
to the terms of a letter agreement dated as of September 14, 2004, Patina retained Petrie Parkman to act as financial advisor in connection with a potential sale, merger,
or other strategic transaction involving Patina. Pursuant to that engagement letter, Patina agreed to pay Petrie Parkman customary fees for its financial advisory services in connection with the
merger based on the transaction value and conditioned upon closing of the merger. In addition, Patina has agreed to reimburse Petrie Parkman for its reasonably incurred
out-of-pocket expenses incurred in connection with the engagement, including fees and disbursements of its legal counsel. Patina has agreed to indemnify Petrie Parkman and its
officers, directors, agents, employees and controlling persons for liabilities related to or arising out of its rendering of services under its engagement, including liabilities under the federal
securities laws. Petrie Parkman has, in the past, provided financial advisory services to Patina and has received customary fees for such services. Furthermore, in the ordinary course of business,
Petrie Parkman or its affiliates may trade in the debt or equity securities of Patina or Noble Energy for the accounts of its customers and, accordingly, may at any time hold a long or short position
in such securities.
Petrie
Parkman, as part of its investment banking business, is continually engaged in the evaluation of energy-related businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and evaluations for corporate and other purposes. Patina selected Petrie Parkman
as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the merger.
61
Merger Consideration
The merger agreement provides that at the effective time of the merger each share of Patina common stock issued and outstanding immediately prior to the effective
time will be converted into the right to receive either a number of shares of Noble Energy common stock or an amount of cash, in each case as described below. Patina stockholders will have the right
to elect to receive either cash or Noble Energy common stock with respect to each share of Patina common stock they hold, such that each Patina stockholder may elect to receive his or her merger
consideration entirely in cash, entirely in Noble Energy common stock or in a combination of cash and Noble Energy common stock, subject in each case to the allocation procedures described below. See
"—Conversion of Shares; Exchange of Certificates; Elections as to Form of Consideration; Allocations—Election Procedure" and "—Allocation." Shares of Noble Energy
common stock issued in the merger will be accompanied by the requisite number of rights under Noble Energy's stockholders' rights agreement. See "Description of Noble Energy Capital
Stock—Rights Agreement." In our discussion we refer to the number of shares of Noble Energy common stock to be received for each share of Patina common stock being converted into Noble
Energy stock as the "per share stock consideration," and we refer to the amount of cash to be received for each share of Patina common stock being converted into cash as the "per share cash
consideration."
In
the merger, Noble Energy will issue approximately 27.8 million shares of common stock and will pay approximately $1.1 billion in cash (based on the outstanding shares of
Patina common stock on April 7, 2005 and in each case subject to upward adjustment, up to a maximum of approximately 30.7 million shares of common stock and $1.2 billion in cash,
in the event that any additional shares of Patina common stock are issued in accordance with the merger agreement pursuant to the exercise of Patina stock options or Patina warrants or otherwise). The
actual per share stock consideration and per share cash consideration to be paid to Patina stockholders cannot be determined until after the effecp; |
Rights Agreement |
|
A-24 |
| Section 3.24 |
|
Recommendation of Company Board of Directors; Opinion of Financial Advisor |
|
A-25 |
| Section 3.25 |
|
Required Vote by Company Stockholders |
|
A-25 |
| Section 3.26 |
|
Brokers |
|
A-25 |
| Section 3.27 |
|
No Other Representations or Warranties |
|
A-25 |
| ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER |
|
A-25 |
| Section 4.1 |
|
Organization |
|
A-25 |
| Section 4.2 |
|
Capitalization |
|
A-26 |
| Section 4.3 |
|
Authorization; Validity of Agreement |
|
A-27 |
| Section 4.4 |
|
No Violations; Consents and Approvals |
|
A-27 |
| Section 4.5 |
|
SEC Reports and Financial Statements |
|
A-28 |
| Section 4.6 |
|
Absence of Certain Changes |
|
A-29 |
| Section 4.7 |
|
Absence of Undisclosed Liabilities |
|
A-29 |
| Section 4.8 |
|
Proxy Statement; Form S-4; Merger Documents |
|
A-30 |
| Section 4.9 |
|
Parent Employee Benefit Plans; ERISA |
|
A-30 |
| Section 4.10 |
|
Litigation; Compliance with Law |
|
A-32 |
| Section 4.11 |
|
Intellectual Property |
|
A-32 |
| Section 4.12 |
|
Material Contracts |
|
A-33 |
| Section 4.13 |
|
Taxes |
|
A-33 |
| Section 4.14 |
|
Environmental Matters |
|
A-35 |
| |
|
|
|
|
i
| Section 4.15 |
|
Parent Real Property; Operating Equipment |
|
A-36 |
| Section 4.16 |
|
Insurance |
Subject
to the allocation procedures described below, the cash consideration to be paid for each share of Patina common stock in respect of which a cash election is made will be equal to
the amount obtained by dividing the "aggregate consideration" by the "total common stock amount." In our discussion we also refer to that amount as the "per share consideration."
- •
- The
"aggregate consideration" is the dollar amount of the sum of:
- •
- the
product of (1) the aggregate number of shares of Noble Energy common stock that Noble Energy will issue pursuant to the merger (which is the product of 0.62521
and 60% of the "total common stock amount") and (2) the "Average Noble Energy Common Stock Value" (referred to in the merger agreement as the "final parent stock price"), and
- •
- the
aggregate amount of cash Noble Energy will pay pursuant to the merger (which is the product of (1) 40% of the total common stock amount and (2) $37.00). We
refer to this aggregate amount of cash as the "total cash amount."
- •
- The
"Average Noble Energy Common Stock Value" is the volume-weighted average of the trading sale prices per share of Noble Energy common stock as reported on the NYSE during
the 10 consecutive trading day period during which the shares of Noble Energy common stock are traded on the NYSE ending on the third calendar day immediately prior to the effective time of the merger
(or, if such calendar day is not a trading day, ending on the trading day immediately preceding such calendar day). We refer to this 10 consecutive trading day period as the "valuation period."
62
- •
- The
"total common stock amount" is the total number of shares of Patina common stock outstanding immediately prior to the effective time of the merger; provided that, for
purposes of determining the aggregate consideration, the total common stock amount will not exceed the sum of 72,820,413 (the number of shares of Patina common stock outstanding on December 14,
2004) and 9,117,832 (the number of shares of Patina common stock permitted to be issued by Patina prior to the merger under the terms of the merger agreement).
Subject
to the allocation procedure described below, the consideration to be paid for each share of Patina common stock in respect of which a stock election is made will be the number of
shares of Noble Energy common stock equal to the "exchange ratio," which is the number obtained by dividing the per share consideration by the Average Noble Energy Common Stock Value.
The
formula described above is designed to substantially equalize the value of the consideration to be received for each share of Patina common stock in the merger at the time the
calculation is made, regardless of whether a Patina stockholder elects to receive cash, Noble Energy common stock, or a combination of cash and Noble Energy common stock. This equalization mechanism
was deemed to be desirable because the value of the Noble Energy common stock will fluctuate. The value of the merger consideration to be received with respect to each share of Patina common stock
will be equal to $14.80 plus approximately $0.375 per $1.00 of Average Noble Energy common stock value.
In
order to ensure that the value of the consideration for each share of Patina common stock is as equal as possible upon receipt by Patina stockholders, regardless of the form of the
consideration, the equalization mechanism is to be applied based on the Average Noble Energy Common Stock Value. The formula is also designed to fix the amount of cash and the number of shares of
Noble Energy common stock to be paid and issued, respectively, in the merger (in each case subject to upward adjustment, up to a maximum of approximately 30.7 million shares of common stock and
$1.2 billion in cash, in the event that any shares of Patina common stock are issued in accordance with the merger agreement pursuant to the exercise of Patina stock options or Patina warrants
or otherwise). Because the amount of cash and the number of shares of Noble common stock to be paid and issued, respectively, in the merger are fixed, the percentage of shares of Patina common stock
that will be exchanged for Noble Energy common stock and the percentage that will be exchanged for cash will depend upon the Average Noble Energy Common Stock Value. The greater the Average Noble
Energy Common Stock Value, the greater the percentage of shares of Patina common stock that will be exchanged for shares of Noble Energy common stock and the lesser the Average Noble Energy Common
Stock Value, the greater the percentage of shares of Patina common stock that will be exchanged for cash.
For
example, if the Average Noble Energy Common Stock Value is $59.18, a Patina stockholder receiving stock would receive 0.62521 shares of Noble Energy common stock per share of Patina
common stock having a value, based on such Average Noble Energy Common Stock Value, of $37.00 per share, and a Patina stockholder receiving cash would receive $37.00 in cash per share of Patina common
stock, subject in each case to the allocation procedures described below. Based on that Average Noble Energy Common Stock Value, 40% of the outstanding shares of Patina common stock would be exchanged
for cash, and 60% would be exchanged for Noble Energy common stock.
The
greater the Average Noble Energy Common Stock Value, the lesser the number of shares of Patina common stock that will be exchanged for cash and the greater the number of shares that
will be exchanged for Noble Energy common stock. For example, if the Average Noble Energy Common Stock Value is $70.00, then 36.0% of the outstanding shares of Patina common stock would be exchanged
for cash, and 64% would be exchanged for Noble Energy common stock. Based on an Average Noble Energy Common Stock Value of $70.00, a Patina stockholder receiving stock would receive
0.5866 shares of Noble Energy common stock per share of Patina common stock having a value, based on such Average Noble Energy Common Stock Value, of $41.06 per share, and a Patina stockholder
63
receiving
cash would receive $41.0588 in cash per share of Patina common stock, subject in each case to the WIDTH="2%"> |
A-36 |
| Section 4.17 |
|
Labor Matters |
|
A-36 |
| Section 4.18 |
|
Affiliate Transactions |
|
A-37 |
| Section 4.19 |
|
Derivative Transactions and Hedging |
|
A-37 |
| Section 4.20 |
|
Disclosure Controls and Procedures |
|
A-37 |
| Section 4.21 |
|
Oil and Gas |
|
A-38 |
| Section 4.22 |
|
Investment Company |
|
A-39 |
| Section 4.23 |
|
Interim Operations of Purchaser |
|
A-39 |
| Section 4.24 |
|
Financing |
|
A-39 |
| Section 4.25 |
|
Required Vote |
|
A-39 |
| Section 4.26 |
|
Recommendation of Parent Board of Directors; Opinion of Financial Advisor |
|
A-39 |
| Section 4.27 |
|
Brokers |
|
A-39 |
| Section 4.28 |
|
No Other Representations or Warranties |
|
A-39 |
| ARTICLE V COVENANTS |
|
A-40 |
| Section 5.1 |
|
Interim Operations of the Company |
|
A-40 |
| Section 5.2 |
|
Interim Operations of Parent |
|
A-43 |
| Section 5.3 |
|
Acquisition Proposals |
|
A-43 |
| Section 5.4 |
|
Access to Information and Properties |
|
A-47 |
| Section 5.5 |
|
Further Action; Reasonable Best Efforts |
|
A-48 |
| Section 5.6 |
|
Proxy Statement; Form S-4; Stockholders' Meeting |
|
A-49 |
| Section 5.7 |
|
Notification of Certain Matters |
|
A-51 |
| Section 5.8 |
|
Directors' and Officers' Insurance and Indemnification |
|
A-51 |
| Section 5.9 |
|
Publicity |
|
A-51 |
| Section 5.10 |
|
Stock Exchange Listing |
|
A-52 |
| allocation procedures described below.
Conversely,
the lesser the Average Noble Energy Common Stock Value the greater the number of shares of Patina common stock that will be exchanged for cash and the lesser the number of
shares that will be exchanged for Noble Energy common stock. For example, if the Average Noble Energy Common Stock Value is $63.00, then approximately 38.5% of the outstanding shares of Patina common
stock would be exchanged for cash, and approximately 61.5% would be exchanged for Noble Energy common stock. Based on an Average Noble Energy Common Stock Value of $63.00, a Patina stockholder
receiving stock would receive 0.6100 shares of Noble Energy common stock per share of Patina common stock having a value, based on such Average Noble Energy Common Stock Value, of $38.43 per
share, and a Patina stockholder receiving cash would receive $38.4329 in cash per share of Patina common stock, subject in each case to the allocation procedures described below.
The
following table sets forth, based on various hypothetical Average Noble Energy Common Stock Values, the per share cash consideration and the per share stock consideration, as well as
the value of such stock consideration based on the hypothetical Average Noble Energy Common Stock Values. The table also shows the percentage of outstanding shares of Patina common stock that would be
converted into Noble Energy common stock and cash based on such Average Noble Energy Common Stock Value. The table is based on the assumption that no Patina options or Patina warrants have been
exercised following the date of this joint proxy statement/prospectus and prior to the closing of the merger, that no additional shares of Patina common stock are otherwise issued following the date
of this joint proxy statement and that the number of exchangeable shares is 74,088,249 (the number of shares of Patina common stock outstanding on April 7, 2005). To the extent that the number
of shares of Patina common stock outstanding increases in accordance with the merger agreement (whether as a result of the exercise of Patina options or Patina warrants or otherwise), the number of
exchangeable
shares will increase and the aggregate transaction value will increase, but there will be no change in the per share stock consideration or per share cash consideration. Each additional exchangeable
share of Patina common stock will increase the aggregate transaction value by 0.375126 shares of Noble Energy common stock and $14.80 in cash.
64
|
|
|
|
Per Share
Stock
Consideration
(Shares of
Noble Energy
Common
Stock)
|
|
|
|
|
|
Percentage of Outstanding
Shares of Patina Common
Stock to Receive
|
|
Average
Noble Energy
Common Stock
Value
|
|
|
|
|
|
|
|
| |
Transaction
Value
(in 000s)
|
|
Value of Per
Share Stock
Consideration
|
|
Per Share Cash
Consideration
|
|
Stock
Consideration
|
|
Cash
Consideration
|
|
| $ |
75.00 |
|
$ |
3,180,938 |
|
0.5725 |
|
$ |
42.9375 |
|
$ |
42.9345 |
|
65.5 |
% |
34.5 |
% |
| |
74.50 |
|
|
3,167,042 |
|
0.5738 |
|
|
42.7481 |
|
|
42.7469 |
|
65.4 |
|
34.6 |
|
| |
74.00 |
|
|
3,153,146 |
|
0.5751 |
|
|
42.5574 |
|
|
|
|
Employee Benefits |
|
A-52 |
| Section 5.12 |
|
Appointment of Directors |
|
A-54 |
| Section 5.13 |
|
Rights Agreement |
|
A-54 |
| Section 5.14 |
|
Certain Tax Matters |
|
A-54 |
| Section 5.15 |
|
Hedging Activities |
|
A-54 |
| Section 5.16 |
|
SOX 404 Certification |
|
A-55 |
| ARTICLE VI CONDITIONS |
|
A-55 |
| Section 6.1 |
|
Conditions to Each Party's Obligation To Effect the Merger |
|
A-55 |
| Section 6.2 |
|
Conditions to the Obligation of the Company to Effect the Merger |
|
A-55 |
| Section 6.3 |
|
Conditions to Obligations of Parent and Purchaser to Effect the Merger |
|
A-56 |
| ARTICLE VII TERMINATION |
|
A-57 |
| Section 7.1 |
|
Termination |
|
A-57 |
| Section 7.2 |
|
Effect of Termination |
|
A-59 |
| ARTICLE VIII MISCELLANEOUS |
|
A-59 |
| Section 8.1 |
|
Fees and Expenses |
|
A-59 |
| Section 8.2 |
|
Amendment; Waiver |
|
A-60 |
| Section 8.3 |
|
Survival |
|
A-61 |
| Section 8.4 |
|
Notices |
|
A-61 |
| Section 8.5 |
|
Interpretation; Definitions |
|
A-62 |
| Section 8.6 |
|
Headings; Schedules |
|
A-66 |
| Section 8.7 |
|
Counterparts |
|
A-66 |
| Section 8.8 |
|
Entire Agreement |
|
A-66 |
| Section 8.9 |
|
Severability |
|
A-66 |
| Section 8.10 |
|
Governing Law; Jurisdiction |
|
A-67 |
| Section 8.11 |
|
Assignment |
|
42.5593 |
|
65.2 |
|
34.8 |
|
| |
73.50 |
|
|
3,139,250 |
|
0.5765 |
|
|
42.3728 |
|
|
42.3718 |
|
65.1 |
|
34.9 |
|
| |
73.00 |
|
|
3,125,353 |
|
0.5779 |
|
|
42.1867 |
|
|
42.1842 |
|
64.9 |
|
35.1 |
|
| |
72.50 |
|
|
3,111,457 |
|
0.5793 |
|
|
41.9993 |
|
|
41.9966 |
|
64.8 |
|
35.2 |
|
| |
72.00 |
|
|
3,097,561 |
|
0.5807 |
|
|
41.8104 |
|
|
41.8091 |
|
64.6 |
|
35.4 |
|
| |
71.50 |
|
|
3,083,665 |
|
0.5821 |
|
|
41.6202 |
|
|
41.6215 |
|
64.4 |
|
35.6 |
|
| |
71.00 |
|
|
3,069,769 |
|
0.5836 |
|
|
41.4356 |
|
|
41.4339 |
|
64.3 |
|
35.7 |
|
| |
70.50 |
|
|
3,055,872 |
|
0.5851 |
|
|
41.2496 |
|
|
41.2464 |
|
64.1 |
|
35.9 |
|
| |
70.00 |
|
|
3,041,976 |
|
0.5866 |
|
|
41.0620 |
|
|
41.0588 |
|
A-67 |
| Section 8.12 |
|
Parties in Interest |
|
A-67 |
| Section 8.13 |
|
Specific Performance |
|
A-67 |
ii
TABLE OF DEFINED TERMS
| Acceptable Confidentiality Agreement |
|
A-62 |
| Acquisition Agreement |
|
A-44 |
| Acquisition Proposal |
|
A-47 |
| Adverse Recommendation Change |
|
A-44 |
| Advisers Act |
|
A-24 |
| affiliates |
|
A-62 |
| Aggregate Consideration |
|
A-2 |
| Antitrust Division |
|
A-49 |
| Assumed Option |
|
A-6 |
| beneficial ownership |
|
A-62 |
| Business Day |
|
A-62 |
| Cash Designated Shares |
|
A-5 |
| Cash Election Shares |
|
A-5 |
| Certificate |
|
A-3 |
| Certificate of Merger |
|
A-1 |
| Closing |
|
A-1 |
| Closing Date |
|
A-1 |
| Code |
|
A-62 |
| Commitment Letter |
|
A-40 |
| Company |
|
A-1 |
| Company Assets |
|
A-62 |
| Company Balance Sheet |
|
A-19 |
| Company Board |
|
A-12 |
| Company Common Stock |
|
A-10 |
| Company Consolidated Group |
|
A-62 |
| Company Directors |
|
A-62 |
| Company Disclosure Letter |
|
A-13 |
| Company Leased Real Property |
|
A-63 |
| Company Leases |
|
A-65 |
| Company Material Contract |
|
A-18 |
| Company Notice |
|
A-44 |
| Company Notice of Change |
|
A-45 |
64.0
| |
36.0 |
|
| |
69.50 |
|
|
3,028,080 |
|
0.5881 |
|
|
40.8730 |
|
|
40.8713 |
|
63.8 |
|
36.2 |
|
| |
69.00 |
|
|
3,014,184 |
|
0.5896 |
|
|
40.6824 |
|
|
40.6837 |
|
63.6 |
|
36.4 |
|
| |
68.50 |
|
|
3,000,287 |
|
0.5912 |
|
|
40.4972 |
|
|
40.4961 |
|
63.5 |
|
36.5 |
|
| |
68.00 |
|
|
2,986,391 |
|
0.5928 |
|
|
40.3104 |
|
|
40.3086 |
|
63.3 |
|
36.7 |
|
| |
67.50 |
|
|
2,972,495 |
|
0.5944 |
|
|
40.1220 |
|
|
40.1210 |
|
63.1 |
|
36.9 |
|
| |
67.00 |
|
|
2,958,599 |
|
0.5960 |
|
|
39.9320 |
|
|
39.9334 |
|
62.9 |
|
37.1 |
|
| |
66.50 |
|
|
2,944,703 |
|
0.5977 |
|
|
39.7471 |
|
|
39.7459 |
|
62.8 |
|
37.2 |
|
| |
66.00 |
|
|
2,930,806 |
|
0.5994 |
|
|
39.5604 |
|
|
39.5583 |
|
62.6 |
|
| Company Oil and Gas Properties |
|
A-63 |
| Company Option |
|
A-5 |
| Company Option Plans |
|
A-5 |
| Company Owned Real Property |
|
A-63 |
| Company Permits |
|
A-17 |
| Company Plans |
|
A-15 |
| Company Preferred Stock |
|
A-10 |
| Company Real Property |
|
A-63 |
| Company Required Vote |
|
A-25 |
| Company Reserve Report |
|
A-24 |
| Company Rights |
|
A-11 |
| Company Rights Agreement |
|
A-11 |
| Company SEC Documents |
|
A-13 |
| Company Series A Common Stock |
|
A-10 |
| Company Warrants |
|
A-10 |
| Competition Laws |
|
A-63 |
| Confidentiality Agreement |
|
A-48 |
| Continuing Employees |
|
A-52 |
| Cravath |
|
A-56 |
| Cut-off Time |
|
A-10 |
| Deemed Stock Amount |
|
A-2 |
| Deferred Compensation Plans |
|
A-52 |
| Derivative Transaction |
|
A-63 |
| DGCL |
|
A-1 |
| Dissenting Share |
|
A-6 |
| Effective Time |
|
A-1 |
| |
|
|
iii
| Election Deadline |
|
A-4 |
| Election Form |
|
A-4 |
| Election Form Record Date |
|
A-4 |
| Employment and Withholding Taxes |
|
A-63 |
| Environmental Claim |
|
A-63 |
| Environmental Laws |
|
A-63 |
| ERISA |
|
A-15 |
| ERISA Affiliate |
|
A-15 |
| Exchange Act |
|
A-13 |
| Exchange Agent |
37.4 |
|
| |
65.50 |
|
|
2,916,910 |
|
0.6011 |
|
|
39.3721 |
|
|
39.3708 |
|
62.4 |
|
37.6 |
|
| |
65.00 |
|
|
2,903,014 |
|
0.6028 |
|
|
39.1820 |
|
|
39.1832 |
|
62.2 |
|
37.8 |
|
| |
64.50 |
|
|
2,889,118 |
|
0.6046 |
|
|
38.9967 |
|
|
38.9956 |
|
62.0 |
|
38.0 |
|
| |
64.00 |
|
|
2,875,222 |
|
0.6064 |
|
|
38.8096 |
|
|
38.8081 |
|
61.9 |
|
38.1 |
|
| |
63.50 |
|
|
2,861,325 |
|
0.6082 |
|
|
38.6207 |
|
|
38.6205 |
|
61.7 |
|
38.3 |
|
| |
63.00 |
|
|
2,847,429 |
|
0.6100 |
|
|
38.4300 |
|
|
38.4329 |
|
61.5 |
|
38.5 |
|
| |
62.50 |
|
|
2,833,533 |
|
0.6119 |
|
|
38.2438 |
|
|
38.2454 |
|
61.3 |
|
38.7 |
|
| |
62.00 |
|
|
2,819,637 |
|
0.6138 |
|
|
38.0556 |
|
|
38.0578 |
|
61.1 |
|
38.9 |
|
| |
61.50 |
|
|
2,805,740 |
|
0.6158 |
|
|
37.8717 |
|
|
37.8702 |
|
60.9 |
|
39.1 |
|
| |
61.00 |
|
|
2,791,844 |
|
0.6177 |
|
|
37.6797 |
|
|
37.6827 |
|
60.7 |
|
39.3 |
|
| |
60.50 |
|
|
2,777,948 |
|
0.6198 |
|
|
37.4979 |
|
|
37.4951 |
|
60.5 |
|
39.5 |
|
| |
60.00 |
|
|
2,764,052 |
|
0.6218 |
|
|
37.3080 |
|
|
37.3076 |
|
60.3 |
|
39.7 |
|
| |
59.50 |
|
|
2,750,156 |
|
0.6239 |
|
|
37.1221 |
|
|
37.1200 |
|
60.1 |
|
39.9 |
|
| |
59.00 |
|
|
2,736,259 |
|
0.6260 |
|
|
36.9340 |
|
|
36.9324 |
|
59.9 |
|
40.1 |
|
| |
58.50 |
|
|
2,722,363 |
|
0.6281 |
|
|
36.7439 |
|
|
36.7449 |
|
59.7 |
|
40.3 |
|
| |
58.00 |
|
|
2,708,467 |
|
0.6303 |
|
|
36.5574 |
|
|
36.5573 |
|
59.5 |
|
40.5 |
|
Assuming
a hypothetical Average Noble Energy Common Stock Value of $61.54, which was the closing price of Noble Energy common stock on December 15, 2004, the day prior to the
announcement of the proposed merger, the merger would have a value of approximately $37.88 per share of Patina common stock. Assuming a hypothetical Average Noble Energy Common Stock Value of $68.95,
which was the closing price of Noble Energy common stock on April 11, 2005, the last business day prior to the date of this document, the merger would have a value of approximately $40.66 per
share of Patina common stock. Assuming a hypothetical Average Noble Energy Common
65
Stock
Value of $68.2020 based on the volume-weighted average of the trading sale prices per share of Noble Energy common stock during the 10 consecutive trading days ended three calendar days prior to
the date of mailing of this joint proxy statement/prospectus, the merger would have a value of approximately $40.38 per share of Patina common stock.
The
actual value of the cash consideration or number of shares of Noble Energy common stock that you will receive for each share of Patina common stock you hold may differ from the
hypothetical amounts shown in this example because the actual amounts will be determined after the effective time of the merger based on a formula set forth in the merger agreement and described in
this document.
No
assurance can be given that the current fair market value of Noble Energy common stock will be equivalent to the fair market value of Noble Energy common stock on the date that the
merger consideration is received by a Patina stockholder or at any other time. The actual fair market value of the Noble Energy common stock received by Patina stockholders depends upon the fair
market value of Noble Energy common stock upon receipt, which may be higher or lower than the Average Noble Energy Common Stock Value or the market price of Noble Energy common stock on the date the
merger was announced, on the date that this document is mailed to Patina's stockholders, on the date a Patina stockholder makes an election with respect to the merger consideration or on the date of
the special meeting of Patina stockholders.
If,
between the date of the merger agreement and the effective time, the shares of Noble Energy common stock are changed into a different number or class of shares by reason of
reclassification, split-up, combination, exchange of shares or similar readjustment, or a stock dividend is declared with a record date within that period, appropriate adjustments will be
made to the per share cash consideration and the per share stock consideration.
No
fractional shares of Noble Energy common stock will be issued to any holder of Patina common stock in connection with the merger. For each fractional share that would otherwise be
issued, Noble Energy will pay cash in an amount equal to the fraction multiplied by the average of the closing sale prices of Noble Energy common stock on the NYSE for the five trading days
immediately preceding the date on which the merger occurs. No interest will be paid or accrued on cash payable in lieu of fractional shares of Noble Energy common stock.
Conversion of Shares; Exchange of Certificates; Elections as to Form of Consideration; Allocations
The conversion of Patina common stock into the right to receive the merger consideration will occur automatically at the effective time of the merger. As soon as
reasonably practicable after the effective time of the merger, Wachovia Bank, N.A., as exchange agent, will exchange certificates formerly representing shares of Patina common stock for merger
consideration to be received in the merger pursuant to the terms of the merger agreement.
Election Procedure
Subject to the allocation mechanism described below, each Patina stockholder may elect to receive with respect to his or her shares of Patina common stock, all
cash, all Noble Energy common stock or a combination of cash and Noble Energy common stock.
Cash Election Shares. Stockholders who elect to receive cash for some or all of their shares will receive the per share cash
consideration in respect of that portion of such holder's shares of Patina common stock equal to such holder's cash election, subject to the allocation mechanism described below. In our discussion we
refer to the shares for which cash elections have been made as "cash election shares."
Stock Election Shares. Stockholders who elect to receive Noble Energy common stock for some or all of their shares will
receive the per share stock consideration in respect of that portion of such
66
holder's
shares of Patina common stock equal to such holder's stock election, subject to the allocation mechanism described below. In our discussion we refer to the shares for which stock elections
have been made as "stock election shares."
No Election Shares. Stockholders who indicate that they have no preference as to whether they receive cash or Noble Energy
common stock, and stockholders who do not make a valid election, will be deemed to have made "no election." Stockholders who are deemed to have made no election will receive the per share stock
consideration unless there is an oversubscription of the stock consideration, in which case they may receive the per share cash consideration for some or all their shares of Patina common stock. In
our discussion we refer to the shares held by stockholders who have made no election as "no election shares." See "—Allocation" beginning on page 69 of this document.
For
example, assuming a Patina stockholder holds 100 shares of Patina stock (and that the Average Noble Energy Common Stock Value is $61.54), if such stockholder made:
- •
- an all cash election, he or she would receive approximately $3,788 in cash;
- •
- an all stock election, he or she would receive 61 shares of Noble Energy common stock (and cash in lieu of fractional
shares); and
- •
- an election for a combination of cash and stock, he or she would receive approximately $37.88 for each cash election share
and approximately 0.6156 shares of Noble Energy common stock for each stock election share. Assuming 50 cash election shares and 50 stock election shares, the Patina stockholder would receive
approximately $1,894 in cash, 30 shares of Noble Energy common stock and cash in lieu of fractional shares.
The
actual allocation of cash and stock would be subject in each case to the allocation procedures described under the heading "—Allocation" beginning on page 69 of this document.
A fixed number of shares of Noble Energy common stock will be issued and a fixed amount of cash paid in the merger. Accordingly, there is no assurance that a
holder of Patina common stock will receive the form of consideration that the holder elects with respect to any or all shares of Patina common stock held by that holder. If the elections result in an
oversubscription with respect to shares of Patina common stock which would otherwise receive either the per share stock consideration or the per share cash consideration, the procedures for allocating
Noble Energy common stock and cash described below under "—Allocation" will be followed by the exchange agent.
Election Form. Together with this joint proxy statement/prospectus, each Patina stockholder received an election form and
other appropriate and customary transmittal materials. Each election form allows the holder to specify (1) the number of shares with respect to which the holder elects to receive the per share
stock consideration, (2) the number of shares with respect to which the holder elects to receive the per share cash consideration or (3) that the holder makes no election. Noble Energy
will also make available forms of election to persons who become holders of Patina common stock subsequent to the record date for the Patina special meeting up until the close of business on the
business day prior to the election deadline.
Holders
of Patina common stock who wish to elect the type of merger consideration they will receive in the merger should carefully review and follow the instructions set forth in the
election form. Shares of Patina common stock as to which the holder has not made a valid election prior to the election deadline, which is 5:00 p.m., Houston, Texas time, on May 10,
2005, will be deemed no election shares.
To make an election, a holder of Patina common stock must submit a properly completed election form so that it is actually received by the exchange agent at or
prior to the election deadline in accordance with the instructions on the election form. An election form will be properly completed only if accompanied by certificates representing all shares of
Patina common stock covered by the election
67
form (or appropriate evidence as to the loss, theft or destruction of such certificate, appropriate evidence as to the ownership of that certificate by the claimant, and appropriate and customary
indemnification). If a stockholder cannot deliver his or her stock certificates to the exchange agent by the election deadline, a stockholder may deliver a notice of guaranteed
delivery promising to deliver his or her stock certificates, as described in the election form, so long as (1) the guarantee of delivery is from a firm which is a member of the NYSE or another
registered national securities exchange or a commercial bank or trust company having an office in the United States and (2) the actual stock certificates are in fact delivered to the exchange
agent by the time set forth in the guarantee of delivery. If you own shares of Patina common stock in "street name" by your broker or other nominee and you wish to make an election, you should seek
instructions from the broker or other nominee holding your shares concerning how to make your election.
An
election may be revoked or changed by the person submitting the election form prior to the election deadline. In the event of a revocation of an election, the exchange agent will,
upon receiving a
written request from the holder of Patina common stock making a revocation, return the certificates of Patina common stock submitted by that holder, and that holder will be deemed to have made no
election. The exchange agent will have reasonable discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in the
election forms, and any good faith decisions of the exchange agent regarding these matters will be binding and conclusive. Neither Noble Energy nor the exchange agent will be
under any obligation to notify any person of any defects in an election form. If you instructed a broker to submit an election for your shares, you must follow your broker's
directions for changing those instructions.
Shares
of Patina common stock as to which the holder has not made a valid election prior to the election deadline, including as a result of revocation, will be deemed no election shares.
If it is determined that any purported cash election or stock election was not properly made, the purported election will be deemed to be of no force or effect and the holder making the purported
election will be deemed not to have made an election for these purposes, unless a proper election is subsequently made on a timely basis.
If
you hold shares of Patina common stock through the Patina Oil & Gas Corporation Profit Sharing and 401(k) Plan, you may elect to receive, with respect to the shares of Patina
common stock allocated to your plan account, all cash, all Noble Energy common stock or a combination of cash and Noble Energy common stock, subject to the allocation mechanism described below. You
will receive instructions from the trustee of the plan as to how to make elections with respect to shares allocated to your plan account. If you own shares through the plan and do not make a valid
election, the plan trustee will make elections with respect to the shares in accordance with the terms of the plan. If you hold shares of Patina common stock through Patina's Amended and Restated
Deferred Compensation Plan for Select Employees, the trustee of such plan will make elections with respect to all shares held by the plan in the manner directed by Patina. You will not be permitted to
instruct the trustee with respect to what elections to make for these shares.
Letter Of Transmittal
Soon after the effective time of the merger, the exchange agent will send a letter of transmittal to each person who was a Patina stockholder at the effective
time of the merger who has not previously and properly surrendered certificates representing shares of Patina common stock to the exchange agent. This mailing will contain instructions on how to
surrender certificates formerly representing shares of Patina common stock (if these certificates have not already been surrendered) in exchange for the merger consideration the holder is entitled to
receive under the merger agreement.
68
If
certificates formerly representing shares of Patina common stock are presented for transfer after the effective time of the merger, they will be exchanged for the merger consideration
into which the shares of Patina common stock formerly represented by that certificate shall have been converted.
If
a certificate formerly representing shares of Patina common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the merger
agreement upon receipt of appropriate evidence as to that loss, theft or destruction, appropriate evidence as to the ownership of that certificate by the claimant, and appropriate and customary
indemnification.
Allocation
A fixed number of shares of Noble Energy common stock will be issued and a fixed amount of cash paid in the merger in each case subject to upward adjustment in
the event that any shares of Patina common stock are issued in accordance with the merger agreement pursuant to Patina stock options or Patina warrants or otherwise. Accordingly, there is no assurance
that you will receive the form or combination of consideration that you elect with respect to any or all shares of Patina common stock you hold. If the elections of all of the Patina stockholders
result in an oversubscription of the pool of cash or Noble Energy common stock, the exchange agent will allocate between cash and Noble Energy common stock in the manner described below.
Oversubscription of the Cash Consideration. If the aggregate cash amount that would be paid upon the conversion in the merger
of the cash election shares is more than the total cash amount, then:
- •
- all
stock election shares and no election shares will be converted into the right to receive the per share stock consideration;
- •
- the
exchange agent will then select from among the cash election shares, by a pro rata selection process, a sufficient number of shares such that the aggregate cash amount
that will be paid in the merger equals as closely as practicable the total cash amount;
- •
- all
cash election shares selected by the exchange agent through the pro rata selection process described above will be converted into the right to receive the per share
stock consideration; and
- •
- the
cash election shares that have not been selected by the exchange agent to be converted into the per share stock consideration will be converted into the right to receive
the per share cash consideration.
Oversubscription of the Stock Consideration. If the aggregate cash amount that would be paid upon the conversion in the
merger of the cash election shares is less than the total cash amount, then:
- •
- all
cash election shares will be converted into the right to receive the per share cash consideration;
- •
- the
exchange agent will then select from among the non-electing shares and then, if necessary, from among the stock election shares, by a pro rata selection
process, a sufficient number of shares such that the aggregate cash amount that will be paid in the merger equals as closely as practicable the total cash amount;
- •
- all
no election and stock election shares selected by the exchange agent through the pro rata selection process described above will be converted into the right to receive
the per share cash consideration; and
- •
- the
stock election shares and any no election shares that have not been selected by the exchange agent to be converted into the per share cash consideration will be
converted into the right to receive the per share stock consideration.
69
The
allocation described above will be computed by the exchange agent within 10 days after the election deadline, unless the merger has not been completed, in which case the
allocation will be completed as soon as practicable after the effective time of the merger. The exchange agent will use an equitable pro rata allocation process to be mutually determined by Patina and
Noble Energy.
Because the United States federal income tax consequences of receiving cash or Noble Energy common stock, or both cash and Noble Energy common stock, will differ,
Patina stockholders are urged to read carefully the information set forth under the heading "—Material United States Federal Income Tax Consequences" and to consult their tax advisors for
a full understanding of the merger's tax consequences to them. In addition, because the stock consideration can fluctuate in value from the determination made during the valuation period, the economic
value per share received by Patina stockholders who receive the stock consideration may, as the date of receipt by them, be more or less than the amount of cash consideration per share received by
Patina stockholders who receive cash consideration.
Dividends and Distributions
Until you surrender your Patina stock certificates for exchange, any dividends or other distributions declared after the effective time with respect to Noble
Energy common stock into which any of your shares may have been converted will accrue, but will not be paid. When you surrender your certificates, Noble Energy will pay any unpaid dividends or other
distributions, without interest. After the effective time, there will be no transfers on the stock transfer books of Patina of any shares of Patina common stock.
Withholding
Each of Noble Energy, the surviving corporation and the exchange agent will be entitled to deduct and withhold from the merger consideration payable to any Patina
stockholder the amounts it is required to deduct and withhold under the Internal Revenue Code or any state, local or foreign tax law. Withheld amounts will be treated for all purposes of the merger as
having been paid to the stockholders from whom they were withheld.
Treatment of Options
Pursuant to their terms and the Patina stock option plans, all options to acquire Patina common stock that are outstanding prior to the merger will automatically
become vested and exercisable prior to the merger. Each outstanding option to acquire Patina common stock granted under Patina's stock option plans that is outstanding and unexercised immediately
prior to the effective time of the merger will be converted automatically at the effective time of the merger into an option to purchase Noble Energy common stock and will continue to be governed by
the terms of the Patina stock plan and related agreement under which it was granted, except that:
- •
- the
number of shares of Noble Energy common stock subject to the new Noble Energy stock option will be equal to the product of the number of shares of Patina common stock
subject to the Patina stock option and the exchange ratio (determined as described above under the heading "—Merger Consideration"), rounded up or down to the nearest whole share;
- •
- the
exercise price per share of Noble Energy common stock subject to the new Noble Energy stock option will be equal to the exercise price per share of Patina common stock
under the Patina stock option divided by the exchange ratio, rounded up or down to the nearest whole cent; and
70
- •
- the
new Noble Energy stock option will not terminate if the holder thereof ceases to be a director, officer, employee or consultant of Noble Energy or any of its
subsidiaries, unless the Patina stock option was issued after December 8, 2004, in which case the new Noble Energy stock option will terminate immediately upon termination of the holder's
employment or retention for "cause" or, otherwise, 60 days after the holder ceases to be a director, officer, employee or consultant of Noble Energy or any of its subsidiaries.
In
any event, stock options that are intended to be incentive stock options under the Internal Revenue Code will be adjusted in the manner prescribed by the Internal Revenue Code.
Treatment of Warrants
Noble Energy is required to assume upon the effective time of the merger all warrants to acquire Patina common stock that are outstanding prior to the merger, by
executing supplemental agreements with the holders of the warrants. Upon the closing of the merger, each such warrant wilNT> |
A-7 |
| Exchange Fund |
|
A-7 |
| Exchange Ratio |
|
A-2 |
| Existing Deferred Compensation Plan |
|
A-52 |
| Expenses Payment |
|
A-64 |
| Final Parent Stock Price |
|
A-2 |
| Financing |
|
A-64 |
| FTC |
|
A-49 |
| GAAP |
|
A-13 |
| Governmental Entity |
|
A-12 |
| Hazardous Substance |
|
A-64 |
| Hedge Termination Period |
|
A-60 |
| Hedging Losses |
|
A-60 |
| HSR Act |
|
Treatment of Restricted Stock
Each outstanding award of restricted Patina common stock made to employees and directors of Patina will become vested prior to the effective time of the merger,
and those vested shares will be treated in the merger in the same manner as other shares of Patina common stock (as described above under the heading "—Merger Consideration").
Effective Time
The merger will be completed when we file a certificate of merger with the Secretary of State of the State of Delaware.
Subject
to satisfaction of the other conditions to the merger, we anticipate that the closing of the merger will occur within five business days after the approval of the merger by the
requisite votes of the Patina and Noble Energy stockholders. However, the effective time of the merger could be delayed if there is a delay in satisfying any conditions to the merger. There can be no
assurances as to whether, or when, Noble Energy and Patina will obtain the required approvals or complete the merger. If the merger is not completed on or before August 31, 2005, either Noble
Energy or Patina may terminate the merger agreement, unless the failure to complete the merger by that date is due to the failure of the party seeking to terminate the merger agreement to fulfill any
material obligations under the merger agreement or a material breach of the merger agreement by such party. See "—Conditions to the Completion of the Merger" immediately below.
Conditions to the Completion of the Merger
The completion of the merger is subject to various conditions. While it is anticipated that all of these conditions will be satisfied, there can be no assurance
as to whether or when all of the conditions will be satisfied or, where permissible, waived.
71
Conditions to Each Party's Obligations
Each party's obligation to complete the merger is subject to the satisfaction or waiver of the following conditions:
- •
- adoption
and approval by Patina's stockholders of the merger agreement and the merger;
- •
- approval
by Noble Energy's stockholders of the issuance of Noble Energy shares in the merger;
- •
- approval
by the NYSE of listing of the shares of Noble Energy common stock to be issued in the merger, subject to official notice of issuance;
- •
- other
than the filing of the certificate of merger in accordance with the DGCL, the receipt of all authorizations, consents and approvals of all governmental entities
required to be obtained prior to consummation of the merger, except for such authorizations, consents and approvals the failure of which to be obtained individually or in the aggregate has not had,
and would not be reasonably likely to have or result in, a material adverse effect on any party to the merger agreement;
- •
- effectiveness
of the registration statement, of which this joint proxy statement/prospectus constitutes a part, and absence of any stop order or proceedings for such purpose
pending before or threatened by the SEC; and
- •
- absence
of any statute, rule, order, decree or regulation, and of any action taken by any court or other governmental entity of competent jurisdiction, which temporarily,
preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the merger or makes the merger illegal.
Additional Conditions to Patina's Obligations
The obligation of Patina to complete the merger is subject to the satisfaction or waiver of the following conditions:
- •
- accuracy
of Noble Energy's and Merger Sub's representations and warranties contained in the merger agreement both at and as of the date of the merger agreement and at and as
of the closing date of the merger, as if made at and as of the closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except where, in
the case of all representations and warranties except those regarding Noble Energy's capitalization, corporate power and authority, validity of the merger agreement and SEC reports, the failure to be
accurate individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a material adverse effect on Noble Energy;
- •
- the
performance in all material respects by Noble Energy and Merger Sub of their respective obligations contained in the merger agreement;
- •
- absence
of any suit, action or proceeding by any court or other governmental entity seeking to restrain, preclude, enjoin or prohibit the merger or any of the other
transactions contemplated by the merger agreement; and
- •
- the
receipt by Patina of an opinion of its counsel, dated as of the date this joint proxy statement/prospectus is filed and as of the closing date of the merger, to the
effect that the merger will be treated as a reorganization under Section 368(a) of the Internal Revenue Code and that each party to the merger agreement will be a "party to the reorganization"
within the meaning of Section 368 of the Internal Revenue Code.
72
Additional Conditions to Noble Energy's Obligations
The obligations of Noble Energy and Merger Sub to complete the merger are subject to the satisfaction or waiver of the following conditions:
- •
- accuracy
of Patina's representations and warranties contained in the merger agreement both at and as of the date of the merger agreement and at and as of the closing date of
the merger, as if made at and as of the closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except where, in the case of all
representations and
warranties except those regarding Patina's capitalization, corporate power and authority, validity of the merger agreement and SEC reports, the failure to be accurate individually or in the aggregate
has not had, and would not be reasonably likely to have or result in, a material adverse effect on Patina;
- •
- the
performance in all material respects by Patina of its obligations contained in the merger agreement;
- •
- absence
of any suit, action or proceeding by any court or other governmental entity seeking to (1) restrain, preclude, enjoin or prohibit the merger or any of the
other transactions contemplated by the merger agreement, or (2) prohibit or limit in any material respect the ownership or operation of any of the parties to the merger agreement or any of
their respective affiliates of a substantial portion of the business or assets of Patina and its subsidiaries, taken as a whole, or to require any person to dispose of or hold separate any material
portion of the business or assets of Patina and its subsidiaries, taken as a whole, as a result of the merger or any of the other transactions contemplated by the merger agreement;
- •
- the
receipt by Noble Energy of an opinion of its counsel, dated as of the date this joint proxy statement/prospectus is filed and as of the closing date of the merger, to
the effect that the merger will be treated as a reorganization under Section 368(a) of the Internal Revenue Code and that each party to the merger agreement will be a "party to the
reorganization" within the meaning of Section 368 of the Internal Revenue Code;
- •
- the
number of dissenting shares not exceeding 15% of the outstanding shares of Patina's common stock; and
- •
- receipt
of all material consents and approvals of any person that Patina or any of its subsidiaries are required to obtain in connection with the consummation of the merger,
including consents and approvals from parties to loans, contracts, leases or other agreements, except for such consents and approvals the failure of which to be obtained individually or in the
aggregate would not be reasonably likely to have or result in a material adverse effect on Patina.
Representations and Warranties
The merger agreement contains representations and warranties made by each of the parties regarding aspects of their respective businesses, financial condition and
structure, as well as other facts pertinent to the merger. Each of Patina on the one hand and Noble Energy and Merger Sub, on the other hand, has made representations and warranties to the other in
the merger agreement with respect to the following subject matters:
- •
- corporate
existence, good standing and qualification to conduct business;
- •
- capitalization,
including ownership of subsidiary capital stock and the absence of restrictions or encumbrances with respect to capital stock of any subsidiary;
- •
- corporate
power and authorization to enter into and carry out the obligations of the merger agreement and the enforceability of the merger agreement;
73
- •
- absence
of any conflict or violation of organizational documents, third party agreements or law or regulation as a result of entering into and carrying out the obligations
of the merger agreement;
- •
- governmental,
third party and regulatory approvals or consents required to complete the merger;
- •
- filings
and reports with the SEC, and financial information;
- •
- absence
of certain changes, events or circumstances;
- •
- absence
of undisclosed liabilities;
- •
- accuracy
of the information supplied for inclusion in this joint proxy statement/prospectus;
- •
- employee
benefit plans;
- •
- litigation,
government orders, judgments and decrees;
- •
- compliance
with laws;
- •
- intellectual
property;
- •
- material
contracts;
- •
- tax
matters;
- •
- environmental
matters;
- •
- real
property and operating equipment;
- •
- insurance;
- •
- labor
and employment matters;
- •
- transactions
with affiliates;
- •
- derivative
and hedging transactions;
- A-65
|
| Parent Leases |
|
A-65 |
| Parent Material Contract |
|
A-33 |
| Parent Notice |
|
A-46 |
| Parent Oil and Gas Properties |
|
A-65 |
| Parent Owned Real Property |
|
A-65 |
| Parent Permits |
|
A-32 |
| Parent Plans |
|
A-30 |
| Parent Preferred Stock |
|
A-26 |
| Parent Proposal |
|
A-39 |
| Parent Real Property |
|
A-65 |
| Parent Reserve Report |
|
A-38 |
| Parent SEC Documents |
|
A-28 |
| |
|
|
iv
| Parent SPD |
|
A-30 |
| Parent Stock Options |
|
A-26 |
| Parent Stockholders' Meeting |
|
A-50 |
| Per Share Cash Consideration |
|
A-2 |
| Per Share Consideration |
|
A-2 |
| Per Share Stock Consideration |
|
A-2 |
| Permit |
|
A-65 |
| Permitted Liens |
|
A-65 |
| Person |
|
A-66 |
| Petrie Parkman |
|
A-25 |
| Pre-Announcement Hedges |
|
A-60 |
| Proxy Statement |
|
A-49 |
| Purchaser |
|
A-1 |
| Release |
|
A-66 |
| Required Parent Vote |
|
A-39 |
| Return |
|
A-66 |
| S-4 |
|
A-12 |
| Secretary of State |
|
A-1 |
| Securities Act |
|
A-13 |
| Skadden Arps |
|
A-57 |
| SOX |
|
A-13 |
| SOX 404 Plan |
|
A-23 |
| SPD |
|
A-15 |
| Special Meeting |
|
74
Conduct of Business Pending the Merger
Operations of Patina
Patina has agreed that it will, and will cause its subsidiaries to, during the period from the date of the merger agreement until the effective time of the merger
or the date, if any, on which the merger agreement is terminated, except as expressly contemplated or permitted by the merger agreement, required by applicable law, or agreed to in writing by Noble
Energy:
- •
- conduct
the business of Patina and its subsidiaries only in the ordinary course consistent with past practice;
- •
- use
its reasonable best efforts to preserve intact its business organization and goodwill and the business organization and goodwill of its subsidiaries; and
- •
- use
its reasonable best efforts to keep available the services of its current officers and employees and preserve and maintain existing relations with customers, suppliers,
officers, employees and creditors.
Patina
has also agreed that it will not, and will not permit any of its subsidiaries to, during the period from the date of the merger agreement until the effective time of the merger or
the date, if any, on which the merger agreement is terminated, except as expressly contemplated or permitted by the merger agreement, required by applicable law, or agreed to in writing by Noble
Energy:
- •
- enter
into any new line of business, incur or commit to any capital expenditures, or any obligations or liabilities in connection with any capital expenditures during
calendar year 2004 other than capital expenditures and obligations or liabilities incurred or committed to in an amount not greater in the aggregate than, and during the same time period set forth in,
Patina's current capital budget approved by the board of directors of Patina in February 2004 and October 2004, or incur or commit to any capital expenditures, or any obligations or
liabilities in connection with any capital expenditures during calendar year 2005 other than capital expenditures and obligations or liabilities incurred or committed to in an amount not greater in
the aggregate than, and during the same time period set forth in, Patina's total capital budget for calendar year 2005 approved by the board of directors of Patina in December 2004;
- •
- amend
its certificate of incorporation or bylaws or similar organizational documents;
- •
- declare,
set aside or pay any dividend (other than, in the case of the Patina, regular quarterly dividends consistent with past practice and in no event exceeding $0.06 per
share per quarter) or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock, except that Patina may permit any direct or indirect
wholly-owned subsidiary to do any of the foregoing;
- •
- adjust,
split, combine or reclassify any capital stock or issue, grant, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible
into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or of any other such securities or agreements of Patina or
any of its subsidiaries, other than issuances by Patina (1) of options and common stock to employees and directors of Patina in the ordinary course of Patina's annual compensation procedures,
consistent with past practice (not to exceed 1.7 million shares in the aggregate), (2) of options to new hires or promoted employees in the ordinary course of business consistent with
past practice (not to exceed 150,000 shares in the aggregate), (3) pursuant to Patina warrants and options (outstanding as of December 15, 2004, or issued thereafter in accordance with
the merger agreement), or (4) pursuant to the Patina rights or Patina rights agreement in effect on the date of the merger agreement;
75
- •
- except
as required pursuant to the terms of the Patina benefit plans in effect on the date of the merger agreement, redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock or any other securities or agreements of the type described in the preceding paragraph;
- •
- except
as required pursuant to the terms of the Patina benefit plans in effect on the date of the merger agreement, grant any increase in the compensation or benefits
payable or to become payable by Patina or any of its subsidiaries to any former or current direct%" ALIGN="RIGHT">A-50
|
| Specified Company SEC Documents |
|
A-14 |
| Specified Parent SEC Documents |
|
A-29 |
| Stock Designated Shares |
|
A-5 |
| Stock Election Shares |
|
A-4 |
| Subsidiary |
|
A-66 |
| Superior Proposal |
|
A-47 |
| Surviving Corporation |
|
A-1 |
| Tax |
|
A-66 |
| Technology |
|
A-18 |
| Termination Date |
|
A-57 |
| Termination Fee |
|
A-59 |
| Total Cash Amount |
|
A-3 |
| Total Common Stock Amount |
|
A-3 |
| Total Stock Amount |
|
A-3 |
| Total Stock Consideration |
|
A-3 |
| Unit |
|
A-66 |
| Valuation Period |
|
A-3 |
| WARN Act |
|
A-22 |
| Well |
|
A-66 |
v
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 15, 2004, by and among Patina Oil & Gas Corporation, a Delaware corporation (the "Company"),
Noble Energy, Inc., a Delaware corporation ("Parent") and Noble Energy Production, Inc., a Delaware corporation and wholly owned subsidiary of Parent ("Purchaser").
WHEREAS,
the respective Boards of Directors of Parent, Purchaser and the Company have each approved this Agreement and the merger of the Company with and into Purchaser (the "Merger")
upon the terms and subject to the conditions of this Agreement and in accordance with the terms of this Agreement and the General Corporation Law of the State of Delaware (the "DGCL");
WHEREAS,
the respective Boards of Directors of Parent and the Company have determined that the Merger is fair to, and in the best interests of, their respective stockholders; and
WHEREAS
for U.S. federal income Tax purposes, it is intended that (a) the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code,
(b) this Agreement will constitute a plan of reorganization and (c) Parent, Purchaser and the Company will each be a party to such reorganization within the meaning of
Section 368(b) of the Code.
NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
Section
1.1 The Merger. Upon the terms and subject to conditions of this Agreement and in accordance with the
DGCL, at the Effective Time, the Company shall be merged with and into Purchaser. At the
Effective Time, the separate existence of the Company shall cease and Purchaser shall continue as the surviving corporation (the "Surviving Corporation"). The Merger shall have the effect as provided
in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, upon the Merger, all the rights, privileges, immunities, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation and all the obligations, duties, debts and liabilities of the Company and Purchaser shall be the obligations, duties, debts and liabilities of the Surviving
Corporation.
Section
1.2 Effective Time. Upon the terms and subject to the conditions of this Agreement, as promptly as
practicable after the Closing and on the Closing Date, Purchaser and the Company will cause a certificate of merger (the "Certificate of Merger") to be duly prepared, executed, acknowledged and filed
with the Secretary of State of the State of Delawor, officer or employee of Patina or any of its subsidiaries, except for any such increases in the
ordinary course of Patina's annual compensation procedures, consistent with past practice;
•except
as required pursuant to the terms of the Patina benefit plans in effect on the date of the merger agreement, adopt, enter into, amend or otherwise increase, or
accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under, any Patina benefit plan (other than entry into employment agreements with
new hires in the ordinary course of business consistent with past practice; provided that such employment agreement shall be terminable at will, without penalty (other than severance obligations that
accrue under Patina's amended and restated change in control plan as in effect on the date of the merger agreement) to Patina or any of its subsidiaries);
•grant
any severance or termination pay to any officer, director or employee of Patina or any of its subsidiaries (other than grants to new hires in the ordinary course
consistent with past practice pursuant to Patina's amended and restated change in control plan);
•change
its methods of accounting in effect as of the date of the merger agreement, except in accordance with changes in U.S. generally accepted accounting principles
("GAAP") as concurred to by Patina's independent auditors;
•acquire
any business organization, division or business by merger, consolidation, purchase of an equity interest or assets, or by any other manner, or acquire any assets
(other than in the ordinary course of business consistent with past practice or pursuant to agreements in effect on the date of the merger agreement);
•sell,
lease, exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange, transfer or otherwise dispose of, any material assets (other than the sale of
inventory and hydrocarbons in the ordinary course of business consistent with past practice or the sale of any assets pursuant to agreements in effect on the date of the merger agreement);
•mortgage,
pledge, hypothecate, grant any security interest in, or otherwise subject any of its assets to any liens, subject to limited exceptions;
•pay,
discharge or satisfy any claims (including claims of stockholders), liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)
where such payment, discharge or satisfaction would require any payment except for the payment, discharge or satisfaction of liabilities or obligations in accordance with the terms of agreements in
effect on the date of the merger agreement or entered into after the date of the merger agreement in the ordinary course of business consistent with past practice, and except for any payments,
discharges or settlements that do not exceed $500,000 individually or $2.5 million in the aggregate;
•compromise,
settle or grant any waiver or release relating to any litigation, other than settlements or compromises of litigation where the amount paid or to be paid does
not exceed $500,000 individually or $2.5 million in the aggregate;
76
- •
- engage
in any transaction with (except pursuant to agreements in effect at the time of the merger agreement), or enter into any agreement, arrangement, or understanding
with, directly or indirectly, any of Patina's affiliates (not including any employees of Patina or any of its subsidiaries, other than the directors and executive officers thereof);
- •
- make
or change any material tax election, amend any tax return in any material respect or settle or compromise any material tax liability;
- •
- take
any action that would, or could reasonably be expected to, result in any of its representations and warranties set forth in the merger agreement becoming untrue in a
manner that would give rise to the failure of the closing condition relating to the satisfaction of the representations and warranties of Patina (see "—Conditions to the Completion of the
Merger");
- •
- adopt
or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Patina or any
of its subsidiaries (other than the merger or with respect to an inactive wholly-owned subsidiary of Patina) or any agreement relating to an acquisition proposal;
- •
- incur
or assume any long-term debt or incur or assume any short-term indebtedness (except for short-term indebtedness in the ordinary
course of business consistent with past practice and in no event exceeding $30.0 million in the aggregate);
- •
- modify
the terms of any indebtedness to increase Patina's obligations with respect to such indebtedness;
- •
- assume,
guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person, except in the
ordinary course of business consistent with past practice and in no event exceeding $500,000 in the aggregate;
- •
- make
any loans, advances or capital contributions to, or investments in, any other person (other than to wholly-owned subsidiaries of Patina, or by wholly-owned subsidiaries
to Patina, or customary loans or advances to employees in accordance with past practice and in no event exceeding $500,000 in the aggregate);
- •
- enter
into any material commitment or transaction, except in the ordinary course of business consistent with past practice;
- •
- enter
into any agreement, understanding or commitment that materially restrains, limits or impedes Patina's or any of its subsidiaries' ability to compete with or conduct
any business or line of business, including geographic limitations on Patina's or any of its subsidiaries' activities;
- •
are (the "Secretary of State") as provided in the DGCL. The Merger shall become effective on the date and at the time when the Certificate of Merger
has been duly filed with the Secretary of State or, subject to the DGCL, such other time as is agreed upon by the parties and specified in the Certificate of Merger, and such time is hereinafter
referred to as the "Effective Time."
Section
1.3 Closing. Unless this Agreement shall have been terminated and the transactions contemplated herein
abandoned pursuant to Section 7.1 and subject to the satisfaction or waiver of the conditions set forth in Article VI, the closing of the Merger (the "Closing") will take place at
10:00 a.m., Houston time, on a date to be specified by the parties, which shall be no later than the second Business Day after satisfaction or waiver (by the party entitled to waive the
condition) of all of the conditions set forth in Article VI (except for those conditions that by their nature cannot be satisfied until the Closing, but subject to the satisfaction or waiver of
those conditions) (the "Closing Date"), at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 1600 Smith Street, Suite 4400, Houston, Texas 77002, unless another time, date and/or place
is agreed to in writing by the parties hereto.
A-1
Section
1.4 Certificate of Incorporation; Bylaws. Pursuant to the Merger, (a) the Certificate of
Incorporation of Purchaser, as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable Law, and (b) the Bylaws of the Purchaser, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law.
Section 1.5 Directors and Officers of the Surviving Corporation and Certain Subsidiaries.
(a) The
directors of Purchaser immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation until their
successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Certificate of Incorporation and
Bylaws.
(b) The
officers of Purchaser immediately prior to the Effective Time shall, from and after the Effective Time, be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and qualified, or their earlier death, resignation or removal.
Section 1.6 Effect on Capital Stock.
(a) At
the Effective Time, subject to the other provisio- modify
or amend in any material respect, or terminate, any material contract to which it is a party or waive in any material respect or assign any of its material rights or
claims, except in the ordinary course of business consistent with past practice;
- •
- fail
to maintain in full force and effect the existing insurance policies covering Patina or its subsidiaries or their respective properties, assets and businesses or
comparable replacement policies, except to the extent such policies cease to be available on commercially reasonable terms; or
- •
- enter
into an agreement, contract, commitment or arrangement to take any of the prohibited actions described above.
In
addition, Patina has agreed that it shall not, nor shall it permit any of its subsidiaries to, enter into any transaction or take any other action that would be reasonably likely to
have a material adverse impact on, or materially delay, the consummation of the transactions contemplated by the merger agreement.
77
Operations of Noble Energy
Noble Energy has agreed that it will, and will cause its subsidiaries to, conduct the business of Noble Energy and its subsidiaries only in the ordinary course
consistent with past practice during the period from the date of the merger agreement until the effective time of the merger or the date, if any, on which the merger agreement is terminated, except as
contemplated or permitted by the merger agreement, required by applicable law, or agreed to in writing by Patina.
Noble
Energy has also agreed that it will not, and will not permit any of its subsidiaries to, during the period from the date of the merger agreement until the effective time of the
merger or the date, if any, on which the merger agreement is terminated, except as expressly contemplated or permitted by the merger agreement, required by applicable law, or agreed to in writing by
Patina:
- •
- (1)
declare, set aside or pay any extraordinary or special dividend or other distribution (other than in the case of any wholly-owned subsidiary of Noble Energy), whether
payable in cash, stock or any other property or right, with respect to its capital stock; provided, however, that Noble Energy may increase the quarterly cash dividend on Noble Energy common stock or
(2) engage in any spin-off or split-off without receiving fair consideration (as determined in the good faith judgment of Noble Energy);
- •
- change
its methods of accounting in effect as of the date of the merger agreement, except in accordance with changes in GAAP as concurred to by Noble Energy's independent
auditors;
- •
- take
any action that would, or could reasonably be expected to, result in any of its representations and warranties set forth in the merger agreement becoming untrue in a
manner that would give rise to the failure of the closing condition relating to the satisfaction of the representations and warranties of Noble Energy (see "—Conditions to the Completion
of the Merger");
- •
- enter
into any new line of business, except as may reasonably relate to Noble Energy's existing businesses;
- •
- solely
in the case of Noble Energy, amend its certificate of incorporation or bylaws or similar organizational documents in a manner that adversely affects the terms of
Noble Energy common stock or adopt or enter into a plan of complete or partial liquidation or dissolution; or
- •
- enter
into an agreement, contract, commitment or arrangement to do any of the foregoing.
In
addition, Noble Energy has agreed that it will not, nor will it permit any of its subsidiaries to, enter into any transaction or take any other action (including any amendment of
Noble Energy's certificate of incorporation) that would be reasonably likely to have a material adverse impact on, or materially delay, the consummation of the transactions contemplated by the merger
agreement.
Reasonable Best Efforts to Obtain Required Stockholder Vote
Each of Patina and Noble Energy will promptly and duly call, give notice of, convene and hold a meeting of its stockholders to be held as soon as is reasonably
practicable after the date on which the registration statement of which this document is part becomes effective. In the case of Patina stockholders, the purpose of voting will be to adopt the merger
agreement and approve the merger and the other transactions contemplated by the merger agreement. In the case of Noble Energy stockholders, the purpose of voting will be to approve of the issuance of
shares of common stock under the merger. Each of Patina and Noble Energy will, through its board of directors, use its reasonable best efforts to obtain the approval of its respective stockholders in
respect of the foregoing. Notwithstanding any adverse recommendation, change or similar circumstance, nothing in the merger agreement is intended to relieve the parties of their respective obligations
to hold a meeting of their stockholders for the approval required to complete the merger.
78
No Solicitation of Alternative Transactions
The merger agreement provides, subject to limited exceptions described below, that each of Patina and Noble Energy will not, and will cause its subsidiaries and
representatives not to:
- •
- directly
or indirectly initiate, solicit, knowingly encourage or facilitate (including by way of furnishing information), or take any other action designed to facilitate or
encourage any inquiries or the making of any proposal that constitutes, or is reasonably likely to lead to, any acquisition proposal (as defined below);
- •
- participate
or engage in any ns of this Article I and Section 2.1, each share of the Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Company Common Stock held directly or indirectly by Parent, Purchaser or the Company or any of their respective Subsidiaries and except
for any Dissenting Shares), together with the Company Rights attached thereto or associated therewith, shall, by virtue of this Agreement and without any action on the part of the holder thereof, be
converted into and exchangeable for the right to receive, at the election of the holder thereof as provided in and subject to the provisions of Section 1.7, either (i) the Per Share
Stock Consideration or (ii) cash in an amount equal to the Per Share Consideration (the "Per Share Cash Consideration", and together with the Per Share Stock Consideration, the "Merger
Consideration").
For
purposes of this Agreement:
"Aggregate
Consideration" shall mean the sum of (x) the Total Stock Consideration and (y) the Total Cash Amount.
"Deemed
Stock Amount" shall mean the Total Common Stock Amount; provided, however, that
regardless of the actual number of shares of Company Common Stock outstanding immediately prior to the Effective Time, in no event shall the Deemed Stock Amount exceed the sum of
(i) 72,820,413, (ii) the aggregate number of shares of Company Common Stock, if any, issued by the Company after the Cut-off Time and prior to the date of this Agreement upon
the exercise of the Company Options or Company Warrants (in each case outstanding as of the Cut-off Time and disclosed in Section 3.2(a) of the Company Disclosure Letter) in
accordance with the terms of such options and (iii) the aggregate number of shares of Company Common Stock, if any, issued by the Company after the date of this Agreement and prior to the
Effective Time in accordance with Section 5.1(e).
"Exchange
Ratio" shall mean the quotient, rounded to the nearest ten-thousandth, obtained by dividing the Per Share Consideration by the Final Parent Stock Price.
"Final
Parent Stock Price" shall mean the volume-weighted average of the trading sale prices per share of Parent Common Stock as reported on the New York Stock Exchange (the "NYSE")
during the Valuation Period.
"Per
Share Consideration" shall mean the quotient, rounded to the nearest ten-thousandth, obtained by dividing the Aggregate Consideration by the Total Common Stock Amount.
A-2
"Per
Share Stock Consideration" shall mean a number of shares (which need not be a whole number) of Parent Common Stock (together with the number of Parent Rights associated therewith)
equal to the Exchange Ratio.
"Total
Cash Amount" shall mean the product obtained by multiplying (x) $37.00 by (y) 40% of the Deemed Stock Amount.
"Total
Common Stock Amount" shall mean the total number of shares of Company Common Stock outstanding immediately prior to the Effective Time.
"Total
Stock Amount" shall mean the product obtained by multiplying (x) 0.62521 by (y) 60% of the Deemed Stock Amount.
"Total
Stock Consideration" shall mean the product obtained by multiplying (x) the Total Stock Amount by (y) the Final Parent Stock Price.
"Valuation
Period" shall mean the ten consecutive trading days during which the shares of Parent Common Stock are traded on the NYSE ending on the third calendar day immediately prior to
the Effective Time, or if such calendar day is not a trading day, then ending on the trading day immediately preceding such calendar day.
(b) All
of the shares of Company Common Stock, and associated Company Rights, converted into the Merger Consideration pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate (each a "Certificate") previously representing any such shares of Company Common Stock shall
thereafter cease to have any rights with respect to such securities, except the right to receive (i) the Merger Consideration, (ii) any dividends and other distributions in accordance
with Section 2.1(c), and (iii) any cash to be paid in lieu of any fractional share of Parent Common Stock in accordance with Section 2.1(e).
(c) If,
between the date of this Agreement and the Effective Time, the shares of Parent Common Stock shall be changed or proposed to be changed into a different number or
class of shares by reason of the occurrence of or record date with respect to any reclassification, recapitalization, split-up, combination, exchange of shares or similar readjustment, in
any such case within such period, or a stock dividend thereon shall be declared with a record date within such period, appropriate adjustments shall be made to the Per Share Cash Consideration and the
Per Share Stock Consideration.
(d) At
the Effective Time, all shares of Company Common Stock that are owned directly or indirectly by Parent, Purchaser or the Company or any of their respective
Subsidiaries shall be cancelled and shall cease to exist and no stock of Parent, cash or other consideration shall be delivered in exchange therefor; provided, however, that, for the avoidance of doubt, this Section 1.6(d) shall not apply to
shares of Company Common Stock held by or on behalf of the Deferred Compensation Plan or the New Deferred Compensation Plan, as to which Section 1.6(a) shall apply. All shares of Parent Common
Stock that are owned by the Company or any of its Subsidiaries shall become authorized unissued stock of Parent.
(e) Each
issued and outstanding share of common stock, par value $0.01 per share, of Purchaser issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.
(f) The
calculations required by Section 1.6(a) shall be prepared by Parent promptly after the Closing.
A-3
- •
- specifies
the material terms and conditions of the superior proposal; and
- •
- identifies
the person or group making such superior proposal; and
- •
- in
the event that Noble Energy proposes any alternative transaction during such four business day period, the board of directors of Patina determines in good faith, after
consultation with its financial advisors and outside legal counsel, that such alternative transaction is not at least as favorable to Patina and its stockholders from a financial point of view as the
superior proposal, taking into account all financial, legal and regulatory terms and conditions of the alternative transaction proposed by Noble Energy.
Patina
has also agreed to:
- •
- advise
Noble Energy in writing of any request for information or any acquisition proposal received from any person, or any inquiry, discussions or negotiations with respect
to any acquisition proposal, the terms and conditions of any request, acquisition proposal, inquiry, discussions or negotiations, and the identity of the person or group making any request or
acquisition proposal or with whom any discussions or negotiations are taking place;
- •
- provide
Noble Energy any non-public information concerning Patina provided to any other person or group in connection with any acquisition proposal that was not
previously provided to Noble Energy and copies of any written materials received from that person or group;
- •
- keep
Noble Energy fully informed of the status of any acquisition proposals (including any changes to any terms and conditions); and
- •
- not
release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which Patina is a party.
Patina's Ability to Make an Adverse Recommendation Change other than in Response to a Superior Proposal
At any time prior to obtaining the required Patina stockholder vote adopting the merger agreement and approving the merger and the other transactions contemplated
by the merger agreement, and subject to Patina's compliance at all times with the non-solicitation provisions described above, and with its obligations to submit the merger agreement to
the Patina stockholders for adoption at the special meeting, the board of directors of Patina may make an adverse recommendation change if the board of directors of Patina:
- •
- provides
written notice to Noble Energy (a "notice of change") that:
- •
- advises
Noble Energy that the board of directors of Patina is contemplating making an adverse recommendation change; and
- �",CP="PATINA OIL & GAS CORPORATION",DN="1",CHK=795861,FOLIO='A-3',FILE='DISK020:[05HOU4.05HOU1024]JV1024A.;5',USER='MTRAN',CD='12-APR-2005;16:30' -->
Section 1.7 Election Procedures.
(a) An
election form and other appropriate and customary transmittal materials (which shall specify that delivery shall be effected, and risk of loss and title to the
Certificates theretofore representing shares of Company Common Stock shall pass, only upon proper delivery of such Certificates to the Exchange Agent) in such form as Parent shall specify and as shall
be reasonably acceptable to the Company (the "Election Form") shall be mailed together with the Proxy Statement or at such other time as the Company and Parent may agree (the "Mailing Date") to each
holder of record of Company Common Stock as of the close of business on the record date for notice of the Company Special Meeting (the "Election Form Record Date").
(b) Each
Election Form shall permit the holder (or the beneficial owner through appropriate and customary documentation and instructions), other than any holder of
Dissenting Shares, to specify (i) the number of shares of such holder's Company Common Stock with respect to which such holder elects to receive the Per Share Stock Consideration ("Stock
Election Shares"), (ii) the number of shares of such holder's Company Common Stock with respect to which such holder elects to receive the Per Share Cash Consideration ("Cash Election Shares"),
or (iii) that such holder makes no election with respect to such holder's Company Common Stock ("No Election Shares"). Any Company Common Stock with respect to which the Exchange Agent has not
received an effective, properly completed Election Form on or before 5:00 p.m., Houston time, on the 33rd day following the Mailing Date (or such other time and date as the
Company and Parent shall agree) (the "Election Deadline") (other than any shares of Company Common Stock that constitute Dissenting Shares as of such time) shall also be deemed to be "No Election
Shares."
(c) Parent
shall make available one or more Election Forms as may reasonably be requested from time to time by all Persons who become holders (or beneficial owners) of
Company Common Stock between the Election Form Record Date and the close of business on the Business Day prior to the Election Deadline, and the Company shall provide to the Exchange Agent all
information reasonably necessary for it to perform as specified herein.
(d) Any
such election shall have been properly made only if the Exchange Agent shall have actually received a properly completed Election Form by the Election Deadline. An
Election Form shall be deemed properly completed only if accompanied by one or more Certificates (or customary affidavits and indemnification regarding the loss or destruction of such Certificates or
the guaranteed delivery of such Certificates) representing all shares of Company Common Stock covered by such Election Form, together with duly executed transmittal materials included in the Election
Form. Any Election Form may be revoked or changed by the Person submitting such Election Form prior to the Election Deadline. In the event an Election Form is revoked prior to the Election Deadline,
the shares of Company Common Stock represented by such Election Form shall become No Election Shares and Parent shall cause the Certificates representing Company Common Stock to be promptly returned
without charge to the Person submitting the Election Form upon written request to that effect from the holder who submitted the Election Form, except to the extent (if any) a subsequent election is
properly made with respect to any or all of the applicable shares of Company Common Stock. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in the Election Forms, and any good faith decisions of the
Exchange Agent regarding such matters shall be binding and conclusive. None of Parent, Purchaser or the Exchange Agent shall be under any obligation to notify any Person of any defect in an Election
Form.
(e) Within
ten Business Days after the Election Deadline, unless the Effective Time has not yet occurred, in which case as soon after the Effective Time as practicable (and
in no event more than ten Business Days after the Effective Time), Parent shall cause the Exchange Agent to effect the allocation
A-4
among
the holders of Company Common Stock of rights to receive Parent Common Stock or cash in the Merger in accordance with the Election Forms as follows:
(i) Cash Election Shares More Than Total Cash Amount. If the aggregate cash amount that would be paid upon the conversion of
the Cash Election Shares in the Merger is greater than the Total Cash Amount, then:
(1) all
Stock Election Shares and No Election Shares shall be converted into the right to receive the Per Share Stock Consideration,
(2) the
Exchange Agent shall then select from among the Cash Election Shares, by a pro rata selection process, a sufficient number of shares ("Stock Designated Shares") such
that the aggregate cash amount that will be paid in the Merger equals as closely as practicable the Total Cash Amount, and all Stock Designated Shares shall be converted into the right to receive the
Per Share Stock Consideration, and
(3) the
Cash Election Shares that are not Stock Designated Shares will be converted into the right to receive the Per Share Cash Consideration.
(ii) Cash Election Shares Less Than Total Cash Amount. If the aggregate cash amount that would be paid upon conversion of the
Cash Election Shares in the Merger is less than the Total Cash Amount, then:
(1) all
Cash Election Shares shall be converted into the right to receive the Per Share Cash Consideration,
(2) the
Exchange Agent shall then select first from among the No Election Shares and then (if necessary) from among the Stock Election Shares, by a pro rata selection
process, a sufficient number of shares ("Cash Designated Shares") such that the aggregate cash amount that will be paid in the Merger equals as closely as practicable the 9; - specifies
the material facts and information constituting the basis for such contemplated determination; and
- •
- determines
in good faith:
- •
- after
consultation with its outside legal counsel and any other advisor it chooses to consult, that the failure to make an adverse recommendation change is inconsistent with
its fiduciary duties to the stockholders of Patina; and
- •
- that
the reasons for making the adverse recommendation change are independent of any pending acquisition proposal;
- •
- provided,
however, that:
- •
- the
board of directors of Patina may not make such an adverse recommendation change until the third business day after receipt by Noble Energy of a notice of change; and
80
- •
- during
the three business day period, Patina will, at the request of Noble Energy, negotiate in good faith with respect to any changes to the merger agreement which would
allow the board of directors of Patina to not make the adverse recommendation change consistent with its fiduciary duties.
Noble Energy's Ability to Make an Adverse Recommendation Change in Response to a Superior Proposal
At any time prior to obtaining the required Noble Energy stockholder vote approving the issuance of Noble Energy common stock in the merger, and subject to Noble
Energy's compliance at all times with the non-solicitation provisions described above, and with its obligations to submit the issuance of Noble Energy common stock in the merger to the
Noble Energy stockholders for approval at the special meeting, the board of directors of Noble Energy may make an adverse recommendation change in response to a superior proposal if:
- •
- four
business days before making such change, Noble Energy provides a notice of superior proposal to Patina that:
- •
- advises
Patina that the board of directors of Noble Energy or any of its committees has received a superior proposal;
- •
- specifies
the material terms and conditions of the superior proposal; and
- •
- identifies
the person or group making such superior proposal; and
- •
- in
the event that Patina proposes any alternative transaction, during such four business day period, the board of directors of Noble Energy determines in good faith, after
consultation with its financial advisors and outside legal counsel, that such alternative transaction is not at least as favorable to Noble Energy and its stockholders from a financial point of view
as the superior proposal, taking into account all financial, legal and regulatory terms and conditions of the alternative transaction proposed by Patina.
Noble
Energy has also agreed to:
- •
- advise
Patina in writing of any request for information or any acquisition proposal received from any person, or any inquiry, discussions or negotiations with respect to any
acquisition proposal, the terms and conditions of any request, acquisition proposal, inquiry, discussions or negotiations, and the identity of the person or group making any request or acquisition
proposal or with whom any discussions or negotiations are taking place;
- •
- provide
Patina any non-public information concerning Noble Energy provided to any other person or group in connection with any acquisition proposal that was not
previously provided to Patina and copies of any written materials received from that person or group;
- •
- keep
Patina fully informed of the status of any acquisition proposals (including any changes to any terms and conditions); and
- •
- not
release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which Noble Energy is a party.
Noble Energy's Ability to Make an Adverse Recommendation Change Other Than in Response to a Superior Proposal
At any time prior to obtaining the required Noble Energy stockholder vote approving the issuance of Noble Energy common stock in the merger, and subject to Noble
Energy's compliance at all times with the non-solicitation provisions described above, and with its obligation to submit the issuance of Noble Energy common stock in the merger to the
Noble Energy stockholders for approval at the
81
special
meeting, the board of directors of Noble Energy may make an adverse recommendation change if the board of directors of Noble Energy:
- •
- provides
a notice of change to Patina that:
- •
- advises
Patina that the board of directors of Noble Energy is contemplating making an adverse recommendation change; and
- •
- specifies
the material facts and information constituting the basis for such contemplated determination; and
- •
- determines
in good faith:
- •
- after
consultation with its outside legal counsel and any other advisor it chooses to consult, that the failure to make an adverse recommendation change is inconsistent with
its fiduciary duties to the stockholders of Noble Energy; and
- •
- that
the reasons for making the adverse recommenTotal Cash Amount, and all
Cash Designated Shares shall be converted into the right to receive the Per Share Cash Consideration, and
(3) the
Stock Election Shares and the No Election shares that are not Cash Designated Shares shall be converted into the right to receive the Per Share Stock Consideration.
(iii) Cash Election Shares Equal to Total Cash Amount. If the aggregate cash amount that would be paid upon conversion of the
Cash Election Shares in the Merger is equal to the Total Cash Amount, then subparagraphs (i) and (ii) above shall not apply and all Cash Election Shares shall be converted into the right
to receive the Per Share Cash Consideration and all Stock Election Shares and No Election Shares shall be converted into the right to receive the Per Share Stock Consideration.
Notwithstanding
anything in this Agreement to the contrary, for purposes of determining the allocations set forth in this Section 1.7(e), Parent shall have the right, but not the
obligation, to require that any shares of Company Common Stock that constitute Dissenting Shares as of the Election Deadline be treated as Cash Election Shares, although no such shares shall be
subject to any of the pro rata selection processes contemplated by this Section 1.7(e).
(f) The
pro rata selection process to be used by the Exchange Agent shall consist of such equitable pro ration processes as shall be mutually determined by Parent and the
Company.
Section
1.8 Stock Options and Warrants. At the Effective Time, each option granted by the Company to purchase
shares of Company Common Stock (each a "Company Option") pursuant to any stock option plan, program or arrangement of the Company, including, without limitation, the Company's 1996 Employee Stock
Option Plan (as amended) and 1996 Stock Plan for Non-Employee Directors (collectively, the "Company Option Plans"), that is outstanding and unexercised immediately
A-5
prior
to the Effective Time shall cease to represent a right to acquire shares of Company Common Stock and shall be converted automatically into options to purchase shares of Parent Common Stock, and
Parent shall assume each such Company Option (hereinafter, "Assumed Option") subject to the terms of the applicable Company Option Plan and the agreement evidencing the grant thereunder of such
Assumed Option (other than the provisions thereof providing for termination of such Assumed Option at the Effective Time); provided, however, that (i) the number of shares of Parent Common
Stock purchasable upon exercise of such Assumed Option shall be equal to the number of shares of Company Common Stock that were purchasable under such Company Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, and rounded to the nearest whole share, (ii) the per share exercise price under such Assumed Option shall be adjusted by dividing the per share exercise
price under such Company Option by the Exchange Ratio, and rounding to the nearest whole cent and (iii) such Assumed Option shall not terminate if the holder ceases to be a director, officer,
employee or consultant of the Surviving Corporation or any of its affiliates (including Parent and its Subsidiaries), unless the applicable Company Option was issued after December 8, 2004, in
which case such Assumed Option shall terminate (A) immediately upon the Surviving Corporation or any of its affiliates (including Parent and its Subsidiaries) terminating its employment or
retention of such holder for "Cause" (as defined in the applicable Company Option Plan) or (B) otherwise, 60 days after the holder ceases to be a director, officer, employee or
consultant of the Surviving Corporation or any of its affiliates (including Parent and its Subsidiaries). In the case of any Assumed Option that is an "incentive stock option" (as defined in
Section 422 of the Code), the exercise price, the number of shares of Parent Common Stock purchasable pursuant to such Assumed Option and the terms and conditions of exercise of such option
shall be determined in order to comply, to the fullest extent possible, with Section 424(a) of the Code. Prior to the Effective Time, Parent shall prepare and file with the Securities and
Exchange Commission (the "SEC") a registration statement on Form S-8 (or other appropriate form) registering all the shares of Parent Common Stock subject to the Assumed Options,
and such registration statement shall be kept effective (and the current status of the prospectus or prospectuses required thereby shall be maintained) as long as any Assumed Option remains
outstanding.
(b) If
the Company Warrant is not exercised prior to the Effective Time, Parent shall assume the Company Warrant in accordance with its terms at the Effective Time by
executing a supplemental agreement with the holder of the Company Warrant in accordance with the terms of the Company Warrant.
Section
1.9 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, with respect to each
share of Company Common Stock as to which the holder thereof shall have properly complied with the provisions of Section 262 of the DGCL as to appraisal rights (each, a "Dissenting Share"), if
any, such holder shall be entitled to payment, solely from the Surviving Corporation, of the appraisal value of the Dissenting Shares to the extent permitted by and in accordance with the provisions
of Section 262 of the DGCL; provided, however, that (i) if any holder of Dissenting Shares, under the circumstances permitted by and in accordance with the DGCL, affirmatively withdraws
his demand for appraisal of such Dissenting Shares, (ii) if any holder of Dissenting Shares fails to establish his entitlement to appraisal rights as provided in the DGCL or (iii) if any
holder of Dissenting Shares takes or fails to take any action the consequence of which is that such holder is not entitled to payment for his shares under the DGCL, such holder or holders (as the case
may be) shall forfeit the right to appraisal of such shares of Company Common Stock and such shares of Company Common Stock shall thereupon cease to constitute Dissenting Shares and if such forfeiture
shall occur following the Election Deadline, each such share of Company Common Stock shall thereafter be deemed to have been converted into and to have become, as of the Effective Time, the right to
receive, without interest thereon, the Per Share Stock Consideration; provided that Parent shall be entitled to convert each such share into the right to receive the Per Share Cash Consideration or a
combination of the Per Share Cash Consideration and Per Share Stock Consideration if Parent shall have received an opinion from
A-6
• provided,
however, that:
- •
- the
board of directors of Noble Energy may not make such an adverse recommendation change until the third business day after receipt of a notice of change by Patina; and
- •
- during
the three business day period, Noble Energy will, at the request of Patina, negotiate in good faith with respect to any changes to the merger agreement which would
allow the board of directors of Noble Energy to not make the adverse recommendation change consistent with its fiduciary duties.
Acquisition Proposal. For purposes of the merger agreement, the term "acquisition proposal" means, with respect to Patina or
Noble Energy, any bona fide proposal for the:
- •
- direct
or indirect acquisition or purchase of a business or assets that constitutes 10% or more of the net revenues, net income or the assets (based on fair market value) of
such party and its subsidiaries, taken as a whole;
- •
- direct
or indirect acquisition or purchase of 10% or more of any class of equity securities or capital stock of such party or any of its subsidiaries whose business
constitutes 10% or more of the net revenues, net income or assets of such party and its subsidiaries, taken as a whole; or
- •
- merger,
consolidation, restructuring, transfer of assets or other business combination, sale of shares of capital stock, tender offer, exchange offer, recapitalization,
stock repurchase program or other similar transaction that if consummated would result in any person beneficially owning 10% or more of any class of equity securities of such party or any of its
subsidiaries whose business constitutes 10% or more of the net revenues, net income or assets of such party and its subsidiaries, taken as a whole, other than the transactions contemplated by the
merger agreement.
The
parties have agreed that, with respect to Noble Energy, the term "acquisition proposal" will not include any acquisition or disposition of any assets or businesses, or any interest therein, in
either case
in exchange for cash, securities, producing properties or other assets, in any single transaction or series of related transactions, where the aggregate value of the consideration paid or received, as
the case may be, by Noble Energy and its subsidiaries, in respect thereof, does not exceed $70.0 million per transaction or series of related transactions.
Superior Proposal. For purposes of the merger agreement, the term "superior proposal" means, with respect to Patina or Noble
Energy, any bona fide written acquisition proposal, made by a third
82
party
to purchase, directly or indirectly, 50% or more of the assets of such party or 50% or more of the outstanding equity securities of such party pursuant to a tender offer, exchange offer or
merger on terms that a majority of the board of directors of such party determines in good faith to be superior to such party and its stockholders (in their capacity as stockholders) from a financial
point of view as compared to the transactions contemplated by the merger agreement and to any alternative transaction or changes to the terms of the merger agreement proposed by any other party to the
merger agreement (after the board of directors of such party consults with its financial advisors and takes into account all financial, legal and regulatory terms and conditions of the acquisition
proposal and the merger agreement, including any changes to the terms of the merger agreement offered by any other party to the merger agreement in response to the superior proposal, including any
conditions to and expected timing of consummation, and any risks of non-consummation, of the acquisition proposal).
Adverse Recommendation Change. For purposes of the merger agreement, the term "adverse recommendation change" means, with
respect to Patina or Noble Energy, a direct or indirect action or public proposal made by its board of directors or a committee of its board of directors to:
- •
- withdraw
(or amend or modify in a manner adverse to the other party) its approval, recommendation or declaration of advisability of the merger agreement, the merger or the
other transactions contemplated by the merger agreement; or
- •
- recommend,
adopt or approve any acquisition proposal.
Termination of the Merger Agreement
General
The merger agreement may be terminated by written notice at any time prior to the effective time of the merger in any of the following ways:
- •
- by
mutual written consent of Noble Energy and Patina;
- •
- by
either Noble Energy or Patina:
- •
- if
the merger is not completed on or before August 31, 2005, unless the failure of the closing to occur by this date is due to the failure of the party seeking to
terminate the merger agreement to fulfill any material obligation under the merger agreement or a material breach of the merger agreement by such party;
- •
- if
any court or other governmental entity shall have issued a statute, rule, order, decree or regulation or taken any other action (which Noble Energy and Patina will use
their reasonable best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the merger or making the merger illegal and such statute, rule,
order, decree, regulation or other action has become final and nonappealable, provided that the terminating party is not in breach of its obligation to use reasonable best efforts to complete the
merger;
- •
- if
the Patina stockholders fail to adopt the merger agreement by the requisite vote, provided that this right to terminate is not available to Patina if it has efore:always'>
Skadden
Arps stating that the Merger shall not fail to satisfy the continuity of interest requirement under Section 368 of the Code as a result thereof. The Company shall give Parent prompt
notice of any demands received by the Company for appraisal of shares of Company Common Stock, and Parent shall have the right to participate in all negotiations and proceedings with respect to such
demands. The Company shall not settle, make any payments with respect to, or offer to settle, any claim with respect to Dissenting Shares without the written consent of Parent.
ARTICLE II
EXCHANGE OF CERTIFICATES
Section 2.1 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall deposit, or shall cause to be deposited, with Wachovia Bank,
N.A. or another bank or trust company designated by Parent and reasonably satisfactory to the Company (the "Exchange Agent"), for the benefit of the holders of shares of Company Common Stock, for
exchange in accordance with this Article II, through the Exchange Agent, sufficient cash and certificates representing shares of Parent Common Stock to make pursuant to this Article II
all deliveries of cash and Parent Common Stock as is required by Article I. Parent agrees to make available to the Exchange Agent, from time to time as needed, cash sufficient to pay any
dividends and other distributions pursuant to Section 2.1(c) and to make payments in lieu of fractional shares pursuant to Section 2.1(e). The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Merger Consideration contemplated to be paid for shares of Company Common Stock pursuant to this Agreement out of the Exchange Fund. Except as contemplated by
Sections 2.1(c) and 2.1(e), the Exchange Fund shall not be used for any other purpose. Any cash and certificates representing Parent Common Stock deposited with the Exchange Agent (including as
payment for fractional shares in accordance with Section 2.1(e) and any dividends or other distributions in accordance with Section 2.1(c)) shall hereinafter be referred to as the
"Exchange Fund."
(b) Exchange Procedures. Promptly after the Effective Time, Parent shall instruct the Exchange Agent to mail to each holder
of record of a Certificate or Certificates which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent and shall be in customary form and
subject to the reasonable approval of the Company prior to the Effective Time) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger
Consideration payable in respect of the shares of Company Common Stock represented by such Certificates. Upon surrender of a Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, properly completed and duly executed, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor (A) one or more shares of Parent Common Stock (which shall be in uncertificated book-entry form unless a physical certificate is requested) representing, in the
aggregate, the whole number of shares of Parent Common Stock, if any, that such holder has the right to receive pursuant to Section 1.6 (after taking into account all shares of Company Common
Stock previously represented by all Certificates then held by such holder) and (B) a check in the amount equal to the cash portion of the Merger Consideration, if any, that such holder has the
right to receive pursuant to Section 1.6 and this Article II, including cash payable in lieu of any fractional shares of Parent Common Stock pursuant to Section 2.1(e) and
dividends and other distributions pursuant to Section 2.1(c). No interest shall be paid or accrued on any Merger Consideration, cash in lieu of fractional shares or on any unpaid dividends and
distributions payable to holders of Certificates. In the event of a transfer of ownership of shares of Company Common Stock which is not registered in the transfer records of the Company, the Merger
Consideration payable in respect of such shares of Company Common Stock may be paid to a transferee if the Certificate representing such shares of Company Common Stock is presented to the
A-7
Exchange
Agent, accompanied by all documents required to evidence and effect such transfer and the Person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other
Taxes required by reason of the delivery of the Merger Consideration in any name other than that of the registered holder of the Certificate surrendered, or required for any other reason, or shall
establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable. Until surrendered as contemplated by this Section 2.1, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration payable in respect of the shares of Company Common Stock represented by such
Certificate, cash in lieu of any fractional shares of Parent Common Stock to which such holder is entitled pursuant to Section 2.1(e) and any dividends or other distributions to which such
holder is entitled pursuant to Section 2.1(c).
(c) Distributions with Respect to Unexchanged Shares of Parent Common Stock.
No dividends or other distributions declared or made with respect to shares of Parent Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock that such holder would be entitled to receive upon surrender of such Certificate and no cash payment in lieu of fractional shares of
Parent Common Stock shall be paid to any such holder until such holder shall surrender such Certificate in accordance with this Section 2.1. Following surrender of any such Certificate, there
shall be paid to such holder of shares of Parent Common Stock issuable in exchange therefor, without interest, (a) promptly after the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid with respect to such shares of Parent Common Stock, and (b) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but prior to such surrender and a payment datbreached any
of its obligations relating to non-solicitation of offers described above under "—No Solicitation of Alternative Transactions" or breached any of its obligations relating to
completing this
joint proxy statement/prospectus and convening a stockholders meeting described above under "—Reasonable Best Efforts to Obtain Required Stockholder Vote";
83
- •
- if
there has been a material breach of or any inaccuracy in any of the representations or warranties set forth in the merger agreement on the part of any of the other
parties, which breach has not been cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party, or which breach, by its nature,
cannot be cured prior to August 31, 2005 (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger
agreement); provided, however, that no party will have the right to terminate the merger agreement for the foregoing purposes unless the breach of representation or warranty, together with all other
such breaches, would entitle the party receiving such representation not to consummate the transactions contemplated by the merger agreement;
- •
- if
there has been a material breach of any of the covenants or agreements set forth in the merger agreement on the part of any of the other parties, which breach has not
been cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party, or which breach, by its nature, cannot be cured prior to
August 31, 2005 (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the merger agreement); or
- •
- if
the Noble Energy stockholders fail to approve the issuance of Noble Energy shares pursuant to the merger; provided that this right to terminate is not available to Noble
Energy if it has breached any of its obligations relating to non-solicitation of offers described above under "—No Solicitation of Alternative Transactions" or breached any of
its obligations relating to completing this joint proxy statement/prospectus and convening a stockholders meeting described above under "—Reasonable Best Efforts to Obtain Required
Stockholder Vote";
- •
- by
Noble Energy if, prior to obtaining the required vote of the Patina stockholders adopting the merger agreement and approving the merger and the other transactions
contemplated by the merger agreement:
- •
- Patina
or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or approved or
recommended, or, in the case of a committee, proposed to the Patina board of directors to approve or recommend, an
acquisition proposal (as defined above under "—No Solicitation of Alternative Transactions");
- •
- Patina
or its board of directors or any committee thereof has resolved to do any of the foregoing; or
- •
- an
adverse recommendation change has occurred with respect to Patina (whether or not in response to a superior proposal) or the Patina board of directors or any committee
thereof has resolved to make such an adverse recommendation change; or
- •
- by
Patina if, prior to obtaining the required vote of the Noble Energy stockholders approving the issuance of the Noble Energy shares pursuant to the merger:
- •
- Noble
Energy or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or,
approved or recommended, or, in the case of a committee, proposed to the Noble Energy board of directors to approve or recommend, an acquisition proposal;
- •
- Noble
Energy or its board of directors or any of its committees has resolved to do any of the foregoing; or
84
- •
- an
adverse recommendation change has occurred with respect to Noble Energy (whether or not in response to a superior proposal) or the Noble Energy board of directors or any
committee thereof has resolved to make such an adverse recommendation change.
Termination Fees and Expenses
Except for the termination fee set forth in the merger agreement and as described below, all costs and expenses incurred in connection with the merger agreement
and the transactions contemplated thereby shall be paid by the party incurring such costs or expenses.
Patina
must pay Noble a termination fee of $100 million if:
- •
- the
merger agreement is terminated by Noble Energy due to an adverse recommendation change by Patina in response to a superior proposal; or
- •
- an
acquisition proposal with respect to Patina has been proposed by any person (other than by Noble Energy, Merger Sub or any of their respective affiliates) or any person
has publicly announced its intention (whether or not conditional) to make such acquisition proposal and such acquisition proposal or such intention has otherwise become publicly known to Patina's
stockholders generally; and
- •
- thereafter
the merger agreement is terminated (1) by either Noble Energy or Patina for failure to close the merger on or before August 31, 2005 or because the
Patina stockholders failed to adopt the merger agreement by the required vote, or (2) by Noble Energy because:
- •
- Patina
or its board of directors has entered into an agreeme subsequent to such surrender payable with respect to such shares of Parent Common
Stock. For purposes of dividends or other distributions in respect of shares of Parent Common Stock, all shares of Parent Common Stock to be issued pursuant to the Merger shall be entitled to
dividends pursuant to the immediately preceding sentence as if such shares of Parent Common Stock were issued and outstanding as of the Effective Time.
(d) Further Rights in Company Common Stock. The Merger Consideration issued upon conversion of a share of Company Common
Stock in accordance with the terms hereof (including any payments made pursuant to Section 2.1(c) or Section 2.1(e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such share of Company Common Stock.
(e) Fractional Shares. No certificates or scrip or shares of Parent Common Stock representing fractional shares of Parent
Common Stock or book-entry credit of the same shall be issued upon the surrender for exchange of Certificates, and such fractional share interests will not entitle the owner thereof to
vote or to have any rights as a holder of any shares of Parent Common Stock.
Notwithstanding
any other provision of this Agreement, each holder of shares of Company Common Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a
fraction of a share of Parent Common Stock (after taking into account all Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to the
product of (i) the average of the closing sale prices of Parent Common Stock on the NYSE as reported by The Wall Street Journal for the five
trading days immediately preceding the date on which the Effective Time shall occur and (ii) the fraction of a share of Parent Common Stock which such holder would otherwise be entitled to
receive pursuant to Section 1.6. As promptly as practicable after the determination of the amount of cash, if any, to be paid to holders of fractional interests, the Exchange Agent shall so
notify Parent, and Parent shall, or shall cause the Surviving Corporation to, deposit such amount with the Exchange Agent and shall cause the Exchange Agent to forward payments to such holders of
fractional interests subject to and in accordance with the terms hereof. The parties acknowledge that payment of cash consideration in lieu of issuing fractional shares of Parent Common Stock was not
separately bargained for consideration but merely represents a mechanical rounding off
A-8
for
purposes of simplifying the corporate and accounting problems that would otherwise be caused by the issuance of fractional shares of Parent Common Stock.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which remains undistributed to the holders of Company
Common Stock for six months after the Effective Time shall be delivered to Parent upon demand and, from and after such delivery to Parent, any holders of Company Common Stock who have not theretofore
complied with this Article II shall thereafter look only to Parent for the Merger Consideration payable in respect of such shares of Company Common Stock, any cash in lieu of fractional shares
of Parent Common Stock to which they are entitled pursuant to Section 2.1(e) and any dividends or other distributions with respect to Parent Common Stock to which they are entitled pursuant to
Section 2.1(c), in each case, without any interest thereon.
(g) No Liability. Neither Parent nor the Surviving Corporation shall be liable to any holder of shares of Company Common
Stock for any such shares of Parent Common Stock (or dividends or distributions with respect thereto) or cash from the Exchange Fund delivered to a public official pursuant to any abandoned property,
escheat or similar Law.
(h) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond, in such reasonable amount as Parent may direct, as
indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall pay in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration payable in respect of the shares of Company Common Stock represented by such Certificate, any cash in lieu of fractional shares of Parent Common Stock to which the holders thereof are
entitled pursuant to Section 2.1(e) and any dividends or other distributions to which the holders thereof are entitled pursuant to Section 2.1(c), in each case, without any interest
thereon.
(i) Withholding. Each of Parent, the Surviving Corporation and the Exchange Agent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any holder of Company Common Stock such amounts as Parent, the Surviving Corporation or the Exchange Agent is required to deduct
and withhold under the Code or any provision of state, local, or foreign Tax Law, with respect to the making of such payment. To the extent that amounts are so withheld by Parent, the Surviving
Corporation or the Exchange Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Stock in respect of whom such deduction
and withholding was made by Parent, the Surviving Corporation or the Exchange Agent, as the case may be.
Section
2.2 Stock Transfer Books. At the Effective Time, the stock transfer books of the Company shall be closed
and thereafter there shall be no further registration of transfers of shares of Company Common Stock theretofore outstanding on the records of the Company. From and after the Effective Time, any
Certificates presented to the Exchange Agent or Parent for any reason shall be converted into the Merger Consideration payable in respect of the shares of Company Common Stock previously represented
by such Certificates, any cash in lieu of fractional shares of Parent Common Stock to which the holders thereof are entitled pursuant to Section 2.1(e) and any dividends or other distributions
to which the holders thereof are entitled pursuant to Section 2.1(c), without any interest thereon.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
&nent with respect to an acquisition proposal (other than a permissible confidentiality agreement) or, approved or
recommended, or, in the case of a committee, proposed to the Patina board of directors to approve or recommend, an acquisition proposal;
- •
- Patina
or its board of directors or any committees thereof has resolved to do any of the foregoing; or
- •
- an
adverse recommendation change has occurred with respect to Patina for any reason other than a superior proposal or the Patina board of directors or any committee thereof
has resolved to make such an adverse recommendation change; and
- •
- within
12 months after termination of the merger agreement, Patina or any of its subsidiaries enters into any definitive agreement providing for an "acquisition
proposal" (as described above under "—No Solicitation of Alternative Transactions", except that all references to "10%" therein are deemed to be references to "40%" for the purposes of the
provision described in this paragraph), or an acquisition proposal with respect to Patina or any of its subsidiaries is consummated.
Patina
must pay an expense payment of $6.0 million to Noble if:
- •
- Noble
Energy terminates the merger agreement due to an adverse recommendation change (or a Patina board committee resolution to make such an adverse recommendation change)
by Patina for any reason other than a superior proposal; and
- •
- prior
to such termination no acquisition proposal with respect to Patina has been proposed by any person (other than any acquisition proposal proposed by Noble Energy or
Merger Sub or any of their respective affiliates) and no person has publicly announced its intention (whether or not conditional) to make such acquisition proposal and no such acquisition proposal or
intention has otherwise become publicly known to Patina's stockholders generally.
85
In
addition, if:
- •
- within
three business days of notification by Patina to Noble Energy of the occurrence of an adverse recommendation change with respect to Patina for any reason other than a
superior proposal (or a resolution to make such an adverse recommendation change), Noble Energy terminates the merger agreement because of such change or resolution; and
- •
- within
three business days of such termination, Noble Energy terminates some or all of the hedging transactions entered into by Noble Energy prior to December 15,
2004 in connection with the transactions contemplated by the merger agreement ("pre-announcement hedges"),
then
Patina would be required to reimburse Noble Energy for up to $45.0 million of hedging losses on pre-announcement hedges covering the years 2006 through 2008 based
on actual losses realized during the three days following the termination.
Noble
Energy must pay Patina a termination fee of $100 million if:
- •
- the
merger agreement is terminated by Patina due to an adverse recommendation change by Noble Energy in response to a superior proposal; or
- •
- an
acquisition proposal with respect to Noble Energy has been proposed by any person or any person has publicly announced its intention (whether or not conditional) to make
such acquisition proposal and such acquisition proposal or such intention has otherwise become publicly known to Noble Energy's stockholders generally; and
- •
- thereafter
the merger agreement is terminated (1) by either Noble Energy or Patina for failure to close the merger on or before August 31, 2005 or because the
Noble Energy stockholders failed to approve the issuance of the Noble Energy shares, or (2) by Patina because:
- •
- Noble
Energy or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or,
approved or recommended, or, in the case of a committee, proposed to the Noble Energy board of directors to approve or recommend, an acquisition proposal;
- •
- Noble
Energy or its board of directors or any committees thereof has resolved to do any of the foregoing; or
- •
- an
adverse recommendation change has occurred with respect to Noble Energy for any reason other than a superior proposal or the Noble Energy board of directors or any
committee thereof has resolved to make such an adverse recommendation change; and
- •
- within
12 months after termination of the merger agreement, Noble Energy or any of its subsidiaries enters into any definitive agreement providing for an "acquisition
proposal" (as described above under "—No Solicitation of Alternative Transactions", except that all references to "10%" therein are deemed to be references to "40%" for the purposes of the
provision described in this paragraph), or an acquisition proposal with respect to Noble Energy or any of its subsidiaries is consummated.
Noble
Energy must pay an expense payment of $6.0 million to Patina if:
- •
- Patina
terminates the merger agreement due to an adverse recommendation change (or a Noble Energy board committee resolution to make such an adverse recommendation change)
by Noble Energy for any reason other than a superior proposal; and
- •
- prior
to such termination no acquisition proposal with respect to Noble Energy has been proposed by any person and no person has publicly announced its intention (whether or
not
86
A-9
disclosed
in such a way as to make its relevance to such other representation, warranty or covenant reasonably apparent), the Company represents and warrants to Parent and Purchaser as follows:
Section 3.1 Organization.
(a) Each
of the Company and each of its Subsidiaries is a corporation or other entity duly organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation or organization, and has all requisite corporate or other power and authority to own, lease, use and operate its properties and to carry on its business as it is now
being conducted.
(b) Each
of the Company and each of its Subsidiaries is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in
which such qualification or licensing is required, except where the failure to be so qualified or licensed individually or in the aggregate has not had, and would not be reasonably likely to have or
result in, a Material Adverse Effect on the Company.
(c) The
Company has previously delivered to Parent a complete and correct copy of each of its certificate of incorporation and bylaws in each case as amended (if so amended)
to the date of this Agreement, and has made available the certificate of incorporation, bylaws or other organizational documents of each of its Subsidiaries, in each case as amended (if so amended) to
the date of this Agreement. Neither the Company nor any of its Subsidiaries is in violation of its certificate of incorporation, bylaws or similar governing documents.
(d) Section 3.1(d)
of the Company Disclosure Letter sets forth a true and correct list of all of the Subsidiaries of the Company and their respective jurisdictions of
incorporation or organization. The respective certificates or articles of incorporation and bylaws or other organizational documents of the Subsidiaries of the Company do not contain any provision
limiting or otherwise restricting the ability of the Company to control its Subsidiaries in any material respect.
Section 3.2 Capitalization.
(a) The
authorized capital stock of the Company consists of 250,000,000 shares of the common stock of the Company, par value $.01 per share (the "Company Common Stock"), of
which 2,000,000 shares are designated Series A Common Stock, par value $.01 per share (the "Company Series A Common Stock"), and 5,000,000 shares of preferred stock, par value $.01 per
share (the "Company Preferred Stock"), of which 25,000 shares are designated Series A Junior Participating Preferred Stock, par value $.01 per share (the "Company Series A Preferred
Stock"). As of the close of business on December 14, 2004 (the "Cut-off Time"), (i) 72,820,413 shares of Company Common Stock were issued and outstanding,
(ii) 6,267,832 shares of Company Common Stock were reserved for issuance upon the exercise of outstanding Company Options and (iii) 1,000,000 shares of Company Common Stock were reserved
for issuance under the outstanding warrants to purchase shares of Company Common Stock (the "Company Warrants"). From the Cut-off Time to the date of this Agreement, no additional shares
of Company Common Stock have been issued (other than pursuant to Company Options and Company Warrants which were outstanding as of the Cut-off Time and are disclosed in
Section 3.2(a) of the Company Disclosure Letter as contemplated below), no additional Company Options or Company Warrants have been issued or granted, and there has been no increase in the
number of shares of Company Common Stock issuable upon exercise of the Company Options and Company Warrants from those issuable under such Company Options and Company Warrants as of the
Cut-off Time. As of the date of this Agreement, (i) no shares of Company Common Stock are held in the treasury of the Company, (ii) there are no shares of the Company
Series A Common Stock issued and outstanding or held in treasury and (iii) there are no shares of Company Preferred Stock, including the Company Series A Preferred Stock, issued
and outstanding or held in treasury. Neither the Company nor any of its Subsidiaries directly or indirectly owns any shares of Company Common Stock. No bonds, debentures, notes or other indebtedness
having the right to vote (or convertible into or exchangeable
A-10
for
securities having the right to vote) on any matters on which stockholders of the Company may vote are issued or outstanding. All issued and outstanding shares of the Company's capital stock are,
and all shares that may be issued or granted pursuant to the exercise of Company Options or the Company Warrants will be, when issued or granted in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and non-assessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. Except for the Company Options, the
Company Warrants and the Company Series A Junior Participating Preferred Stock purchase rights (the "Company Rights") issued pursuant to the Rights Agreement, dated as of May 25, 2001,
between the Company and Mellon Investor Services LLC (the "Company Rights Agreement"), there are no outstanding or authorized (x) options, warrants, preemptive rights, subscriptions, calls or
other rights, convertible securities, agreements, claims or commitments of any character obligating the Company or any of its Subsidiaries to issue, transfer or sell any shares of capital stock or
other equity interest in the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, (y) contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock of the Company or any of its Subsidiaries or any such securities or agreements listed in clause (x) of this
sentence, or (z) voting trusts or similar agreements to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock of the Company or any7">
Effect of Termination
In the event of the termination of the merger agreement as described above, written notice must be given by the terminating party to the other parties specifying
the provision of the merger agreement pursuant to which such termination is made, and except as described in this paragraph, the merger agreement shall become null and void after the expiration of any
applicable period following such notice. In the event of the termination of the merger agreement, there will be no liability on the part of Noble Energy, Merger Sub or Patina, except as described
above under "—Termination Fees and Expenses" above and except with respect to the requirement to comply with the
confidentiality agreement; provided that no party will be relieved from any liability or obligation with respect to any willful breach of the merger agreement.
Material United States Federal Income Tax Consequences
The following is a summary of the material U.S. federal income tax consequences of the merger to Patina stockholders who are U.S. persons. This summary is based
on provisions of the Internal Revenue Code, Treasury Regulations promulgated thereunder, and administrative and judicial interpretations of the Internal Revenue Code, all as in effect as of the date
of this joint proxy statement/prospectus, and all of which are subject to change, possibly with retroactive effect. This summary assumes that Patina stockholders hold their shares as capital assets
and does not address all aspects of U.S. federal income taxation that may be applicable to Patina stockholders in light of their particular circumstances or to Patina stockholders subject to special
treatment under U.S. federal income tax law, such as:
- •
- entities
treated as partnerships for U.S. federal income tax purposes or Patina stockholders that hold their shares through entities treated as partnerships for U.S. federal
income tax purposes;
- •
- certain
U.S. expatriates;
- •
- persons
that hold Patina common stock as part of a straddle, appreciated financial position, hedge, synthetic security, conversion transaction or other integrated
investment;
- •
- persons
whose functional currency is not the U.S. dollar;
- •
- persons
who acquired Patina common stock through the exercise of employee stock options or otherwise as compensation;
- •
- persons
subject to the U.S. alternative minimum tax;
- •
- mutual
funds;
- •
- financial
institutions;
- •
- insurance
companies;
- •
- tax-exempt
entities;
- •
- dealers
in securities or foreign currencies; and
- •
- traders
in securities that mark-to-market.
Furthermore,
this summary does not address any aspect of state, local or foreign laws, or any federal laws other than those pertaining to income taxation.
For
purposes of this discussion, a "U.S. person" means (1) a citizen or individual resident of the U.S., (2) a corporation or other entity taxable as a corporation created
or organized under the laws of the U.S. or any of its political subdivisions, (3) a trust if (A) a U.S. court is able to exercise primary
87
supervision
over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) the trust has made a valid election
under the applicable Treasury regulations to be treated as a U.S. person, or (4) an estate, the income of which is subject to U.S. federal income taxation regardless of its source.
General U.S. Federal Income Tax Considerations of the Merger to Patina Stockholders
The obligation of Patina to consummate the merger is conditioned on its receipt of an opinion of Cravath, dated as of the closing date of the merger, to the
effect that, on the basis of the facts, assumptions, representations and covenants set forth or referred to therein, for U.S. federal income tax purposes, the merger will qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code and that Noble Energy, Merger Sub and Patina will each be "a party to the reorganization" within the meaning of
Section 368 of the Internal Revenue Code. In addition, the obligation of Noble Energy to consummate the merger is conditioned on its receipt of an opinion of Skadden, Arps, dated as of the
closing date of the merger, to the effect that, on the basis of the facts, assumptions, representations and covenants set forth or referred to therein, for U.S. federal income tax purposes, the merger
will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and that Noble Energy, Merger Sub and Patina will each be "a party to the reorganization"
within the meaning of Section 368 of the Internal Revenue Code. None of the opinions referred to in this paragraph or the opinions stated below will be binding on the Internal Revenue Service
or the courts, and no rulings will be sought from the Internal Revenue Service regarding the tax treatment of the merger. Accordingly, there can be no certainty that the Internal Revenue Service will
not challenge the conclusions set forth in any of the opinions stated or referred to herein or that a court would not sustain such a challenge.
In
addition, in connection with the filing of the registration statement of which this document forms a part, Cravath and Skadden, Arps have delivered to Patina and Noble Energy,
respectively, their opinions that, for U.S. federal income tax purposes, the merger will qualify as a reorganization under Section 368(a) of the Internal Revenue Code and that Noble Energy,
Merger Sub and Pat of its
Subsidiaries. Section 3.2(a) of the Company Disclosure Letter sets forth the following information with respect to each Company Option and Company Warrant outstanding as of the
Cut-off Time: (i) name of the holder; (ii) number of shares of Company Common Stock issuable upon exercise thereof; (iii) exercise price; (iv) issue date;
(v) termination date; and (vi) whether such option or warrant contains any put, redemption or similar feature. At the Effective Time, there will not be any outstanding subscriptions,
options, warrants, calls, preemptive rights, subscriptions, or other rights, convertible or exchangeable securities, agreements, claims or commitments of any character by which the Company or any of
its Subsidiaries will be bound calling
for the purchase or issuance of any shares of the capital stock of the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or any other such securities or
agreements.
(b) (i) All
of the issued and outstanding shares of capital stock (or equivalent equity interests of entities other than corporations) of each of the Company's
Subsidiaries are owned, directly or indirectly, by the Company free and clear of any Liens, other than statutory Liens for Taxes not yet due and payable and such other restrictions as may exist under
applicable Law, and all such shares or other ownership interests have been duly authorized, validly issued and are fully paid and non-assessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof, and (ii) neither the Company nor any of its Subsidiaries owns any shares of capital stock or other securities of, or interest in, any
other Person, except for (A) shares of capital stock or other securities of non-affiliates that (x) do not constitute more than a 5% interest in such
non-affiliates or (y) have an aggregate value (per issuer) that does not exceed $100,000 and (B) the securities of the Subsidiaries of the Company or any Subsidiary of the
Company, or is obligated to make any capital contribution to or other investment in any other Person.
(c) No
material indebtedness of the Company or any of its Subsidiaries contains any restriction upon (i) the prepayment of any indebtedness of the Company or any of
its Subsidiaries, (ii) the incurrence of indebtedness by the Company or any of its Subsidiaries, or (iii) the ability of the Company or any of its Subsidiaries to grant any Lien on the
properties or assets of the Company or any of its Subsidiaries.
Section 3.3 Authorization; Validity of Agreement.
(a) The
Company has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby have been duly authorized by the Board of Directors of the Company
A-11
(the
"Company Board"). Except for the Company Required Vote, no other corporate proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and
delivery of this Agreement by Parent and Purchaser, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforcement may be
subject to or limited by (i) bankruptcy, insolvency or other similar Laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding at law or in equity).
(b) The
Company Board has adopted such resolutions as are necessary so that the provisions of Section 203 of the DGCL are inapplicable to the Merger or any of the
other transactions contemplated by this Agreement. Except for Section 203 of the DGCL (which has been rendered inapplicable), to the knowledge of the Company, no "moratorium," "control share,"
"fair price" or other antitakeover Laws are applicable to the Merger or any of the other transactions contemplated by this Agreement.
Section 3.4 No Violations; Consents and Approvals.
(a) Neither
the execution, delivery and performance of this Agreement by the Company nor the consummation by the Company of the Merger or any other transactions contemplated
hereby will (i) violate any provision of the certificate of incorporation or the bylaws of the Company, or the certificate of incorporation, bylaws or similar governing documents of any of the
Company's Subsidiaries, (ii) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination of or a right of termination, cancellation or amendment under, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or assets of the Company or any of its Subsidiaries under, or result in the acceleration or trigger of any payment, time of payment, vesting
or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, guarantee, other evidence of
indebtedness, lease, license, contract, collective bargaining agreement, agreement or other legally binding instrument or obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their respective assets or properties may be bound, or (iii) conflict with or violate any federal, state, local or foreign order, writ, injunction, judgment,
settlement, award, decree, statute, law, rule or regulation (collectively, "Laws") applicable to the Company, any of its Subsidiaries or any of their respective properties or assets; except in the
case of clause (ii), for such conflicts, violations, breaches, defaults or Liens which individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on the Company.
(b) No
material filing or registration with, declaration or notification to, or order, authorization, consent or approval of, any federal, state, local or foreign court,
arbitral, legislative, executive or regulatory authority or agency (a "Governmental Entity") or any other Person is required in connection with the execution, delivery and performina will each be "a party to the reorganization" within the meaning of Section 368 of the Internal Revenue Code. Such opinions and the opinions set forth below have been
rendered on the basis of certain assumptions, including assumptions regarding the absence of changes in existing facts and that the merger will be completed in accordance with this joint proxy
statement/prospectus and the merger agreement. These opinions and the opinions set forth below also have been rendered on the basis of certain representations and covenants, including those contained
in officers' certificates of Patina and Noble Energy, all of which must be true and accurate in all respects as of the effective date of the registration statement and must continue to be true and
accurate in all respects as of the effective time of the merger. If any of those assumptions or representations are inaccurate, incomplete or untrue or any of the covenants are breached, the
conclusions contained in the opinions referred to in this paragraph or stated below could be affected.
The
discussion set forth below, subject to the limitations and qualifications set forth herein, constitutes the opinion of Cravath and of Skadden, Arps as to the material U.S. federal
income tax consequences of the merger to a Patina stockholder:
- •
- If
a Patina stockholder exchanges all of his or her shares of Patina common stock solely for shares of Noble Energy common stock in the merger, that Patina stockholder will
not recognize (i.e., take into account for income tax purposes) gain or loss, except for any gain or loss recognized with respect to cash received instead of a fractional share of Noble Energy common
stock.
- •
- If
a Patina stockholder exchanges his or her shares of Patina common stock solely for cash in the merger, that Patina stockholder generally will recognize (i.e., take into
account for income tax purposes) capital gain or loss equal to the difference between the amount of cash received
88
and
its tax basis in the Patina common stock. (If, however, the Patina stockholder owns shares of Noble Energy common stock actually or constructively after the merger, the stockholder might be
subject to dividend treatment. See "—Possible Treatment of Cash as a Dividend" immediately below.)
- •
- If
a Patina stockholder exchanges his or her shares of Patina common stock for a combination of Noble Energy common stock and cash, that Patina stockholder will generally
recognize (i.e., take into account for income tax purposes) capital gain (but not loss). Any such gain recognized will equal the lesser of: (1) the amount of cash received by the stockholder in
the merger (excluding cash received instead of a fractional share, as discussed below) and (2) the excess, if any, of (a) the sum of the amount of cash (excluding any cash received
instead of a fractional share) and the fair market value of the Noble Energy common stock received by the stockholder in the merger over (b) that stockholder's adjusted tax basis in the Patina
common stock exchanged by the stockholder in the merger. For this purpose, a Patina stockholder must calculate gain or loss separately for each identifiable block of Patina common stock exchanged by
the stockholder in the merger. Except as discussed under "—Possible Treatment of Cash as a Dividend," any gain recognized by a Patina stockholder in the merger generally will constitute
capital gain.
- •
- The
aggregate tax basis of the shares of Noble Energy common stock received by a Patina stockholder in exchange for Patina common stock pursuant to the merger (before
reduction for the basis in any fractional share of Noble Energy common stock for which cash is received) will be the same as the aggregate tax basis of the stockholder's Patina common stock, decreased
by the amount of cash received by the stockholder in the merger (excluding any cash received instead of a fractional share) and increased by the amount of gain or dividend income recognized by the
stockholder in the merger (excluding any gain recognized as a result of cash received instead of a fractional share).
- •
- The
holding period of the shares of Noble Energy common stock received by a Patina stockholder in the merger generally will include the holding period of the stockholder's
Patina common stock exchanged for Noble Energy common stock.
- •
- If
a Patina stockholder has differing bases or holding periods in respect of his or her shares of Patina common stock, such stockholder should consult his or her tax advisor
prior to the exchange with regard to identifying the bases or holding periods of the particular shares of Noble Energy common stock received in the merger.
Possible Treatment of Cash as a Dividend
There are certain circumstances, generally involving a Patina stockholder who is also a substantial holder of Noble Energy common stock, in which all or part of
the gain recognized by such stockholder would be treated as a dividend rather than as capital gain.
Each
Patina stockholder should consult his or her tax advisor about the possibility that all or a portion of any cash received in exchange for Patina common stock will be treated as a
dividend, based on the stockholder's specific circumstances.
Cash Received Instead of a Fractional Share
Noble Energy will not issue any fractional shares of Noble Energy common stock in the merger. Rather, each holder of Patina common stock exchanged in the merger
who otherwise would have received a fraction of a share of Noble Energy common stock will receive cash. A Patina stockholder who receives cash instead of a fractional share of Noble Energy common
stock generally will recognize capital gain or loss based on the difference between the amount of the cash received and the tax basis that the stockholder would have had in such fractional share.
89
Capital Gain and Dividend Income of Individuals
Capital gain recognized by an individual holder of Patina common stock in connection with the merger will be subject to a maximum U.S. federal income tax rate of
15% if the individual's holding period for the Patina common stock is more than one year at the effective time of the merger. The deductibility of capital losses is subject to limitations. Anyance of this
Agreement by the Company or the consummation by the Company of the Merger or any other transactions contemplated hereby, except for (i) the filing with the SEC of the Proxy Statement in
definitive form relating to the meetings of the Company's and Parent's stockholders to be held in connection with this Agreement and the transactions contemplated hereby, and the filing and
declaration of effectiveness of the registration statement on Form S-4 (the "S-4") in which the Proxy Statement will be included as a prospectus, (ii) the
adoption of this Agreement and the approval of the Merger by the Company Required Vote, (iii) such filings, authorizations or approvals as may be required under (A) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder ("HSR Act") or (B) any other Competition Laws, rules or regulations,
(iv) the filing of the Certificate of Merger with the Secretary of State and (v) such consents, approvals, orders, authorizations, notifications,
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registrations,
declarations and filings (x) as are customarily made or obtained in connection with the transfer of interests in or change of control of ownership of oil and gas properties and
(y) the failure of which to be obtained or made, individually or in the aggregate, has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the
Company.
Section 3.5 SEC Reports and Financial Statements.
(a) The
Company has timely filed with the SEC all forms and other documents (including exhibits and other information incorporated therein) required to be filed by it since
January 1, 2001 (such documents, the "Company SEC Documents"), including (i) its Annual Reports on Form 10-K for the years ended December 31, 2001,
December 31, 2002 and December 31, 2003, respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended March 31, June 30 and
September 30, 2004, (iii) all proxy statements relating to meetings of stockholders of the Company since January 1, 2001 (in the form mailed to stockholders), and (iv) all
other forms, reports and registration statements required to be filed by the Company with the SEC since January 1, 2001. As of their respective dates, the Company SEC Documents, including the
financial statements and schedules provided therein or incorporated by reference therein, (x) did not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (y) complied in all material respects
with the applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange Act"), the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "Securities Act") and the Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated thereunder ("SOX"), as the case may be.
(b) The
December 31, 2003 consolidated balance sheet of the Company and the related consolidated statements of income, changes in stockholders' equity and cash flows
(including, in each case, the related notes, where applicable), as reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed with
the SEC under the Exchange Act, and the unaudited consolidated balance sheets of the Company and its Subsidiaries (including the related notes, where applicable) as of September 30, 2004 and
the related (i) unaudited consolidated statements of income for the three and nine-month periods then ended and (ii) unaudited consolidated statements of cash flows and
changes in stockholders' equity for the nine-month periods then ended (in each case including the related notes, where applicable), as reported in the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 2004 filed with the SEC under the Exchange Act, fairly present, and the financial statements to be filed by the Company with the
SEC after the date of this Agreement will fairly present (subject, in the case of unaudited statements, to recurring audit adjustments normal in nature and amount), in all material respects, the
consolidated financial position and the results of the consolidated operations, cash flows and changes in stockholders' equity of the Company and its Subsidiaries as of the respective dates or for the
respective fiscal periods therein set forth; each of such statements (including the related notes, where applicable) complies, and the financial statements to be filed by the Company with the SEC
after the date of this Agreement will comply, with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been, and the financial statements to be filed by the Company with the SEC after the date of this Agreement will be, prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied during the periods involved, except as indicated in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q. The books and records of the Company and its Subsidiaries have been, and are being, maintained in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions. Deloitte & Touche LLP is an independent public accounting firm with respect to the Company and has not resigned or been dismissed as
independent public accountants of the Company.
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Section 3.6 Absence of Certain Changes.
(a) Except
as disclosed in the Company SEC Documents filed by the Company with the SEC prior to the date of this Agreement (the "Specified Company SEC Documents"), to the
extent that it is reasonably apparent that the disclosure in the Specified Company SEC Documents is responsive to the matters set forth in this Section 3.6(a), since September 30, 2004,
(i) the Company and its Subsidiaries have conducted their respective operations only in the ordinary course consistent with past practice and (ii) there has not occurred or continued to
exist any event, change, occurrence, effect, fact, circumstance or condition which, individually or in the aggregate, has had, or would be reasonably likely to have or result in, a Material Adverse
Effect on the Company.
&nb
dividend income recognized in the merger by individual Patina stockholders generally will be subject to tax at a maximum rate of 15%.
Reporting Requirements
Patina stockholders receiving Noble Energy common stock in the merger must file a statement with their U.S. federal income tax returns setting forth their
tax basis in the Patina common stock exchanged in the merger and the fair market value of the Noble Energy common stock and the amount of any cash received in the merger. In addition, Patina
stockholders will be required to retain permanent records of these facts relating to the merger.
Backup Withholding
Certain noncorporate holders of Patina common stock may be subject to backup withholding, at applicable federal rates, on amounts received pursuant to the merger.
Backup withholding will not apply, however, to a Patina stockholder who (1) provides a correct taxpayer identification number or (2) comes within certain exempt categories and, in each
case, complies with applicable certification requirements. If a Patina stockholder does not provide Noble Energy (or the exchange agent) with his or her correct taxpayer identification number, the
stockholder may be subject to penalties imposed by the Internal Revenue Service. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the
stockholder's U.S. federal income tax liability, provided that the stockholder furnishes certain required information to the Internal Revenue Service.
The
summary of material U.S. federal income tax consequences set forth above is intended to provide only a general summary of the merger and is not intended to be a complete analysis or
description of all potential U.S. federal income tax consequences of the merger. In addition, the summary does not address tax consequences that may vary with, or are contingent on, individual
circumstances. Moreover, the summary does not address any non-income tax or any foreign, state, local or other tax consequences of the merger. Accordingly, each
Patina stockholder is strongly urged to consult his or her tax advisor to determine the particular federal, state, local or foreign income, reporting or other tax consequences of the merger to that
stockholder.
Extension, Waiver and Amendment of the Merger Agreement
Extension and Waiver
At any time prior to the effective time of the merger, Noble Energy, Merger Sub and Patina may, to the extent legally allowed:
- •
- extend
the time for the performance of any of the obligations or other acts of the other parties under the merger agreement;
- •
- waive
any inaccuracies in the other parties' representations and warranties contained in the merger agreement or in any document, certificate or writing delivered pursuant
the merger agreement by the other parties; and
- •
- waive
the other parties' compliance with any of its agreements contained in the merger agreement.
90
Any
such waiver or extension is subject to the following conditions:
- •
- any
agreement allowing an extension or waiver must be set forth in a written instrument signed on behalf of the party allowing the extension or waiver;
- •
- any
waiver will only waive the respective matter described in the writing and will not impair the rights of the party granting the waiver in any other respect or at any
other time;
- •
- neither
any waiver by any party to the merger agreement, nor the failure by any party to enforce any provisions of the merger agreement or to exercise any rights will be
construed as a
waiver of any other breach or default, or as a waiver of any such provisions, rights or privileges under the merger agreement; and
- •
- the
rights and remedies provided under the merger agreement are cumulative and none is exclusive of any other, or of any rights or remedies that any party may otherwise
have.
Amendment
Subject to compliance with applicable law, Noble Energy, Merger Sub and Patina may amend the merger agreement at any time before or after adoption of the merger
agreement by Patina stockholders. However, after any adoption of the merger agreement by Patina stockholders there may not be, without their further approval, any amendment of the merger agreement
that:
- •
- changes
the merger consideration to be received by the Patina stockholders in the merger;
- •
- changes
any term of the certificate of incorporation of Merger Sub; or
- •
- adversely
affects the holders of any shares of Patina capital stock.
Employee Benefit Plans and Existing Agreements
The merger agreement provides that during the period from the closing date of the merger to the six month anniversary thereof, Noble Energy will, and will cause
its subsidiaries to, continue to provide to each person who is employed by Patina or any of its subsidiaries immediately prior to the effective time of the merger, compensation (including base salary
and incentive and bonus opportunities, but excluding equity-based compensation) and benefits (including vacation, paid time-off and severance) that are not materially less favorable in the
aggregate than those provided to the Patina employees by Patina and its subsidiaries immediately prior to the effective time of the merger.
The
service of each Patina employee with Patina or its subsidiaries (or any predecessor employer) prior to the effective time of the merger will be treated as service with Noble Energy
and its subsidiaries for purposes of each employee benefit plan of Noble Energy (including vacation, paid time-off and severance plans) in which ssp; (b) Except
as disclosed in the Specified Company SEC Documents, to the extent that it is reasonably apparent that the disclosure in the Specified Company SEC Documents is
responsive to the matters set forth in this Section 3.6(b), since September 30, 2004 to the date of this Agreement, neither the Company nor any of its Subsidiaries has (i) except
as required pursuant to the terms of the Company Plans as in effect on September 30, 2004 or as required to comply with applicable Law, (A) increased or agreed to increase the wages,
salaries, compensation, pension, or other fringe benefits or perquisites payable to any officer, employee or director from the amount thereof in effect as of September 30, 2004, other than
increases in wages, salaries and other cash compensation in the ordinary course of business consistent with past practice, (B) granted any severance or termination pay, (C) entered into
or made any loans to any of its officers, directors or employees or made any change in its borrowing or lending arrangements for or on behalf of any of such Persons or (D) adopted or amended,
or accelerated the payment or vesting of benefits under, any Company Plan, (ii) declared, set aside or paid any dividend or other distribution (whether in cash, stock or property) with respect
to any of the Company's capital stock, other than regular quarterly cash dividends on the Company Common Stock, (iii) effected or authorized any split, combination or reclassification of any of
the Company's capital stock or any issuance thereof or issued any other securities in respect of, in lieu of or in substitution for shares of the Company's capital stock, except for issuances of
Company Common Stock upon the exercise of Company Options, in each case in accordance with their terms at the time of exercise, (iv) changed in any material respect, or had knowledge of any
reason that required any material change in, any accounting methods (or underlying assumptions), principles or practices of the Company or its Subsidiaries, including any material reserving, renewal
or residual method, practice or policy, (v) made any material Tax election or settled or compromised any material income Tax liability, (vi) made any material change in the policies and
procedures of the Company or its Subsidiaries in connection with trading activities, (vii) sold, leased, exchanged, transferred or otherwise disposed of any material Company Asset other than in
the ordinary course consistent with past practice, (viii) revalued, or had knowledge of any reason that required revaluing, any of the Company Assets in any material respect, including writing
down the value of any of the Company Assets or writing off notes or accounts receivable, in each case in any material respect and other than in the ordinary course of business consistent with past
practice, or (ix) made any agreement or commitment (contingent or otherwise) to do any of the foregoing.
Section
3.7 Absence of Undisclosed Liabilities. Except as disclosed in the Specified Company SEC Documents, to
the extent that it is reasonably apparent that the disclosure in the Specified Company SEC Documents is responsive to the matters set forth in this Section 3.7, neither the Company nor any of
its Subsidiaries has any liabilities or obligations (accrued, contingent or otherwise), except for (i) liabilities that individually or in the aggregate have not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on the Company, (ii) liabilities in respect of Litigation (which are the subject of Section 3.10), and
(iii) liabilities under Environmental Laws (which are the subject of Section 3.14). Neither the Company nor any of its Subsidiaries is in default in respect of the terms and conditions
of any indebtedness or other agreement which individually or in the
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aggregate
has had, or would be reasonably likely to have or result in, a Material Adverse Effect on the Company.
Section
3.8 Proxy Statement; Form S-4; Merger Documents. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (a) the
S-4 at the time the S-4 becomes effective under the Securities Act or (b) the Proxy Statement (and any amendment thereof or supplement thereto) at the date(s) mailed to
the stockholders of the Company and Parent, at the time of the Company Special Meeting, at the time of the Parent Stockholders' Meeting and at the Effective Time, will contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement and the S-4 will comply in all material respects with the provisions of the Exchange Act, except that no representation is made by the Company with respect
to statements made in the Proxy Statement based on information supplied to the Company by Parent or Purchaser for inclusion in the Proxy Statement or the S-4.
Section 3.9 Employee Benefit Plans; ERISA.
(a) Section 3.9(a)
of the Company Disclosure Letter contains a complete and correct list as of the date of this Agreement of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, stock appreciation right or other equity-based incentive, severance, termination, change in control, retention, employment, hospitalization or
other medical, life or other insurance, disability, other welfare, supplemental unemployment, profit-sharing, pension, or retirement plan, program, agreement or arrangement, and each other director or
employee compensation or benefit plan, program, agreement or arrangement, sponsored, maintained or contributed to by the Company, any of its Subsidiaries or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Company or any of its Subsidiaries would be deemed a "single employer" within the meaning of Section 4001(b) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or to which the Company or an ERISA Affiliate is party, whether written or oral, for the benefit of any current or former officer,
employee or director of the Company, any of its Subsidiaries or any ERISA Affiliate (the "Company Plans").
(b) With
respect to each Company Plan, the Company has heretofore delivered to Parent complete and correct copies of each of the following documents (including all
amendments to such documents), as applicable:
(i) the
Company Plan or a written description of any Company Plan not in writing;
(ii) uch Patina employee is eligible to
participate after the effective time of the merger, including for purposes of eligibility, vesting and benefit levels and accruals (other than defined benefit pension plan accruals).
Following
the effective time of the merger, for purposes of each employee benefit plan of Noble Energy in which any Patina employee or his or her eligible dependents is eligible to
participate, Noble Energy has agreed to, and has agreed to cause its subsidiaries to, (1) waive any pre-existing condition, exclusion, actively-at-work
requirement or waiting period to the extent such condition, exclusion, requirement or waiting period was satisfied or waived under the comparable employee benefit plan of Patina as of the effective
time of the merger (or, if later, the date on which the employee transitions to the Noble benefit plan) and (2) provide full credit for any co-payments, deductibles or similar
payments made or incurred prior to the effective time of the merger for the plan year in which the effective time date of the merger (or the applicable plan transition date) occurs.
91
Noble
Energy has agreed to, and has agreed to cause its subsidiaries to, honor, in accordance with its terms, each employee benefit plan of Patina and all obligations thereunder,
including any rights or benefits arising as a result of the transactions contemplated by the merger agreement (either alone or in combination with any other event).
The
parties agreed that, prior to the effective time of the merger, Patina will be entitled to amend and modify its Amended and Restated Deferred Compensation Plan for Select Employees
and its 2005 Deferred Compensation Plan for Select Employees, in each case, solely to the extent necessary to comply with Section 409A of the Internal Revenue Code and any rules, regulations or
other guidance promulgated thereunder by any governmental entity.
Following
the effective time of the merger, Noble Energy has agreed not to, and has agreed not to permit any of its subsidiaries or any of its or their respective officers or employees
to, take any action (including the waiver of any term or condition of either of Patina's deferred compensation plans discussed in the preceding paragraph) that results, or would be reasonably likely
to result, in the imposition of any tax or interest penalty under Section 409A of the Internal Revenue Code on any current or former participant in either of Patina's deferred compensation
plans, including any "material modification" (within the meaning of Section 885(d)(2)(B) of the American Jobs Creation Act of 2004) of Patina's Amended and Restated Deferred Compensation Plan
for Select Employees with respect to amounts deferred in taxable years beginning before January 1, 2005.
Noble
Energy has agreed to, and has agreed to cause its subsidiaries and its and their respective officers and employees to, take all actions (including any amendment or modification of
either of Patina's deferred compensation plans) following the effective time necessary to ensure that each deferred compensation plan complies, by its terms and in its operation, with any rules,
regulations or other guidance promulgated under Section 409A of the Internal Revenue Code by any governmental entity after the date of the merger agreement; provided, however, that the
foregoing obligations will not apply (1) in the event that there is no such action that could be taken that would ensure such compliance, in which case Noble Energy has agreed to notify the
participants in the Patina deferred compensation plan in order that they may have the opportunity to challenge such fact, or (2) to the extent that such action is necessary to cause such
deferred compensation plan to comply with Section 409A of the Internal Revenue Code or any rule, regulation or other guidance promulgated thereunder by any governmental entity as in effect
immediately prior to the effective time of the merger. The merger agreement provides, however, that Noble Energy will be entitled to amend or modify Patina's 2005 Deferred Compensation Plan for Select
Employees to provide that (1) no additional amounts will be contributed to or deferred under the plan and (2) to the extent no tax or interest penalty under Section 409A of the
Code would be imposed on any participant therein, amounts previously contributed to or deferred under Patina's 2005 Deferred Compensation Plan for Select Employees will be distributed to the
participants therein, in each case subject to Noble Energy's obligation to provide employee benefits to Patina employees that are not materially less favorable in the aggregate than those received
immediately prior to the effective time of the merger. Noble Energy has agreed to indemnify and hold harmless each current and former participant in either of Patina's deferred compensation plans on
an after-tax basis from any tax or interest penalty imposed under Section 409A of the Internal Revenue Code (or any successor or replacement provision thereto) to the extent imposed
as a result of any failure of Noble Energy, any of its subsidiaries or any of its or their respective officers or employees to comply with the provisions described in this paragraph and the preceding
paragraph; provided that Noble Energy will not be obligated to so indemnify and hold harmless any such participant with respect to any such tax or interest penalty to the extent such tax or interest
penalty is imposed as a result of the refusal of such participant to give any consent or approval required to effect any action required to be taken pursuant to the provisions described in this
paragraph.
92
Prior to the effective time of the merger, Noble Energy and Patina, and their respective boards of directors, have agreed to use their reasonable best efforts to take all actions to
cause any dispositions of Patina common stock (including derivative securities with respect to Patina common stock) or acquisitions of Noble Energy common stock (including derivative securities with
respect to Noble Energy common stock) resulting from the transactions contemplated hereby by each individual who is subject to the reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") to be exempt from Section 16(b) of the Exchange Act under Rule 16b-3 promulgated under the Exchange Act.
The
merger agreement acknowledges that it contains no requirement that Noble Energy or any of its affiliates continue to employ any Patina employee for any length of time following the
closing date of the merger. Subject to certain restrictions described above with respect to the Patina deferred compensation plans, the merger agreement does n a
copy of the most recent annual report or Internal Revenue Service Form 5500 Series, including all related reports required therewith;
(iii) a
copy of the most recent Summary Company Plan Description ("SPD"), together with all Summaries of Material Modification issued with respect to such SPD and all other
material employee communications relating to each Company Plan distributed by the Company or any of its Subsidiaries from December 31, 2003 to the date of this Agreement;
(iv) if
the Company Plan or any obligations thereunder are funded through a trust or any other funding vehicle or through insurance, the trust or other funding agreement and
the latest financial statements thereof or evidence of insurance coverage thereof;
(v) all
contracts relating to the Company Plan with respect to which the Company or any ERISA Affiliate may have any material liability, including insurance contracts,
investment management agreements, subscription and participation agreements and record keeping agreements;
(vi) if
the Company Plan is intended to qualify under Section 401(a) of the Code, the most recent determination letter received from the Internal Revenue Service; and
(vii) all
material communications between the Company or any ERISA Affiliate and any Governmental Entity.
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(c) No
Company Plan in effect as of the date hereof is subject to Title IV or Section 302 of ERISA. No liability under Title IV or Section 302 of ERISA has
been incurred by the Company or any ERISA Affiliate that has not been satisfied in full, and no condition exists that would be reasonably likely to result in the Company or any ERISA Affiliate
incurring any such liability, other than liability for premiums due to the Pension Benefit Guaranty Corporation (which premiums have been paid when due). Insofar as the representation made in this
Section 3.9(c) applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, such representation is made with respect to any employee benefit plan, program, agreement or arrangement subject to
Title IV of ERISA to which the Company or any ERISA Affiliate made, or was required to make, contributions during the five-year period ending on the last day of the most recent plan year
ended prior to the Closing Date.
(d) None
of the Company, any ERISA Affiliate, any of the Company Plans, any trust created thereunder and, to the knowledge of the Company, any trustee or administrator
thereof has engaged in a transaction or has taken or failed to take any action with respect to a Company Plan in connection with which the Company, any of its Subsidiaries or any ERISA Affiliate would
be reasonably likely to be subject to a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975(a) or (b), 4976 or 4980B of the
Code.
(e) All
contributions required to be made by the Company and its Subsidiaries with respect to any Company Plan on or prior to the Closing Date have been timely made or are
reflected on the consolidated balance sheet of the Company dated as of September 30, 2004 contained in the Specified Company SEC Documents. Since September 30, 2004, there has been no
amendment to, written interpretation of or announcement (whether or not written) by the Company or any ERISA Affiliate relating to, or change in the terms of employee participation or coverage under,
any Company Plan that would increase materially the expense of maintaining such Company Plan above the level of expense incurred in respect thereof for the most recent fiscal year ended prior to the
date hereof.
(f) Each
of the Company Plans has been operated and administered by the Company and its Subsidiaries in all material respects in accordance with applicable Laws, including
ERISA and the Code.
(g) With
respect to each of the Company Plans that is intended to be "qualified" within the meaning of Section 401(a) of the Code, the Company has received a
currently effective determination letter from the IRS stating that it is so qualified, such letter has not been revoked, and, to the knowledge of the Company, no event has occurred that would be
reasonably likely to affect such qualified status. No fund established under a Company Plan is intended to satisfy the requirements of Section 501(c)(9) of the Code.
(h) No
amounts payable under the Company Plans as a result of the transactions contemplated hereby will fail to be deductible for federal income Tax purposes by virtue of
Sections 280G or 162(m) of the Code.
(i) No
Company Plan provides death, medical, hospitalization or similar benefits (whether or not insured) with respect to any current or former employee of the Company, its
Subsidiaries or any ERISA Affiliate after retirement or other termination of service, other than (i) coverage mandated by applicable Law, (ii) death benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA or (iii) benefits, the full direct cost of which is borne by the current or former employee (or beneficiary thereof).
(j) The
consummation of the transactions contemplated by this Agreement will not, either alone or in combination with any other event, (i) entitle any current or
former employee, officer or director of the Company, any of its Subsidiaries or any ERISA Affiliate to severance pay, unemployment compensation or any other similar termination payment under any
Company Plan, or (ii) accelerate the time of payment or vesting of, increase the amount of or otherwise enhance any benefit due any such employee, officer or director under any Company Plan.
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(k) To
the knowledge of the Company, neither the Company nor any Subsidiary has contributed to a nonconforming group health plan (as defined in Section 5000(c) of the
Code) and no ERISA Affiliate of the Company or any of its Subsidiaries has incurred a Tax under Section 5000(a) of the Code which is or could become a liability of the Company or any of its
Subsidiaries.
ot prevent Noble Energy or its affiliates
from terminating, or modifying the terms of employment of, any Patina employee following the closing date of the merger or terminating or modifying to any extent any employee benefit plan of Patina or
any other employee benefit plan, program, agreement or arrangement that Noble Energy or its affiliates may establish or maintain; provided, however, that to the extent that, and for so long as, a
Patina employee remains employed by Noble Energy or any of its subsidiaries during the six month period following the effective time of the merger, the compensation and benefits payable to such
employee during such period will be subject to the provision described in the first paragraph under "—Employee Benefit Plans and Existing Agreements." In addition, Patina has a change in
control plan pursuant to which certain severance payments must be made upon an employee's termination without cause. See "—Financial Interests of Patina's Directors and Executive Officers
in the Merger—Change in Control Plan".
Prior
to the effective time of the merger, Patina will amend the rabbi trust maintained in connection with Patina's deferred compensation plans to provide that, as of the effective time
of the merger, the shares of Noble Energy common stock in such rabbi trust issued in exchange for shares of Patina common stock pursuant to the merger will be subject to the claims of Noble Energy's
creditors, in addition to the claims of Patina's creditors, and any shares of Noble Energy common stock not transferred to the surviving corporation's employees will revert to Noble Energy on
termination of such rabbi trust.
NYSE Listing of Noble Energy Common Stock; Delisting and Deregistration of Patina Common Stock
It is a condition to completion of the merger that the shares of Noble Energy common stock issuable in the merger be authorized for listing on the NYSE, subject
to official notice of issuance. If the merger is
completed, Patina common stock will cease to be listed on the NYSE and Patina's shares will be deregistered under the Exchange Act.
Expenses
The merger agreement provides that each of Noble Energy and Patina will pay its own costs and expenses in connection with the transactions contemplated by the
merger agreement, except as described above in "—Termination of the Merger Agreement—Termination Fees and Expenses."
Dividends
The merger agreement provides that, prior to the effective time:
- •
- Patina
or any of its subsidiaries may not declare, set aside or pay any dividend (other than, in the case of the Patina, regular quarterly dividends consistent with past
practice and in no event exceeding $0.06 per share per quarter) or other distribution, whether payable in cash, stock or
93
Appraisal Rights
Shares of Patina common stock outstanding immediately prior to the effective time of the merger and held by a holder who has not voted in favor of, or consented
in writing to, the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and who has delivered a written demand for appraisal of
such shares in accordance with Section 262 of the DGCL will not be converted into the right to receive the merger consideration, unless and until the dissenting holder fails to perfect or
effectively withdraws or otherwise loses his or her right to appraisal and payment under the DGCL. If, after the effective time of the merger, a dissenting stockholder fails to perfect or effectively
withdraws or loses his or her right to appraisal, his or her shares of Patina common stock will be treated as if they had been converted as of the effective time of the merger into the right to
receive the merger consideration without interest or dividends thereon.
Regulatory Filings and Approvals Required to Complete the Merger
The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (the "HSR Act"), which prevents
transactions subject to its requirements from being consummated until the required notification forms and attachments are furnished to the Antitrust Division of the Department of Justice and the
Federal Trade Commission and certain waiting periods expire or are terminated. Noble Energy was granted its request for early termination of the waiting period with the Department of Justice and the
Federal Trade Commission on February 4, 2005. No further action under the HSR Act need be taken if the merger is completed within one year of early termination of the waiting period.
The
Department of Justice or the Federal Trade Commission, however, are not legally precluded from challenging the merger on antitrust grounds either before or after expiration of the
HSR Act waiting period. Accordingly, at any time before or after the effective time of the merger, either the Department of Justice or the Federal Trade Commission could bring an action under the
antitrust laws, including an injunction action, if deemed necessary to protect competition in any relevant market. Moreover, at any time before or after the effective time of the merger,
notwithstanding that the applicable waiting period may have expired or been terminated, any state or private party could challenge the merger under the antitrust laws, although a private plaintiff
would need to establish that it had the requisite antitrust standing. There can be no assurance that a governmental or private challenge to the merger will not be made or that, if a challenge is made,
the partie; (l) There
is no pending or, to the knowledge of the Company, threatened material Litigation by, on behalf of or against any Company Plan by any participant (or beneficiary
thereof) in such Company Plan or otherwise involving any such Company Plan (other than routine claims for benefits).
Section 3.10 Litigation; Compliance with Law.
(a) Except
as disclosed in the Specified Company SEC Documents, (i) there is no Litigation pending or, to the knowledge of the Company, threatened in writing against,
relating to or naming as a party thereto the Company or any of its Subsidiaries, any of their respective properties or assets or any of the Company's officers or directors (in their capacities as
such), (ii) there is no agreement, order, judgment, decree, injunction or award of any Governmental Entity against and/or binding upon the Company, any of its Subsidiaries or any of the
Company's officers or directors (in their capacities as such) that, in the case of either clause (i) or (ii), individually or in the aggregate has had, or would be reasonably likely to have or
result in, a Material Adverse Effect on the Company, and (iii) there is no Litigation that the Company or any of its Subsidiaries has pending against other parties, where such Litigation is
intended to enforce or preserve material rights of the Company or any of its Subsidiaries.
(b) Each
of the Company and its Subsidiaries has complied, and is in compliance, in all material respects with all Laws and Permits which affect the respective businesses of
the Company or any of its Subsidiaries, the Company Real Property and/or the Company Assets, and the Company and its Subsidiaries have not been and are not in violation in any material respect of any
such Law or Permit; nor has any notice, charge, claim or action has been received by the Company or any of its Subsidiaries or been filed, commenced, or to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries alleging any violation of the foregoing.
(c) The
Company and its Subsidiaries hold all Permits necessary for the ownership, leasing, operation, occupancy and use of the Company Real Property, the Company Assets and
the conduct of their respective businesses as currently conducted ("Company Permits"), except where the failure to hold such Company Permits individually or in the aggregate has not had, and would not
be reasonably likely to have or result in, a Material Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries has received notice that any Company Permit will be terminated or
modified or cannot be renewed in the ordinary course of business, and the Company has no knowledge of any reasonable basis for any such termination, modification or nonrenewal, in each case except for
any such terminations, modifications or nonrenewals that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the
Company. The execution, delivery and performance of this Agreement and the consummation of the Merger or any other transactions contemplated hereby do not and will not violate any Company Permit, or
result in any termination, modification or nonrenewal thereof, except in each case for any such violations, terminations, modifications or nonrenewals that individually or in the aggregate have not
had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the Company.
(d) This
Section 3.10 does not relate to matters with respect to (i) Company Plans, ERISA and other employee benefit matters (which are the subject of
Section 3.9), (ii) Tax Laws and other Tax matters (which are the subject of Section 3.13), (iii) Environmental Laws and other environmental matters (which are the subject
of Section 3.14), and (iv) labor matters (which are the subject of Section 3.17).
Section 3.11 Intellectual Property.
(a) The
Company and its Subsidiaries own, or possess sufficient and legally enforceable licenses or other rights to use, any and all United States and foreign patents,
patent applications, patent disclosures, mask works, computer software, geophysical data, trademarks, trade dress, trade names,
A-17
logos,
Internet domain names, copyrights and service marks, including applications to register and registrations for any of the foregoing, as well as trade secrets, know-how, data and
other proprietary rights and information (all of the foregoing, referred to as "Technology" and together with trademarks, trade names and service marks, referred to as "Intellectual Property")
necessary for the conduct of the business and operations of the Company and its Subsidiaries as currently conducted, free and clear of any Liens (except for any Permitted Liens).
(b) To
the knowledge of the Company, the conduct of the business of the Company and its Subsidiaries does not infringe, conflict with or otherwise violate in any material
respect any Intellectual Property of any Person, and none of the Company or any of its Subsidiaries has received notice or has knowledge of any such material infringement, conflict or other violation.
Section 3.12 Material Contracts.
(a) Except
as disclosed in the Specified Company SEC Documents, to the extent that it is reasonably apparent that the disclosure in the Specified Company SEC Documents is
responsive to the matters set forth in this Section 3.12(a), as of the date of this Agreement, neither the Company nor any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral) (i) which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement, (ii) which materially restrains, limits or impedes the Company's or any of its Subsidiaries', or will materially restrain, limit or impede the
Surviving Corporation's, ability to compete with or conduct any business or any line of business, including geographic limitations on the Company's or any of its Subsidiaries' or the Surviving
Corporation's activities, (iii) which is a material production sharing agreement, joint venture or operating agreement, balancing agreement, farm-out or farm-in
agreement, enhanced oil recovery agreement, unitization and pooling agreement or other similar contract or agreement relating to the exploratios would prevail.
We
are not aware of any other material governmental or regulatory approval required for the completion of the merger, other than compliance with the applicable corporate law of the State
of Delaware.
Hedging Activities
In connection with the announcement of the merger agreement, in order to reduce the price sensitivity associated with future oil and gas prices, Noble Energy
entered into additional financial
94
derivative
transactions ("hedges") using its own production that was available to be hedged. The natural gas hedges totaled 130 million British thermal units ("MMBTU") per day starting in
May 2005 through December 2005 and 170 MMBTUs per day for 2006 through 2008. The crude oil hedges totaled 13,100 barrels of oil per day starting in May 2005 through
December 2005 and approximately 16,700 barrels of oil per day for 2006 through 2008. These hedges consist of fixed price swaps that average $6.167 per MMBTU for natural gas and $39.30 per
barrel of oil. Prior to the closing of the merger, Noble Energy may enter into additional financial derivative transactions using its existing production.
The
merger agreement provides that if Noble Energy terminates the merger agreement within three business days of receiving notification that the Patina board of directors has made an
adverse recommendation change, or resolved to make such a change (in either case for any reason other than a superior proposal), Patina would be required to reimburse Noble Energy for up to
$45.0 million of actual losses realized by Noble Energy with respect to certain hedges for the years 2006 through 2008. In addition, pursuant to the merger agreement, prior to the closing of
the merger, Patina has agreed to terminate its existing hedge positions.
For
additional information regarding Noble Energy's hedges, including hedging not connected with the announcement of the merger agreement, please see Noble Energy's previous SEC filings.
Accounting Treatment
The merger will be accounted for as a "purchase," as that term is used under GAAP, for accounting and financial reporting purposes. Patina will be treated as the
acquired corporation for accounting and financial reporting purposes. Patina's assets, liabilities and other items will be adjusted to their estimated fair value on the closing date of the merger and
combined with the historical book values of the assets and liabilities of Noble Energy. Applicable income tax effects of these adjustments will be included as a component of the combined company's
deferred tax asset or liability. The difference between the estimated fair value of the assets (including separately identifiable intangible assets, such as core deposit intangibles), liabilities and
other items (adjusted as discussed above) and the purchase
price will be recorded as goodwill. Financial statements of Noble Energy issued after the merger will reflect the values and will not be restated retroactively to reflect the historical financial
position or results of operations of Patina.
Financial Interests of Patina's Directors and Executive Officers in the Merger
In considering the recommendations of the Patina board of directors with respect to the merger agreement, you should be aware that Patina's directors and
executive officers have financial and other interests in the merger in addition to their interests as stockholders of Patina. The Patina board of directors was aware of these additional interests and
considered them, among other matters, in reaching its decision to approve the merger agreement and to recommend that Patina stockholders vote to adopt the merger agreement and approve the merger and
the other transactions contemplated by the merger agreement.
Board of Directors
The merger agreement provides that Noble Energy will increase the size of its board of directors by two members and that, following the merger, Noble Energy will
appoint Thomas J. Edelman and Jeffrey L. Berenson, who are currently members of the Patina board of directors, to fill the vacancies created by such increase. Noble Energy has also agreed to recommend
that Mr. Edelman and Mr. Berenson be elected to the Noble Energy board of directors at the first annual meeting of Noble Energy stockholders following the merger.
95
Stock Options
Pursuant to their terms and the Patina stock option plans, all options to acquire Patina common stock, including stock options held by directors and executive
officers of Patina, that are outstanding prior to the merger will automatically become vested and exercisable. The merger agreement provides that each stock option that is outstanding and unexercised
immediately prior to the effective time of the merger will be converted into an option to acquire shares of Noble Energy common stock. For a more complete description of the terms of the new Noble
Energy stock options, see above under the heading "—Treatment of Options."
The
following table sets forth, as of April 7, 2005, the number of shares of Patina common stock subject to vested and unvested stock options held by Patina's directors and
executive officers and the estimated value of of those stock options based on the closing price of Patina of $40.83 per share on April 7, 2005:
Name
|
|
Title
|
|
Number of
Shares Subject
to Unvested
Options
|
|
Estimated Value of Unvested Options
|
|
Number of
Shares
Subject to
Vested
Options
|
(b) (i) Each
Company Material Contract is valid and binding and in full force and effect, (ii) the Company and each of its Subsidiaries has performed all
obligations required to be performed by it to date under each Company Material Contract, (iii) no event or condition exists which constitutes or, after notice or lapse of time or both, would
constitute, a default on the part of the Company or any of its Subsidiaries under any such Company Material Contract and (iv) to the knowledge of the Company, no other party to such Company
Material Contract is in default in any respect thereunder, except in each case where there has not been, and would not be reasonably likely to be, individually or in the aggregate, a material adverse
effect on the rights or remedies of the Company or its Subsidiaries under such Company Material Contracts.
Section 3.13 Taxes.
(a) (i) All
material Returns required to be filed by or with respect to the Company, its Subsidiaries and each Company Consolidated Group have been timely filed in
accordance with all applicable Laws and all such Returns are true, correct and complete in all material respects, (ii) the Company, its Subsidiaries and each Company Consolidated Group have
timely paid all material Taxes due or claimed to be due, (iii) all material Employment and Withholding Taxes and any other material amounts required to be withheld with respect to Taxes have
been either duly and timely paid to the proper Governmental Entity or properly set aside in accounts for such purpose in accordance with applicable Laws, (iv) the charges, accruals and reserves
for Taxes with respect to the Company, its
A-18
Subsidiaries
and each Company Consolidated Group reflected in the balance sheet, dated as of December 31, 2003, included in the Company's Annual Report on Form 10-K for the
term ended December 31, 2003 (the "Company Balance Sheet") are adequate under GAAP, (v) no material deficiencies or other claims for any Taxes asserted or assessed, or, to the knowledge
of the Company, proposed, against the Company or any of its Subsidiaries has not been resolved in all material respects, and (vi) there is no material Litigation pending or, to the knowledge of
any of the Company or its Subsidiaries, threatened or scheduled to commence, against or with respect to the Company or any of its Subsidiaries in respect of any Tax or Return.
(b) The
statues of limitations for the federal income Tax Returns of the Company, its Subsidiaries and each Company Consolidated Group have expired or otherwise have been
closed for all taxable periods ending on or before December 31, 1996.
(c) Since
January 1, 1997, neither the Company nor any of its Subsidiaries has been a member of any "affiliated group" (as defined in Section 1504(a) of the
Code) or has been included in any "consolidated," "unitary" or "combined" Return (other than Returns which include only the Company and any Subsidiaries of the Company) provided for under the Laws of
the United States, any foreign jurisdiction or any state or locality and none of the Company nor any of its Subsidiaries has any liability for the Taxes of any Person (other than the Company or any of
its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision under any state, local or foreign law), or as a successor or transferee.
(d) As
of the date of this Agreement, to the knowledge of the Company, there are no Non-U.S. Stockholders that hold more than 5% of the Company Common Stock.
(e) There
are no Tax sharing, allocation, indemnification or similar agreements or arrangements, whether written or unwritten, in effect under which the Company or any of
its Subsidiaries could be liable for any material Taxes of any Person other than the Company or any Subsidiary of the Company.
(f) Neither
the Company nor any of its Subsidiaries has entered into an agreement or waiver extending any statute of limitations relating to the payment or collection of a
material amount of Taxes, nor is any request for such a waiver or extension pending.
(g) There
are no Liens for Taxes on any asset of the Company or its Subsidiaries, except for Permitted Liens.
(h) Neither
the Company nor any of its Subsidiaries is the subject of or bound by any material private letter ruling, technical advice memorandum, closing agreement or
similar material ruling, memorandum or agreement with any taxing authority.
(i) Neither
the Company nor its Subsidiaries has entered into, has any liability in respect of, or has any filing obligations with respect to, any "reportable transactions,"
as defined in Section 1.6011-4(b)(1) of the Treasury Regulations.
(j) Neither
the Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable
income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing
Date under Section 481(c) of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (ii) "closing agreement" as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign Tax Law) executed on or prior to the Closing Date, or (iii) deferred intercompany gain or excess loss account
described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law).
(k) Neither
the Compa2%"> |
Estimated Value of Vested Options
|
| Thomas J. Edelman |
|
Chairman, Chief Executive Officer, President and Chairman of the Board |
|
586,002 |
|
$ |
8,241,994 |
|
1,181,180 |
|
$ |
36,011,257 |
| Jay W. Decker |
|
Former President and Director, resigned December 22, 2004 |
|
219,002 |
|
$ |
4,850,864 |
|
— |
|
$ |
— |
| David J. Kornder |
|
Executive Vice President, Chief Financial Officer, and Director |
|
268,002 |
|
$ |
3,946,874 |
|
403,506 |
|
$ |
11,841,390 |
| Andrew M. Ashby |
|
Senior Vice President — Operations |
|
137,602 |
|
$ |
1,469,831 |
|
83,677 |
|
$ |
2,209,148 |
| Ted D. Brown |
|
Senior Vice President — Operations |
|
90,700 |
|
$ |
511,596 |
|
— |
|
$ |
— |
| Barton R. Brookman |
|
Vice President — Operations |
|
54,902 |
|
$ |
711,302 |
|
20,526 |
|
$ |
520,981 |
| Marianne N. Hallinan |
|
Vice President — Human Resources and Associate General Counsel |
|
49,900 |
|
$ |
411,272 |
|
— |
|
$ |
— |
| James A. Lillo |
|
Vice President — Acquisitions |
|
56,802 |
|
$ |
737,011 |
|
12,126 |
|
$ |
395,065 |
| Scott J. Reasoner |
|
Vice President — Operations |
|
45,000 |
|
$ |
486,178 |
|
13,390 |
|
$ |
272,536 |
| Terry L. Ruby |
|
Vice President — Land |
|
11,502 |
|
$ |
313,314 |
|
1,126 |
|
$ |
36,685 |
| Donald R. Shaw |
|
Vice President — Asset Development |
|
78,702
A-19
(l) The
Company has made available to Parent correct and complete copies of (i) all U.S. federal income Tax Returns of the Company and its Subsidiaries relating to
taxable periods ending on or after December 31, 2001, filed through the date hereof and (ii) any material audit report within the last three years relating to any material Taxes due from
or with respect to the Company or any of its Subsidiaries.
(m) No
jurisdiction where the Company or any of its Subsidiaries does not file a Return has made a claim that the Company or any of its Subsidiaries is required to
file a Return for a material amount of Taxes for such jurisdiction.
(n) Within
the last three years, neither the Company nor any of its affiliates has owned any material assets located outside the United States or conducted a material trade
or business outside the United States.
(o) All
of the transactions which the Company has accounted for as hedges under SFAS 133 have also been treated as hedging transactions for federal income Tax
purposes pursuant to Treasury Regulation Section 1.1221-2 and have been properly identified as such under Treasury Regulation Section 1.1221-2(f).
Section 3.14 Environmental Matters.
(a) Except
for such matters that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the
Company, the Company and its Subsidiaries have complied, and are in compliance, with all applicable Environmental Laws, which compliance includes the possession of all Permits required under
applicable Environmental Laws and compliance with the terms and conditions thereof and the making and filing with all applicable Governmental Entities of all reports, forms and documents and the
maintenance of all records required to be made, filed or maintained by it under any Environmental Law. Neither the Company nor any of its Subsidiaries has received any communication (written or, if
oral, would be reasonably likely to result in a formal claim) from any Person, whether a Governmental Entity, citizens group, employee or otherwise, that alleges that the Company or any of its
Subsidiaries is not in compliance in any material respect with Environmental Laws and that has not been resolved in all material respects.
(b) Except
for such matters that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the
Company, there are no Environmental Claims pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries or, to the knowledge of the Company, against any
Person whose liability for any Environmental Claim the Company or any of its Subsidiaries has retained or assumed either contractually or by operation of law.
(c) Except
for such matters that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the
Company, neither the Company nor any of its Subsidiaries is subject to any liability or obligation (accrued, contingent or otherwise) to cleanup, correct, abate or to take any response, remedial or
corrective action under or pursuant to any Environmental Laws, relating to (i) environmental conditions on, under, or about any of the properties or assets owned, leased, operated or used by
the Company or any of its Subsidiaries or any predecessor thereto at the present time or in the past, including the air, soil, surface water and groundwater conditions at, on, under, from or near such
properties, or (ii) the past or present use, management, handling, transport, treatment, generation, storage, disposal or Release of any Hazardous Substances, whether on-site at any
Company Real Property, or at any off-site location. The Company has provided or made available to Parent all material studies, assessments, reports, data, results of investigations or
audits, analyses and test results, in the possession, custody or control of the Company or any of its Subsidiaries relating to (x) the environmental conditions on, under or about any of the
properties or assets owned, leased, operated or used by any of the Company and its Subsidiaries or any predecessor in interest thereto at the present time or in the past and (y) any Hazardous
Substances used, managed, handled, transported, treated, generated, stored or Released by any Person on, under, about or from, any of the properties, assets and businesses of the Company or any of its
Subsidiaries.
A-20
(d) Except for such matters that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the
Company, to the knowledge of the Company, there are no past or present actions, activities, circumstances, conditions, events or incidents, including the release, emission, discharge, presence or
disposal of any Hazardous Substance, that would be reasonably likely to form the basis of any Environmental Claim against the Company or any of its Subsidiaries or against any Person whose liability
for such Environmental Claim the Company or any of its Subsidiaries has retained or assumed either contractually or by operation of law.
(e) Without
in any way limiting the generality of the foregoing, there are no underground storage tanks located at any property currently owned, leased or operated by the
Company or any of its Subsidiaries.
(f) Neither
the Company nor any of its Subsidiaries is required by virtue of the transactions contemplated by this Agreement, or as a condition to the effectiveness of any
transactions contemplated by this Agreement, (i) to perform a site assessment for Hazardous Substances at any Company Real Property or (ii) to remove or remediate any Hazardous
Substances from any Company Real Property.
&nbs/FONT> |
|
$ |
952,040 |
|
— |
|
$ |
— |
| David W. Siple |
|
Vice President — Land |
|
49,002 |
|
$ |
621,239 |
|
19,626 |
|
$ |
507,490 |
| Michael N. Stefanoudakis |
|
Vice President and General Counsel |
|
71,200 |
|
$ |
569,936 |
|
— |
|
$ |
— |
| Michael J. Wendling |
|
Vice President — Reservoir Engineering |
|
44,902 |
|
$ |
483,508 |
|
29,966 |
|
$ |
791,030 |
| Charles E. Bayless |
|
Director |
|
12,750 |
|
$ |
181,800 |
|
2,250 |
|
$ |
32,850 |
| Jeffrey L. Berenson |
|
Director |
|
24,692 |
|
$ |
558,707 |
|
14,060 |
|
$ |
381,965 |
| Robert J. Clark |
|
Director |
|
24,692 |
|
$ |
568,085 |
|
45,312 |
|
$ |
1,420,623 |
| Elizabeth K. Lanier |
|
Director |
|
24,692 |
|
$ |
568,085 |
|
45,312 |
|
$ |
1,420,623 |
| Alexander P. Lynch |
|
Director |
|
24,692 |
|
$ |
568,085 |
|
45,312 |
|
$ |
1,420,623 |
| Paul M. Rady |
|
Director |
|
24,692 |
|
$ |
568,085 |
|
45,312 |
|
$ |
1,384,839 |
| Jon R. Whitney |
|
Director |
|
12,750 |
|
$ |
181,800 |
|
2,250 |
|
$ |
32,850 |
Restricted Stock
Pursuant to their terms, all shares of restricted Patina common stock held by Patina's directors and executive officers that are outstanding but unvestedp; Section 3.15 Company Real Property; Operating Equipment.
(a) Section 3.15(a)
of the Company Disclosure Letter contains a complete and correct list, as of the date of this Agreement, of all Company Owned Real Property
setting forth information sufficient to specifically identify such Company Owned Real Property and the legal owner thereof. The Company and its Subsidiaries have good, valid fee simple title to the
Company Owned Real Property, free and clear of any Liens other than Permitted Liens. Each Company Lease grants the lessee under the Company Lease the exclusive right to use and occupy the premises and
rights demised thereunder free and clear of any Lien other than Permitted Liens. Each of the Company and its Subsidiaries has good and valid title to the leasehold estate or other interest created
under its respective Company Leases free and clear of any Liens other than Permitted Liens.
(b) The
Company Real Property constitutes all the fee, leasehold and other interests in real property held by the Company and its Subsidiaries, other than the Company Oil
and Gas Properties. The use and operation of the Company Real Property in the conduct of the business of the Company and its Subsidiaries does not violate any instrument of record or agreement
affecting the Company Real Property, except for such violations as individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on
the Company. No current use by the Company and its Subsidiaries of the Company Real Property is dependent on a nonconforming use or other governmental approval.
(c) All
material operating equipment owned or leased by the Company or any of its Subsidiaries are, in the aggregate, in a state of repair so as to be adequate in all
material respects for reasonably prudent operations in the areas in which they are operated.
Section
3.16 Insurance. Section 3.16 of the Company Disclosure Letter contains a complete and correct
list of all material insurance policies maintained by or on behalf of any of the Company and its Subsidiaries as of the date of this Agreement. Such policies are, and at the Closing policies or
replacement policies having substantially similar coverages will be, in full force and effect, and all premiums due thereon have been or will be paid. The Company and its Subsidiaries have complied in
all material respects with the terms and provisions of such policies. With respect to any material insurance claim submitted by the Company or any of its Subsidiaries since January 1, 2003,
neither the Company nor any of its Subsidiaries has received any refusal of coverage, reservation of rights or other notice that the issuer of the applicable insurance policy or policies is not
willing or able to perform its obligations thereunder.
A-21
Section 3.17 Labor Matters.
(a) Neither
the Company nor any of its Subsidiaries is, or since January 1, 2000 has been, a party to or bound by a collective bargaining agreement or other similar
agreement with any labor union or labor organization applicable to the employees of the Company or any of its Subsidiaries, and no such agreement is currently being negotiated. Since January 1,
2000, no representation election petition or application for certification has been filed by any employees of the Company or any of its Subsidiaries, nor is such a petition or application pending with
the National Labor Relations Board or any Governmental Entity, and, to the knowledge of the Company, no labor union is currently engaged in or threatening, organizational efforts with respect to any
employees of the Company or any of its Subsidiaries. Since January 1, 2000, no labor dispute, strike, slowdown, picketing, work stoppage, lockout or other collective labor action involving the
employees of the Company or any of its Subsidiaries has occurred or is in progress or, to the knowledge of the Company, has been threatened against the Company or any of its Subsidiaries.
(b) Except
as individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the Company, each of the
Company and its Subsidiaries is in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, immigration and wages and hours, and is not
engaged in any unfair or unlawful labor practice.
(c) There
is no material Litigation pending, or to the knowledge of the Company, threatened involving the Company or any of its Subsidiaries and any of their respective
employees or former employees.
(d) To
the knowledge of the Company, since January 1, 2003, no employee of the Company or any of its Subsidiaries has provided or is providing information to any law
enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any material applicable Law, in each case, by the Company, any of its
Subsidiaries or any of their respective officers or directors.
(e) Since
January 1, 2001, neither the Company nor any of its Subsidiaries has effectuated (i) a "plant closing" (as defined in the Worker Adjustment and
Retraining Notification Act, as amended (the "WARN Act")), affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Company or any
of its Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site of employment or facility of the Company or any of its Subsidiaries; nor has the Company or any of
its Subsidiaries been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any state, local or foreign Law or regulation similar
to the WARN Act.
(f) Section 3.17(f)
of the Company Disclosure Letter contains a complete and correct list, as of the date of this Agreement, of the names of all directors and
officers of the Company, together with (i) such Person's position or function, annual base salary or wages, (ii) any incentive or bonus arrangement with respect to such Person and
(iii) the number of shares of Company Common Stock owned beneficially or of record, or both, by such Person.
Section
3.18 prior to
the merger will become fully vested. In the merger, these shares will be treated in the same manner as other shares of Patina common stock (as described above under the heading "—Merger
Consideration").
96
The
following table sets forth, as of April 7, 2005, the number of shares of unvested restricted Patina common stock held by Patina's directors and executive officers and the
estimated value of such shares based on the closing price of Patina of $40.83 per share on April 7, 2005:
Name
|
|
Title
|
|
Unvested Shares of
Restricted Stock Held
|
|
Estimated Value of Unvested Restricted Shares
|
| Thomas J. Edelman |
|
Chairman, Chief Executive Officer, President and Chairman of the Board |
|
7,000 |
|
$ |
285,810 |
| Jay W. Decker |
|
Former President and Director, resigned December 22, 2004 |
|
5,250 |
|
$ |
214,358 |
| David J. Kornder |
|
Executive Vice President, Chief Financial Officer, and Director |
|
4,200 |
|
$ |
171,486 |
| Andrew M. Ashby |
|
Senior Vice President — Operations |
|
2,100 |
|
$ |
85,743 |
| Ted D. Brown |
|
Senior Vice President — Operations |
|
12,000 |
|
$ |
489,960 |
| Barton R. Brookman |
|
Vice President — Operations |
|
1,400 |
|
$ |
57,162 |
| Marianne N. Hallinan |
|
Vice President Human Resources and
Associate General Counsel |
|
— |
|
|
— |
| James A. Lillo |
|
Vice President — Acquisitions |
|
1,400 |
|
$ |
57,162 |
| Scott J. Reasoner |
|
Vice President — Operations |
|
— |
|
|
— |
| Terry L. Ruby |
|
Vice President — Land |
|
1,400 |
|
$ |
57,162 |
| Donald R. Shaw |
|
Vice President — Asset Development |
|
— |
|
|
— |
| David W. Siple |
|
Vice President — Land |
|
1,400 |
|
$ |
57,162 |
| Michael N. Stefanoudakis |
|
Vice President and General Counsel |
|
— Section 3.18 of the Company Disclosure Letter contains a complete
and correct list, as of the date of this Agreement, of all agreements, contracts, transfers of assets or liabilities or other commitments or transactions, whether or not entered into in the ordinary
course of business, to or by which the Company or any of its Subsidiaries, on the one hand, and any of their respective officers or directors (or any of their respective Affiliates, other than the
Company or any of its direct or indirect wholly owned Subsidiaries) on the other hand, are or have been a party or otherwise bound or affected, and that (a) are currently pending, in effect or
have been in effect during the past 12 months, (b) involve continuing liabilities and obligations that, individually or in the
A-22
aggregate,
have been, are or will be material to the Company and its Subsidiaries, taken as a whole and (c) are not Company Plans disclosed in Section 3.9(a) of the Company Disclosure
Letter.
Section
3.19 Derivative Transactions and Hedging. Section 3.19 of the Company Disclosure Letter contains
a complete and correct list of all Derivative Transactions (including each outstanding Hydrocarbon or financial hedging position attributable to the Hydrocarbon production of the Company and its
Subsidiaries) entered into by the Company or any of its Subsidiaries or for the account of any of its customers as of the date of this Agreement. All such Derivative Transactions were, and any
Derivative Transactions entered into after the date of this Agreement will be, entered into in accordance with applicable Laws, and in accordance with the investment, securities, commodities, risk
management and other policies, practices and procedures employed by the Company and its Subsidiaries. The Company and each of its Subsidiaries have duly performed in all material respects all of their
respective obligations under the Derivative Transactions to the extent that such obligations to perform have accrued, and, to the knowledge of the Company, there are no material breaches, violations,
collateral deficiencies, requests for collateral or demands for payment (except for ordinary course margin deposit requests), or defaults or allegations or assertions of such by any party thereunder.
Section
3.20 Disclosure Controls and Procedures. Since January 1, 2003, the Company and each of its
Subsidiaries has had in place "disclosure controls and procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the Exchange Act) designed and maintained to ensure in
all material respects that (a) transactions are executed in accordance with management's general or specific authorizations, (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting principals and to maintain accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization, (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences, (e) all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and (f) all such information is accumulated and communicated to the
Company's management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company
required under the Exchange Act with respect to such reports. The Company's disclosure controls and procedures ensure that information required to be disclosed by the Company in the reports filed with
the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. None of the Company's or its Subsidiaries' records,
systems, controls, data or information are recorded, stored, maintained, operated or otherwise wholly or partly dependent on or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access thereto and therefrom) are not under the exclusive ownership and direct control of the Company or its Subsidiaries or
accountants. The Company has diligently completed in all material respects its work plan (the "SOX 404 Plan") relating to documentation, testing and evaluation of the Company's internal control over
financial reporting for purposes of providing the report required by SOX 404 and related SEC rules. As of the date of this Agreement, to the knowledge of the Company, (i) there is no reason
that it will not be able, on a timely basis, to complete and include in the Company's Annual Report on Form 10-K for the year ending December 31, 2004, management's
assessment of the Company's internal controls and procedures for financial reporting in accordance with Section 404 of SOX and (ii) there is no material weakness, significant deficiency
or control deficiency, in each case as such term is defined in PCAOB Auditing Std. No. 2.
A-23
Section 3.21 Oil and Gas.
(a) The
Company has furnished Parent prior to the date of this Agreement with reports estimating the Company's and its Subsidiaries' proved oil and gas reserves as of
December 31, 2003, as audited by Netherland, Sewell & Associates, Inc. (the "Company Reserve Report"). The factual, non-interpretive data on which the Company Reserve Report
was based for purposes of estimating the oil and gas reserves set forth in the Company Reserve Report was accurate in all material respects.
(b) All
operated producing oil and gas wells included in the Company Reserve Report have been operated and produced and, to the knowledge of the Company, drilled, in
accordance in all material respects with generally accepted oil and gas field practices and in compliance in all material respects with applicable oil and gas leases and applicable Law.
(c) All
material proceeds from the sale of crude oil, natural gas liquids and other hydrocarbons produced from crude oil or natural gas ("Hydrocarbons") produced from the
Company Oil and Gas Properties are being received by the Company and its Subsidiaries > |
|
|
— |
| Michael J. Wendling |
|
Vice President — Reservoir Engineering |
|
— |
|
|
— |
| Charles E. Bayless |
|
Director |
|
2,000 |
|
$ |
81,660 |
| Jeffrey L. Berenson |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Robert J. Clark |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Elizabeth K. Lanier |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Alexander P. Lynch |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Paul M. Rady |
|
Director |
|
3,400 |
|
$ |
138,822 |
| Jon R. Whitney |
|
Director |
|
2,000 |
|
$ |
81,660 |
Employment Agreement with Mr. Edelman
Thomas J. Edelman, Patina's Chairman, President and Chief Executive Officer, is party to an employment agreement with Patina. The agreement provides that, upon a
change in control of Patina, all of Mr. Edelman's stock options and other stock-based awards and all his unvested rights under other Patina employee benefit plans will automatically vest. In
addition, the agreement provides that if Mr. Edelman's employment with Patina terminates for any reason within 12 months after a change in control, Mr. Edelman will receive all
accrued salary and unpaid bonus (including a partial year bonus for 2005). In addition, Mr. Edelman will receive a cash severance payment equal to two and one-half times the sum of
(1) Mr. Edelman's base salary for 2004, (2) the bonus paid to Mr. Edelman in 2004 plus the full amount payable to Mr. Edelman under Patina's Long Term Incentive
Program for Chief Executive Officer, (3) 100% of the contribution Patina would have made to Mr. Edelman's 401(k) account for the year in which Mr. Edelman's employment was
terminated, and (4) 100% of the matching deferral under Patina's deferred compensation plan for the year in which Mr. Edelman's employment was terminated, assuming Mr. Edelman
deferred the maximum amount pursuant to such plans. Mr. Edelman will be entitled to the continuation for 24 months of medical, disability and life insurance benefits. Mr. Edelman
will also be entitled to a tax gross-up payment in the event he is subject to excise taxes under Sections 280G and 4999 of the Internal Revenue Code on amounts payable to him. The approval
of the merger by Patina stockholders will constitute a change in control under the agreement. Mr. Edelman will not continue his employment with Patina after the effective time of the merger,
and so he will be entitled to the severance payment and other benefits provided in the agreement. Mr. Edelman will receive an aggregate severance payment under the agreement as a result of the
merger of approximately $11,500,000.
97
Change in Control Plan
Patina has a change in control plan in which all of Patina's executive officers (other than Mr. Edelman) and other employees participate. The plan provides
that, upon a change in control, all the executive officers' stock options and other stock-based awards and all the executive officers' unvested rights under other Patina employee benefit plans will
automatically vest. In addition, each executive officer will receive a cash severance payment in the event that his or her employment is terminated without "cause" within one year of a change in
control or if he or she resigns after a "material change" that occurs within one year of a change in control. The amount of the severance payment for any executive officer is generally equal to the
sum of 200% of the executive officer's base compensation for 2004, 100% of the executive officer's accrued but unpaid bonus (including a pro rated partial year bonus for 2005) and 150% of the annual
bonus actually paid to the executive in a timely manner and are not being held in suspense for any reason (except in the ordinary course of business).
(d) Neither
the Company nor any of its Subsidiaries has received any material advance, take-or-pay or other similar payments that entitle purchasers
of production to receive deliveries of Hydrocarbons without paying therefor, and, on a net, company-wide basis, the Company is neither underproduced nor overproduced, in either case, to
any material extent, under gas balancing or similar arrangements.
(e) The
Company and its Subsidiaries have good and defensible title to all oil and gas properties forming the basis for the reserves reflected in the Company Reserve Report
as attributable to interests owned by the Company and its Subsidiaries and free and clear of all Liens, except for (i) Permitted Liens and (ii) Liens associated with obligations
reflected in the Company Reserve Report. The oil and gas leases and other agreements that provide the Company and its Subsidiaries with operating rights in the oil and gas properties reflected in the
Company Reserve Report are legal, valid and binding and in full force and effect, and the rentals, royalties and other payments due thereunder have been properly and timely paid and there is no
existing default (or event that, with notice or lapse of time or both, would become a default) under any of such oil and gas leases or other agreements, except, in each case, as individually or in the
aggregate has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the Company.
(f) No
claim, notice or order from any Governmental Entity or other Person has been received by the Company or any of its Subsidiaries due to Hydrocarbon production in
excess of allowables or similar violations that could result in curtailment of production after the Closing Date from any unit or oil and gas properties of the Company or any of its Subsidiaries,
except any such violations which individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the Company.
Section
3.22 Investment Company. Neither the Company nor any of its Subsidiaries is an "investment company," a
company "controlled" by an "investment company," or an "investment adviser" within the meaning of the Investment Company Act of 1940, as amended (the "Investment Company Act"), or the Investment
Advisers Act of 1940, as amended (the "Advisers Act").
Section
3.23 Rights Agreement. The Company has taken all action so that the entering into of this Agreement and
the consummation of the transactions contemplated hereby and thereby do not and will not result in the grant of any rights to any Person under the Company Rights Agreement or enable or require the
Company Rights to be exercised, distributed or triggered.
A-24
Section 3.24 Recommendation of Company Board of Directors; Opinion of Financial Advisor.
(a) The
Company Board, at a meeting duly called and held, duly adopted resolutions (i) determining that this Agreement and the transactions contemplated hereby are
fair to, and in the best interests of, the stockholders of the Company, (ii) approving this Agreement and the transactions contemplated hereby, (iii) resolving to recommend adoption of
this Agreement and approval of the Merger and the other transactions contemplated hereby by the stockholders of the Company and (iv) directing that the adoption of this Agreement and the
approval of the Merger and the other transactions contemplated hereby be submitted to the Company's stockholders for consideration in accordance with this Agreement, which resolutions, as of the date
of this Agreement, have not been subsequently rescinded, modified or withdrawn in any way.
(b) The
Company has received an opinion of Petrie Parkman & Co., Inc. ("Petrie Parkman") to the effect that, as of the date of this Agreement, the Merger
Consideration to be received by the holders of shares of Company Common Stock (other than Parent, Purchaser or the Company) in the Merger is fair, from a financial point of view, to such holders, a
signed copy of which has been, or will promptly be, delivered to Parent. The Company has received the approval of Petrie Parkman to permit the inclusion of a copy of its written opinion in its
entirety in the Proxy Statement, subject to Petrie Parkman's review of the Proxy Statement.
Section
3.25 Required Vote by Company Stockholders. The affirmative vote of the holders of a majority of the
outstanding Shares entitled to vote hereon (the "Company Required Vote") is the only vote of any class of capital stock of the Company required by the DGCL or the certificate of incorporation or the
bylaws of the Company to adopt this Agreement and approve the Merger and the other transactions contemplated hereby.
Section
3.26 Brokers. Except for Petrie Parkman, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its
Subsidiaries, that is or will be payable by the Company or any of its Subsidiaries. The Company is solely responsible for the fees and expenses of Petrie Parkman as and to the extent set forth in the
engagement letter dated as of September 14, 2004. The Company has previously delivered to Parent a true and correct copy of such engagement letter.
Section
3.27 No Other Representations or Warranties. Except for the representations and warranties contained in
this Article III, neither the Company nor any other Person makes any other express or implied representation or warranty on behalf of the Company or any of its affiliates in connection with
this Agreement or the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Except as set forth in the disclosure letter delivered by Parent to the Company at or prior to the execution and delivery of this Agreement (the "Parent
Disclosofficer in 2004 in respect of Patina's 2003 fiscal year. Under the plan, "cause" includes acts of dishonesty constituting a felony and willful malfeasance or
misconduct; and "material change" includes a change in status, position or responsibilities other than a promotion and a reduction in base compensation or certain benefits. The approval of the merger
by Patina stockholders will constitute a change in control under the plan. The executive officers of Patina would be entitled to receive aggregate severance payments of approximately
$7.6 million, plus pro rated partial year bonuses for 2005, if the change in control plan were triggered with respect to all Patina executive officers.
Consulting Agreements
Noble Energy has agreed to enter into consulting agreements with each of Mr. Edelman and David J. Kornder, Patina's Executive Vice President, Chief
Financial Officer and Secretary. Pursuant to the proposed consulting agreements, Mr. Edelman and Mr. Kornder will serve as consultants to the combined company for a period of
12 months following the merger, in exchange for monthly retainers of $50,000 and $35,000, respectively.
Separation and Consulting Agreement
Patina has entered into a separation and consulting agreement with Jay W. Decker, Patina's former President and director. Pursuant to this agreement,
Mr. Decker resigned as President and director of Patina effective December 22, 2004 and agreed to serve as a consultant to Patina from such date until the later of
(1) June 30, 2005 and (2) 90 days after the effective time of the merger, in consideration of a monthly retainer of $50,000. In addition, pursuant to the agreement,
Mr. Decker's stock options and restricted stock awards will continue to vest in accordance with their existing vesting schedule (subject to acceleration on closing of the merger) and
Mr. Decker will receive a payment of approximately $2.9 million, the amount he would have received under Patina's change in control plan had he continued as President, if the merger is
completed on or before December 31, 2005.
Continuing Employment with Noble Energy
Subject to completion of the merger, Noble Energy has offered continuing employment following the merger to each of Andrew Ashby, Ted Brown, Scott Reasoner,
Donald Shaw and David Siple, which offers have been accepted. These individuals will receive base salary and annual bonus opportunities that are substantially similar to those currently provided by
Patina, and they will participate in Noble Energy's short- and long-term incentive plans and other employee benefit plans and programs in which similarly situated management employees of Noble Energy
participate. Each of these individuals will also be paid certain nonrecurring payments by Noble Energy during their first year of employment with Noble Energy, the total amount of which will be
roughly equal to the cash benefits to which the individual would have been entitled under the Patina's change in control plan had the individual's employment been terminated without "cause" (as
described above, "—Change in Control Plan").
98
Deferred Compensation Plan
Patina maintains two deferred compensation plans through which its executive officers and certain other employees defer the receipt of compensation and receive
contributions from Patina. The plans provide that, immediately prior to a change in control, the interests of participants in the plans automatically vest. In addition, a participant may be entitled
to a tax gross-up payment in the event that he or she is required to accept a plan distribution prior to the date the participant had otherwise elected for such distribution under the plan
as a result of a participant's termination without cause in connection with a change in control, or as a result of any amendment or termination of a plan in connection with a change in control. The
approval of the merger by Patina stockholders will constitute a change in control under the plans.
The
merger agreement provides that Noble Energy will take certain actions, and refrain from taking certain actions, with respect to the deferred compensation plans regarding compliance
with Section 409A of the Internal Revenue Code, and that Noble Energy will indemnify and hold harmless the participants in the plans, including Patina's executive officers, on an after-tax
basis from any tax or interest penalty imposed under Section 409A as a result of a failure by Noble Energy to comply with those obligations. These provisions of the merger agreement are further
described above under the heading "—Employee Benefit Plans and Existing Agreements."
Indemnification and Insurance
The merger agreement provides that, after the effective time of the merger, Noble Energy will indemnify, defend and hold harmless the present and former officers,
directors, employees and agents of Patina and its subsidiaries in such capacities to the fullest extent that Patina or its subsidiaries would have been required to do so in accordance with the
provisions of each indemnification or similar agreement between Patina or any of its subsidiaries and any such individual, in each case against any losses, damages, expenses or liabilities resulting
from any claim, liability, loss, damage, cost or expense, asserted against, or incurred by, any such individual that is based on the fact that such individual is or was a director, officer, employee
or agent of Patina or its subsidiaries and arising out of actions or omissions or alleged actions or omissions occurring at or prior to the effective time of the merger. Noble Energy will also take
all necessary actions to ensure that its director's and officer's liability insurance continues to cover Messrs. Edelman and Berenson and each officer and director of Patina, in each case so
long as they remain employed or retained by Noble Energy or any affiliate of Noble Energy (including the surviving corporation) as an officer or director and, to the extent Noble Energy's current
directors' and officers' liability insurance policy covers consultants, as a consultant, on terms that are no less favorable than those enjoyed by Noble Energy's other directors and officers.
In
addition, the merger agreement provides that prior to the closing of the merger, Patina will purchase, and after the effective time of the merger the surviving corporation will
maintain, directors' and officers' liability insurance covering, for a period of six years after the effective time of the merger, the directors and officers of Patina and its subsidiaries who are
currently covered by Patina's existing directors' and officers' liability insurance with respect to claims arising from facts or events that occurred before the effective time of the merger, on terms
and conditions no less favorable to such directors and officers than those in effect on December 15, 2004; provided, however, that the aggregate annual ure Letter") (each section of which qualifies the correspondingly numbered representation, warranty or covenant to the extent specified therein and such other representations, warranties or
covenants to the extent a matter in such section is disclosed in such a way as to make its relevance to such other representation, warranty or covenant reasonably apparent), Parent and Purchaser,
jointly and severally, represent and warrant to the Company as follows:
Section 4.1 Organization.
(a) Each
of Parent, Purchaser and their respective Subsidiaries is a corporation or other entity duly organized, validly existing, and in good standing under the Laws of the
jurisdiction of its
A-25
incorporation
or organization, and has all requisite corporate or other power and authority to own, lease, use and operate its properties and to carry on its business as it is now being conducted.
(b) Each
of Parent, Purchaser and their respective Subsidiaries is duly qualified or licensed to do business as a foreign corporation and is in good standing in each
jurisdiction in which such qualification or licensing is required, except where the failure to be so qualified or licensed individually or in the aggregate has not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on Parent.
(c) Each
of Parent and Purchaser has previously delivered to the Company a complete and correct copy of each of its certificate of incorporation and bylaws in each case as
amended (if so amended) to the date of this Agreement, and has made available the certificate of incorporation, bylaws or other organizational documents of each of its Subsidiaries, in each case as
amended (if so amended) to the date of this Agreement. Neither Parent, Purchaser nor any of their respective Subsidiaries is in violation of its certificate of incorporation, bylaws or similar
governing documents.
(d) Section 4.1(d)
of the Parent Disclosure Letter sets forth a true and correct list of all of the Subsidiaries of Parent and Purchaser and their respective
jurisdictions of incorporation or organization. The respective certificates or articles of incorporation and bylaws or other organizational documents of the Subsidiaries of Parent and Purchaser do not
contain any provision limiting or otherwise restricting the ability of Parent or Purchaser to control any of their respective Subsidiaries in any material respect.
Section 4.2 Capitalization.
(a) As
of the date of this Agreement, the authorized capital stock of Parent consists of 100,000,000 shares of common stock, par value $3.331/3 per share (the
"Parent Common Stock"), 4,000,000 shares of preferred stock, par value $1.00 per share (the "Parent Preferred Stock"), 630,000 shares of which have been designated Series A junior participating
preferred stock and 125,000 shares of which have been designated Series B mandatorily convertible preferred stock. As of November 30, 2004, (i) 58,980,650 shares of Parent Common
Stock were issued and outstanding, (ii) 3,549,976 shares of Parent Common Stock were issued and held in the treasury of Parent, (iii) no shares of Parent Preferred Stock were issued and
outstanding, and (iv) 5,610,347 shares of Parent Common Stock were reserved for issuance upon exercise of options under the 1988 Non-Employee Director Stock Option Plan, as amended,
and the 1992 Stock Option and Restricted Stock Plan, as amended (the "Parent Stock Options"). Neither Parent nor any of its Subsidiaries directly or indirectly owns any shares of Company Common Stock.
No bonds, debentures, notes or other indebtedness having the right to vote (or convertible into or exchangeable for securities having the right to vote) on any matters on which stockholders of Parent
may vote are issued or outstanding. All the issued and outstanding shares of Parent's capital stock are, and all shares which may be issued or granted pursuant to the exercise of the Parent Stock
Options will be, when issued or granted in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and non-assessable and free of preemptive rights, with
no personal liability attaching to ownership thereof. Except as set forth above, there are no existing (x) options, warrants, preemptive rights, subscriptions, calls or other rights,
convertible securities, agreements, claims or commitments of any character obligating Parent or any of its Subsidiaries to issue, transfer or sell any shares of capital stock or other equity interest
in Parent or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests, (y) contractual obligations of Parent or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any capital stock of Parent or any of its Subsidiaries or any such securities or agreements listed in clause (x) of this sentence, or (z) voting
trusts or similar agreements to which Parent or any of its Subsidiaries is a party with respect to the voting of the capital stock of Parent or any of its Subsidiaries. At the Effective Time, there
will not be any outstanding subscriptions, options, warrants, calls, preemptive rights, subscriptions, or other rights, convertible or exchangeable securities, agreements, claims or commitments of any
character by which Parent or any of its Subsidiaries will be bound calling
A-26
for
the purchase or issuance of any shares of the capital stock of Parent or any of its Subsidiaries or securities convertible into or exchangeable for such shares or any other such securities or
agreements.
(b) All
of the issued and outstanding shares of capital stock (or equivalent equity interests of entities other than corporations) of each of Parent's Subsidiaries are
beneficially owned, directly or indirectly, by Parent free and clear of any Lien, other than statutory Liens for Taxes not yet due and payable and such restrictions as may exist under applicable Law,
and all such shares or other ownership interests have been duly authorized and validly issued and are fully paid and non-assessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof.
Section
4.3 Authorization; Validity of Agreement. premiums for such insurance at any time
during such period may not exceed 175% of the per annum rate of premium currently paid by Patina and its subsidiaries for such insurance on December 15, 2004. Patina and Noble Energy have
agreed that, in the event that such insurance cannot be obtained for 175% of the per annum rate of premium currently paid by Patina, Noble Energy will nonetheless be obligated to provide such
directors' and officers' liability insurance as may be obtained for such sum.
99
Restrictions on Resales by Affiliates
Shares of Noble Energy common stock to be issued to Patina stockholders in the merger have been registered under the Securities Act, as amended, and may be traded
freely and without restriction by those stockholders not deemed to be affiliates (as that term is defined under the Securities Act) of Patina. Any subsequent transfer of shares, however, by any person
who is an affiliate of Patina at the
time the merger is submitted for a vote of the Patina stockholders will, under existing law, require either:
- •
- the
further registration under the Securities Act of the Noble Energy common stock to be transferred;
- •
- compliance
with Rule 145 promulgated under the Securities Act, which permits limited sales under certain circumstances; or
- •
- the
availability of another exemption from registration.
An
"affiliate" of Patina is a person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, Patina. These
restrictions are expected to apply to the directors and executive officers of Patina and the holders of 10% or more of the outstanding Patina common stock. The same restrictions apply to the spouses
and certain relatives of those persons and any trusts, estates, corporations or other entities in which those persons have a 10% or greater beneficial or equity interest. Noble Energy will give stop
transfer instructions to the transfer agent with respect to the shares of Noble Energy common stock to be received by persons subject to these restrictions, and the certificates for their shares will
be appropriately legended.
100
PROPOSED AMENDMENT TO NOBLE ENERGY'S CERTIFICATE OF INCORPORATION
Noble Energy presently is authorized to issue 104 million shares of capital stock, divided into 100 million shares of Noble Energy common stock and
4.0 million shares of preferred stock. As of March 31, 2005, 62,787,416 shares of Noble Energy common stock were issued, including 3,549,976 treasury shares, and 59,237,440 shares
of Noble Energy common stock were outstanding. As of March 31, 2005, a total of 5,356,477 shares of Noble Energy common stock were available for delivery in the future in respect of awards that
have been or are authorized to be made under Noble Energy's stock based compensation plans, which amount did not include an estimated 4.0 million shares that would become issuable upon
conversion of existing Patina stock options under the terms of the merger agreement. Based upon the number of shares of Patina common stock outstanding on April 7, 2005, approximately
27.8 million shares of Noble Energy common stock are estimated to be issued in the merger upon the conversion of Patina common stock. As of March 31, 2005, no shares of preferred stock
of Noble Energy were issued and no other class of capital stock of Noble Energy was authorized.
The
Noble Energy board of directors has approved an amendment to Noble Energy's certificate of incorporation to increase the number of authorized shares of Noble Energy common stock from
100 million to 250 million. Noble Energy has a sufficient number of authorized shares under Noble Energy's certificate of incorporation to complete the merger. Therefore, approval of the
amendment to increase the number of authorized shares of common stock is not a condition to the merger.
The
Noble Energy board of directors believes that an increase is advisable and in the best interests of Noble Energy and Noble Energy stockholders. Following the merger, in the event
that the amendment to Noble Energy's certificate of incorporation is not approved, Noble Energy will have approximately 13.0 million authorized and unissued shares of Noble Energy common stock, which
amount includes those unissued shares of Noble Energy common stock reserved for issuance in respect of awards that have been or are authorized to be made under Noble Energy's Stock based Compensation
Plans and existing Patina options that will convert into Noble Energy options under the terms of the merger agreement. The Noble Energy board of directors believes that an increase in authorized
shares of Noble Energy common stock to 250 million will give Noble Energy greater flexibility in the future by allowing Noble Energy the latitude to declare stock dividends or stock splits, to
use its common stock to acquire other assets (for example, the merger) or to issue its common stock for other corporate purposes, including stock dividends, raising additional capital, issuance
pursuant to employee and director stock plans and possible future acquisitions. There are no current plans, understandings or arrangements for issuing a material number of additional shares of Noble
Energy common stock from the additional shares proposed to be authorized pursuant to the amendment.
The
issuance of shares of Noble Energy common stock, including the additional shares that would be authorized if the proposed amendment is adopted, may dilute the present equity
ownership position of current holders of Noble Energy common stock and may be made without stockholder approval, unless otherwise required by applicable laws or stock exchange regulations. The
amendment might also have the effect of discouraging an attempt by another person or entity through the acquisition of a substantial number of shares of Noble Energy common stock, to acquire control
of Noble Energy with a view to consummating a merger, sale of all or any part of Noble Energy's assets, or a similar transaction, because the issuance of new shares could be used to dilute the stock
ownership of such person or entit Each of Parent and Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by Parent and Purchaser of this Agreement and the
consummation by Parent and Purchaser of the transactions contemplated hereby have been duly authorized by the respective Board of Directors of Parent and Purchaser. Except for the Required Parent
Vote, no other corporate proceedings on the part of Parent or Purchaser are necessary to authorize the execution, delivery and performance of this Agreement by Parent and Purchaser and the
consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent and Purchaser and, assuming due authorization, execution and delivery of this
Agreement by the Company, is a valid and binding obligation of each of Parent and Purchaser enforceable against it in accordance with its terms, except as such enforcement may be subject to or limited
by (i) bankruptcy, insolvency or other similar Laws, now or hereafter in effect, affecting creditors' rights generally and (ii) the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
Section 4.4 No Violations; Consents and Approvals.
(a) Neither
the execution, delivery and performance of this Agreement by Parent and Purchaser nor the consummation by Parent and Purchaser of the Merger or any other
transactions contemplated hereby will (i) violate any provision of the certificate of incorporation or the bylaws of Parent or Purchaser, or the certificate of incorporation, bylaws or similar
governing documents of any of Parent's or Purchaser's respective Subsidiaries, (ii) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a
default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination, cancellation or amendment under,
accelerate the performance required by, or result in the creation of any Lien upon any of the respective properties or assets of Parent or Purchaser or any of their respective Subsidiaries under, or
result in the acceleration or trigger of any payment, time of payment, vesting or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, guarantee, other evidence of indebtedness, lease, license, contract, collective bargaining agreement, agreement or other legally binding instrument or
obligation to which Parent or Purchaser or any of their respective Subsidiaries is a party or by which any of them or any of their respective assets or properties may be bound, or
(iii) conflict with or violate any Laws applicable to Parent or Purchaser, any of their respective Subsidiaries or any of their respective properties or assets; except in the case of
clause (ii), for such conflicts, violations, breaches, defaults or Liens which individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material
Adverse Effect on Parent.
(b) No
material filing or registration with, declaration or notification to, or order, authorization, consent or approval of, any Governmental Entity or any other Person is
required in connection with the execution, delivery and performance of this Agreement by Parent and Purchaser or the consummation by Parent and Purchaser of the Merger or any other transactions
contemplated hereby, except for (i) the filing with the SEC of the Proxy Statement in definitive form relating to the meetings of the Company's and Parent's stockholders to be held in
connection with this Agreement and the
A-27
transactions
contemplated hereby, and the filing and declaration of effectiveness of the S-4 in which the Proxy Statement will be included as a prospectus, (ii) the adoption of the
Parent Proposal by the Required Parent Vote, (iii) such filings, authorizations or approvals as may be required under (A) the HSR Act or (B) any other Competition Laws, rules or
regulations, (iv) the filing of the Certificate of Merger with the Secretary of State and (v) such consents, approvals, orders, authorizations, notifications, registrations, declarations
and filings (x) as are customarily made or obtained in connection with the transfer of interests in or change of control of ownership of oil and gas properties and (y) the failure of
which to be obtained or made, individually or in the aggregate, has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent.
Section 4.5 SEC Reports and Financial Statements.
(a) Parent
has timely filed with the SEC all forms and other documents (including exhibits and other information incorporated therein) required to be filed by it since
January 1, 2001 (such documents, the "Parent SEC Documents"), including (i) its Annual Reports on Form 10-K for the years ended December 31, 2001,
December 31, 2002 and December 31, 2003, respectively, (ii) its Quarterly Reports on Form 10-Q for the periods ended March 31, June 30 and
September 30, 2004, (iii) all proxy statements relating to meetings of stockholders of Parent since January 1, 2001 (in the form mailed to stockholders), and (iv) all other
forms, reports and registration statements required to be filed by Parent with the SEC since January 1, 2001. As of their respective dates, the Parent SEC Documents, including the financial
statements and schedules provided therein or incorporated by reference therein, (x) did not contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading and (y) complied in all material respects with the
applicable requirements of the Exchange Act, the Securities Act and SOX, as the case may be.
(b) The
December 31, 2003 consolidated balance sheet of Parent and the related consolidated statements of income, changes in stockholders' equity and cash flows
(including, in each case, the related notes, where applicable), as reported in Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed with the
SEC under the Exchange Act, and the unaudited consolidated balance sheets of Parent and its Subsidiaries (including the related notes, where applicable) as of September 30, 2004 and the related
(i) unaudited consolidated statements of income for the three and nine-month periods then ended and (ii) unaudited consolidated statements of cash flows and changes in
stocky.
All
shares of Noble Energy common stock, including those now authorized and those that would be authorized by the proposed amendment to Noble Energy's certificate of incorporation, are
equal in rank and have the same voting, dividend and liquidation rights. Holders of Noble Energy common stock do not have preemptive rights.
101
Pursuant
to Noble Energy's rights plan, one series A junior participating preferred stock purchase right will be issued with each share of Noble Energy common stock. See
"Description of Noble Energy Capital Stock—Rights Agreement" below.
The Noble Energy board of directors unanimously recommends that Noble Energy stockholders vote "FOR" approval of the amendment to Noble Energy's certificate of
incorporation.
To
effect the increase in authorized shares of Noble Energy common stock, it is proposed that the first sentence of Article Fourth of Noble Energy's Restated Certificate of Incorporation
be amended to read in its entirety as follows:
"The
total number of shares of all classes of stock which the Corporation shall have authority to issue is 254,000,000 shares, consisting of (1) 4,000,000 shares of Preferred Stock, $1.00 par
value ("Preferred Stock"), and (2) 250,000,000 shares of Common Stock, $3.331/3 par value ("Common Stock")."
The
affirmative vote of the holders of a majority of the outstanding shares of Noble Energy common stock is required to approve the amendment to Noble Energy's certificate of
incorporation. Unless a contrary choice is specified, proxies solicited by the Noble Energy board of directors will be voted for the amendment.
102
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information and explanatory notes present how the combined financial statements of Noble Energy and
Patina may have appeared had the businesses actually been combined as of December 31, 2004 (with respect to the balance sheet information using currently available fair value information) or as
of January 1, 2004 (with respect to statements of operations information). The unaudited pro forma condensed combined financial information shows the impact of the merger of Noble Energy and
Patina on the companies' respective historical financial positions and results of operations under the purchase method of accounting with Noble Energy treated as the acquirer. Under this method of
accounting, the assets and liabilities of Patina will be recorded by Noble Energy at their estimated fair values as of the date the merger is completed. The unaudited pro forma condensed combined
financial information combines the historical financial information of Noble Energy and Patina as of and for the year ended December 31, 2004. The unaudited pro forma condensed combined balance
sheet as of December 31, 2004 assumes the merger was completed on that date. The unaudited pro forma condensed combined statements of operations give effect to the merger as if the merger had
been completed on January 1, 2004.
The
merger agreement was announced on December 16, 2004 and provides for Noble Energy to issue approximately 27.3 million shares of common stock and $1.1 billion in
cash consideration to Patina common stockholders (in each case subject to upward adjustment in the event that any shares of Patina common stock are issued in accordance with the merger agreement
pursuant to the exercise of Patina stock options or Patina warrants or otherwise). The unaudited pro forma condensed combined financial information has been derived from and should be read together
with the historical consolidated financial statements and the related notes of both Noble Energy and Patina, which are incorporated in this document by reference.
The
unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the financial results of the combined companies had the
companies actually been combined and had the impact of possible revenue enhancements, expense efficiencies, asset dispositions and share repurchases, among other factors, been considered. In addition,
as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial information, the allocation of the purchase price reflected in the pro forma condensed
combined financial information is subject to adjustment and may vary from the actual purchase price allocation that will be recorded upon the effective time of the merger.
103
Noble Energy, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Combined Balance Sheet
As of December 31, 2004
(Amounts in thousands)
|
|
Noble
Energy
|
|
Patina
|
|
Adjustments
|
|
Pro
Forma
Combined
|
|
| Assets |
|
|
|
|
|
|
|
|
|
A-28
independent
public accounting firm with respect to Parent and has not resigned or been dismissed as independent public accountants of Parent.
Section 4.6 Absence of Certain Changes.
(a) Except
as disclosed in the Parent SEC Documents filed by Parent with the SEC prior to the date of this Agreement (the "Specified Parent SEC Documents"), to the extent
that it is reasonably apparent that the disclosure in the Specified Parent SEC Documents is responsive to the matters set forth in this Section 4.6(a), since September 30, 2004,
(i) Parent and its Subsidiaries have conducted their respective operations only in the ordinary course consistent with past practice and (ii) there has not occurred or continued to exist
any event, change, occurrence, effect, fact, circumstance or condition which, individually or in the aggregate, has had, or would be reasonably likely to have or result in, a Material Adverse Effect
on Parent.
(b) Except
as disclosed in the Specified Parent SEC Documents, to the extent that it is reasonably apparent that the disclosure in the Specified Parent SEC Documents is
responsive to the matters set forth in this Section 4.6(b), since September 30, 2004 to the date of this Agreement, neither Parent nor any of its Subsidiaries has (i) except as
required pursuant to the terms of the Parent Plans as in effect on September 30, 2004 or as required to comply with applicable Law, (A) increased or agreed to increase the wages,
salaries, compensation, pension, or other fringe benefits or perquisites payable to any officer, employee or director from the amount thereof in effect as of September 30, 2004, other than
increases in wages, salaries and other cash compensation in the ordinary course of business consistent with past practice, (B) granted any severance or termination pay, (C) entered into
or made any loans to any of its officers, directors or employees or made any change in its borrowing or lending arrangements for or on behalf of any of such Persons or (D) adopted or amended,
or accelerated the payment or vesting of benefits under, any Parent Plan, (ii) declared, set aside or paid any dividend or other distribution (whether in cash, stock or property) with respect
to any of the Parent's capital stock, other than regular quarterly cash dividends on the Parent Common Stock, (iii) effected or authorized any split, combination or reclassification of any of
the Parent's capital stock or any issuance thereof or issued any other securities in respect of, in lieu of or in substitution for shares of the Parent's capital stock, except for issuances of Parent
Common Stock upon the exercise of Parent Options, in each case in accordance with their terms at the time of exercise, (iv) changed in any material respect, or had knowledge of any reason that
required any material change in, any accounting methods (or underlying assumptions), principles or practices of Parent or its Subsidiaries, including any material reserving, renewal or residual
method, practice or policy, (v) made any material Tax election or settled or compromised any material income Tax liability, (vi) made any material change in the policies and procedures
of Parent or its Subsidiaries in connection with trading activities, (vii) sold, leased, exchanged, transferred or otherwise disposed of any material Parent Asset other than in the ordinary
course consistent with past practice, (viii) revalued, or had knowledge of any reason that required revaluing, any of the Parent Assets in any material respect, including writing down the value
of any of the Parent Assets or writing off notes or accounts receivable, in each case in any material respect and other than in the ordinary course of business consistent with past practice, or
(ix) made any agreement or commitment (contingent or otherwise) to do any of the foregoing.
Section
4.7 Absence of Undisclosed Liabilities. Except as disclosed in the Specified Parent SEC Documents, to
the extent that it is reasonably apparent that the disclosure in the Specified Parent SEC Documents is responsive to the matters set forth in this Section 4.7, neither Parent nor any of its
Subsidiaries has any liabilities or obligations (accrued, contingent or otherwise), except for (i) liabilities that individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on Parent, (ii) liabilities in respect of Litigation (which are the subject of Section 4.10), and (iii) liabilities under
Environmental Laws (which are the subject of Section 4.14). Neither Parent nor any of its Subsidiaries is in default in respect of the terms and conditions of any
A-29
indebtedness
or other agreement which individually or in the aggregate has had, or would be reasonably likely to have or result in, a Material Adverse Effect on Parent.
Section
4.8 Proxy Statement; Form S-D WIDTH="2%">
|
|
|
| Current Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Cash and cash equivalents |
|
$ |
179,794 |
|
$ |
3,024 |
|
$ |
(3,024 |
)(a) |
$ |
179,794 |
|
| |
Accounts receivable — trade, net |
|
|
407,349 |
|
|
83,444 |
|
|
— |
|
|
490,793 |
|
| |
Derivative financial instruments |
|
|
28,733 |
|
|
7,256 |
|
|
(7,256 |
)(a) |
|
28,733 |
|
| |
Materials and supplies inventories |
|
|
12,109 |
|
|
13,592 |
|
|
— |
|
|
25,701 |
|
| |
Income taxes receivable |
|
|
— |
|
|
7,137 |
|
|
— |
|
|
7,137 |
|
| |
Deferred taxes |
|
|
13,039 |
|
|
54,817 |
|
|
25,144 |
(a) |
|
93,000 |
|
| |
Other current assets |
|
|
28,278 |
|
|
11,950 |
|
|
(11,950 |
)(a) |
|
28,278 |
|
| |
Probable insurance claims |
|
|
65,000 |
|
|
— |
|
|
— |
|
|
65,000 |
|
| |
|
|
|
|
|
|
|
|
|
(b) With
respect to each Parent Plan, Parent has heretofore delivered to the Company complete and correct copies of each of the following documents (including all amendments
to such documents), as applicable:
(i) the
Parent Plan or a written description of any Parent Plan not in writing;
(ii) a
copy of the most recent annual report or Internal Revenue Service Form 5500 Series, including all related reports required therewith;
(iii) a
copy of the most recent Summary Parent Plan Description ("Parent SPD"), together with all Summaries of Material Modification issued with respect to such Parent SPD
and all other material employee communications relating to each Parent Plan distributed by Parent or any of its Subsidiaries from December 31, 2003 to the date of this Agreement;
(iv) if
the Parent Plan or any obligations thereunder are funded through a trust or any other funding vehicle or through insurance, the trust or other funding agreement and
the latest financial statements thereof or evidence of insurance coverage thereof;
(v) all
contracts relating to the Parent Plan with respect to which Parent or any Parent ERISA Affiliate may have any material liability, including insurance contracts,
investment management agreements, subscription and participation agreements and record keeping agreements;
(vi) if
the Parent Plan is intended to qualify under Section 401(a) of the Code, the most recent determination letter received from the Internal Revenue Service; and
A-30
(vii) all
material communications between Parent or any Parent ERISA Affiliate and any Governmental Entity.
(c) No
Parent Plan in effect as of the date hereof is subject to Title IV or Section 302 of ERISA. No liability under Title IV or Section 302 of ERISA has been
incurred by Parent or any Parent ERISA Affiliate that has not been satisfied in full, and no condition exists that would be reasonably likely to result in Parent or any Parent ERISA Affiliate
incurring any such liability, other than liability for premiums due to the Pension Benefit Guaranty Corporation (which premiums have been paid when due). Insofar as the representation made in this
Section 4.9(c) applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, such representation is made with respect to any employee benefit plan, program, agreement or arrangement subject to
Title IV of ERISA to which Parent or any Parent ERISA Affiliate made, or was required to make, contributions during the five-year period ending on the last day of the most recent plan year
ended prior to the Closing Date.
(d) None
of Parent, any Parent ERISA Affiliate, any of the Parent Plans, any trust created thereunder and, to the knowledge of Parent, any trustee or administrator thereof
has engaged in a transaction or has taken or failed to take any action with respect to a Parent Plan in connection with which Parent, any of its Subsidiaries or any Parent ERISA Affiliate would be
reasonably likely to be subject to a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a Tax imposed pursuant to Section 4975(a) or (b), 4976 or 4980B of the
Code.
(e) All
contributions required to be made by Parent and its Subsidiaries with respect to any Parent Plan on or prior to the Closing Date have been timely made or are
reflected on the consolidated balance sheet of Parent dated as of September 30, 2004 contained in the Specified Parent SEC Documents. Since September 30, 2004, there has been no
amendment to, written interpretation of or announcement (whether or not written) by Parent or any Parent ERISA Affiliate relating to, or change in the terms of employee participation or coverage
under, any Parent Plan that would increase materially the expense of maintaining such Parent Plan above the level of expense incurred in respect thereof for the most recent fiscal year ended prior to
the date hereof.
(f) Each
of the Parent Plans has been operated and administeredFF" VALIGN="BOTTOM">
|
|
|
Total Current Assets |
|
|
734,302 |
|
|
181,220 |
|
|
2,914 |
|
|
918,436 |
|
| |
|
|
|
|
|
|
|
|
|
| Property, Plant and Equipment, at cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Proved properties |
|
|
4,142,078 |
|
|
1,884,003 |
|
|
370,597 |
(a) |
|
6,396,678 |
|
| |
Unproved properties |
|
|
150,483 |
|
|
9,066 |
|
|
1,012,734 |
(a) |
|
1,172,283 |
|
| |
Other PP&E |
|
|
56,707 |
|
|
18,622 |
|
|
(8,681 |
)(a) |
|
66,648 |
|
| |
Less: accumulated depreciation, depletion and amortization |
|
|
(2,016,318 |
) |
|
(690,075 |
) |
|
690,075 |
(a) |
|
(2,016,318 |
) |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total property, plant and equipment, net |
|
|
2,332,950 |
|
|
1,221,616 |
|
|
2,064,725 |
|
|
5,619,291 |
|
| |
|
|
|
|
|
|
|
|
|
| Investment in Unconsolidated Subsidiaries |
|
|
231,795 |
|
|
— |
|
|
(g) With
respect to each of the Parent Plans that is intended to be "qualified" within the meaning of Section 401(a) of the Code, Parent has received a currently
effective determination letter from the IRS stating that it is so qualified, such letter has not been revoked, and, to the knowledge of Parent, no event has occurred that would be reasonably likely to
affect such qualified status. No fund established under a Parent Plan is intended to satisfy the requirements of Section 501(c)(9) of the Code.
(h) No
amounts payable under the Parent Plans as a result of the transactions contemplated hereby will fail to be deductible for federal income Tax purposes by virtue of
Sections 280G or 162(m) of the Code.
(i) No
Parent Plan provides death, medical, hospitalization or similar benefits (whether or not insured) with respect to any current or former employee of Parent, its
Subsidiaries or any Parent ERISA Affiliate after retirement or other termination of service, other than (i) coverage mandated by applicable Law, (ii) death benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA or (iii) benefits, the full direct cost of which is borne by the current or former employee (or beneficiary thereof).
(j) The
consummation of the transactions contemplated by this Agreement will not, either alone or in combination with any other event, (i) entitle any current or
former employee, officer or director of Parent, any of its Subsidiaries or any Parent ERISA Affiliate to severance pay, unemployment compensation or any other similar termination payment under any
Parent Plan, or (ii) accelerate the time of payment or vesting of, increase the amount of or otherwise enhance any benefit due any such employee, officer or director under any Parent Plan.
A-31
(k) To
the knowledge of Parent, neither Parent nor any Subsidiary has contributed to a nonconforming group health plan (as defined in Section 5000(c) of the Code) and
no Parent ERISA Affiliate or any of its Subsidiaries has incurred a Tax under Section 5000(a) of the Code which is or could become a liability of Parent or any of its Subsidiaries.
(l) There
is no pending or, to the knowledge of Parent, threatened material Litigation by, on behalf of or against any Parent Plan by any participant (or beneficiary
thereof) in such Parent Plan or otherwise involving such Parent Plan (other than routine claims for benefits).
Section 4.10 Litigation; Compliance with Law.
(a) Except
as disclosed in the Specified Parent SEC Documents, (i) there is no Litigation pending or, to the knowledge of Parent, threatened in writing against,
relating to or naming as a party thereto Parent or any of its Subsidiaries, any of their respective properties or assets or any of Parent's officers or directors (in their capacities as such),
(ii) there is no agreement, order, judgment, decree, injunction or award of any Governmental Entity against and/or binding upon Parent, any of its Subsidiaries or any of Parent's officers or
directors (in their capacities as such) that, in the case of either clause (i) or (ii), individually or in the aggregate has had, or would be reasonably likely to have or result in, a Material
Adverse Effect on Parent, and (iii) there is no Litigation that Parent or any of its Subsidiaries has pending against other parties, where such Litigation is intended to enforce or preserve
material rights of Parent or any of its Subsidiaries.
(b) Each
of Parent and its Subsidiaries has complied, and is in compliance, in all material respects with all Laws and Permits which affect the respective businesses of
Parent or any of its Subsidiaries, the Parent Real Property and/or the Parent Assets, and Parent and its Subsidiaries have not been and are not in violation in any material respect of any such Law or
Permit; nor has any notice, charge, claim or action has been received by Parent or any of its Subsidiaries or been filed, commenced, or to the knowledge of Parent, threatened against Parent or any of
its Subsidiaries alleging any violation of the foregoing.
(c) Parent
and its Subsidiaries hold all Permits necessary for the ownership, leasing, operation, occupancy and use of the Parent Real Property, the Parent Assets and the
conduct of their respective businesses as currently conducted ("Parent Permits"), except where the failure to hold such Parent Permits individually or in the aggregate has not had, and would not be
reasonably likely to have or result in, a Material Adverse Effect on Parent. Neither Parent nor any of its Subsidiaries has received notice that any Parent Permit will be terminated or modified or
cannot be renewed in the ordinary course of business, and Parent has no knowledge of any reasonable basis for any such termination, modification or nonrenewal, in each case except for any such
terminations, modifications or nonrenewals that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent. The
execution, delivery and performance of this Agreement and the consummation of the Merger or any other transactions contemplated hereby do not and will not violate any Parent Permit, or result in any
termination, modification or nonrenewal thereof, except in each case for any such violations, terminations, modifications or nonrenewals that individually or in the aggregate have not had, and would
not be reasonably likely to have or result in, a Material Adverse Effect on Parent.
(d) This
Section 4.10 does not relate to matters with respect to (i) Parent Plans, ERISA and other employee benefit matters (which are the subject of
Section 4.9), (ii) Tax Laws and other Tax matters (which are the subject of Section 4.13), (iii) Environmental Laws and other environmental matters (which are the subject
of Section 4.14), and (iv) labor matters (which are the subject of Section 4.17).
Section 4.11 Intellectual Property.
(a) Parent
and its Subsidiaries own, or possess sufficient and legally enforceable licenses or other rights to use, any and all Technology and IntellectuaNT SIZE=2>— |
|
|
231,795 |
|
| Other Assets |
|
|
144,124 |
|
|
26,203 |
|
|
29,810 |
(a) |
|
200,137 |
|
| Goodwill |
|
|
— |
|
|
— |
|
|
1,103,159 |
(a) |
|
1,103,159 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Assets |
|
$ |
3,443,171 |
|
$ |
1,429,039 |
|
$ |
3,200,608 |
|
$ |
8,072,818 |
|
| |
|
|
|
|
|
|
|
|
|
| Liabilities and Shareholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Accounts payable — trade |
|
$ |
431,521 |
|
$ |
105,822 |
|
$ |
— |
|
$ |
537,343 |
|
| |
Derivative financial instruments |
|
|
50,304 |
|
|
151,512 |
|
|
(151,512 |
)(a) |
|
50,304 |
|
| |
Asset retirement obligation |
|
|
79,568 |
|
|
— |
|
|
— |
|
|
79,568 |
|
| |
Interest payable |
|
|
11,439 |
|
l Property
necessary for the conduct of the business and operations of Parent and its Subsidiaries as currently conducted, free and clear of any Liens (except for any Permitted Liens).
(b) To
the knowledge of Parent, the conduct of the business of Parent and its Subsidiaries does not infringe, conflict with or otherwise violate in any material respect any
Intellectual Property of any Person, and none of Parent or any of its Subsidiaries has received notice or has knowledge of any such material infringement, conflict or other violation.
A-32
Section 4.12 Material Contracts.
(a) Except
as disclosed in the Specified Parent SEC Documents, to the extent that it is reasonably apparent that the disclosure in the Specified Parent SEC Documents is
responsive to the matters set forth in this Section 4.12(a), as of the date of this Agreement, neither Parent nor any of its Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) which is a material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed after the
date of this Agreement, (ii) which materially restrains, limits or impedes Parent's or any of its Subsidiaries', or will materially restrain, limit or impede the Surviving Corporation's,
ability to compete with or conduct any business or any line of business, including geographic limitations on Parent's or any of its Subsidiaries' or the Surviving Corporation's activities,
(iii) which is a material production sharing agreement, joint venture or operating agreement, balancing agreement, farm-out or farm-in agreement, enhanced oil recovery
agreement, unitization and pooling agreement or other similar contract or agreement relating to the exploration, development and production of oil and natural gas, (iv) which is a material
take-or-pay agreement or other similar agreement that entitles purchasers of production to receive delivery of Hydrocarbons without paying therefor, or (v) which is
otherwise material to Parent and its Subsidiaries taken as a whole. Each contract, arrangement, commitment or understanding of the type described in this Section 4.12(a), whether or not set
forth in Section 4.12(a) of the Parent Disclosure Letter or disclosed in the Specified Parent SEC Documents, is referred to herein as a "Parent Material Contract." Parent has previously made
available to the Company true, complete and correct copies of each Parent Material Contract.
(b) (i) Each
Parent Material Contract is valid and binding and in full force and effect, (ii) Parent and each of its Subsidiaries has performed all obligations
required to be performed by it to date under each Parent Material Contract, (iii) no event or condition exists which constitutes or, after notice or lapse of time or both, would constitute, a
default on the part of Parent or any of its Subsidiaries under any such Parent Material Contract and (iv) to the knowledge of Parent, no other party to such Parent Material Contract is in
default in any respect thereunder, except in each case where there has not been, and would not be reasonably likely to be, individually or in the aggregate, a material adverse effect on the rights or
remedies of Parent or its Subsidiaries under such Parent Material Contracts.
Section 4.13 Taxes.
(a) (i) All
material Returns required to be filed by or with respect to Parent, its Subsidiaries and each Parent Consolidated Group have been timely filed in
accordance with all applicable Laws and all such Returns are true, correct and complete in all material respects, (ii) Parent, its Subsidiaries and each Parent Consolidated Group have timely
paid all material Taxes due or claimed to be due, (iii) all material Employment and Withholding Taxes and any other material amounts required to be withheld with respect to Taxes have been
either duly and timely paid to the proper Governmental Entity or properly set aside in accounts for such purpose in accordance with applicable Laws, (iv) the charges, accruals and reserves for
Taxes with respect to Parent, its Subsidiaries and each Parent Consolidated Group reflected in the balance sheet, dated as of December 31, 2003, included in Parent's Annual Report on
Form 10-K for the term ended December 31, 2003 (the "Parent Balance Sheet") are adequate under GAAP, (v) no material deficiencies or other claims for any Taxes
asserted or assessed, or, to the knowledge of Parent, proposed, against Parent or any of its Subsidiaries has not been resolved in all material respects, and (vi) there is no material
Litigation pending or, to the knowledge of any of Parent or its Subsidiaries, threatened or scheduled to commence, against or with respect to Parent or any of its Subsidiaries in respect of any Tax or
Return.
(b) The
statues of limitations for the federal income Tax Returns of Parent, its Subsidiaries and each Parent Consolidated Group have expired or otherwise have been closed
for all taxable periods ending on or before December 31, 2000.
A-33
(c) Since
January 1, 2001, neither Parent nor any of its Subsidiaries has been a member of any "affiliated group" (as defined in Section 1504(a) of the Code)
or has been included in any "consolidated," "unitary" or "combined" Return (other than Returns which include only Parent and any Subsidiaries of Parent) provided for under the Laws of the United
States, any foreign jurisdiction or any state or locality and none of Parent nor any of its Subsidiaries has any liability for the Taxes of any Person (other than Parent or any of its Subsidiaries)
under Treasury Regulation Section 1.1502-6 (or any similar provision under any state, local or foreign law), or as a successor or transferee.
(d) There
are no Tax sharing, allocation, indemnification or similar agreements or arrangements, whether written or unwritten, in effect under which Parent or any of its
Subsidiaries could be liable for any material Taxes of any Person other than Parent or any Subsidiary of Parent.
(e) Neither
Parent nor any of its Subsidiaries has entered into an agreement or waiver extending any statute of limitations rela |
— |
|
|
— |
|
|
11,439 |
|
| |
Other current liabilities |
|
|
27,320 |
|
|
28,135 |
|
|
— |
|
|
55,455 |
|
| |
Income taxes — current |
|
|
64,852 |
|
|
— |
|
|
— |
|
|
64,852 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Current Liabilities |
|
|
665,004 |
|
|
285,469 |
|
|
(151,512 |
) |
|
798,961 |
|
| |
|
|
|
|
|
|
|
|
|
| Deferred Income Taxes |
|
|
183,351 |
|
|
203,473 |
|
|
725,143 |
(a) |
|
1,111,967 |
|
| Deferred Compensation Liability |
|
|
— |
|
|
103,634 |
|
|
(123 |
)(a) |
|
103,511 |
|
| Asset Retirement Obligation |
|
|
175,415 |
|
|
31,461 |
|
|
— |
|
|
206,876 |
|
| Other Noncurrent Liabilities |
|
|
79,157 |
|
|
97,183 |
|
|
(66,167 |
)(a) |
|
110,173 |
|
| Long-Term Debt |
|
|
880,256 |
|
|
297,000 |
|
|
1,334,392 |
(a) |
|
2,511,648 |
|
| |
ting to the payment or collection of a
material amount of Taxes, nor is any request for such a waiver or extension pending.
(f) There
are no Liens for Taxes on any asset of Parent or its Subsidiaries, except for Permitted Liens.
(g) Neither
Parent nor any of its Subsidiaries is the subject of or bound by any material private letter ruling, technical advice memorandum, closing agreement or similar
material ruling, memorandum or agreement with any taxing authority.
(h) Neither
Parent nor its Subsidiaries has entered into, has any liability in respect of, or has any filing obligations with respect to, any "reportable transactions," as
defined in Section 1.6011-4(b)(1) of the Treasury Regulations.
(i) Neither
Parent nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for
any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date under
Section 481(c) of the Code (or any corresponding or similar provision of state, local or foreign Tax Law), (ii) "closing agreement" as described in Section 7121 of the Code (or
any corresponding or similar provision of state, local or foreign Tax Law) executed on or prior to the Closing Date, or (iii) deferred intercompany gain or excess loss account described in
Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law).
(j) Neither
Parent nor any of its Subsidiaries has taken or agreed to take any action or knows of any fact, agreement, plan or other circumstance that would be reasonably
likely to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
(k) Parent
has made available to the Company correct and complete copies of (i) all U.S. federal income Tax Returns of Parent and its Subsidiaries relating to taxable
periods ending on or after December 31, 2001, filed through the date hereof and (ii) any material audit report within the last four years relating to any material Taxes due from or with
respect to Parent or any of its Subsidiaries.
(l) No
jurisdiction where Parent or any of its Subsidiaries does not file a Return has made a claim that Parent or any of its Subsidiaries is required to
file a Return for a material amount of Taxes for such jurisdiction.
(m) All
of the transactions which Parent has accounted for as hedges under SFAS 133 have also been treated as hedging transactions for federal income Tax purposes
pursuant to Treasury Regulation Section 1.1221-2 and have been properly identified as such under Treasury Regulation Section 1.1221-2(f).
A-34
Section 4.14 Environmental Matters.
(a) Except
for such matters that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent,
Parent and its Subsidiaries have complied, and are in compliance, with all applicable Environmental Laws, which compliance includes the possession of all Permits required under applicable
Environmental Laws and compliance with the terms and conditions thereof and the making and filing with all applicable Governmental Entities of all reports, forms and documents and the maintenance of
all records required to be made, filed or maintained by it under any Environmental Law. Neither Parent nor any of its Subsidiaries has received any communication (written or, if oral, would be
reasonably likely to result in a formal claim) from any Person, whether a Governmental Entity, citizens group, employee or otherwise, that alleges that Parent or any of its Subsidiaries is not in
compliance in any material respect with Environmental Laws and that has not been resolved in all material respects.
(b) Except
for such matters that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent,
there are no Environmental Claims pending or, to the knowledge of Parent, threatened against Parent or any of its Subsidiaries or, to the knowledge of Parent, against any Person whose liability for
any Environmental Claim Parent or any of its Subsidiaries has retained or assumed either contractually or by operation of law.
(c) Except
for such matters that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent,
neither Parent nor any of its Subsidiaries is subject to any liability or obligation (accrued, contingent or otherwise) to cleanup, correct, abate or to take any response, remedial or corrective
action under or pursuant to any Environmental Laws, relating to (i) environmental conditions on, under, or about any of the properties or assets owned, leased, operated or used by Parent or any
of its Subsidiaries or any predecessor thereto at the present time or in the past, including the air, soil, surface water and groundwater conditions at, on, under, from or near such properties, or
(ii) the past or present use, management, handling, transport, treatment, generation, storage, disposal or Release of any Hazardous Substances, whether on-site at any Parent Real
Property, or at any off-site location. Parent has provided or made available to the Company all material studies, assessments, reports, data, results of investigations or audits, analyses
and test results, in the possession, custody or control of Parent or any of its Subsidiaries relating to (x) the environmental conditions on, under or about any of the properties or assets
owned, leased, operated or used by any of Parent and its Subsidiaries or any predecessor in interest thereto at the present time or in the past and (y) any Hazardous Substances used, managed,
handled, transported, treated, generated, stored or Released by any Person on, under, about or from, any of the properties, assets and businesses of Parent or any of its Subsidiaries.
(d) Except
for such matters that individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent,
to the knowledge of Parent, there are no past or present actions, activities, circu |
|
|
|
|
|
|
|
|
| |
|
|
Total Liabilities |
|
|
1,983,183 |
|
|
1,018,220 |
|
|
1,841,733 |
|
|
4,843,136 |
|
| |
|
|
|
|
|
|
|
|
|
| Shareholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Common stock |
|
|
208,576 |
|
|
728 |
|
|
90,349 |
(a) |
|
299,653 |
|
| |
Capital in excess of par value |
|
|
500,034 |
|
|
207,017 |
|
|
1,519,098 |
(a) |
|
2,226,149 |
|
| |
Treasury stock |
|
|
(75,956 |
) |
|
(6,945 |
) |
|
(40,553 |
)(a) |
|
(123,454 |
) |
| |
Deferred compensation |
|
|
(1,671 |
) |
|
(1,011 |
) |
|
1,011 |
(a) |
|
(1,671 |
) |
| |
Retained earnings |
|
|
843,792 |
|
|
341,492 |
|
|
(341,492 |
)(a) |
|
843,792 |
|
| |
Accumulated other comprehensive loss |
|
|
(14,787 |
) |
|
(130,462 |
) |
|
130,462 |
(a) |
|
(14,787 |
) |
| |
|
|
|
|
|
|
|
|
|
|
(e) Without
in any way limiting the generality of the foregoing, there are no underground storage tanks located at any property currently owned, leased or operated by Parent
or any of its Subsidiaries.
(f) Neither
Parent nor any of its Subsidiaries is required by virtue of the transactions contemplated by this Agreement, or as a condition to the effectiveness of any
transactions contemplated by this Agreement, (i) to perform a site assessment for Hazardous Substances at any Parent Real Property or (ii) to remove or remediate any Hazardous Substances
from any Parent Real Property.
A-35
Section 4.15 Parent Real Property; Operating Equipment.
(a) Section 4.15(a)
of the Parent Disclosure Letter contains a complete and correct list, as of the date of this Agreement, of all Parent Owned Real Property setting
forth information sufficient to specifically identify such Parent Owned Real Property and the legal owner thereof. Parent and its Subsidiaries have good, valid fee simple title to the Parent Owned
Real Property, free and clear of any Liens other than Permitted Liens. Each Parent Lease grants the lessee under the Parent Lease the exclusive right to use and occupy the premises and rights demised
thereunder free and clear of any Lien other than Permitted Liens. Each of Parent and its Subsidiaries has good and valid title to the leasehold estate or other interest created under its respective
Parent Leases free and clear of any Liens other than Permitted Liens.
(b) The
Parent Real Property constitutes all the fee, leasehold and other interests in real property held by Parent and its Subsidiaries, other than the Parent Oil and Gas
Properties. The use and operation of the Parent Real Property in the conduct of the business of Parent and its Subsidiaries does not violate any instrument of record or agreement affecting the Parent
Real Property, except for such violations as individually or in the aggregate have not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent. No current use
by Parent and its Subsidiaries of the Parent Real Property is dependent on a nonconforming use or other governmental approval.
(c) All
material operating equipment owned or leased by Parent or any of its Subsidiaries are, in the aggregate, in a state of repair so as to be adequate in all material
respects for reasonably prudent operations in the areas in which they are operated.
Section
4.16 Insurance. Section 4.16 of the Parent Disclosure Letter contains a complete and correct list
of all material insurance policies maintained by or on behalf of any of Parent and its Subsidiaries as of the date of this Agreement. Such policies are, and at the Closing policies or replacement
policies
having substantially similar coverages will be, in full force and effect, and all premiums due thereon have been or will be paid. Parent and its Subsidiaries have complied in all material respects
with the terms and provisions of such policies. With respect to any material insurance claim submitted by Parent or any of its Subsidiaries since January 1, 2003, neither Parent nor any of its
Subsidiaries has received any refusal of coverage, reservation of rights or other notice that the issuer of the applicable insurance policy or policies is not willing or able to perform its
obligations thereunder.
Section 4.17 Labor Matters.
(a) Neither
Parent nor any of its Subsidiaries is, or since January 1, 2000 has been, a party to or bound by a collective bargaining agreement or other similar
agreement with any labor union or labor organization applicable to the employees of Parent or any of its Subsidiaries, and no such agreement is currently being negotiated. Since January 1,
2000, no representation election petition or application for certification has been filed by any employees of Parent or any of its Subsidiaries, nor is such a petition or application pending with the
National Labor Relations Board or any Governmental Entity, and, to the knowledge of Parent, no labor union is currently engaged in or threatening, organizational efforts with respect to any employees
of Parent or any of its Subsidiaries. Since January 1, 2000, no labor dispute, strike, slowdown, picketing, work stoppage, lockout or other collective labor action involving the employees of
Parent or any of its Subsidiaries has occurred or is in progress or, to the knowledge of Parent, has been threatened against Parent or any of its Subsidiaries.
(b) Except
as individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent, each of Parent and
its Subsidiaries is in compliance with all applicable Laws respecting employment and employment practices, terms and conditions of employment, immigration and wages and hours, and is not engaged in
any unfair or unlawful labor practice.
A-36
(c) There
is no material Litigation pending, or to the knowledge of Parent, threatened involving Parent or any of its Subsidiaries and any of their respective employees or
former employees.
(d) To
the knowledge of Parent, since January 1, 2003, no employee of Parent or any of its Subsidiaries has provided or is providing information to any law
enforcement agency regarding the commission or possible commission of any crime or the violation or possible violation of any material applicable Law, in each case, by Parent, any of its Subsidiaries
or any of their respective officers or directors.
(e) T SIZE=2> |
|
|
1,459,988 |
|
|
410,819 |
|
|
1,358,875 |
|
|
3,229,682 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Liabilities and Shareholders' Equity |
|
$ |
3,443,171 |
|
$ |
1,429,039 |
|
$ |
3,200,608 |
|
$ |
8,072,818 |
|
| |
|
|
|
|
|
|
|
|
|
See
accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
104
Noble Energy, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2004
(Amounts in thousands except per share)
|
|
Noble Energy
|
|
Patina
|
|
Adjustments
|
|
Pro Forma Combined
|
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Oil and gas sales and royalties |
|
$ |
1,174,199 |
|
$ |
544,815 |
|
$ |
17,795 |
(b) |
$ |
1,736,809 |
|
| |
Gathering, marketing and processing |
|
|
49,250 |
|
|
— |
|
|
— |
|
|
49,250 |
|
| |
Electricity sales |
|
|
58,627 |
|
|
— |
|
|
— |
|
|
58,627 |
|
| |
Income from unconsolidated subsidiaries |
|
|
69,100 |
|
|
— |
|
&Since
January 1, 2001, neither Parent nor any of its Subsidiaries has effectuated (i) a "plant closing" (as defined in the WARN Act), affecting any site of
employment or one or more facilities or operating units within any site of employment or facility of Parent or any of its Subsidiaries, or (ii) a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of Parent or any of its Subsidiaries; nor has Parent nor any of its Subsidiaries been affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any state, local or foreign Law or regulation similar to the WARN Act.
(f) Section 4.17(f)
of the Parent Disclosure Letter contains a complete and correct list, as of the date of this Agreement, of the names of all directors and officers
of Parent, together with the number of shares of Parent Common Stock owned beneficially or of record, or both, by such Person.
Section
4.18 Affiliate Transactions. Section 4.18 of the Parent Disclosure Letter contains a complete and
correct list, as of the date of this Agreement, of all agreements, contracts, transfers of assets or liabilities or other commitments or transactions, whether or not entered into in the ordinary
course of business, to or by which Parent or any of its Subsidiaries, on the one hand, and any of their respective officers or directors (or any of their respective Affiliates, other than Parent or
any of its direct or indirect wholly owned Subsidiaries) on the other hand, are or have been a party or otherwise bound or affected, and that (a) are currently pending, in effect or have been
in effect during the past 12 months, (b) involve continuing liabilities and obligations that, individually or in the aggregate, have been, are or will be material to Parent and its
Subsidiaries, taken as a whole and (c) are not Parent Plans.
Section
4.19 Derivative Transactions and Hedging. Section 4.19 of the Parent Disclosure Letter contains a
complete and correct list of all Derivative Transactions (including each outstanding Hydrocarbon or financial hedging position attributable to the Hydrocarbon production of Parent and its
Subsidiaries) entered into by Parent or any of its Subsidiaries or for the account of any of its customers as of December 10, 2004. All such Derivative Transactions were, and any Derivative
Transactions entered into after the date of this Agreement will be, entered into in accordance with applicable Laws, and in accordance with the investment, securities, commodities, risk management and
other policies, practices and procedures employed by Parent and its Subsidiaries. Parent and each of its Subsidiaries have duly performed in all material respects all of their respective obligations
under the Derivative Transactions to the extent that such obligations to perform have accrued, and, to the knowledge of Parent, there are no material breaches, violations, collateral deficiencies,
requests for collateral or demands for payment (except for ordinary course margin deposit requests), or defaults or allegations or assertions of such by any party thereunder.
Section
4.20 Disclosure Controls and Procedures. Since January 1, 2003, Parent and each of its
Subsidiaries has had in place "disclosure controls and procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the Exchange Act) designed and maintained to ensure in
all material respects that (a) transactions are executed in accordance with management's general or specific authorizations, (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted accounting principals and to maintain accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization, (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and
A-37
appropriate
action is taken with respect to any differences, (e) all information (both financial and non-financial) required to be disclosed by Parent in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and (f) all such information is accumulated
and communicated to Parent's management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer
of Parent required under the Exchange Act with respect to such reports. Parent's disclosure controls and procedures ensure that information required to be disclosed by Parent in the reports filed with
the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. None of Parent's or its Subsidiaries' records, systems,
controls, data or information are recorded, stored, maintained, operated or otherwise wholly or partly dependent on or held by any means (including any electronic, mechanical or photographic process,
whether computerized or not) which (including all means of access thereto and therefrom) are not under the exclusive ownership and direct control of Parent or its Subsidiaries or accountants. Parent
has diligently completed in all material respects its SOX 404 Plan. As of the date of this Agreement, to the knowledge of Parent, (i) there is no reason that it will not be able, on a timely
basis, to complete and include in Parent's Annual Report on Form 10-K for the year ending December 31, 2004, management's assessment of Parent's internal controls and
procedures for financial reporting in accordance with Section 404 of SOX and (ii) there is no material weakness, significant deficiency or control deficiency, in each case as such term
is defined in PCAOB Auditing Std. No. 2.
Section 4.21 Oil and Gas.
(a) Parent
has furnished the Company prior to the date of this Agreement with summaries of International and Domestic Regional Reserve Estimates estimating Parent's and its
Subsidiaries' proved oil and gas reserves as of December 31, 2003 (the "Parent Reserve Report"). The factual, non-interpretive data on which the Parent Reserve Report was based for
purposes of estimating the oil and gas reserves set forth in the Parent Reserve Report was accurate in all material respects.
(b) All
operated producing oil and gas wells included in the Parent Reserve Report have been operated and produced and, to the knowledge of Parent, drilled, in accordance in
all material respects with generally acnbsp; |
— |
|
|
69,100 |
|
| |
Other revenues |
|
|
— |
|
|
16,186 |
|
|
(16,186 |
)(e) |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total revenues |
|
|
1,351,176 |
|
|
561,001 |
|
|
1,609 |
|
|
1,913,786 |
|
| |
|
|
|
|
|
|
|
|
|
| Costs and Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Oil and gas operations |
|
|
158,695 |
|
|
71,596 |
|
|
— |
|
|
230,291 |
|
| |
Production taxes and transportation |
|
|
46,575 |
|
|
46,034 |
|
|
17,795 |
(b) |
|
110,404 |
|
| |
Oil and gas exploration |
|
|
117,001 |
|
|
2,058 |
|
|
— |
|
|
119,059 |
|
| |
Gathering, marketing and processing |
|
|
37,699 |
|
|
— |
|
|
— |
|
|
37,699 |
|
| |
Electricity generation |
|
|
47,788 |
|
|
— |
|
|
— |
|
|
47,788 |
|
| |
Depreciation, depletion andcepted oil and gas field practices and in compliance in all material respects with applicable oil and gas leases and applicable Law.
(c) All
material proceeds from the sale of Hydrocarbons produced from Parent Oil and Gas Properties are being received by Parent and its Subsidiaries in a timely manner and
are not being held in suspense for any reason (except in the ordinary course of business).
(d) Neither
Parent nor any of its Subsidiaries has received any material advance, take-or-pay or other similar payments that entitle purchasers of
production to receive deliveries of Hydrocarbons without paying therefor, and, on a net, company-wide basis, Parent is neither underproduced nor overproduced, in either case, to any
material extent, under gas balancing or similar arrangements.
(e) Parent
and its Subsidiaries have good and defensible title to all oil and gas properties forming the basis for the reserves reflected in the Parent Reserve Report as
attributable to interests owned by Parent and its Subsidiaries and free and clear of all Liens, except for (i) Permitted Liens and (ii) Liens associated with obligations reflected in the
Parent Reserve Report. The oil and gas leases and other agreements that provide Parent and its Subsidiaries with operating rights in the oil and gas properties reflected in the Parent Reserve Report
are legal, valid and binding and in full force and effect, and the rentals, royalties and other payments due thereunder have been properly and timely paid and there is no existing default (or event
that, with notice or lapse of time or both, would become a default) under any of such oil and gas leases or other agreements, except, in each case, as individually or in the aggregate has not had, and
would not be reasonably likely to have or result in, a Material Adverse Effect on Parent.
A-38
(f) No
claim, notice or order from any Governmental Entity or other Person has been received by Parent or any of its Subsidiaries due to Hydrocarbon production in excess of
allowables or similar violations that could result in curtailment of production after the Closing Date from any unit or oil and gas properties of Parent or any of its Subsidiaries, except any such
violations which individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent.
Section
4.22 Investment Company. Neither Parent nor any of its Subsidiaries, including Purchaser, is an
"investment company," a company "controlled" by an "investment company," or an "investment adviser" within the meaning of the Investment Company Act, or the Advisers Act.
Section
4.23 Interim Operations of Purchaser. Purchaser was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has engaged in no business other than in connection with entering into this Agreement and engaging in the transactions contemplated by this Agreement.
Section
4.24 Financing. Parent has received a commitment letter from JPMorgan whereby such financial
institutions have committed, upon the terms and subject to the conditions set forth therein, to provide debt financing in the amount of $1,300,000,000. Parent has delivered a complete and correct copy
of the letter referred to in this Section 4.24 as in effect on the date hereof to the Company, and Parent will deliver to the Company correct and complete copies of the definitive agreements
for the financing of the Merger (the "Commitment Letter")
Section
4.25 Required Vote. The affirmative vote of the holders of a majority of votes cast at a meeting at
which a majority of the outstanding shares of Parent Common Stock are present and voting (the "Required Parent Vote") is the only vote of the holders of any class or series of the capital stock of
Parent necessary to authorize the issuance of Parent Common Stock pursuant to this Agreement under Rule 312.02 of the NYSE (the "Parent Proposal").
Section 4.26 Recommendation of Parent Board of Directors; Opinion of Financial Advisor.
(a) The
Parent Board, at a meeting duly called and held, duly adopted resolutions (i) determining that this Agreement, the transactions contemplated hereby and the
Parent Proposal are fair to, and in the best interests of, the stockholders of Parent, (ii) approving this Agreement, the transactions contemplated hereby and the Parent Proposal,
(iii) resolving to recommend approval and adoption of the Parent Proposal to the stockholders of Parent and (iv) directing that the Parent Proposal be submitted to Parent's stockholders
for consideration in accordance with this Agreement, which resolutions, as of the date of this Agreement, have not been subsequently rescinded, modified or withdrawn in any way.
(b) Parent
has received an opinion of JPMorgan to the effect that, as of the date of this Agreement, the Merger Consideration to be paid by Parent in the Merger is fair,
from a financial point of view, to Parent, a signed copy of which opinion has been, or will promptly be, delivered to the Company. Parent has received the approval of JPMorgan to permit the inclusion
of a copy of its written opinion in its entirety in the Proxy Statement, subject to JPMorgan's review of the Proxy Statement.
Section
4.27 Brokers. Except for JPMorgan, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or any of its Subsidiaries, that is or
will be payable by Parent or any of its Subsidiaries. Parent is solely responsible for the fees and expenses of JPMorgan as and to the extent set forth in the engagement letter, dated as of
November 30,
2004. Parent has previously delivered to the Company a true and correct copy of such engagement letter.
Section
4.28 No Other Representations or Warranties. Except for the representatio amortization |
|
|
308,855 |
|
|
126,849 |
|
|
42,350 |
(c) |
|
478,054 |
|
| |
Impairment of operating assets |
|
|
9,885 |
|
|
— |
|
|
— |
|
|
9,885 |
|
| |
Selling, general and administrative |
|
|
59,091 |
|
|
26,390 |
|
|
— |
|
|
85,481 |
|
| |
Deferred compensation adjustment |
|
|
— |
|
|
31,722 |
|
|
— |
|
|
31,722 |
|
| |
Accretion of asset retirement obligation |
|
|
9,352 |
|
|
— |
|
|
1,499 |
(c) |
|
10,851 |
|
| |
Loss on involuntary conversion of assets |
|
|
1,000 |
|
|
— |
|
|
— |
|
|
1,000 |
|
| |
Interest expense |
|
|
48,227 |
|
|
12,563 |
|
|
45,305 |
(d) |
|
106,095 |
|
| |
Other expense (income), net |
|
|
(9,033 |
) |
|
301 |
|
|
(16,186 |
)(e) |
|
(24,918 |
) |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Total Costs and Expenses |
|
|
835,135 |
|
|
317,513 |
|
|
90,763 |
|
|
1,243,411 |
|
|
A-39
express
or implied representation or warranty on behalf of Parent, Purchaser or any of their respective affiliates in connection with this Agreement or the transactions contemplated hereby.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company.
The
Company covenants and agrees as to itself and its Subsidiaries that during the period from the date of this Agreement until the Effective Time or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1, except as (w) disclosed in Section 5.1 of the Company Disclosure Letter, (x) expressly contemplated or permitted by
this Agreement, (y) required by applicable Law, or (z) agreed to in writing by Parent, after the date of this Agreement and prior to the Effective Time:
(a) the
business of the Company and its Subsidiaries shall be conducted only in the ordinary course consistent with past practice, and the Company shall use its reasonable
best efforts to preserve intact its business organization and goodwill and the business organization and goodwill of its Subsidiaries and keep available the services of their current officers and
employees and preserve and maintain existing relations with customers, suppliers, officers, employees and creditors;
(b) the
Company shall not, nor shall it permit any of its Subsidiaries to, (i) enter into any new line of business, or (ii) incur or commit to any capital
expenditures, or any obligations or liabilities in connection with any capital expenditures during calendar year 2004 other than capital expenditures and obligations or liabilities incurred or
committed to in an amount not greater in the aggregate than, and during the same time period set forth in, the Company's current capital budget approved by the Company Board in February 2004
and October 2004, the amount of which has been furnished to Parent prior to the date of this Agreement, or (iii) incur or commit to any capital expenditures, or any obligations or
liabilities in connection with any capital expenditures during calendar year 2005 other than capital expenditures and obligations or liabilities incurred or committed to in an amount not
greater in the aggregate than, and during the same time period set forth in, the Company's total capital budget for calendar year 2005 approved by the Company Board in December 2004, which has
been furnished to Parent prior to the date of this Agreement;
(c) the
Company shall not, nor shall it permit any of its Subsidiaries to, amend its certificate of incorporation or bylaws or similar organizational documents;
(d) the
Company shall not, nor shall it permit any of its Subsidiaries (other than direct or indirect wholly owned Subsidiaries) to, declare, set aside or pay any dividend
(other than, in the case of the Company, regular quarterly dividends consistent with past practice and in no event exceeding $0.06 per share per quarter) or other distribution, whether payable in
cash, stock or any other property or right, with respect to its capital stock;
(e) the
Company shall not, nor shall it permit any of its Subsidiaries to (i) adjust, split, combine or reclassify any capital stock or issue, grant, sell, transfer,
pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of
capital stock of any class or of any other such securities or agreements of the Company or any of its Subsidiaries, other than issuances (A) by the Company of Company Options and Company Common
Stock to employees and directors of the Company in the ordinary course of the Company's annual compensation procedures, consistent with past practice and in accordance with Section 5.1(e)(i)(A)
of the Company Disclosure Letter; (B) of Company Options to new hires or promoted employees in the ordinary course of business consistent with past practice and in accordance with
Section 5.1(e)(i)(B) of the Company Disclosure Letter; (C) pursuant to the Company Warrants and the Company Options outstanding on the date of this Agreement or issued after the date of
this Agreement in accordance with clauses (A) or (B) hereof or (D) pursuant to the Company Rights or Company Rights Agreement in effect on the date of this Agreement, or
(ii) except as
A-40
required
pursuant to the terms of the Company Plans in effect on the date of this Agreement, redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or any other
securities or agreements of the type described in clause (i) of this Section 5.1(e);
(f) except
as required pursuant to the terms of the Company Plans in effect on the date of this Agreement, the Company shall not, nor shall it permit any of its Subsidiaries
to, (i) grant any increase in the compensation or benefits payable or to become payable by the Company or any of its Subsidiaries to any former or current director, officer or employee of the
Company or any of its Subsidiaries, except for any such increases in the ordinary course of the Company's annual compensation procedures, consistent with past practice and in accordance with
Section 5.1(f)(i) of the Company Disclosure Letter; (ii) adopt, enter into, amend or otherwise increase, or accelerate the payment or vesting of the amounts, benefits or rights
payable or accrued or to become payable or accrued under, any Company Plan (other than entry into employment agreements with new hires in the ordinary course of business consistent with past practice;
provided that such employment agreement shall be terminable at will, without penalty (other than severance obligations that accrue under the
Company's Amended and Restated Change in Control Plan as in effect on the date of this Agreement (the "CIC Plan")) to the Company or any of its Subsidiaries, or (iii) grant any severance or
termination pay to any officer, director or employee of the Company or any of its Subsidiaries (other than grants to new hires in the ordinary course consistent with past practice pursuant to the CIC
Plan);
(g) the
Company shall not, nor shall /TD>
|
|
|
|
|
|
|
|
|
|
| Income Before Taxes |
|
|
516,041 |
|
|
243,488 |
|
|
(89,154 |
) |
|
670,375 |
|
| Income Tax Provision (Benefit) |
|
|
202,191 |
|
|
92,525 |
|
|
(34,959 |
)(f) |
|
259,757 |
|
| |
|
|
|
|
|
|
|
|
|
| Income From Continuing Operations |
|
$ |
313,850 |
|
$ |
150,963 |
|
$ |
(54,195 |
) |
$ |
410,618 |
|
| |
|
|
|
|
|
|
|
|
|
| Income From Continuing Operations Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
$ |
5.39 |
|
|
|
|
|
|
|
$ |
4.85 |
|
| |
Diluted |
|
$ |
5.30 |
|
|
|
|
|
|
|
$ |
4.69 |
|
| Weighted Average Shares Outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
58,275 |
|
|
|
|
|
26,366 |
(g) |
|
84,641 |
|
| |
Diluted |
(h) the
Company shall not, nor shall it permit any of its Subsidiaries to (i) acquire any Person or other business organization, division or business by merger,
consolidation, purchase of an equity interest or assets, or by any other manner, or (ii) other than in the ordinary course of business consistent with past practice or pursuant to agreements in
effect on the date of this Agreement and set forth in Section 3.12 of the Company Disclosure Letter, acquire any assets;
(i) other
than the sale of inventory and Hydrocarbons in the ordinary course of business consistent with past practice or the sale of any assets pursuant to agreements in
effect on the date of this Agreement and set forth in Section 3.12 of the Company Disclosure Letter, the Company shall not, nor shall it permit any of its Subsidiaries to, sell, lease,
exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange, transfer or otherwise dispose of, any material Company Assets;
(j) the
Company shall not, nor shall it permit any of its Subsidiaries to, mortgage, pledge, hypothecate, grant any security interest in, or otherwise subject to any other
Lien other than Permitted Liens, any of the Assets;
(k) the
Company shall not, nor shall it permit any of its Subsidiaries to, (i) except as set forth in clause (ii) below, pay, discharge or satisfy any claims
(including claims of stockholders), liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) where such payment, discharge or satisfaction would require any
payment except for the payment, discharge or satisfaction of liabilities or obligations in accordance with the terms of agreements in effect on the date of this Agreement or entered into after the
date of this Agreement in the ordinary course of business consistent with past practice and not in violation of this Agreement, in each case to which the Company or any of its Subsidiaries is bound
and except for any payments, discharges or settlements that do not exceed $500,000 individually or $2,500,000 in the aggregate, or (ii) compromise, settle, grant any waiver or release relating
to any Litigation, other than settlements or compromises of litigation where the amount paid or to be paid does not exceed $500,000 individually or $2,500,000 in the aggregate;
A-41
(l) the
Company shall not, nor shall it permit any of its Subsidiaries to, engage in any transaction with (except pursuant to agreements in effect at the time of this
Agreement and set forth in Section 3.9(a) or 3.18 of the Company Disclosure Letter), or enter into any agreement, arrangement, or understanding with, directly or indirectly, any of the
Company's affiliates; provided, that for the avoidance of doubt, for purposes of this clause (l), the term "affiliates" shall not include any employees of the Company or any of its
Subsidiaries, other than the directors and executive officers thereof;
(m) the
Company shall not, nor shall it permit any of its Subsidiaries to, make or change any material Tax election, amend any Return in any material respect or settle or
compromise any material Tax liability;
(n) the
Company shall not, nor shall it permit any of its Subsidiaries to, take any action that would, or could reasonably be expected to, result in any of its
representations and warranties set forth in this Agreement becoming untrue in a manner that would give rise to the failure of the closing condition set forth in Section 6.3(a);
(o) the
Company shall not, nor shall it permit any of its Subsidiaries to, adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger or with respect to an inactive wholly-owned Subsidiary of the Company) or any
agreement relating to an Acquisition Proposal, except as provided for in Section 5.3;
(p) the
Company shall not, nor shall it permit any of its Subsidiaries to, (i) incur or assume any long-term debt, or except in the ordinary course of
business consistent with past practice and in no event exceeding $30,000,000 in the aggregate, incur or assume any short-term indebtedness, (ii) modify the terms of any indebtedness
to increase the Company's obligations with respect thereto (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other Person, except in the ordinary course of business consistent with past practice and in no event exceeding $500,000 in the aggregate, (iv) make any loans, advances or
capital contributions to, or investments in, any other Person (other than to wholly owned Subsidiaries of the Company, or by such Subsidiaries to the Company, or customary loans or advances to
employees in accordance with past practice and in no event exceeding $500,000) in the aggregate, or (v) enter into any material commitment or transaction, except in the ordinary course of
business consistent with past practice;
(q) the
Company shall not, nor shall it permit any of its Subsidiaries to, enter into any agreement, understanding or commitment that materially restrains, limits or impedes
the Company's or any of its Subsidiaries' ability to compete with or conduct any business or line of business, including geographic limitations on the Company's or any of its Subsidiaries' activities;
(r) except
in the ordinary course of business consistent with past practice, the Company shall not, nor shall it permit any of its Subsidiaries to, modify or amend in any
material respect, or terminate, any material contract to which it is a party or waive in any material respect or assign any of its material rights or claims;
(s) the
Company shall not, nor shall it permit any of its Subsidiaries to, fail to maintain in full force and effect the existing insurance policies covering the Company or
its Subsidiaries or their respective properties, assets and businesses or comparable replacement policies, except to the extent such policies cease to be available on commercially reasonable terms;
and
(t) the
Company shall not, nor shall it permit any of its Subsidia WIDTH="2%">
|
59,226 |
|
|
|
|
|
28,291 |
(g) |
|
87,517 |
|
See
accompanying Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
105
NOBLE ENERGY, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
As of and For the Year Ended December 31, 2004
Note 1 Basis of Presentation
The accompanying unaudited pro forma condensed combined balance sheet of Noble Energy as of December 31, 2004 has been prepared to give effect to the
merger as if it had occurred on December 31, 2004.
The
accompanying unaudited pro forma condensed combined statement of operations of Noble Energy for the year ended December 31, 2004 has been prepared to give effect to the merger
as if the merger had occurred on January 1, 2004.
Noble
Energy and Patina both use the successful efforts method of accounting for their oil and gas producing activities.
Noble
Energy will account for the merger using the purchase method of accounting for business combinations. Under the purchase method of accounting, Noble Energy is deemed to be the
acquirer for accounting purposes based on a number of factors determined in accordance with GAAP. The purchase method of accounting requires that Patina assets acquired and liabilities assumed by
Noble Energy be recorded at their estimated fair values.
Note 2 Pro Forma Adjustments Related to the Merger
The unaudited pro forma condensed combined balance sheet includes the following adjustments:
- (a)
- These
adjustments reflect the elimination of the components of Patina's historical stockholders' equity, the purchase price paid by Noble Energy and adjustments to the historical book
values of Patina's assets and liabilities as of December 31, 2004 to their estimated fair values, in accordance with purchase accounting. The following table represents the preliminary
allocation of the total purchase price of Patina to the assets acquired and the liabilities assumed based on the preliminary estimates of fair value.
|
|
|
(in thousands,
except stock price)
|
|
| |
Shares of Noble Energy common stock to be issued to Patina |
|
|
27,323 |
(i) |
| |
Average Noble Energy common stock price |
|
$ |
60.36 |
(i) |
| |
|
|
|
|
| |
Fair value of common stock to be issued |
|
$ |
1,649,118 |
|
| |
Cash consideration paid to Patina stockholders |
|
|
1,078,049 |
(i) |
| |
Plus: estimated cash consideration paid to Patina warrant holders |
|
|
8,894 |
(ii) |
| |
Plus: estimated Noble Energy merger costs |
|
|
17,500 |
(iii) |
| |
Plus: estimated fair value of Patina employee stock options and warrants |
|
|
168,074 |
(iv) |
| |
|
|
|
|
| |
Total Purchase Price |
|
|
2,921,635 |
ries to, enter into an agreement, contract, commitment or arrangement to do any of the foregoing.
Notwithstanding
anything in this Section 5.1 to the contrary, the Company shall not, nor shall it permit any of its Subsidiaries to, enter into any transaction or take any other action that
would be reasonably
A-42
likely
to have a material adverse impact on, or materially delay, the consummation of the transactions contemplated by this Agreement.
Section 5.2 Interim Operations of Parent.
Parent
covenants and agrees as to itself and its Subsidiaries that during the period from the date of this Agreement until the Effective Time or the date, if any, on which this Agreement
is earlier terminated pursuant to Section 7.1, except as (w) disclosed in Section 5.2 of the Parent Disclosure Letter, (x) expressly contemplated or permitted by this
Agreement, (y) required by applicable Law, or (z) agreed to in writing by the Company, after the date of this Agreement and prior to the Effective Time:
(a) the
business of Parent and its Subsidiaries shall be conducted only in the ordinary course consistent with past practice;
(b) solely
in the case of Parent and any non-wholly owned Subsidiary of Parent, Parent shall not (i) declare, set aside or pay any extraordinary or
special dividend or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock; provided, however, that nothing contained herein shall
prohibit Parent from increasing the quarterly cash dividend on Parent Common Stock, or (ii) engage in any spin-off or
split-off without receiving fair consideration (determined in the good faith judgment of Parent);
(c) Parent
shall not, nor shall it permit any of its Subsidiaries to, change its methods of accounting in effect as of the date of this Agreement, except in accordance with
changes in GAAP as concurred to by Parent's independent auditors;
(d) Parent
shall not, nor shall it permit any of its Subsidiaries to, take any action that would, or could reasonably be expected to, result in any of its representations
and warranties set forth in this Agreement becoming untrue in a manner that would give rise to the failure of the closing condition set forth in Section 6.2(a);
(e) solely
in the case of Parent, Parent shall not amend its certificate of incorporation or bylaws or similar organizational documents in a manner that adversely affects
the terms of the Parent Common Stock;
(f) solely
in the case of Parent, Parent shall not adopt or enter into a plan of complete or partial liquidation or dissolution;
(g) Parent
shall not, nor shall it permit any of its Subsidiaries to, enter into any new line of business, except as may reasonably relate to Parent's existing businesses;
and
(h) Parent
shall not, nor shall it permit any of its Subsidiaries to, enter into an agreement, contract, commitment or arrangement to do any of the foregoing.
Notwithstanding
anything in this Section 5.2 to the contrary, Parent shall not, nor shall it permit any of its Subsidiaries to, enter into any transaction or take any other action (including
any amendment of Parent's certificate of incorporation) that would be reasonably likely to have a material adverse impact on, or materially delay, the consummation of the transactions contemplated by
this Agreement.
Section 5.3 Acquisition Proposals.
(a) The
Company agrees that, except as expressly contemplated by this Agreement, neither it nor any of its Subsidiaries shall, and the Company shall, and shall cause its
Subsidiaries to, cause their respective officers, directors, investment bankers, attorneys, accountants, financial advisors, agents and other representatives not to (i) directly or indirectly
initiate, solicit, knowingly encourage or facilitate (including by way of furnishing information) any inquiries or the making or submission of any proposal that constitutes, or could reasonably be
expected to lead to, an Acquisition Proposal, (ii) participate or engage in discussions or negotiations with, or disclose any non-public information or data relating to the Company
or any of its Subsidiaries or afford access to the properties, books or records of the Company or any of its Subsidiaries to any Person that has made an Acquisition Proposal or to any
A-43
Person
in contemplation of an Acquisition Proposal, or (iii) accept an Acquisition Proposal or enter into any agreement, including any letter of intent, memorandum of understanding, agreement
in principle, merger agreement, acquisition agreement, option agreement, joint venture agreement, partnership agreement or other similar agreement, arrangement or understanding,
(A) constituting or related to, or that is intended to or could reasonably be expected to lead to, any Acquisition Proposal (other than an Acceptable Confidentiality Agreement permitted
pursuant to this Section 5.3) or (B) requiring, intended to cause, or which could reasonably be expected to cause the Company to abandon, terminate or fail to consummate the Merger or
any other transaction contemplated by this Agreement (each an "Acquisition Agreement"). Any violation of the foregoing restrictions by any of the Company's Subsidiaries or by any representatives of
the Company or any of its Subsidiaries, whether or not such representative is so authorized and whether or not such representative is purporting to act on behalf of the Company or any of its
Subsidiaries or otherwise, shall be deemed to be a breach of this Agreement by the Company. Notwithstanding anything to the contrary in this Agreement, the Company and the Company Board may take any
actions described in clause (ii) of this Section 5.3(a) with respect to a third party if at any time prior to obtaining the Company Required Vote (x) the Company receives a
written Acquisition Proposal from such third party (and such Acquisition Proposal was not initiated, soli |
| |
Plus: liabilities assumed by Noble Energy |
|
|
|
|
| |
|
Current liabilities |
|
|
133,957 |
|
| |
Fair value of long-term debt, net of cash acquired |
|
|
526,949 |
(v) |
| |
Asset retirement obligations |
|
|
31,461 |
|
| |
Other non-current liabilities |
|
|
31,016 |
|
| |
Deferred compensation liability (see Note 3) |
|
|
103,511 |
|
| |
Deferred income taxes |
|
|
928,616 |
|
| |
|
|
|
|
| |
Total Purchase Price Plus Liabilities Assumed |
|
$ |
4,677,145 |
|
| |
|
|
|
|
106
|
|
|
(in thousands)
|
|
| |
Fair Value of Patina Assets: |
|
|
|
|
| |
Current assets |
|
$ |
184,134 |
|
| |
Proved oil and gas properties |
|
|
2,254,600 |
|
| |
Unproved oil and gas properties |
|
|
1,021,800 |
|
| |
Other non-current assets |
|
|
65,954 |
|
| |
Treasury stock held in deferred compensation plan (see Note 3) |
|
|
47,498 |
|
| |
Goodwill |
|
|
1,103,159 |
(vi) |
| |
|
|
|
|
| |
Total Fair Value of Patina Assets |
|
$ |
4,677,145 |
|
| |
|
|
|
|
- (i)
- Under
the terms of the merger agreement, total consideration for the shares of Patina is fixed at approximately $1cited, knowingly encouraged or facilitated by the Company or any of its Subsidiaries or any of
their respective officers, directors, investment bankers, attorneys, accountants, financial advisors, agents or other representatives) and (y) such proposal constitutes, or the Company Board
determines in good faith (after consultation with its financial advisors and outside legal counsel) that such proposal could reasonably be expected to lead to, a Superior Proposal, provided that the
Company shall not deliver any information to such third party without entering into an Acceptable Confidentiality Agreement. Nothing contained in this Section 5.3 shall prohibit the Company or
the Company Board from taking and disclosing to the Company's stockholders a position with respect to an Acquisition Proposal pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or from making any similar disclosure, in either case to the extent required by applicable Law.
(b) Neither
(i) the Company Board nor any committee thereof shall directly or indirectly (A) withdraw (or amend or modify in a manner adverse to Parent or
Purchaser), or publicly propose to withdraw (or amend or modify in a manner adverse to Parent or Purchaser), the approval, recommendation or declaration of advisability by the Company Board or any
such committee thereof of this Agreement, the Merger or the other transactions contemplated by this Agreement or (B) recommend, adopt or approve, or propose publicly to recommend, adopt or
approve, any Acquisition Proposal (any action described in this clause (i) being referred to as a "Company Adverse Recommendation Change") nor (ii) shall the Company or any of its
Subsidiaries execute or enter into an Acquisition Agreement. Notwithstanding the foregoing, at any time prior to obtaining the Company Required Vote, and subject to the Company's compliance at all
times with the provisions of this Section 5.3 and Section 5.6, in response to a Superior Proposal, the Company Board may make a Company Adverse Recommendation Change; provided, however,
that the Company shall not be entitled to exercise its right to make a Company Adverse Recommendation Change in response to a Superior Proposal (X) until four Business Days after the Company
provides written notice to Parent (a "Company Notice") advising Parent that the Company Board or a committee thereof has received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal, and identifying the Person or group making such Superior Proposal and (Y) if during such four Business Day period, Parent proposes any alternative transaction (including
any modifications to the terms of this Agreement), unless the Company Board determines in good faith (after consultation with its financial advisors and outside legal counsel, and taking into account
all financial, legal, and regulatory terms and conditions of such alternative transaction proposal) that such alternative transaction proposal is not at least as favorable to the Company and its
stockholders from a financial point of view as the Superior Proposal (it being understood that any change in the financial or other material terms of a Superior Proposal shall require a new Company
Notice and a new four Business Day period under this Section 5.3(b)).
A-44
(c) Notwithstanding
the first sentence of Section 5.3(b), at any time prior to obtaining the Company Required Vote, and subject to the Company's compliance at all
times with the provisions of this Section 5.3 and Section 5.6, the Company Board may make a Company Adverse Recommendation Change described in clause (A) of the definition thereof
if the Company Board (i) determines in good faith, after consultation with its outside legal counsel and any other advisor it chooses to consult, that the failure to make such Company Adverse
Recommendation Change is inconsistent with its fiduciary duties to the stockholders of the Company, (ii) determines in good faith that the reasons for making such Company Adverse Recommendation
Change are independent of any pending Acquisition Proposal and (iii) provides written notice to Parent (a "Company Notice of Change") advising Parent that the Company Board is contemplating
making a Company Adverse Recommendation Change and specifying the material facts and information constituting the basis for such contemplated determination; provided, however, that (x) the Company Board may not make such a Company Adverse Recommendation
Change until the third Business Day after receipt by Parent of the Company Notice of Change and (y) during such three Business Day period, at the request of Parent, the Company shall negotiate
in good faith with respect to any changes or modifications to this Agreement which would allow the Company Board not to make such Company Adverse Recommendation Change consistent with its fiduciary
duties.
(d) Parent
agrees that, except as expressly contemplated by this Agreement, neither it nor any of its Subsidiaries shall, and Parent shall, and shall cause its Subsidiaries
to, cause their respective officers, directors, investment bankers, attorneys, accountants, financial advisors, agents and other representatives not to (i) directly or indirectly initiate,
solicit, knowingly encourage or facilitate (including by way of furnishing information) any inquiries or the making or submission of any proposal that constitutes, or could reasonably be expected to
lead to, an Acquisition Proposal, (ii) participate or engage in discussions or negotiations with, or disclose any non-public information or data relating to Parent or any of its
Subsidiaries or afford access to the properties, books or records of Parent or any of its Subsidiaries to any Person that has made an Acquisition Proposal or to any Person in contemplation of an
Acquisition Proposal, or (iii) accept an Acquisition Proposal or enter into any Acquisition Agreement. Any violation of the foregoing restrictions by any of Parent's Subsidiaries or by any
representatives of Parent or any of its Subsidiaries, whether or not such representative is so authorized and whether or not such representative is purporting to act on behalf of Parent or any of its
Subsidiaries or otherwise, shall be deemed to be a breach of this Agreement by Parent. Notwithstanding anything to the contrary in this Agreement, Parent and the Parent Board may take any actions
described in clause (ii) of this Section 5.3(d) with respect to a third party if at any time prior to obtaining the Required Parent Vote (x) Parent receives a written Acquisition
Proposal from such third party (and such Acquisition Proposal was not initiated, solicited, knowingly encouraged or facilitated by Parent or any of its Subsidiaries or any of their respective
officers, directors, investment bankers, attorneys, accountants, financial advisors, agents or other representatives) and (y) such proposal constitutes, or the Parent Board determines in good
faith (after consultation with its financial advisors and outside legal counsel) that such proposal could reasonably be expected to lead to, a Superior Proposal, provided that Parent shall not deliver
any information to such third party without entering into an Acceptabl.1 billion in cash and approximately 27.3 million Noble
Energy shares (in each case subject to upward adjustment up to a maximum of approximately $1.2 billion in cash and 30.7 million shares, in the event that any shares of Patina common
stock are issued in accordance with the merger agreement pursuant to the exercise of Patina stock options or Patina warrants or otherwise). The average Noble Energy common stock price of $60.36 was
based on the average of the closing prices of Noble Energy common stock during the five business days commencing two days before the merger was announced. For purposes of preparing the unaudited pro
forma condensed combined financial statements, we have assumed that none of the Patina options or warrants are exercised subsequent to December 31, 2004 and prior to the closing of the merger
(see (iv) below).
(ii)In
accordance with the terms of the Patina warrants, upon closing of the merger, all of the warrants outstanding will be exercisable for the consideration that would have been
received in the merger by a holder of the number of shares of Patina common stock purchasable under such warrants, assuming such shares were no election shares and received the consideration received
by a majority of the no election shares. For purposes of preparing the unaudited pro forma condensed combined financial statements, we have assumed that (x) all 1.0 million Patina
warrants are outstanding as of the closing of the merger and (y) the warrants will become exercisable for 60% Noble Energy common stock and 40% cash. After applying the exchange ratio based on
an estimated average Noble Energy common stock price of $60.36, the warrants would be exercisable for approximately 375,095 shares of Noble Energy common stock and $8.9 million in cash.
(iii)The
total purchase price includes $17.5 million of estimated merger costs to be incurred by Noble Energy. These costs include investment banking expenses, legal and
accounting fees, printing expenses and other merger related costs. These costs have been added to long-term debt in the unaudited pro forma condensed combined balance sheet.
(iv)All
Patina stock options and, to the extent not paid in cash, Patina warrants will be converted in the merger into Noble Energy stock options and Noble Energy warrants. The fair
values of the Patina options and Patina warrants outstanding at December 31, 2004 were estimated using Black-Scholes valuation assumptions, including expected life, volatility, risk free
interest rates and the expected dividend yield.
107
- (v)
- The
fair value of long-term debt, net of cash acquired, was estimated as follows (in 000's):
| Patina debt balance, December 31, 2004 |
|
$ |
297,000 |
|
| Termination of hedges—current |
|
|
144,256 |
(1) |
| Termination of hedges—non current |
|
|
66,167 |
(1) |
| Return of third party margin deposits |
|
|
(11,950 |
)(1) |
| Estimated merger costs |
|
|
12,500 |
|
| Estimated employee benefit plan costs |
|
|
22,000 |
|
| Less cash acquired |
|
|
(3,024 |
) |
| |
|
|
|
| Total |
|
$ |
526,949 |
|
| |
|
|
|
- (1)
- These
adjustments assume the settlement, net of third party margin deposits, of Patina's hedging instruments on December 31, 2004, (pursuant to the merger agreement, at the
request of Noble Energy the hedges will be terminated prior to closing). These settlements result in the recognition of a current deferred tax asset as a result of the realized losses on the
settlements.
- (vi)
- The
preliminary allocation of purchase price includes approximately $1.1 billion of goodwill. Approximately $700 million results from deferred income tax liabilities
recorded to goodwill due to the excess of book basis over tax basis. The significant factors that contributed to the recognition of goodwill include, but are not limited to, economies of scale in
connection with our existing domestic operations, and the ability to acquire an established business with an assembled workforce with technological and operational expertise in tight gas sand
formations. In July 2001, the Financial Accounting Standards Board issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets. As
a result of these two pronouncements, goodwill recorded in connection with busine Confidentiality Agreement. Nothing contained in this Section 5.3 shall prohibit Parent or the Parent Board from taking
and disclosing to Parent's stockholders a position with respect to an Acquisition Proposal pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
from making any similar disclosure, in either case to the extent required by applicable Law.
(e) Neither
(i) the Parent Board nor any committee thereof shall directly or indirectly (A) withdraw (or amend or modify in a manner adverse to the Company),
or publicly propose to withdraw (or amend or modify in a manner adverse to the Company), the approval, recommendation or declaration of advisability by the Parent Board or any such committee thereof
of this Agreement, the Merger, the other transactions contemplated by this Agreement or the Parent Proposal or (B) recommend, adopt or approve, or propose publicly to recommend, adopt or
approve, any
A-45
Acquisition
Proposal (any action described in this clause (i) being referred to as a "Parent Adverse Recommendation Change") nor (ii) shall Parent or any of its Subsidiaries execute or
enter into, any Acquisition Agreement. Notwithstanding the foregoing, at any time prior to obtaining the Required Parent Vote, and subject to Parent's compliance at all times with the provisions of
this Section 5.3 and Section 5.6, in response to a Superior Proposal, the Parent Board may make a Parent Adverse Recommendation Change; provided, however, that Parent shall not be
entitled to exercise its right to make a Parent Adverse Recommendation Change in response to a Superior Proposal (X) until four Business Days after Parent provides written notice to the Company
(a "Parent Notice") advising the Company that the Parent Board or a committee thereof has received a Superior Proposal, specifying the material terms and conditions of such Superior Proposal, and
identifying the Person or group making such Superior Proposal and (Y) if during such four Business Day period, the Company proposes any alternative transaction (including any modifications to
the terms of this Agreement), unless the Parent Board determines in good faith (after consultation with its financial advisors and outside legal counsel, and taking into account all financial, legal,
and regulatory terms and conditions of such alternative transaction proposal) that such alternative transaction proposal is not at least as favorable to Parent and its stockholders from a financial
point of view as the Superior Proposal (it being understood that any change in the financial or other material terms of a Superior Proposal shall require a new Parent Notice and a new four Business
Day period under this Section 5.3(e)).
(f) Notwithstanding
the first sentence of Section 5.3(e), at any time prior to obtaining the Required Parent Vote, and subject to Parent's compliance at all times
with the provisions of this Section 5.3 and Section 5.6, the Parent Board may make a Parent Adverse Recommendation Change described in clause (A) of the definition thereof after
the Parent Board (i) determines in good faith, after consultation with its outside legal counsel and any other advisor it chooses to consult, that the failure to make such Parent Adverse
Recommendation Change is inconsistent with its fiduciary duties to the stockholders of Parent, (ii) determines in good faith that the reasons for making such Parent Adverse Recommendation
Change are independent of any pending Acquisition Proposal and (iii) provides written notice to the Company (a "Parent Notice of Change") advising the Company that the Parent Board is
contemplating making a Parent Adverse Recommendation Change and specifying the material facts and information constituting the basis for such contemplated determination; provided, however, that (x) the Parent Board may not make such a Parent Adverse Recommendation
Change until the third Business Day after receipt by the Company of the Parent Notice of Change and (y) during such three Business Day period, at the request of the Company, Parent shall
negotiate in good faith with respect to any changes or modifications to this Agreement which would allow the Parent Board not to make such Parent Adverse Recommendation Change consistent with its
fiduciary duties.
(g) The
Parties agree that in addition to the obligations of the Company and Parent set forth in paragraphs (a) through (f) of this Section 5.3, as
promptly as practicable after receipt thereof, the Company or Parent, as applicable, shall advise Parent or the Company, respectively, in writing of any request for information or any Acquisition
Proposal received from any Person, or any inquiry, discussions or negotiations with respect to any Acquisition Proposal, and the terms and conditions of such request, Acquisition Proposal, inquiry,
discussions or negotiations, and the Company or Parent, as applicable, shall promptly provide to Parent or the Company, respectively, copies of any written materials received by the Company or Parent,
as applicable, in connection with any of the foregoing, and the identity of the Person or group making any such request, Acquisition Proposal or inquiry or with whom any discussions or negotiations
are taking place. Each of the Company and Parent agrees that it shall simultaneously provide to the other any non-public information concerning itself or its Subsidiaries provided to any
other Person or group in connection with any Acquisition Proposal which was not previously provided to the other. The Company and Parent shall keep
Parent and the Company, respectively, fully informed of the status of any Acquisition Proposals (including the identity of the parties and price involved and any changes to any material terms and
conditions thereof). Each of the Company and Parent agrees not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which it is a party.
A-46
(h) For purposes of this Agreement, with respect a party hereto, "Acquisition Proposal" shall mean any bona fide proposal, whether or not in writing, for the
(i) direct or indirect acquisition or purchase of a business or assets that constitutes 10% or more of the net revenues, net income or the assets (based on the fair market value thereof) of
such party and its Subsidiaries, taken as a whole, (ii) direct or indirect acquisition or purchase of 10% or more of any class of equity securities or capital stock of such Party or any of its
Subsidiaries whose business constitutes 10% or more of the net revenues, net income or assets of such party and its Subsidiaries, taken as a whole, or (iii) merger, consolidation,
restructuess combinations is no longer amortized but rather tested for impairment at least annually. Accordingly, the
accompanying unaudited pro forma condensed combined statements of operations include no amortization of the goodwill to be recorded in the merger.
The
purchase price allocation is preliminary and is subject to change due to several factors, including, but not limited to: (1) changes in the fair values of Patina's assets and
liabilities as of the effective time of the merger; (2) the actual merger costs incurred; (3) the number of Patina shares, warrants, stock options and restricted stock outstanding at the
closing date of the merger, and (4) changes in Noble Energy valuation estimates that may be made between now and the time the purchase price allocation is finalized. These changes will not be
known until after the closing date of the merger.
The
unaudited pro forma condensed combined statements of operations include the following adjustments:
- (b)
- This
adjustment reclassifies Patina's historical gathering, processing, and marketing costs and transportation expenses to conform with Noble Energy's presentation.
108
- (c)
- These
adjustments increase Patina's historical depletion expense associated with oil and gas properties based on the pro forma allocation of purchase price and reclassify accretion
expense of the asset retirement obligation to conform with Noble Energy's presentation.
- (d)
- This
adjustment increases interest expense for the effect of the additional debt assumed from the merger and the amounts borrowed under Noble Energy's new five year credit facility
and the amortization of the related debt issuance costs. The interest rate used in the calculation of interest expense is based on an expected interest rate of 3.51%. A 1/8 percentage
point change in the interest rate would result in an adjustment to pro forma income from continuing operations of approximately $2.0 million for the year ended December 31, 2004. See
Note 5.
- (e)
- This
adjustment reclassifies Patina's historical other revenue amounts to conform with Noble Energy's presentation.
- (f)
- This
adjustment records the income tax impact of the depletion expense and the interest expense pro forma adjustments at an effective income tax rate of 37.3% and adjusts Patina's
historical tax provisions to the combined effective tax rate.
- (g)
- These
adjustments reflect Noble Energy's weighted average basic and diluted common shares outstanding during the year ended December 31, 2004 based on the estimated Noble
Energy common stock to be issued in the merger. See Note 4.
Note 3 Deferred Compensation Plan
These pro forma adjustments represent the assumption of Patina's existing deferred compensation plan by Noble Energy. The assets of the deferred compensation plan
are held in a rabbi trust and are comprised of mutual fund investments and Patina common stock. The unaudited pro forma condensed combined balance sheet adjustments assume that the shares of Patina
common stock held in the rabbi trust will be allocated 60% in Noble Energy common stock and 40% in cash, with the cash received by the rabbi trust used to purchase additional mutual fund investments.
The pro forma deferred compensation liability and treasury stock amount represent the fair value of the deferred compensation liability and treasury stock based on a Noble Energy stock price of $60.36
(see Note 2).
109
Note 4 Weighted Average Common Shares Outstanding
Unaudited pro forma condensed combined income from continuing operations per share for the periods presented below has been calculated based on the weighted
average number of shares outstanding as follows:
|
|
Year ended
December 31, 2004
|
|
|
(in thousands)
|
| Basic: |
|
|
| Noble Energy weighted average common shares outstanding |
|
58,275 |
| Patina basic shares outstanding adjusted for the merger (i) |
|
26,366 |
| |
|
|
| Pro forma weighted average Noble Energy shares outstanding |
|
84,641 |
| |
|
|
Diluted: |
|
|
| Noble Energy weighted average common shares outstanding |
|
59,226 |
| Patina diluted shares outstanding adjusted for the merger (i) |
|
28,291 |
| |
provided, however, that for purposes of this Agreement, with respect to Parent, any transaction (or
proposal with respect thereto) that is described in Section 5.2(a) of the Parent Disclosure Letter shall not constitute an Acquisition Proposal. The term "Superior Proposal" shall mean, with
respect to a party hereto, any bona fide written Acquisition Proposal made by a third party to acquire (which term shall include a parent to parent merger or other business combination with a similar
result), directly or indirectly, pursuant to a tender offer, exchange offer, merger, share exchange, consolidation or other business combination, (A) 50% or more of the assets of such party and
its Subsidiaries, taken as a whole, or (B) 50% or more of the equity securities of such party, in each case on terms which a majority of the board of directors of such party determines in good
faith (after consultation with its financial advisors and outside legal counsel, and taking into account all financial, legal and regulatory terms and conditions of the Acquisition Proposal and this
Agreement, including any alternative transaction (including any modifications to the terms of this Agreement) proposed by any other party in response to such Superior Proposal, including any
conditions to and expected timing of consummation, and any risks of non-consummation, of such Acquisition Proposal) to be superior to such party and its stockholders (in their capacity as
stockholders) from a financial point of view as compared to the transactions contemplated hereby and to any alternative transaction (including any modifications to the terms of this Agreement)
proposed by any other party hereto pursuant to this Section 5.3.
(i) Immediately
after the execution and delivery of this Agreement, each party hereto will, and will cause its Subsidiaries and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to, cease and terminate any existing activities, discussions or negotiations with any parties conducted heretofore with respect
to any possible Acquisition Proposal. Each party agrees that it shall (i) take the necessary steps to promptly inform its officers, directors, investments bankers, attorneys, accountants,
financial advisors, agents or other representatives involved in the transactions contemplated by this Agreement of the obligations undertaken in this Section 5.3 and (ii) request each
Person who has heretofore executed a confidentiality agreement in connection with such Person's consideration of acquiring such party or any portion thereof to return or destroy (which destruction
shall be certified in writing by an executive officer of such Person) all confidential information heretofore furnished to such Person by or on its behalf.
Section 5.4 Access to Information and Properties.
(a) Upon
reasonable notice and subject to applicable Laws relating to the exchange of information, each of the Company and Parent shall, and shall cause each of its
Subsidiaries to, afford to the authorized representatives of the other party, including officers, employees, accountants, counsel and other representatives of the other party, reasonable access,
during normal business hours during the period prior to the Effective Time, to all of its properties, contracts, books, commitments, records, data and books and personnel and, during such period, it
shall, and shall cause its Subsidiaries to, make available to the other parties all information concerning its business, properties and personnel as the
A-47
other
parties may reasonably request. No party nor any of its Subsidiaries shall be required to provide access to or to disclose information where such access or disclosure would violate or prejudice
the rights of its customers, jeopardize any attorney-client privilege or contravene any Law or binding agreement entered into prior to the date of this Agreement. The Company and Parent will make
appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply.
(b) From
the date of this Agreement until the Effective Time, each party and its authorized representatives, including engineers, advisors and consultants, lenders and
financing sources, upon reasonable notice and in a manner that does not unreasonably interfere with the business of the applicable party or any of its Subsidiaries, may enter into and upon all or any
portion of the real property owned or leased by the other party in order to investigate and assess, as such party reasonably deems necessary or appropriate, the environmental condition of such real
property and the other assets or the businesses of such other party or any of its Subsidiaries (an "Investigation"). An Investigation may include a Phase I environmental site assessment, or similar
investigation; provided, however, that an Investigation shall not include any sampling or testing of soil and/or ground or surface waters at, on or under any real property. Each party hereto shall,
and shall cause each of its Subsidiaries to, cooperate with the other parties in conducting any such Investigation, facilitating further testing or evaluation as may be reasonably prudent with respect
to matters identified in the investigation, allow any other party reasonable access to such party's and its Subsidiaries' respective businesses, real property and other assets, together with full
permission to conduct any such Investigation, and provide to any other party all plans, soil or surface or ground water tests or reports, any environmental investigation results, reports or
assessments previously or contemporaneously conducted or prepared by or on behalf of such party, its Subsidiaries, or any of their predecessors that are in the possession of such party or any of its
Subsidiaries, and all information relating to environmental matters regarding such party's and its Subsidiaries' respective businesses, real property and other assets that are in the possession of
such party or any of its Subsidiaries.
(c) Parent
and the Company will hold any information contemplated under Sections 5.4(a) and/or (b) above in accordance with the provisions of the confidentiality
agreement between the Company and Parent, dated as of August 9, 2004 (the "Confidentiality Agreement"); provided, however, that each party's
obligations under the Confidentiality Agreement shall terminate > |
|
| Pro forma weighted average Noble Energy shares outstanding |
|
87,517 |
| |
|
|
- (i)
- The
Patina weighted average basic and diluted shares outstanding have been adjusted to give effect to the exchange of Patina common stock for Noble Energy common stock, the vesting of
restricted stock, the exchange of the Patina options, and the exchange of the Patina warrants which are not paid in cash.
Note 5 Merger Financing
Noble Energy has executed a commitment letter with JPMorgan Chase Bank under which JPMorgan Chase Bank has agreed to advance up to $1.3 billion to Noble
Energy. These funds, along with capacity available under its two existing $400 million credit facilities, will be utilized to fund the cash portion and to repay a portion of liabilities assumed
in the merger. It is expected that JPMorgan Chase Bank will syndicate a part of the $1.3 billion credit facility to a group of financial institutions. This facility will be a senior unsecured
revolving credit facility with a five-year term and with other terms and conditions similar to Noble Energy's two existing $400 million credit facilities. It is expected that the loan will bear
interest at a rate per annum equal to the London Interbank Offered Rate (2.76% per annum as of March 7, 2005) plus 60 basis points. In addition, there is a facility fee for the loan
equal to 15 basis points. Noble Energy will incur approximately $2.5 million of debt issuance costs associated with the $1.3 billion commitment agreement.
110
Note 6 Unaudited Supplemental Pro Forma Combined Information Related to Oil and Gas Activities
The following unaudited supplemental pro forma combined information for oil and gas producing activities is presented pursuant to the disclosure requirements of
Statement of Financial Accounting Standards No. 69 "Disclosures About Oil and Gas Producing Activities."
Pro Forma Combined Reserve Quantity Information
The following table sets forth the changes in net reserve quantities of oil and NGLs combined, gas and total proved reserves for Noble Energy, Patina and on a Pro
Forma Combined basis for the year ended December 31, 2004:
|
|
Noble Energy
|
|
Patina
|
|
Pro Forma Combined
|
|
|
|
Oil
MBbls
|
|
Gas
MMcf
|
|
MBOE
|
|
Oil
MBbls
|
|
Gas
MMcf
|
|
MBOE
|
|
Oil
MBbls
|
|
Gas
MMcf
|
|
MBOE
|
|
| Total Proved Reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| UNITED STATES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
42,304 |
|
558,058 |
|
135,314 |
|
81,947 |
|
(d) No
investigation by Parent or the Company or their respective representatives shall affect the representations, warranties, covenants or agreements of the other set
forth in this Agreement.
Section 5.5 Further Action; Reasonable Best Efforts.
(a) Upon
the terms and subject to the conditions herein provided, each of the parties hereto agrees to use its reasonable best efforts to take, or cause to be taken, all
action and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement, including using
reasonable best efforts to satisfy the conditions precedent to the obligations of any of the parties hereto, to obtain all necessary authorizations, consents and approvals, and to effect all necessary
registrations and filings, and to assist Parent and Purchaser in obtaining the Financing. Each of the parties hereto will furnish to the other parties such necessary information and reasonable
assistance as such other parties may reasonably request in connection with the foregoing and will provide the other parties with copies of all filings made by such party with any Governmental Entity
or any other information supplied by such party to a Governmental Entity in connection with this Agreement and the transactions contemplated hereby.
(b) Each
of Parent, Purchaser and the Company shall use their respective reasonable best efforts to resolve such objections, if any, as may be asserted with respect to the
transactions contemplated hereby under any applicable Law. Without limiting the foregoing, the Company and Parent shall, as
A-48
soon
as practicable, file Notification and Report Forms under the HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") and shall use reasonable best efforts to respond as promptly as practicable to all inquiries received from the FTC or the Antitrust Division for additional information or documentation.
(c) Each
party shall (i) take all actions necessary to ensure that no state takeover Law or similar Law is or becomes applicable to this Agreement, the Merger or any
of the other transactions contemplated by this Agreement and (ii) if any state takeover Law or similar Law becomes applicable to this Agreement, the Merger or any of the other transactions
contemplated by this Agreement, take all action necessary to ensure that the Merger and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such Law on this Agreement, the Merger and the other transactions contemplated by this Agreement; provided, however, that
notwithstanding the foregoing, Parent shall not be required to take any action to exempt any shareholder of the Company from any such Law.
(d) In
case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or
directors of the Surviving Corporation shall take or cause to be taken all such necessary action.
(e) Each
of the parties hereto shall use reasonable best efforts to prevent the entry of, and to cause to be discharged or vacated, any order or injunction of a Governmental
Entity precluding, restraining, enjoining or prohibiting consummation of the Merger.
(f) Notwithstanding
the foregoing provisions of this Section 5.5, neither Parent nor Purchaser shall be required to accept, as a condition to obtaining any required
approval or resolving any objection of any Governmental Entity, any requirement to divest or hold separate or in trust (or the imposition of any other condition or restriction with respect to) any of
the respective businesses of Parent, Purchaser, the Company or any of their respective Subsidiaries, the Company Assets, the Parent Assets, the Company Real Property or the Parent Real Property.
Section 5.6 Proxy Statement; Form S-4; Stockholders' Meeting.
(a) As
promptly as practicable after the execution of this Agreement, the Company and Parent shall cooperate in preparing and each shall cause to be filed with the SEC, in
connection with the Merger, a joint proxy statement in preliminary form (together with any amendments or supplements thereto, the "Proxy Statement") and Parent shall promptly prepare and file with the
SEC the S-4, in which the Proxy Statement will be included as a prospectus, and the parties shall file, if necessary, any other statement or schedule relating to this Agreement and the
transactions contemplated hereby. Each of the Company, Parent and Purchaser shall use their respective reasonable best efforts to furnish the information required to be included by the SEC in the
Proxy Statement, the S-4 and any such statement or schedule. Each of the Company and Parent shall use its reasonable best efforts to have the S-4 declared effective under the
Securities Act as promptly as practicable after such filing, and each of the Company and Parent shall as promptly as practicable thereafter mail the Proxy Statement to its stockholders. Parent shall
also use reasonable best efforts to obtain all necessary state securities Law or "Blue Sky" permits and approvals required to carry out the transactions contemplated by this Agreement.
(b) If
at any time prior to the Effective Time, any event or circumstance relating to the Company, Parent and Purchaser or any of their respective affiliates, or its or
their respective officers or directors, should be discovered by the Company, Parent or Purchaser that should be set forth in an amendment to the S-4 or a supplement to the Proxy Statement,
the Company, Parent or Purchaser shall promptly inform the other parties hereto thereof in writing. All documents that the Company or Parent is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply
A-49
as
to form in all material respects with applicable req WIDTH="8%" ALIGN="RIGHT">1,024,334
|
252,669 |
|
124,251 |
|
1,582,392 |
|
387,983 |
|
| Revisions of previous estimates |
|
976 |
|
(7,452 |
) |
(266 |
) |
267 |
|
(31,999 |
) |
(5,066 |
) |
1,243 |
|
(39,451 |
) |
(5,332 |
) |
| Extensions, discoveries & other additions |
|
16,760 |
|
74,277 |
|
29,140 |
|
12,324 |
|
178,401 |
|
42,058 |
|
29,084 |
|
252,678 |
|
71,198 |
|
| Production |
|
(8,073 |
) |
(89,458 |
) |
(22,983 |
) |
(6,606 |
) |
(78,290 |
) |
(19,654 |
) |
(14,679 |
) |
(167,748 |
) |
(42,637 |
) |
| Sales of minerals in place |
|
(2,190 |
) |
(30,127 |
) |
(7,211 |
) |
(816 |
) |
(18,033 |
) |
(3,822 |
) |
(3,006 |
) |
(48,160 |
) |
(11,033 |
) |
| Purchases of minerals in place |
|
5,289 |
|
14,437 |
|
7,695 |
|
1,169 |
|
14,882 |
|
3,649 |
|
6,458 |
|
29,319 |
|
11,344 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
55,066 |
|
519,735 |
|
141,689 |
|
88,285 |
|
1,089,295 |
|
269,834 |
|
143,351 |
|
1,6uirements of the Securities Act and the Exchange Act. The parties shall notify each other promptly of the time when the S-4 has
become effective, of the issuance of any stop order or suspension of the qualification of the Parent Common Stock issuable in connection with the Merger for offering or sale in any jurisdiction, or of
the receipt of any comments from the SEC or the staff of the SEC and of any request by the SEC or the staff of the SEC for amendments or supplements to the Proxy Statement or the S-4 or
for additional information and shall supply each other with copies of (i) all correspondence between it or any of its Representatives, on the one hand, and the SEC or the staff of the SEC, on
the other hand, with respect to the Proxy Statement, the S-4 or the Merger and (ii) all orders of the SEC relating to the S-4.
(c) The
Company, acting through the Company Board, shall, in accordance with its certificate of incorporation and bylaws and with applicable Law, promptly and duly call,
give notice of, convene and hold, as soon as practicable following the date upon which the S-4 becomes effective for the purposes of voting upon the adoption of this Agreement and the
approval of the consummation of the transactions contemplated by this Agreement, including the Merger, a special meeting of its stockholders for the sole purpose of considering and taking action upon
this Agreement (such meeting, including any postponement or adjournment thereof, the "Company Special Meeting"), and shall use its reasonable best efforts to hold the Company Special Meeting no later
than 45 days after such date. Except as otherwise provided in Section 5.3(b) or 5.3(c), the Company, acting through the Company Board, shall (i) recommend adoption of this
Agreement and include in the Proxy Statement such recommendation and (ii) use its reasonable best efforts to solicit and obtain such adoption. Notwithstanding any Company Adverse Recommendation
Change or the commencement, public proposal, public disclosure or communication to the Company of any Acquisition Proposal with respect to the Company or any of its Subsidiaries, or any other fact or
circumstance, this Agreement shall be submitted to the stockholders of the Company at the Company Special Meeting for the purpose of adopting this Agreement, with such disclosures as shall be required
by applicable Law. At any such Company Special Meeting following any such withdrawal, amendment or modification of the Company Board's recommendation of this Agreement, the Company may submit this
Agreement to its stockholders without a recommendation or with a negative recommendation (although the approval of this Agreement by the Company Board may not be rescinded or amended), in which event
the Company Board may communicate the basis for its lack of a recommendation or negative recommendation to its stockholders in the Proxy Statement or an appropriate amendment or supplement thereto.
(d) Parent,
acting through the Parent Board, shall, in accordance with its certificate of incorporation and bylaws and with applicable Law, promptly and duly call, give
notice of, convene and hold, as soon as practicable following the date upon which the S-4 becomes effective for the purposes of voting upon the Parent Proposal a special meeting of its
stockholders (such meeting, including any postponements or adjournments thereof, the "Parent Stockholders' Meeting"), and shall use its reasonable best efforts to hold the Parent Stockholders' Meeting
no later than 45 days after such date. Except as otherwise provided in Section 5.3(e) or 5.3(f), Parent, acting through the Parent Board, shall (i) recommend approval of the
Parent Proposal and include in the Proxy Statement such recommendation and (ii) use its reasonable best efforts to solicit and obtain such approval. Notwithstanding any Parent Adverse
Recommendation Change or the commencement, public proposal, public disclosure or communication to Parent of any Acquisition Proposal with respect to Parent or any of its Subsidiaries, or any other
fact or circumstance, the Parent Proposal shall be submitted to the stockholders of Parent at the Parent Stockholders' Meeting for the purpose of approval of the Parent Proposal, with such disclosures
as shall be required by applicable Law. At any such Parent Stockholders' Meeting following any such withdrawal, amendment or modification of the Parent Board's recommendation of the Parent Proposal,
Parent may submit the Parent Proposal to its stockholders without a recommendation or with a negative recommendation (although the approval of the Parent Proposal by the Parent Board may not be
rescinded or amended), in which event the Parent
A-50
Board
may communicate the basis for its lack of a recommendation or negative recommendation to its stockholders in the Proxy Statement or an appropriate amendment or supplement thereto.
Section
5.7 Notification of Certain Matters.
(a) The
Company shall give prompt notice to Parent of any fact, event or circumstance as to which the Company obtains knowledge that would be reasonably likely to result in
a failure of a condition set forth in Section 6.3(a) or 6.3(b). Parent and Purchaser shall give prompt notice to the Company of any fact, event or circumstance as to which Parent or Purchaser
obtains knowledge that would be reasonably likely to result in a failure of a condition set forth in Section 6.2(a) or 6.2(b).
(b) Immediately
prior to Closing, the Company shall provide Parent with a complete list of the number of employee terminations (other than voluntary resignations and
terminations for cause) for the 90-day period prior to Closing, by facility or geographic site of employment.
Section 5.8 Directors' and Officers' Insurance and Indemnification.
(a) After
the Effective Time, Parent shall (i) indemnify, defend and hold harmless the present and former officers, directors, employees and agents of the Company and
any of its Subsidiaries in such capacities ("Indemnified Parties") to the fullest extent that the Company or any of its Subsidiaries would have been required to do so in accordance with the provisions
of each indemnification or similar agreement between the Company or any of its Subsidiaries and any Indemnified Party, in each case against any losses, damages, expenses or liabilities resulting from
any claim, liability, loss, damage, cost or expense, asserted against, or incurred by, an Indemnified Party that is based on the fact that such Indemnified Party is or was a director, officer,
employee or agent of the Company or any of its Subsidiaries and arising out of actions or omissions or alleged actions or omissions occurring at or prior to the Effective Time and (ii) take all
necessary actions to ensure that Parent's director's and officer's liability insurance continues to cover each Company Di09,030 |
|
411,523 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARGENTINA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
8,921 |
|
2,448 |
|
9,329 |
|
— |
|
— |
|
— |
|
8,921 |
|
2,448 |
|
9,329 |
|
| Revisions of previous estimates |
|
1,995 |
|
(937 |
) |
1,839 |
|
— |
|
— |
|
— |
|
1,995 |
|
(937 |
) |
1,839 |
|
| Extensions, discoveries & other additions |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Production |
|
(1,085 |
) |
(142 |
) |
(1,109 |
) |
— |
|
— |
|
— |
|
(1,085 |
) |
(142 |
) |
(1,109 |
) |
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
(b) Prior
to the Closing, the Company shall purchase, and after the Effective Time the Surviving Corporation shall maintain, directors' and officers' liability insurance
covering, for a period of six years after the Effective Time, the directors and officers of the Company and its Subsidiaries who are currently covered by the Company's existing directors' and
officers' liability insurance with respect to claims arising from facts or events that occurred before the Effective Time, on terms and conditions no less favorable to such directors and officers than
those in effect on the date of this Agreement; provided, however, that the aggregate annual premiums for such insurance at any time during such period shall not exceed 175% of the per annum rate of
premium currently paid by the Company and its Subsidiaries for such insurance on the date of this Agreement. It is understood and agreed that in the event that such insurance cannot be obtained for
175% of the per annum rate of premium currently paid by the Company, Parent shall nonetheless be obligated to provide such directors' and officers' liability insurance as may be obtained for such sum.
Section
5.9 Publicity. Neither the Company, Parent, Purchaser nor any of their respective affiliates shall issue
or cause the publication of any press release or other announcement with respect to the Merger, this Agreement or the other transactions contemplated by this Agreement without the prior consultation
of the other party, except as may be required by Law or by any listing agreement with a national securities exchange if all reasonable best efforts have been made to consult with the other party.
A-51
Section
5.10 Stock Exchange Listing. Parent shall use its reasonable best efforts to cause the shares of Parent
Common Stock to be issued in the Merger to be approved for listing on the NYSE, subject to official notice of issuance, as of the Effective Time.
Section
5.11 Employee Benefits.
(a) During
the period from the Closing Date until the six month anniversary thereof, Parent shall, or shall cause its Subsidiaries to, provide to each Person who is employed
by the Company or any of its Subsidiaries immediately prior to the Effective Time (the "Continuing Employees") compensation (including base salary and incentive and bonus opportunities, but excluding
equity-based compensation) and benefits (including vacation, paid time-off and severance) that are not materially less favorable in the aggregate than those provided to the Continuing
Employees by the Company and its Subsidiaries immediately prior to the Effective Time.
(b) The
service of each Continuing Employee with the Company or its Subsidiaries (or any predecessor employer) prior to the Effective Time shall be treated as service with
Parent and its Subsidiaries for purposes of each Parent Plan (including vacation, paid time-off and severance plans) in which such Continuing Employee is eligible to participate after the
Effective Time, including for purposes of eligibility, vesting and benefit levels and accruals (other than defined benefit pension plan accruals).
(c) Following
the Effective Time, for purposes of each Parent Plan in which any Continuing Employee or his or her eligible dependents is eligible to participate after the
Effective Time, Parent shall, or shall cause its Subsidiaries to, (i) waive any pre-existing condition, exclusion, actively-at-work requirement or waiting
period to the extent such condition, exclusion, requirement or waiting period was satisfied or waived under the comparable Company Plan as of the Effective Time(or, if later, any applicable plan
transaction date) and (ii) provide full credit for any co-payments, deductibles or similar payments made or incurred prior to the Effective Time for the plan year in which the
Effective Time (or such transition date) occurs.
(d) Parent
shall, and shall cause its Subsidiaries to, honor, in accordance with its terms, each Company Plan and all obligations thereunder, including any rights or
benefits arising as a result of the transactions contemplated hereby (either alone or in combination with any other event), and Parent hereby acknowledges that the consummation of the Merger
constitutes a change of control or change in control, as the case may be, for all purposes under such Company Plans.
(e) Notwithstanding
anything herein to the contrary, prior to the Effective Time, the Company shall be entitled to amend and modify the Company's Amended and Restated
Deferred Compensation Plan for Select Employees (the "Existing Deferred Compensation Plan") and the Company's 2005 Deferred Compensation Plan for Select Employees (together with the Existing Deferred
Compensation Plan, the "Deferred Compensation Plans"), in each case, solely to the extent necessary to comply with Section 409A of the Code and any rules, regulations or other guidance
promulgated thereunder by any Governmental Entity.
(f) Following
the Effective Time, (i) Parent shall not, and shall not permit any of its Subsidiaries or any of its or their respective officers or employees to, take
any action (including the waiver of any term or condition of either Deferred Compensation Plan) that results, or would be reasonably likely to result, in the imposition of any Tax or interest penalty
under Section 409A of the Code on any current or former participant in either Deferred Compensation Plan, including any "material modification" (within the meaning of
Section 885(d)(2)(B) of the American Jobs Creation Act of 2004) of the Existing Deferred Compensation Plan with respect to amounts deferred in taxable years beginning before January 1,
2005, and (ii) Parent shall, and shall cause its Subsidiaries and its and their respective officers and employees to, take all actions (including any amendment or modification of either
Deferred Compensation Plan) necessary to ensure that each Deferred Compensation Plan complies, by
A-52
its
terms and in its operation, with any rules, regulations or other guidance promulgated under Section 409A of the Code by any Governmental Entity after the date hereof; provided, however, that the foregoing provisions of clause (ii) shall not apply (A) in the
event that there is no such action that could be taken that would ensure such compliance, in which case Parent shall so notify the participants in such Deferred Compensation Plan in order that they
may have the opportunity to challenge such fact, or (B) to the extent that such action is necessary to cause such Deferred Compensation Plan to comply with Section 409A of the Code or
any rule, regulation or other guidance promulgated thereunder by any Governmental Entity as in effect immediately prior to the Effective Time; provided, further, however, that Parent shall be entitled to amend or modify the New Deferred Compensation Plan to
provide that (A) no additional amounts will be contributed to or deferred under the New Deferred Compensation Plan and (B) to the extent no Tax or interest penalty under
Section 409A of the Code would be imposed on any participant therein, amounts previously contributed to or deferred under the New Deferred Compensation Plan will be distributed to the
participants therein, in each case subject to the requirements of Section 5.11(a). Parent shall indemnify and hold harmless each current and former participant in either Deferred Compensation
Plan on an after-Tax basis from any Tax or interest penalty imposed under Section 409A of the Code (or any successor or replacement provision thereto) to the extent imposed as a
result of any failure of Parent, any of its Subsidiaries or any of its or their respective officers or employees to comply with of this Section 5.11(f), provided that Parent shall not be obligated
to so indemnify and hold harmless any such participant with respect to any such Tax or interest penalty to
the extent such Tax or interest penalty is imposed as a result of the refusal of such participant to give any consent or approval required to effect any action required to be taken pursuant to
Section 5.11(f)(ii).
(g) Prior
to the Closing Date, Parent and the Company, and their respective Boards of Directors, shall use their reasonable best efforts to take all actions to cause any
dispositions of Company Common Stock (including derivative securities with respect to Company Common Stock) or acquisitions of Parent Common Stock (including derivative securities with respect to
Parent Common Stock) resulting from the transactions contemplated hereby by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act to be exempt from
Section 16(b) of the Exchange Act under Rule 16b-3 promulgated under the Exchange Act.
(h) Nothing
in this Agreement shall be construed as requiring Parent or any of its Affiliates to employ any Continuing Employee for any length of time following the Closing
Date. Subject to Section 5.11(f), nothing in this Agreement, express or implied, shall be construed to prevent Parent or its Affiliates from (i) terminating, or modifying the terms of
employment of, any Continuing Employee following the Closing Date or (ii) terminating or modifying to any extent any Company Plan or any other employee benefit plan, program, agreement or
arrangement that Parent or its Affiliates may establish or maintain; provided, however, that to the extent that, and for so long as, a Continuing Employee remains employed by Parent or any of its
Subsidiaries during the six month period following the Closing, the compensation and benefits payable to such employee during such period shall be subject to Section 5.11(a).
(i) Prior
to the Effective Time, the Company shall amend the rabbi trust established in connection with the Existing Deferred Compensation Plan to provide that (x) as
of the Effective Time, the shares of Parent Common Stock in such rabbi trust issued in exchange for shares of Company Common Stock pursuant to Section 1.6 will be subject to the claims of
Parent's creditors, in addition to the claims of the Company's creditors, and (y) any shares of Parent Common Stock not transferred to the Surviving Corporation's employees will revert to
Parent on termination of such rabbi trust.
(j) The
company shall take the actions set forth in Section 5.11(j) of the Company Disclosure Letter as soon as practicable after the date of this Agreement.
A-53
(k) The
parties hereby agree and acknowledge that Section 5.11(k) of the Company Disclosure Letter sets forth, with respect to each officer of the Company listed
therein, the cash severance payments that would be due to such officer under the Company's Change in Control Plan (the "CIC") if such officer were terminated within one year after the Closing without
"cause" (as defined in the CIC) or if such officer resigns within 30 days of a "Material Change" (as defined in the CIC) during such one-year period.
Section
5.12 Appointment of Directors. Parent shall take all necessary corporate action to increase the size of
the Board of Directors of Parent by two members and to appoint the Company Directors immediately following the Effective Time to fill the vacancy on the Board of Directors of Parent created by such
increase. Parent, through the Parent Board and subject to the Parent Board's fiduciary duties to the stockholders of Parent, shall take all necessary action to recommend that the Company Directors be
elected to the Parent Board in the proxy statement relating to the first annual meeting of the stockholders of Parent following the Closing.
Section
5.13 Rights Agreement. The Company Board shall take such action as is necessary to render the Company
Rights inapplicable to the Merger and the other transactions contemplated by this Agreement.
Section 5.14 Certain Tax Matters.
(a) Parent
and the Company shall each use its reasonable best efforts to cause the Merger to qualify as a "reorganization" within the meaning of Section 368(a) of the
Code and to obtain the Tax opinions set forth in D>
| |
— |
|
— |
|
3,024 |
|
— |
|
3,024 |
|
| Production |
|
(1,421 |
) |
— |
|
(1,421 |
) |
— |
|
— |
|
— |
|
(1,421 |
) |
— |
|
(1,421 |
) |
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
10,501 |
|
— |
|
10,501 |
|
— |
|
— |
|
— |
|
10,501 |
|
— |
|
10,501 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ECUADOR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) Officers
of Parent, Purchaser and the Company shall execute and deliver to Cravath, Tax counsel for the Company, and Skadden Arps, Tax counsel for Parent, certificates
substantially in the form agreed to by the parties and such law firms at such time or times as may reasonably be requested by such law firms, including prior to the time the S-4 is
declared effective by the SEC and the Effective Time, in connection with such Tax counsel's respective delivery of opinions pursuant to Sections 6.2(d) and 6.3(d). Each of Parent, Purchaser and the
Company shall use its reasonable best efforts not to take or cause to be taken any action that would cause to be untrue (or fail to take or cause not to be taken any action which would cause to be
untrue) any of the certifications and representations included in the certificates described in this Section 5.14(b).
(c) The
Company and Parent shall cooperate in the preparation, execution and filing of all Tax Returns, questionnaires, applications or other documents regarding any real
property transfer or gains, sales, use, transfer, value added, stock transfer and stamp Taxes, and transfer, recording, registration and other fees and similar Taxes which become payable in connection
with the Merger that are required or permitted to be filed on or before the Effective Time. Each of Purchaser and the Company shall pay, without deduction from any amount payable to holders of Company
Common Stock and without reimbursement from the other party, any such Taxes or fees imposed on it by any Governmental Entity, which becomes payable in connection with the Merger.
Section
5.15 Hedging Activities. At least ten days prior to the date of the Company Special Meeting, Parent
shall provide the Company with a list of specific Derivative Transactions to which the Company or any of its Subsidiaries is a party (the "Specified Derivative Transactions") that Parent intends for
the Company and its Subsidiaries to unwind or terminate. Beginning on the first Business Day after the Company Special Meeting, the Company shall, or shall cause its Subsidiaries to, unwind or
otherwise terminate, on terms reasonably acceptable to Parent, each Specified Derivative Transaction, such that (i) each Specified Derivative Transaction is unwound or terminated as promptly as
reasonably practicable, but in any event prior to the end of the fifth Business Day after the Company Special Meeting and (ii) after such unwinding or termination, neither the Company nor any
A-54
of
its Subsidiaries, will have any further obligation in respect of such Specified Derivative Transaction; provided, that the Company shall not be
required to take any of the foregoing actions unless each of Parent and Purchaser provides a written agreement and acknowledgement to the Company that all conditions to Closing set forth in
Article VI have been satisfied or waived by Parent and Purchaser (other than the condition set forth in Section 6.3(b) with respect to actions taken or required to be taken by the
Company under this Agreement after the Company Special Meeting). Notwithstanding the foregoing, the parties hereby agree and acknowledge that during the five Business Day period prior to the Company
Special Meeting, the Company may, at its option, begin to unwind or otherwise terminate any Specified Derivative Transaction on terms reasonably acceptable to Parent.
Section
5.16 SOX 404 Certification. The Company shall diligently pursue its SOX 404 Plan and shall complete and
include in the Company's Annual Report on Form 10-K for the year ending December 31, 2004, management's assessment of the Company's internal controls and procedures for
financial reporting in accordance with Section 404 of SOX.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger.
The
respective obligation of each party to effect the Merger shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which
may be waived by the parties hereto in writing, in whole or in part, to the extent permitted by applicable Law):
(a) (i) This
Agreement and the Merger shall have been adopted and approved by the Company Required Vote and (ii) the Parent Proposal shall have been approved
and adopted by the Required Parent Vote;
(b) No
statute, rule, order, decree or regulation shall have been enacted or promulgated, and no action shall have been taken, by any Governmental Entity of competent
jurisdiction which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the Merger or makes the Merger illegal;
(c) Other
than filing the Certificate of Merger in accordance with the DGCL, all authorizations, consents and approvals of all Governmental Entities required to be obtained
prior to consummation of the Merger shall have been obtained, except for such authorizations, consents, and approvals the failure of which to be obtained individually or in the aggregate has not had,
and would not be reasonably likely to have or result in, a Material Adverse Effect on any party to this Agreement;
(d) The
S-4 shall have been declared effective, and no stop order suspending the effectiveness of the S-4 shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the SEC; and
(e) The
shares of Parent Common Stock issuable to the stockholders of the Company in the Merger and to the holders of the Assumed Options and the Company Warrants shall have
been authorized for listing on the NYSE, subject to official notice of issuance.
Section 6.2 Conditions to the Obligation of the Company to Effect the Merger.
The
obligation of the Company to effect the Merger is further subject to the satisfaction or waiver at or prior to the Effective Time of the following conditions:
|
|
|
| Balance at January 1, 2004 |
|
— |
|
79,298 |
|
13,216 |
|
— |
|
— |
|
— |
|
— |
|
79,298 |
|
13,216 |
|
| Revisions of previous estimates |
|
— |
|
(27,398 |
) |
(4,566 |
) |
— |
|
— |
|
— |
|
— |
|
(27,398 |
) |
(4,566 |
) |
| Extensions, discoveries & other additions |
|
— |
|
75,081 |
|
12,514 |
|
— |
|
— |
|
— |
|
— |
|
75,081 |
|
12,514 |
|
| Production |
|
— |
|
(7,640 |
) |
(1,273 |
) |
— |
|
— |
|
— |
|
— |
|
(7,640 |
) |
(1,273 |
) |
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
> (a) (i) The
representations and warranties of each of Parent and Purchaser set forth in Sections 4.2, 4.3 and 4.5(a) shall be true and correct in all material
respects both at and as of the date of this Agreement and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as
of such date); and
A-55
(ii) the
representations and warranties of each of Parent and Purchaser set forth in this Agreement (other than the representations and warranties set forth in Sections 4.2, 4.3 and 4.5(a))
shall be true and correct (without giving effect to any limitation as to "materiality" or "Material Adverse Effect" set forth therein) both at and as of the date of this Agreement and at and as of the
Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any limitation as to "materiality" or "Material Adverse Effect" set forth therein) individually or in the aggregate has not had, and
would not be reasonably likely to have or result in, a Material Adverse Effect on Parent. The Company shall have received a certificate signed on behalf of Parent by each of two senior executive
officers of Parent to the foregoing effect;
(b) Each
of Parent and Purchaser shall have performed in all material respects its obligations under this Agreement required to be performed by it at or prior to the
Effective Time pursuant to the terms of this Agreement, and the Company shall have received a certificate signed on behalf of each of Parent and Purchaser by the Chief Executive Officer of each of
Parent and Purchaser to such effect;
(c) There
shall not be pending any suit, action or proceeding by any Governmental Entity seeking to restrain, preclude, enjoin or prohibit the Merger or any of the other
transactions contemplated by this Agreement; and
(d) The
Company shall have received the opinion of Cravath, Swaine & Moore LLP ("Cravath"), counsel to the Company, in form and substance reasonably satisfactory to
the Company, on the date on which the Form S-4 is filed and on the Closing Date, in each case dated as of such respective date, rendered on the basis of facts, representations and
assumptions set forth in such opinion and the certificates obtained from officers of Parent, Purchaser and the Company, all of which are consistent with the state of facts existing as of the date on
which the Form S-4 is filed and the Effective Time, as applicable, to the effect that (i) the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code and (ii) the Company, Parent and Purchaser will each be a "party to the reorganization" within the meaning of Section 368 of the Code. In rendering the
opinion described in this Section 6.2(d), Cravath shall have received and may rely upon the certificates and representations referred to in Section 5.14(b).
Section 6.3 Conditions to Obligations of Parent and Purchaser to Effect the Merger.
The
obligations of Parent and Purchaser to effect the Merger are further subject to the satisfaction or waiver at or prior to the Effective Time of the following conditions:
(a) (i) The
representations and warranties of the Company set forth in Sections 3.2, 3.3 and 3.5(a) shall be true and correct in all material respects both at and as
of the date of this Agreement and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date); and
(ii) the representations and warranties of the Company set forth in this Agreement (other than the representations and warranties set forth in Sections 3.2, 3.3 and 3.5(a)) shall be true and
correct (without giving effect to any limitation as to "materiality" or "Material Adverse Effect" set forth therein) both at and as of the date of this Agreement and at and as of the Closing Date, as
if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true
and correct (without giving effect to any limitation as to "materiality" or "Material Adverse Effect" set forth therein) individually or in the aggregate has not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the Company. Parent shall have received a certificate signed on behalf of the Company by each of two senior executive officers of the Company
to the foregoing effect;
A-56
(b) The
Company shall have performed in all material respects each of its obligations under this Agreement required to be performed by it at or prior to the Effective Time
pursuant to the terms of this Agreement, and Parent shall have received a certificate signed on behalf of the Company by the Chief Executive Officer or Chief Financial Officer to such effect;
(c) There
shall not be pending any suit, action or proceeding by any Governmental Entity seeking to (i) prohibit or limit in any material respect the ownership or
operation by the Company, Parent, Purchaser or any of their respective affiliates of a substantial portion of the business or assets of the Company and its Subsidiaries, taken as a whole, or to
require any such Person to dispose of or hold separate any material portion of the business or assets of the Company and its Subsidiaries, taken as a whole, as a result of the Merger or any of the
other transactions contemplated by this Agreement or (ii) restrain, preclude, enjoin or prohibit the Merger or any of the other transactions contemplated by this Agreement;
(d) Parent
shall have received the opinion of Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden Arps"), counsel to Parent, in form and substance reasonably
satisfactory to Parent, on the date on which the Form S-4 is filed and on the Closing Date, in each case dated as of such respective date, rendered on the basis of facts,
representations and assumptions set forth in such opinion and the certificates obtained from officers of Parent, Purchaser and the Company, all of which are consistent with the state of facts existi |
— |
|
119,341 |
|
19,891 |
|
— |
|
— |
|
— |
|
— |
|
119,341 |
|
19,891 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111
EQUATORIAL GUINEA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
113,198 |
|
537,998 |
|
202,864 |
|
— |
|
— |
|
— |
|
113,198 |
|
537,998 |
|
202,864 |
|
| Revisions of previous estimates |
|
(777 |
) |
(4,130 |
) |
(1,465 |
) |
— |
|
— |
|
— |
|
(777 |
) |
(4,130 |
) |
(1,465 |
) |
| Extensions, discoveries & other additions |
|
— |
|
400,288 |
|
66,715 |
|
— |
|
— |
|
— |
|
— |
|
400,288 |
|
66,715 |
|
| Production
(e) The
number of Dissenting Shares shall not exceed 15% of the outstanding shares of Company Common Stock; and
(f) All
material consents and approvals of any Person that the Company or any of its Subsidiaries are required to obtain in connection with the consummation of the Merger,
including consents and approvals from parties to loans, contracts, leases or other agreements, shall have been obtained, and a copy of each such consent and approval shall have been provided to Parent
at or prior to the Closing, except for such consents and approvals the failure of which to be obtained individually or in the aggregate would not be reasonably likely to have or result in a Material
Adverse Effect on the Company.
ARTICLE VII
TERMINATION
Section 7.1 Termination.
Notwithstanding
anything herein to the contrary, this Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time:
(a) By
the mutual consent of Parent and the Company in a written instrument.
(b) By
either the Company or Parent upon written notice to the other, if:
(i) the
Merger shall not have been consummated on or before August 31, 2005 (the "Termination Date"); provided that the right to terminate this Agreement pursuant to
this Section 7.1(b)(i) shall not be available to a party whose failure to fulfill any material obligation under this Agreement or other material breach of this Agreement has been the
cause of, or resulted in, the failure of the Merger to have been consummated on or before such date;
(ii) any
Governmental Entity shall have issued a statute, rule, order, decree or regulation or taken any other action (which statute, rule, order, decree, regulation or
other action the
A-57
parties
hereto shall have used their reasonable best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the Merger or making the Merger
illegal and such statute, rule, order, decree, regulation or other action shall have become final and nonappealable (provided that the terminating party is not then in breach of Section 5.5);
(iii) the
stockholders of the Company fail to adopt this Agreement by the Company Required Vote at the Company Special Meeting; provided that the Company shall not be
entitled to terminate this Agreement pursuant to this Section 7.1(b)(iii) if it has breached any of its obligations under Section 5.3 or Section 5.6;
(iv) there
shall have been a material breach of or any inaccuracy in any of the representations or warranties set forth in this Agreement on the part of any of the other
parties, which breach is not cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party, or which breach, by its nature, cannot be
cured prior to the Termination Date (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained herein); provided,
however, that no party shall have the right to terminate this Agreement pursuant to this Section 7.1(b)(iv) unless the breach of representation or warranty, together with all other such
breaches, would entitle the party receiving such representation not to consummate the transactions contemplated by this Agreement under Section 6.3(a) (in the case of a breach of representation
or warranty by the Company) or Section 6.2(a) (in the case of a breach of representation or warranty by Parent or Purchaser);
(v) if
there shall have been a material breach of any of the covenants or agreements set forth in this Agreement on the part of any of the other parties, which breach shall
not have been cured within 30 days following receipt by the breaching party of written notice of such breach from the terminating party, or which breach, by its nature, cannot be cured prior to
the Termination Date (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained herein); or
(vi) the
Parent Proposal shall not have been approved and adopted by the Required Parent Vote at the Parent Stockholders' Meeting; provided that Parent shall not be entitled
to terminate this Agreement pursuant to this Section 7.1(b)(vi) if it has breached any of its obligations under Section 5.3 or 5.6.
(c) By
Parent, upon written notice to the Company, if prior to obtaining the Company Required Vote (i) the Company, or the Company Board, as the case may be, shall
have (A) entered into any Acquisition Agreement or (B) approved or recommended, or, in the case of a committee, proposed to the Company Board, to approve or recommend, any Acquisition
Proposal, (ii) the Company or the
Company Board or any committee thereof shall have resolved to do any of the foregoing, (iii) a Company Adverse Recommendation Change shall have occurred in response to a Superior Proposal or
the Company Board or any committee thereof shall have resolved to make such Company Adverse Recommendation Change or (iv) a Company Adverse Recommendation Change shall have occurred for any
reason other than a Superior Proposal or the Company Board or any committee thereof shall have resolved to make such Company Adverse Recommendation Change.
(d) By
the Company, upon written notice to Parent, if prior to obtaining the Required Parent Vote (i) Parent, or the Parent Board, as the case may be, shall have
(A) entered into any Acquisition Agreement or (B) approved or recommended, or, in the case of a committee, proposed to the Parent Board, toTD>
|
(3,691 |
) |
(16,747 |
) |
(6,482 |
) |
— |
|
— |
|
— |
|
(3,691 |
) |
(16,747 |
) |
(6,482 |
) |
|
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
108,730 |
|
917,409 |
|
261,632 |
|
— |
|
— |
|
— |
|
108,730 |
|
917,409 |
|
261,632 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ISRAEL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
— |
|
450,307 |
|
75,051 |
|
—
A-58
Section 7.2 Effect of Termination. In the event of the termination of this Agreement as provided in
Section 7.1, written notice thereof shall forthwith be given by the terminating party to the other parties specifying the provision of this Agreement pursuant to which such termination is made,
and except as provided in this Section 7.2, this Agreement shall forthwith become null and void after the expiration of any applicable period following such notice. In the event of such
termination, there shall be no liability on the part of Parent, Purchaser or the Company, except as set forth in Section 8.1 of this Agreement and except with respect to the requirement to
comply with the Confidentiality Agreement; provided that nothing herein shall relieve any party from any liability or obligation with respect to any willful breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses.
(a) Whether
or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses, except as provided in Sections 8.1(d) and 8.1(e).
(b) If
this Agreement is terminated by Parent pursuant to Section 7.1(c)(iii), then the Company shall pay to Parent in immediately available funds a termination fee
in an amount equal to U.S.$100 million (the "Termination Fee").
(c) If
this Agreement is terminated by the Company pursuant to Section 7.1(d)(iii), then Parent shall pay to the Company the Termination Fee in immediately available
funds.
(d) If
this Agreement is terminated by Parent pursuant to Section 7.1(c)(iv) and prior to such termination no Acquisition Proposal with respect to the Company
has been proposed by any Person (other than Parent and Purchaser or any of their respective affiliates) and no Person has publicly announced its intention (whether or not conditional) to make such
Acquisition Proposal and such Acquisition Proposal and such intention has not otherwise become publicly known to the Company's stockholders generally, then the Company shall pay to Parent the Expenses
Payment in immediately available funds.
(e) If
this Agreement is terminated by the Company pursuant to Section 7.1(d)(iv) and prior to such termination no Acquisition Proposal with respect to Parent
has been proposed by any Person and no Person has publicly announced its intention (whether or not conditional) to make such Acquisition Proposal and such Acquisition Proposal and such intention has
not otherwise become publicly known to Parent's stockholders generally, then Parent shall pay to the Company the Expenses Payment in immediately available funds.
(f) In
the event that (i) an Acquisition Proposal with respect to the Company has been proposed by any Person (other than Parent and Purchaser or any of their
respective affiliates) or any Person has publicly announced its intention (whether or not conditional) to make such Acquisition Proposal or such Acquisition Proposal or such intention has otherwise
become publicly known to the Company's stockholders generally, (ii) thereafter this Agreement is terminated by either the Company or Parent pursuant to Section 7.1(b)(i) or
7.1(b)(iii) or by Parent pursuant to Section 7.1(c)(i), (ii) or (iv) and (iii) within 12 months after the termination of this Agreement, the Company or any of
its Subsidiaries enters into any definitive agreement providing for an Acquisition Proposal, or an Acquisition Proposal with respect to the Company or any of its Subsidiaries is consummated, then the
Company shall pay to Parent the Termination Fee in immediately available funds.
(g) In
the event that (i) an Acquisition Proposal with respect to Parent has been proposed by any Person or any Person has publicly announced its intention (whether
or not conditional) to make such Acquisition Proposal or such Acquisition Proposal or such intention has otherwise become publicly
A-59
known
to Parent's stockholders generally, (ii) thereafter this Agreement is terminated by either the Company or Parent pursuant to Section 7.1(b)(i) or 7.1(b)(vi) or by the
Company pursuant to Section 7.1(d)(i), (ii) or (iv) and (iii) within 12 months after the termination of this Agreement, Parent or any of its Subsidiaries enters into
any definitive agreement providing for an Acquisition Proposal, or an Acquisition Proposal with respect to Parent or any of its Subsidiaries is consummated, then Parent shall pay to the Company the
Termination Fee in immediately available funds.
(h) If
(i) this Agreement is terminated by Parent pursuant to Section 7.1(c)(iv) within three Business Days of notification by the Company to Parent of
the Company Adverse Recommendation Change (or the resolution to make a Company Adverse Recommendation Change) giving rise to such termination and (ii) within three Business Days of such
termination (the "Hedge Termination Period") Parent terminates some or all of the hedging transactions entered into by Parent prior to December 15, 2004 in connection with the transactions
contemplated by this Agreement ("Pre-Announcement Hedges"), then the Company will reimburse Parent for up to $45 million of hedging losses on Pre-Announcement Hedges
covering the years 2006-2008 based on actual losses realized during the Hedge Termination Period (the "Hedging Losses"). > |
|
— |
|
— |
|
— |
|
450,307 |
|
75,051 |
|
| Revisions of previous estimates |
|
— |
|
(15,441 |
) |
(2,574 |
) |
— |
|
— |
|
— |
|
— |
|
(15,441 |
) |
(2,574 |
) |
| Extensions, discoveries & other additions |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Production |
|
— |
|
(17,573 |
) |
(2,929 |
) |
— |
|
— |
|
— |
|
— |
|
(17,573 |
) |
(2,929 |
) |
| Sales of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
— |
|
417,293 |
|
69,548 |
|
— |
|
— |
|
— |
|
(j) Any
payment of the Termination Fee or Expenses Payment pursuant to Section 8.1(b), 8.1(c), 8.1(d) or 8.1(e) shall be made within one Business Day after
termination of this Agreement by wire transfer of immediately available funds to an account designated by Parent. Any payment of the Termination Fee pursuant to Section 8.1(f) or 8.1(g) shall
be made prior to the first to occur of the events described in clause (iii) of Section 8.1(f) or 8.1(g), respectively. Any reimbursement of Hedging Losses pursuant to
Section 8.1(h) shall be made within one Business Day after notice by Parent to the Company of the Hedging Losses accompanied by appropriate documentation thereof, and shall be by wire transfer
of immediately available funds to an account designated by Parent. The parties acknowledge that the agreements contained in this Section 8.1 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, none of the parties would enter into this Agreement; accordingly, if the Company or Parent fails promptly to pay or cause to be paid
the amounts due pursuant to this Section 8.1, and, in order to obtain such payment, Parent or the Company, respectively, commences a suit that results in a judgment against the Company or
Parent, respectively, for the amounts set forth in this Section 8.1, the Company or Parent shall pay to Parent or the Company (as the case may be) its reasonable costs and expenses (including
attorneys' fees and expenses) in connection with such suit and any appeal relating thereto, together with interest on the amounts set forth in this Section 8.1 at the prime rate of Citibank,
N.A. in effect on the date such payment was required to be made.
(k) This
Section 8.1 shall survive any termination of this Agreement.
Section 8.2 Amendment; Waiver.
(a) This
Agreement may be amended by the parties to this Agreement, by action taken or authorized by their respective boards of directors, at any time before or after
approval by the stockholders of the Company of the matters presented in connection with the Merger, but after any such approval no amendment shall be made without the approval of the stockholders of
the Company if such amendment alters or changes (i) the Merger Consideration, (ii) any term of the Certificate of Incorporation or (iii) any terms or conditions of this Agreement
if such alteration or change would adversely affect the holders of any shares of capital stock of the Company. This Agreement may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
A-60
(b) At
any time prior to the Effective Time, the parties to this Agreement may (i) extend the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and warranties of the other parties contained herein or in any document, certificate or writing delivered pursuant
hereto by the other party or (iii) waive compliance with any of the agreements or conditions of the other parties hereto contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Any such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto of a breach
of or a default under any of the provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any
right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights
and remedies herein provided are cumulative and none is exclusive of any other, or of any rights or remedies that any party may otherwise have at Law or in equity.
Section
8.3 Survival. The representations and warranties contained in this Agreement or in any certificates or
other documents delivered prior to or as of the Effective Time shall survive until (but not beyond) the Effective Time. The covenants and agreements of the parties hereto (including the Surviving
Corporation after the Merger) shall survive the Effective Time without limitation (except for those which, by their terms, contemplate a shorter survival period).
Section 8.4 Notices.
All
notices and other communications hereunder shall be in writing and shall be deemed given upon (a) transmitter's confirmation of a receipt of a facsimile transmission,
(b) confirmed delivery by a standard overnight carrier or when delivered by hand, (c) the expiration of five Business Days after the day when mailed in the United States by certified or
registered mail, postage prepaid, or (d) delivery in Person, addressed at the following addresses (or at such other address for a party as shall be specified by like notice):
(a) if
to the Company, to:
Patina
Oil & Gas Corporation
1625 Broadway, Suite 2000
Denver, Colorado 80202
Telephone: 303-389-3600
Facsimile: 303-389-3680
Attention:
Michael Stefanoudakis
with
a copy to:
Cravath,
Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Telephone: 212-474-1000
Facsimile: 212-474-3700
Attention: Allen Finkelson
Robert I. Townsend, III
A-61
|
|
417,293 |
|
69,548 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORTH SEA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
8,460 |
|
13,811 |
|
10,762 |
|
— |
|
— |
|
— |
|
8,460 |
|
13,811 |
|
10,762 |
|
| Revisions of previous estimates |
|
1,037 |
|
1,552 |
|
1,296 |
|
— |
|
— |
|
— |
|
1,037 |
|
1,552 |
|
1,296 |
|
| Extensions, discoveries & other additions |
|
4,414 |
|
685 |
|
4,528 |
|
— |
|
— |
|
— |
|
4,414 |
|
685 |
|
4,528 |
|
| Production |
|
(2,459 |
) |
(4,130 |
) |
(3,147 |
) |
— |
|
— |
|
— |
|
(2,459 |
) |
(4,130 |
) |
(3,147 |
) |
| Sales of minerals in place |
|
(2,116 |
) |
(204 |
) |
(2,150 |
) |
— |
|
— |
|
— |
|
(2,116 |
) |
(204 |
) |
(2,150 |
) |
The
following terms have the following definitions:
(a) "Acceptable
Confidentiality Agreement" means, with respect to the Company or Parent, an agreement that imposes obligations and restrictions on the counterparty thereto
which are substantially similar to the terms that are binding on the other party to this Agreement, as applicable, under the Confidentiality Agreement.
(b) "Business
Day" means any day other than Saturday and Sunday and any day on which banks are not required or authorized to close in the State of Delaware or New York.
(c) "Code"
means the Internal Revenue Code of 1986, as amended.
(d) "Company
Assets" means all of the properties and assets (real, personal or mixed, tangible or intangible) of the Company and its Subsidiaries.
(e) "Company
Consolidated Group" means any affiliated group within the meaning of Section 1504(a) of the Code, in which the Company (or any Subsidiary of the Company)
is or has ever been a member or any group of corporations with which Company files, has filed or is or was required to file an affiliated, consolidated, combined, unitary or aggregate Tax return.
(f) "Company
Directors" means the two individuals currently serving on the Company Board who are set forth on Schedule 8.5(f).
A-62
(g) "Company
Leased Real Property" means all interests in real property pursuant to the Company Leases other than the Company Oil and Gas Properties and other oil, gas and
mineral rights of the Company and its Subsidiaries.
(h) "Company
Leases" means the real property leases subleases, licenses and use or occupancy agreements pursuant to which Parent or any of its Subsidiaries is the lessee,
sublessee, licensee, user, operator or occupant of real property, or interests therein other than such leases subleases, licenses and use or occupancy agreements relating to the Company Oil and Gas
Properties and other oil, gas and mineral rights of the Company and its Subsidiaries.
(i) "Company
Oil and Gas Properties" means, with respect to the Company or any of its Subsidiaries, all of the Company's or any of its Subsidiaries' right, title and
interest in, to and under, or derived from oil and gas leases and rights, Wells and Units, including all land, facilities, personal property and equipment, Contracts and information pertaining or
relating thereto.
(j) "Company
Owned Real Property" means the real property and interests in real property owned by the Company and its Subsidiaries other than the Company Oil and Gas
Properties and other oil, gas and mineral rights of the Company and its Subsidiaries.
(k) "Company
Real Property" means the Company Owned Real Property and the Company Leased Real Property.
(l) "Competition
Laws" means Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of
competition or restraint of trade and includes the HSR Act.
(m) "Derivative
Transaction" means any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or
collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions or
any indexes, or any other similar transaction (including any option with respect to any of these transactions) or combination of any of these transactions, including collateralized mortgage
obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar
arrangements related to such transactions.
(n) "Employment
and Withholding Taxes" means any federal, state, local, foreign or other employment, unemployment, insurance, social security, disability, workers'
compensation, payroll, health care or other similar Tax and all Taxes required to be withheld by or on behalf of each of the Company and any of its Subsidiaries in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other party, in each case, on or in respect of the business or assets thereof.
(o) "Environmental
Claim" means any cF" VALIGN="BOTTOM">
Purchases of minerals in place |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
9,336 |
|
11,714 |
|
11,289 |
|
— |
|
— |
|
— |
|
9,336 |
|
11,714 |
|
11,289 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at January 1, 2004 |
|
183,219 |
|
1,641,920 |
|
456,872 |
|
81,947 |
|
1,024,334 |
|
252,669 |
|
265,166 |
|
2,666,254 |
|
709,541 |
|
| Revisions of previous estimates |
|
1,793 |
|
(53,806 |
) |
(7,174 |
) |
267 |
|
(31,999 |
) |
(5,066 |
) |
2,060 |
|
(85,805 |
) |
(12,240 |
) |
| Extensions, discoveries & other additions |
|
24,198 |
|
550,331 |
|
115,921
(p) "Environmental
Laws" means all Laws, including common law, relating to pollution, cleanup, restoration or protection of the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata and natural resources) or to the protection of flora
A-63
or
fauna or their habitat or to human or public health or safety, including (i) Laws relating to emissions, discharges, Releases or threatened Releases of Hazardous Substances, or otherwise
relating to the manufacture, generation, processing, distribution, use, sale, treatment, receipt, storage, disposal, transport or handling of Hazardous Substances, including the Comprehensive
Environmental Response, Compensation, and Liability Act and the Resource Conservation and Recovery Act, and (ii) the Occupational Safety and Health Act.
(q) "Expenses
Payment" means $6 million, which is an amount the parties agree is in respect of the aggregate amount of all out-of-pocket fees
and expenses incurred or paid by the Company or Parent in connection with the negotiation and performance of this Agreement and the transactions contemplated by this Agreement.
(r) "Financing"
means debt financing in the amounts set forth in the Commitment Letter and on terms not less favorable to the borrower than those set forth in the Commitment
Letter.
(s) "Hazardous
Substance" means (i) chemicals, pollutants, contaminants, wastes, toxic and hazardous substances, and oil and petroleum products, (ii) any
substance that is or contains asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum or petroleum-derived substances or wastes, radon gas or related materials or lead or
lead-based paint or materials, (iii) any substance, material or waste that requires investigation, removal or remediation under any Environmental Law, or is defined, listed or
identified as hazardous, toxic or otherwise dangerous under any Environmental Laws or (iv) any substance that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous.
(t) "JPMorgan"
means J. P. Morgan Securities Inc.
(u) "knowledge"
means, with respect to the Company, the actual knowledge of the individuals listed in Section 3.17(f) of the Company Disclosure Letter, after due
inquiry and (ii) with respect to Parent, the actual knowledge of the individuals listed in Section 4.17(f) of the Parent Disclosure Letter, after due inquiry.
(v) "Liens"
means any mortgage, pledge, deed of trust, hypothecation, right of others, claim, security interest, encumbrance, burden, title defect, title retention
agreement, lease, sublease, license, occupancy agreement, easement, covenant, condition, encroachment, voting trust agreement, interest, option, right of first offer, negotiation or refusal, proxy,
lien, charge or other restrictions or limitations of any nature whatsoever.
(w) "Litigation"
means any action, claim, suit, proceeding, audit, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal or regulatory, in law
or in equity, by or before any Governmental Entity or arbitrator (including worker's compensation claims).
(x) "Material
Adverse Effect" means, with respect to Parent or the Company, as the case may be, (i) a material adverse effect on the business, results of operations
or financial condition of such party and its Subsidiaries taken as a whole or (ii) any change or effect that prevents or materially impedes or delays the consummation by such party of the
Merger and the other transactions contemplated hereby; provided, that none of the following shall be deemed, either alone or in combination, to constitute, and none of the following shall be taken
into account in determining whether there has been or will be, a Material Adverse Effect: (A) changes and effects attributable to changes in Laws of general applicability or interpretations
thereof by courts or governmental authorities, (B) changes and effects attributable to or resulting from changes in general industry conditions or general economic conditions, including changes
in commodity prices, except, in each case, to the extent any such changes or effects disproportionately affect such party and (C) changes and effects attributable to the announcement or
pendency of this Agreement or the Merger.
A-64
(y) "Non-U.S.
Stockholder" means a stockholder who is not (i) an individual who is a citizen or resident of the United States, (ii) a corporation,
or other Person taxable as a corporation, created or organized in or under the Laws of the Untied States, any state thereof or the District of Columbia, (iii) an estate, the income of which is
subject to U.S. federal income taxation regardless of its source, (iv) a trust if (x) a court within the United States is able to exercise primary supervision over the administration of
the trust and (y) one or more U.S. Persons have the authority to control all substantial decisions of the trust or if the trust has made a valid election to be treated as a U.S. Person or
(v) a partnership, or other Person treated as a partnership for United States federal income Tax purposes, to the extent that the beneficial ownership of the Company Common Stock is attributed
to its partners who fall into the categories described in clauses (i)-(iv) above.
(z) "Parent
Assets" means all of the properties and assets (real, personal or mixed, tangible or intangible) of Parent and its Subsidiaries.
&NT> |
|
12,324 |
|
178,401 |
|
42,058 |
|
36,522 |
|
728,732 |
|
157,979 |
|
| Production |
|
(16,729 |
) |
(135,690 |
) |
(39,344 |
) |
(6,606 |
) |
(78,290 |
) |
(19,654 |
) |
(23,335 |
) |
(213,980 |
) |
(58,998 |
) |
| Sales of minerals in place |
|
(4,306 |
) |
(30,331 |
) |
(9,361 |
) |
(816 |
) |
(18,033 |
) |
(3,822 |
) |
(5,122 |
) |
(48,364 |
) |
(13,183 |
) |
| Purchases of minerals in place |
|
5,289 |
|
14,437 |
|
7,695 |
|
1,169 |
|
14,882 |
|
3,649 |
|
6,458 |
|
29,319 |
|
11,344 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
193,464 |
|
1,986,861 |
|
524,609 |
|
88,285 |
|
1,089,295 |
|
269,834 |
|
281,749 |
|
3,076,156 |
|
794,443 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Developed Reserves: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(bb) "Parent
Leased Real Property" means all interests in real property pursuant to the Parent Leases other than the Parent Oil and Gas Properties and other oil, gas and
mineral rights of Parent and its Subsidiaries.
(cc) "Parent
Leases" means the real property leases subleases, licenses and use or occupancy agreements pursuant to which Parent or any of its Subsidiaries is the lessee,
sublessee, licensee, user, operator or occupant of real property, or interests therein other than such leases subleases, licenses and
use or occupancy agreements relating to the Parent Oil and Gas Properties and other oil, gas and mineral rights of Parent and its Subsidiaries.
(dd) "Parent
Oil and Gas Properties" means, with respect to Parent or any of its Subsidiaries, all of Parent's or any of its Subsidiaries' right, title and interest in, to
and under, or derived from oil and gas leases and rights, Wells and Units, including all land, facilities, personal property and equipment, Contracts and information pertaining or relating thereto.
(ee) "Parent
Owned Real Property" means the real property and interests in real property owned by Parent and its Subsidiaries other than the Parent Oil and Gas Properties
and other oil, gas and mineral rights of Parent and its Subsidiaries.
(ff) "Parent
Real Property" means the Parent Owned Real Property and the Parent Leased Real Property.
(gg) "Permit"
means any permit, license, waiver, concession, grant, registration, variance, exemption, authorization, operating certificate, franchise, order or approval
issued by any Governmental Entity.
(hh) "Permitted
Liens" "means (i) Liens reserved against or identified in the Company Balance Sheet or the Parent Balance Sheet, as the case may be, to the extent so
reserved or reflected or described in the notes thereto, (ii) Liens for Taxes not yet due and payable, (iii) in the case of oil and gas leases, the lessor's royalty interest(s), and
(iv) those Liens that, individually or in the aggregate with all other Permitted Liens, do not and would not be reasonably likely to materially interfere with the use or value of the properties
or assets of the Company and its Subsidiaries or Parent and its Subsidiaries, as the case may be and in each case taken as a whole as currently used, or otherwise individually or in the aggregate have
not had, and would not
A-65
reasonably
be likely to have or result in, a Material Adverse Effect on the Company or Parent, as the case may be.
(ii) "Person"
means any natural person, firm, individual, partnership, joint venture, business trust, trust, association, corporation, company, unincorporated entity or
Governmental Entity.
(jj) "Release"
means any releasing, disposing, discharging, injecting, spilling, leaking, pumping, dumping, emitting, escaping, emptying, dispersal, leaching, migration or
placing into, through or upon the environment, including any land, soil, surface water, ground water or air.
(kk) "Return"
means any return, estimated Tax return, report, declaration, form, claim for refund or information statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
(ll) "Subsidiary"
means with respect to any Person, any other Person of which 50% or more of the securities or other interests having by their terms ordinary voting power
for the election of directors or others performing similar functions are directly or indirectly owned by such Person.
(mm) "Tax"
means (i) any federal, state, local, foreign or other tax, import, duty or other governmental charge or assessment or deficiencies thereof, including
income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits, windfall profits, gross receipts, value added, sales, use, excise,
custom duties, transfer, conveyance, mortgage, registration, stamp, documentary, recording, premium, severance, environmental, real and personal property, ad valorem, intangibles, rent, occupancy,
license, occupational, employment, unemployment insurance, social security, disability, workers' compensation, payroll, health care, withholding, estimated or other similar tax and including all
interest and penalties thereon and additions to tax; (ii) any liability for the payment of any amounts described in clauses (i), (ii) or (iii) as a result of being a member of an
affiliated, consolidated, combined, unitary or similar group or as a result of transferor, successor or similar liability; and (iii) any liability for the payments of any amounts as a result of
being a party to any Tax Sharing Agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in
clause (i) or (ii).
(nn) "Unit"
means the area covered by a unitization, communitization or pooling agreement or order applicable to Wells, but only as to those formations in which a Well or
Wells are currently completed and producing Hydrocarbons.
(oo) "Well"
means a well for the purpose of producing Hydrocarbons or disposing of fluids produced in connection with the production of Hydrocarbons.
Section
8.6 Headings; Schedules. The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. Disclosure of any matter pursuant to any Section of the Company Disclosure Letter or Parent Disclosure Letter shall not be
deemed to be an admission or representation as to the materiality of the item so disclosed.
Secti>
|
|
|
|
|
| United States |
|
32,390 |
|
430,513 |
|
104,142 |
|
65,455 |
|
767,603 |
|
193,389 |
|
97,845 |
|
1,198,116 |
|
297,531 |
|
| Argentina |
|
7,539 |
|
1,118 |
|
7,725 |
|
— |
|
— |
|
— |
|
7,539 |
|
1,118 |
|
7,725 |
|
| China |
|
10,501 |
|
— |
|
10,501 |
|
— |
|
— |
|
— |
|
10,501 |
|
— |
|
10,501 |
|
| Ecuador |
|
— |
|
119,341 |
|
19,891 |
|
— |
|
— |
|
— |
|
— |
|
119,341 |
|
19,891 |
|
| Equatiorial Guinea |
|
108,730 |
|
447,347 |
|
183,288 |
|
— |
|
— |
|
— |
|
108,730 |
|
447,347 |
|
183,288 |
|
| Israel |
|
— |
|
360,428 |
|
60,071 |
|
— |
|
— |
|
— |
|
— |
|
360,428 |
|
60,071 |
|
| North Sea |
|
9,336 |
|
11,714 |
|
11,289 |
|
— |
|
— |
|
— |
|
9,336 |
|
11,714 |
|
11,289 |
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall be considered one and the same agreement.
Section
8.8 Entire Agreement. This Agreement and the Confidentiality Agreement constitute the entire agreement,
and supersede all prior agreements and understandings (written and oral), among the parties with respect to the subject matter of this Agreement.
Section
8.9 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or other authority to be invalid, void, unenforceable or against its
A-66
regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.
Section
8.10 Governing Law; Jurisdiction. This Agreement shall be governed, construed and enforced in accordance
with the Laws of the State of Delaware without giving effect to the principles of conflicts of law thereof. Each of the parties hereto hereby agrees that any claim, suit, action or other proceeding,
directly or indirectly, arising out of, under or relating to this Agreement shall be heard and determined in the Chancery Court of the State of Delaware (and each agrees that no such claim, action,
suit or other proceeding relating to this Agreement shall be brought by it or any of its affiliates except in such court), and the parties hereto hereby irrevocably and unconditionally submit to the
exclusive jurisdiction of any such court in any such claim, suit, action or other proceeding and irrevocably and unconditionally waive the defense of an inconvenient forum to the maintenance of any
such claim, suit, action or other proceeding. Each of the parties hereto further agrees that, to the fullest extent permitted by applicable Law, service of any process, summons, notice or document by
U.S. registered mail to such Person's respective address set forth in Section 8.4 shall be effective service of process for any claim, action, suit or other proceeding in Delaware with respect
to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. The parties hereto hereby agree that a final, non-appealable judgment in
any such claim, suit, action or other proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.
Section
8.11 Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties; provided that each of Parent and Purchaser may assign this
Agreement to any of its Subsidiaries, or to any lender to each of Parent and Purchaser or any Subsidiary or affiliate thereof as security for obligations to such lender, and provided, further, that no
assignment to any such lender shall in any way affect Parent's or Purchaser's obligations or liabilities under this Agreement.
Section
8.12 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each
party to this Agreement and their permitted assignees, and (other than Sections 5.8 and 8.11) nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. Without limiting the foregoing, no direct or indirect holder of any equity interests or securities of any
party to this Agreement (whether such holder is a limited or general partner, member, stockholder or
otherwise), nor any affiliate of any party to this Agreement, nor any director, officer, employee, representative, agent or other controlling Person of each of the parties to this Agreement and their
respective affiliates shall have any liability or obligation arising under this Agreement or the transactions contemplated hereby.
Section
8.13 Specific Performance. The parties to this Agreement agree that irreparable damage would occur in
the event that any provision of this Agreement was not performed in accordance with the terms of this Agreement and that the parties shall be entitled to specific performance of the terms of this
Agreement in addition to any other remedy at Law or equity.
A-67
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.
| |
|
NOBLE ENERGY, INC. |
|
|
By: |
/s/ CHARLES D. DAVIDSON
Name: Charles D. Davidson
Title: President |
|
|
NOBLE ENERGY PRODUCTION, INC. |
|
|
By: |
/s/ CHARLES D. DAVIDSON
Name: Charles D. Davidson
Title: President |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance at December 31, 2004 |
|
168,496 |
|
1,370,461 |
|
396,907 |
|
65,455 |
|
767,603 |
|
193,389 |
|
233,951 |
|
2,138,064 |
|
590,296 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112
Pro Forma Combined Standardized Measure of Discounted Future Net Cash Flows
The following tables set forth the standardized measure of discounted future net cash flows relating to proved oil and gas reserves of Noble Energy, Patina and on
a Pro Forma Combined basis as of December 31, 2004, as well as changes therein for the year then ended for Noble Energy, Patina and on a Pro Forma Combined basis:
|
|
Noble Energy
|
|
Patina
|
|
Pro Forma
Combined
|
|
|
|
($ in millions)
|
|
| UNITED STATES |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
5,429 |
|
$ |
9,773 |
|
$ |
15,202 |
|
| Future production costs |
|
|
(1,135 |
) |
|
(2,471 |
) |
|
(3,606 |
) |
| Future development costs |
|
|
(364 |
) |
|
(1,126 |
) |
|
(1,490 |
) |
| Future income tax expense |
|
|
(1,219 |
) |
|
(2,021 |
) |
|
(3,240 |
) |
| |
PATINA OIL & GAS CORPORATION |
|
|
By: |
/s/ THOMAS J. EDELMAN
Name: Thomas J. Edelman
Title: Chairman and Chief Executive Officer |
A-68
Annex B
[J.P.
Morgan Letterhead]
December 15,
2004
The
Board of Directors
Noble Energy, Inc.
100 Glenborough Drive, Suite 100
Houston, TX 77067-3299
Members
of the Board of Directors:
You
have requested our opinion as to the fairness, from a financial point of view, to Noble Energy, Inc. (the "Company") of the consideration to be paid by the Company in the proposed merger
(the "Merger") of a wholly-owned subsidiary of the Company (the "Merger Subsidiary") with Patina Oil & Gas Corporation (the "Merger Partner"). Pursuant to the Agreement and Plan of Merger (the
"Agreement") to be entered into among the Company, Merger Subsidiary and the Merger Partner, the Merger Partner will become a wholly-owned subsidiary of the Company, and each outstanding share of
common stock, par value $0.01 per share, of the Merger Partner (the "Merger Partner Common Stock"), other than shares of Merger Partner Common Stock held directly or indirectly by the Company, Merger
Subsidiary or Merger Partner or any of their respective subsidiaries and except for any shares as to which statutory appraisal rights are perfected, will be converted into the right to receive the per
share consideration calculated pursuant to a formula specified in the Agreement. The
merger consideration will be payable in shares of the Company's common stock, par value $3.331/3 per share (the "Company Common Stock"), or, at the election of the holder, cash,
provided that the elections of holders will be adjusted as provided in the Agreement so that the aggregate amount of cash consideration paid in the Merger is approximately equal to the product of
(i) $37.00 times (ii) 0.4 times (iii) the total number of shares of Merger Partner
Common Stock outstanding.
In
arriving at our opinion, we have (i) reviewed a draft of the Agreement dated December 15, 2004; (ii) reviewed certain publicly available business and financial information
concerning the Merger Partner and the Company and the industries in which they operate; (iii) compared the proposed financial terms of the Merger with the publicly available financial terms of
certain transactions involving companies we deemed relevant and the consideration received for such companies; (iv) compared the financial and operating performance of the Merger Partner and
the Company with publicly available information concerning certain other companies we deemed relevant and reviewed the current and historical market prices of the Merger Partner Common Stock and the
Company Common Stock and certain publicly traded securities of such other companies; (v) reviewed certain internal financial analyses and forecasts prepared by the managements of the Merger
Partner and the Company relating to their respective businesses, as well as the estimated amount and timing of the cost savings and related expenses and synergies expected to result from the Merger
(the "Synergies"); (vi) reviewed oil and gas reserve reports for the Company and the Merger Partner prepared by the managements of the Company and the Merger Partner, respectively, and audited
by Netherland, Sewell & Associates, Inc. (collectively, the "Reserve Reports"); and (vii) performed such other financial studies and analyses and considered such other information
as we deemed appropriate for the purposes of this opinion.
In
addition, we have held discussions with certain members of the management of the Merger Partner and the Company with respect to certain aspects of the Merger, and the past and current business
operations of the Merger Partner and the Company, the financial condition and future prospects and operations of the Merger Partner and the Company, the effects of the Merger on the financial
condition and future prospects of the Company, and certain other matters we believed necessary or appropriate to our inquiry.
B-1
In
giving our opinion, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information that was publicly available or was furnished to us by the
Merger Partner and the Company or otherwise reviewed by us, and we have not assumed any responsibility or liability therefor. We have not conducted any valuation or appraisal of any assets or
liabilities, nor have any such valuations or appraisals been provided to us, other than the Reserve Reports. In relying on financial analyses and forecasts provided to us, including the Synergies, we
have assumed that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations
and financial condition of the Merger Partner and the Company to which such analyses or forecasts relate. In relying on the Reserve Reports, we have assumed that they have been reasonably prepared by
the managements of the Company and the Merger Partner, respectively, based on assumptions reflecting the best currently available estimates and judgments by the respective managements. We have also
assumed that the Merger will qualify as a tax-free reorganization for United States federal income tax purposes, that the
other transactions contemplated by the Agreement will be consummated as described in the Agreement and that the definitive Agreement will not differ in any material respects from the draft thereof
furnished to us. We have relied as to all legal matters relevant to rendering our opinion upon the advice of counsel. We have further assumed that all material governmental, regulatory or other
consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on the Merger Partner or the Company or on the contemplated benefits of the Merger. For
the purposes of our opinion, we have calculated the consideration payable in the Merger based upon the fully diluted number of shares of Merger Partner Common Stock outstanding as reflected in
Section 3.2(a) of the Agreement.
Our
opinion is necessarily based on economic, market and other conditions as in effect on, and the information made available to us as of, the date hereof. > |
|
|
|
|
|
|
| Future net cash flows |
|
|
2,711 |
|
|
4,155 |
|
|
6,866 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(1,104 |
) |
|
(2,056 |
) |
|
(3,160 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
1,607 |
|
$ |
2,099 |
|
$ |
3,706 |
|
| |
|
|
|
|
|
|
|
EQUATORIAL GUINEA |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
4,358 |
|
$ |
— |
|
$ |
4,358 |
|
| Future production costs |
|
|
(490 |
) |
|
— |
|
|
(490 |
) |
| Future development costs |
|
|
(83 |
) |
|
— |
|
|
(83 |
) |
| Future income tax expense |
|
|
(1,704 |
) |
|
— |
|
|
(1,704 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
2,081 |
|
|
— |
|
|
2,081 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(1,079 |
) |
|
— |
|
|
(1,079 |
) |
| |
|
|
|
|
We
have acted as financial advisor to the Company with respect to the proposed Merger and, upon public announcement of the Merger, will receive a fee form the Company for our services. We will also
receive an additional fee if the proposed Merger is consummated. In the ordinary course of our businesses, we and our affiliates may actively trade the debt and equity securities of the Company or the
Merger Partner for our own account or for the accounts of customers and, accordingly, we may at any time hold long or short positions in such securities. We and our affiliates have provided from time
to time certain investment banking and commercial banking services for the Company for customary compensation and certain commercial banking services for the Merger Partner for customary compensation.
Specifically, JPMorgan Chase Bank, an affiliate of ours, is agent bank and a lender under credit facilities of each of the Company and the Merger Partner and receives fees for the rendering of such
services. In addition, in connection with the Merger we or certain of our affiliates have assisted the Company in connection with certain commodity hedging transactions and may arrange and/or provide
financing to the Company, all for customary compensation. Alexander P. Lynch, a Managing Director of J.P. Morgan Securities Inc., is a member of the Board of Directors of the
Merger Partner.
On
the basis of and subject to the foregoing, it is our opinion as of the date hereof that the consideration to be paid in the proposed Merger is fair, from a financial point of view, to the Company.
This
letter is provided to the Board of Directors of the Company in connection with and for the purposes of its evaluation of the Merger. This opinion does not constitute a recommendation to any
B-2
shareholder
of the Company as to how such shareholder should vote with respect to the Merger or any other matter. This opinion may not be disclosed, referred to, or communicated (in whole or in part)
to any third party for any purpose whatsoever except with our prior written approval. This opinion may be reproduced in full in any proxy or information statement mailed to shareholders of the Company
but may not otherwise be disclosed publicly in any manner without our prior written approval.
Very
truly yours,
/s/
J.P. MORGAN SECURITIES INC.
J.P.
MORGAN SECURITIES INC.
B-3
Annex C
[Petrie Parkman & Co. Letterhead]
December 15, 2004
The
Board of Directors
Patina Oil & Gas Corporation
1625 Broadway
Suite 2000
Denver, Colorado 80202
Members
of the Board:
Noble
Energy, Inc., a Delaware corporation ("Noble" or the "Parent"), Noble Energy Production, Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and
Patina Oil & Gas Corporation, a Delaware corporation ("Patina" or the "Company"), propose to enter into an agreement and plan of merger (the "Merger Agreement") which provides for, among other things,
the merger of the Company with and into Purchaser (the "Merger"). Pursuant to the Merger Agreement at the effective time, each share of the Company common stock issued and outstanding immediately
prior to the effective time (other than shares of Company common stock held by Parent, Purchaser or the Company) par value $0.01 per share (the "Patina Common Stock"), shall be converted into and
exchangeable for the right to receive (i) an initial exchange rate of 0.62521 shares of Parent common stock, par value $3.33 1/3 per share ("Parent Common Stock") (the "Per Share Stock
Consideration") or (ii) $37.00 per share in cash (the "Per Share Cash Consideration") (or a specified combination thereof), as the holder of such Patina Common Stock may elect pursuant to the
procedures set forth in the Merger Agreement and subject to certain adjustment and proration procedures and limitations specified in the Merger Agreement (the "Merger Consideration").
You
have requested our opinion as to whether the Merger Consideration to be received by the holders of Patina Common Stock (other than Parent, Purchaser or the Company) in the Merger is
fair, from a financial point of view, to such holders.
In
arriving at our opinion, we have, among other things:
- 1.
- reviewed
certain publicly available business and financial information relating to Patina and Noble, including (i) Annual Reports on Form 10-K and related audited
financial statements for the fiscal years ended December 31, 2001, December 31, 2002 and December 31, 2003 and (ii) the Quarterly Reports on Form 10-Q and related
unaudited financial statements for the fiscal quarter ended September 30, 2004;
- 2.
- reviewed
certain estimates of Patina's oil and gas reserves, including (i) internal estimates of proved reserves prepared by the management and staff of the Company and audited
by the independent engineering firm of Netherland, Sewell & Associates, Inc. ("NSAI") as of December 31, 2003, (ii) estimates of proved and non-proved reserves prepared by the management
and staff of the Company as of July 1, 2004, and (iii) estimates of projected proved and non-proved reserves prepared by the management and staff of the Company as of January 1,
2005;
- 3.
- reviewed
certain estimates of Noble's oil and gas reserves, including (i) internal estimates of proved reserves prepared by the management and staff of the Company and audited
by NSAI as of December 31 2003 (ii) estimates of proved reserves prepared by NSAI as of December 31, 2003 for proved reserves located in Equatorial Guinea, and
(iii) estimates of proved and non-proved reserves prep/FONT>
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
1,002 |
|
$ |
— |
|
$ |
1,002 |
|
| |
|
|
|
|
|
|
|
ECUADOR |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
377 |
|
$ |
— |
|
$ |
377 |
|
| Future production costs |
|
|
(42 |
) |
|
— |
|
|
(42 |
) |
| Future development costs |
|
|
(16 |
) |
|
— |
|
|
(16 |
) |
| Future income tax expense |
|
|
(129 |
) |
|
— |
|
|
(129 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
190 |
|
|
— |
|
|
190 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(82 |
) |
|
— |
|
|
(82 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
108 |
|
$ |
— |
|
$ |
108 |
|
| |
|
|
|
|
|
|
|
ISRAEL |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
ared by the management and staff of the Company as of July 1, 2004;
C-1
- 4.
- analyzed
certain historical and projected financial and operating data of Patina and Noble prepared by the management and staff of Patina and Noble, respectively;
- 5.
- discussed
the current operations and prospects of Noble with the managements and staffs of Patina and Noble, and discussed the current operations and prospects of Patina with the
management and staff of Patina;
- 6.
- discussed
the political and other risks associated with certain oil and gas assets of Noble located in certain countries other than the United States with consultants retained by
Patina;
- 7.
- reviewed
the historical market prices and trading history of Patina Common Stock and Parent Common Stock;
- 8.
- compared
recent stock market capitalization indicators for Patina and Noble with recent stock market capitalization indicators for certain other publicly-traded independent energy
companies;
- 9.
- compared
the financial terms of the Merger with the financial terms of other transactions that we deemed to be relevant;
- 10.
- participated
in certain discussions and negotiations among the representatives of Patina, Noble and their respective financial and legal advisors;
- 11.
- reviewed
a draft dated December 15, 2004 of the Merger Agreement; and
- 12.
- reviewed
such other financial studies and analyses and performed such other investigations and taken into account such other matters as we have deemed necessary or appropriate.
In
connection with our opinion, we have assumed and relied upon, without assuming any responsibility for, or independently verifying, the accuracy and completeness of all information
supplied or otherwise made available to us by Patina and Noble. We have further relied upon the assurances of representatives of the management of Patina and Noble that they are unaware of any facts
that would make the information provided to us incomplete or misleading in any material respect. With respect to projected financial and operating data, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and judgments of the managements and staffs of Patina and Noble, respectively, relating to the future financial and operational
performance of each company. With respect to the estimates of oil and gas reserves, we have assumed that they have been reasonably prepared on bases reflecting the best available estimates and
judgments of the managements and staffs of Patina and Noble (and NSAI, as applicable) relating to the oil and gas properties of Patina and Noble, respectively. We have not made an independent
evaluation or appraisal of the assets
or liabilities of Patina or Noble, nor, except for the estimates of oil and gas reserves referred to above, have we been furnished with any such evaluations or appraisals. In addition, we have not
assumed any obligation to conduct, nor have we conducted, any physical inspection of the properties or facilities of Patina or Noble. We have also assumed that the final form of the Merger Agreement
will be substantially similar to the last draft reviewed by us, and that the Merger will be consummated in accordance with the terms of the Merger Agreement without waiver of any of the conditions
precedent to the Merger contained in the Merger Agreement.
Our
opinion relates solely to the fairness from a financial point of view of the Merger Consideration to be received by the holders of Patina Common Stock in the Merger (other than
Parent, Purchaser, or the Company). Our advisory services and the opinion expressed herein are provided for the information and assistance of the Board of Directors of Patina in connection with its
consideration of the transactions contemplated by the Merger Agreement and our opinion does not constitute a recommendation to any holder of Patina Common Stock as to how such holder should vote on
the Merger. Our opinion does not address the relative merits of the Merger as compared to any alternative business transaction or strategic alternative that might be available to Patina, nor does it
C-2
address
the underlying business decision of Patina to engage in the Merger. Furthermore, we have not solicited, nor have we been asked to solicit, offers from other parties to acquire all or a part of
Patina. We have not been asked to consider, and this opinion does not address, the tax consequences of the Merger to any particular shareholder of Patina, or the prices at which the Patina Common
Stock or Parent Common Stock will actually trade at any time, including following the announcement or consummation of the Merger. We are not rendering any legal or accounting advice and understand
Patina is relying on its legal counsel and accounting advisors as to legal and accounting matters in connection with the Merger. As you are aware, we are acting as financial advisor to Patina and we
will receive a fee from Patina for our services, which fee is contingent upon the consummation of the Merger. In addition, Patina has agreed to indemnify us for certain liabilities arising out of our
engagement. We have, in the past, provided financial advisory services to Patina, and have received customary fees for such services. Furthermore, in the ordinary course of business, we or our
affiliates may trade in the debt or equity securities of Patina, as well as securities of Noble, for the accounts of our customers or for our own account and, accordingly, may at any time hold a long
or short position in such securities.
Our
opinion is rendered on the basis of conditions in the securities markets and the oil and gas markets as they exist and can be evaluated on the date hereof and the conditions and
prospects, financial and otherwise, of Patina and Noble as they have been represented to us as of the date hereof or as they were reflected in the materials and discussions described above.
Based
upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration to be received by the holders of Patina Common Stock (other than Parent,
Purchaser, or the Company) in the Merger is fair, from a financial point of view, to such holders.
|
$ |
1,089 |
|
$ |
— |
|
$ |
1,089 |
|
| Future production costs |
|
|
(133 |
) |
|
— |
|
|
(133 |
) |
| Future development costs |
|
|
(88 |
) |
|
— |
|
|
(88 |
) |
| Future income tax expense |
|
|
(264 |
) |
|
— |
|
|
(264 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
604 |
|
|
— |
|
|
604 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(249 |
) |
|
— |
|
|
(249 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
355 |
|
$ |
— |
|
$ |
355 |
|
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
113
NORTH SEA |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
439 |
|
$ |
— |
|
$ |
439 |
|
| Future production costs |
|
|
(153 |
) |
|
—
| |
|
Very truly yours, |
|
|
PETRIE PARKMAN & CO., INC. |
|
|
By: |
/s/ JON C. HUGHES
Jon C. Hughes |
C-3
Annex D
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
SECTION 262—APPRAISAL RIGHTS.
(a) Any
stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word "stockholder" means a
holder of record of stock in a stock corporation and also a member of record of a nonstock corporation; the words "stock" and "share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the words "depository receipt" mean a receipt or other instrument issued by a depository representing an interest in one or
more shares, or fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal
rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 257, § 258, § 263 or
§ 264 of this title:
(1) Provided,
however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities
Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation
surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title.
(2) Notwithstanding
paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares
of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
b. Shares
of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash
in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any
combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing
subparagraphs a., b. and c. of this paragraph.
D-1
(3) In
the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
(c) Any
corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its
stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the
assets of the corporation. If the certificate of incorporation contains such a provision, the procedures of this section, including those set forth in subsections (d) and (e) of this
section, shall apply as nearly as is practicable.
(d) Appraisal
rights shall be perfected as follows:
(1) If
|
|
|
(153 |
) |
| Future development costs |
|
|
(23 |
) |
|
— |
|
|
(23 |
) |
| Future income tax expense |
|
|
(109 |
) |
|
— |
|
|
(109 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
154 |
|
|
— |
|
|
154 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(33 |
) |
|
— |
|
|
(33 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
121 |
|
$ |
— |
|
$ |
121 |
|
| |
|
|
|
|
|
|
|
OTHER INTERNATIONAL |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
662 |
|
$ |
— |
|
$ |
662 |
|
| Future production costs |
|
|
(310 |
) |
|
— |
|
|
(310 |
) |
| Future development costs |
|
|
(33 |
) |
|
— |
|
|
(33 |
) |
| Future income tax expense |
|
|
(93 |
) |
|
— |
|
|
(93 |
) |
| |
|
|
|
|
|
|
|
|
(2) If
the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then, either a constituent corporation before the effective
date of the merger or consolidation, or the surviving or resulting corporation within ten days thereafter, shall notify each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing
from the surviving or resulting corporation the appraisal of such holder's shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of such holder's shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each
such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder's shares in accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining
D-2
the
stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.
(e) Within
120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal rights, may file a petition in the Court of Chancery demanding a determination of the value of the stock
of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation, any stockholder shall have the right to withdraw
such stockholder's demand for appraisal and to accept the terms offered upon the merger or consolidation. Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d) hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or
resulting from the consolidation a statement setting forth the aggregate number of shares not voted in favor of the merger or consolidation and with respect to which demands for appraisal have been
received and the aggregate number of holders of such shares. Such written statement shall be mailed to the stockholder within 10 days after such stockholder's written request for such a
statement is received by the surviving or resulting corporation or within 10 days after expiration of the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon
the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within
20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have
demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed
for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general circulation published in the City of Wilmington, Delaware or such publication as the
Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the costs thereof shall be borne by the surviving or resulting corporation.
(g) SIZE=2>Future net cash flows |
|
|
226 |
|
|
— |
|
|
226 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(77 |
) |
|
— |
|
|
(77 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
149 |
|
$ |
— |
|
$ |
149 |
|
| |
|
|
|
|
|
|
|
TOTAL |
|
|
|
|
|
|
|
|
|
|
| Future cash inflows |
|
$ |
12,354 |
|
$ |
9,773 |
|
$ |
22,127 |
|
| Future production costs |
|
|
(2,263 |
) |
|
(2,471 |
) |
|
(4,734 |
) |
| Future development costs |
|
|
(607 |
) |
|
(1,126 |
) |
|
(1,733 |
) |
| Future income tax expense |
|
|
(3,518 |
) |
|
(2,021 |
) |
|
(5,539 |
) |
| |
|
|
|
|
|
|
|
| Future net cash flows |
|
|
5,966 |
|
|
4,155 |
|
|
10,121 |
|
| 10% annual discount factor for estimated timing of cash flows |
|
|
(2,624 |
) |
|
(2,056 |
) |
|
(4,680 |
) |
| |
|
|
|
|
|
|
|
| Standardized measure of discounted future net cash flows |
|
$ |
3,342 |
D-3
upon
the appraisal prior to the final determination of the stockholder entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant
to subsection (f) of this section and who has submitted such stockholder's certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until
it is finally determined that such stockholder is not entitled to appraisal rights under this section.
(i) The
Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders
entitled thereto. Interest may be simple or compound, as the Court may direct. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case
of holders of shares represented by certificates upon the surrender to the corporation of the certificates representing such stock. The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation be a corporation of this State or of any state.
(j) The
costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From
and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section
shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record
at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection
(e) of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder's demand for an appraisal and an acceptance of the
merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to
any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just.
(l) The
shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
D-4
| |
