Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On October 25, 2021, Oasis Midstream Partners LP (the "Partnership") and OMP GP
LLC, a Delaware limited liability company and the general partner of the
Partnership (the "General Partner"), entered into an Agreement and Plan of
Merger (the "Merger Agreement"), with Crestwood Equity Partners LP, a Delaware
limited partnership ("Crestwood"), Project Falcon Merger Sub LLC, a Delaware
limited liability company and direct wholly owned subsidiary of Crestwood
("Merger Sub"), Project Phantom Merger Sub LLC, a Delaware limited liability
company and direct wholly owned subsidiary of Crestwood ("GP Merger Sub"), and,
solely for the purposes of Section 2.1(a)(i) of the Merger Agreement, Crestwood
Equity GP LLC, a Delaware limited liability company and the general partner of
Crestwood ("Crestwood GP"). Upon the terms and subject to the conditions set
forth in the Merger Agreement, Merger Sub will merge with and into the
Partnership (the "LP Merger"), with the Partnership surviving the LP Merger as a
subsidiary of Crestwood, and GP Merger Sub will merge with and into the General
Partner (the "GP Merger" and, together with the LP Merger, the "Mergers"), with
the General Partner surviving the GP Merger as a wholly owned subsidiary of
Crestwood. On October 25, 2021, the board of directors of Crestwood GP, and the
board of directors of the General Partner (the "Board"), unanimously approved
the Merger Agreement. The Conflicts Committee of the Board provided Special
Approval (as defined in the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of March 30, 2021), and in connection
with such Special Approval received a fairness opinion from Jefferies LLC.
At the effective time of the Mergers (the "Effective Time"): (i) 6,520,944
common units representing limited partner interests in the Partnership
("Partnership Common Units") issued and outstanding immediately prior to the
Effective Time and owned by OMS Holdings LLC, a Delaware limited liability
company ("OMS Holdings") and subsidiary of Oasis Petroleum Inc. ("Oasis
Petroleum") (such Partnership Common Units, the "Sponsor Cash Units"), will be
converted into and will thereafter represent the right to receive $150,000,000
in cash in the aggregate and each other Partnership Common Unit issued and
outstanding immediately prior to the Effective Time owned by Oasis Petroleum or
its subsidiaries (other than the Partnership) (together with the Sponsor Cash
Units, the "Sponsor Units") will be converted into and will thereafter represent
the right to receive 0.7680 common units representing limited partner interests
in Crestwood ("Crestwood Common Units"); (ii) each Partnership Common Unit
issued and outstanding immediately prior to the Effective Time (other than the
Sponsor Units) will be converted into and will thereafter represent the right to
receive 0.8700 (the "Public Holder Exchange Ratio") Crestwood Common Units and
(iii) all of the limited liability company interests of the General Partner
issued and outstanding as of immediately prior to the Effective Time will be
converted into and will thereafter represent the right to receive $10,000,000 in
cash. Upon completion of the Mergers, Oasis Petroleum is expected to own
approximately 21.7% of the Crestwood common units.
Each award of restricted units that corresponds to Partnership Common Units,
vested or unvested (each, a "Partnership Restricted Unit Award"), that is
outstanding immediately prior to the Effective Time, will, immediately prior to
the Effective Time, automatically become fully vested to the extent unvested and
will, without any action on the part of the Partnership, Crestwood or the holder
thereof and subject to satisfaction of all applicable tax withholding
obligations, be cancelled and converted into a right to receive a number of
unrestricted Crestwood Common Units equal to the product obtained by multiplying
the number of Partnership Common Units subject to such Partnership Restricted
Unit Award immediately prior to the Effective Time by the Public Holder Exchange
Ratio.
The completion of the Mergers is subject to the satisfaction or waiver of
customary closing conditions, including, among others: (i) adoption of the
Merger Agreement by holders of a majority of the outstanding Partnership Common
Units entitled to vote thereon, (ii) absence of any court order or regulatory
injunction prohibiting completion of the Mergers, (iii) expiration or
termination of review under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (iv) effectiveness of a registration statement
of Crestwood on Form S-4 (the "Form S-4") in connection with the issuance of
Crestwood Common Units in the LP Merger, (v) the mailing of the combined consent
statement/prospectus to all holders of Partnership Common Units following
effectiveness of the Form S-4 and at least 20 days prior to the closing date,
(vi) the authorization for listing of Crestwood Common Units to be issued in the
LP Merger on the NYSE and (vii) the consummation of the Pre-Closing Transactions
(as defined in the Merger Agreement). The obligation of each of the Partnership
and Crestwood to consummate the Mergers is also conditioned upon compliance by
the other party in all material respects with its covenants and, subject to
materiality standards specified in the Merger Agreement, the accuracy of the
representations and warranties of the other party.
Crestwood and the Partnership have made customary representations and warranties
in the Merger Agreement. The Merger Agreement also contains customary covenants
and agreements, including covenants and agreements relating to (i) the conduct
of each of the Partnership's and Crestwood's respective businesses between the
date of the signing of the Merger Agreement and the Effective Time and (ii) the
efforts of the parties to cause
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the Mergers to be completed, including actions which may be necessary to cause
the expiration or termination of the waiting period under the HSR Act. Pursuant
to the terms of the Merger Agreement, each of Crestwood and the Partnership
shall use its reasonable best efforts to take any and all steps necessary,
subject to certain limitations, to obtain antitrust clearance in order to
facilitate closing of the Mergers.
The Merger Agreement contains certain termination rights for the Partnership and
Crestwood as more particularly set forth in the Merger Agreement. The Merger
Agreement further provides that, upon termination of the Merger Agreement under
certain circumstances, the Partnership may be required to pay Crestwood a
termination fee of $40,000,000.
At the closing of the transactions contemplated by the Merger Agreement, the
Partnership will enter into a Master Amendment to Commercial Agreements a form
of which is attached as an exhibit to the Merger Agreement. The Master Amendment
to Commercial Agreements will amend certain commercial agreements between Oasis
Petroleum and the Partnership at closing, as more particularly set forth in the
Master Amendment to Commercial Agreements.
The transaction has been approved by both general partners of Crestwood and OMP.
The transaction terms were reviewed, negotiated and approved by the conflicts
committee of the board of directors of the General Partner and, in connection
with providing Special Approval, the board of directors of the General Partner
received a fairness opinion from Jefferies LLC. The Merger Agreement is attached
hereto as Exhibit 2.1 and is incorporated herein by reference. The foregoing
summary has been included to provide investors and security holders with
information regarding the terms of the Merger Agreement, including the Master
Amendment to Commercial Agreements attached as an exhibit thereto and is
qualified in its entirety by the terms and conditions of the Merger Agreement,
including the Master Amendment to Commercial Agreements. It is not intended to
provide any other factual information about the Partnership, Crestwood or their
respective subsidiaries and affiliates. The Merger Agreement contains
representations and warranties by each of the parties to the Merger Agreement,
which were made only for purposes of the Merger Agreement and as of specified
dates. The representations, warranties and covenants in the Merger Agreement
were made solely for the benefit of the parties to the Merger Agreement; may be
subject to limitations agreed upon by the contracting parties, including being
qualified by confidential disclosures made for the purposes of allocating
contractual risk between the parties to the Merger Agreement instead of
establishing these matters as facts; and may be subject to standards of
materiality applicable to the contracting parties that differ from those
applicable to investors. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or condition of the Partnership, Crestwood or any of their
respective subsidiaries or affiliates. Moreover, information concerning the
subject matter of the representations, warranties and covenants may change after
the date of the Merger Agreement, which subsequent information may or may not be
fully reflected in the Partnership's or Crestwood's public disclosures.
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Support Agreement
Contemporaneously with the execution of the Merger Agreement, the Partnership,
Crestwood, Oasis Petroleum, the General Partner and OMS Holdings entered into a
support agreement (the "Support Agreement") regarding the Partnership Common
Units owned by Oasis Petroleum and OMS Holdings (or their affiliates). Pursuant
to the Support Agreement, Oasis Petroleum and OMS Holdings have agreed to, among
other things (and as applicable), following effectiveness of the Form S-4,
execute and deliver, or cause an affiliate to execute and deliver, a written
consent (the "Written Consent") covering all of their Partnership Common Units,
approving the Merger Agreement and the transactions contemplated thereby. The
Support Agreement and the Merger Agreement may be terminated in the event the
Written Consent is not delivered.
In addition, the Support Agreement includes certain affirmative and restrictive
covenants of the parties, including, among others, Oasis Petroleum's waiver of
certain consent, notice, approval and re-negotiation rights under certain
Commercial Agreements (as defined in the Support Agreement) that would be
triggered by the transactions contemplated by the Merger Agreement.
The Support Agreement is attached hereto as Exhibit 10.1 and is incorporated
into this Item 1.01 by reference. The foregoing summary has been included to
provide investors and security holders with information regarding the terms of
the Support Agreement and is qualified in its entirety by the terms and
conditions of the Support Agreement. It is not intended to provide any other
factual information about the parties or their respective subsidiaries and
affiliates. The Support Agreement contain representations and warranties by each
of the parties to the Support Agreement, which were made only for purposes of
the Support Agreement and as of a specified date. The representations,
warranties and covenants in the Support Agreement were made solely for the
benefit of the parties to the Support Agreement; may be subject to limitations
agreed upon by the contracting parties; and may be subject to standards of
materiality, applicable to the contracting parties that differ from those
applicable to investors. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the
actual state of facts or condition of the parties or any of their respective
subsidiaries or affiliates. Moreover, information concerning the subject matter
of the representations, warranties and covenants may change after the date of
the Support Agreement, which subsequent information may or may not be fully
reflected in the Partnership's or Crestwood's public disclosures.
Crude Oil Gathering and Storage Agreement
On October 25, 2021, OMP Operating LLC ("OMP"), an indirect wholly-owned
subsidiary of the Partnership entered into an Amended and Restated Crude Oil
Gathering and Storage Agreement (the "A&R Crude Agreement") with Oasis Petroleum
North America LLC ("OPNA") and Oasis Petroleum Marketing LLC ("OPM"), both
indirect wholly-owned subsidiaries of Oasis Petroleum, which A&R Crude Agreement
amends and restates the Crude Oil Gas Gathering and Storage Agreement, dated
October 5, 2021 between the Partnership, OPNA and OPM, and pursuant to which (i)
OPNA and OPM agreed to deliver into OMP's crude oil gathering system all of the
crude oil produced that is owned or controlled by OPNA or OPM (subject to
certain limited exceptions) from a dedicated area in the City of Williston and
Painted Woods areas, and (ii) OMP will perform certain gathering and storage
services for the crude oil delivered. The A&R Crude Agreement provides for an
initial term of 15 years.
Produced and Flowback Water Gathering and Disposal Agreement
On October 25, 2021, OMP entered into an Amended and Restated Produced and
Flowback Water Gathering and Disposal Agreement (the "A&R Produced Water
Agreement") with OPNA, which A&R Produced Water Agreement amends and restates
the Produced and Flowback Water Gathering and Disposal Agreement, dated October
5, 2021 between the Partnership, OPNA and OPM, and pursuant to which OPNA
dedicated the City of Williston and Painted Woods areas to the Partnership for
produced and flowback water gathering and disposal services. The A&R Produced
Water Agreement provides for an initial term of 15 years.
Gas Gathering, Compression and Processing Agreement
On October 25, 2021, OMP entered into a Gas Gathering, Compression, and
Processing with OPNA and OPM (the "Gas Gathering Agreement") pursuant to which
(i) OPNA and OPM agreed to deliver into the Partnership's natural gas gathering
system all of the natural gas produced that is owned or controlled by OPNA or
OPM (subject to certain limited exceptions) from dedicated areas in the City of
Williston and Painted Woods areas and (ii) OMP, or its designee, will perform
certain gathering, compression, and processing services. The Gas Gathering
Agreement provides for an initial term of 15 years.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
2.1* Agreement and Plan of Merger, dated as of October 25, 2021, by and
among Oasis Midstream Partners LP, OMP GP LLC, Crestwood Equity
Partners LP, Project Phantom Merger Sub LLC, Project Falcon Merger Sub
LLC, and, solely for the purposes of Section 2.1(a)(i) thereof,
Crestwood Equity GP LLC.
10.1** Support Agreement, dated as of October 25, 2021, by and among
Crestwood Equity Partners LP, Oasis Midstream Partners LP, OMP GP LLC,
Oasis Petroleum Inc. and OMS Holdings LLC.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
* Schedules and certain exhibits to this Exhibit are omitted pursuant to
Regulation S-K Item 601(b)(2). The Partnership agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the SEC upon
request.
** Schedules and certain exhibits to this Exhibit are omitted pursuant to
Regulation S-K Item 601(b)(10). The Partnership agrees to furnish
supplementally a copy of any omitted schedule or exhibit to the SEC upon
request.
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