Resolute Energy Corporation Announces $135 M Delaware Basin Acquisition

Resolute Energy Corporation today reported that it has entered into a definitive agreement (the "Acquisition Agreement") with Firewheel Energy, LLC ("Firewheel"), a portfolio company of EnCap Investments, to acquire certain oil and gas properties located in Reeves County, Texas, for a purchase price of $135 million (the "Firewheel Properties"). The transaction is expected to close on October 7, 2016.

The Firewheel Properties consist of 3,293 net acres in our highly productive Delaware Basin operating area, and include interests in thirteen horizontal and fifteen vertical wells, which produce approximately 1,200 net Boe per day. Approximately 95% of the acreage and substantially all of the production and proved reserves are located within the Resolute-operated Mustang project area in Reeves County. The remainder of the acreage is also in Reeves County. The Firewheel Properties contain estimated proved reserves of 6.2 MMBoe with PV-10 of $45.8 million, using strip pricing at June 30, 2016. The acquisition also includes Firewheel's interest in the Earn-Out Agreement (to which we are also a party) with Caprock Permian Processing LLC and Caprock Field Services LLC (collectively, "Caprock"). Following the closing of the acquisition, Resolute will receive 100% of all payments from Caprock under the Earn-Out Agreement.

The purchase price for the acquisition is $135 million, consisting of $90 million payable in cash and the issuance to Firewheel of 2,114,523 shares of our common stock, equal to $45 million, based on 90% of the volume weighted average price of our common stock as traded on the NYSE for the 15 trading days ending on October 4, 2016. We expect to finance the cash portion of the acquisition price with the net proceeds of a private offering of a newly created class of preferred stock of the Company, and borrowings under our Revolving Credit Facility (which is currently undrawn).

The acreage to be acquired represents an approximately 25% increase in our net acreage in Reeves County while leaving our gross acreage position essentially unchanged as the Company already owns interests in all of the same properties. The completion of this acquisition will result in a higher interest in the production and cash flow generated from our operated wells, further leveraging the work of our field staff.

The Acquisition Agreement contains terms and conditions customary to transactions of this type. Subject to our right to be indemnified for certain liabilities for a limited period of time and for breaches of representations and warranties, we will assume substantially all liabilities associated with the acquired properties. The closing of the acquisition is subject to the satisfaction or waiver of certain customary conditions, including the material accuracy of the representations and warranties of us and Firewheel. The Acquisition Agreement contains certain customary termination rights for each of us and Firewheel, including the right of either party to terminate in the event that the acquisition has not been completed within five business days of execution of the Acquisition Agreement. The transaction has an effective date of September 1, 2016.

Nicholas J. Sutton, Resolute's Chairman and Chief Executive Officer, said: "This acquisition adds materially to our prospective acreage in one of the most exciting U.S. oil and gas basins, with 95% of the acquired acreage operated by Resolute. Our Mustang project area, covering more than 12,400 gross acres, is one of our two concentrated acreage positions in the Delaware Basin. This transaction allows us to add acreage, production and opportunity without either the uncertainty associated with acquiring more speculative acreage or adding to our staffing and infrastructure needs. We believe that the Firewheel acquisition is exactly the kind of targeted, focused, consolidating opportunity that leverages the strengths of our team and our assets."