Houlihan Lokey Advises Vital Energy

Houlihan Lokey is pleased to announce that Vital Energy, Inc. (Vital) has acquired the assets of Henry Energy LP and Henry Resources LLC (Henry), Tall City Property Holdings III LLC (Tall City), and Maple Energy Holdings, LLC (Maple). Total consideration for the transactions is approximately $1.165 billion; Vital has funded the transactions through the issuance of 9.57 million shares of its common stock (NYSE:VTLE), 4.98 million shares of perpetual mandatorily convertible preferred securities, and $300 million in borrowings under its senior secured credit facility. This transaction closed on November 6, 2023.

In addition, Vital announced the following:

• Vital Energy intends to publicly offer $300 million in aggregate principal amount of 10.125% senior unsecured notes due 2028 and $500 million in aggregate principal amount of senior unsecured notes due 2030, according to the announcement to offer senior notes.
• Additionally, Vital will commence an underwritten public offering of 2,500,000 shares of its common stock. Vital expects to grant the underwriters a 30-day option to purchase up to 375,000 additional shares of the common stock, according to the announcement to issue common stock. Subsequently, the offering was upsized to 2,750,000 shares of common stock for total gross proceeds of ~$148.5 million, granting underwriters a 30-day option to purchase up to 412,500 additional shares, according to the announcement of upsized common stock offering.
• Vital’s credit facility borrowing base and elected commitment increased to $1.5 billion and $1.25 billion, respectively (from $1.3 billion and $1.0 billion, respectively).

The transaction is immediately transformative for Vital, including:

• Material increase in scale, adding ~53,000 net acres and proved reserves of ~248 million barrels of oil equivalent.
• Expanded high-value, oil-weighted inventory through the addition of ~150 gross locations.
• Increases FY 2024E pro forma free cash flow by ~90%.
• Accretion to financial metrics and improvements to capital efficiency.
• Substantial deleveraging of Vital’s balance sheet to ~1.0x at YE 2024.

Houlihan Lokey has proudly acted as the lead financial advisor to Vital for the aforementioned acquisitions in this transaction, which are the seventh, eighth, and ninth in Houlihan Lokey’s long-term relationship with the company (formerly known as Laredo Petroleum). Year-to-date, including these transactions, Houlihan Lokey has advised on >$1.7 billion of acquisitions for the company with an approximate 50/50 split consideration of debt and equity.

We offer our sincerest congratulations to the Vital team. We look forward to discussing the transaction with you, our valued relationships, and exploring how Houlihan Lokey can help you reach your goals.