Vitesse Energy to acquire Lucero Energy for $222M

Vitesse Energy (VTS) and Lucero Energy announced they have entered into a definitive agreement under which Vitesse will acquire Lucero in an all-stock transaction with a fully diluted equity value of $222M. Under the terms of the agreement, Lucero shareholders will receive 0.01239 of a share of Vitesse common stock for each common share of Lucero. The addition of Lucero’s operations will provide additional scale to Vitesse’s assets across the Bakken, where Lucero had approximately 6.4 Mboe per day of two-stream net production during the third quarter of 2024. Lucero had no outstanding debt and $56M of cash as of September 30 and Vitesse expects to use a portion of the cash held by Lucero at closing to reduce outstanding borrowings under Vitesse’s revolving credit facility. Vitesse is targeting about $3M of general and administrative synergies annually. In this all-stock transaction, each outstanding common share of Lucero will be exchanged for 0.01239 of a share of Vitesse common stock, with approximately 8,175,000 shares of common stock expected to be issued at closing. After closing, existing Vitesse stockholders are expected to own approximately 80% and existing Lucero shareholders are expected to own approximately 20% of the company on a fully diluted basis. The transaction will be structured as a plan of arrangement under the Business Corporations Act and is subject to the approval of at least two-thirds of the votes cast by holders of Lucero common shares at a meeting to be called to consider the transaction and if required under applicable Canadian securities laws, a majority of the votes cast by Lucero shareholders at such meeting. The issuance of shares of Vitesse common stock as consideration in the transaction is subject to the approval of the majority of votes cast at a meeting by holders of shares of Vitesse common stock in connection with the transaction, pursuant to the rules of the New York Stock Exchange, or NYSE. Following the closing of the transaction, the board of directors of Vitesse will increase to nine members and will comprise the seven current members of Vitesse’s board and two nominees currently serving on Lucero’s board, namely Messrs. Reaves and Chernoff. Vitesse’s leadership team will continue to serve in their respective capacities in the company. Vitesse expects to promptly hedge a significant portion of the commodity risk associated with this transaction through 2026 and has hedged a meaningful portion of its own production into 2026. Vitesse historically hedges a portion of its expected oil production volumes to increase the predictability and certainty of its cash flow. Vitesse does not currently have hedges in place on its expected natural gas production volumes. The transaction has been unanimously approved by the boards of directors of both companies. The transaction is expected to close by the second quarter of 2025. The transaction is subject to customary closing conditions in the United States and Canada, as well as the approvals by Vitesse’s and Lucero’s shareholders described above, the approval of the Court of King’s Bench of Alberta, the listing of shares of Vitesse’s stock to be issued in the transaction on NYSE and certain other approvals. Further information regarding the transaction will be contained in a management information circular that Lucero will prepare, file and mail to Lucero shareholders in advance of its shareholder meeting and a proxy statement that Vitesse will file with the Securities and Exchange Commission and mail to Vitesse stockholders in advance of its stockholders meeting. Copies of the arrangement agreement and management information circular will be available on Lucero’s profile on SEDAR+ at www.sedarplus.ca and the arrangement agreement and proxy statement will be available on the SEC’s website at www.sec.gov under Vitesse’s profile. The board of directors of Lucero has unanimously determined that the arrangement and the other transactions contemplated by the arrangement agreement are in the best interests of Lucero and fair to holders of the shares of Lucero, authorized and approved the entering into of the arrangement agreement and the performance by Lucero of its obligations under such agreement, and recommend that holders of Lucero shares vote in favor of a special resolution to approve the arrangement. FR XIII PetroShale Holdings L.P, and each of the directors and executive officers of Lucero who hold shares of Lucero, representing in aggregate approximately 63% of the outstanding shares of Lucero (on a non-diluted basis), have entered into support agreements with Vitesse and have agreed, among other things, to support and vote in favor of the transaction, subject to the provisions of such agreements.