Mid-Con Energy reorganization claims top executive, board members as the company prepares for the future
TULSA — The top executive and board members at Mid-Con Energy Partners are out after a restructuring of the company’s ownership, it announced Friday.
The company also announced an operational change it plans to execute and updated its financial plans for the year.
Changes at the top
Randy Olmstead, the company’s top executive since it was founded in 1986, resigned from both that position and from his post as chairman of Mid-Con’s board of directors effective immediately, the company announced.
Besides Olmstead, board members Fred Ball Jr., John (“J.W.”) Brown, Peter A. Leidel and Wilkie S. Colyer Jr. also resigned.
Chad B. Roller, Mid-Con’s chief operating officer, thanked Olmstead and departing board members for their efforts to help the company reorganize.
Roller said the company also appreciates the steady guidance Olmstead provided to the operation throughout its history.
“His leadership and experience over three decades was invaluable in guiding the partnership through both up and down cycles in oil prices,” Roller said.
The company also announced it installed Robert Boulware, Travis Goff and Fred Reynolds as new board members.
Boulware, one-time CEO of ING Funds Distributor, also has held various executive and management positions with WESAV Financial, Bank of America and Western Savings.
Since 2008, he has served on the Brighthouse Funds Trustee Board as chairman of its investment committee and as a member of its nominating and governance and audit committees. He also serves on the board of Vertical Capital Fund and Gainsco Auto Insurance and is board chairman at Sharespost 100 Fund.
Goff is the president of Goff Capital, headquartered in Fort Worth, Texas, where he manages its public and private investments. Goff Capital is the majority unit holder in Mid-Con after the restructuring.
He also serves as a board member for several other companies in the oil and gas, manufacturing, and media and entertainment industries.
Reynolds is the principal owner of Fred S. Reynolds & Associates, a petroleum engineering consulting firm that also is located in Fort Worth.
“As the partnership flips to a new page, we enthusiastically welcome our new board members,” Roller said. “Their experience and vested ownership coupled with technical expertise will be invaluable as the partnership navigates through the eventual recovery in the energy sector.”
The catalyst leading to Mid-Con’s wholesale changes was a restructuring of its ownership in a transaction with its preferred equity holders.
Officials said the company converted preferred units held primarily by Goff Capital into common units that were worth $3.12 each.
Other equity owners agreed to take common unit distributions in exchange for giving up ownership in its general partner, Mid-Con GP.
The maneuvers gave Goff Capital ownership of the majority of the company’s 14.3 million outstanding common units.
Roller said the changes strengthen Mid-Con’s balance sheet by reducing costs because it eliminated the company’s obligations to pay future dividends on preferred units.
Mid-Con also announced Friday its borrowing base has been redetermined by its lenders and now is set at $64 million, reduced by $31 million because of the collapse of global energy markets that happened earlier this year.
Officials said Friday it has agreed with lenders to reduce its debt by $10 million between now and November, and issued new guidance that states it plans no capital expenditures between now and then and will look to sell non-core assets to help raise that cash.
The other change Mid-Con announced on Friday is that it plans to turn over operations of its assets in Oklahoma and Wyoming later this year to Contango Oil & Gas Co.
Officials said Friday they expect the switch is expected to generate pro-forma annual cash savings of abouty $6.5 million for Mid-Con, compared to 2019.
Colyer, it is worth mentioning, is Contango’s CEO and a past principal with Goff Capital. Officials said Contango also will receive warrants as part of its compensation, allowing it to acquire common units of the partnership.
The transition from Mid-Con Operating, a subsidiary of Mid-Con, to Contango is expected to happen by the third quarter of this year.
“The shift of operations will allow us to leverage the larger scale of Contango to ultimately reduce cost,” Roller said. “Contango has existing production in our core areas and an operations team with a proven track record, who will be joined by key members of the partnership’s existing operations team.”