According to the Complaint, Energen is an oil and natural gas company engaged in the exploration, development and production of oil, natural gas liquids and natural gas. The Company’s operations occur in the Permian Basin and are conducted through Energen’s subsidiary, Energen Resources Corporation (“Energen Resources”). Energen’s operations focus on increasing production and adding proved reserves through the development of oil, natural gas liquids and natural gas properties. At the end of 2017, the Company’s proved reserves totaled 444 million barrels of oil equivalent (“MMBOE”).
On August 14, 2018, Energen and Diamondback Energy, Inc. issued a joint press release announcing they had entered into an Agreement and Plan of Merger (the “Merger Agreement”). Under the terms of the Merger Agreement, Energen stockholders will be entitled to receive 0.6442 of a share of Diamondback common stock per Energen common share (the “Merger Consideration”). The Proposed Transaction is valued at approximately $9.2 billion.
On September 13, 2018, Diamondback and Energen filed a joint proxy statement/prospectus on Form S-4 (as amended on October 11, 2018, the “Registration Statement”) with the SEC. The Complaint alleges that the Registration Statement, which recommends that Energen stockholders vote in favor of the Proposed Transaction, omits or misrepresents material information concerning, among other things: (i) Energen’s and Diamondback’s financial projections, relied upon by the Company’s financial advisors in their financial analyses; (ii) the data and inputs underlying the financial valuation analyses that support the fairness opinions provided by their financial advisors; (iii) the background process leading to the Proposed Transaction; and (iv) Energen insiders’ potential conflicts of interest. The failure to adequately disclose such material information constitutes a violation of Sections 14(a) and 20(a) of the Exchange Act as Energen stockholders need such information in order to cast a fully-informed vote in connection with the Proposed Transaction.