S-4 1 d611561ds4.htm S-4 S-4
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As filed with the Securities and Exchange Commission on October 12, 2018

Registration No. 333-            

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Eclipse Resources Corporation

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware   1311   46-4812998

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

2121 Old Gatesburg Road, Suite 110

State College, Pennsylvania 16803

(814) 308-9754

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Benjamin W. Hulburt

Chairman, President and Chief Executive Officer

Eclipse Resources Corporation

2121 Old Gatesburg Road, Suite 110

State College, Pennsylvania 16803

(814) 308-9754

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

with copies to:

 

Bryn A. Sappington

Paul S. Conneely

Norton Rose Fulbright US LLP

2200 Ross Avenue, Suite 3600

Dallas, Texas 75201

(214) 855-8000

 

John K. Reinhart

President and Chief Executive Officer

Blue Ridge Mountain Resources, Inc.

122 West John Carpenter Freeway, Suite 300

Irving, Texas 75039

(469) 444-1647

 

Charles H. Still, Jr.

Bracewell LLP

711 Louisiana Street, Suite 2300

Houston, Texas 77002

(713) 223-2300

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon completion of the transactions described in this registration statement.

If the securities being registered on this Form are being offered in connection with the formation of a holding company, and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer   ☐      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☒

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

 

Title of each class of

securities to be registered

 

Amount

to be

registered

 

Proposed

maximum

offering price

per share

 

Proposed

maximum

aggregate

offering price

 

Amount of

registration fee

Common Stock, par value $0.01 per share

  15,665,727(1)   N/A   $309,003,355(2)   $37,452(3)

 

 

(1)

Represents the maximum number of shares of the registrant’s common stock estimated to be issuable in connection with the merger described herein. Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), this registration statement also covers an indeterminate number of additional shares of common stock as may be issuable as a result of stock splits, stock dividends or similar transactions. The number of shares of common stock of the registrant being registered is based upon the product obtained by multiplying (x) the sum of (a) 50,901,282 shares of common stock, $0.01 par value per share, of Blue Ridge Mountain Resources, Inc. (“BRMR common stock”) estimated to be outstanding immediately prior to the merger plus (b) 2,192,078 shares of BRMR common stock issuable with respect to or subject to equity-based awards estimated to be outstanding immediately prior to the merger by (y) an exchange ratio of 0.29506 (being the exchange ratio provided for in the merger agreement after adjustment to reflect a 15-for-1 reverse stock split with respect to the issued and outstanding common stock of the registrant prior to the effective time of the merger).

(2)

Estimated solely for purposes of calculating the registration fee required by Section 6(b) of the Securities Act and calculated pursuant to Rules 457(f)(1) and 457(c) under the Securities Act. The proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of BRMR common stock (the securities to be cancelled in the merger described herein) in accordance with Rule 457(c) under the Securities Act as follows: the product of (x) $5.82, the average of the high and low prices per share of BRMR common stock on October 10, 2018 as reported on the OTC Market Group Inc.’s OTC Grey market, multiplied by (y) 53,093,360, the maximum number of shares of BRMR common stock to be exchanged in the merger or otherwise issuable or subject to equity-based awards described herein.

(3)

Determined in accordance with Section 6(b) of the Securities Act at a rate equal to $121.20 per $1,000,000 of the proposed maximum aggregate offering price.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this consent solicitation statement/information statement/prospectus is not complete and may be changed. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This consent solicitation statement/information statement/prospectus is not an offer to sell these securities and does not constitute the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION, DATED OCTOBER 12, 2018

 

             LOGO    LOGO

JOINT LETTER TO STOCKHOLDERS OF ECLIPSE RESOURCES CORPORATION

AND STOCKHOLDERS OF BLUE RIDGE MOUNTAIN RESOURCES, INC.

Dear Stockholders of Eclipse Resources Corporation and Blue Ridge Mountain Resources, Inc.:

The board of directors (the “Eclipse board”) of Eclipse Resources Corporation (“Eclipse”) and the board of directors (the “BRMR board”) of Blue Ridge Mountain Resources, Inc. (“BRMR”) each has approved an Agreement and Plan of Merger, dated as of August 25, 2018 (as it may be amended from time to time, the “merger agreement”), by and among Eclipse, Everest Merger Sub Inc., a wholly owned subsidiary of Eclipse (“Merger Sub”), and BRMR, pursuant to which Merger Sub will merge with and into BRMR, with BRMR surviving as a wholly owned subsidiary of Eclipse (the “merger”).

Pursuant to the terms and subject to the conditions set forth in the merger agreement, at the effective time of the merger, each issued and outstanding share of common stock, par value $0.01 per share, of BRMR (the “BRMR common stock”) (other than those owned by BRMR (as treasury shares or otherwise) or by Eclipse or Merger Sub or by any direct or indirect wholly owned subsidiary of BRMR, Eclipse or Merger Sub, which will be automatically cancelled and retired and cease to exist, and other than dissenting shares) will be converted into the right to receive 4.4259 newly issued, fully paid and nonassessable shares of common stock, par value $0.01 per share, of Eclipse (the “Eclipse common stock”), subject to adjustment as specified in the merger agreement. This exchange ratio will be adjusted proportionately to reflect the 15-to-1 reverse stock split (described below) with respect to the issued and outstanding shares of Eclipse common stock that Eclipse plans to implement immediately prior to, and conditioned on, the completion of the merger. The resulting adjusted exchange ratio will be 0.29506 of a share of Eclipse common stock for each share of BRMR common stock. Assuming the merger is completed, the shares of Eclipse common stock that BRMR stockholders will receive in the merger will be listed and traded on the New York Stock Exchange.

BRMR is requesting that BRMR stockholders execute and return a written consent to, among other things, (i) adopt the merger agreement, and (ii) approve the merger and the other transactions contemplated by the merger agreement. The BRMR board has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, BRMR and its stockholders and unanimously recommends that BRMR stockholders consent to the adoption of the merger agreement and the approval of the merger and the other transactions contemplated by the merger agreement. Certain stockholders of BRMR, representing approximately 60.3% of the outstanding shares of BRMR common stock as of                 , 2018, have entered into a voting agreement (the “BRMR voting agreement”) with BRMR and Eclipse pursuant to which they have agreed, subject to the terms of the BRMR voting agreement, to execute and return written consents adopting the merger agreement and approving the merger, the other transactions contemplated by the merger agreement and any actions related to the merger agreement within one business day after both the registration statement of which this consent solicitation statement/information statement/prospectus forms a part becomes effective under the Securities Act of 1933, as amended, and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders. The delivery of the written consents pursuant to the BRMR voting agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement. BRMR also is soliciting written consents of its stockholders to approve the receipt by three executive officers of BRMR of certain payments that they could receive as a result of the merger and that, separately or in the aggregate, could be “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, as described more fully in this consent solicitation statement/information statement/prospectus. The BRMR board recommends that BRMR stockholders consent to the approval of these payments.


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The Eclipse board has unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including (A) the issuance of the shares of Eclipse common stock pursuant to the merger agreement (the “Eclipse Stock Issuance”), and (B) the amendment and restatement, effective as of immediately prior to the effective time of the merger, of the Amended and Restated Certificate of Incorporation of Eclipse to (1) declassify the Eclipse board and (2) effect a reverse stock split of the issued and outstanding shares of Eclipse common stock at a ratio of 15-to-1 (the “Eclipse Charter Amendment”), are fair to, and in the best interests of, Eclipse and its stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the Eclipse Stock Issuance and the Eclipse Charter Amendment, (iii) directed that the approval of the Eclipse Stock Issuance and the Eclipse Charter Amendment be submitted to the Eclipse stockholders, and (iv) resolved to recommend that the Eclipse stockholders approve the Eclipse Stock Issuance and the Eclipse Charter Amendment. Prior to the execution and delivery of the merger agreement, certain Eclipse stockholders that beneficially owned, in the aggregate, 172,955,027 shares of Eclipse common stock, or approximately 57.2% of the shares of Eclipse common stock outstanding and entitled to consent to such matters as of August 23, 2018, executed and delivered a written consent in lieu of a meeting (the “Eclipse Stockholder Written Consent”) approving the Eclipse Stock Issuance and the Eclipse Charter Amendment, which Eclipse Stockholder Written Consent became effective upon the execution of the merger agreement in accordance with Section 228(c) of the Delaware General Corporation Law. As a result, no further action by the Eclipse stockholders is required to approve the Eclipse Stock Issuance, the Eclipse Charter Amendment, the merger agreement or the consummation of the transactions contemplated by the merger agreement, including the merger.

This consent solicitation statement/information statement/prospectus provides you with detailed information about the BRMR solicitation of written consents, the merger agreement, the merger and the other transactions contemplated by the merger agreement, including the Eclipse Stock Issuance and the Eclipse Charter Amendment. A copy of the merger agreement is included as Annex A to this consent solicitation statement/information statement/prospectus. We encourage you to read this consent solicitation statement/information statement/prospectus, the merger agreement and the other annexes to this consent solicitation statement/information statement/prospectus carefully and in their entirety. In particular, you should carefully consider the discussion in the section of this consent solicitation statement/information statement/prospectus entitled “Risk Factors” beginning on page 50. You may also obtain more information about Eclipse from the documents it files with the Securities and Exchange Commission (the “SEC”).

Thank you in advance for your continued support.

Sincerely,

 

Benjamin W. Hulburt

   John K. Reinhart

Chairman, President and Chief Executive Officer

Eclipse Resources Corporation

  

President and Chief Executive Officer

Blue Ridge Mountain Resources, Inc.

Neither the SEC nor any state securities regulatory agency has approved or disapproved of the securities to be issued in connection with the merger or passed upon the adequacy or accuracy of this consent solicitation statement/information statement/prospectus. Any representation to the contrary is a criminal offense.

This consent solicitation statement/information statement/prospectus is dated                     , 2018 and is first being mailed to stockholders of Eclipse and BRMR on or about                     , 2018.


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LOGO

2121 Old Gatesburg Road, Suite 110

State College, Pennsylvania 16803

NOTICE OF ACTION BY WRITTEN CONSENT TO ECLIPSE STOCKHOLDERS—WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY

To the Stockholders of Eclipse Resources Corporation:

The board of directors (the “Eclipse board”) of Eclipse Resources Corporation, a Delaware corporation (“Eclipse”), has approved an Agreement and Plan of Merger, dated as of August 25, 2018 (as it may be amended from time to time, the “merger agreement”), by and among Eclipse, Everest Merger Sub Inc., a wholly owned subsidiary of Eclipse (“Merger Sub”), and Blue Ridge Mountain Resources, Inc. (“BRMR”), pursuant to which Merger Sub will merge with and into BRMR, with BRMR surviving as a wholly owned subsidiary of Eclipse (the “merger”).

Pursuant to the terms and subject to the conditions set forth in the merger agreement, at the effective time of the merger, each issued and outstanding share of common stock, par value $0.01 per share, of BRMR (the “BRMR common stock”) (other than those owned by BRMR (as treasury shares or otherwise) or by Eclipse or Merger Sub or by any direct or indirect wholly owned subsidiary of BRMR, Eclipse or Merger Sub, which will be automatically cancelled and retired and cease to exist, and other than dissenting shares) will be converted into the right to receive 4.4259 newly issued, fully paid and nonassessable shares of common stock, par value $0.01 per share, of Eclipse (the “Eclipse common stock”), subject to adjustment as specified in the merger agreement. This exchange ratio will be adjusted proportionately to reflect the 15-to-1 reverse stock split (described below) with respect to the issued and outstanding shares of Eclipse common stock that Eclipse plans to implement immediately prior to, and conditioned on, the completion of the merger. The resulting adjusted exchange ratio will be 0.29506 of a share of Eclipse common stock for each share of BRMR common stock.

The Eclipse board has unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including (A) the issuance of the shares of Eclipse common stock pursuant to the merger agreement (the “Eclipse Stock Issuance”), and (B) the amendment and restatement, effective as of immediately prior to the effective time of the merger, of the Amended and Restated Certificate of Incorporation of Eclipse to (1) declassify the Eclipse board and (2) effect a reverse stock split of the issued and outstanding shares of Eclipse common stock at a ratio of 15-to-1 (the “Eclipse Charter Amendment”), are fair to, and in the best interests of, Eclipse and its stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the Eclipse Stock Issuance and the Eclipse Charter Amendment, (iii) directed that the approval of the Eclipse Stock Issuance and the Eclipse Charter Amendment be submitted to the Eclipse stockholders, and (iv) resolved to recommend that the Eclipse stockholders approve the Eclipse Stock Issuance and the Eclipse Charter Amendment. Prior to the execution and delivery of the merger agreement, certain Eclipse stockholders that beneficially owned, in the aggregate, 172,955,027 shares of Eclipse common stock, or approximately 57.2% of the shares of Eclipse common stock outstanding and entitled to consent to such matters as of August 23, 2018, executed and delivered a written consent in lieu of a meeting (the “Eclipse Stockholder Written Consent”) approving the Eclipse Stock Issuance and the Eclipse Charter Amendment, which Eclipse Stockholder Written Consent became effective upon the execution of the merger agreement in accordance with Section 228(c) of the Delaware General Corporation Law. As a result, no further action by Eclipse stockholders is required to approve the Eclipse Stock Issuance, the Eclipse Charter Amendment, the merger agreement or the consummation of the transactions contemplated by the merger agreement, including the merger.


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If Eclipse and BRMR do not complete the merger, Eclipse will not amend its Amended and Restated Certificate of Incorporation as contemplated by the Eclipse Charter Amendment, notwithstanding that Eclipse’s stockholders have previously approved the Eclipse Charter Amendment.

Eclipse has not solicited and will not be soliciting its stockholders’ authorization or approval of the merger agreement, the merger and the other transactions contemplated by the merger agreement, including the Eclipse Stock Issuance and the Eclipse Charter Amendment. Eclipse is furnishing this Notice of Action by Written Consent and this consent solicitation statement/information statement/prospectus to provide its stockholders with material information concerning the actions taken in connection with the Eclipse Stockholder Written Consent in accordance with the requirements of the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder, including Regulation 14C.

This consent solicitation statement/information statement/prospectus provides you with detailed information about the merger agreement, the merger and the other transactions contemplated by the merger agreement, including the Eclipse Stock Issuance and the Eclipse Charter Amendment. A copy of the merger agreement is included as Annex A to this consent solicitation statement/information statement/prospectus. We encourage you to read this consent solicitation statement/information statement/prospectus, the merger agreement, the Eclipse Charter Amendment and the other annexes to this consent solicitation statement/information statement/prospectus carefully and in their entirety. You may also obtain more information about Eclipse from the documents it files with the Securities and Exchange Commission.

 

    By Order of the Board of Directors,
       
State College, Pennsylvania       Christopher K. Hulburt
                    , 2018       Secretary


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LOGO

122 West John Carpenter Freeway, Suite 300

Irving, Texas 75039

NOTICE OF SOLICITATION OF WRITTEN CONSENTS

NOTICE OF PROPOSED DRAG TRANSACTION

Blue Ridge Mountain Resources, Inc. (“BRMR”) is requesting that you execute and return your written consent to:

 

   

(i) adopt the Agreement and Plan of Merger, dated as of August 25, 2018, by and among Eclipse Resources Corporation (“Eclipse”), Everest Merger Sub Inc., a wholly owned subsidiary of Eclipse (“Merger Sub”), and BRMR (as it may be amended from time to time, the “merger agreement”), pursuant to which Merger Sub will be merged with and into BRMR (the “merger”), with BRMR surviving the merger as a direct wholly owned subsidiary of Eclipse; and (ii) approve the merger and the other transactions contemplated by the merger agreement; and

 

   

separately approve the receipt by three executive officers of BRMR of certain payments (the “BRMR 280G payments”) that they could receive as a result of the merger and that, separately or in the aggregate, could be “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended, as described more fully in this consent solicitation statement/information statement/prospectus.

A copy of the merger agreement is attached as Annex A to this consent solicitation statement/information statement/prospectus. As a result of the merger, each share of BRMR common stock issued and outstanding immediately prior to the merger will be converted into the right to receive 4.4259 shares of Eclipse common stock, subject to adjustment as specified in the merger agreement, including for the 15-to-1 reverse stock split of Eclipse common stock to be effected immediately prior to, and conditioned on, the closing of the merger, resulting in an adjusted exchange ratio of 0.29506 of a share of Eclipse common stock for each share of BRMR common stock.

The board of directors of BRMR has fixed                     , 2018 as the record date for the determination of the BRMR stockholders entitled to execute and deliver written consents with respect to the adoption of the merger agreement and the approval of the merger and the other transactions contemplated by the merger agreement and to the approval of the BRMR 280G payments.

The BRMR board of directors has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, BRMR and its stockholders and unanimously recommends that BRMR stockholders consent to the adoption of the merger agreement and the approval of the merger and the other transactions contemplated by the merger agreement and to the approval of the BRMR 280G payments.

Certain stockholders of BRMR, representing approximately 60.3% of the outstanding shares of BRMR common stock as of                     , 2018, have entered into a voting agreement (the “BRMR voting agreement”) with BRMR and Eclipse pursuant to which they have agreed, subject to the terms of the BRMR voting agreement, to execute and return written consents adopting the merger agreement and approving the merger, the other transactions contemplated by the merger agreement and any actions related to the merger agreement within one business day after both the registration statement of which this consent solicitation statement/information statement/prospectus forms a part becomes effective under the Securities Act of 1933, as amended, and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders. The delivery of the written consents pursuant to the BRMR voting agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement. The BRMR voting agreement does not require that the BRMR stockholders party thereto consent to the approval of the BRMR 280G payments.


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This notice and consent solicitation statement/information statement/prospectus also constitute notice of a proposed Drag Transaction, as defined in the Stockholders Agreement dated as of May 6, 2016 by and among BRMR and the holders of BRMR common stock.

 

   

By Order of the Board of Directors

   

Paul M. Johnston

   

Senior Vice President, General Counsel and Secretary

   

Irving, Texas

   

                     , 2018


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REFERENCES TO ADDITIONAL INFORMATION

This consent solicitation statement/information statement/prospectus references important business and financial information about Eclipse from other documents that are not included in or delivered with this consent solicitation statement/information statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain those documents incorporated by reference in this consent solicitation statement/information statement/prospectus by accessing the website maintained by the SEC at www.sec.gov, for documents regarding Eclipse, or by requesting copies in writing or by telephone from the appropriate company, as set forth below, for documents regarding either Eclipse or BRMR:

 

Eclipse Resources Corporation
2121 Old Gatesburg Road, Suite 110

State College, Pennsylvania 16803

Attention: Investor Relations

Telephone: (814) 308-9754

 

Blue Ridge Mountain Resources, Inc.
122 West John Carpenter Freeway, Suite 300

Irving, Texas 75039

Attention: Frank E. Day, Vice President and Corporate Counsel

Telephone: (469) 444-1647

You will not be charged for any of these documents that you request. To obtain timely delivery of documents, you must request them by                     , 2018, which is no later than five business days before the targeted final date for the receipt of written consents from BRMR stockholders.

For more information, see the section entitled “Where You Can Find More Information” beginning on page 262 of this consent solicitation statement/information statement/prospectus.


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ABOUT THIS CONSENT SOLICITATION STATEMENT/INFORMATION STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by Eclipse (File No. 333-            ), constitutes a prospectus of Eclipse under Section 5 of the Securities Act with respect to the shares of Eclipse common stock to be issued to BRMR stockholders pursuant to the merger agreement.

This document also constitutes an information statement of Eclipse for purposes of the Exchange Act and Delaware law. In addition, this document constitutes (i) a consent solicitation statement of BRMR with respect to the solicitation of consents to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement and to separately approve the BRMR 280G payments and (ii) a notice to the holders of BRMR common stock of a proposed Drag Transaction, as defined in the BRMR stockholders agreement.

Eclipse has supplied all information contained or incorporated by reference herein relating to Eclipse, and BRMR has supplied all information contained herein relating to BRMR. Eclipse and BRMR have both contributed to the information relating to the merger agreement contained in this consent solicitation statement/information statement/prospectus.

You should rely only on the information contained in, or incorporated by reference into, this consent solicitation statement/information statement/prospectus. Eclipse and BRMR have not authorized anyone to provide you with information that is different from that contained or incorporated by reference herein. This consent solicitation statement/information statement/prospectus is dated                     , 2018, and you should not assume that the information contained in this consent solicitation statement/information statement/prospectus is accurate as of any date other than such date unless otherwise specifically provided herein. Further, you should not assume that the information incorporated by reference herein is accurate as of any date other than the date of the incorporated document. Neither the mailing of this consent solicitation statement/information statement/prospectus to Eclipse or BRMR stockholders nor the issuance by Eclipse of shares of Eclipse common stock pursuant to the merger agreement will create any implication to the contrary.

All currency amounts referenced in this consent solicitation statement/information statement/prospectus are in U.S. dollars.


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TABLE OF CONTENTS

 

COMMONLY USED DEFINED TERMS

     1  

GLOSSARY OF OIL AND NATURAL GAS TERMS

     3  

QUESTIONS AND ANSWERS

     6  

SUMMARY

     20  

Information About the Companies

     20  

The Merger and the Merger Agreement

     21  

Merger Consideration

     21  

Risk Factors

     21  

Treatment of BRMR Equity Awards

     22  

The Eclipse Board’s Reasons for the Merger

     22  

Recommendation of the BRMR Board and Reasons for the Merger

     22  

Opinions of Financial Advisors

     23  

Eclipse Actions by Written Consent

     24  

BRMR Solicitation of Written Consents

     24  

Interests of Eclipse Directors and Executive Officers in the Merger

     27  

Board of Directors and Management of Eclipse and the Surviving Corporation Following Completion of the Merger

     27  

Interests of BRMR Directors and Executive Officers in the Merger

     27  

Conditions to the Completion of the Merger

     28  

No Solicitation

     29  

Changes of Recommendation

     31  

Termination

     32  

Termination Fees

     33  

Regulatory Approvals

     34  

Specific Performance; Remedies

     34  

Dissenters’ Rights of Appraisal

     35  

Material U.S. Federal Income Tax Consequences of the Merger

     35  

Comparison of Stockholders’ Rights

     35  

Listing of Eclipse Common Stock; Halting of Trading of BRMR Shares

     36  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ECLIPSE

     37  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF BRMR

     40  

SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

     43  

SUMMARY PRO FORMA OIL, NATURAL GAS AND NGL RESERVE INFORMATION

     44  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     47  

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

     48  

RISK FACTORS

     50  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     63  

INFORMATION ABOUT ECLIPSE

     65  

ECLIPSE ACTIONS BY WRITTEN CONSENT

     66  


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BRMR SOLICITATION OF WRITTEN CONSENTS

     68  

Adoption of the Merger Agreement and Approval of the Merger

     68  

Approval of the BRMR 280G Payments

     69  

Record Date

     73  

Shares Entitled to Consent

     73  

Drag Transaction Under BRMR Stockholders Agreement

     73  

Notice of Proposed Drag Transaction

     75  

Consent by BRMR Directors and Executive Officers

     75  

How to Return Your Written Consent

     75  

Deadline for Returning Written Consents

     75  

Written Consents Not Returned

     76  

Elections on Written Consents; Written Consents Without Elections

     76  

Revocation of Consent

     76  

Solicitation of Consents

     76  

Stockholders Should Not Send Stock Certificates With Their Written Consents

     77  

BRMR Stockholder Account Maintenance

     77  

THE MERGER

     78  

Transaction Structure

     78  

Consideration to BRMR Stockholders

     78  

Background of the Merger

     78  

The Eclipse Board’s Reasons for the Merger

     88  

Opinion of Jefferies, Eclipse’s Financial Advisor

     92  

Recommendation of the BRMR Board and Reasons for the Merger

     101  

Opinion of Barclays, BRMR’s Financial Advisor

     105  

Eclipse Unaudited Forecasted Financial Information

     119  

BRMR Unaudited Forecasted Financial Information

     121  

Regulatory Approvals

     123  

Interests of Eclipse Directors and Executive Officers in the Merger

     123  

Board of Directors and Management of Eclipse Following Completion of the Merger

     124  

Interests of BRMR Directors and Executive Officers in the Merger

     125  

Treatment of BRMR Equity Awards

     128  

Executive Officer Severance Arrangements

     129  

Indemnification and Insurance

     131  

Listing of Eclipse Shares; Halting of Trading of BRMR Shares

     132  

Accounting Treatment of the Merger

     132  

Treatment of Indebtedness

     132  

THE MERGER AGREEMENT

     133  

Explanatory Note Regarding the Merger Agreement

     133  

The Merger

     133  

Closing

     133  


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Organizational Documents; Directors and Officers

     134  

Effect of the Merger on Capital Stock; Merger Consideration

     135  

Treatment of BRMR Equity Awards in the Merger

     136  

Payment for Securities; Exchange

     137  

Withholding Taxes

     139  

Dissenters’ Rights of Appraisal

     139  

Representations and Warranties

     140  

Interim Operations of BRMR and Eclipse Pending the Merger

     143  

No Solicitation; Changes of Recommendation

     149  

Preparation of Consent Solicitation Statement/Information Statement/Prospectus and Registration Statement

     156  

BRMR Consent Solicitation and Eclipse Stockholder Written Consent

     158  

Access to Information

     159  

HSR and Other Regulatory Approvals

     159  

Employee Matters

     161  

Indemnification; Directors’ and Officers’ Insurance

     162  

Transaction Litigation

     163  

Public Announcements

     163  

Advice of Certain Matters

     163  

Transfer Taxes

     163  

Reasonable Best Efforts; Notification

     163  

Section 16 Matters

     164  

Stock Exchange Listing

     164  

BRMR Credit Agreement; Financing Cooperation

     164  

Tax Matters

     165  

Takeover Laws

     165  

Obligations of Merger Sub

     165  

Amendment of Eclipse Certificate of Incorporation and Bylaws

     165  

Eclipse Stockholders Agreement

     165  

Conditions to the Completion of the Merger

     166  

Termination

     168  

Effect of Termination

     171  

Expenses

     171  

Specific Performance; Remedies

     171  

No Third-Party Beneficiaries

     172  

Amendment

     172  

Governing Law

     172  

Voting Agreements

     172  

Lock-Up Agreements

     173  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     175  

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

     179  

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

     184  


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COMPARISON OF STOCKHOLDERS’ RIGHTS

     187  

DISSENTERS’ RIGHTS OF APPRAISAL

     197  

BUSINESS AND PROPERTIES OF BRMR

     201  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF BRMR

     213  

MANAGEMENT OF ECLIPSE UPON CONSUMMATION OF THE MERGER

     241  

SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT/DIRECTORS OF ECLIPSE

     255  

SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT/DIRECTORS OF BRMR

     257  

VALIDITY OF COMMON STOCK

     259  

TAX OPINIONS

     259  

EXPERTS

     259  

HOUSEHOLDING

     260  

FUTURE STOCKHOLDER PROPOSALS

     261  

WHERE YOU CAN FIND MORE INFORMATION

     262  

INDEX TO FINANCIAL STATEMENTS OF BRMR

     FS-1  

Annex A—Agreement and Plan of Merger, dated as of August  25, 2018

  

Annex B—Opinion of Jefferies LLC

  

Annex C—Opinion of Barclays Capital Inc.

  

Annex D—Section 262 of the Delaware General Corporation Law

  

Annex E—Eclipse Voting Agreement

  

Annex F—BRMR Voting Agreement

  

Annex G—Eclipse Lock-Up Agreement

  

Annex H—Form of BRMR Lock-Up Agreement

  

Annex I—Board Observation Agreement, dated as of August  25, 2018

  

Annex J—Form of Second Amended and Restated Certificate of Incorporation of Eclipse

  

Annex K—Form of Second Amended and Restated Bylaws of Eclipse

  


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COMMONLY USED DEFINED TERMS

As used in this consent solicitation statement/information statement/prospectus, unless the context indicates or otherwise requires, the following terms have the following meanings:

 

   

“BRMR” refers to Blue Ridge Mountain Resources, Inc.;

 

   

“BRMR 280G payments” refers to certain payments that three executive officers of BRMR could receive as a result of the merger and that, separately or in the aggregate, could be “parachute payments” within the meaning of Section 280G of the Code, as described more fully elsewhere in this consent solicitation statement/information statement/prospectus;

 

   

“BRMR board” refers to the BRMR board of directors;

 

   

“BRMR bylaws” refers to the Second Amended and Restated By-Laws of BRMR, as amended;

 

   

“BRMR book-entry shares” refers to eligible shares of BRMR common stock held in book-entry form;

 

   

“BRMR certificate of incorporation” refers to the Second Amended and Restated Certificate of Incorporation of BRMR, as amended;

 

   

“BRMR common stock” refers to common stock, par value $0.01 per share, of BRMR;

 

   

“BRMR common stock certificates” refers to certificates that represent eligible shares of BRMR common stock;

 

   

“BRMR stockholders agreement” refers to the Stockholders Agreement dated as of May 6, 2016 by and among BRMR and the holders of BRMR common stock;

 

   

“BRMR voting agreement” refers to the Voting Agreement, dated as of August 25, 2018, by and among Eclipse, BRMR, and the stockholders of BRMR party thereto, a copy of which is attached as Annex F to this consent solicitation statement/information statement/prospectus;

 

   

“Code” refers to the Internal Revenue Code of 1986, as amended;

 

   

“DGCL” refers to the General Corporation Law of the State of Delaware;

 

   

“DTC” refers to the Depository Trust Company;

 

   

“EBITDA” refers to earnings before interest, taxes, depreciation and amortization;

 

   

“Eclipse” refers to Eclipse Resources Corporation;

 

   

“Eclipse board” refers to the Eclipse board of directors;

 

   

“Eclipse bylaws” refers to the Amended and Restated Bylaws of Eclipse, as amended;

 

   

“Eclipse certificate of incorporation” refers to the Amended and Restated Certificate of Incorporation of Eclipse, as amended;

 

   

“Eclipse charter amendment” refers to the amendment and restatement, effective as of immediately prior to the effective time of the merger, of the Eclipse certificate of incorporation to (i) declassify the Eclipse board and (ii) effect the Eclipse reverse stock split;

 

   

“Eclipse common stock” refers to common stock, par value $0.01 per share, of Eclipse;

 

   

“Eclipse I” refers to Eclipse Resources I, LP, which is Eclipse’s predecessor for accounting purposes;

 

   

“Eclipse reverse stock split” refers to a reverse stock split whereby each 15 shares of Eclipse common stock issued and outstanding immediately prior to the effectiveness of such reverse stock split shall, automatically and without any action on the part of the respective holders thereof, be combined and converted into one share of Eclipse common stock;

 

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“Eclipse stock issuance” refers to the issuance of the shares of Eclipse common stock pursuant to the merger agreement;

 

   

“Eclipse voting agreement” refers to the Voting Agreement, dated as of August 25, 2018, by and among Eclipse, BRMR, and the EnCap Entities, a copy of which is attached as Annex E to this consent solicitation statement/information statement/prospectus;

 

   

“EnCap” refers to EnCap Investments L.P.;

 

   

“EnCap Entities” refers to EnCap Energy Capital Fund VIII, L.P., EnCap Energy Capital Fund VIII Co-Investors, L.P., and EnCap Energy Capital Fund IX, L.P.;

 

   

“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;

 

   

“exchange ratio” refers to 4.4259, as such number may be adjusted pursuant to the merger agreement, including to reflect the Eclipse reverse stock split;

 

   

“GAAP” refers to accounting principles generally accepted in the United States of America;

 

   

“HSR Act” refers to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

 

   

“IRS” refers to the Internal Revenue Service;

 

   

“merger” refers to the merger of Merger Sub with and into BRMR, with BRMR surviving as a wholly owned subsidiary of Eclipse;

 

   

“merger agreement” refers to the Agreement and Plan of Merger, dated as of August 25, 2018, among Eclipse, Merger Sub, and BRMR, as it may be amended or modified from time to time, a copy of which is attached as Annex A to this consent solicitation statement/information statement/prospectus;

 

   

“Merger Sub” refers to Everest Merger Sub Inc., a wholly owned subsidiary of Eclipse;

 

   

“NYSE” refers to the New York Stock Exchange;

 

   

“SEC” refers to the United States Securities and Exchange Commission; and

 

   

“Securities Act” refers to the Securities Act of 1933, as amended.

 

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GLOSSARY OF OIL AND NATURAL GAS TERMS

As used in this consent solicitation statement/information statement/prospectus, unless the context indicates or otherwise requires, the following terms have the following meanings:

 

   

“Bbl” refers to a standard barrel containing 42 U.S. gallons;

 

   

“Bbls/d” refers to Bbls per day;

 

   

“Bcfe” refers to one billion cubic feet of natural gas equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or NGLs;

 

   

“Btu” refers to one British thermal unit, which is the quantity of heat required to raise the temperature of a one-pound mass of water by one degree Fahrenheit;

 

   

“Completion” refers to the process of treating a drilled well followed by the installation of permanent equipment for the production of oil or natural gas or, in the case of a dry hole, the reporting of abandonment to the appropriate agency;

 

   

“Developed acreage” refers to the number of acres that are allocated or assignable to productive wells or wells capable of production;

 

   

“Differential” refers to an adjustment to the price of oil or natural gas from an established spot market price to reflect differences in the quality and/or location of oil, NGLs or natural gas;

 

   

“Dry hole” or “dry well” refers to a well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes;

 

   

“Exploration” refers to a development or other project that may target proven or unproven reserves (such as probable or possible reserves), but which generally has a lower risk than that associated with exploration projects;

 

   

“Field” refers to an area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations;

 

   

“Formation” refers to a layer of rock that has distinct characteristics that differs from nearby rock;

 

   

“Gross acres” or “gross wells” refers to the total acres or wells, as the case may be, in which a working interest is owned;

 

   

“Horizontal drilling” refers to a drilling technique used in certain formations where a well is drilled vertically to a certain depth and then drilled at a right angle within a specified interval;

 

   

“Identified drilling locations” refers to total gross (net) resource play locations that Eclipse or BRMR, as applicable, may be able to drill on its existing acreage. Actual drilling activities may change depending on the availability of capital, regulatory approvals, seasonal restrictions, natural gas and oil prices, costs, drilling results and other factors;

 

   

“MBbl” refers to one thousand barrels;

 

   

“Mcf” refers to one thousand cubic feet;

 

   

“Mcfe” refers to one thousand cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or NGLs;

 

   

“Mcf/d” refers to Mcf per day;

 

   

“MMBtu” refers to one million Btus;

 

   

“MMcf” refers to one million cubic feet;

 

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“MMcfe” refers to one million cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or NGLs;

 

   

“MMcfe/d” refers to MMcfe per day.

 

   

“Net acres” refers to the amount of leased real estate that a petroleum and/or natural gas company has a true working interest in. Net acres express actual percentage interest when a company shares its working interest with another company; the total acreage under lease by a company is referred to as gross acres. Net acres account for the company’s percentage interest, multiplied by the gross acreage. If a company holds the entire working interest, its net acreage and gross acreage will be the same;

 

   

“Net production” refers to production that is owned by Eclipse or BRMR, as applicable, less royalties and production due others;

 

   

“NGLs” refers to natural gas liquids, which are hydrocarbons found in natural gas that may be extracted as liquefied petroleum gas and natural gasoline;

 

   

“NYMEX” refers to the New York Mercantile Exchange;

 

   

“Operator” refers to the individual or company responsible for the exploration and/or production of an oil or natural gas well or lease;

 

   

“Plugging” refers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape into another or to the surface;

 

   

“Productive well” refers to a well that is expected to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the production exceeds production expenses and taxes;

 

   

“Prospect” refers to a geological feature mapped as a location or probable location of a commercial oil and/or gas accumulation. A prospect is defined as a result of geophysical and geological studies allowing the identification and quantification of uncertainties, probabilities of success, estimates of potential resources and economic viability;

 

   

“Proved undeveloped reserves” or “PUDs” refers to proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion;

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances;

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time;

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir (as defined in Rule 4-10(a) (2) of Regulation S-X), or by other evidence using reliable technology establishing reasonable certainty;

 

   

“PV-10” refers to, when used with respect to natural gas and oil reserves, the estimated future gross revenue to be generated from the production of proved reserves, net of estimated production costs, future development costs and abandonment costs, using sales prices used in estimating proved oil and gas reserves and costs in effect at the determination date, before income taxes, and without giving effect to non-property-related expenses, discounted to a present value using an annual discount rate of 10% in accordance with the guidelines of the SEC;

 

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“Realized price” refers to the cash market price less all expected quality, transportation and demand adjustments;

 

   

“Reservoir” refers to a porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is separate from other reservoirs;

 

   

“Spacing” refers to the distance between wells producing from the same reservoir. Spacing is often expressed in terms of acres, e.g., 40-acre spacing, and is often established by regulatory agencies;

 

   

“Spot market price” refers to the cash market price without reduction for expected quality, transportation and demand adjustments;

 

   

“Standardized measure” refers to discounted future net cash flows estimated by applying sales prices used in estimating proved oil and gas reserves to the estimated future production of year-end proved reserves. Future cash inflows are reduced by estimated future production costs and development costs based on period-end costs to determine pre-tax cash inflows. Future income taxes, if applicable, are computed by applying the statutory tax rate to the excess of pre-tax cash inflows over the tax basis in the natural gas and oil properties. Future net cash inflows after income taxes are discounted using a 10% annual discount rate;

 

   

“Undeveloped acreage” refers to lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves;

 

   

“Unit” refers to the joining of all or substantially all interests in a reservoir or field, rather than a single tract, to provide for development and operation without regard to separate property interests. It also refers to the area covered by a unitization agreement;

 

   

“Working interest” refers to the right granted to the lessee of a property to explore for and to produce and own oil, natural gas or other minerals. The working interest owners bear the exploration, development and operating costs on either a cash, penalty or carried basis;

 

   

“WTI” refers to West Texas Intermediate; and

 

   

The terms “development project,” “development well,” “exploratory well,” “proved developed reserves,” “proved reserves” and “reserves” are defined by the SEC.

 

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QUESTIONS AND ANSWERS

The following questions and answers are intended to address briefly some commonly asked questions regarding the merger, the merger agreement, the Eclipse stock issuance and the other transactions contemplated by the merger agreement, including the Eclipse charter amendment. We urge you to read carefully this entire consent solicitation statement/information statement/prospectus, including the annexes and the other documents referred to or incorporated by reference into this consent solicitation statement/information statement/prospectus, because the information in this section does not provide all of the information that might be important to you.

General

 

Q:

What is the merger?

 

A:

Pursuant to the merger agreement and subject to the conditions set forth therein, Merger Sub will merge with and into BRMR, with BRMR surviving as a wholly owned subsidiary of Eclipse. A copy of the merger agreement is included in this consent solicitation statement/information statement/prospectus as Annex A.

Immediately prior to the consummation of the merger, Eclipse will amend the Eclipse certificate of incorporation to effect a 15-for-1 reverse stock split. Therefore, if the merger is completed, BRMR stockholders will receive, for each share of BRMR common stock they hold immediately prior to the merger, a number of shares of Eclipse common stock equal to 0.29506 (except for any excluded shares and dissenting shares, each as defined in the section entitled “The Merger Agreement—Effect of the Merger on Capital Stock; Merger Consideration” beginning on page 135), plus cash in lieu of fractional shares, subject to adjustment as specified in the merger agreement.

The merger cannot be completed unless, among other things, BRMR stockholders adopt the merger agreement and approve the merger. Certain stockholders of BRMR beneficially owning approximately 60.3% of the outstanding shares of BRMR common stock have entered into the BRMR voting agreement with Eclipse and BRMR whereby, among other things, such BRMR stockholders have agreed to vote or provide written consents in favor of adoption of the merger agreement and approval of the merger, the other transactions contemplated by the merger agreement and any actions related to the merger agreement, subject to certain terms and conditions. For more information regarding the BRMR voting agreement, see the section entitled “The Merger Agreement—Voting Agreements—BRMR Voting Agreement” beginning on page 173.

 

Q:

Why am I receiving this consent solicitation statement/information statement/prospectus?

 

A:

We are delivering this document to you because it is an information statement being used by the Eclipse board to provide Eclipse stockholders with material information concerning the actions taken in connection with the Eclipse stockholder written consent (as defined below), and a consent solicitation statement being used by the BRMR board to solicit written consents of BRMR stockholders to (i) adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement and (ii) separately approve the BRMR 280G payments. This document is also a prospectus that is being delivered to BRMR stockholders because, in connection with the merger, Eclipse will be issuing to BRMR stockholders shares of Eclipse common stock as merger consideration. Finally, this document is also a notice to holders of BRMR common stock of a proposed Drag Transaction, as defined in the BRMR stockholders agreement.

 

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Q:

What will holders of BRMR equity awards receive in the merger?

 

A:

The merger agreement provides for the following treatment of BRMR equity awards in the merger, consistent with the terms of the applicable BRMR equity plan and/or equity award agreement:

BRMR Restricted Stock Units

Each outstanding restricted stock unit of BRMR (which we refer to as “BRMR RSUs”) will vest in full at the effective time of the merger. Each BRMR RSU is the equivalent of one share of BRMR common stock. Except as described below with respect to certain BRMR RSUs granted to directors of BRMR, each holder of outstanding BRMR RSUs will be entitled to elect, no later than five business days prior to the closing date, whether to receive in the merger for such BRMR RSUs (i) the merger consideration (including cash in lieu of fractional shares) for each share of BRMR common stock subject to such holder’s BRMR RSUs, (ii) cash equal to the product of (A) the number of shares of BRMR common stock subject to such holder’s BRMR RSUs multiplied by (B) (1) the closing price of Eclipse common stock on the NYSE on the closing date multiplied by (2) the exchange ratio, or (iii) a combination thereof, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement. The foregoing does not apply to certain BRMR RSUs granted to directors of BRMR, the terms of which do not provide for such an election. Holders of these other BRMR RSUs will receive the merger consideration (including cash in lieu of fractional shares) for each share of BRMR common stock subject to such BRMR RSUs, after giving effect to an adjustment to the number of such BRMR RSUs in connection with the merger pursuant to the terms of the applicable award agreement, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement.

BRMR Performance Interest Awards

Each holder of a performance interest award granted by BRMR (which we refer to as “BRMR PIAs”) will receive as a result of the merger in respect of such holder’s BRMR PIA the merger consideration (including cash in lieu of fractional shares) for a number of shares of BRMR common stock equal to (i) the “Performance Interest Stock Value” (as defined in and determined by the BRMR board under the applicable award agreement governing such BRMR PIA) divided by (ii) (A) the closing price of Eclipse common stock on the NYSE on the closing date multiplied by (B) the exchange ratio, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement.

BRMR Restricted Stock

Each outstanding share of restricted BRMR common stock (which we refer to as “BRMR restricted stock”) will vest in full at the effective time of the merger, and the holders thereof will be entitled to receive the merger consideration (including cash in lieu of fractional shares) for such shares of BRMR restricted stock, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement.

For additional information regarding the treatment of BRMR equity awards, see the section entitled “The Merger Agreement—Treatment of BRMR Equity Awards in the Merger” beginning on page 136.

 

Q:

What equity stake will BRMR stockholders hold in Eclipse immediately following the merger?

 

A:

Based on the number of issued and outstanding shares of Eclipse and BRMR common stock as of                 , 2018, and the adjusted exchange ratio of 0.29506 after giving effect to the Eclipse reverse stock split described below, holders of shares of BRMR common stock as of immediately prior to the effective time of the merger would hold, in the aggregate, approximately 42.5% of the issued and outstanding shares of Eclipse common stock, on a fully diluted basis, immediately following the effective time of the merger. The exact equity stake of BRMR stockholders in Eclipse immediately following the effective time of the

 

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  merger will depend on the number of shares of Eclipse common stock and BRMR common stock issued and outstanding immediately prior to the effective time of the merger, as provided in the section entitled “The Merger Agreement—Effect of the Merger on Capital Stock; Merger Consideration” beginning on page 135.

 

Q:

What will happen to BRMR as a result of the merger?

 

A:

If the merger is completed, Merger Sub will merge with and into BRMR. As a result of the merger, the separate corporate existence of Merger Sub will cease, and BRMR will continue as the surviving corporation in the merger and as a wholly owned subsidiary of Eclipse. Furthermore, shares of BRMR common stock will no longer be traded on the OTC Market Group Inc.’s OTC Grey market (which we refer to as the “OTC Grey”).

 

Q:

I own shares of BRMR common stock. What will happen to those shares as a result of the merger?

 

A:

If the merger is completed, your shares of BRMR common stock will be converted into the right to receive the merger consideration. All such shares of BRMR common stock, when so converted, will cease to be outstanding and will automatically be cancelled. Each holder of a share of BRMR common stock that was outstanding immediately prior to the effective time of the merger will cease to have any rights with respect to shares of BRMR common stock except the right to receive the merger consideration, any dividends or distributions made with respect to shares of Eclipse common stock with a record date after the effective time of the merger, and any cash to be paid in lieu of any fractional shares of Eclipse common stock, in each case to be issued or paid upon the exchange of any certificates or book-entry shares of BRMR common stock for the merger consideration. For additional information, see the sections entitled “The Merger—Consideration to BRMR Stockholders” and “The Merger Agreement—Effect of the Merger on Capital Stock; Merger Consideration” beginning on pages 78 and 135, respectively.

 

Q:

Where will the Eclipse common stock that BRMR stockholders receive in the merger be publicly traded?

 

A:

Assuming the merger is completed, the shares of Eclipse common stock that BRMR stockholders will receive in the merger will be listed and traded on the NYSE.

 

Q:

What happens if the merger is not completed?

 

A:

If the merger agreement and the merger are not adopted and approved by BRMR stockholders or if the merger is not completed for any other reason, BRMR stockholders will not receive any merger consideration, and their shares of BRMR common stock will remain outstanding. In such event, BRMR will remain an independent private company, and it is expected that BRMR common stock will continue to be traded on the OTC Grey. If the merger agreement is terminated under specified circumstances, either BRMR or Eclipse (depending on the circumstances) may be required to pay the other party a termination fee, reverse termination fee or other termination-related payment. For a more detailed discussion of the termination fees, see “The Merger Agreement—Termination” beginning on page 168.

Certain stockholders of BRMR, representing approximately 60.3% of the outstanding shares of BRMR common stock as of                 , 2018, have entered into the BRMR voting agreement with BRMR and Eclipse pursuant to which they have agreed, subject to the terms of the BRMR voting agreement, to execute and return written consents adopting the merger agreement and approving the merger, the other transactions contemplated by the merger agreement and any actions related to the merger agreement within one business day after both the registration statement of which this consent solicitation statement/information statement/prospectus forms a part becomes effective under the Securities Act, and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders. The delivery of the written consents pursuant to the BRMR voting agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement.

 

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Q:

What is the Eclipse reverse stock split?

 

A:

The Eclipse stockholders have approved by written consent the Eclipse charter amendment, which provides for a 15-to-1 reverse stock split with respect to the issued and outstanding Eclipse common stock in connection with the merger. If the reverse stock split is effected, then every 15 issued and outstanding shares of Eclipse common stock would be combined and reclassified into one share of Eclipse common stock. Immediately following the Eclipse reverse stock split, each Eclipse stockholder will own a reduced number of shares of Eclipse common stock. The Eclipse reverse stock split will happen at the same time for every Eclipse stockholder, will affect every Eclipse stockholder uniformly and will not change any Eclipse stockholder’s percentage ownership interest or relative voting rights in Eclipse (other than to the extent that the reverse stock split would result in any Eclipse stockholder owning a fractional share, because cash will be paid in lieu of fractional shares). The Eclipse reverse stock split will not change the number of authorized shares of Eclipse common stock. As we explain below, while there can be no assurance as to Eclipse’s future valuation or stock price, the Eclipse reverse stock split should not in itself change the overall valuation of Eclipse, the value of an Eclipse stockholder’s investment or the value of the consideration BRMR stockholders should expect to receive in the merger.

 

Q:

Why is Eclipse doing a reverse stock split?

 

A:

The Eclipse board believes that it is in the best interests of Eclipse and its stockholders to reduce the number of issued and outstanding shares of Eclipse common stock through a 15-for-1 reverse stock split implemented in connection with the merger. Over the past few years, the trading price per share of Eclipse common stock has declined. Eclipse is concerned that a low trading price per share for Eclipse common stock could cause the shares to trade outside of the optimal trading range for an oil and gas exploration and production company, and that this lower trading price could decrease the marketability and liquidity of Eclipse common stock following the merger. The Eclipse board believes that some institutional investors and investment funds may be reluctant to invest, and in some cases may be prohibited from investing, in lower-priced stocks and that brokerage firms may be reluctant to recommend lower-priced stocks to their clients. Eclipse believes that, following the merger, the Eclipse reverse stock split could improve the marketability and liquidity of Eclipse common stock. In addition, the Eclipse reverse stock split may also assist Eclipse in continuing to meet the NYSE’s minimum per share trading price requirements.

 

Q:

What is the impact of the Eclipse reverse stock split?

 

A:

When the 15-to-1 reverse stock split occurs, Eclipse’s stock price and earnings per share should all increase by a factor of fifteen. The following is an illustrative example for a stockholder owning 15,000 shares of Eclipse common stock prior to the Eclipse reverse stock split:

 

     Pre-split      Post-split  

Number of shares

     15,000        1,000  

Illustrative share price

   $ 1.50      $ 22.50  

Investment value

   $ 22,500      $ 22,500  

We cannot guarantee that the Eclipse reverse stock split will proportionately increase the market price of Eclipse common stock. Eclipse expects to pay cash in lieu of issuing any fractional shares in connection with the Eclipse reverse stock split.

 

Q:

For the BRMR stockholders, what is the impact of the Eclipse reverse stock split?

 

A:

You will receive one-fifteenth of the number of shares of Eclipse common stock in the transaction that you would have received on a pre-split basis; however, those shares should be valued at a price per share that is fifteen times greater. Please see the illustrative example above, and note that we cannot assure you that the market price of Eclipse common stock will increase in proportion to the Eclipse reverse stock split.

 

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Q:

How was the adjusted exchange ratio of 0.29506 of a share of Eclipse common stock for each share of BRMR common stock derived?

 

A:

The merger agreement provides that, in the event of a 15-to-1 reverse stock split, the exchange ratio of 4.4259 shares of Eclipse common stock for each share of BRMR common stock will be divided by fifteen, resulting in an adjusted exchange ratio of 0.29506 of a share of Eclipse common stock for each share of BRMR common stock.

 

Q:

If I do not favor the adoption of the merger agreement as an Eclipse and/or BRMR stockholder, what are my rights?

 

A:

Eclipse stockholders. Under Delaware law, Eclipse stockholders are not entitled to dissenters’ or appraisal rights in connection with the issuance of shares of Eclipse common stock as contemplated by the merger agreement.

BRMR stockholders. Unless the merger constitutes a “drag transaction” as described below, holders of BRMR common stock have the right to dissent from the proposed merger and, subject to certain conditions provided for in Section 262 of the DGCL, to receive payment of the fair value of their BRMR common stock as determined by the Delaware Court of Chancery. BRMR stockholders will be bound by the terms of the merger unless the merger does not constitute a drag transaction and they dissent by complying with all of the requirements of the Delaware dissenters’ rights statute. See the section entitled “Dissenters’ Rights of Appraisal” beginning on page 197 for a summary of dissenters’ rights available to BRMR stockholders, which summary is not intended to be a complete statement of applicable Delaware law and is qualified in its entirety by reference to Section 262 of the DGCL which is set forth in its entirety as Annex D to this consent solicitation statement/information statement/prospectus.

 

Q:

What is a drag transaction, and what are the consequences if the merger constitutes a drag transaction?

 

A:

Under the BRMR stockholders agreement, which is binding on all holders of shares of BRMR common stock, if holders of more than 66 23% of the outstanding shares of BRMR common stock propose to transfer their shares of BRMR common stock in a merger or similar transaction in exchange for cash or marketable securities, then those holders may request that the transaction be a “drag transaction” for purposes of the BRMR stockholders agreement. In that case, among other matters, all other holders of BRMR common stock:

 

   

will be required to transfer their shares of BRMR common stock in the transaction on the same terms as the dragging holders;

 

   

will be required to vote (including by written consent) their shares of BRMR common stock in favor of the drag transaction;

 

   

will be prohibited from raising any objection to the drag transaction or the process pursuant to which it was arranged;

 

   

will be required to execute and deliver certain documentation in connection with, and take certain other actions in furtherance of, the drag transaction; and

 

   

will be required to waive and refrain from exercising (and will be deemed to have irrevocably waived) any appraisal, dissenters’ or similar rights with respect to the drag transaction.

The merger will meet the requirements for eligibility as a drag transaction under the BRMR stockholders agreement. Accordingly, if the holders of more than 66 23% of the outstanding shares of BRMR common stock deliver written consents and make the necessary request for the merger to be a drag transaction, the merger will constitute a drag transaction, and each other holder of BRMR common stock:

 

   

will not be entitled to exercise appraisal rights under Section 262 of the DGCL; and

 

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will be contractually obligated with respect to the other matters described above, including the obligation to consent to the merger, although the failure of any such BRMR stockholder to deliver a written consent will not affect the consummation of the merger or the amount and nature of the consideration such stockholder will be entitled to receive in the merger.

In the BRMR voting agreement, BRMR stockholders who beneficially own approximately 60.3% of the outstanding shares of BRMR common stock have agreed to take all actions necessary to cause the merger to be a drag transaction, in addition to their agreement to deliver written consents adopting the merger agreement and approving the merger and the other transactions contemplated by the merger agreement. Therefore, the holders of only an additional approximately 6.4% of the outstanding shares of BRMR common stock would need to deliver written consents and make the necessary request in order for the merger to become a drag transaction. Accordingly, BRMR believes that it is highly likely that the merger will constitute a drag transaction, with the consequences described above.

The BRMR stockholders agreement requires BRMR to provide at least 20 calendar days’ prior written notice to each selling holder of any proposed drag transaction, specifying the consideration to be paid by the purchaser, the identity of the purchaser and the material terms of the drag transaction. This consent solicitation statement/information statement/prospectus constitutes notice of the merger as a proposed drag transaction. BRMR will provide a subsequent notice to the BRMR stockholders when and if it receives written consents and related requests from holders of BRMR common stock sufficient to cause the merger to be a drag transaction.

For additional information regarding the potential for the merger to be a drag transaction, the related consequences and the provisions of the BRMR stockholders agreement governing these matters, see “Risk Factors—BRMR stockholders will not be able to exercise appraisal rights, among other matters, if the merger constitutes a drag transaction under the BRMR stockholders agreement” and “BRMR Solicitation of Written Consents—Drag Transaction Under BRMR Stockholders Agreement.”

 

Q:

Are there any risks that I should consider as a BRMR stockholder in deciding whether to deliver a written consent, or as an Eclipse stockholder in evaluating the effects of the merger on my Eclipse common stock?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 50. You also should read and carefully consider the risk factors of Eclipse contained in the documents that are incorporated by reference in this consent solicitation statement/information statement/prospectus.

 

Q:

What are the material U.S. federal income tax consequences of the merger to BRMR stockholders?

 

A:

It is a condition to each of BRMR’s and Eclipse’s obligation to complete the merger that each receives a written opinion from its counsel to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinions, for U.S. federal income tax purposes, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

Assuming the merger qualifies as a reorganization, U.S. holders (as defined in the section entitled “Material U.S. Federal Income Tax Consequences of The Merger” beginning on page 175) of shares of BRMR common stock generally will not recognize any U.S. federal income tax gain or loss upon receipt of Eclipse common stock in exchange for BRMR common stock in the merger, except that gain or loss will be recognized with respect to any cash received in lieu of a fractional share of Eclipse common stock. The U.S. federal income tax consequences to Non-U.S. holders of the merger are discussed in the section entitled “Material U.S. Federal Income Tax Consequences Of The Merger—U.S. Federal Income Tax Consequences to Non-U.S. Holders” beginning on page 178 and such holders generally will be required to recognize gain or loss upon receipt of Eclipse common stock plus cash in lieu of fractional shares in exchange for BRMR common stock. Additionally, the merger consideration paid to non-U.S. holders will be subject to

 

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withholding at the rate of 15%. The discussion of the material U.S. federal income tax consequences contained in this consent solicitation statement/information statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all potential U.S. federal income tax consequences of the merger that may vary with, or are dependent on, individual circumstances. In addition, it does not address the effects of any foreign, state or local tax laws, or federal tax laws other than U.S. federal income tax laws.

TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.

 

Q:

When is the merger expected to be completed?

 

A:

Eclipse and BRMR are working to complete the merger as quickly as possible. Subject to the satisfaction or waiver of the conditions described in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 166, including the adoption of the merger agreement and the approval of the merger by BRMR stockholders and certain other customary closing conditions, the transaction is expected to close in the fourth quarter of 2018. However, neither Eclipse nor BRMR can predict the actual date on which the merger will be completed, nor can the parties assure that the merger will be completed at all, because completion is subject to conditions beyond either party’s control.

 

Q:

If I am a BRMR stockholder, how will I receive the merger consideration to which I am entitled?

 

A:

If you are a holder of BRMR common stock certificates, a notice advising you of the effectiveness of the merger and a letter of transmittal and instructions for the surrender of your BRMR common stock certificates will be mailed to you as soon as practicable after the effective time of the merger. After receiving proper documentation from you, the exchange agent will send to you (i) a statement reflecting the aggregate whole number of shares of Eclipse common stock (which will be in uncertificated book-entry form) that you have a right to receive pursuant to the merger agreement and (ii) a check in the amount equal to the cash payable in lieu of any fractional shares of Eclipse common stock and dividends and other distributions on the shares of Eclipse common stock issuable to you as merger consideration.

If you are a holder of BRMR book-entry shares which are held through the DTC, the exchange agent will transmit to DTC or its nominees as soon as reasonably practicable on or after the closing date, the merger consideration, cash in lieu of any fractional shares of Eclipse common stock and any dividends and other distributions on the shares of Eclipse common stock issuable as merger consideration, in each case, that DTC has the right to receive.

If you are a holder of record of BRMR book-entry shares which are not held through DTC, the exchange agent will deliver to you, as soon as practicable after the effective time of the merger, (i) a notice advising you of the effectiveness of the merger, (ii) a statement reflecting the aggregate whole number of shares of Eclipse common stock (which will be in uncertificated book-entry form) that you have a right to receive pursuant to the merger agreement and (iii) a check in the amount equal to the cash payable in lieu of any fractional shares of Eclipse common stock and dividends and other distributions on the shares of Eclipse common stock issuable to you as merger consideration.

No interest will be paid or accrued on any amount payable for shares of BRMR common stock eligible to receive the merger consideration pursuant to the merger agreement.

For additional information on the exchange of BRMR common stock for the merger consideration, see the section entitled “The Merger Agreement—Payment for Securities; Exchange” beginning on page 137.

 

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Q:

If I am a holder of BRMR common stock certificates, do I need to send in my stock certificates at this time to receive the merger consideration?

 

A:

No. Please DO NOT send your BRMR common stock certificates with your written consent. You should carefully review and follow the instructions set forth in the letter of transmittal, which will be mailed to you, regarding the surrender of your stock certificates.

 

Q:

If I am a BRMR stockholder, will the shares of Eclipse common stock issued in the merger receive a dividend?

 

A:

After the completion of the merger, the shares of Eclipse common stock issued in connection with the merger will carry with them the right to receive the same dividends on shares of Eclipse common stock as all other holders of shares of Eclipse common stock, for any dividend the record date for which occurs after the merger is completed.

Since its inception, Eclipse has not paid any cash dividends on the shares of Eclipse common stock, as described in greater detail in the section entitled “Comparative Per Share Market Price and Dividend Information—Eclipse Market Price and Dividend Information” beginning on page 48. Any future Eclipse dividends will remain subject to approval by the Eclipse board.

 

Q:

What are the BRMR 280G payments, and why is BRMR asking its stockholders to approve them?

 

A:

Under Section 280G of the Code, “parachute payments” may arise when there is a change in control of an employer and as a result, certain employees, officers or directors, referred to as “disqualified individuals” receive compensation equal to or in excess of three times their average annual compensation from the employer for the five years preceding the taxable year in which the change of control occurs. If parachute payments are paid and no applicable exception applies, the amount by which the change of control payments and benefits exceeds one times that five-year average (1) are not deductible by the employer and (2) are subject to a 20% excise tax payable by the recipient of the payment or benefit.

Section 280G of the Code provides an exception from these tax penalties for a corporation undergoing a change in control if no stock in the corporation is readily tradeable on an established securities market, as long as the payments that would otherwise be parachute payments are contingent on stockholder approval, and are approved in a timely manner by a vote of the stockholders owning more than 75% of the voting power of all outstanding stock of such corporation, after having received adequate disclosure of all material facts concerning such payments. For purposes of this exception, stock of the corporation that is actually or constructively owned by a person who is to receive a payment that would otherwise constitute a “parachute payment” under Section 280G of the Code (if such exception is not satisfied) is not counted as outstanding stock, unless this is the case with respect to all stockholders. The right of a disqualified individual to receive such payments must be conditioned upon satisfying this stockholder approval exception.

The merger will constitute a change in control of BRMR for purposes of Section 280G of the Code, certain executive officers of BRMR (whom we refer to as the “280G Officers”) may be determined to be “disqualified individuals” with respect to Section 280G of the Code and certain potential payments to them may be considered “parachute payments” under Section 280G of the Code. The 280G Officers intend to enter into waiver agreements with BRMR pursuant to which their rights to receive such payments in excess of a certain threshold amount will be contingent upon satisfying this exception. Accordingly, BRMR is seeking written consents of the BRMR stockholders to approve the BRMR 280G payments. Approval of the BRMR 280G payments by the holders of more than 75% of the outstanding shares of BRMR common stock (other than shares held by such executive officers of BRMR) should satisfy the stockholder approval exception under Section 280G of the Code.

If the BRMR stockholders do not approve the BRMR 280G payments, the 280G Officers will not be entitled to receive the BRMR 280G payments. If the BRMR 280G payments are approved by the BRMR stockholders, the 280G Officers will be entitled to receive the BRMR 280G payments, provided that they

 

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would otherwise be entitled to receive them under the applicable agreements. Certain of the BRMR 280G payments are contingent upon the occurrence of certain termination of employment events in addition to the occurrence of a change in control.

For additional information, see “BRMR Solicitation of Written ConsentsApproval of the BRMR 280G Payments” beginning on page 69.

 

Q:

Will the BRMR 280G payments affect the amount of merger consideration to be received by BRMR stockholders?

 

A:

No. Whether the BRMR stockholders approve the BRMR 280G payments and whether any such payments are actually made will have no effect on the value or number of shares of Eclipse common stock that a BRMR stockholder will receive if the merger is completed.

 

Q:

What is “householding”?

 

A:

To reduce the expense of delivering duplicate materials to stockholders who may have more than one account holding Eclipse common stock but who share the same address, Eclipse has adopted a procedure approved by the SEC called “householding.” Under this procedure, certain stockholders of record who have the same address and last name will receive only one copy of this consent solicitation statement/information statement/prospectus until such time as one or more of these stockholders notifies Eclipse that they want to receive separate copies. In addition, the broker, bank or other nominee for any stockholder who is a beneficial owner of Eclipse common stock may deliver only one copy of this consent solicitation statement/information statement/prospectus to multiple stockholders who share the same address, unless that broker, bank or other nominee has received contrary instructions from one or more of the Eclipse stockholders. This procedure reduces duplicate mailings and saves printing costs and postage fees, as well as natural resources. Eclipse stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions. Eclipse is not asking Eclipse stockholders for a proxy or written consent in this consent solicitation statement/information statement/prospectus. BRMR has not elected to institute householding.

 

Q:

What should I do now?

 

A:

You should read this consent solicitation statement/information statement/prospectus carefully, and in its entirety, including the annexes hereto and the information incorporated by reference herein, and, if you are a BRMR stockholder, return your completed, signed and dated written consent in the enclosed postage-paid envelope as soon as possible so that your shares of BRMR common stock will be voted in accordance with your instructions.

 

Q:

Where can I find more information about Eclipse, BRMR and the merger?

 

A:

You can find out more information about Eclipse, BRMR and the merger by reading this consent solicitation statement/information statement/prospectus and, with respect to Eclipse and BRMR, from various sources described in the section entitled “Where You Can Find More Information” beginning on page 262.

For Eclipse Stockholders

 

Q:

Did the Eclipse board approve the transactions contemplated by the merger agreement?

 

A:

After careful consideration of various factors described in “The Merger—The Eclipse Board’s Reasons for the Merger,” the Eclipse board unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including (A) the Eclipse stock issuance, and (B) the Eclipse charter amendment, are fair to, and in the best interests of, Eclipse and its stockholders, (ii) approved and declared advisable the

 

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  merger agreement and the transactions contemplated thereby, including the Eclipse stock issuance and the Eclipse charter amendment, (iii) directed that the approval of the Eclipse stock issuance and the Eclipse charter amendment be submitted to the Eclipse stockholders, and (iv) resolved to recommend that the stockholders approve the Eclipse stock issuance and the Eclipse charter amendment.

 

Q:

Has stockholder approval of the Eclipse stock issuance and the Eclipse charter amendment been obtained?

 

A:

Yes. Prior to the execution and delivery of the merger agreement, certain Eclipse stockholders that beneficially owned, in the aggregate, 172,955,027 shares of Eclipse common stock, or approximately 57.2% of the shares of Eclipse common stock outstanding and entitled to consent to such matters as of August 23, 2018, executed and delivered a written consent in lieu of a meeting (which we refer to as the “Eclipse stockholder written consent”) approving the Eclipse stock issuance and the Eclipse charter amendment, which Eclipse stockholder written consent became effective upon the execution of the merger agreement in accordance with Section 228(c) of the DGCL. As a result, no further action by the Eclipse stockholders is required to approve the Eclipse stock issuance, the Eclipse charter amendment, the merger agreement or the consummation of the transactions contemplated by the merger agreement.

 

Q:

Why am I receiving this consent solicitation statement/information statement/prospectus?

 

A:

This consent solicitation statement/information statement/prospectus is being provided to you for your information to comply with the Exchange Act requirements. You are urged to read this consent solicitation statement/information statement/prospectus in its entirety. However, no action is required on your part in connection with this document. Eclipse is not asking you for a proxy and you are requested not to send Eclipse a proxy.

 

Q:

What will happen to my shares of Eclipse common stock?

 

A:

Nothing. You will continue to own the same shares of Eclipse common stock that you own prior to the effective time of the merger. As a result of the Eclipse stock issuance, however, the overall ownership percentage of the Eclipse stockholders in the combined company following the merger will be diluted. In addition, upon completion of the Eclipse reverse stock split, every 15 issued and outstanding shares of Eclipse common stock will be combined and reclassified into one share of Eclipse common stock.

 

Q:

Do the Eclipse directors and executive officers have any interests in the merger?

 

A:

Yes. In connection with the consummation of the merger, Eclipse’s directors and executive officers have interests in the merger that may be different from, or in addition to, those of the stockholders of Eclipse generally. The Eclipse board was aware of these interests and considered them, among other things, in reaching its decision to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, including the Eclipse stock issuance and the Eclipse charter amendment. These interests are described in more detail in the section entitled “The Merger—Interests of Eclipse Directors and Executive Officers in the Merger” beginning on page 123.

For BRMR Stockholders

 

Q:

How can I return my written consent?

 

A:

If you hold shares of BRMR common stock as of the close of business on the record date and you desire to submit your written consent, you must fill out the enclosed written consent, date and sign it, and promptly return it to BRMR by hand delivery or mail to Blue Ridge Mountain Resources, Inc., 122 West John Carpenter Freeway, Suite 300, Irving, Texas 75039, Attention: Frank E. Day, Vice President and Corporate Counsel. BRMR does not anticipate holding a stockholders meeting to consider these matters, which means you will not be able to vote in person by attending a stockholders meeting.

 

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Q:

Who is entitled to execute and return a written consent?

 

A:

The BRMR board has fixed                 , 2018 as the record date for the determination of the BRMR stockholders entitled to execute and return written consents with respect to adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and to approval of the BRMR 280G payments. Holders of outstanding shares of BRMR common stock as of the close of business on the record date will be entitled to execute and return the written consent furnished with this consent solicitation statement/information statement/prospectus. As of the close of business on the record date, there were 50,901,282 shares of BRMR common stock outstanding and with respect to which the holders are entitled to execute and return written consents.

 

Q:

What is the deadline for returning my written consent?

 

A:

BRMR has set 5:00 p.m., Irving, Texas time, on                 , 2018 as the targeted final date for the receipt of written consents. BRMR reserves the right to extend the final date for the receipt of written consents beyond                 , 2018 for any reason in its sole discretion. Among other reasons, BRMR may extend the final date for receipt of written consents if necessary in order to receive written consents and requests from holders of shares of BRMR common stock sufficient to cause the merger to be a drag transaction under the BRMR stockholders agreement as described above or to receive written consents from the holders of shares of BRMR common stock sufficient to approve the BRMR 280G payments. Any such extension may be made without notice to the BRMR stockholders, although BRMR currently expects that it would issue a press release or other public communication notifying the BRMR stockholders of any such extension.

In addition, BRMR reserves the right to conclude the consent solicitation prior to                 , 2018 if, prior to that date, BRMR has received written consents from holders of shares of BRMR common stock sufficient to (i) adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, (ii) cause the merger to be a drag transaction under the BRMR stockholders agreement and (iii) approve the BRMR 280G payments. Any such early conclusion of the consent solicitation may be made without notice to the BRMR stockholders, although BRMR currently expects that it would issue a press release or other public communication notifying the BRMR stockholders of any such early conclusion.

 

Q:

What stockholder consent is required to adopt the merger agreement and approve the merger?

 

A:

BRMR cannot complete the merger unless the BRMR stockholders adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement. BRMR needs this stockholder approval for two reasons. First, under the DGCL, the merger agreement must be adopted by the affirmative vote of or consent with respect to a majority of the outstanding shares of BRMR common stock. Second, the BRMR stockholders agreement prohibits BRMR from consummating a merger or taking certain other actions, including amending its certificate of incorporation and bylaws and changing the number of members of the BRMR board, each of which would occur upon consummation of the merger pursuant to the merger agreement, without the approval of the holders of a majority of the outstanding shares of BRMR common stock. Accordingly, the merger and the other transactions contemplated by the merger agreement require the same approval of BRMR stockholders under the BRMR stockholders agreement as is required for the adoption of the merger agreement pursuant to the DGCL. BRMR stockholders are being asked to consent to the adoption of the merger agreement for purposes of the DGCL and the approval of the merger and the other transactions contemplated by the merger agreement for purposes of the BRMR stockholders agreement as a single proposal.

The parties to the BRMR voting agreement, representing approximately 60.3% of the outstanding shares of BRMR common stock, have agreed, subject to the terms of the BRMR voting agreement, to execute and return written consents adopting the merger agreement and approving the merger, the other transactions contemplated by the merger agreement and any actions related to the merger agreement within one business day after both the registration statement of which this consent solicitation statement/information statement/

 

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prospectus forms a part becomes effective under the Securities Act and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders. The delivery of the written consents by the parties to the BRMR voting agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement.

 

Q:

What stockholder consent is required to approve the BRMR 280G payments?

 

A:

Approval of the BRMR 280G payments requires the consent of the holders of more than 75% of the outstanding shares of BRMR common stock, excluding those shares held or constructively owned by the executive officers whose parachute payments BRMR stockholders are being asked to approve.

 

Q:

Is adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement subject to approval of the BRMR 280G payments?

 

A:

No. The proposal to approve the BRMR 280G payments is a separate proposal from the proposal to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement. Failure of BRMR stockholders to approve the BRMR 280G payments will have no effect on the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement. The written consent accompanying this consent solicitation statement/information statement/prospectus provides BRMR stockholders the opportunity to consent to either or both of the two proposals.

 

Q:

What happens if I do not execute and return my written consent?

 

A:

If you are a BRMR stockholder as of the close of business on the record date and you do not execute and return a written consent, your shares of BRMR common stock will not be voted with respect to the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement or to the approval of the BRMR 280G payments. Accordingly, failure to execute and return a written consent effectively will constitute a vote against adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and against approval of the BRMR 280G payments.

 

Q:

What happens if I execute and return my written consent without specifying an election to consent in favor of or against a matter as to which BRMR is seeking written consents?

 

A:

The written consent accompanying this consent solicitation statement/information statement/prospectus provides the opportunity to elect to consent separately in favor of or against each of two matters as to which BRMR is soliciting consents (i.e., (1) adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement, and (2) approval of the BRMR 280G payments). Accordingly, you may execute a written consent electing to consent (i) in favor of both matters, (ii) against both matters or (iii) in favor one matter and against the other matter.

If you execute and return your written consent but do not make a specific election with respect to one or both of the matters as to which BRMR is soliciting consents, you will be deemed to have elected to consent in favor of each matter for which you do not make a specific election.

 

Q:

Does the BRMR board recommend that the BRMR stockholders adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement and approve the BRMR 280G payments?

 

A:

Yes. By unanimous vote, the BRMR board has (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, BRMR and

 

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  its stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, (iii) directed that the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement be submitted to the stockholders of BRMR for action thereon and (iv) resolved to recommend that the BRMR stockholders adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement. The BRMR board unanimously recommends that you consent to the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement. See “The Merger—Recommendation of the BRMR Board and Reasons for the Merger” beginning on page 101 of this consent solicitation statement/information statement/prospectus. In considering the recommendation of the BRMR board with respect to the merger agreement and the merger you should be aware that directors and executive officers of BRMR are parties to agreements or participants in other arrangements that give them interests in the merger that may be different from, or in addition to, your interests as a stockholder of BRMR. You should consider these interests in consenting to the adoption of the merger agreement. These different interests are described under “Interests of BRMR Directors and Executive Officers in the Merger” beginning on page 125 of this consent solicitation statement/information statement/prospectus.

The BRMR board believes that the payments and benefits the 280G Officers are eligible to receive or may be eligible to receive upon or following the consummation of the merger represent reasonable and appropriate compensation for the 280G Officers given their performance and the circumstances of the merger. Accordingly, the BRMR board unanimously recommends that the BRMR stockholders execute and deliver written consents to approve the BRMR 280G payments. See “BRMR Solicitation of Written Consents—Approval of the BRMR 280G Payments—Recommendation of the BRMR Board.”

 

Q:

What happens if I sell my shares after the record date but before the effective time of the merger?

 

A:

If you sell or otherwise transfer shares of BRMR common stock after the record date but prior to the effective time of the merger, then you will not receive the merger consideration. However, you may still provide a written consent as described herein. You must hold your shares through the effective time of the merger to receive the merger consideration.

 

Q:

Can I revoke my written consent?

 

A:

Yes, except as described below with respect to parties to the BRMR voting agreement. After you execute and return your written consent, except as described below with respect to parties to the BRMR voting agreement, you may revoke your written consent or change your election with respect to either matter (or both matters) as to which BRMR is soliciting consents at any time before BRMR receives written consents from holders of shares of BRMR common stock sufficient to approve the applicable matter. Once BRMR has received written consents from holders of shares of BRMR common stock sufficient to approve a matter, consents with respect to that matter may not be revoked and elections with respect to that matter may not be changed. Because the delivery of the written consents by the BRMR stockholders party to the BRMR stockholders agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, you will not be able to revoke your consent or change your election with respect to that matter after the delivery of written consents by those BRMR stockholders. Those BRMR stockholders have agreed, subject to the terms of the BRMR voting agreement, to execute and return such written consents within one business day after both the registration statement of which this consent solicitation statement/information statement/prospectus forms a part becomes effective under the Securities Act and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders.

If you are a BRMR stockholder that is a party to the BRMR voting agreement, your consent to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement will be irrevocable, but you may revoke your consent or change your election with respect to approval of the BRMR 280G payments as described above.

 

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At any time at which you are permitted to revoke your consent or change your election, you can do so by delivering a written notice stating that you revoke your consent or delivering a new written consent with a later date, in either case to Blue Ridge Mountain Resources, Inc., 122 West John Carpenter Freeway, Suite 300, Irving, Texas 75039, Attention: Frank E. Day, Vice President and Corporate Counsel.

 

Q:

Should I send in my BRMR stock certificates now?

 

A:

No. After the merger is completed, the exchange agent selected by Eclipse will send former BRMR stockholders written instructions for exchanging their BRMR stock certificates and BRMR book entry shares for the merger consideration.

 

Q:

Who can answer my questions?

 

A:

If you have any questions about the merger or how to return your written consent, or if you need additional copies of this consent solicitation statement/information statement/prospectus or a replacement written consent, you should contact BRMR at Blue Ridge Mountain Resources, Inc., 122 West John Carpenter Freeway, Suite 300, Irving, Texas 75039, Attention: Frank E. Day, Vice President and Corporate Counsel or by telephone at (469) 444-1647.

 

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SUMMARY

This summary highlights selected information included in this consent solicitation statement/information statement/prospectus and does not contain all of the information that may be important to you. Accordingly, you should read this entire consent solicitation statement/information statement/prospectus, including the annexes hereto and the other documents referred to or incorporated by reference herein, carefully and in their entirety. You may obtain the information about Eclipse that is incorporated by reference into this consent solicitation statement/information statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 262. Each item in this summary includes a page reference directing you to a more complete description of that item in this consent solicitation statement/information statement/prospectus.

Information About the Companies (pages 65 and 201)

Eclipse Resources Corporation

2121 Old Gatesburg Road, Suite 110

State College, Pennsylvania 16803

Phone: (814) 308-9754

Eclipse is an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. As of June 30, 2018, Eclipse had assembled an acreage position approximating 197,500 net acres in Eastern Ohio and 43,500 net acres in Pennsylvania, which excludes any acreage currently pending title. Approximately 134,500 of Eclipse’s net acres are located in the Utica Shale fairway, which Eclipse refers to as the Utica Core Area, and approximately 14,600 of these net acres are also prospective for the highly liquids rich area of the Marcellus Shale in Eastern Ohio within what Eclipse refers to as its Marcellus Area. Eclipse is the operator of approximately 96% of its net acreage within the Utica Core Area and its Marcellus Area. Eclipse intends to focus on developing its substantial inventory of horizontal drilling locations during commodity price environments that will allow it to generate attractive returns and will continue to opportunistically add to this acreage position where it can acquire acreage at attractive prices. Eclipse was formed in 2014 and is incorporated in the State of Delaware.

Everest Merger Sub Inc.

c/o Eclipse Resources Corporation

2121 Old Gatesburg Road, Suite 110

State College, Pennsylvania 16803

Phone: (814) 308-9754

Merger Sub, whose legal name is Everest Merger Sub Inc., is a direct, wholly owned subsidiary of Eclipse. Upon the completion of the merger, Merger Sub will cease to exist. Merger Sub was incorporated in Delaware on August 10, 2018 for the sole purpose of effecting the merger.

Blue Ridge Mountain Resources, Inc.

Blue Ridge Mountain Resources, Inc.

122 West John Carpenter Freeway, Suite 300

Irving, Texas 75039

Phone: (469) 444-1647

BRMR is an independent exploration and production company engaged in the acquisition, development and production of natural gas, NGLs and oil. BRMR is active in two of the most prolific unconventional shale



 

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resource plays in North America, the Marcellus and Utica Shales. As of June 30, 2018, BRMR held approximately 114,000 net surface leasehold acres in the Marcellus and Utica Shales in Ohio and West Virginia, approximately 108,250, or 95%, of which are undeveloped. Approximately 67% of BRMR’s total net surface acres in these areas are held by production. BRMR is the operator on approximately 98% of this net acreage and holds an average 81% working interest across the position within developed units.

The Merger and the Merger Agreement (page 133)

The terms and conditions of the merger are contained in the merger agreement, which is attached to this consent solicitation statement/information statement/prospectus as Annex A and is incorporated by reference herein in its entirety. Eclipse and BRMR encourage you to read the merger agreement carefully, and in its entirety, as it is the legal document that governs the merger.

The Eclipse board and BRMR board each has unanimously approved the merger agreement and the transactions contemplated by the merger agreement. Pursuant to the terms and subject to the conditions included in the merger agreement, Eclipse has agreed to acquire BRMR by means of a merger of Merger Sub with and into BRMR, with BRMR surviving the merger as a wholly owned subsidiary of Eclipse.

Merger Consideration (page 135)

As a result of the merger, each eligible share of BRMR common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive 0.29506 of a share of Eclipse common stock, subject to adjustment as specified in the merger agreement (the merger consideration), after giving effect to the Eclipse reverse stock split.

BRMR stockholders will not be entitled to receive any fractional shares of Eclipse common stock in the merger, and no BRMR stockholders will be entitled to dividends, voting rights or any other rights in respect of any fractional shares of Eclipse common stock. BRMR stockholders that would have otherwise been entitled to receive a fractional share of Eclipse common stock will instead be entitled to receive, in lieu of fractional shares, an amount in cash, without interest, equal to the product of the volume weighted average price of Eclipse common stock for the five consecutive trading days immediately prior to the closing date as reported by Bloomberg, L.P. (adjusted to give effect to the Eclipse reverse stock split), multiplied by the fraction of a share of Eclipse common stock to which the holder would otherwise be entitled.

Risk Factors (page 50)

The merger and an investment in Eclipse common stock involve risks, some of which are related to the transactions contemplated by the merger agreement. You should carefully consider the information about these risks set forth under the section entitled “Risk Factors” beginning on page 50, together with the other information included or incorporated by reference in this consent solicitation statement/information statement/prospectus, particularly the risk factors contained in Eclipse’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. BRMR stockholders should carefully consider the risks set out in that section before submitting their written consents. For additional information, see the section entitled “Where You Can Find More Information” beginning on page 262.



 

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Treatment of BRMR Equity Awards (page 136)

The merger agreement provides for the following treatment of BRMR equity awards in the merger, consistent with the terms of the applicable BRMR equity plan and/or equity award agreement:

BRMR Restricted Stock Units

Each outstanding BRMR RSU will vest in full at the effective time of the merger. Each BRMR RSU is the equivalent of one share of BRMR common stock. Except as described below with respect to certain BRMR RSUs granted to directors of BRMR, each holder of outstanding BRMR RSUs will be entitled to elect, no later than five business days prior to the closing date, whether to receive in the merger for such BRMR RSUs (i) the merger consideration (including cash in lieu of fractional shares) for each share of BRMR common stock subject to such holder’s BRMR RSUs, (ii) cash equal to the product of (A) the number of shares of BRMR common stock subject to such holder’s BRMR RSUs multiplied by (B) (1) the closing price of Eclipse common stock on the NYSE on the closing date multiplied by (2) the exchange ratio, or (iii) a combination thereof, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement. The foregoing does not apply to certain BRMR RSUs granted to directors of BRMR, the terms of which do not provide for such an election. Holders of these other BRMR RSUs will receive the merger consideration (including cash in lieu of fractional shares) for each share of BRMR common stock subject to such BRMR RSUs, after giving effect to an adjustment to the number of such BRMR RSUs in connection with the merger pursuant to the terms of the applicable award agreement, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement.

BRMR Performance Interest Awards

Each holder of a BRMR PIA will receive as a result of the merger in respect of such holder’s BRMR PIA the merger consideration (including cash in lieu of fractional shares) for a number of shares of BRMR common stock equal to (i) the “Performance Interest Stock Value” (as defined in and determined by the BRMR board under the applicable award agreement governing such BRMR PIA) divided by (ii) (A) the closing price of Eclipse common stock on the NYSE on the closing date multiplied by (B) the exchange ratio, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement.

BRMR Restricted Stock

Each outstanding share of BRMR restricted stock will vest in full at the effective time of the merger, and the holders thereof will be entitled to receive the merger consideration (including cash in lieu of fractional shares) for such shares of BRMR restricted stock, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement.

The Eclipse Board’s Reasons for the Merger (page 88)

The Eclipse board recommended that Eclipse stockholders approve the Eclipse stock issuance and the Eclipse charter amendment. For the factors considered by the Eclipse board in reaching this decision, see the section entitled “The Merger—The Eclipse Boards Reasons for the Merger” beginning on page 88.

Recommendation of the BRMR Board and Reasons for the Merger (page 101)

The BRMR board unanimously recommends that you deliver a written consent to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement. For a discussion of the factors considered by the BRMR board in reaching this decision and additional information on the recommendation of the BRMR board, see the section entitled “The Merger—Recommendation of the BRMR Board and Reasons for the Merger” beginning on page 101.



 

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Opinions of Financial Advisors (pages 92 and 105)

Opinion of Jefferies, Eclipse’s financial advisor

In March 2018, Eclipse retained Jefferies LLC (which we refer to as “Jefferies”) to act as Eclipse’s financial advisor in connection with certain potential strategic transactions, including a possible acquisition by Eclipse or possible sale, disposition or other business transaction or series of related transactions involving all or a material portion of the voting securities or assets of Eclipse. At a meeting of the Eclipse board on August 23, 2018, a representative of Jefferies rendered Jefferies’ opinion to the Eclipse board to the effect that, as of that date and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken as set forth in its opinion, the exchange ratio as set forth in the merger agreement was fair, from a financial point of view, to Eclipse, as more fully described in the section of this consent solicitation statement/information statement/prospectus entitled “The Merger— Opinion of Jefferies, Eclipse’s Financial Advisor” beginning on page 92.

The full text of the written opinion of Jefferies, dated as of August 23, 2018, is attached hereto as Annex B. Jefferies’ opinion sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Jefferies in rendering its opinion. Eclipse encourages you to read Jefferies’ opinion carefully and in its entirety. Jefferies’ opinion was directed to the Eclipse board (in its capacity as such) and addresses only the fairness, from a financial point of view, to Eclipse of the exchange ratio as set forth in the merger agreement. It does not address the relative merits of the transactions contemplated by the merger agreement as compared to any alternative transaction or opportunity that might be available to Eclipse, nor does it address the underlying business decision by Eclipse to engage in the merger or the terms of the merger agreement or the documents referred to therein. Jefferies’ opinion does not constitute a recommendation as to how or whether any holder of Eclipse common stock should consent, vote or act with respect to the Eclipse stock issuance, the Eclipse charter amendment or any matter related thereto.

For additional information, see the section entitled “The Merger—Opinion of Jefferies, Eclipse’s Financial Advisor” beginning on page 92 and Annex B.

Opinion of Barclays, BRMR’s financial advisor

BRMR engaged Barclays Capital Inc. (which we refer to as “Barclays”) to act as its financial advisor with respect to the merger. On August 22, 2018, Barclays rendered its oral opinion (which opinion was subsequently confirmed in writing) to the BRMR board that, as of such date and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, from a financial point of view, the exchange ratio to be offered to BRMR stockholders in the merger was fair to such stockholders, as more fully described in the section of this consent solicitation statement/information statement/prospectus entitled “The Merger— Opinion of Barclays, BRMR’s Financial Advisor” beginning on page 105. The summary of Barclays’ opinion set forth below is qualified in its entirety by reference to the full text of Barclays’ written opinion.

The full text of Barclays’ written opinion, dated as of August 22, 2018, is attached as Annex C to this consent solicitation statement/information statement/prospectus. Barclays’ written opinion sets forth, among other things, the assumptions made, procedures followed, factors considered and limitations upon the review undertaken by Barclays in rendering its opinion. You are encouraged to read the opinion carefully in its entirety.

Barclays’ opinion was addressed to the BRMR board, addressed only the fairness, from a financial point of view, to BRMR stockholders of the exchange ratio to be offered to such stockholders and does not constitute a recommendation to any BRMR stockholder as to how such stockholder should vote with respect to the merger or any other matter. Barclays was not requested to opine as to, and its opinion did not in any manner address, BRMR’s underlying business decision to proceed with or effect the merger or the likelihood of the consummation of the merger. In addition, Barclays expressed no opinion on, and its



 

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opinion did not in any manner address, the fairness of the amount or the nature of any compensation to any officers, directors or employees of any party to the merger or any class of such persons, relative to the consideration to be offered to BRMR stockholders in connection with the merger. Barclays’ opinion did not address the relative merits of the merger as compared to any other transaction or business strategy in which BRMR might engage.

For additional information, see the section entitled “The Merger—Opinion of Barclays, BRMRs Financial Advisor” beginning on page 105 and Annex C.

Eclipse Actions by Written Consent (page 66)

On August 23, 2018, the Eclipse board unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the Eclipse stock issuance pursuant to the merger agreement, and the Eclipse charter amendment, are fair to, and in the best interests of, Eclipse and its stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the Eclipse stock issuance and the Eclipse charter amendment, (iii) directed that the approval of the Eclipse stock issuance and the Eclipse charter amendment be submitted to the Eclipse stockholders, and (iv) resolved to recommend that the Eclipse stockholders approve the Eclipse stock issuance and approve and adopt the Eclipse charter amendment. Eclipse stockholder approval is required for (x) the Eclipse stock issuance under the rules of the NYSE and (y) the Eclipse charter amendment under the Eclipse certificate of incorporation and the DGCL.

Pursuant to Section 228 of the DGCL and Section 2.14 of the Eclipse bylaws, any action required or permitted to be taken at any annual or special meeting of Eclipse stockholders may be taken without a meeting, without prior notice and without a vote of Eclipse stockholders, if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. On August 25, 2018, the EnCap Entities, direct holders of an aggregate of 172,955,027 shares of Eclipse common stock, which comprised approximately 57.2% of the issued and outstanding shares of Eclipse common stock, as of August 23, 2018, executed and delivered the Eclipse stockholder written consent and thereby approved the Eclipse stock issuance and Eclipse charter amendment.

As a result of the Eclipse stockholder written consent, the requisite stockholder approval of the Eclipse stock issuance has been received as required under the rules of the NYSE, and the requisite stockholder approval of the Eclipse charter amendment has been received as required under the Eclipse certificate of incorporation and the DGCL. This consent solicitation statement/information statement/prospectus is furnished by Eclipse for the purpose of informing and notifying Eclipse stockholders regarding the actions taken by the Eclipse stockholder written consent and is being provided pursuant to the requirements of Rule 14c-2 promulgated under Section 13 of the Exchange Act and Section  228(e) of the DGCL.

BRMR Solicitation of Written Consents (page 68)

BRMR is providing this consent solicitation statement/information statement/prospectus to its stockholders in connection with the solicitation of written consents to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement and to separately approve the BRMR 280G payments.

The record date for the determination of BRMR stockholders entitled to execute and return written consents with respect to the consent solicitation contemplated by this consent solicitation statement/information statement/prospectus is                 , 2018. Only BRMR stockholders of record at the close of business on the record date of                 , 2018 will be entitled to execute and return written consents. As of the close of business on the record date, there were 50,901,282 shares of BRMR common stock outstanding and with respect to which the holders are entitled to execute and return written consents. As of the close of business on the record date, the



 

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directors and executive officers of BRMR beneficially owned and were entitled to execute and return written consents with respect to, in the aggregate, 484,811 shares of BRMR common stock, representing less than one percent of the shares of BRMR common stock outstanding on that date. Each holder of BRMR common stock is entitled to one vote for each share of BRMR common stock owned as of the close of business on the record date.

Under the DGCL, the merger agreement must be adopted by the affirmative vote of or consent with respect to a majority of the outstanding shares of BRMR common stock. In addition, the BRMR stockholders agreement prohibits BRMR from consummating a merger or taking certain other actions, including amending its certificate of incorporation and bylaws and changing the number of members of the BRMR board, each of which would occur upon consummation of the merger pursuant to the merger agreement, without the approval of the holders of a majority of the outstanding shares of BRMR common stock. Accordingly, the merger and the other transactions contemplated by the merger agreement require the same approval of BRMR stockholders as is required for the adoption of the merger agreement pursuant to the DGCL. BRMR stockholders are being asked to consent to the adoption of the merger agreement for purposes of the DGCL and the approval of the merger and the other transactions contemplated by the merger agreement for purposes of the BRMR stockholders agreement as a single proposal.

The parties to the BRMR voting agreement, representing approximately 60.3% of the outstanding shares of BRMR common stock, have agreed, subject to the terms of the BRMR voting agreement, to execute and return written consents adopting the merger agreement and approving the merger, the other transactions contemplated by the merger agreement and any actions related to the merger agreement within one business day after both the registration statement of which this consent solicitation statement/information statement/prospectus forms a part becomes effective under the Securities Act and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders. The delivery of the written consents by the parties to the BRMR voting agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement.

Under Section 280G of the Code, approval of the BRMR 280G payments requires, with respect to each of the 280G Officers, consent of the holders as of the record date of more than 75% of the outstanding shares of BRMR common stock. The BRMR voting agreement does not require the BRMR stockholders to consent to or vote in favor of approval of the BRMR 280G payments. Action by written consent of the BRMR stockholders to approve the BRMR 280G payments is separate from their action by written consent to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, which adoption and approval is not conditioned upon the approval of the BRMR 280G payments.

Holders of shares of BRMR common stock as of the close of business on the record date may complete, date, and sign the written consent furnished with this consent solicitation statement/prospectus and promptly return it to BRMR by hand delivery or mail to Blue Ridge Mountain Resources, Inc., 122 West John Carpenter Freeway, Suite 300, Irving, Texas 75039, Attention: Frank E. Day, Vice President and Corporate Counsel.

BRMR has set 5:00 p.m., Irving, Texas time, on                 , 2018 as the targeted final date for the receipt of written consents. BRMR reserves the right to extend the final date for the receipt of written consents beyond                 , 2018 for any reason in its sole discretion. Among other reasons, BRMR may extend the final date for receipt of written consents if necessary in order to receive written consents and requests from holders of shares of BRMR common stock sufficient to cause the merger to be a drag transaction under the BRMR stockholders agreement or to receive written consents from the holders of shares of BRMR common stock sufficient to approve the BRMR 280G payments. Any such extension may be made without notice to the BRMR stockholders, although BRMR currently expects that it would issue a press release or other public communication notifying the BRMR stockholders of any such extension. In addition, BRMR reserves the right to conclude the consent solicitation prior to                 , 2018 if, prior to that date, BRMR has received written consents from holders of



 

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shares of BRMR common stock sufficient to (i) adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, (ii) cause the merger to be a drag transaction under the BRMR stockholders agreement and (iii) approve the BRMR 280G payments. Any such early conclusion of the consent solicitation may be made without notice to the BRMR stockholders, although BRMR currently expects that it would issue a press release or other public communication notifying the BRMR stockholders of any such early conclusion.

If you are a BRMR stockholder as of the close of business on the record date and you do not execute and return a written consent, your shares of BRMR common stock will not be voted with respect to the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement or to the approval of the BRMR 280G payments. Accordingly, failure to execute and return a written consent effectively will constitute a vote against adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and against approval of the BRMR 280G payments.

The written consent accompanying this consent solicitation statement/information statement/prospectus provides the opportunity to elect to consent separately in favor of or against each of two matters as to which BRMR is soliciting consents (i.e., (1) adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement, and (2) approval of the BRMR 280G payments). Accordingly, you may execute a written consent electing to consent (i) in favor of both matters, (ii) against both matters or (iii) in favor of one matter and against the other matter. If you execute and return your written consent but do not make a specific election with respect to one or both of the matters as to which BRMR is soliciting consents, you will be deemed to have elected to consent in favor of each matter for which you do not make a specific election.

After you execute and return your written consent, except as described below with respect to parties to the BRMR voting agreement, you may revoke your written consent or change your election with respect to either matter (or both matters) as to which BRMR is soliciting consents at any time before BRMR receives written consents from holders of shares of BRMR common stock sufficient to approve the applicable matter. Once BRMR has received written consents from holders of shares of BRMR common stock sufficient to approve a matter, consents with respect to that matter may not be revoked and elections with respect to that matter may not be changed. Because the delivery of the written consents by the BRMR stockholders party to the BRMR stockholders agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, you will not be able to revoke your consent or change your election with respect to that matter after the delivery of written consents by those BRMR stockholders. Those BRMR stockholders have agreed, subject to the terms of the BRMR voting agreement, to execute and return such written consents within one business day after both the registration statement of which this consent solicitation statement/information statement/prospectus forms a part becomes effective under the Securities Act and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders.

If you are a BRMR stockholder that is a party to the BRMR voting agreement, your consent to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement will be irrevocable, but you may revoke your consent or change your election with respect to approval of the BRMR 280G payments as described above.

At any time at which you are permitted to revoke your consent or change your election, you can do so by delivering a written notice stating that you revoke your consent or delivering a new written consent with a later date, in either case to Blue Ridge Mountain Resources, Inc., 122 West John Carpenter Freeway, Suite 300, Irving, Texas 75039, Attention: Frank E. Day, Vice President and Corporate Counsel.



 

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Interests of Eclipse Directors and Executive Officers in the Merger (page 123)

Eclipse stockholders should be aware that the executive officers and directors of Eclipse have interests in the merger that may be different from, or in addition to, the interests of Eclipse stockholders generally. These interests are described in more detail in the section entitled “The Merger—Interests of Eclipse Directors and Executive Officers in the Merger” and “The Merger—Executive Officer Severance Arrangements” beginning on pages 123 and 129, respectively. The members of the Eclipse board were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement, in approving the merger agreement and in determining to recommend that Eclipse stockholders approve the Eclipse stock issuance and the Eclipse charter amendment.

Board of Directors and Management of Eclipse and the Surviving Corporation Following Completion of the Merger (pages 124 and 241)

Prior to the effective time of the merger, Eclipse will take all actions necessary to cause the Eclipse board as of and immediately following the effective time of the merger to consist of a total of ten directors meeting certain independence standards and other qualifications as set forth in the merger agreement, five of whom shall be designated by Eclipse and five of whom shall be designated by BRMR. From and after the effective time of the merger, such directors will serve as such until their respective successors are duly elected or appointed and qualified or their earlier resignation or removal; provided, however, that one of the directors designated by BRMR will resign on the first anniversary of the effective time of the merger and the Eclipse board will be reduced to consist of a total of nine directors. For information regarding the persons expected to be the directors of Eclipse upon consummation of the merger, see the section entitled “Management of Eclipse Upon Consummation of the Merger.”

Prior to the effective time of the merger, Eclipse will take all actions necessary to cause the officers of Eclipse as of and immediately following the effective time of the merger to be the individuals listed on the disclosure letter delivered by Eclipse to BRMR in connection with the merger agreement, or, in certain cases, a replacement for such individual. From and after the effective time of the merger, such officers will serve until their resignation or removal from office by the Eclipse board. Prior to the effective time of the merger, Eclipse will take all actions necessary to cause the resignation or removal of each officer of Eclipse who will not be an officer of Eclipse as of and after the effective time of the merger as provided in the merger agreement from all offices and positions held by such person with Eclipse or any of its subsidiaries, with such resignation or removal to be effective as of the effective time of the merger. For information regarding the persons expected to be the executive officers of Eclipse upon consummation of the merger, see the section entitled “Management of Eclipse Upon Consummation of the Merger.”

At the effective time, the directors of the surviving corporation will be John Reinhart and Oleg Tolmachev, each to hold office in accordance with the certificate of incorporation and bylaws of the surviving corporation until their respective successors are duly elected or appointed and qualified or their earlier removal or resignation. At the effective time, the officers of the surviving corporation will be the individuals listed on the disclosure letter delivered by Eclipse to BRMR in connection with the merger agreement, or, in certain cases, a replacement for such individual. The executive officers of the surviving corporation upon consummation of the merger will be the same as the executive officers of Eclipse upon consummation of the merger. Each of such officers will hold office in accordance with the certificate of incorporation and bylaws of the surviving corporation until their respective successors are duly appointed or their earlier removal or resignation.

Interests of BRMR Directors and Executive Officers in the Merger (page 125)

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merger that may be different from, or in addition to, the interests of BRMR stockholders generally. These interests are described in more detail in the sections entitled “The Merger—Interests of BRMR Directors and Executive Officers in the Merger” and “The Merger—Treatment of BRMR Equity Awards” beginning on pages 125, and 128, respectively. The members of the BRMR board were aware of and considered these interests, among other matters, in evaluating and negotiating the merger agreement, in approving the merger agreement and in determining to recommend that BRMR stockholders adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement.

Conditions to the Completion of the Merger (page 166)

Each party’s obligation to complete the merger is subject to the satisfaction or waiver of the following mutual conditions:

 

   

Eclipse Stockholder Approval. The Eclipse stockholders must have approved the Eclipse stock issuance and Eclipse charter amendment in accordance with the rules and regulations of the NYSE, the DGCL, and the organizational documents of Eclipse (which we refer to as the “Eclipse Stockholder Approval”), and such Eclipse Stockholder Approval must be in full force and effect.

 

   

BRMR Stockholder Approval. The BRMR stockholders must have adopted the merger agreement in accordance with the DGCL and the organization documents of BRMR and approved the merger in accordance with the BRMR stockholders agreement (which we refer to as the “BRMR Stockholder Approval”), and such BRMR Stockholder Approval must be in full force and effect.

 

   

Regulatory Approval. Any waiting period under the HSR Act applicable to the merger and the other transactions contemplated by the merger agreement must have expired or been terminated.

 

   

No Injunctions or Restraints. Any governmental entity having jurisdiction over Eclipse, BRMR and Merger Sub must not have issued any order, decree, ruling, injunction or other action that is in effect (whether temporary, preliminary or permanent) restraining, enjoining or otherwise prohibiting the consummation of the merger, and any law that makes the consummation of the merger illegal or otherwise prohibited must not have been adopted.

 

   

Effectiveness of the Registration Statement. The registration statement, of which this consent solicitation statement/information statement/prospectus forms a part, must have been declared effective by the SEC under the Securities Act and must not be the subject of any stop order or proceedings seeking a stop order.

 

   

NYSE Listing. The shares of Eclipse common stock issuable to BRMR stockholders pursuant to the merger agreement must have been authorized for listing on the NYSE, upon official notice of issuance.

 

   

Appraisal Rights. The total number of dissenting shares must not exceed 12% of the issued and outstanding shares of BRMR common stock immediately prior to the effective time of the merger and the time period for holders of BRMR common stock to submit a written demand for appraisal in accordance with the provisions of Section 262 of the DGCL must have expired.

The obligations of Eclipse and Merger Sub to complete the merger are subject to the satisfaction or waiver of further conditions, including:

 

   

the accuracy of the representations and warranties of BRMR contained in the merger agreement as of August 25, 2018 and as of the closing date (other than representations that by their terms speak specifically as of another date or period of time), subject to the materiality standards provided in the merger agreement;

 

   

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Eclipse having received a certificate of BRMR signed by an executive officer of BRMR, dated as of the closing date, confirming that the conditions set forth in the two bullets directly above have been satisfied; and

 

   

Eclipse having received an opinion from Norton Rose Fulbright US LLP, in form and substance reasonably satisfactory to Eclipse, dated as of the closing date (and, if requested, dated as of the date on which the registration statement, of which this consent solicitation statement/information statement/prospectus forms a part, is declared effective by the SEC), to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

The obligation of BRMR to complete the merger is subject to the satisfaction or waiver of the following additional conditions:

 

   

the accuracy of the representations and warranties of Eclipse contained in the merger agreement as of August 25, 2018 and as of the closing date (other than representations that by their terms speak specifically as of another date or period of time), subject to the materiality standards provided in the merger agreement;

 

   

Eclipse and Merger Sub having performed and complied with in all material respects all of their respective obligations under the merger agreement required to be performed or complied with by them at or prior to the effective time of the merger;

 

   

BRMR having received a certificate of Eclipse signed by an executive officer of Eclipse, dated as of the closing date, confirming that the conditions in the two bullets directly above have been satisfied; and

 

   

BRMR having received an opinion from Bracewell LLP, in form and substance reasonably satisfactory to BRMR, dated as of the closing date (and, if requested, dated as of the date on which the registration statement, of which this consent solicitation statement/information statement/prospectus forms a part, is declared effective by the SEC), to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

No Solicitation (page 149)

No Solicitation by Eclipse

Eclipse has agreed that, from and after August 25, 2018 until the effective time of the merger, or if earlier, the termination of the merger agreement in accordance with its terms, Eclipse and its officers and directors will, and will cause Eclipse’s subsidiaries and their respective officers and directors to, and will use their reasonable best efforts to cause the other representatives of Eclipse and its subsidiaries to, immediately cease, and cause to be terminated, any solicitation, encouragement, discussion or negotiations ongoing with any third party with respect to any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, an Eclipse competing proposal (as such term is defined in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—Definitions of Competing Proposals” beginning on page 155).

Eclipse has also agreed that, except as expressly permitted by the merger agreement, from and after August 25, 2018 until the effective time of the merger, or if earlier, the termination of the merger agreement in accordance with its terms, Eclipse and its officers and directors will not, and will cause Eclipse’s subsidiaries and their respective officers and directors not to, and will use their reasonable best efforts to cause the other representatives of Eclipse and its subsidiaries not to, directly or indirectly, initiate, solicit, propose, knowingly encourage, or knowingly facilitate any inquiry or the making of any proposal or offer that constitutes, or would reasonably be expected to result in, an Eclipse competing proposal.



 

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No Solicitation by BRMR

BRMR has agreed that, from and after August 25, 2018 until the effective time of the merger, or if earlier, the termination of the merger agreement in accordance with its terms, BRMR and its officers and directors will, and will cause BRMR’s subsidiaries and their respective officers and directors to, and will use their reasonable best efforts to cause the other representatives of BRMR and its subsidiaries to, immediately cease, and cause to be terminated, any solicitation, encouragement, discussion or negotiations ongoing with any third party with respect to any inquiry, proposal or offer that constitutes, or would reasonably be expected to lead to, a BRMR competing proposal (as such term is defined in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—Definitions of Competing Proposals” beginning on page 155).

BRMR has also agreed that, except as expressly permitted by the merger agreement, from and after August 25, 2018 until the effective time of the merger, or if earlier, the termination of the merger agreement in accordance with its terms, BRMR and its officers and directors will not, and will cause BRMR’s subsidiaries and their respective officers and directors not to, and will use their reasonable best efforts to cause the other representatives of BRMR and its subsidiaries not to, directly or indirectly:

 

   

initiate, solicit, propose, knowingly encourage, or knowingly facilitate any inquiry or the making of any proposal or offer that constitutes, or would reasonably be expected to result in, a BRMR competing proposal;

 

   

engage in, continue or otherwise participate in any discussions with any person with respect to or negotiations with any person with respect to, relating to, or in furtherance of a BRMR competing proposal or any inquiry, proposal or offer that would reasonably be expected to lead to a BRMR competing proposal;

 

   

furnish any information regarding BRMR or its subsidiaries, or access to the properties, assets or employees of BRMR or its subsidiaries, to any person in connection with or in response to any BRMR competing proposal or any inquiry, proposal or offer that would reasonably be expected to lead to a BRMR competing proposal;

 

   

enter into any letter of intent or agreement in principal, or other agreement providing for a BRMR competing proposal (other than certain confidentiality agreements entered into as permitted by the merger agreement);

 

   

submit any BRMR competing proposal to the vote of BRMR stockholders; or

 

   

resolve, agree or publicly propose to, or permit BRMR or any of its subsidiaries or any of their respective representatives to agree or publicly propose to, take any of the actions referred to above.

Notwithstanding the agreements described above, prior to, but not after, the receipt of the BRMR Stockholder Approval, BRMR and its representatives may engage in the second and third bullets directly above with any person if (i) BRMR receives an unsolicited bona fide written BRMR competing proposal from such person; and (ii) such BRMR competing proposal did not arise from or in connection with a breach of the obligations described directly above and in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—No Solicitation by BRMR” beginning on page 150; provided, however, that:

 

   

no information that is prohibited from being furnished pursuant to the “no solicitation” obligations described above and in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—No Solicitation by BRMR” may be furnished until BRMR receives an executed confidentiality agreement, subject to certain conditions, including that the terms of such confidentiality agreement are no less favorable to BRMR in the aggregate than the terms of the Mutual Confidentiality Agreement dated April 25, 2018 between Eclipse and BRMR;



 

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any non-public information furnished to such person will have previously been made available to Eclipse or is made available to Eclipse prior to or concurrently with the time such information is made available to such person;

 

   

prior to taking any such actions, the BRMR board or any committee of the BRMR board determines in good faith, after consultation with its financial advisors and outside legal counsel, that such BRMR competing proposal is, or would reasonably be expected to lead to, a BRMR superior proposal (as defined in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—Definition of BRMR Superior Proposal”); and

 

   

prior to taking any such actions, the BRMR board determines in good faith after consultation with its outside legal counsel that failure to take such action would be inconsistent with the fiduciary duties owed by the BRMR board to the stockholders of BRMR under applicable law.

Changes of Recommendation (page 149)

Eclipse Restrictions on Changes of Recommendation

The Eclipse board may not effect an Eclipse recommendation change (as defined in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—Eclipse: Restrictions on Changes of Recommendation” beginning on page 152).

BRMR Restrictions on Changes of Recommendation

Subject to certain exceptions described below, the BRMR board may not effect a BRMR recommendation change (as defined in the section entitled “The Merger Agreement—No-Solicitation; Changes of Recommendation—BRMR: Restrictions on Changes of Recommendation” beginning on page 152).

BRMR: Permitted Changes of Recommendation and Permitted Termination to Enter into a Superior Proposal

Prior to, but not after, the receipt of the BRMR Stockholder Approval, in response to an unsolicited bona fide written BRMR competing proposal from a third party that did not arise from or in connection with a breach of the “no solicitation” obligations described above and in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—No Solicitation by BRMR,” the BRMR board or a committee thereof may effect a BRMR recommendation change or terminate the merger agreement if:

 

   

the BRMR board determines in good faith, after consultation with its financial advisors and outside legal counsel, that such BRMR competing proposal is a BRMR superior proposal and, after consultation with its outside legal counsel, that the failure to effect a BRMR recommendation change in response to such BRMR superior proposal would be inconsistent with the fiduciary duties owed by the BRMR board to the stockholders of BRMR under applicable law; and

 

   

BRMR provides Eclipse written notice of such proposed action and the basis of such proposed action four business days in advance, which notice must set forth in writing that the BRMR board intends to take such action and the basis therefor, including a copy of the available proposed BRMR competing proposal and any applicable transaction and financing documents, and complies with certain obligations, each as described in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—BRMR: Permitted Changes of Recommendation and Permitted Termination to Enter into a Superior Proposal” beginning on page 153.

BRMR: Permitted Changes of Recommendation in Connection with Intervening Events

Prior to, but not after, the receipt of the BRMR Stockholder Approval, in response to a BRMR intervening event (as defined in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—



 

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BRMR: Permitted Changes of Recommendation in Connection with Intervening Events” beginning on page 154) that occurs or arises after August 25, 2018 and that did not arise from or in connection with a breach of the merger agreement by BRMR, BRMR may effect a BRMR recommendation change if:

 

   

the BRMR board or a committee thereof determines in good faith, after consultation with its financial advisors and outside legal counsel, that a BRMR intervening event has occurred and, after consultation with its outside legal counsel, that failure to effect a BRMR recommendation change in response to such BRMR intervening event would be inconsistent with the fiduciary duties owed by the BRMR board to the stockholders of BRMR under applicable law; and

 

   

BRMR provides Eclipse written notice of such proposed action and the basis of such proposed action four business days in advance, which notice will set forth in writing that the BRMR board intends to take such action and the basis therefor, including a reasonably detailed description of the facts and circumstances of the BRMR intervening event, and complies with certain obligations, each as described in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—BRMR: Permitted Changes of Recommendation in Connection with Intervening Events” beginning on page 154.

Termination (page 168)

Eclipse and BRMR may terminate the merger agreement and abandon the merger at any time prior to the effective time of the merger by mutual written consent of Eclipse and BRMR.

The merger agreement may also be terminated by either Eclipse or BRMR at any time prior to the effective time of the merger in any of the following situations:

 

   

if any governmental entity having jurisdiction over any party has issued any order, decree, ruling or injunction or taken any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the merger and such order, decree, ruling or injunction or other action has become final and nonappealable, or if any law has been adopted that permanently makes the consummation of the merger illegal or otherwise permanently prohibited, so long as the terminating party has not breached any material covenant or agreement under the merger agreement that has caused or resulted in such order, decree, ruling or injunction or other action;

 

   

upon an end date termination event (as defined in the section entitled “The Merger Agreement—Termination—Termination Rights” beginning on page 168);

 

   

upon a BRMR stockholder approval termination event (as defined in the section entitled “The Merger Agreement—Termination—Termination Rights” beginning on page 168);or

 

   

upon a dissenting shares termination event (as defined in the section entitled “The Merger Agreement—Termination—Termination Rights” beginning on page 168).

In addition, the merger agreement may be terminated by Eclipse:

 

   

if prior to, but not after, receipt of the BRMR Stockholder Approval, the BRMR board or a committee of the BRMR board has effected a BRMR recommendation change;

 

   

upon a BRMR breach termination event (as defined in the section entitled “The Merger Agreement—Termination—Termination Rights” beginning on page 168); or

 

   

upon a BRMR no solicitation breach termination event (as defined in the section entitled “The Merger Agreement—Termination—Termination Rights” beginning on page 168).



 

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Further, the merger agreement may be terminated by BRMR:

 

   

upon an Eclipse stockholder approval termination event (as defined in the section entitled “The Merger Agreement—Termination—Termination Rights” beginning on page 168);

 

   

upon an Eclipse breach termination event (as defined in the section entitled “The Merger Agreement—Termination—Termination Rights” beginning on page 168); or

 

   

upon a BRMR superior proposal termination event (as defined in the section entitled “The Merger Agreement—Termination—Termination Rights” beginning on page 168).

Termination Fees (page 169)

Termination Fees Payable by Eclipse

The merger agreement requires Eclipse to pay BRMR a termination fee of $12 million (which we refer to as the “reverse termination fee”) if:

 

   

BRMR terminates the merger agreement due to an Eclipse stockholder approval termination event; or

 

   

(i) BRMR or Eclipse terminates the merger agreement due to an end date termination event or BRMR terminates the merger agreement due to an Eclipse breach termination event and following August 25, 2018 and on or before the date of any such termination, an Eclipse competing proposal was announced, disclosed or otherwise communicated to the Eclipse board and not withdrawn without qualification at least seven business days prior to the date of such termination (however, an Eclipse competing proposal will not be deemed to have been “publicly withdrawn” by any person if, within 12 months of the termination of the merger agreement, Eclipse or any of its subsidiaries have entered into a definitive agreement with respect to, or have consummated, or have approved or recommended to the Eclipse stockholders or otherwise not opposed, in the case of a tender offer or exchange offer, an Eclipse competing proposal made by or on behalf of such person or any of its affiliates), and (ii) within 12 months after the date of such termination, Eclipse enters into a definitive agreement with respect to an Eclipse competing proposal (or publicly approves or recommends to the Eclipse stockholders or otherwise does not oppose, in the case of a tender or exchange offer, an Eclipse competing proposal) or consummates an Eclipse competing proposal. For purposes of this paragraph, any reference in the definition of Eclipse competing proposal to “20%” will be deemed to be a reference to “more than 50%” and any Eclipse competing proposal made prior to August 25, 2018 will be deemed to have been made following August 25, 2018 if Eclipse breaches the “no solicitation” obligations described above and in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—No Solicitation by Eclipse” with respect to such Eclipse competing proposal.

In no event will Eclipse be required to pay the reverse termination fee on more than one occasion. In addition, if both the termination fee (as defined below) and the reverse termination fee are payable pursuant to the merger agreement, no payment of the termination fee or the reverse termination fee will be required.

Termination Fees Payable by BRMR

The merger agreement requires BRMR to pay Eclipse a termination fee of (i) $18 million, if payable (A) in connection with a termination of the merger agreement by Eclipse due to a BRMR recommendation change in response to a BRMR intervening event, or (B) in connection with a termination of the merger agreement by Eclipse or BRMR due to a BRMR stockholder approval termination event and BRMR has effected a BRMR recommendation change in response to a BRMR intervening event, or (ii) $12 million, if payable in any other circumstance (which, in each case, we refer to as the “termination fee”) if:

 

   

BRMR terminates the merger agreement due to a BRMR superior proposal termination event;



 

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Eclipse terminates the merger agreement due to a BRMR recommendation change or due to a BRMR no solicitation breach termination event;

 

   

Eclipse or BRMR terminates the merger agreement due to a BRMR stockholder approval termination event and the BRMR board or a committee thereof has effected a BRMR recommendation change; or

 

   

(i) (A) Eclipse or BRMR terminates the merger agreement due to a BRMR stockholder approval termination event and following August 25, 2018 and on or before the date of such termination a BRMR competing proposal was publicly announced or publicly disclosed and not publicly withdrawn without qualification at least seven business days prior to the BRMR Stockholder Consent Deadline or (B) BRMR or Eclipse terminates the merger agreement due to an end date termination event or Eclipse terminates the merger agreement due to a BRMR breach termination event and following August 25, 2018 and on or before the date of such termination a BRMR competing proposal has been announced, disclosed or otherwise communicated to the BRMR board and not withdrawn without qualification at least seven business days prior to the date of such termination (however, a BRMR competing proposal will not be deemed to have been “publicly withdrawn” by any person if, within 12 months of the termination of the merger agreement, BRMR or any of its subsidiaries have entered into a definitive agreement with respect to, or have consummated, or have approved or recommended to the BRMR stockholders or otherwise have not opposed, in the case of a tender offer or exchange offer, a BRMR competing proposal made by or on behalf of such person or any of its affiliates), and (ii) within 12 months after the date of such termination, BRMR enters into a definitive agreement with respect to a BRMR competing proposal (or publicly approves or recommends to the BRMR stockholders or otherwise does not oppose, in the case of a tender or exchange offer, a BRMR competing proposal) or consummates a BRMR competing proposal. For purposes of this paragraph, any reference in the definition of BRMR competing proposal to “20%” will be deemed to be a reference to “more than 50%” and any BRMR competing proposal made prior to August 25, 2018 will be deemed to have been made following August 25, 2018 if BRMR breaches the “no solicitation” obligations described above and in the section entitled “The Merger Agreement—No Solicitation; Changes of Recommendation—No Solicitation by BRMR” with respect to such BRMR competing proposal.

In no event will BRMR be required to pay the termination fee on more than one occasion. In addition, if both the termination fee and the reverse termination fee (as described above) are payable pursuant to the merger agreement, no payment of the termination fee or the reverse termination fee will be required.

Regulatory Approvals (page 159)

Although the merger agreement includes covenants of the parties with respect to the making of any required filings under the HSR Act and efforts to obtain the expiration or early termination of the waiting period under the HSR Act, Eclipse and BRMR have determined that no filing under the HSR Act is required in connection with the merger. Neither Eclipse nor BRMR is aware of any material governmental approvals or actions that are required for completion of the merger. It is presently contemplated that if any such additional material governmental approvals or actions are required, those approvals or actions will be sought.

For additional information, see the section entitled “The Merger Agreement—HSR and Other Regulatory Approvals” beginning on page 159.

Specific Performance; Remedies (page 171)

Eclipse, BRMR and Merger Sub have agreed that each will be entitled to an injunction or injunctions, or any other appropriate form of specific performance or equitable relief, to prevent breaches of the merger agreement and to enforce specifically the terms and provisions of the merger agreement.



 

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Except in the case of fraud or a willful and material breach, the monetary remedies and the specific performance remedies set forth in the merger agreement will be the receiving party’s sole and exclusive remedy against the paying party.

Dissenters’ Rights of Appraisal (page 197)

Unless the merger constitutes a drag transaction under the BRMR stockholders agreement, holders of BRMR common stock have the right to dissent from the proposed merger and, subject to certain conditions provided for in Section 262 of the DGCL, to receive payment of the fair value of their BRMR common stock as determined by the Delaware Court of Chancery. BRMR stockholders will be bound by the terms of the merger unless the merger does not constitute a drag transaction and they dissent by complying with all of the requirements of the Delaware dissenters’ rights statute. See the section entitled “Dissenters’ Rights of Appraisal” beginning on page 197 for a summary of dissenters’ rights available to BRMR stockholders, which summary is not intended to be a complete statement of applicable Delaware law and is qualified in its entirety by reference to Section 262 of the DGCL which is set forth in its entirety as Annex D to this consent solicitation statement/information statement/prospectus.

Eclipse stockholders do not have dissenter’s or appraisal rights in connection with the merger.

Material U.S. Federal Income Tax Consequences of the Merger (page 175)

It is a condition to each of BRMR’s and Eclipse’s obligation to complete the merger that each receives a written opinion from its counsel to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinions, for U.S. federal income tax purposes, the merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

Assuming the merger qualifies as a “reorganization,” U.S. holders of shares of BRMR common stock generally will not recognize any gain or loss upon receipt of Eclipse common stock in exchange for BRMR common stock in the merger, except that gain or loss will be recognized with respect to any cash received in lieu of a fractional share of Eclipse common stock. On the other hand, non-U.S. holders generally will be required to recognize gain or loss upon receipt of Eclipse common stock and cash in lieu of a fractional share, and the merger consideration will be subject to withholding at the rate of 15%. The U.S. federal income tax consequences of the merger are discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences Of The Merger” beginning on page 175. The discussion of the material U.S. federal income tax consequences contained in this consent solicitation statement/information statement/prospectus is intended to provide only a general discussion and is not a complete analysis or description of all potential U.S. federal income tax consequences of the merger that may vary with, or are dependent on, individual circumstances. In addition, it does not address the effects of any foreign, state or local tax laws, or federal tax laws other than U.S. federal income tax laws.

TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES AS A RESULT OF THE MERGER TO YOU IN YOUR PARTICULAR CIRCUMSTANCES.

Comparison of Stockholders’ Rights (page 187)

The rights of BRMR stockholders who receive shares of Eclipse common stock in the merger will be governed by the Eclipse certificate of incorporation and the Eclipse bylaws, rather than by the BRMR certificate of incorporation, the BRMR bylaws and the BRMR stockholders agreement. As a result, BRMR stockholders will have different rights once they become Eclipse stockholders due to the differences in the organizational documents of BRMR and Eclipse. The key differences are described in the section entitled “Comparison of Stockholders’ Rights” beginning on page 187.



 

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Listing of Eclipse Common Stock; Halting of Trading of BRMR Shares (page 164)

If the merger is completed, the shares of Eclipse common stock to be issued in the merger will be listed for trading on the NYSE, and shares of BRMR common stock will cease to be traded on the OTC Grey.



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ECLIPSE

The following table presents selected historical consolidated financial data for Eclipse (1) as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 and (2) as of and for the six months ended June 30, 2018 and 2017. The consolidated financial data for each of the years ended December 31, 2017, 2016 and 2015, and as of December 31, 2017 and 2016, have been derived from Eclipse’s selected financial data and audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2017, which is incorporated by reference herein in its entirety. The selected historical consolidated financial data of Eclipse for each of the years ended December 31, 2014 and 2013 and as of December 31, 2015, 2014 and 2013 have been derived from Eclipse’s selected financial data and audited consolidated financial statements for such years, which have not been incorporated by reference herein. The selected historical consolidated financial data for the six months ended June 30, 2018 and 2017 and as of June 30, 2018 have been derived from Eclipse’s unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, which is incorporated by reference herein in its entirety. The selected balance sheet data as of June 30, 2017 has been derived from Eclipse’s unaudited consolidated financial statements as of June 30, 2017, which have not been incorporated by reference herein.

On June 24, 2014, prior to the closing of Eclipse’s initial public offering, Eclipse completed its corporate reorganization (which we refer to as the “Corporate Reorganization”), pursuant to which, among other things, Eclipse I, Eclipse’s predecessor for accounting purposes, became a direct subsidiary of Eclipse. Information presented for the period from January 1, 2014 through June 23, 2014, as contained within the year ended December 31, 2014, and for the year ended December 31, 2013 pertains to the historical financial statements and results of operations of Eclipse I. As a result, the historical financial data may not give you an accurate indication of what Eclipse’s actual results would have been had the Corporate Reorganization been completed at the beginning of the periods presented or of what Eclipse’s future results of operations are likely to be.

The information set forth below is only a summary and is not necessarily indicative of the results of future operations of Eclipse nor does it include the effects of the merger. This summary should be read together with the other information contained in Eclipse’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, including the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. For additional information, see the section entitled “Where You Can Find More Information” beginning on page 262.

 

    Six Months Ended
June 30,
    Year Ended December 31,  
Statement of Operations data: (in thousands)   2018     2017     2017     2016     2015     2014     2013  
    (unaudited)                                

REVENUES

           

Natural gas, oil and natural gas liquids sales

  $ 213,441     $ 185,625     $ 380,178     $ 223,015     $ 234,601     $ 137,816     $ 12,935  

Brokered natural gas and marketing

    373       2,428       3,481       12,019       20,720       —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    213,814       188,053       383,659       235,034       255,321       137,816       12,935  

OPERATING EXPENSES

             

Lease operating

    16,714       6,911       20,525       9,023       13,904       8,518       2,576  

Transportation, gathering and compression

    59,060       61,846       124,839       109,226       85,846       18,114       67  

Production and ad valorem taxes

    4,623       3,964       8,490       7,927       3,722       2,163       77  

Brokered natural gas and marketing expense

    477       2,466       3,191       12,268       26,173       —         —    

Depreciation, depletion and amortization

    63,916       51,341       118,818       92,948       244,750       89,218       6,163  

Exploration

    24,898       20,577       50,208       52,775       116,211       21,186       3,022  

General and administrative

    20,454       20,862       44,553       39,431       46,409       42,109       21,276  

Rig termination and standby

    —         —         1       3,846       9,672       3,283       —    

Impairment of proved oil and gas properties

    —         —         —         17,665       691,334       34,855       2,081  

Accretion of asset retirement obligations

    317       252       544       391       1,623       791       364  

(Gain) loss on sale of assets

    (1,820     1       (179     6,936       (4,737     (960     —    

Gain on reduction of pension liability

    —         —         —         —         —         (2,208     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

    188,639       168,220       370,990       352,436       1,234,907       217,069       35,626  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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    Six Months Ended
June 30,
    Year Ended December 31,  
Statement of Operations data: (in thousands)   2018     2017     2017     2016     2015     2014     2013  
    (unaudited)                                

OPERATING INCOME (LOSS)

    25,175       19,833       12,669       (117,402     (979,586     (79,253     (22,691

OTHER INCOME (EXPENSE)

             

Gain (loss) on derivative instruments

    (20,792     43,274       45,365       (52,338     56,021       20,791       —    

Interest expense, net

    (26,043     (24,747     (49,490     (50,789     (53,400     (48,347     (20,850

Gain (loss) on early extinguishment of debt

    —         —         —         14,489       (59,392     —         —    

Other income (expense)

    —         (19     (19     (149     400       353       —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total income (expense), net

    (46,835     18,508       (4,144     (88,787     (56,371     (27,203     (20,850
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

    (21,660     38,341       8,525       (206,189     (1,035,957     (106,456     (43,541

INCOME TAX BENEFIT (EXPENSE)

    —         —         —         (546     74,166       (73,519     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS)

  $ (21,660   $ 38,341     $ 8,525     $ (206,735   $ (961,791   $ (179,975   $ (43,541
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) PER COMMON SHARE

             

Basic

  $ (0.07   $ 0.15     $ 0.03     $ (0.86   $ (4.41   $ (1.25   $ (0.58

Diluted

  $ (0.07   $ 0.15     $ 0.03     $ (0.86   $ (4.41   $ (1.25   $ (0.58

Statement of Cash Flow data:

             

Net cash provided by (used in)

             

Operating activities

  $ 50,837     $ 65,441     $ 112,746     $ 6,405     $ 80,299     $ 8,513     $ 12,438  

Investing activities

    (114,465     (166,005     (292,469     (89,318     (437,268     (718,436     (894,274

Financing activities

    58,453       (3,590     (4,282     99,737       473,857       667,931       964,288  

Balance Sheet data:

             

Cash and cash equivalents

  $ 12,049     $ 97,075     $ 17,224     $ 201,229     $ 184,405     $ 67,517     $ 109,509  

Total property and equipment, net

    1,271,204       1,066,053       1,114,372       947,500       993,968       1,722,827       1,018,084  

Total assets

    1,405,799       1,212,257       1,223,527       1,198,644       1,266,665       1,879,709       1,143,523  

Total debt

    496,397       493,644       495,021       492,278       527,248       408,754       389,247  

Total stockholders’ equity

    643,364       597,305       572,354       556,607       633,374       1,155,912       667,971  

Other financial data:

             

Adjusted EBITDAX(1)

  $ 114,099     $ 89,800     $ 189,138     $ 102,071     $ 120,976     $ 67,347     $ (11,018

 

(1)

For additional information regarding Adjusted EBITDAX and a reconciliation of the GAAP measure of net income (loss) to Adjusted EBITDAX (non-GAAP) for the fiscal years ended December 31, 2017, 2016, 2015, 2014 and 2013 and for the six months ended June 30, 2018 and 2017, see the section entitled “—Non-GAAP Financial Measure—Adjusted EBITDAX” directly below.

Non-GAAP Financial Measure—Adjusted EBITDAX

Reconciliation of Net Income (Loss) to Adjusted EBITDAX

“Adjusted EBITDAX” is a non-GAAP financial measure that Eclipse defines as net income (loss) before interest expense or interest income; income taxes; write-down of abandoned leases; impairments; DD&A; amortization of deferred financing costs; gain (loss) on derivative instruments, net cash receipts (payments) on settled derivative instruments, and premiums (paid) received on options that settled during the period; non-cash compensation expense; gain or loss from sale of interest in gas properties; exploration expenses; and other unusual or infrequent items set forth in the table below. Adjusted EBITDAX, as used and defined by Eclipse, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with U.S. GAAP. Adjusted EBITDAX should not be considered in isolation or as a substitute for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with U.S. GAAP. Adjusted EBITDAX provides no information regarding a company’s capital structure, borrowings, interest costs, capital expenditures, and working capital movement or tax position. Adjusted EBITDAX does not represent funds available for discretionary use because those funds may be required for debt service, capital expenditures, working capital, income taxes, franchise taxes, exploration expenses, and other commitments and obligations. However, Eclipse’s management team believes Adjusted EBITDAX is useful to an investor in evaluating Eclipse’s financial performance because this measure:

 

   

is widely used by investors in the oil and natural gas industry to measure a company’s operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired, among other factors;



 

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helps investors to more meaningfully evaluate and compare the results of Eclipse’s operations from period to period by removing the effect of Eclipse’s capital structure from its operating structure; and

 

   

is used by Eclipse’s management team for various purposes, including as a measure of operating performance, in presentations to the Eclipse board, as a basis for strategic planning and forecasting and by Eclipse’s lenders pursuant to covenants under the credit agreement governing its revolving credit facility and the indenture governing its senior unsecured notes.

There are significant limitations to using Adjusted EBITDAX as a measure of performance, including the inability to analyze the effect of certain recurring and non-recurring items that materially affect Eclipse’s net income or loss, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDAX reported by different companies.

The following table provides a reconciliation of the GAAP measure of net income (loss) to Adjusted EBITDAX (non-GAAP) for the periods indicated:

 

    Six Months Ended June 30,     Year Ended December 31,  
(in thousands)         2018                 2017           2017     2016     2015     2014     2013  

Net income (loss)

  $ (21,660   $ 38,341     $ 8,525     $ (206,735   $ (961,791   $ (179,975   $ (43,541

Depreciation, depletion and amortization

    63,916       51,341       118,818       92,948       244,750       89,218       6,163  

Exploration expense

    24,898       20,577       50,208       52,775       116,211       21,186       3,022  

Rig termination and standby

    —         —         1       3,846       9,672       3,283       —    

Stock-based compensation

    3,960       4,429       9,301       6,216       4,635       256       43  

Impairment of proved oil and gas properties

    —         —         —         17,665       691,334       34,855       2,081  

Accretion of asset retirement obligations

    317       252       544       391       1,623       791       364  

(Gain) loss on sale of assets

    (1,820     1       (179     6,936       (4,737     (960     —    

Gain on reduction of pension obligations

    —         —         —         —         —         (2,208     —    

(Gain) loss on derivative instruments

    20,792       (43,274     (45,365     52,338       (56,021     (20,791     —    

Net cash receipts (payments) on settled derivatives

    (2,347     (6,633     (2,224     38,696       37,074       564       —    

Net cash paid for option premium

    —         —         —         —         —         (385     —    

Interest expense, net

    26,043       24,747       49,490       50,789       53,400       48,347       20,850  

(Gain) loss on early extinguishment of debt

    —         —         —         (14,489     59,392       —         —    

Other (income) expense

    —         19       19       149       (400     (353     —    

Income tax (benefit) expense

    —         —         —         546       (74,166     73,519       —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX

  $ 114,099     $ 89,800     $ 189,138     $ 102,071     $ 120,976     $ 67,347     $ (11,018
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF BRMR

The following table presents selected historical consolidated financial data for BRMR (1) as of December 31, 2017 and 2016 and for the year ended December 31, 2017 and the period from May 7, 2016 to December 31, 2016 (Successor), (2) for the period from January 1, 2016 to May 6, 2016 (Predecessor), and (3) as of June 30, 2018 and for the six months ended June 30, 2018 and 2017 (Successor). The consolidated financial data as of December 31, 2017 and 2016 and for the year ended December 31, 2017, the period from May 7, 2016 to December 31, 2016 (Successor) and the period from January 1, 2016 to May 6, 2016 (Predecessor) have been derived from the audited consolidated financial statements of BRMR included elsewhere in this consent solicitation statement/information statement/prospectus. The consolidated financial data as of June 30, 2018 and for the six months ended June 30, 2018 and 2017 have been derived from the unaudited consolidated financial statements of BRMR included elsewhere in this consent solicitation statement/information statement/prospectus and, in the opinion of BRMR’s management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of this information.

BRMR emerged from bankruptcy on May 6, 2016 and applied fresh start accounting as of that date, resulting in BRMR becoming a new entity for financial reporting purposes. Accordingly, BRMR’s consolidated financial data for periods subsequent to May 6, 2016 (presented as the “Successor”) are not comparable to its consolidated financial data for prior periods (presented as the “Predecessor”).

The information set forth below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of BRMR” and the historical consolidated financial statements of BRMR and the notes thereto included elsewhere in this consent solicitation statement/information statement/prospectus. The financial data set forth below may not be indicative of BRMR’s future results of operations, financial position and cash flows.

 

     Successor         Predecessor  
     Six Months
Ended
June 30,
    Year Ended
December 31,

2017
    Period from
May 7, 2016 to
December 31,

2016
         Period from
January 1,
2016 to
May 6,

2016
 
     2018     2017  
     (unaudited)        
     (in thousands)  

Statement of Operations Data:

            

Revenues and other:

            

Oil and natural gas sales

   $ 60,591   $ 44,852   $ 83,168   $ 46,627     $ 21,805

Oilfield services(1)

     —         —         —         6,267       1,224

Other revenue

     431     202     715     378       282
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total revenue

     61,022     45,054     83,883     53,272       23,311

Operating expenses:

            

Production costs

     7,205     4,573     10,691     10,835       5,076

Severance taxes

     1,317     350     1,475     2,207       323

Transportation, processing, and other related costs

     20,820     25,849     45,605     32,592       18,244

Exploration and impairment of unproved oil and natural gas properties

     4,812     15,404     56,334     20,511       8,202

Impairment of proved oil and natural gas properties

     330     6     2,488     1,127       1

Oilfield services(1)

     —         —         —         4,645       1,901

Other operating expenses

     153     979     1,088     2,467       2

Depletion, depreciation, amortization and accretion

     14,257     7,963     13,615     20,869       29,189

(Gain) loss on sale of assets, net

     (4,289     (3,658     (6,545     7,480       (418

Impairment of other assets

     673     —         —         2,462       —    

General and administrative

     9,224     11,123     18,610     18,460       7,560
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total operating expenses

     54,502     62,589     143,361     123,655       70,080
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 


 

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     Successor         Predecessor  
     Six Months
Ended
June 30,
    Year Ended
December 31,

2017
    Period from
May 7, 2016 to
December 31,

2016
         Period from
January 1,
2016 to
May 6,

2016
 
     2018     2017  
     (unaudited)        
     (in thousands)  

Operating income (loss)

     6,520     (17,535     (59,478     (70,383       (46,769

Other income (expense):

            

Interest expense, net, excluding compromised interest

     (1,479     (4,856     (8,630     (7,045       (11,221

Loss on extinguishment of debt

     —         —         (2,657     —           —    

Gain (loss) on derivative contracts, net

     (3,521     5,902     10,206     (4,104       —    

Other income (expense)

     39     2,371     2,447     555       (111
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Total other income (expense), net

     (4,961     3,417     1,366     (10,594       (11,332
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations before reorganization items and income tax

     1,559     (14,118     (58,112     (80,977       (58,101

Reorganization items, net(2)

     (1,285     (509     (829     (3,970       (132,144
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations before income tax

     274     (14,627     (58,941     (84,947       (190,245

Income tax benefit

     —         5,573     —         —           —    
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations

     274     (9,054     (58,941     (84,947       (190,245

Income (loss) from discontinued operations, net of tax

     (4,759     4,398     (137,818     (43,107       405,310

Gain on disposal of discontinued operations, net of tax

     —         10,245     21,539     —           —    
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Net income (loss)

   $ (4,485   $ 5,589   $ (175,220   $ (128,054     $ 215,065
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Statement of Cash Flow Data:

            

Net cash provided by (used in)

            

Operating activities

   $ 27,166   $ 9,955   $ 14,192   $ (28,952     $ (111,203

Investing activities

     (71,000     63,070     102,706     2,306       (4,559

Financing activities

     (286     (3,422     (36,754     (6,734       135,987

Balance Sheet Data (at period end):

            

Cash and cash equivalents

   $ 63,855     $ 107,975   $ 27,831    

Total property and equipment, net

     541,657       478,254     503,236    

Total assets

     662,981       650,080     840,354    

Total debt

     24,026       23,890     52,409    

Total shareholders’ equity

     539,112       542,541     715,273    

Other Financial Data:

            

Adjusted EBITDAX(3)

   $ 23,575   $ 4,365   $ 8,559   $ (11,968     $ (9,296

 

(1)

Prior to 2017, BRMR conducted oilfield service operations through the ownership of drilling rigs used primarily for vertical section (top-hole) air drilling in the Appalachian basin for BRMR and third parties. BRMR sold substantially all of its drilling rigs and related equipment effective December 31, 2016 and has not engaged in oilfield services operations after that time.

(2)

Reorganization items represent the direct and incremental costs of BRMR’s bankruptcy, such as professional fees, pre-petition liability claim adjustments and losses related to terminating contracts.

(3)

Adjusted EBITDAX is a non-GAAP financial measure. For a definition of Adjusted EBITDAX and a reconciliation of Adjusted EBITDAX to net income (loss), see “—Non-GAAP Financial Measure—Adjusted EBITDAX” directly below.

Non-GAAP Financial Measure—Adjusted EBITDAX

Adjusted EBITDAX is a supplemental non-GAAP financial measure that is used by BRMR’s management and external users of BRMR’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. BRMR defines Adjusted EBITDAX as income (loss) from continuing operations before depreciation, depletion, amortization and accretion, exploration expense, impairment of oil and natural gas properties, impairment of other assets, stock-based compensation expense, bad debt expense, gain or loss on sale of assets, gain or loss on derivative contracts, interest expense, loss on extinguishment of debt, income tax expense or benefit, reorganization items, other income and expense and other non-recurring items. Adjusted EBITDAX is not a measure of net income (loss) as determined by U.S. GAAP.



 

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BRMR’s management believes Adjusted EBITDAX is useful because it allows them to more effectively evaluate BRMR’s operating performance and compare the results of its operations from period to period and against its peers without regard to its financing methods or capital structure. BRMR excludes the items listed above from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially from company to company within BRMR’s industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP or as an indicator of BRMR’s operating performance or liquidity. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depletable and depreciable assets, none of which are components of Adjusted EBITDAX. BRMR’s presentation of Adjusted EBITDAX should not be construed as an inference that its results will be unaffected by these items. BRMR’s computations of Adjusted EBITDAX may not be comparable to other similarly titled measures of other companies.

The following table presents a reconciliation of the non-GAAP financial measure Adjusted EBITDAX to net income (loss), the most directly comparable GAAP financial measure, for the periods presented.

 

     Successor         Predecessor  
     Six Months
Ended
June 30,
    Year Ended
December 31,

2017
    Period from
May 7, 2016 to

December 31,
2016
        Period from
January 1,
2016 to

May 6,
2016
 
     2018     2017      
     (in thousands)  

Adjusted EBITDAX reconciliation to net income (loss):

            

Net income (loss)

   $ (4,485   $ 5,589   $ (175,220   $ (128,054     $ 215,065

Income (loss) from discontinued operations, net of tax

     4,759       (4,398 )     137,818       43,107         (405,310 )

Gain on disposal of discontinued operations, net of tax

     —         (10,245 )     (21,539 )     —           —    
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Income (loss) from continuing operations

     274     (9,054     (58,941     (84,947       (190,245

Depletion, depreciation, amortization and accretion

     14,257     7,963     13,615     20,869       29,189

Exploration and impairment of unproved oil and natural gas properties

     4,812     15,404     56,334     20,511       8,202

Impairment of proved oil and natural gas properties

     330     6     2,488     1,127       1

Impairment of other assets

     673     —         —         2,462       —    

Stock-based compensation

     1,056     1,353     2,638     926       (15

Bad debt expense

     216     476     (849     5,040       514

(Gain) loss on sale of assets, net

     (4,289     (3,658     (6,545     7,480       (418

(Gain) loss on derivative contracts, net

     3,521     (5,902     (10,206     4,104       —    

Interest expense, net, excluding compromised interest

     1,479     4,856     8,630     7,045       11,221

Loss on extinguishment of debt

     —         —         2,657     —           —    

Other (income) expense

     (39     (2,371     (2,447     (555       111

Income tax benefit

     —         (5,573     —         —           —    

Reorganization items, net

     1,285     509     829     3,970       132,144

Other non-recurring items

     —         356     356     —           —    
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 

Adjusted EBITDAX

   $ 23,575   $ 4,365   $ 8,559   $ (11,968 )     $ (9,296
  

 

 

   

 

 

   

 

 

   

 

 

     

 

 

 


 

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SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

The following summary unaudited pro forma combined balance sheet data gives effect to the proposed merger as if it had occurred on June 30, 2018, and the following unaudited pro forma combined statement of operations data for the year ended December 31, 2017 and the six months ended June 30, 2018 are presented as if the merger had occurred on January 1, 2017. The following summary unaudited pro forma combined financial information has been prepared for illustrative purposes only and is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the merger occurred as of the dates indicated. In addition, the unaudited pro forma combined financial information does not purport to project the future financial position or operating results of the combined company. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section entitled “Risk Factors” beginning on page 50. The following summary unaudited pro forma combined financial information should be read in conjunction with the section titled “Unaudited Pro Forma Combined Financial Statements” beginning on page 179 and the related notes included in this consent solicitation statement/information statement/prospectus. The per share calculations below reflect the 15-to-1 reverse stock split of Eclipse common stock to be effected immediately prior to the closing of the merger.

 

(in thousands)    As of
June 30, 2018
 

Pro Forma Combined Balance Sheet Data:

  

Cash and cash equivalents

   $ 48,706  

Total assets

   $ 1,850,460  

Debt, net of unamortized discount and debt issuance costs

   $ 496,519  

Total stockholders’ equity

   $ 928,379  

 

(in thousands, except per share data)    Six Months Ended
June 30, 2018
    Year Ended
December 31, 2017
 

Pro Forma Combined Statement of Operations Data:

    

Operating revenues

   $ 274,704     $ 472,130  

Loss from continuing operations

   $ (20,223   $ (49,938

Loss from continuing operations per share, basic

   $ (0.57   $ (1.51

Loss from continuing operations per share, diluted

   $ (0.57   $ (1.51


 

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Table of Contents

SUMMARY PRO FORMA COMBINED OIL, NATURAL GAS AND NGL RESERVE INFORMATION

The following tables present the estimated pro forma combined net proved developed and undeveloped natural gas, NGLs and crude oil reserves as of December 31, 2017, along with a summary of changes in quantities of net remaining proved reserves during the year ended December 31, 2017. The pro forma reserve information set forth below gives effect to the merger as if the merger had been completed on January 1, 2017. The following summary pro forma reserve information has been prepared for illustrative purposes only, is not necessarily indicative of the results that might have occurred had the merger been completed on January 1, 2017, and is not intended to be a projection of future results of the combined company. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section entitled “Risk Factors” beginning on page 50. The summary pro forma combined reserve information should be read in conjunction with the section titled “Unaudited Pro Forma Combined Financial Statements” beginning on page 179 and the related notes included in this consent solicitation statement/information statement/prospectus.

 

    Total Equivalent (Bcfe)  
    ECR Historical     BRMR Historical     ECR Pro Forma
Combined
 

Proved Reserves:

     

December 31, 2016

    469.4       227.1       696.5  

Reserve revisions

    695.6       190.0       885.6  

Extensions and discoveries

    405.1       23.7       428.8  

Acquisitions

    1.9       —         1.9  

Divestitures

    —         (16.8     (16.8

Production

    (113.4     (28.2     (141.6

December 31, 2017

    1,458.6       395.8       1,854.4  

 

    Natural Gas (Bcf)  
    ECR Historical     BRMR Historical     ECR Pro Forma
Combined
 

Proved Reserves:

     

December 31, 2016

    386.4       172.5       558.9  

Reserve revisions

    515.1       133.3       648.4  

Extensions and discoveries

    274.4       23.7       298.1  

Acquisitions

    1.6       —         1.6  

Divestitures

    —         (1.3     (1.3

Production

    (87.4     (21.3     (108.7

December 31, 2017

    1,090.1       306.9       1,397.0  

 

    NGLs (MBbls)  
    ECR Historical     BRMR Historical     ECR Pro Forma
Combined
 

Proved Reserves:

     

December 31, 2016

    8,675.5       6,185.4       14,860.9  

Reserve revisions

    20,327.3       7,802.6       28,129.9  

Extensions and discoveries

    15,598.8       —         15,598.8  

Acquisitions

    42.6       —         42.6  

Divestitures

    —         (208.0     (208.0

Production

    (2,713.6     (883.4     (3,597.0

December 31, 2017

    41,930.6       12,896.6       54,827.2  


 

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    Oil (MBbls)  
    ECR Historical     BRMR Historical     ECR Pro Forma
Combined
 

Proved Reserves:

     

December 31, 2016

    5,157.7       2,917.2       8,074.9  

Reserve revisions

    9,746.8       1,640.1       11,386.9  

Extensions and discoveries

    6,192.9       —         6,192.9  

Acquisitions

    5.8       —         5.8  

Divestitures

    —         (2,376.8     (2,376.8

Production

    (1,622.4     (265.4     (1,887.8

December 31, 2017

    19,480.8       1,915.1       21,395.9  

 

    Total (Bcfe)  
    ECR Historical     BRMR Historical     ECR Pro Forma
Combined
 

Proved Undeveloped Reserves (PUDs):

     

December 31, 2016

    171.6       20.0       191.6  

Reserve revisions

    528.5       81.7       610.2  

Acquisitions

    1.3       —         1.3  

Extensions and discoveries

    391.2       23.7       414.9  

Transfers to proved developed

    (90.0     —         (90.0
 

 

 

   

 

 

   

 

 

 

December 31, 2017

    1,002.6       125.4       1,128.0  
 

 

 

   

 

 

   

 

 

 

The changes in the pro forma combined standardized measure of discounted future net cash flows relating to proved natural gas, NGLs and crude oil reserves for the year ended December 31, 2017 are as follows (in thousands):

 

     ECR
Historical
     BRMR
Historical
     ECR Pro Forma
Combined
 

Standardized Measure as of December 31, 2016

   $ 205,981      $ 70,382      $ 276,363  

Net change in prices and production costs

     653,347        120,373        773,720  

Net change in future development costs

     (385,042      (71,337      (456,379

Sales, less production costs

     (226,324      (27,905      (254,229

Extensions

     135,734        10,120        145,854  

Acquisitions

     2,365        —          2,365  

Divestitures

     —          (16,741      (16,741

Revisions of previous quantity estimates

     322,917        62,005        384,922  

Previously estimated development costs incurred

     34,102        10,459        44,561  

Accretion of discount

     20,598        7,038        27,636  

Changes in timing and other

     (33,992      (13,071      (47,063
  

 

 

    

 

 

    

 

 

 

Standardized Measure as of December 31, 2017

   $ 729,686      $ 151,323      $ 881,009  
  

 

 

    

 

 

    

 

 

 


 

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The pro forma combined standardized measure of discounted future net cash flows relating to proved natural gas, NGLs and crude oil reserves as of December 31, 2017 is as follows (in thousands):

 

     ECR
Historical
    BRMR
Historical
    ECR Pro Forma
Combined
 

Future cash inflows (total revenues)

   $ 4,750,238     $ 1,321,305     $ 6,071,543  

Future production costs

     (2,332,310     (875,918     (3,208,228

Future development costs (capital costs)

     (879,399     (108,711     (988,110
  

 

 

   

 

 

   

 

 

 

Future net cash flows

     1,538,529       336,676       1,875,205  

10% annual discount for estimated timing of cash flows

     (808,843     (185,353     (994,196
  

 

 

   

 

 

   

 

 

 

Standardized Measure of Discounted Future Net Cash Flow as of December 31, 2017

   $ 729,686     $ 151,323     $ 881,009  
  

 

 

   

 

 

   

 

 

 


 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

The following table presents Eclipse’s and BRMR’s historical and pro forma per share data for the year ended December 31, 2017 and for the six months ended June 30, 2018. The pro forma per share data for the year ended December 31, 2017 and for the six months ended June 30, 2018 is presented as if the merger had been completed on January 1, 2017. The pro forma per share data as of June 30, 2018 is presented as if the merger had been completed on June 30, 2018. The BRMR equivalent pro forma amounts have been computed by multiplying the Eclipse pro forma amounts by the exchange ratio. This information should be read together with the historical consolidated financial statements and related notes of Eclipse, filed with the SEC and incorporated by reference in this consent solicitation statement/information statement/prospectus, and BRMR, included in this consent solicitation statement/information statement/prospectus, and with the unaudited pro forma combined financial statements included in the section entitled “Unaudited Pro Forma Combined Financial Statements” beginning on page 179. The pro forma per share calculations below reflect the 15-to-1 reverse stock split of Eclipse common stock to be effected immediately prior to the closing of the merger.

 

     Six Months Ended
June 30, 2018
    Year Ended
December 31, 2017
 
     (unaudited)        

Historical-ECR

    

Earnings (loss) per share, basic

   $ (0.07   $ 0.03  

Earnings (loss) per share, diluted

   $ (0.07   $ 0.03  

Book value per share

   $ 2.16    

Historical-BRMR (Unaudited)

    

Earnings (loss) from continuing operations per share, basic

   $ 0.01     $ (1.16

Earnings (loss) from continuing operations per share, diluted

   $ 0.01     $ (1.16

Book value per share

   $ 10.58    

Pro Forma Combined (Unaudited)

    

Earnings (loss) from continuing operations per share, basic

   $ (0.57   $ (1.51

Earnings (loss) from continuing operations per share, diluted

   $ (0.57   $ (1.51

Book value per share

   $ 26.13    

Equivalent Pro Forma BRMR (Unaudited)

    

Loss from continuing operations per share, basic

   $ (0.17   $ (0.44

Loss from continuing operations per share, diluted

   $ (0.17   $ (0.44

Book value per share

   $ 7.71    


 

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

Eclipse Market Price and Dividend Information

Eclipse common stock is listed on the NYSE under the symbol “ECR.” The following table sets forth the high and low prices per share for Eclipse common stock for the periods indicated, rounded to the nearest whole cent. No cash dividends were declared with respect to Eclipse common stock in the periods indicated. Eclipse’s fiscal year ends on December 31.

 

     High ($)      Low ($)  

2016

     

First Quarter

   $ 2.09      $ 0.65  

Second Quarter

   $ 4.42      $ 1.32  

Third Quarter

   $ 3.81      $ 2.42  

Fourth Quarter

   $ 3.66      $ 2.32  

2017

     

First Quarter

   $ 2.81      $ 2.03  

Second Quarter

   $ 3.03      $ 1.60  

Third Quarter

   $ 3.10      $ 2.06  

Fourth Quarter

   $ 2.73      $ 2.12  

2018

     

First Quarter

   $ 2.79      $ 1.25  

Second Quarter

   $ 1.82      $ 1.23  

Third Quarter

   $ 1.89      $ 1.16  

BRMR Market Price and Dividend Information

BRMR common stock is not listed on a securities exchange, and prices for BRMR common stock are not quoted in an interdealer quotation system. However, since BRMR’s emergence from bankruptcy on May 6, 2016, BRMR common stock has traded sporadically on the OTC Grey, currently under the symbol “BRMR.” The following table sets forth the high and low bid prices per share for BRMR common stock on the OTC Grey for the periods indicated, in each case rounded to the nearest whole cent. BRMR’s fiscal year ends on December 31. In general, broker dealers are not willing or able to publicly quote securities traded on the OTC Grey because of lack of investor interest, limited availability of information regarding the issuer or regulatory requirements. Accordingly, the OTC Grey may not constitute an established public trading market for the BRMR common stock, and you should not rely on the bid prices set forth below as being the product of an established public trading market. These prices are as reported by OTC Markets Group Inc. and do not necessarily represent actual transactions or reflect retail mark-up, mark-down or commission.

 

     High ($)      Low ($)  

2016:

     

Second Quarter (commencing May 6)

   $ 13.63      $ 9.00  

Third Quarter

   $ 13.63      $ 11.88  

Fourth Quarter

   $ 13.25      $ 9.45  

2017:

     

First Quarter

   $ 12.00      $ 10.25  

Second Quarter

   $ 11.08      $ 8.50  

Third Quarter

   $ 10.00      $ 8.15  

Fourth Quarter

   $ 10.00      $ 7.50  

2018:

     

First Quarter

   $ 9.20      $ 7.50  

Second Quarter

   $ 8.70      $ 5.40  

Third Quarter

   $ 7.00      $ 5.00  


 

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BRMR has not paid any dividends on its common stock since its emergence from bankruptcy on May 6, 2016, and it does not anticipate declaring or paying any cash dividends to holders of BRMR common stock in the foreseeable future. In addition, the terms of BRMR’s existing senior term loan facility restrict BRMR’s ability to pay cash dividends. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of BRMRLiquidity and Capital ResourcesCredit FacilitiesSenior Term Loan Facility.”

As of                 , 2018, the BRMR common stock was held by             holders of record. The number of holders of record does not include stockholders for whom shares are held in a “nominee” or “street” name.

Comparison of Eclipse and BRMR Market Prices and Implied Share Value of the Stock Consideration

The following table sets forth the closing sale price per share of Eclipse common stock as reported on the NYSE and the closing bid price for BRMR common stock as reported on the OTC Grey on August 24, 2018, the last trading day prior to the public announcement of the merger, and on                 , 2018, the last practicable trading day prior to the mailing of this consent solicitation statement/information statement/prospectus. The table also shows the estimated implied value of the merger consideration proposed for each share of BRMR common stock as of the same two dates. This implied value was calculated by multiplying the closing price of a share of Eclipse common stock on the relevant date by the exchange ratio of 4.4259 shares of Eclipse common stock for each share of BRMR common stock.

 

     Eclipse Common Stock      BRMR Common Stock      Implied Per Share Value
of Merger Consideration
 

August 24, 2018

   $ 1.68      $ 5.50      $ 7.44  

October 9, 2018

   $ 1.33      $ 6.00      $ 5.89  

Eclipse and BRMR stockholders are encouraged to obtain current market quotations for Eclipse common stock and BRMR common stock and to review carefully the other information contained in this consent solicitation statement/information statement/prospectus or incorporated by reference herein. No assurance can be given concerning the market price of Eclipse common stock before or after the effective date of the merger. For additional information, see the section entitled “Where You Can Find More Information” beginning on page 262.



 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference herein, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements”, BRMR stockholders should carefully consider the following risks before submitting their written consents with respect to the merger. BRMR stockholders should also consider the other information in this consent solicitation statement/information statement/prospectus and the other documents incorporated by reference herein, particularly the risk factors contained in Eclipse’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. For additional information, see the section entitled “Where You Can Find More Information”. The risk factors described below or in documents incorporated by reference related to the business and operations of Eclipse or BRMR also will apply to the business and operations of the combined company following the completion of the merger.

Because the market price of shares of Eclipse common stock will fluctuate and the exchange ratio will not be adjusted to reflect such fluctuations, BRMR stockholders cannot be certain of the precise value of any merger consideration they may receive in the merger.

At the time the merger is completed following the Eclipse reverse stock split, each issued and outstanding share of BRMR common stock (other than dissenting shares as described in “The Merger AgreementDissenters’ Rights of Appraisal”, and other than excluded shares as described in “The Merger AgreementEffect of the Merger on Capital Stock; Merger Consideration”, which will be cancelled for no consideration) will be converted into the right to receive the (post-Eclipse reverse stock split) merger consideration of 0.29506 of a share of Eclipse common stock. The merger agreement does not contain a price-based termination right and there will be no adjustment to the merger consideration for changes in the market price of Eclipse common stock or BRMR common stock prior to the completion of the merger. If the merger is completed, there will be a time lapse between each of the date of this consent solicitation statement/information statement/prospectus, the dates on which BRMR stockholders execute written consents to adopt the merger agreement and approve the transactions contemplated thereby, and the date on which BRMR stockholders entitled to receive the merger consideration actually receive the merger consideration. The market value of shares of Eclipse common stock may fluctuate during and after these periods as a result of a variety of factors, including general market, industry and economic conditions, changes in oil, natural gas and NGL prices, changes in Eclipse’s or BRMR’s businesses, operations and prospects, litigation and regulatory considerations. Such factors are difficult to predict and, in many cases, may be beyond the control of Eclipse and BRMR. Consequently, at the time BRMR stockholders decide whether to approve the merger agreement, they will not know the actual market value of any merger consideration they will receive when the merger is completed. The actual value of any merger consideration received by BRMR stockholders at the completion of the merger will depend on the market value of the shares of Eclipse common stock at that time. This market value may differ, possibly materially, from the market value of shares of Eclipse common stock at the time the merger agreement was entered into or at any other time. BRMR stockholders should obtain current stock quotations for shares of Eclipse common stock before delivering a written consent with respect to their shares of BRMR common stock. For additional information about the merger consideration, see the sections entitled “The Merger—Consideration to BRMR Stockholders” and “The Merger Agreement—Effect of the Merger on Capital Stock; Merger Consideration”.

The market price of Eclipse common stock will continue to fluctuate after the merger.

Upon completion of the merger, holders of BRMR common stock who receive merger consideration will become holders of shares of Eclipse common stock. The market price of Eclipse common stock may fluctuate significantly following completion of the merger and holders of BRMR common stock could lose some or all of the value of their investment in Eclipse common stock. In addition, the stock market has experienced significant price and volume fluctuations in recent times which, if they continue to occur, could have a material adverse effect on the market for, or liquidity of, the Eclipse common stock, regardless of Eclipse’s actual operating performance.

 

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BRMR stockholders will have a reduced ownership and voting interest in the combined company after the merger compared to their ownership in BRMR and will exercise less influence over management of the combined company.

Currently, BRMR stockholders have the power to approve or reject any matters requiring stockholder approval under Delaware law and the BRMR certificate of incorporation and bylaws. In addition, BRMR stockholders currently have certain approval and other rights under the BRMR stockholders agreement, which approval and other rights will terminate upon completion of the merger. Upon completion of the merger, each BRMR stockholder who receives shares of Eclipse common stock in the merger will become a stockholder of Eclipse with a percentage ownership of Eclipse that is significantly smaller than such BRMR stockholder’s current percentage ownership of BRMR. Based on the number of issued and outstanding shares of Eclipse common stock and shares of BRMR common stock as of                     , 2018 and the post-Eclipse reverse stock split exchange ratio of 0.29506, after the merger BRMR stockholders are expected to become owners of approximately 42.5% of the outstanding shares of Eclipse common stock, without giving effect to any shares of Eclipse common stock held by BRMR stockholders prior to the completion of the merger. Even if all former BRMR stockholders voted together on all matters presented to Eclipse stockholders from time to time, the former BRMR stockholders would exercise significantly less influence over Eclipse after the completion of the merger relative to their influence over BRMR prior to the completion of the merger, and thus would have a less significant impact on the approval or rejection of future Eclipse proposals submitted to a stockholder vote.

The merger may not be completed and the merger agreement may be terminated in accordance with its terms.

The merger is subject to a number of conditions, some of which are beyond the control of Eclipse and BRMR, that must be satisfied or waived prior to the completion of the merger, which are described in the section entitled “The Merger Agreement—Conditions to the Completion of the Merger”. These conditions to the completion of the merger may not be satisfied or waived in a timely manner or at all, and, accordingly, the merger may be delayed or may not be completed. Any delay in completing the merger could cause the combined company not to realize some or all of the benefits expected to be achieved if the merger is successfully completed within its expected time frame.

In addition, if the merger is not completed on or before February 28, 2019 (provided certain conditions are met), either Eclipse or BRMR may choose not to proceed with the merger and terminate the merger agreement, and the parties can mutually decide to terminate the merger agreement at any time, before or after stockholder approval. In addition, Eclipse and BRMR may elect to terminate the merger agreement in certain circumstances as further detailed in the section entitled “The Merger Agreement—Termination”.

The merger agreement limits Eclipse’s ability and BRMR’s ability to pursue alternatives to the merger.

The merger agreement contains provisions, including “no shop” provisions and other negative covenants, that may discourage a third party from submitting an Eclipse competing proposal or a BRMR competing proposal that might result in greater value to Eclipse’s or BRMR’s respective stockholders than the merger, or may result in a potential acquirer of Eclipse, or a potential competing acquirer of BRMR, proposing to pay a lower per share price to acquire Eclipse or BRMR, respectively, than it might otherwise have proposed to pay because of the added expense of the termination fee that is payable in certain circumstances. These provisions include a general prohibition on Eclipse and BRMR from soliciting or, with respect to BRMR subject to certain exceptions relating to the exercise of fiduciary duties by the BRMR board, entering into discussions with any third party regarding any competing proposal or offer for a competing transaction. For additional information, see the section entitled “The Merger Agreement—Termination”.

 

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Failure to complete the merger could negatively impact the price of shares of Eclipse common stock and the price of shares of BRMR common stock, as well as Eclipse’s and BRMR’s respective future businesses and financial results.

The merger agreement contains a number of conditions, some of which are beyond the control of Eclipse and BRMR, that must be satisfied or waived prior to the completion of the merger. There can be no assurance that all of the conditions to the completion of the merger will be so satisfied or waived. If these conditions are not satisfied or waived, Eclipse and BRMR will be unable to complete the merger.

If the merger is not completed for any reason, including the failure to receive the required approvals of the BRMR stockholders, Eclipse’s and BRMR’s respective businesses and financial results may be adversely affected, including as follows:

 

   

Eclipse and BRMR may experience negative reactions from the financial markets, including negative impacts on the market price of Eclipse common stock and BRMR common stock;

 

   

the manner in which customers, vendors, business partners and other third parties perceive Eclipse and BRMR may be negatively impacted, which in turn could affect Eclipse’s and BRMR’s operations;

 

   

Eclipse and BRMR may become subject to litigation related to the failure to complete the merger;

 

   

Eclipse and BRMR may experience negative reactions from employees; and

 

   

Eclipse and BRMR will have expended time and resources that could otherwise have been spent on Eclipse’s and BRMR’s existing businesses and the pursuit of other opportunities that could have been beneficial to each company, and Eclipse’s and BRMR’s ongoing business and financial results may be adversely affected.

In addition to the above risks, if the merger agreement is terminated and either party’s board seeks an alternative transaction, such party’s stockholders cannot be certain that such party will be able to find a party willing to engage in a transaction on more attractive terms than the merger. If the merger agreement is terminated under specified circumstances, either Eclipse or BRMR may be required to pay the other party a termination fee, reverse termination fee or other termination-related payment. For a description of these circumstances, see the section entitled “The Merger Agreement—Termination”.

Required regulatory approvals of the NYSE may not be received, may take longer than expected to be received or may impose conditions that are not presently anticipated or cannot be met.

Completion of the merger is conditioned upon the approval by the NYSE of the listing of the shares of Eclipse common stock to be issued in the merger upon official notice of issuance. Moreover, approval by the NYSE will be required in connection with the Eclipse reverse stock split. There can be no assurance that such approval will be obtained and that the other conditions to completing the merger will be satisfied.

Eclipse and BRMR will be subject to business uncertainties while the merger is pending, which could adversely affect their respective businesses.

Uncertainty about the effect of the merger on management personnel, key employees, skilled workers, customers and contractual counterparties may have an adverse effect on Eclipse and BRMR. These uncertainties may impair Eclipse’s and BRMR’s ability to attract, retain or motivate management personnel, key employees or skilled workers until the merger is completed and for a period of time thereafter, and could cause customers, contractual counterparties and others that deal with Eclipse and BRMR to seek to change their existing business relationships with Eclipse and BRMR, respectively. Retention of management personnel, key employees and skilled workers at Eclipse and BRMR may be particularly challenging during the pendency of the merger, as such persons may experience uncertainty about their roles with the combined company following the merger. In addition, the merger agreement restricts Eclipse and BRMR from entering into certain transactions and taking

 

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other specified actions without the consent of the other party, and generally requires each party to continue its operations in the ordinary course, until completion of the merger. These restrictions could be in place for an extended period of time if completion of the merger is delayed. These restrictions may prevent Eclipse and BRMR from pursuing attractive business opportunities that may arise prior to the completion of the merger. For a description of the restrictive covenants to which Eclipse and BRMR are subject, see the section entitled “The Merger Agreement—Interim Operations of BRMR and Eclipse Pending the Merger”.

Directors and executive officers of Eclipse may have interests in the merger that are different from, or in addition to, the interests of Eclipse stockholders.

Eclipse’s executive officers and directors have interests in the merger that may be different from, or in addition to, the interests of Eclipse stockholders generally. The members of the Eclipse board were aware of and considered these interests, among other matters, when they approved the merger agreement, the Eclipse stock issuance and the Eclipse charter amendment. These interests are described in more detail in the section entitled “The Merger—Interests of Eclipse Directors and Executive Officers in the Merger”.

Directors and executive officers of BRMR may have interests in the merger that are different from, or in addition to, the interests of BRMR stockholders.

Directors and executive officers of BRMR may have interests in the merger that are different from, or in addition to, the interests of BRMR stockholders generally. These interests include, among others, the treatment of outstanding equity and equity-based awards pursuant to the merger agreement, Eclipse’s agreement to appoint five directors designated by BRMR as directors of Eclipse, including BRMR’s current chief executive officer, and to appoint certain executive officers of BRMR as executive officers of Eclipse, and rights to ongoing indemnification and insurance coverage. The members of the BRMR board were aware of and considered these interests, among other matters, when they approved the merger agreement and the transactions contemplated thereby and recommended that the BRMR stockholders adopt the merger agreement and approve the transactions contemplated thereby. These interests may cause the BRMR’s directors and officers to view the merger differently and more favorably than a BRMR stockholder. These interests are described in more detail in the section entitled “The Merger—Interests of BRMR Directors and Executive Officers in the Merger”.

The merger may not be accretive, and may be dilutive, to Eclipse’s earnings per share, which may negatively affect the market price of Eclipse common stock.

Because shares of Eclipse common stock will be issued in the merger, the merger may be dilutive to Eclipse’s earnings per share, which could negatively affect the market price of Eclipse common stock.

In connection with the completion of the merger, based on the number of issued and outstanding shares of BRMR common stock as of             , 2018 and the outstanding BRMR equity awards currently estimated to be payable in Eclipse common stock in connection with the merger, Eclipse will issue up to approximately              shares of Eclipse common stock. The issuance of these new shares of Eclipse common stock could have the effect of depressing the market price of Eclipse common stock, through dilution of earnings per share or otherwise. Any dilution of, or delay of any accretion to, Eclipse’s earnings per share could cause the price of shares of Eclipse common stock to decline or increase at a reduced rate.

Eclipse and BRMR will incur significant transaction and merger-related costs in connection with the merger, which may be in excess of those anticipated by Eclipse or BRMR.

Each of Eclipse and BRMR has incurred and expects to continue to incur a number of non-recurring costs associated with negotiating and completing the merger, integrating the operations of the two companies and achieving desired synergies. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated. The substantial majority of non-recurring expenses will consist of transaction costs related to the merger and include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, severance and benefit costs and filing fees.

 

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Eclipse and BRMR will also incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs and employment-related costs. Eclipse and BRMR will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the integration of the two companies’ businesses. Although Eclipse and BRMR each expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow Eclipse and BRMR to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. For additional information, see the risk factor entitled “The integration of BRMR into Eclipse may not be as successful as anticipated” below.

The fees and costs described above have been, and will continue to be, substantial, are difficult to estimate, and the timing and amounts of such fees and costs may be different than are currently anticipated by Eclipse and BRMR.

Many of these fees and costs will be borne by Eclipse or BRMR even if the merger is not completed.

The opinions of Eclipse’s and BRMR’s respective financial advisors will not reflect changes in circumstances between the date of such opinions and the completion of the merger.

Eclipse and BRMR have received opinions from their respective financial advisors in connection with the signing of the merger agreement, but have not requested updated opinions from their respective financial advisors as of the date of this consent solicitation statement/information statement/prospectus. Developments after the date of such opinions, including changes in the operations and prospects of Eclipse or BRMR, general market and economic conditions and other factors that may be beyond the control of Eclipse or BRMR, may significantly alter the value of Eclipse or BRMR or the prices of the shares of Eclipse common stock or of the shares of BRMR common stock by the time the merger is completed. The opinions do not speak as of the date of this consent solicitation statement/information statement/prospectus, the time the merger will be completed or as of any date other than the date of such opinions. Because Eclipse and BRMR do not currently anticipate asking their respective financial advisors to update their opinions, the opinions will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed. The BRMR board’s recommendation that BRMR stockholders execute and deliver a signed written consent to adopt the merger agreement and approve the transactions contemplated thereby, however, is made as of the date of this consent solicitation statement/information statement/prospectus.

For a description of the opinions that Eclipse and BRMR received from their respective financial advisors, see the sections entitled “The Merger—Opinion of Jefferies, Eclipse’s Financial Advisor” and “The Merger—Opinion of Barclays, BRMR’s Financial Advisor”. A copy of the opinion of Jefferies, Eclipse’s financial advisor, is attached as Annex B to this consent solicitation statement/information statement/prospectus, and a copy of the opinion of Barclays, BRMR’s financial advisor, is attached as Annex C to this consent solicitation statement/information statement/prospectus, and each is incorporated by reference herein in its entirety.

Completion of the merger may trigger change in control, anti-assignment or other provisions in certain agreements to which Eclipse or BRMR is a party.

The completion of the merger may trigger change in control, anti-assignment or other provisions in certain agreements to which Eclipse or BRMR is a party. If Eclipse and BRMR are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages or other remedies. Even if Eclipse and BRMR are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Eclipse or BRMR. Any such termination, remedies or renegotiated terms could adversely affect the combined company’s business, financial condition or results of operations.

 

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The combined company’s current or future debt may limit its financial flexibility.

As of September 30, 2018, Eclipse had $99 million outstanding under its revolving credit facility and a total of $510.5 million in principal amount of senior unsecured notes. As of September 30, 2018, BRMR had $25 million outstanding under its senior term loan facility. In connection with the closing, it is anticipated that the revolving credit facility of Eclipse will be amended and restated (see “The Merger—Treatment of Indebtedness”) and that BRMR’s senior term loan facility will be repaid in full and terminated (see “The Merger AgreementBRMR Credit Agreement; Financing Cooperation”). The combined company may incur additional debt from time to time in connection with the financing of operations, acquisitions, recapitalizations and refinancings. The level of the combined company’s debt could have several important effects on future operations, including, among others:

 

   

a significant portion of the combined company’s income from operations may be applied to the payment of principal and interest on the debt and will not be available for other purposes;

 

   

covenants contained in the combined company’s existing and future debt arrangements may require the combined company to meet financial tests that may affect its flexibility in planning for and reacting to changes in its business, including possible acquisition opportunities;

 

   

the combined company’s ability to obtain additional financing for capital expenditures, acquisitions, general corporate and other purposes may be limited or burdened by increased costs or more restrictive covenants;

 

   

the combined company may not be able to refinance or extend the term of the existing debt on favorable terms or at all which would have a material adverse effect on its ability to continue operations;

 

   

the combined company may be at a competitive disadvantage to similar companies that have less debt;

 

   

the combined company’s vulnerability to adverse economic and industry conditions may increase; and

 

   

the combined company may face limitations on its flexibility to plan for and react to changes in its business and the industries in which it operates.

The unaudited pro forma combined financial information and unaudited forecasted financial information included in this consent solicitation statement/information statement/prospectus is presented for illustrative purposes only and does not represent the actual financial condition or results of operations of the combined company following the completion of the merger. Future results of the combined company may differ, possibly materially, from the unaudited pro forma combined financial information and unaudited forecasted financial information presented in this consent solicitation statement/information statement/prospectus.

The unaudited pro forma combined financial statements and unaudited forecasted financial information contained in this consent solicitation statement/information statement/prospectus are presented for illustrative purposes only, contain a variety of adjustments, assumptions and preliminary estimates, and are subject to a variety of uncertainties, and do not represent the actual financial condition or results of operations of Eclipse and BRMR prior to the merger or that of the combined company following the merger. The unaudited pro forma combined financial statements do not reflect the effect of any potential divestitures that may occur prior to or subsequent to the completion of the merger or the costs associated with the integration process. For additional information, see the section entitled “Unaudited Pro Forma Combined Financial Statements”. In addition, the merger and post-merger integration process may give rise to unexpected liabilities and costs, including costs associated with employee integration and with the defense and resolution of transaction-related litigation or other claims, if any. Unexpected delays in completing the merger or in connection with the post-merger integration process may significantly increase the related costs and expenses incurred by Eclipse. The actual financial positions and results of operations of Eclipse and BRMR prior to the merger and that of the combined company following the merger may be different, possibly materially, from the unaudited pro forma combined financial statements or the

 

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unaudited forecasted financial information included in this consent solicitation statement/information statement/prospectus. In addition, the assumptions used in preparing the unaudited pro forma combined financial statements and unaudited forecasted financial information included in this consent solicitation statement/information statement/prospectus may not prove to be accurate and may be affected by other factors. Any potential decline in the combined company’s financial condition or results of operations, or a failure to achieve projected results, may cause significant variations or declines in the stock price of the combined company. Moreover, any significant changes in the market price of Eclipse common stock may cause a significant change in the purchase price used for Eclipse’s accounting purposes and the unaudited pro forma financial statements contained in this consent solicitation statement/information statement/prospectus.

BRMR stockholders will not be able to exercise appraisal rights, among other matters, if the merger constitutes a drag transaction under the BRMR stockholders agreement.

Under the BRMR stockholders agreement, which is binding on all holders of shares of BRMR common stock, if holders of more than 66 23% of the outstanding shares of BRMR common stock deliver written consents adopting the merger agreement and approving the merger and the other transactions contemplated by the merger agreement and make the request necessary for the merger to constitute a drag transaction for purposes of the BRMR stockholders agreement, all other holders of BRMR common stock, among other things:

 

   

will be required to waive and refrain from exercising (and will be deemed to have irrevocably waived) any appraisal, dissenters’ or similar rights with respect to the merger and therefore will not be entitled to exercise appraisal rights under Section 262 of the DGCL in connection with the merger;

 

   

will be prohibited from raising any objection to the merger or the process pursuant to which it was arranged; and

 

   

will be contractually obligated with respect to certain other matters related to the merger, including the obligation to consent to the merger, although the failure of any such BRMR stockholder to deliver a written consent will not affect the consummation of the merger or the amount and nature of the consideration such stockholder will be entitled to receive in the merger.

In the BRMR voting agreement, BRMR stockholders who beneficially own approximately 60.3% of the outstanding shares of BRMR common stock have agreed to take all actions necessary to cause the merger to be a drag transaction, in addition to their agreement to deliver written consents adopting the merger agreement and approving the merger and the other transactions contemplated by the merger agreement. Therefore, the holders of only an additional approximately 6.4% of the outstanding shares of BRMR common stock would need to deliver written consents and make the necessary request in order for the merger to become a drag transaction. Accordingly, BRMR believes that it is highly likely that the merger will constitute a drag transaction, with the consequences described above and elsewhere in this consent solicitation statement/information statement/prospectus.

For additional information regarding the potential for the merger to be a drag transaction, the related consequences and the provisions of the BRMR stockholders agreement governing these matters, see “BRMR Solicitation of Written ConsentsDrag Transaction Under BRMR Stockholders Agreement.”

The impact of the recent significant federal tax reform on the combined company is uncertain and may significantly affect the operations of the combined company after the merger.

On December 22, 2017, the President signed the budget reconciliation act commonly referred to as the Tax Cuts and Jobs Act, which we refer to as the TCJA, into law. The TCJA makes broad and complex changes to the Code and includes significant provisions that may impact income taxes in future years including: (1) the reduction in the U.S. federal corporate tax rate from 35% to 21%; (2) the limitation on the current deductibility of net interest expense in excess of 30% of adjusted taxable income; (3) the limitation on utilization of net operating losses,

 

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which we refer to as NOLs, generated after the 2017 tax year to 80% of taxable income; (4) the unlimited carryforward of NOLs generated after the 2017 tax year; (5) the repeal of the corporate alternative minimum tax; (6) temporary 100% expensing of certain business assets; (7) additional limitations on certain general and administrative expenses; and (8) changes in determining the excessive compensation limitation. Eclipse and BRMR continue to evaluate the impact of the TCJA on the combined company’s business. Future interpretations of the TCJA, which may vary from Eclipse’s current interpretation, and possible changes to state tax laws in response to the recently enacted federal legislation, may have a significant effect on the combined company and may, in certain cases, be adverse to the operation of the business of the combined company.

The integration of BRMR into Eclipse may not be as successful as anticipated.

The merger involves numerous operational, strategic, financial, accounting, legal, tax and other risks, potential liabilities associated with the acquired businesses, and uncertainties related to design, operation and integration of BRMR’s internal control over financial reporting. Difficulties or delays in integrating BRMR into Eclipse may result in the combined company performing differently than expected, in operational challenges or in the failure to realize anticipated expense-related efficiencies or other anticipated benefits of the merger and could adversely affect the combined company’s business, financial condition or results of operations. Eclipse’s and BRMR’s existing businesses could also be negatively impacted by the merger. Potential difficulties or delays that may be encountered in the integration process include, among other factors:

 

   

the inability to successfully integrate the businesses of BRMR into Eclipse in a manner that permits the combined company to achieve the full expense-related efficiencies and operational and other synergies anticipated from the merger;

 

   

complexities associated with managing the larger, more complex, integrated business;

 

   

integrating personnel from the two companies and the loss of management personnel, key employees or skilled workers;

 

   

potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the merger, including one-time cash costs to integrate the two companies that may exceed the anticipated range of such one-time cash costs that Eclipse and BRMR estimated as of the date of the execution of the merger agreement;

 

   

integrating relationships with customers, vendors and business partners;

 

   

performance shortfalls or damage to business relationships as a result of the diversion of management’s attention caused by completing the merger and integrating BRMR’s operations into Eclipse; and

 

   

the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.

The combined company’s results may suffer if it does not effectively manage its expanded operations following the merger.

Following completion of the merger, the combined company’s success will depend, in part, on its ability to manage its expansion, which poses numerous risks and uncertainties and challenges for management, including the need to integrate the operations and businesses of Eclipse and BRMR in an efficient and timely manner, to combine systems and management controls and to integrate relationships with customers, vendors and business partners. There can be no assurance that the combined company will be successful in these efforts.

Business challenges currently faced by one company may negatively impact the combined company.

To the extent that either Eclipse or BRMR has or is perceived to have any operational or other business challenges, those challenges may raise concerns by existing customers, vendors or business partners of the other company following the merger, which may adversely impact the combined company’s relationship with such parties.

 

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Even if Eclipse and BRMR complete the merger, the combined company may fail to realize all of the anticipated benefits of the merger.

The success of the merger will depend, in part, on the combined company’s ability to realize the anticipated expense-related efficiencies and other anticipated benefits from combining Eclipse’s and BRMR’s businesses, including operational and other synergies that Eclipse and BRMR believe the combined company will achieve. The anticipated expense-related efficiencies and other anticipated benefits of the merger may not be realized fully or at all, may take longer to realize than expected or could have other adverse effects that Eclipse and BRMR do not currently foresee. The integration process may, for each of Eclipse and BRMR, result in the loss of management personnel, key employees or skilled workers, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies. There could be potential unknown liabilities and unforeseen expenses associated with the merger that were not discovered in the course of performing due diligence.

Uncertainties associated with the merger may cause a loss of management personnel, key employees and skilled workers, which could adversely affect the future business and operations of the combined company.

Eclipse and BRMR are dependent on the experience and industry knowledge of their management personnel, key employees and skilled workers to execute their business plans. Each company’s success until the merger and the combined company’s success after the merger will depend in part upon the ability of Eclipse and BRMR to attract, retain and motivate management personnel, key employees and skilled workers. Current and prospective management personnel, key employees and skilled workers of Eclipse and BRMR may experience uncertainty about their roles within the combined company following the merger, which may have an adverse effect on the ability of each of Eclipse and BRMR to attract, retain or motivate management personnel, key employees or skilled workers. Accordingly, no assurance can be given that the combined company will be able to attract, retain or motivate management personnel, key employees or skilled workers of Eclipse and BRMR to the same extent that Eclipse and BRMR have previously been able to attract, retain and motivate their own management personnel, key employees and skilled workers.

The market price of Eclipse common stock may decline in the future as a result of the sale of shares of Eclipse common stock held by former BRMR stockholders or current Eclipse stockholders.

Based on the number of shares of BRMR common stock outstanding as of             , 2018 and the outstanding BRMR equity awards currently estimated to be payable in Eclipse common stock in connection with the merger, Eclipse expects to issue up to approximately              shares of Eclipse common stock to BRMR stockholders and holders of BRMR equity awards in connection with the merger. Following their receipt of such shares of Eclipse common stock, former BRMR stockholders and former holders of BRMR equity awards may seek to sell the shares of Eclipse common stock delivered to them and, except as described in “The Merger Agreement—Lock-Up Agreements,” the merger agreement and the documents ancillary thereto contain no restriction on the ability of former BRMR stockholders and former holders of BRMR equity awards to sell such shares of Eclipse common stock following completion of the merger. Other Eclipse stockholders, except as described in “The Merger Agreement—Lock-Up Agreements,” may also seek to sell shares of Eclipse common stock held by them following, or in anticipation of, completion of the merger. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of shares of Eclipse common stock, may affect the market for, and the market price of, Eclipse common stock in an adverse manner.

The combined company may record goodwill and other intangible assets that could become impaired and result in material non-cash charges to the results of operations of the combined company in the future.

The merger will be accounted for as an acquisition by Eclipse in accordance with GAAP. Under the acquisition method of accounting, the assets and liabilities of BRMR and its subsidiaries will be recorded, as of completion of the merger, at their respective estimated fair values and added to those of Eclipse. The reported financial

 

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condition and results of operations of Eclipse for periods after completion of the merger will reflect BRMR balances and results after completion of the merger but will not be restated retroactively to reflect the historical financial condition or results of operations of BRMR for periods prior to the merger. For additional information, see the section entitled “Unaudited Pro Forma Combined Financial Statements”.

Under the acquisition method of accounting, the total purchase price will be allocated to BRMR’s tangible assets and liabilities and identifiable intangible assets based on their estimated fair values as of the date of completion of the merger. The excess of the purchase price over those fair values may be recorded as goodwill. While Eclipse and BRMR do not expect that the merger will result in the creation of goodwill based upon the application of the acquisition method of accounting, the purchase price allocation analysis has not been finalized. To the extent goodwill or intangible assets are booked and the value of goodwill or intangibles becomes impaired, the combined company may be required to incur material non-cash charges relating to such impairment. The combined company’s results of operations may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.

Shares of Eclipse common stock received by BRMR stockholders as a result of the merger will have different rights from shares of BRMR common stock.

Upon completion of the merger, BRMR stockholders will no longer be stockholders of BRMR, and BRMR stockholders who receive merger consideration will become Eclipse stockholders. There will be important differences between the current rights of BRMR stockholders and the rights to which such stockholders will be entitled as Eclipse stockholders. For a discussion of the different rights associated with shares of Eclipse common stock, see the section entitled “Comparison of Stockholders’ Rights”.

The market price of Eclipse common stock may be affected by factors different from those that historically have affected BRMR common stock.

Upon completion of the merger, holders of BRMR common stock who receive merger consideration will become holders of Eclipse common stock. The businesses of Eclipse differ from those of BRMR in certain respects, and, accordingly, the financial condition or results of operations and/or cash flows of Eclipse after the merger, as well as the market price of Eclipse common stock, may be affected by factors different from those currently affecting the financial condition or results of operations and/or cash flows of BRMR. Following the completion of the merger, BRMR will be part of a larger company, so decisions affecting BRMR may be made in respect of the larger combined business as a whole rather than the BRMR businesses individually. For a discussion of the businesses of Eclipse and BRMR and of some important factors to consider in connection with those businesses, see the sections entitled “Information About the Companies” and “Business and Properties of BRMR” and the documents incorporated by reference in the section entitled “Where You Can Find More Information”, the section entitled “Risk Factors” in Eclipse’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, and “Risk FactorsRisks Related to BRMR’s Business.”

Following the completion of the merger, Eclipse may incorporate BRMR’s hedging activities into Eclipse’s business, and Eclipse may be exposed to additional commodity price risks arising from such hedges.

To mitigate its exposure to changes in commodity prices, BRMR hedges crude oil, natural gas and NGL prices from time to time, primarily through the use of certain derivative instruments. If Eclipse assumes existing BRMR hedges, Eclipse will bear the economic impact of all of BRMR’s current hedges following the completion of the merger. Actual crude oil, natural gas and NGL prices may differ from the combined company’s expectations and, as a result, such hedges may or may not have a negative impact on the business of the combined company.

Eclipse and BRMR may be targets of securities class actions and derivative lawsuits which could result in substantial costs and may delay or prevent the merger from being completed.

Securities class actions and derivative lawsuits are often brought against public and private companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against these claims can result

 

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in substantial costs and divert director, management and employee time and resources. Eclipse and BRMR cannot predict the outcome of any securities class action or derivative lawsuit, nor can Eclipse and BRMR predict the time and expense that will be required to resolve any such proceeding or the extent to which such expense may be covered by applicable insurance policies. An adverse judgment could result in monetary damages, which could have a negative impact on Eclipse’s and BRMR’s respective liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the merger, then that injunction may delay or prevent the merger from being completed, which may adversely affect Eclipse’s and BRMR’s respective business, financial position and results of operation.

Eclipse’s and BRMR’s ability to use their respective net operating losses and other tax attributes to offset future income will become subject to certain limitations.

Section 382 of the Code generally serves to limit the use of acquired tax attributes over their fair market values after the effective time of an “ownership change” of the stock of a C corporation with these traits (such corporation is referred to as a “loss corporation”). Tax losses and certain other attributes discussed below (which we refer to as “tax attributes”) on hand at the time of an ownership change are referred to as “pre-change losses.” These tax attributes are subject to an annual limitation based upon the product of: (i) the fair market value of the loss corporation’s stock immediately before the ownership change multiplied by (ii) a federally published rate, which we refer to as the “long-term tax exempt rate,” which is currently 2.29%. An ownership change generally occurs when there are cumulative exchanges of more than 50% of a loss corporation’s stock held by 5% or greater shareholders within a 36-month look-back period. The annual limitation of a loss corporation may be increased where the entity had a net unrealized built-in gain at the time of the ownership change, meaning that the fair market value of its assets exceeded their tax bases by more than 15% and such assets are disposed of at a gain or depreciated/depleted (on the portion of tax basis in excess of their fair market values) within 5 years of the ownership change. Conversely, loss corporations with a net unrealized built-in loss (“NUBIL”) at the time of the ownership change, meaning that the fair market value of its assets were less than their tax bases by more than 15%, must treat a disposition loss or similar depreciation/depletion within the 5 year post-ownership change period as a pre-change loss like a net operating loss for purposes of the Code Section 382 limitation.

BRMR underwent an ownership change when it emerged from bankruptcy on May 6, 2016 and will undergo a second ownership change at the effective time of the merger. Additionally, as a result of the bankruptcy, BRMR reduced its tax attributes at the effective time of its discharge pursuant to its plan of reorganization as required by Section 382(l)(6) of the Code. As such, the tax attributes of BRMR will be subject to two annual limitations: (i) one based on its post-discharge equity value under Section 382(l)(6) of the Code; and (ii) a second annual limitation (on additional tax attributes generated since the bankruptcy but prior to the merger) based upon the fair market value of its stock immediately before the merger.

Eclipse has not incurred an ownership change since inception, but is expected to as a result of the merger. As such, Eclipse will be subject to its own separate ownership change based upon the fair market value of its stock immediately before the effective time of the merger. Additionally, at this time, Eclipse’s management expects that each of BRMR and Eclipse will have NUBILs on their respective assets for federal income tax purposes. As a result of the above described statutory limitations on the use of tax attributes post-merger and other market considerations, Eclipse management has concluded that recording a valuation allowance in an amount equal to the net deferred tax assets resulting from both acquired and historic tax attributes is appropriate. The presence of this valuation allowance on the BRMR net tax attributes means that there is no effect on purchase accounting of the acquired tax attributes from its acquisition by Eclipse. Further, there is no effect on Eclipse’s current period or 2018 annual earnings from the income tax effect of the merger, as no income tax benefit has been nor is expected to be recorded. Should the future judgment of Eclipse’s management change with respect to the post-merger recoverability of either of BRMR’s or Eclipse’s net tax attributes, the effect of such changes would be recorded in income from continuing operations in the period of such change in judgment.

 

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Non-U.S. holders of BRMR common stock generally will be subject to U.S. federal income tax upon receipt of the merger consideration and, with respect to non-U.S. holders, such consideration will also be subject to withholding.

BRMR is a U.S. real property holding corporation, as such term is defined in the Code. As a result, non-U.S. holders of BRMR common stock generally will be subject to U.S. federal income tax upon receipt of the merger consideration. The merger consideration also will be subject to withholding at the rate of 15%. The withholding is not an additional tax, and will be applied against a non-U.S. holder’s U.S. federal income tax liability. A non-U.S. holder may be entitled to a refund of the amount withheld, provided that such non-U.S. holder timely furnishes the required information to the IRS. Alternatively, a non-U.S. holder may apply for a withholding tax certificate to reduce or eliminate, where applicable, the amount required to be withheld based on such holder’s actual U.S. tax liability as a result of the merger, if the holder timely furnishes such withholding tax certificate to Eclipse.

There are risks associated with the proposed Eclipse reverse stock split, including that the reverse stock split may not result in a proportionate increase in the per share price of Eclipse common stock.

If the merger is completed, Eclipse will effect a 15-to-1 reverse stock split immediately before the merger. Eclipse cannot predict whether or to what extent the Eclipse reverse stock split will proportionately increase the market price of Eclipse common stock. The market price of Eclipse common stock will be based on Eclipse’s performance and other factors, including broader market conditions, which are unrelated to the number of shares of Eclipse common stock outstanding.

The Eclipse reverse stock split would have the effect of increasing the amount of common stock Eclipse is authorized to issue without further approval by Eclipse stockholders.

As a result of the Eclipse reverse stock split, and after giving effect to the merger, Eclipse expects that it will have approximately 35,820,729 shares of common stock outstanding, compared to 302,325,028 shares of Eclipse common stock outstanding as of October 9, 2018. Eclipse’s Amended and Restated Certificate of Incorporation currently authorizes Eclipse to issue 1 billion shares of common stock and Eclipse does not anticipate reducing this amount in connection with the Eclipse reverse stock split or the merger. As a result, Eclipse expects the Eclipse reverse stock split, after completing the merger, will give it the ability to issue approximately 964,179,271 additional shares of common stock. Except in certain instances, as required by law or the NYSE, these additional shares may be issued by Eclipse without further vote of Eclipse stockholders. If the Eclipse board chooses to issue additional shares of Eclipse common stock, such issuance could have a dilutive effect on the equity, earnings and voting interests of Eclipse stockholders.

Risks Relating to Eclipse’s Business.

You should read and consider risk factors specific to Eclipse’s businesses that will also affect the combined company after the completion of the merger. These risks are described in Part I, Item 1A of Eclipse’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in Part II, Item 1A of Eclipse’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, and in other documents that are incorporated by reference herein. For the location of information incorporated by reference in this consent solicitation statement/information statement/prospectus, see the section entitled “Where You Can Find More Information”.

Risks Relating to BRMR’s Business.

BRMR is subject to all of the risks and uncertainties incident to the exploration for and development, production, gathering and sale of natural gas, NGLs and oil.

As an oil and gas exploration and production company, BRMR is subject to the risks and uncertainties incident to this industry, most of which are difficult to predict and many of which are beyond BRMR’s control. These risks include, but are not limited to, legal and environmental risks, drilling and other operating risks, regulatory

 

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changes, commodity price volatility and declines in the price of natural gas, NGLs and oil, inflation, lack of availability of drilling, production and processing equipment and services, counterparty credit risk, the uncertainty inherent in estimating natural gas, NGL and oil reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described in Part I, Item 1A of Eclipse’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in Part II, Item 1A of Eclipse’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. Because BRMR is engaged in substantially the same business and in the same general geographic area as Eclipse, the risks described in those reports filed by Eclipse and incorporated by reference in this consent solicitation statement/information statement/prospectus apply to BRMR in generally the same manner as they apply to Eclipse.

There is a limited trading market for BRMR common stock and the market price of BRMR common stock is subject to volatility.

BRMR common stock is not listed on a securities exchange, and prices for BRMR common stock are not quoted in an interdealer quotation system. However, since BRMR’s emergence from bankruptcy on May 6, 2016, BRMR common stock has traded sporadically on the OTC Grey, currently under the symbol “BRMR.” OTC Grey securities do not have bid or ask quotations in the OTC Link system or the OTC Bulletin Board (“OTCBB”). Although broker-dealers must report OTC Grey market trades to the Financial Industry Regulatory Authority and trade data is therefore available from public sources, the OTC Grey may not constitute an established public trading market for the BRMR common stock, and you should not rely on the OTC Grey trading prices as being the product of an established public trading market. Trading in the OTC Grey typically is much more limited than trading on a national securities exchange or in other over-the-counter markets for which quotations are available on the OTCBB. In general, broker-dealers are not willing or able to publicly quote securities traded on the OTC Grey because of lack of investor interest, limited availability of information regarding the issuer or regulatory requirements. The market prices and trading volumes of BRMR common stock may be subject to wide fluctuations. BRMR common stock may continue to be traded only infrequently in transactions arranged through brokers or otherwise, and reliable market quotations may not be available. Holders of BRMR common stock may experience difficulty in reselling, or an inability to sell, their shares. In addition, the lack of an active trading market or significant sales of BRMR common stock, or the expectation of such sales, could materially and adversely affect the market price of BRMR common stock. Moreover, the lack of an active trading market or significant sales of BRMR common stock, or the expectation of such sales, makes it difficult to determine the fair market value of BRMR, and therefore the aggregate value to be received from Eclipse in connection with the merger may be less than or greater than the aggregate fair market value of BRMR.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This consent solicitation statement/information statement/prospectus, and the documents to which BRMR and Eclipse refer you in this consent solicitation statement/information statement/prospectus, as well as oral statements made or to be made by BRMR and Eclipse, include certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. All statements, other than statements of historical fact, included in this consent solicitation statement/information statement/prospectus that address activities, events or developments that Eclipse or BRMR expects, believes or anticipates will or may occur in the future are forward-looking statements. Words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “create,” “intend,” “could,” “may,” “foresee,” “plan,” “will,” “guidance,” “look,” “outlook,” “goal,” “future,” “assume,” “forecast,” “build,” “focus,” “work,” “continue” or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements include, but are not limited to, statements regarding the merger, pro forma descriptions of the combined company and its operations, integration and transition plans, synergies, opportunities and anticipated future performance. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this consent solicitation statement/information statement/prospectus. These include:

 

   

the risk that the merger agreement may be terminated in accordance with its terms and that the merger may not be completed;

 

   

the risk that the parties may not be able to satisfy the conditions to the completion of the merger in a timely manner or at all;

 

   

the risk that the merger may not be accretive, and may be dilutive, to Eclipse’s earnings per share, which may negatively affect the market price of Eclipse common stock;

 

   

the possibility that Eclipse and BRMR will incur significant transaction and other costs in connection with the merger, which may be in excess of those anticipated by Eclipse or BRMR;

 

   

the risk that Eclipse may fail to realize the benefits expected from the merger;

 

   

the risk that the combined company may be unable to achieve operational or corporate synergies or that it may take longer than expected to achieve those synergies;

 

   

the risk that any announcements relating to, or the completion of, the merger could have adverse effects on the market price of Eclipse common stock;

 

   

the risk that the merger and its announcement and/or completion could have an adverse effect on the ability of Eclipse and BRMR to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers; and

 

   

the risks to their operating results and businesses generally.

Such factors are difficult to predict and, in many cases, may be beyond the control of Eclipse and BRMR. Eclipse’s and BRMR’s forward-looking statements are based on assumptions that Eclipse and BRMR, respectively, believe to be reasonable but that may not prove to be accurate. Consequently, all of the forward-looking statements Eclipse and BRMR make in this consent solicitation statement/information statement/prospectus are qualified by the information contained or incorporated by reference herein, including the information contained under this heading and the information detailed in Eclipse’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and Eclipse’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018. For additional information, see the sections entitled “Risk Factors” and “Where You Can Find More Information”.

 

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Eclipse and BRMR undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances that occur, or which they become aware of, except as required by applicable law or regulation. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

 

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INFORMATION ABOUT ECLIPSE

Eclipse Resources Corporation

2121 Old Gatesburg Road, Suite 110

State College, Pennsylvania 16803

Phone: (814) 308-9754

Eclipse is an independent exploration and production company engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. As of June 30, 2018, Eclipse had assembled an acreage position approximating 197,500 net acres in Eastern Ohio and 43,500 net acres in Pennsylvania, which excludes any acreage currently pending title. Approximately 134,500 of Eclipse’s net acres are located in the Utica Shale fairway, which Eclipse refers to as the Utica Core Area, and approximately 14,600 of these net acres are also prospective for the highly liquids rich area of the Marcellus Shale in Eastern Ohio within what Eclipse refers to as its Marcellus Area. Eclipse is the operator of approximately 96% of its net acreage within the Utica Core Area and its Marcellus Area. Eclipse intends to focus on developing its substantial inventory of horizontal drilling locations during commodity price environments that will allow it to generate attractive returns and will continue to opportunistically add to this acreage position where it can acquire acreage at attractive prices. As of June 30, 2018, Eclipse, or its operating partners, had commenced drilling 246 gross wells within the Utica Core Area and its Marcellus Area, of which 5 gross were top holed, 2 gross were drilling, 14 gross were awaiting completion or were in the process of being completed, and 225 gross had been turned to sales. As of June 30, 2018, Eclipse was operating 2 horizontal rigs in the Utica Core Area. Eclipse had average daily production for the three months ended June 30, 2018 of approximately 305.5 MMcfe comprised of approximately 72% natural gas, 18% NGLs and 10% oil. Eclipse was formed in 2014 and is incorporated in the State of Delaware.

Everest Merger Sub Inc.

c/o Eclipse Resources Corporation

2121 Old Gatesburg Road, Suite 110

State College, Pennsylvania 16803

Phone: (814) 308-9754

Merger Sub, whose legal name is Everest Merger Sub Inc., is a direct, wholly owned subsidiary of Eclipse. Upon the completion of the merger, Merger Sub will cease to exist. Merger Sub was incorporated in Delaware on August 10, 2018 for the sole purpose of effecting the merger.

 

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ECLIPSE ACTIONS BY WRITTEN CONSENT

Eclipse Stock Issuance and Eclipse Charter Amendment

On August 23, 2018, the Eclipse board unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the Eclipse stock issuance and the Eclipse charter amendment, are fair to, and in the best interests of, Eclipse and its stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the Eclipse stock issuance, and the Eclipse charter amendment, (iii) directed that the approval of the Eclipse stock issuance and the Eclipse charter amendment be submitted to the Eclipse stockholders, and (iv) resolved to recommend that the Eclipse stockholders approve the Eclipse stock issuance and approve and adopt the Eclipse charter amendment.

Because Eclipse common stock is traded on the NYSE, Eclipse is subject to Section 312.03 of the NYSE’s Listed Company Manual (which we refer to as “Rule 312”), which requires that Eclipse obtain stockholder approval before issuing shares of common stock if (i) the common stock has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of such stock or of securities convertible into or exercisable for common stock, or (ii) the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock or of securities convertible into or exercisable for common stock. The Eclipse stock issuance qualifies as a stock issuance requiring stockholder approval under Rule 312.

Article Thirteenth of the Eclipse certificate of incorporation provides that, prior to the date that certain Eclipse stockholders, including the EnCap Entities, no longer collectively beneficially own more than 50% of the outstanding shares of Eclipse common stock, the affirmative vote of the holders of a majority in voting power of the outstanding shares of Eclipse common stock entitled to vote thereon, voting together as a single class, shall be required to amend, alter or repeal any provision of the Eclipse certificate of incorporation. Thus, Eclipse is required to obtain stockholder approval to effect the Eclipse charter amendment.

Pursuant to Section 228 of the DGCL and Section 2.14 of the Eclipse bylaws, any action required or permitted to be taken at any annual or special meeting of Eclipse stockholders may be taken without a meeting, without prior notice and without a vote of Eclipse stockholders, if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. On August 25, 2018, the EnCap Entities, direct holders of an aggregate of 172,955,027 shares of Eclipse common stock, which comprised approximately 57.2% of the issued and outstanding shares of Eclipse common stock as of August 23, 2018, executed and delivered the Eclipse stockholder written consent and thereby approved the Eclipse stock issuance and Eclipse charter amendment. The Eclipse charter amendment will become effective as of immediately prior to the effective time of the merger.

Once effective, the Eclipse charter amendment will result in the declassification of the Eclipse board. The current Eclipse certificate of incorporation provides for a classified Eclipse board, whereby the Eclipse board is classified into three classes and directors in each class are elected to serve for three-year terms and until either they are re-elected or their successors are elected and qualified or until their earlier resignation or removal. Each year, the directors of one class stand for re-election as their terms of office expire. The Eclipse charter amendment will eliminate Eclipse’s classified board of directors. Accordingly, after the closing of the merger, all directors of Eclipse will be elected annually to serve one-year terms expiring at the next succeeding annual meeting of Eclipse’s stockholders.

In addition, the Eclipse charter amendment will result in the Eclipse reverse stock split, which is a 15-to-1 reverse stock split with respect to the issued and outstanding Eclipse common stock in connection with the merger. If the Eclipse reverse stock split is effected, then every fifteen issued and outstanding shares of Eclipse common stock will be combined and converted into one share of Eclipse common stock. Immediately following the Eclipse reverse stock split, each Eclipse stockholder will own a reduced number of shares of Eclipse common

 

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stock. The Eclipse reverse stock split will happen at the same time for every Eclipse stockholder, will affect every Eclipse stockholder uniformly and will not change any Eclipse stockholder’s percentage ownership interest or relative voting rights in Eclipse (other than to the extent that the reverse stock split would result in any Eclipse stockholder owning a fractional share, because cash will be paid in lieu of fractional shares). The Eclipse reverse stock split will not change the number of authorized shares of Eclipse common stock.

No Further Eclipse Stockholder Action Needed

As a result of the Eclipse stockholder written consent, the requisite stockholder approval of the Eclipse stock issuance has been received as required under Rule 312, and the requisite stockholder approval of the Eclipse charter amendment has been received as required under the Eclipse certificate of incorporation and the DGCL. Accordingly, all corporate approvals by or on behalf of Eclipse required for the Eclipse stock issuance and the Eclipse charter amendment have been obtained and no further votes will be needed. The Eclipse board does not intend to solicit any proxies or consents in connection with the foregoing actions. This consent solicitation statement/information statement/prospectus is furnished by Eclipse for the purpose of informing and notifying Eclipse stockholders regarding the actions taken by the Eclipse stockholder written consent and is being provided pursuant to the requirements of Rule 14c-2 promulgated under Section 13 of the Exchange Act and Section 228(e) of the DGCL.

 

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BRMR SOLICITATION OF WRITTEN CONSENTS

BRMR is providing this consent solicitation statement/information statement/prospectus to its stockholders in connection with the solicitation of written consents to (i) adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement and (ii) separately approve the BRMR 280G payments. This consent solicitation statement/information statement/prospectus is first being mailed to BRMR stockholders on or about                 , 2018.

Adoption of the Merger Agreement and Approval of the Merger

BRMR is requesting that BRMR stockholders execute and return written consents to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement.

Consent Required

Under the DGCL, the merger agreement must be adopted by the affirmative vote of or consent with respect to a majority of the outstanding shares of BRMR common stock. In addition, the BRMR stockholders agreement prohibits BRMR from consummating a merger or taking certain other actions, including amending its certificate of incorporation and bylaws and changing the number of members of the BRMR board, each of which would occur upon consummation of the merger pursuant to the merger agreement, without the approval of the holders of a majority of the outstanding shares of BRMR common stock. Accordingly, the merger and the other transactions contemplated by the merger agreement require the same approval of BRMR stockholders under the BRMR stockholders agreement as is required for the adoption of the merger agreement pursuant to the DGCL. BRMR stockholders are being asked to consent to the adoption of the merger agreement for purposes of the DGCL and the approval of the merger and the other transactions contemplated by the merger agreement for purposes of the BRMR stockholders agreement as a single proposal.

The parties to the BRMR voting agreement, representing approximately 60.3% of the outstanding shares of BRMR common stock, have agreed, subject to the terms of the BRMR voting agreement, to execute and return written consents adopting the merger agreement and approving the merger, the other transactions contemplated by the merger agreement and any actions related to the merger agreement within one business day after both the registration statement of which this consent solicitation statement/information statement/prospectus forms a part becomes effective under the Securities Act and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders. The delivery of the written consents by the parties to the BRMR voting agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement.

Adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement are not conditioned upon the approval of the BRMR 280G payments.

Recommendation of the BRMR Board

The BRMR board has reviewed and considered the terms of the merger agreement and the merger and the other transactions contemplated by the merger agreement and has unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, BRMR and its stockholders. Accordingly, the BRMR board unanimously recommends that the BRMR stockholders execute and deliver written consents to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement. For additional information regarding the recommendation of the BRMR board and its reasons for the merger, see “The Merger—Recommendation of the BRMR Board and Reasons for the Merger.”

BRMR stockholders should carefully read this consent solicitation statement/information statement/prospectus, including any documents incorporated by reference, and the annexes in their entirety for more detailed

 

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information concerning the merger agreement and the merger and the other transactions contemplated by the merger agreement.

Approval of the BRMR 280G Payments

BRMR also is requesting that BRMR stockholders execute and return written consents to approve the BRMR 280G payments.

Section 280G of the Code

Section 280G of the Code provides that certain “payments or benefits” made to or earned by certain individuals as a result of a change in control of a corporation may be characterized as a “parachute payment.” In general, a “parachute payment” is any payment that:

 

   

is in the nature of compensation, in whatever form made, including the value of any payments or benefits that are accelerated by reason of a change in control;

 

   

is paid to certain officers, stockholders or highly compensated employees or independent contractors of the corporation (referred to as “disqualified individuals”);

 

   

is contingent (or treated as contingent) on a change in control of the corporation; and

 

   

has (together with other payments described in the foregoing bullet points that are made to the same individual) an aggregate present value equal to or in excess of three times the amount of the individual’s average annual compensation from the corporation during the five calendar years preceding the calendar year in which the change in control occurs (such average annual compensation is referred to as the “Base Amount”).

If all such compensatory payments made or benefits earned equal or exceed an amount equal to three times the Base Amount (referred to as the “Safe Harbor Threshold”), all such compensation in excess of the Base Amount constitutes an “excess parachute payment” under the Code. The excess parachute payment is not deductible by the corporation, and the recipient is subject to a 20% excise tax on the excess parachute payment.

In general, payments will not be characterized as a parachute payment, however, if the following conditions are satisfied (referred to as the “stockholder approval exception”):

 

   

the recipient waives his or her right to receive a portion of the payments that is sufficient to reduce the payments or benefits below the recipient’s Safe Harbor Threshold;

 

   

receipt of the waived amount (or retention of the waived amount, if payment of such amount occurs before the stockholder vote) is contingent upon the approval by the holders of more than 75% of the outstanding voting shares of the corporation undergoing the change in control, excluding shares held by the recipient and certain stockholders related to the recipient; and

 

   

such stockholder approval is obtained.

The merger will constitute a change in control of BRMR for purposes of Section 280G of the Code.

BRMR has entered into various compensatory arrangements with its officers and other employees, including John K. Reinhart, BRMR’s President and Chief Executive Officer, Michael Koy, BRMR’s Executive Vice President and Chief Financial Officer, and Paul M. Johnston, BRMR’s Senior Vice President and General Counsel (referred to collectively as the “280G Officers”), each of whom is a disqualified individual under Section 280G of the Code. Under certain of these arrangements, which are described below under “—Description of the BRMR 280G Payments,” the 280G Officers are eligible to receive or may be eligible to receive certain payments and benefits upon or following the consummation of the merger that could be parachute payments in an amount equal to or in excess of their respective Safe Harbor Thresholds. Each of the 280G Officers intends to

 

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enter into a waiver agreement with BRMR (referred to as the “Waiver Agreements”) pursuant to which he will waive any and all right or entitlement to certain payments or benefits to the extent that any portion of such payment or benefits, either individually or in the aggregate, together with any other compensation and benefits being received in connection with the merger or the other transactions contemplated by the merger agreement, would exceed an amount equal to his Safe Harbor Threshold minus $1.00, unless approved by the holders of more than 75% of the outstanding shares of BRMR common stock (excluding, with respect to each 280G Officer, shares owned by such 280G Officer or certain related persons).

The “BRMR 280G payments,” which BRMR is seeking consent of its stockholders to approve, are the payments and benefits waived by the 280G Officers pursuant to the Waiver Agreements.

Description of the BRMR 280G Payments

Set forth below are descriptions of the potential payments and benefits to the 280G Officers that could, individually or in the aggregate, constitute parachute payments, the estimated values of such payments determined in accordance with Section 280G of the Code and certain assumptions in connection therewith. The following information assumes that (i) the closing of the merger will occur on November 15, 2018 and (ii) the closing price of the Eclipse common stock on the NYSE on the closing date is $1.25 (without taking into account the Eclipse reverse stock split). For additional information regarding the equity awards and severance arrangements described below, see “Management of Eclipse Upon Consummation of the Merger—Certain Information Regarding Executive Officers and Directors of BRMR—Executive Compensation.”

BRMR Restricted Stock Units

Each outstanding BRMR RSU will vest in full at the effective time of the merger. Each BRMR RSU is the equivalent of one share of BRMR common stock. Except with respect to certain BRMR RSUs granted to directors of BRMR, each holder of outstanding BRMR RSUs will be entitled to elect, no later than five business days prior to the closing date, whether to receive in the merger for such BRMR RSUs (i) the merger consideration (including cash in lieu of fractional shares) for each share of BRMR common stock subject to such holder’s BRMR RSUs, (ii) cash equal to the product of (A) the number of shares of BRMR common stock subject to such holder’s BRMR RSUs multiplied by (B) (1) the closing price of Eclipse common stock on the NYSE on the closing date multiplied by (2) the exchange ratio, or (iii) a combination thereof, subject to applicable withholding taxes as provided in the merger agreement and the applicable award agreement.

Of the 280G Officers, only Mr. Johnston is a holder of BRMR RSUs. He was awarded 75,447 BRMR RSUs, which converts to a value of $417,401, based on the assumptions described above. That amount is included in the calculations of the estimated BRMR 280G payments as reflected in the tables below.

BRMR Performance Interest Awards

Each holder of a BRMR PIA will receive, as a result of the merger in respect of such holder’s BRMR PIA, the merger consideration (including cash in lieu of fractional shares) for a number of shares of BRMR common stock equal to (i) the “Performance Interest Stock Value” (as defined in and determined by the BRMR board under the applicable award agreement governing such BRMR PIA) divided by (ii) (A) the closing price of Eclipse common stock on the NYSE on the closing date multiplied by (B) the exchange ratio.

Each 280G Officer has been awarded a BRMR PIA, which is an interest (expressed as a percentage and based on the attainment of certain levels of “Exit Value” of BRMR) in the “Exit Value” of BRMR (as defined in the award agreements) upon a change in control (the merger). Based on the BRMR board’s determination of the Exit Value, the values of the payments to be made (in the form of Eclipse common stock) in respect of the BRMR PIAs for Messrs. Reinhart, Koy and Johnston are $4,643,288, $1,409,724 and $592,560, respectively. Such amounts are included in the calculations of the estimated BRMR 280G payments as reflected in the tables below.

BRMR Restricted Stock

Each outstanding share of BRMR restricted stock will vest in full at the effective time of the merger, and the holders thereof will be entitled to receive the merger consideration (including cash in lieu of fractional shares) for

 

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such shares of BRMR restricted stock. Messrs. Reinhart and Koy were originally awarded 250,270 and 125,761 shares of BRMR restricted stock, respectively. Of the shares of BRMR restricted stock awarded to Mr. Reinhart, he will vest in 83,424 shares at the effective time of the merger, having previously fully vested in 166,846 shares. Mr. Reinhart’s remaining 83,424 shares of BRMR restricted stock are otherwise scheduled to vest on September 6, 2019. Of the shares of BRMR restricted stock awarded to Mr. Koy, he will vest in 41,921 shares at the effective time of the merger, having previously fully vested in 83,840 shares. Mr. Koy’s remaining 41,921 shares of BRMR restricted stock are otherwise scheduled to vest on October 31, 2019.

The values, as calculated in accordance with Section 280G of the Code and based on the assumptions described above, with respect to Mr. Reinhart’s and Mr. Koy’s vesting early in their BRMR restricted stock because of the merger are $52,188 and $31,869 for Mr. Reinhart and Mr. Koy, respectively, and such amounts are included in the calculations of the estimated BRMR 280G payments as reflected in the tables below.

Potential Severance Payments

Each 280G Officer is party to an employment agreement with BRMR providing for a severance payment upon a 280G Officer’s termination of employment under certain circumstances upon or within twelve months after the closing of the merger. Under such circumstances, Mr. Reinhart is entitled to a lump sum cash payment equal to the sum of (i) two times his base salary and (ii) the product of (A) his target annual bonus for the calendar year in which such termination of employment occurs (calculated at 100% of base salary) and (B) a fraction, in which the numerator is the number of days Mr. Reinhart was an employee of the BRMR in the calendar year in which such termination of employment occurred and the denominator is 365. Under such circumstances, Mr. Johnston is entitled to a lump sum cash payment equal to the sum of (i) 50% of his base salary and (ii) an amount equal to 50% of his target annual bonus for the calendar year in which termination of employment occurs (calculated at 45% of base salary). The values of Messrs. Reinhart’s and Johnston’s severance payments that could potentially be paid within twelve months after the merger are $1,330,816 and $186,688, respectively, based on the assumptions described above, and such amounts are included in the calculations of the estimated BRMR 280G payments as reflected in the tables below. For purposes of calculating the estimated BRMR 280G payments, these values also assume that Messrs. Reinhart’s and Johnston’s employment will be terminated as of the closing date of the merger. It is expected that Messrs. Reinhart and Johnston will become executive officers of Eclipse upon closing of the merger and, accordingly, that they are unlikely to receive the potential severance payments. Mr. Koy is voluntarily terminating his employment with BRMR immediately prior to the closing of the merger and will not be entitled to any severance benefit.

Accelerated 2018 Performance Bonus

Annual performance bonuses for BRMR employees are typically paid by BRMR prior to the end of March in the year following the calendar year in which the bonus is earned. For the 2018 annual performance bonuses for certain executive officers of BRMR, including the 280G Officers, the compensation committee of the BRMR board has determined (i) the amounts of such bonuses, based on the executive officers’ target bonuses and the criteria established by the compensation committee earlier in the year, and (ii) that such bonuses will be paid at closing of the merger. The values to the 280G Officers of receiving the 2018 annual performance bonuses prior to the time such bonuses would normally be paid are $6,018, $3,011 and $1,536 for Messrs. Reinhart, Koy and Johnston, respectively, based on the assumptions described above. These values are included in the calculations of the estimated BRMR 280G payments as reflected in the tables below.

 

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Aggregate Potential Payments

The table below indicates, for each of the 280G Officers, the aggregate estimated amount of the potential payments described above that are included in the calculation of the estimated BRMR 280G payments.

 

     John Reinhart      Michael Koy      Paul Johnston  

BRMR Restricted Stock Units

     —          —        $ 417,401  

BRMR Performance Interest Awards

   $ 4,643,288      $ 1,409,724        592,560  

BRMR Restricted Stock

     52,188        31,869        —    

Potential Severance Payments

     1,330,816        —          186,688  

Accelerated 2018 Performance Bonus

     6,018        3,011        1,536  
  

 

 

    

 

 

    

 

 

 

Aggregate Potential Payments

   $ 6,032,310      $ 1,444,604      $ 1,198,185  
  

 

 

    

 

 

    

 

 

 

BRMR 280G Payments—Waived Payments and Benefits under the Waiver Agreements

The table below indicates, for each of the 280G Officers, the estimated amount of his BRMR 280G payments, which are the payments and benefits waived under his Waiver Agreement.

 

     John Reinhart      Michael Koy      Paul Johnston  

Aggregate Potential Payments

   $ 6,032,310    $ 1,444,604    $ 1,198,185

Safe Harbor Threshold, plus $1.00

     (2,491,078      (1,508,388      (1,123,847
  

 

 

    

 

 

    

 

 

 

BRMR 280G Payments—Waived Payments and Benefits

   $ 3,541,232      —        $ 74,338  
  

 

 

    

 

 

    

 

 

 

The amounts set forth above are based upon estimates and assumptions relating to the determination of the aggregate potential payments and the BRMR 280G payments. Although BRMR believes that the estimates and assumptions used to determine these amounts are reasonable, the actual amounts and values of these payments may be greater (or less) than the amounts set forth in the tables above. This is why Mr. Koy, even though it appears from the table above that he has no reason to sign a Waiver Agreement, intends to enter into a Waiver Agreement. If the BRMR 280G payments are approved by the requisite consent of the BRMR stockholders, such payments will have been approved regardless of the actual amounts and values of those payments.

Other members of the management team of BRMR, not individually listed above, are receiving payments similar to some, but not all, of the payments listed above. Their aggregate payments are significantly below their respective Safe Harbor Thresholds, and therefore are not “parachute payments” under Section 280G of the Code.

Consent Required

Under Section 280G of the Code, approval of the BRMR 280G payments requires, with respect to each of the 280G Officers, consent of the holders as of the record date of more than 75% of the outstanding shares of BRMR common stock, excluding those shares held or constructively owned by the 280G Officers. The BRMR voting agreement does not require the BRMR stockholders party thereto to consent to or vote in favor of approval of the BRMR 280G payments.

Action by written consent of the BRMR stockholders to approve the BRMR 280G payments is separate from their action by written consent to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, which adoption and approval is not conditioned upon the approval of the BRMR 280G payments.

If the BRMR stockholders do not approve the BRMR 280G payments, the 280G Officers will have forfeited their rights to receive the waived BRMR 280G payments. Regardless of whether the BRMR stockholders approve or do not approve the BRMR 280G payments, each of the 280G Officers will be entitled to receive the benefits they are otherwise entitled to receive, other than the waived BRMR 280G payments.

 

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Recommendation of the BRMR Board

The BRMR board believes that the payments and benefits the 280G Officers are eligible to receive or may be eligible to receive upon or following the consummation of the merger represent reasonable and appropriate compensation for the 280G Officers given their performance and the circumstances of the merger. In that regard, the BRMR board has noted that:

 

   

the compensation arrangements under which the BRMR 280G payments will or may be made have been in place for more than two years, in the case of Messrs. Reinhart and Koy, and were intentionally structured to incentivize BRMR’s executive officers to execute a transaction that would provide enhanced value and liquidity for BRMR’s stockholders;

 

   

the BRMR board has not authorized any additional bonuses or other one-time compensation for BRMR’s executive officers in connection with the merger;

 

   

the greatest portion of the BRMR 280G payments will be received in the form of Eclipse common stock, and it is expected that, in the case of Mr. Reinhart and Mr. Johnston, a portion of the BRMR 280G payments, consisting of the potential severance payments (which, in the case of Mr. Reinhart, is a substantial portion of his BRMR 280G payments), is unlikely to be paid; and

 

   

none of BRMR or its stockholders would receive a tax deduction or other economic benefit as a result of the payment by the 280G Officers of the excise tax under Section 280G of the Code.

Accordingly, the BRMR board unanimously recommends that the BRMR stockholders execute and deliver written consents to approve the BRMR 280G payments.

Record Date

The record date for the determination of BRMR stockholders entitled to execute and return written consents with respect to the consent solicitation contemplated by this consent solicitation statement/information statement/prospectus is                 , 2018.

Shares Entitled to Consent

Only BRMR stockholders of record at the close of business on the record date of                 , 2018 will be entitled to execute and return written consents. Shares of BRMR common stock held by BRMR as treasury shares will not be entitled to vote.

As of the close of business on the record date, there were 50,901,282 shares of BRMR common stock outstanding and with respect to which the holders are entitled to execute and return written consents. Each holder of BRMR common stock is entitled to one vote for each share of BRMR common stock owned as of the close of business on the record date.

Drag Transaction Under BRMR Stockholders Agreement

The BRMR stockholders agreement was entered into in connection with BRMR’s emergence from bankruptcy in May 2016 by BRMR and all of its stockholders upon its emergence from bankruptcy. The BRMR stockholders agreement contains restrictions on transfer of shares of BRMR common stock that, among other matters, require any transferee of shares of BRMR common stock to execute and deliver to BRMR a joinder agreement pursuant to which the transferee agrees to be bound by the terms and provisions of the BRMR stockholders agreement. The agreement provides that any transfer in violation of the transfer restrictions shall be null and void ab initio and of no force or effect. Additionally, the BRMR certificate of incorporation provides that, to the fullest extent permitted by law, every holder of shares of BRMR common stock shall be subject to, and shall be deemed to be bound by, the BRMR stockholders agreement at such time as such holder receives shares of BRMR common stock, regardless of whether such holder has executed the BRMR stockholders agreement or a counterpart thereof. Accordingly, the BRMR stockholders agreement, including the provisions related to drag transactions, is binding on all holders of shares of BRMR common stock.

 

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Under the BRMR stockholders agreement, a “drag-eligible transaction” includes a transaction or series of related transactions that results in 100% of the issued and outstanding shares of BRMR common stock being owned by an unaffiliated person (as defined in the BRMR stockholders agreement), including by way of a merger. Because the merger will result in Eclipse owning 100% of the issued and outstanding shares of BRMR common stock and Eclipse is an unaffiliated person, the merger constitutes a drag-eligible transaction.

The BRMR stockholders agreement provides that, if holders of more than 66 23% of the outstanding shares of BRMR common stock propose to transfer shares of BRMR common stock in a transaction that would constitute a drag-eligible transaction, then, at the request of such holders (referred to as the “drag-transferring holders”), each other holder of shares of BRMR common stock (referred to as the “selling holders”) shall be required to sell all shares of BRMR common stock owned by it, subject to limited exceptions that are inapplicable to the merger. Any such proposed drag-eligible transaction constitutes a “drag transaction” under the BRMR stockholders agreement if (i) the consideration received by the selling holders consists solely of cash and/or marketable securities (which includes securities that are listed on a national securities exchange) and is in the same form and amount of consideration per share of BRMR common stock to be received by the drag-transferring holders, and (ii) the terms and conditions of the sale by the selling holders are the same as those upon which the drag-transferring holders sell their shares. Based on the nature of the merger consideration (i.e., solely marketable securities in the form of Eclipse common stock and cash in lieu of fractional shares) and the terms of the merger providing that all BRMR stockholders will receive the same consideration per share of BRMR common stock, the merger will constitute a drag transaction if the holders of more than 66 23% of the outstanding shares of BRMR common stock propose to transfers their shares of common stock in the merger and request that the other holders of BRMR common stock transfer their shares in the merger.

In the BRMR voting agreement, BRMR stockholders who beneficially own approximately 60.3% of the outstanding shares of BRMR common stock have agreed to take all actions necessary to cause the merger to be a drag transaction, in addition to their agreement to deliver written consents adopting the merger agreement and approving the merger and the other transactions contemplated by the merger agreement. The form of written consent these BRMR stockholders will be required to execute and deliver (as attached to the BRMR voting agreement) includes a confirmation that the BRMR stockholders propose to transfer their shares of BRMR common stock in the merger and a request that each other holder of shares of BRMR common stock be required to sell their shares in the merger. Accordingly, if BRMR receives similar consents from the holders of an additional approximately 6.4% of the outstanding shares of BRMR common stock, the merger will constitute a drag transaction. Accordingly, BRMR believes that it is highly likely that the merger will constitute a drag transaction, with the consequences described below.

Under the terms of the BRMR stockholders agreement, if the merger constitutes a drag transaction, the selling holders:

 

   

will be required to vote (including by written consent) their shares of BRMR common stock in favor of the merger;

 

   

will be prohibited from raising any objection to the merger or the process pursuant to which it was arranged;

 

   

will be required to execute and deliver certain documentation in connection with, and take certain other actions in furtherance of, the merger; and

 

   

will be required to waive and refrain from exercising (and will be deemed to have irrevocably waived) any appraisal, dissenters’ or similar rights with respect to the merger.

If the merger constitutes a drag transaction, whether any selling holder complies with its obligations to consent in favor of the merger, execute related documentation or take other actions in furtherance of the merger will have no effect on the consummation of the merger or the amount and nature of the consideration the selling holders

 

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will be entitled to receive in the merger. Accordingly, as a practical matter, the primary consequences to the selling holders of the merger constituting a drag transaction will be that they:

 

   

will not be entitled to exercise appraisal rights under Section 262 of the DGCL; and

 

   

will be prohibited from raising any objection to the merger or the process pursuant to which it was arranged.

Notice of Proposed Drag Transaction

The BRMR stockholders agreement requires BRMR to provide at least 20 calendar days’ prior written notice to each selling holder of any proposed drag transaction, specifying the consideration to be paid by the purchaser, the identity of the purchaser and the material terms of the drag transaction. This consent solicitation statement/information statement/prospectus constitutes notice of the merger as a proposed drag transaction. BRMR will provide a subsequent notice to the BRMR stockholders when and if it receives written consents and related requests from holders of BRMR common stock sufficient to cause the merger to be a drag transaction.

Consent by BRMR Directors and Executive Officers

At the close of business on the record date, BRMR’s directors and executive officers beneficially owned and had the right to vote 484,811 shares of BRMR common stock, representing less than 1.0% of the shares of BRMR common stock outstanding on the record date. It is expected that BRMR’s directors and executive officers will (i) consent to the adoption of the merger agreement and the approval of the merger and the other transactions contemplated by the merger agreement and to the approval of the BRMR 280G payments and (ii) join the parties to the BRMR voting agreement in seeking to cause the merger to be a drag transaction under the BRMR stockholders agreement. However, no director or executive officer has entered into any agreement obligating him or her to take such actions. Any such consent by the 280G Officers to the approval of the BRMR 280G payments will not count toward the required approval of their respective BRMR 280G payments.

How to Return Your Written Consent

Holders of shares of BRMR common stock as of the close of business on the record date should complete, date, and sign the written consent furnished with this consent solicitation statement/information statement/prospectus and promptly return it to BRMR by hand delivery or mail to Blue Ridge Mountain Resources, Inc., 122 West John Carpenter Freeway, Suite 300, Irving, Texas 75039, Attention: Frank E. Day, Vice President and Corporate Counsel.

Deadline for Returning Written Consents

BRMR has set 5:00 p.m., Irving, Texas time, on                 , 2018 as the targeted final date for the receipt of written consents. BRMR reserves the right to extend the final date for the receipt of written consents beyond                 , 2018 for any reason in its sole discretion. Among other reasons, BRMR may extend the final date for receipt of written consents if necessary in order to receive written consents and requests from holders of shares of BRMR common stock sufficient to cause the merger to be a drag transaction under the BRMR stockholders agreement as described above or to receive written consents from the holders of shares of BRMR common stock sufficient to approve the BRMR 280G payments. Any such extension may be made without notice to the BRMR stockholders, although BRMR currently expects that it would issue a press release or other public communication notifying the BRMR stockholders of any such extension.

In addition, BRMR reserves the right to conclude the consent solicitation prior to                 , 2018 if, prior to that date, BRMR has received written consents from holders of shares of BRMR common stock sufficient to (i) adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, (ii) cause the merger to be a drag transaction under the BRMR stockholders agreement and (iii) approve the BRMR 280G payments. Any such early conclusion of the consent solicitation may be made without notice to the BRMR stockholders, although BRMR currently expects that it would issue a press release or other public communication notifying the BRMR stockholders of any such early conclusion.

 

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Written Consents Not Returned

If you are a BRMR stockholder as of the close of business on the record date and you do not execute and return a written consent, your shares of BRMR common stock will not be voted with respect to the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement or to the approval of the BRMR 280G payments. Accordingly, failure to execute and return a written consent effectively will constitute a vote against adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and against approval of the BRMR 280G payments.

Elections on Written Consents; Written Consents Without Elections

The written consent accompanying this consent solicitation statement/information statement/prospectus provides the opportunity to elect to consent separately in favor of or against each of two matters as to which BRMR is soliciting consents (i.e., (1) adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement, and (2) approval of the BRMR 280G payments). Accordingly, you may execute a written consent electing to consent (i) in favor of both matters, (ii) against both matters or (iii) in favor one matter and against the other matter.

If you execute and return your written consent but do not make a specific election with respect to one or both of the matters as to which BRMR is soliciting consents, you will be deemed to have elected to consent in favor of each matter for which you do not make a specific election.

Revocation of Consent

After you execute and return your written consent, except as described below with respect to parties to the BRMR voting agreement, you may revoke your written consent or change your election with respect to either matter (or both matters) as to which BRMR is soliciting consents at any time before BRMR receives written consents from holders of shares of BRMR common stock sufficient to approve the applicable matter. Once BRMR has received written consents from holders of shares of BRMR common stock sufficient to approve a matter, consents with respect to that matter may not be revoked and elections with respect to that matter may not be changed. Because the delivery of the written consents by the BRMR stockholders party to the BRMR stockholders agreement will be sufficient to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement, you will not be able to revoke your consent or change your election with respect to that matter after the delivery of written consents by those BRMR stockholders. Those BRMR stockholders have agreed, subject to the terms of the BRMR voting agreement, to execute and return such written consents within one business day after both the registration statement of which this consent solicitation statement/information statement/prospectus forms a part becomes effective under the Securities Act and this consent solicitation statement/information statement/prospectus has been delivered to such BRMR stockholders.

If you are a BRMR stockholder that is a party to the BRMR voting agreement, your consent to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement will be irrevocable, but you may revoke your consent or change your election with respect to approval of the BRMR 280G payments as described above.

At any time at which you are permitted to revoke your consent or change your election, you can do so by delivering a written notice stating that you revoke your consent or delivering a new written consent with a later date, in either case to Blue Ridge Mountain Resources, Inc., 122 West John Carpenter Freeway, Suite 300, Irving, Texas 75039, Attention: Frank E. Day, Vice President and Corporate Counsel.

Solicitation of Consents

This consent solicitation statement/prospectus is furnished in connection with the solicitation of written consents by the BRMR board.

 

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BRMR will bear all costs and expenses in connection with the solicitation of written consents, including the charges of brokerage houses and other custodians, nominees, or fiduciaries for forwarding documents to security owners. Written consents may also be solicited by certain of BRMR’s directors, officers and employees by telephone, electronic mail, letter, facsimile, or in person, but no additional compensation will be paid to them (other than reasonable out-of-pocket expenses).

Stockholders Should Not Send Stock Certificates With Their Written Consents

A letter of transmittal and instructions for the surrender of BRMR stock certificates or book entry shares will be mailed to the BRMR stockholders shortly after the effective time of the merger.

BRMR Stockholder Account Maintenance

BRMR’s transfer agent is American Stock Transfer and Trust Company, LLC. All communications concerning accounts of BRMR stockholders of record, including address changes, name changes, inquiries as to requirements to transfer shares of BRMR common stock and similar issues, can be handled by contacting American Stock Transfer and Trust Company, LLC at 6201 15th Avenue, Brooklyn, New York 11219 or calling toll-free at (800) 937-5449.

 

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THE MERGER

This discussion of the merger is qualified in its entirety by reference to the merger agreement, which is attached to this consent solicitation statement/information statement/prospectus as Annex A and incorporated by reference herein in its entirety. You should read the entire merger agreement carefully as it is the legal document that governs the merger.

Transaction Structure

At the effective time of the merger, Merger Sub will merge with and into BRMR. As a result of the merger, the separate corporate existence of Merger Sub will cease, and BRMR will continue as the surviving corporation in the merger and as a wholly owned subsidiary of Eclipse.

Consideration to BRMR Stockholders

As a result of the merger, each eligible share of BRMR common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive 0.29506 of a share of Eclipse common stock, subject to adjustment as specified in the merger agreement (the merger consideration), after giving effect to the Eclipse reverse stock split.

BRMR stockholders will not be entitled to receive any fractional shares of Eclipse common stock in the merger, and no BRMR stockholders will be entitled to dividends, voting rights or any other rights in respect of any fractional shares of Eclipse common stock. BRMR stockholders that would have otherwise been entitled to receive a fractional share of Eclipse common stock will instead be entitled to receive, in lieu of fractional shares, an amount in cash, without interest, equal to the product of the volume weighted average price of Eclipse common stock for the five consecutive trading days immediately prior to the closing date as reported by Bloomberg, L.P. (adjusted to give effect to the Eclipse reverse stock split), multiplied by the fraction of a share of Eclipse common stock to which the holder would otherwise be entitled.

Background of the Merger

Following BRMR’s emergence from bankruptcy in May 2016, BRMR’s management and the BRMR board regularly reviewed BRMR’s strategic plan, considered a variety of transactions to enhance value for BRMR and its stockholders, including acquisitions and divestitures, joint ventures and other similar transactions, and discussed potential transactions and opportunities with potential transaction counterparties and investment banking firms. However, BRMR’s entry into the merger agreement with Eclipse was not the product of a formal process to identify strategic alternatives for BRMR.

In October 2017, a subsidiary of Eclipse and a subsidiary of BRMR entered into a joint venture for the development of certain oil and gas properties in which both subsidiaries owned an interest. The negotiations regarding this joint venture did not involve discussions regarding a merger or other business combination between Eclipse and BRMR, and no such discussions otherwise occurred between the parties prior to the contacts described below.

In early 2018, the Eclipse board began to have discussions with Eclipse management about initiating a process to identify strategic alternatives for Eclipse. During this time, Eclipse board members approached Jefferies as a potential financial advisor to assist the Eclipse board in the review of strategic alternatives. Jefferies was selected by the Eclipse board because of its investment banking expertise in the oil and gas sector, its demonstrated transactional success and its institutional knowledge of Eclipse due to past strategic engagements. The Eclipse board and management team requested that Jefferies provide its views on a potential process for strategic alternatives at an Eclipse board meeting to be held in early March 2018.

 

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On March 7, 2018, at a meeting of the Eclipse board, representatives of Jefferies discussed with the Eclipse board a potential process by which the Eclipse board could identify and evaluate strategic alternatives for Eclipse, including a potential sale or merger of Eclipse to or with a third party, a potential acquisition of assets or the equity of a third party by Eclipse, or a strategy of continuing to execute a stand-alone business plan. The Eclipse board, together with the representatives of Jefferies, also discussed that the process might be aided if Eclipse were to publicly announce that it was undertaking a strategic review process in order to facilitate dialogue with a wide variety of counterparties. After discussion, the Eclipse board approved moving forward with the strategic review process.

On March 26, 2018, the Eclipse board approved the engagement of Jefferies as Eclipse’s financial advisor in connection with the strategic review process, and Eclipse executed an engagement letter with Jefferies. Additionally, because the Eclipse board determined that it was possible that the potential counterparties to a strategic transaction might include affiliates of EnCap and the EnCap Entities owned a majority of the outstanding shares of Eclipse common stock, the Eclipse board determined that it would be more efficient, advisable and in the best interests of Eclipse and its stockholders for the Eclipse board to appoint a committee of directors who are not affiliated with and are independent from EnCap to oversee the process of reviewing strategic alternatives. Accordingly, on that date, the Eclipse board established a committee comprised of Randall M. Albert, Richard D. Paterson and Joseph C. Winkler III (which we refer to as the “Eclipse Transaction Committee”), who were each determined by the Eclipse board to be independent of EnCap, and delegated to the Eclipse Transaction Committee, among other things, the power and authority to (i) review strategic alternatives available to Eclipse, including a potential strategic transaction, (ii) establish, approve, modify, monitor and direct the process and procedures related to the negotiation, review and evaluation of any potential strategic transaction, (iii) review, evaluate, investigate and pursue and negotiate the terms and conditions of a potential strategic transaction, and (iv) retain and compensate advisors, including its own legal and financial advisors.

On March 26, 2018, Eclipse issued a press release announcing that the Eclipse board had initiated a process to evaluate and consider a full range of strategic alternatives for Eclipse and that Eclipse had retained Jefferies as its financial advisor.

Following the issuance of the press release, at the direction of Eclipse management, Jefferies contacted potential counterparties, including 27 public companies, 26 financial buyers, 3 international buyers and 31 privately held strategic buyers, to gauge interest in pursuing a potential transaction with Eclipse. These potential counterparties were identified by the Eclipse board and Eclipse management, with input from Jefferies, and included parties who may be interested in a variety of different transaction types, as well as parties who contacted Eclipse or its advisors following the issuance of the press release.

As part of Jefferies’ outreach to potential counterparties, a representative of Jefferies, on behalf of Eclipse, contacted John Reinhart, BRMR’s President and Chief Executive Officer, by email on March 26, 2018 after the issuance of Eclipse’s press release on that day. The email, which was similar to communications sent generally to other potential counterparties, indicated that Jefferies, on behalf of Eclipse, desired to discuss Eclipse and its goals in more detail and requested a telephone call for that purpose. By reply email later that day, Mr. Reinhart indicated that BRMR would be interested in learning more about the goals of Eclipse’s process. Through subsequent emails, a call was scheduled for March 29, 2018.

At a meeting of the BRMR board on March 28, 2018, Mr. Reinhart advised the BRMR board that Eclipse had engaged Jefferies as its financial advisor in connection with Eclipse’s exploration of strategic alternatives and that BRMR’s management believed that a business combination or other strategic transaction with Eclipse could be value enhancing to BRMR. Mr. Reinhart informed the BRMR board that BRMR’s management intended to discuss this matter with Jefferies and would report back to the BRMR board regarding any such discussions.

On March 29, 2018, representatives of Jefferies, Mr. Reinhart and Michael Koy, BRMR’s Executive Vice President and Chief Financial Officer, held a telephone call during which representatives of Jefferies discussed Eclipse’s process, including the objectives and timeline. Following the call, a representative of Jefferies, on behalf of Eclipse, sent a form of confidentiality agreement to Mr. Reinhart and Mr. Koy.

 

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Later that day, Mr. Reinhart provided an update on the conversation with representatives of Jefferies to the BRMR board by email.

On April 3, 2018, the Eclipse Transaction Committee met to receive an update from representatives of Jefferies and Eclipse management regarding the status of the strategic process. At the meeting, the Eclipse Transaction Committee retained Potter Anderson & Corroon LLP (“Potter Anderson”) as its legal advisor, and reviewed and reaffirmed the independence from EnCap of the members of the Eclipse Transaction Committee.

Over the next several weeks, Eclipse negotiated one-way confidentiality agreements with 17 potential counterparties, including BRMR, pursuant to which the counterparties agreed to maintain the confidentiality of certain Eclipse information. At the request of the Eclipse Transaction Committee, these negotiations were conducted on behalf of Eclipse primarily by Christopher Hulburt, Eclipse’s Executive Vice President, Secretary and General Counsel, in cooperation with Potter Anderson. On April 13, 2018, BRMR executed a one-way confidentiality agreement with Eclipse.

On the evening of April 16, 2018, Mr. Reinhart called Oleg Tolmachev, Eclipse’s Executive Vice President and Chief Operating Officer, to discuss drilling activities for the existing joint venture between Eclipse and BRMR. Mr. Reinhart and Mr. Tolmachev had previously worked together at Chesapeake Energy Corporation. During the conversation, Mr. Reinhart mentioned the ongoing strategic process undertaken by Eclipse and also stated that he believed BRMR and Eclipse should explore a merger. Mr. Tolmachev told Mr. Reinhart that he would pass the suggestion on to Eclipse’s Chairman, President and Chief Executive Officer, Benjamin Hulburt. After the call, Mr. Reinhart emailed a copy of BRMR’s then-current investor materials to Mr. Tolmachev, which Mr. Tolmachev then passed on to Benjamin Hulburt.

On April 17, 2018, in order to permit Eclipse to begin possible due diligence investigations of BRMR, a draft of a mutual non-disclosure agreement was sent to BRMR.

On April 20, 2018, Eclipse and BRMR management conducted a conference call during which Mr. Reinhart briefly presented the BRMR investor presentation and discussed some of the advantages of a potential merger between Eclipse and BRMR. During the call, Eclipse and BRMR management scheduled an in-person meeting to be held in Jefferies’ Houston, Texas offices on May 15, 2018.

Over the next several days, the parties continued to negotiate the terms of the mutual non-disclosure agreement.

At a telephonic meeting of the BRMR board on April 24, 2018, Mr. Reinhart updated the BRMR board on BRMR management’s prior discussions with Eclipse and Jefferies and plans to continue those discussions.

On April 25, 2018, management of BRMR and Eclipse, as well as representatives of Jefferies, held a meeting at Jefferies’ Houston, Texas offices. At this meeting, Eclipse management gave a presentation regarding Eclipse to BRMR’s management.

On May 1, 2018, Eclipse and BRMR executed the mutual non-disclosure agreement, which included mutual standstill provisions.

BRMR management continued to review evaluation material provided by Eclipse in the virtual data room Eclipse had established for potential counterparties. Other potential counterparties also continued to review materials in Eclipse’s virtual data room, and Eclipse management continued to make management presentations to other potential counterparties.

On May 2, 2018, at the direction of Eclipse, representatives of Jefferies provided potential counterparties with a bid instruction letter that included an initial diligence request list and stated that written proposals must be submitted by potential counterparties to Jefferies, on behalf of Eclipse, by June 15, 2018.

 

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On May 11, 2018, BRMR management met with representatives of Barclays to discuss the potential engagement of Barclays as financial advisor to BRMR in connection with a potential transaction with Eclipse and various matters related to a potential transaction.

On May 15, 2018, Eclipse management, representatives of Jefferies, BRMR management and representatives of Barclays met in Jefferies’ Houston, Texas offices. In that meeting, members of BRMR management made a presentation regarding BRMR to Eclipse’s management and advisors.

Over the next several weeks, Eclipse continued to enter into confidentiality agreements with and Eclipse management continued to provide management presentations to other potential counterparties. In total, Eclipse management made presentations to 11 potential counterparties, including BRMR.

At a telephonic meeting of the BRMR board on May 24, 2018, Mr. Reinhart updated the BRMR board on discussions and meetings with Eclipse and Jefferies and the status of the analysis by BRMR’s management and advisors of a potential merger between BRMR and Eclipse. Mr. Reinhart described to the BRMR board the potential benefits of a merger with Eclipse and reviewed with the BRMR board various financial and operational metrics of BRMR and Eclipse. Also at this meeting, Mr. Reinhart noted that BRMR’s management had been working with Barclays on an analysis of a potential merger with Eclipse and intended to formally engage Barclays as BRMR’s financial advisor in connection with a potential transaction with Eclipse. Mr. Reinhart noted that BRMR’s management had engaged with other firms regarding their potentially acting as financial advisor to BRMR and noted the reasons for engaging Barclays, including Barclays’ experience in providing financial advisory services in similar transactions and its expertise in the oil and gas industry. After discussion, the BRMR board concurred with management’s decision to engage Barclays.

On May 30, 2018, members of BRMR management and representatives of Barclays had a call with representatives of Jefferies, acting on behalf of Eclipse, during which BRMR management provided an update on the status of BRMR’s review of Eclipse and related matters.

On June 7, 2018, at a telephonic meeting of the BRMR board, representatives of Barclays made a presentation to the BRMR board regarding a potential merger between BRMR and Eclipse, including Barclays’ preliminary analyses of various financial and operational metrics of BRMR, Eclipse and a pro forma combined company, potential advantages of the merger and potential implied ranges of percentage ownership of a combined company by BRMR and Eclipse stockholders.

On June 14, 2018, the BRMR board met again by telephone to discuss the potential submission to Eclipse of a non-binding indication of interest for a potential merger between BRMR and Eclipse. At this meeting, representatives of Barclays updated the presentation to the BRMR board given at the June 7, 2018 meeting of the BRMR board, and Mr. Reinhart discussed with the BRMR board the terms of the proposed non-binding indication of interest. Following discussion, the BRMR board unanimously approved the submission to Eclipse of a non-binding indication of interest (i) proposing an all-stock merger of BRMR and Eclipse in which shares of BRMR common stock would be exchanged for newly issued shares of Eclipse common stock, resulting in BRMR stockholders owning between 43.0% and 48.0% of the pro forma outstanding equity of Eclipse, and (ii) stating, among other matters, that existing BRMR management would have a significant role in the management of the combined entity and that board representation of the combined entity would be consistent with the level of ownership each stockholder group would have in the combined entity.

On June 15, 2018, BRMR submitted its non-binding indication of interest to Jefferies, on behalf of Eclipse, with the terms approved by the BRMR board, and two other potential counterparties submitted indicative proposals to Jefferies, on behalf of Eclipse. None of the potential counterparties that submitted proposals was an affiliate of EnCap.

On the morning of June 16, 2018, the Eclipse Transaction Committee held a telephonic meeting, with representatives of Eclipse management and representatives of Jefferies in attendance, for an update regarding the proposals received from potential transaction counterparties. During the meeting, the participants discussed that none of the proposals received was from a party that was an affiliate of EnCap.

 

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Later that day, the full Eclipse board met to discuss the proposals received. Representatives of Jefferies reviewed with the Eclipse board a summary of the terms of the proposals received and the identity of the potential counterparties. After discussion among the directors and with counsel, since none of those submitting proposals was an affiliate of EnCap, the Eclipse board determined that it was unnecessary to delegate authority to an independent committee to review and approve potential transactions with any of the potential counterparties that had submitted proposals. Accordingly, the Eclipse board dissolved the Eclipse Transaction Committee.

On June 19, 2018, at the direction of Eclipse, representatives of Jefferies had a call with BRMR management, during which they provided feedback on BRMR’s indication of interest and indicated an expectation that Eclipse would move forward with negotiations with BRMR. The participants on the call also discussed BRMR’s desire to reflect the terms of the potential transaction in a non-binding letter of intent. BRMR believed that a letter of intent would be necessary so that it could approach certain of its significant stockholders to obtain their approval for BRMR to enter into a definitive agreement for the proposed merger, as the entry by BRMR into an agreement for certain matters, including a merger of BRMR, requires the prior approval of the holders of a majority of the outstanding shares of BRMR common stock under the BRMR stockholders agreement. Mr. Reinhart updated the BRMR board on this communication later that day by email.

Eclipse and BRMR, through their respective representatives, sent initial due diligence request lists to one another on June 18, 2018 and June 19, 2018, respectively. Both parties submitted multiple follow-up due diligence requests to other during the due diligence process, which continued throughout the period leading up to the signing of the merger agreement.

On June 21, 2018, the Eclipse board met telephonically to discuss and further evaluate the proposals received in the strategic process.

On June 25, 2018, the Eclipse board met again to further evaluate and discuss the three proposals received. After the Eclipse board’s discussion of each of the proposals with Eclipse management and representatives of Jefferies, the Eclipse board determined that Eclipse should prioritize pursuing the BRMR proposal. Of the three indicative proposals received, the Eclipse board determined that the BRMR proposal provided the highest potential value for the stockholders of Eclipse and the best strategic fit based on, among other things, the proposed relative ownership of the combined company by the Eclipse stockholders and the BRMR stockholders and the exchange ratio implied thereby and the resulting implied valuation of Eclipse, BRMR’s financial metrics, including its current cash flows, its liquidity profile and its acreage positions, which were generally contiguous with and complimentary to many of Eclipse’s acreage positions.

On June 25, 2018, Mr. Reinhart met with members of the Eclipse board, other than Benjamin Hulburt and Christopher Hulburt, at EnCap’s offices in Houston, Texas and then attended a dinner in order for representatives of EnCap and two independent directors of Eclipse to become further acquainted with Mr. Reinhart and his management vision for the combined entity. These discussions centered on alignment on strategy for a combined company and the benefits and synergies a combination could provide, as well as leadership and management of a combined company.

On June 26, 2018, BRMR and Eclipse management and certain members of the Eclipse board met in EnCap’s offices in Houston, Texas to discuss BRMR’s proposal. Representatives of Jefferies and Barclays also attended the meeting. At the meeting, representatives of Eclipse and BRMR and their advisors discussed BRMR’s proposal and negotiated regarding the potential exchange ratio, though no agreement was reached on this point.

At a telephonic meeting of the BRMR board on June 27, 2018, Mr. Reinhart provided an update to the BRMR board on discussions with Eclipse.

On June 28, 2018, Mr. Reinhart and representatives of EnCap held a telephone call on which they further discussed relative valuations of the two companies.

The BRMR board met again by telephone on June 29, 2018. At this meeting, Mr. Reinhart provided a further update on discussions with Eclipse and EnCap, and representatives of Barclays made an updated presentation regarding its analysis of the potential merger.

 

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Also on June 29, 2018, representatives of EnCap had a telephone conversation with Michael Jennings, the Chairman of the BRMR board, and Mr. Reinhart to further discuss various matters related to the potential merger and the pro forma combined company.

On July 2, 2018, BRMR management provided to the BRMR board a proposed draft of a non-binding letter of intent containing more detailed terms of a proposed transaction for the BRMR board’s review and comment.

On July 3, 2018, BRMR sent the draft non-binding letter of intent to Mark Burroughs, a Managing Director of EnCap and a member of the Eclipse board, which Mr. Burroughs forwarded to Eclipse management, representatives of Jefferies and representatives of Norton Rose Fulbright, in its capacity as counsel to Eclipse (“Norton Rose Fulbright”). The non-binding letter of intent proposed that:

 

   

the proposed merger would be structured using an exchange ratio that would result in BRMR stockholders owning 42.5% of the combined entity following the merger;

 

   

at closing of the merger, half of the board of directors of the combined company would be designees of BRMR and the other half would be designees of Eclipse; after one year, one of the BRMR designated directors would resign from the board;

 

   

the merger agreement would contain customary representations, warranties, covenants and conditions for transactions of this type, that the representations and warranties would not survive closing, and that the parties would be obligated to pay mutually agreeable termination fees in certain circumstances in connection with the termination of the merger agreement;

 

   

both EnCap and significant stockholders of BRMR would enter into voting agreements in which they would agree to approve the proposed merger; and

 

   

BRMR would not enter into a merger agreement until it had received the consent of holders of a majority of BRMR’s issued and outstanding shares of common stock, as required under the BRMR stockholders agreement.

The letter of intent also included binding exclusivity provisions that required Eclipse to terminate other negotiations regarding alternative transactions and to negotiate exclusively with BRMR for a specified period following execution of the letter of intent.

Over the next few days, BRMR management, Eclipse management and their respective counsel continued to negotiate the terms of the letter of intent, including the inclusion of exclusivity provisions that would apply to BRMR and proposing that the letter of intent would terminate on August 7, 2018, which would result in the termination of the exclusivity provisions applicable to both parties on such date.

At a telephonic meeting of the BRMR board on July 11, 2018, management of BRMR reviewed with the BRMR board the proposed final terms of the letter of intent. Following discussion, the BRMR board approved BRMR’s entry into the letter of intent.

The Eclipse board met the following morning and also approved the letter of intent. The parties executed the letter of intent later that day.

On July 12, 2018, representatives of Norton Rose Fulbright sent drafts of the merger agreement and the BRMR voting agreement to BRMR and its counsel, Bracewell LLP (“Bracewell”). The draft BRMR voting agreement provided that the BRMR stockholders executing the voting agreement would be required to vote in favor of or provide written consents approving the merger agreement with respect to all of the shares of BRMR common stock owned by such stockholders; provided, however, that if the BRMR board changed its recommendation regarding the merger, such stockholders would only be required to so vote or provide such written consents with respect to shares constituting an aggregate of 35% of the outstanding shares of BRMR common stock.

 

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On July 12, 2018, Mr. Reinhart met with representatives of EnCap to discuss a potential pro forma business plan of the combined company.

On July 13, 2018, BRMR management sent an email to certain of BRMR’s stockholders, each of which beneficially owned more than 5% of the outstanding BRMR common stock and all of which together beneficially owned a majority of the outstanding BRMR common stock, informing these stockholders that BRMR was engaged in discussions regarding a potential transaction that, if pursued, would require approval of the holders of a majority of the outstanding BRMR common stock prior to entry into an agreement for the transaction under the terms of the BRMR stockholders agreement. The email requested that these BRMR stockholders agree to confidentiality obligations with BRMR in order for BRMR to discuss the potential transaction with the stockholders and provide them with related confidential information.

Over the next few days, BRMR management and representatives of Bracewell negotiated with the BRMR stockholders who had been contacted regarding the confidentiality obligations of the stockholders. As the stockholders agreed to confidentiality obligations, BRMR management met individually, either telephonically or in-person, with those stockholders to discuss the potential transaction and seek their written consent for purposes of the BRMR stockholders agreement. Representatives of BRMR also discussed with these stockholders the desire for the stockholders to enter into a voting agreement with Eclipse and BRMR pursuant to which they would agree to vote in favor of, or consent to, the approval of the merger. The meetings took place from July 18, 2018 to July 23, 2018. BRMR received written consents for BRMR’s entry into the merger agreement from the holders of a majority of the outstanding shares of BRMR common stock prior to the execution and delivery of the merger agreement. These consents were limited in scope solely to the entry into the merger agreement and expressly indicated that they did not constitute approval of the merger for purposes of the DGCL or the BRMR stockholders agreement.

During the meetings with BRMR stockholders, certain of the stockholders expressed to representatives of BRMR a desire for significant stockholders of BRMR and EnCap to enter into a lock-up agreement pursuant to which they would agree not to transfer shares of Eclipse common stock for a period of time following the closing of the merger. Representatives of BRMR and its advisors subsequently relayed this request to representatives of Eclipse and its advisors.

On July 24, 2018, Mr. Jennings met with representatives of EnCap to discuss various matters related to the pro forma combined company.

Later that day, representatives of Bracewell sent a revised draft of the merger agreement to Eclipse and its advisors, including Norton Rose Fulbright and Jefferies. The next day, representatives of Bracewell sent a revised draft of the BRMR voting agreement to the same group.

At a meeting of the BRMR board on July 26, 2018, Mr. Reinhart updated the BRMR board on the status of negotiations with Eclipse and discussions with BRMR’s significant stockholders.

On July 28, 2018, representatives of Norton Rose Fulbright sent revised drafts of the merger agreement and the BRMR voting agreement to BRMR and its advisors, including Bracewell and Barclays.

On July 30, 2018, Eclipse management, BRMR management and representatives of their respective counsel, Norton Rose Fulbright and Bracewell, met telephonically to negotiate the terms of the draft merger agreement. Also present at the meeting were representatives of Jefferies and Barclays, as well as Mr. Burroughs and representatives of EnCap’s counsel, Vinson & Elkins. During the negotiations, the parties discussed various terms of the merger agreement, including, without limitation, the relative symmetry, extent and qualifications to the representations and warranties, the terms of the non-solicitation provisions applicable to both Eclipse and BRMR, the conditions precedent to both parties’ obligations to consummate the merger transaction, the termination provisions, the amount of and circumstances under which termination fees would be payable by

 

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either party, and whether Eclipse would effect a reverse stock-split in connection with the closing of the proposed merger. The parties also discussed which stockholders of each party would execute voting agreements, the requirements and timing for such stockholders to execute written consents, and the possibility that the transaction would qualify as a drag transaction under the BRMR stockholders agreement.

While the parties continued to negotiate the terms of the definitive agreements for the proposed merger, Eclipse and BRMR and their respective advisors continued to conduct due diligence investigations of the other party and its operations and assets. As part of this process, each party continued to upload documents and other materials to their respective virtual data rooms.

On the morning of July 31, 2018, the Eclipse board met telephonically to discuss regular business and to receive an update regarding the status of negotiations between Eclipse and BRMR and of Eclipse’s due diligence investigations of BRMR and its assets. In the meeting, representatives of Norton Rose Fulbright updated the Eclipse board regarding the negotiations from the prior day, and Christopher Hulburt updated the Eclipse board regarding the status of Eclipse’s due diligence investigations.

On the afternoon of July 31, 2018, internal legal personnel for Eclipse and BRMR, as well as representatives of their respective counsels, Norton Rose Fulbright and Bracewell, conducted a telephonic meeting to further negotiate open points on the merger agreement. During the call, the parties discussed the extent of and qualifications to the various representations and warranties, especially BRMR’s representations and warranties regarding its oil and gas properties, as well as the provisions of the non-solicitation covenants applicable to Eclipse and the circumstances under which termination fees would be payable by either party. Following the call, representatives of Bracewell distributed a revised draft of the BRMR voting agreement to representatives of Norton Rose Fulbright.

Later that afternoon, Paul Johnston, the Senior Vice President and General Counsel of BRMR, e-mailed representatives of Norton Rose Fulbright to inform them that Mr. Reinhart wanted the attorneys for both sides to stop work on the merger agreement until the parties had better alignment on the open issues in the merger agreement. Mr. Reinhart then telephoned Mr. Burroughs and repeated this desire. On this call, Mr. Burroughs and Mr. Reinhart discussed the open items, including the status of Eclipse’s due diligence investigations of BRMR’s oil and gas properties and the appropriate extent of those investigations. Mr. Burroughs and Mr. Reinhart concluded that the parties would be best served to concentrate on efficiently assisting Eclipse personnel and representatives with completion of those investigations before negotiating further regarding the terms of the merger agreement since the results of those investigations would likely provide a clearer context for further negotiations.

On the afternoon of August 1, 2018, Eclipse management, including Christopher Hulburt and other members of the Eclipse legal and land departments, and BRMR management, including Mr. Johnston, held a telephone call to discuss Eclipse’s “high-priority” open diligence requests regarding title and other oil and gas related matters. Over the next few weeks, representatives of BRMR worked to provide Eclipse personnel with the requested materials, and Eclipse legal and land department personnel worked to review the material provided.

Also on August 1, 2018, Mr. Reinhart provided an update on the status of negotiations to the BRMR board by email.

On August 2, 2018, representatives of Norton Rose Fulbright called representatives of Bracewell to inform them that the terms of the revised BRMR voting agreement distributed by Bracewell on July 31, 2018 were generally acceptable.

On August 3, 2018, Mr. Johnston emailed representatives of Norton Rose Fulbright on behalf of BRMR to request an extension to the exclusivity provisions of the letter of intent, which was at that time scheduled to expire on August 7, 2018.

 

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On August 7, 2018, the Eclipse board met telephonically to receive an update on Eclipse’s due diligence investigations of BRMR and to consider whether to grant an extension to the exclusivity period applicable under the letter of intent. Christopher Hulburt informed the Eclipse board that progress was being made regarding land and title diligence matters, but that additional work was still required. The Eclipse board determined that it would request that BRMR provide a revised draft of the merger agreement before considering whether or not the extension of exclusivity was appropriate. Following the call, Mr. Burroughs contacted Mr. Reinhart to ask him to summarize the main open points remaining to complete negotiations regarding the merger agreement. Later that same day, Mr. Reinhart emailed Mr. Burroughs a summary, which included the extent and qualifications of BRMR’s representations and warranties regarding its material oil and gas properties, the extent of Eclipse’s non-solicitation obligations, whether BRMR’s obligation to consummate the merger should be conditioned upon the percentage of BRMR stockholders that assert appraisal rights, and the circumstances under which BRMR should have to pay a termination fee to Eclipse.

Later that same day, representatives of Norton Rose Fulbright sent to representatives of Bracewell a draft of a form of lock-up agreement that certain stockholders of BRMR and EnCap would be asked to execute in connection with the execution of voting agreements. The lock-up agreement provided that the BRMR stockholders and EnCap would generally not be permitted to engage in transactions in Eclipse common stock for a period of time following the effectiveness of the merger.

On August 8, 2018, representatives of Bracewell sent a revised draft of the merger agreement to Eclipse and its advisors. The revised draft reflected the positions expressed by Mr. Reinhart to Mr. Burroughs the prior day.

On August 9, 2018, representatives of Bracewell and Norton Rose Fulbright conducted a telephone conference to negotiate certain remaining unresolved terms of the merger agreement, including whether BRMR would be entitled to condition its obligation to consummate the merger upon no more than a certain percentage of its stockholders asserting appraisal rights, the amount of each parties’ termination fees and the circumstances under which those fees would be payable, and the extent of Eclipse’s non-solicitation obligations. Eclipse had proposed that the termination fee payable by BRMR in connection with certain events would be $12.0 million, but such fee would be increased to $21.0 million if the termination right was exercised in connection with a BRMR intervening event (as defined in the section entitled “The Merger—No Solicitation; Changes of Recommendation—BRMR: Permitted Changes of Recommendation in Connection with Intervening Events”). Later that afternoon, after discussing with its client, representatives of Bracewell communicated BRMR’s general agreement with the proposed terms, though representatives of Bracewell proposed that the increased termination fee payable by BRMR in the case of a termination associated with a BRMR intervening event should be $18.0 million. Later that evening, representatives of Norton Rose Fulbright sent a revised draft of the merger agreement to BRMR and its advisors, including Bracewell and Barclays. The revised draft included the terms agreed upon earlier by representatives of Bracewell and Norton Rose Fulbright, including that the termination fee associated with a BRMR intervening event would be $18.0 million and also proposing that the expense reimbursement payable to Eclipse if the merger agreement is terminated in certain circumstances should be $3.25 million.

On August 10, 2018, representatives of Bracewell sent a revised draft of the lock-up agreement to representatives of Norton Rose Fulbright. The revised draft proposed reducing the applicable lock-up period from 90 days to 60 days following the effectiveness of the merger. Representatives of Norton Rose Fulbright sent a revised draft of the lock-up agreement back to Bracewell later that same day accepting these terms and reflecting additional minor changes.

On August 13, 2018, representatives of Norton Rose Fulbright and Bracewell conducted a telephone conference to negotiate some remaining items in the merger agreement, including provisions related to the treatment of outstanding BRMR incentive awards, representations and warranty dollar thresholds and certain changes to the interim operating covenants applicable to both companies. Later that evening, representatives of Bracewell sent a revised draft of the merger agreement to representatives of Norton Rose Fulbright reflecting the changes

 

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discussed earlier during the telephone conference. The representatives of Bracewell also stated that, since the merger agreement was likely in substantially final form with no remaining material items to be negotiated, it intended to circulate this draft as well as drafts of the lock-up agreement and voting agreement to certain of BRMR’s significant stockholders for review and approval.

On August 14, 2018, BRMR distributed drafts of the merger agreement, the voting agreement and the lock-up agreement to certain of its significant stockholders, each of which beneficially owned more than 5% of the outstanding shares of BRMR common stock. Over the next week, BRMR management and representatives of Bracewell communicated with these BRMR stockholders and engaged in negotiations regarding the terms of the BRMR voting agreement and the lock-up agreements that would be executed by such stockholders.

On August 17, 2018, the Eclipse board met to receive an update on the status of the proposed transaction. Representatives of Norton Rose Fulbright updated the Eclipse board regarding the material developments regarding the merger agreement, including the general agreement regarding the conditions to closing and the amount of the BRMR termination fee and the circumstances under which it would be payable. Christopher Hulburt and Mr. Tolmachev updated the Eclipse board regarding the status of due diligence investigations. Later that afternoon, representatives of Norton Rose Fulbright and Bracewell exchanged drafts of each party’s disclosure schedules to the merger agreement.

On August 20, 2018, the Eclipse board held a meeting in EnCap’s offices in Houston, Texas. Eclipse management as well as representatives of Jefferies, Norton Rose Fulbright and Vinson & Elkins were also present. During the meeting, representatives of Norton Rose Fulbright updated the Eclipse board regarding events and developments since the prior meeting of the Eclipse board and summarized the material provisions of the merger agreement. Additionally, during the meeting, Eclipse management updated the Eclipse board regarding the findings from their financial and legal due diligence of BRMR, its operations and assets. Finally, during the meeting, representatives of Jefferies discussed with the Eclipse board their preliminary financial analysis of the proposed exchange ratio contemplated in connection with the merger.

Over the next few days, representatives of Norton Rose Fulbright participated in multiple calls with representatives of Bracewell, Mr. Johnston and others to resolve the remaining open issues in the merger agreement, including confirmation of the exchange ratio and interim operating covenants of Eclipse and BRMR. Additionally, representatives of Bracewell and BRMR management, in consultation with representatives of Norton Rose Fulbright and Vinson & Elkins, continued to work with the significant BRMR stockholders to finalize the BRMR voting agreement and the lock-up agreements.

On August 22, 2018, the BRMR board held a telephonic meeting. Representatives of BRMR management, Bracewell and Barclays participated in the meeting. During the meeting, representatives of Bracewell summarized the substantially final terms of the merger agreement, which had previously been provided to the BRMR board. Additionally, representatives of Barclays presented to the BRMR board Barclays’ financial analyses of the exchange ratio set forth in the merger agreement. Following its presentation, upon the request of the BRMR board, Barclays rendered its oral opinion to the BRMR board, which opinion was subsequently confirmed by delivery of a written opinion dated August 22, 2018, to the effect that, based upon and subject to the limitations, qualifications and assumptions set forth therein, as of the date of the opinion, from a financial point of view, the exchange ratio to be offered to BRMR stockholders in the merger was fair to such stockholders. After discussion, the BRMR board unanimously (i) determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to, and in the best interests of, BRMR and its stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the merger, (iii) directed that the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement be submitted to the BRMR stockholders for action thereon, and (iv) resolved to recommend that the BRMR stockholders adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement.

 

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On the evening of August 23, 2018, the parties and their respective advisors resolved the remaining open issues regarding the final terms of the merger agreement. For additional information regarding the final terms of the merger agreement, see the section entitled “The Merger Agreement” beginning on page 133. Additionally, a copy of the final merger agreement is attached as Annex A to this consent solicitation statement/information statement/prospectus.

On August 23, 2018, the Eclipse board held a meeting. Representatives of Eclipse management, Norton Rose Fulbright, Vinson & Elkins and Jefferies attended the meeting. During the meeting, representatives of Norton Rose Fulbright summarized the substantially final terms of the merger agreement, which had previously been provided to the Eclipse board. At this meeting, representatives of Jefferies reviewed with the Eclipse board Jefferies’ financial analyses of the exchange ratio of 4.4259 set forth in the merger agreement and, following discussion thereof, rendered Jefferies’ opinion to the Eclipse board (in its capacity as such) to the effect that, as of August 23, 2018 and based upon and subject to the various assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken as set forth in its opinion, the exchange ratio set forth in the merger agreement was fair, from a financial point of view, to Eclipse. After discussion, the Eclipse board unanimously (i) declared the merger agreement and the transactions contemplated thereby, including the issuance of shares of Eclipse common stock provided for in the merger agreement, to be fair to, and in the best interests of, Eclipse (ii) determined that the merger agreement and the transactions contemplated thereby are approved and declared advisable, (iii) resolved to submit the issuance of the shares of Eclipse common stock issuable under the merger agreement to the Eclipse stockholders (which submission could be accomplished by obtaining a written consent from the majority stockholders of Eclipse), and (iv) resolved to recommend that the stockholders of Eclipse approve the stock issuance. Additionally, the Eclipse board (i) approved the amendment of Eclipse’s certificate of incorporation to approve a 1-for-15 reverse stock-split in connection with the closing of the merger, subject to approval by the Eclipse stockholders, and (ii) resolved to recommend that the stockholders of Eclipse approve such amendment.

On August 24, 2018, representatives of Norton Rose Fulbright and Bracewell exchanged email correspondence and communications with Eclipse and BRMR management to finalize disclosure schedules to the merger agreement.

On August 25, 2018, the parties executed the merger agreement, and certain affiliates of EnCap that are stockholders of Eclipse executed a written consent approving the issuance of the shares of Eclipse common stock under the merger agreement and the amendment to the Eclipse certificate of incorporation to effect the 1-for-15 reverse stock-split in connection with the closing of the merger. Additionally, certain affiliates of EnCap and certain stockholders of BRMR, each of which beneficially owned more than 5% of the outstanding shares of BRMR common stock, executed voting agreements and lock-up agreements.

On August 27, 2018, the parties issued a joint press release announcing the execution of the merger agreement.

The Eclipse Board’s Reasons for the Merger

By unanimous vote, the Eclipse board, at a meeting held on August 23, 2018, (i) determined that the merger agreement and the transactions contemplated thereby, including the Eclipse stock issuance, are fair to, and in the best interests of, Eclipse and its stockholders, (ii) approved and declared advisable the merger agreement and the transactions contemplated thereby, including the Eclipse stock issuance, (iii) directed that the approval of the Eclipse stock issuance be submitted to the Eclipse stockholders for action thereon and (iv) resolved to recommend that the Eclipse stockholders approve the Eclipse stock issuance. On August 25, 2018, the Eclipse stockholders approved, among other matters, the Eclipse stock issuance. See “Eclipse Actions by Written Consent”.

In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement, including the Eclipse stock issuance, the Eclipse board consulted with Eclipse’s senior management,

 

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internal and outside legal counsel and financial advisors. In recommending that Eclipse stockholders approve the Eclipse stock issuance, the Eclipse board also considered a number of factors, including the following factors (not necessarily in order of relative importance) which the Eclipse board viewed as being generally positive or favorable in making its determination, approval and related recommendation:

 

   

Participation in Potential Upside. The Eclipse board considered that, following the merger, Eclipse stockholders would have the opportunity as stockholders to participate in the value of the combined company, including the expected future growth, which the Eclipse board viewed as an important opportunity for Eclipse stockholders from the perspective of maximizing long-term returns.

 

   

Fixed Exchange Ratio. The Eclipse board considered the fact that the merger consideration is a fixed number of shares and will not fluctuate in the event that the trading price of BRMR common stock increases relative to the trading price of Eclipse common stock between the announcement of the merger and the completion of the merger.

 

   

Benefits of a Combined Company. The Eclipse board believed that the company resulting from a combination of Eclipse and BRMR would be well positioned to achieve future growth and generate additional returns for Eclipse’s stockholders, including due to:

 

   

the consolidation of Eclipse’s and BRMR’s contiguous and complementary acreage positions to create a premier Appalachian pure-play and one of the largest Utica focused operators;

 

   

the combined company’s substantial undeveloped acreage with a deep inventory of both wet and dry gas Utica drilling locations along with Marcellus acreage, providing the opportunity for a consolidated drilling program with attractive growth and cash flow potential;

 

   

potential opportunities for accretive acquisitions within the combined company’s operating area;

 

   

the combined company’s solid financial position with ample expected near-term liquidity to fund development, improved leverage metrics and no near-term debt maturities;

 

   

anticipated enhanced capital efficiency and operating margins on a per unit basis and significant annual general and administrative expense savings across the combined asset base;

 

   

combining BRMR’s high-performing management team with exceptional technical teams from both companies;

 

   

shared midstream providers and expanded production base, allowing for increased optionality and optimization of midstream and downstream commitments and producer netbacks; and

 

   

other benefits that will potentially be available to the combined company due to the significantly larger scale of its operations.

 

   

Continuation of Standalone Eclipse or Pursuit of Other Strategic Transactions. The Eclipse board considered Eclipse’s business, prospects and other strategic opportunities, including the risks associated with continuing to operate as a stand-alone company and the likelihood that Eclipse would be able to identify and consummate any alternative strategic transaction that would provide greater value to Eclipse stockholders than the merger.

 

   

Competing Proposals; Termination Fees; Expense Reimbursement. The Eclipse board considered the possibility that a third party could be willing to enter into a strategic transaction with BRMR on terms more favorable than the merger. In connection therewith, the Eclipse board considered the terms of the merger agreement relating to non-solicitation covenants and termination fees, and the potential that such provisions might deter alternative bidders that might have been willing to submit a superior proposal to BRMR, particularly in light of the fact that BRMR had not broadly canvassed the market for interested counterparties prior to entering into the merger agreement. The Eclipse board also considered that, under specified circumstances, BRMR may be required to pay a termination fee or

 

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expenses in the event the merger agreement is terminated and the effect this could have on BRMR, including:

 

   

the possibility that the termination fee could discourage other potential parties from making a competing offer;

 

   

if the merger is not consummated, BRMR will pay its own expenses incident to preparing for and entering into and carrying out its obligations under the merger agreement and the transactions contemplated thereby; and

 

   

the requirement that if the merger agreement is terminated as a result of the failure to obtain approval of BRMR stockholders or in certain other circumstances, BRMR would be obligated to reimburse Eclipse for $3.25 million of its expenses in connection with the merger agreement.

 

   

Recommendation by Eclipse’s senior management team. The Eclipse board considered the senior management team’s recommendation of the contemplated transaction.