Business context and reporting period
Entity mismatch: The supplied filing is Silver Run Acquisition Corporation’s unaudited Form 10-Q for the quarter ended June 30, 2016—not a Permian Resources Corp filing. Silver Run was a blank-check company seeking a business combination and had no significant operating activity by quarter-end. It completed a $500 million IPO on February 29, 2016.
Financial results and liquidity
- Revenue: None for the three- and six-month periods ended June 30, 2016.
- Net income: $31,882 for the quarter and $64,521 for the six months, mainly from trust-account investment income of $234,232 and $296,814, respectively. Basic and diluted EPS was reported as $0.00.
- Expenses: General and administrative expenses, including related-party administrative fees, totaled $202,350 for the quarter and $232,293 for the six months. No operating margin is meaningful for this pre-combination SPAC.
- Cash flow: Six-month operating cash use was $134,131; investing cash use was $500.3 million, primarily the trust deposit; financing cash provided was $501.1 million. Ending cash outside the trust was $778,524.
- Assets and liquidity: Trust investments were $500.3 million, held in short-term U.S. government securities. Working capital surplus was $975,176. The trust funds were restricted principally to a business combination, redemptions, or permitted tax payments.
- Debt and obligations: No long-term debt was reported at June 30. Liabilities included $17.5 million of deferred underwriting compensation, payable only if a business combination closes. Public shares classified as redeemable temporary equity totaled $478.8 million.
Changes versus the prior period
The filing provides no comparable 2015 quarterly operating results; the company was formed in November 2015 and had not yet completed its IPO. The six-month balance sheet reflects the February 2016 IPO and placement of $500 million in the trust account. No operating trend comparison is meaningful given the company’s limited pre-combination activity.
Outlook, risks, and unusual items
- After quarter-end, Silver Run disclosed a proposed transaction to acquire approximately 89% of Centennial Resource Production, LLC. The disclosed cash contribution was approximately $1.187 billion, potentially increased by $200 million if the sellers elected additional cash, plus funds to repay certain target debt. The transaction remained subject to conditions, including stockholder approval and financing.
- Investors were also told of subscription commitments for $200 million from other investors and up to approximately $810 million from a Riverstone affiliate, with potential additional funding intended to cover transaction costs, debt repayment, and public-share redemptions. These were conditional commitments, not completed financing.
- The company had 24 months from the IPO closing to complete a business combination or redeem public shares and liquidate. Redemptions, creditor claims against trust assets, financing availability, and failure to complete a transaction were material risks. The charter also barred redemptions that would reduce net tangible assets below $5,000,001.
- Management said it expected sufficient funds for operations before a combination, but might need additional financing to complete one. It reported no material change in previously disclosed risk factors, no legal proceedings, and effective disclosure controls.
Important facts to verify
- Confirm the intended issuer: the supplied filing identifies Silver Run Acquisition Corporation, not Permian Resources Corp.
- Verify the proposed Centennial transaction’s final terms, closing status, required approvals, debt repayment, and any seller cash election.
- Confirm whether the stated subscription commitments and any additional financing were funded and how public-share redemptions affected proceeds.
- Check the trust balance, redemption rights, deferred underwriting fee, and applicable 24-month deadline against later filings.