Bonanza Creek Announces Transformative Agreement to Acquire Restructured HighPoint Resources

Creates a company of scale in the rural DJ Basin with production of 50,000 Boe/d and a consolidated, contiguous leasehold position of approximately 206,000 net acres
Accretive on all key financial metrics with a transformative impact on sustainable free cash flow generationDENVER, Nov. 09, 2020 (GLOBE NEWSWIRE) — Bonanza Creek Energy, Inc. (“Bonanza Creek” or the “Company”) (NYSE: BCEI) and HighPoint Resources Corporation (“HighPoint”) (NYSE: HPR) today announced that they have entered into a definitive merger agreement to combine Bonanza Creek and HighPoint in a transaction valued at approximately $376¹ million as of November 6, 2020. The transaction value is based on the equity to be issued to HighPoint equity holders, the equity and debt to be issued to HighPoint debt holders in connection with the Exchange Offer (as defined below) and the remaining debt to be assumed. Bonanza Creek will issue 9.8 million shares of common stock and up to $100 million in senior unsecured notes in the transaction. The transaction has been unanimously approved by the board of directors of each company.The strategic combination is expected to create the leading unconventional oil producer in rural Weld County and to significantly increase free cash flow and economic resilience. With its enhanced operating scale and significant increase in free cash flow, the Company plans to pursue a business model focused on strong capital returns to its shareholders. Highlights of the transaction include:Materially increases Bonanza Creek’s scale based on expected pro forma fourth quarter production of 50,000 Boe/d (53% oil) and a rural Weld County leasehold position of 206,000 net acresSignificantly increases expected pro forma 2021 levered free cash flow² to ~$130 million.Expected to result in approximately $31 million in 2021 synergies on a pro forma basis, with $150 million of PV10 synergies total, which represents nearly 45% of Bonanza Creek’s market capitalization at announcementMaintains strong balance sheet with an estimated pro forma leverage ratio less than 0.7x at the estimated closing dateLow cost operations with anticipated pro forma cash costs³ between $9.00 and $10.00 per BoeTransaction Details

Under the terms of the definitive merger agreement, Bonanza Creek and HighPoint have agreed to commence a registered exchange offer and consent solicitation (the “Exchange Offer and Consent Solicitation”) and simultaneous solicitation of a prepackaged plan of reorganization under Chapter 11 of the United States Bankruptcy Code (the “Prepackaged Plan”). The Exchange Offer and Consent Solicitation will be conditioned on a minimum participation of not less than 97.5% of the aggregate outstanding principal amount of HighPoint senior unsecured notes (the “HighPoint Notes”) (the “Minimum Participation Condition”). Creates the Leading Rural DJ Producer – On a pro forma basis, Bonanza Creek will have approximately 206,000 net acres in Weld County. Approximately 100% of the pro forma acreage will be unincorporated acreage not subject to regulation by municipalities, and only approximately 8% of the acreage will be subject to Federal mineral or surface regulations. Bonanza Creek remains committed to engaging community stakeholders to ensure safe, thoughtful, and responsible development.Enhances Size and Scale – On a pro forma basis, fourth quarter 2020 production is expected to be approximately 50,000 Boe/d, with oil representing ~53%.Disciplined Capital Allocation – The transaction is expected to accelerate Bonanza Creek’s transition to a business model that focuses on free cash flow generation by increasing projected free cash flow to approximately $130 million in 2021, assuming NYMEX strip pricing. The Company will use excess free cash flow to reduce debt, return capital to shareholders, reinvest in the business, and pursue additional value-driven consolidation opportunities.Drives Significant Synergies – Bonanza Creek expects the strategic combination to generate significant synergies of $150 million in present value, including $15 million of near-term capital expenditures savings. In 2021, the Company expects synergies to be $31 million consisting of savings from general and administrative expenses, lease operating expenses and capital expenditures. Additionally, the integration of HighPoint’s midstream infrastructure into Bonanza Creek’s Rocky Mountain Infrastructure should provide additional flow assurance, operating and surface cost efficiencies and greater flexibility to third-party processing and takeaway.Maintains Strong Balance Sheet and Liquidity – Bonanza Creek expects to maintain its strong financial position with an estimated pro forma net debt-to-EBITDAX ratio at the estimated closing date under the Exchange Offer and Consent Solicitation of less than 0.7x on 2021 EBITDAX.Accretive to Financial Metrics – The transaction is expected to be immediately accretive in the first year to all relevant per-share-metrics, including cash flow, free cash flow, and net asset value. The transaction is also expected to be accretive to general and administrative expenses per Boe and lease operating expenses per Boe.Governance and LeadershipFollowing the completion of the transaction, the board of directors of the combined company will consist of 7 members: 5 directors from Bonanza Creek and 2 selected by HighPoint’s supporting noteholders. Eric Greager will serve as the CEO of the combined company and Brian Steck will serve as chairman of the board. Preliminary Pro Forma 2021 Outlook

Bonanza Creek’s long-term strategy is to be a low-cost operator focused on generating free cash flow and returning cash to shareholders. In 2021, the Company is expected to generate approximately $130 million of free cash flow assuming NYMEX strip pricing. Full year production is expected to average between 45,000 and 50,000 Boe/d. Bonanza Creek expects its combined cash costs to be between $9.00 and $10.00 per Boe.In connection with the transaction, Bonanza Creek has entered into a tax benefits preservation plan designed to protect the availability of the Company’s existing net operating loss carryforwards and other tax attributes (collectively, the “Tax Benefits”). The Company’s ability to use its Tax Benefits would be substantially limited if it were to experience an “ownership change,” as defined under Section 382 of the Internal Revenue Code.  Further details of the tax benefits preservation plan are provided in a separate Bonanza Creek announcement issued today.Advisors

Evercore is serving as financial advisor and Vinson & Elkins LLP is serving as legal advisor to Bonanza Creek. Tudor, Pickering, Holt & Co. / Perella Weinberg Partners are serving as financial advisor, Kirkland & Ellis LLP is serving as legal advisor, and AlixPartners, LLP is serving as restructuring advisor to HighPoint. Akin Gump LLP is serving as legal advisor to an informal group of HighPoint Noteholders that have signed the TSA.  J.P. Morgan Securities LLC also served as an advisor to HighPoint.

Conference Call InformationDate / Time: Monday, November 9, 2020, 8:30 a.m. ET / 6:30 a.m. MTA live webcast and replay of this event will be available under the “For Investors – Events” page on the Investor Relations section of the Company’s website at www.bonanzacrk.com. This replay will be available through November 23, 2020.Larry C. Busnardo
Vice President, Investor Relations
303-312-8514
lbusnardo@hpres.com______________________
¹ Reflects HighPoint projected balance sheet at transaction close
² Levered Free Cash Flow = EBITDAX less change in working capital, less cash interest expense, less capex
³ Cash costs include LOE, production + ad valorem taxes, GP&T, Cash G&A, midstream expenses, interest and other cash costs