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As filed with the Securities and Exchange Commission on July 7, 2022

Registration No. 333-264986

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 1

TO

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

GRANITE RIDGE RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1311   88-2227812

(State or other jurisdiction of incorporation

or organization)

 

(Primary Standard Industrial

Classification Code Number)

  (I.R.S. Employer Identification No.)

137 Newbury Street, 7th Floor

Boston, MA 02116 (857) 362-9205

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

 

 

c/o Executive Network Partnering Corporation

137 Newbury Street, 7th Floor

Boston, MA 02116

(857) 362-9205

Attn: Alex J. Dunn

Chief Executive Officer and Chief Financial Officer

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

 

 

Copies to:

 

Julian J. Seiguer, P.C.

Christian Nagler

Wayne Williams

Anne Peetz

Kirkland & Ellis LLP

609 Main Street

Houston, Texas 77002

Tel: (713) 836-3600

 

Amy R. Curtis

Jeremiah M. Mayfield

Holland & Knight LLP

One Arts Plaza

1722 Routh Street, Suite 1500

Dallas, Texas 75201

(214) 969-1763

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and after all conditions under the Business Combination Agreement to consummate the proposed Business Combination are satisfied or waived.

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 registered 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 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, please place an  ☒  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)  ☐

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 of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission (the “Commission”), acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

GRANITE RIDGE RESOURCES, INC.

SUBJECT TO COMPLETION, DATED JULY 7, 2022

PRELIMINARY PROXY STATEMENT FOR

SPECIAL MEETING OF STOCKHOLDERS OF

EXECUTIVE NETWORK PARTNERING CORPORATION

PROSPECTUS FOR 182,988,393 SHARES OF COMMON STOCK AND 10,350,000 WARRANTS OF

GRANITE RIDGE RESOURCES, INC.

 

 

The board of directors (our “Board”) of Executive Network Partnering Corporation, a Delaware corporation (“we,” “us,” “our,” the “Company” or “ENPC”), has unanimously approved the Business Combination (as defined herein) contemplated by the Business Combination Agreement (as defined herein). Our Board engaged Stephens Inc. to provide an opinion as to the fairness, from a financial point of view, of the consideration to be issued by Parent (as defined herein) for GREP (as defined herein) in the Business Combination to the holders of our Class A common stock. As described in this proxy statement/prospectus, at the special meeting of ENPC stockholders (the “special meeting”), our stockholders will be asked to consider and vote upon a proposal (the “Business Combination Proposal”) to approve the Business Combination and adopt the Business Combination Agreement.

Our stockholders will also be asked to consider and vote upon the following proposals:

 

  (a)

The Charter Proposals — To consider and vote upon, on a non-binding advisory basis, three separate proposals to amend the certificate of incorporation of Parent, effective following the Business Combination, (i) to approve the name “Granite Ridge Resources, Inc.” for Parent, to provide for a single class of common stock of Parent, and to omit provisions of the ENPC certificate of incorporation (as defined herein) that will not be applicable to Parent following the Business Combination; (ii) to allow for stockholders of Parent to take action by written consent under certain conditions; and (iii) to exempt certain entities affiliated with Grey Rock from the restrictions of Section 203 of the DGCL (such proposals taken together, the “Charter Proposals”). A copy of the amended and restated certificate of incorporation of Parent is attached to the accompanying proxy statement/prospectus as Annex B.

 

  (b)

The Incentive Plan Proposal — To approve and adopt the Parent 2022 Omnibus Incentive Plan (an equity-based incentive plan), a copy of which is attached to the accompanying proxy statement/prospectus as Annex C (the “Incentive Plan Proposal”).

 

  (c)

The Adjournment Proposal — To adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and voting of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes received to pass the resolution to approve the Business Combination Proposal (the “Adjournment Proposal”).

Each of these proposals is more fully described in the accompanying proxy statement/prospectus.

As a result of the consummation of the Transactions (as defined herein), GREP will become a wholly-owned subsidiary of Parent. The aggregate consideration to be paid in the Transactions to the direct and indirect owners of GREP will consist of 130.0 million shares of Parent’s common stock. Upon consummation of the Business Combination, Parent will become the public company and the name of the public company will be Granite Ridge Resources, Inc.

Pursuant to the Business Combination Agreement and immediately prior to the effective time of the ENPC Merger (as defined herein), (i) 495,357 shares of ENPC Class F common stock (as defined herein) shall be converted into 1,238,393 shares of ENPC Class A common stock (as defined herein) (of which 371,518 shares of ENPC Class A common stock shall be subject to the vesting and forfeiture provisions set forth in the Sponsor Agreement (as defined herein) upon their conversion to Parent common stock in accordance with the terms of the Business Combination Agreement), and the remainder of ENPC Class F common stock outstanding will automatically be cancelled without any conversion, payment or distribution with respect thereto (the “ENPC Class F Conversion”), (ii) all other remaining shares of ENPC Class A common stock held by the Sponsor shall automatically be cancelled without any conversion, payment or distribution (the “Sponsor Share Cancellation”) and (iii) all shares of ENPC Class B common stock (as defined herein) outstanding will be deemed transferred to ENPC and be surrendered and forfeited for no consideration (the “ENPC Class B Contribution”). Effective immediately prior to the ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, any and all ENPC CAPSTM, which are composed of one share of ENPC Class A common stock and one-fourth of one ENPC warrant, shall be immediately and automatically detached and broken into their constituent parts, such that a holder of an ENPC CAPSTM shall be deemed to hold one share of ENPC Class A common stock and one-fourth of one ENPC warrant and such underlying constituent securities shall be converted or cancelled (the “CAPSTM Separation”). Following the ENPC Class F Conversion, Sponsor Share Cancellation, ENPC Class B Contribution and CAPSTM Separation, each share of ENPC Class A common stock issued and outstanding will be converted into a right to receive one share of Parent common stock. Immediately prior to the effective time of the ENPC Merger, all ENPC private placement warrants and ENPC working capital warrants will be deemed transferred to ENPC and will be surrendered and forfeited for no consideration. At the effective time of the ENPC Merger, each ENPC public warrant issued and outstanding, entitling the holder thereof to purchase one share of ENPC Class A common stock at an exercise price of $11.50 per share (after giving effect to the Forward Split (as defined herein) and subject to further adjustment), will be converted into the right to receive a warrant to purchase one share of Parent common stock at an exercise price of $11.50 per share (subject to adjustment) upon consummation of the Business Combination. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A. Accordingly, this proxy statement/prospectus covers an aggregate of 182,988,393 shares of Parent’s common stock and 10,350,000 Parent warrants. Our directors and executive officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) the interests of our stockholders. For additional information, see the table under the section entitled “Questions and Answers About the Proposals For Stockholders — What equity stake will current ENPC stockholders and Existing GREP Members hold in Parent after the closing?

Our Class A common stock, CAPSTM and warrants are currently listed on the New York Stock Exchange (the “NYSE”) under the symbols “ENPC,” “ENPC.U” and “ENPC WS,” respectively. Parent will apply to list, to be effective at the time of the Business Combination, its common stock and warrants on the NYSE under the symbols “GRNT” and “GRNT WS,” respectively. We expect our Class A common stock, CAPSTM and warrants will be delisted from the NYSE.

After the completion of the Business Combination, Existing GREP Members will beneficially own approximately 75.5% of the combined voting power of the Parent common stock, assuming no redemptions (or 99.0% assuming maximum redemptions). As a result, Parent will be a “controlled company” within the meaning of the NYSE rules and may elect to take advantage of certain “controlled company” exemptions. See “Management of Parent Following the Business Combination—Independence of Directors.

The accompanying proxy statement/prospectus provides stockholders of ENPC with detailed information about the Business Combination and other matters to be considered at the special meeting. We encourage you to read the entire accompanying proxy statement/prospectus, including the annexes and other documents referred to therein, carefully and in their entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 37 of the accompanying proxy statement/prospectus.

This proxy statement/prospectus is dated             , 2022, and is first being mailed to our stockholders on or about             , 2022.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OR ANY OF THE SECURITIES TO BE ISSUED IN THE TRANSACTIONS, PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.


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EXECUTIVE NETWORK PARTNERING CORPORATION

137 Newbury Street, 7th Floor

Boston, MA 02116

Dear Executive Network Partnering Corporation Stockholders:

On May 16, 2022, Executive Network Partnering Corporation, a Delaware corporation (“we,” “us,” “our,” or “ENPC”), entered into a Business Combination Agreement (the “Business Combination Agreement”) by and among ENPC, Granite Ridge Resources, Inc., a Delaware corporation (“Parent”), ENPC Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“ENPC Merger Sub”), GREP Merger Sub, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent (“GREP Merger Sub” and, together with ENPC Merger Sub, the “Merger Subs”), and GREP Holdings, LLC, a Delaware limited liability company (“GREP”), which provides, among other things, that (i) ENPC Merger Sub will merge with and into ENPC (the “ENPC Merger”), with ENPC surviving the ENPC Merger as a wholly-owned subsidiary of Parent and (ii) GREP Merger Sub will merge with and into GREP (the “GREP Merger,” and together with the ENPC Merger, the “Mergers”), with GREP surviving the GREP Merger as a wholly-owned subsidiary of Parent (the transactions contemplated by the foregoing clauses (i) and (ii) the “Business Combination,” and together with the other transactions contemplated by the Business Combination Agreement, the “Transactions”).

At the special meeting of ENPC stockholders (the “special meeting”), our stockholders will be asked to consider and vote upon a proposal (the “Business Combination Proposal”) to approve the Business Combination and adopt the Business Combination Agreement. The aggregate consideration to be paid in the Transactions to the direct or indirect owners of GREP will consist of 130.0 million shares of Parent’s common stock. The number of shares of the equity consideration was determined based on a $10.00 per share value for Parent’s common stock.

Pursuant to the Business Combination Agreement and immediately prior to the effective time of the ENPC Merger, (i) 495,357 shares of ENPC Class F common stock shall be converted into 1,238,393 shares of ENPC Class A common stock (of which 371,518 shares of ENPC Class A common stock shall be subject to the vesting and forfeiture provisions set forth in the Sponsor Agreement upon their conversion to Parent common stock in accordance with the terms of the Business Combination Agreement), and the remainder of ENPC Class F common stock outstanding will automatically be cancelled without any conversion, payment or distribution with respect thereto (the “ENPC Class F Conversion”), (ii) all other remaining shares of ENPC Class A common stock held by the Sponsor shall automatically be cancelled without any conversion, payment or distribution (the “Sponsor Share Cancellation”) and (iii) all shares of ENPC Class B common stock outstanding will be deemed transferred to ENPC and be surrendered and forfeited for no consideration (the “ENPC Class B Contribution”). Effective immediately prior to the ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, any and all ENPC CAPSTM, which are composed of one share of ENPC Class A common stock and one-fourth of one ENPC warrant, shall be immediately and automatically detached and broken into their constituent parts, such that a holder of an ENPC CAPSTM shall be deemed to hold one share of ENPC Class A common stock and one-fourth of one ENPC warrant and such underlying constituent securities shall be converted or cancelled (the “CAPSTM Separation”). Following the ENPC Class F Conversion, Sponsor Share Cancellation, ENPC Class B Contribution and CAPSTM Separation, each share of ENPC Class A common stock issued and outstanding will be converted into a right to receive one share of Parent common stock. Immediately prior to the effective time of the ENPC Merger, all ENPC private placement warrants and ENPC working capital warrants will be deemed transferred to ENPC and will be surrendered and forfeited for no consideration. At the effective time of the ENPC Merger, each ENPC public warrant issued and outstanding, entitling the holder thereof to purchase one share of ENPC Class A common stock at an exercise price of $11.50 per share (after giving effect to the Forward Split and subject to further adjustment), will be converted into the right to receive a warrant to purchase one share of Parent common stock at an exercise price of $11.50 per share (subject to adjustment) upon consummation of the Business Combination. For additional information, see the section in the accompanying proxy statement/prospectus entitled “Proposal No. 1 — The Business Combination Proposal — The Business Combination Agreement.” A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A. Accordingly, this proxy statement/prospectus covers an aggregate of 182,988,393 shares of Parent common stock and 10,350,000 Parent warrants.


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Our stockholders will also be asked to consider and vote upon the following proposals:

 

  (a)

The Charter Proposals — To consider and vote upon, on a non-binding advisory basis, three separate proposals to amend the certificate of incorporation of Parent, effective following the Business Combination, (i) to approve the name “Granite Ridge Resources, Inc.” for Parent, to provide for a single class of common stock of Parent, and to remove provisions in the ENPC certificate of incorporation that will not be applicable to Parent following the Business Combination; (ii) to allow for stockholders of Parent to take action by written consent under certain conditions; and (iii) to exempt certain entities affiliated with Grey Rock from the restrictions of Section 203 of the DGCL (such proposals taken together, the “Charter Proposals”). A copy of the amended and restated certificate of incorporation of Parent is attached to the accompanying proxy statement/prospectus as Annex B.

 

  (b)

The Incentive Plan Proposal — To approve and adopt the Parent 2022 Omnibus Incentive Plan (an equity-based incentive plan), a copy of which is attached to the accompanying proxy statement/prospectus as Annex C (the “Incentive Plan Proposal”).

 

  (c)

The Adjournment Proposal — To adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and voting of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes received to pass the resolution to approve the Business Combination Proposal (the “Adjournment Proposal”).

Each of these proposals is more fully described in the accompanying proxy statement/prospectus.

Our Class A common stock, CAPSTM and warrants are currently listed on the New York Stock Exchange (the “NYSE”) under the symbols “ENPC,” “ENPC.U” and “ENPC WS,” respectively. Parent will apply to list, to be effective at the time of the Business Combination, its common stock and warrants on the NYSE under the symbols “GRNT” and “GRNT WS,” respectively. We expect our Class A common stock, CAPSTM and warrants will be delisted from the NYSE.

After the completion of the Business Combination, Existing GREP Members will beneficially own approximately 75.5% of the combined voting power of the Parent common stock, assuming no redemptions (or 99.0% assuming maximum redemptions). As a result, Parent will be a “controlled company” within the meaning of the NYSE rules and may elect to take advantage of certain “controlled company” exemptions. See “Management of Parent Following the Business Combination—Independence of Directors.

Pursuant to our amended and restated certificate of incorporation (as amended, the “ENPC certificate of incorporation”), we are providing holders of the shares of Class A common stock included in the CAPSTM issued in our initial public offering (such holders, the “public stockholders”) with the opportunity, upon the closing of the Transactions and subject to the limitations described in the accompanying proxy statement/prospectus, to redeem their shares of our Class A common stock for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the consummation of the Transactions) in our Trust Account (as defined herein). For illustrative purposes, based on funds in our Trust Account of approximately $414.1 million as of March 31, 2022, stockholders would have received a redemption price of approximately $10.00 per share of our Class A common stock. Public stockholders may elect to redeem their shares even if they vote “FOR” the Business Combination Proposal.

We are providing the accompanying proxy statement/prospectus and proxy card to our stockholders in connection with the solicitation of proxies to be voted at the special meeting and at any adjournments or postponements of the special meeting. The special meeting of our stockholders will be held virtually at             , Eastern Time, on             , 2022. Whether or not you plan to attend the special meeting, we urge you to read the accompanying proxy statement/prospectus (including the annexes) carefully, including the section entitled Risk Factors beginning on page 37.

Your vote is very important, regardless of the number of shares of our common stock you own. To ensure your representation at the special meeting, please take time to vote by following the instructions contained in the accompanying proxy statement/prospectus and on your proxy card. Please vote promptly


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whether or not you expect to attend the special meeting. Submitting a proxy now will not prevent you from being able to vote online at the special meeting.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the special meeting. If you fail to return your proxy card and do not attend the special meeting, if you abstain from voting, or if you hold your shares in “street name” through a broker or other nominee and fail to give such nominee voting instructions (a “broker non-vote”), it will have the same effect as a vote “AGAINST” the Business Combination Proposal but will have no effect on the Charter Proposals, the Incentive Plan Proposal or the Adjournment Proposal. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote online, obtain a legal proxy from your broker or bank.

The Business Combination Proposal is not conditioned on the approval of any other proposal. The Incentive Plan Proposal is conditioned on the approval of the Business Combination Proposal. Neither the Charter Proposals nor the Adjournment Proposal are conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event the Business Combination Proposal does not receive the requisite vote for approval, then we will not consummate the Business Combination. If we do not consummate a business combination or amend the ENPC certificate of incorporation by stockholder approval by December 18, 2022, we will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such Trust Account to our public stockholders.

Our Board unanimously recommends that our stockholders vote “FOR” the Business Combination Proposal and “FOR” the other proposals presented in this proxy statement/prospectus. In considering the recommendation of our Board, you should keep in mind that our directors and executive officers may have interests in the Transactions that are different from or in addition to (and may conflict with) the interests of our stockholders generally. For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination.”

 

Sincerely,
 
Alex J. Dunn
Chief Executive Officer and Chief Financial Officer


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EXECUTIVE NETWORK PARTNERING CORPORATION

137 Newbury Street, 7th Floor Boston, MA 02116

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS OF EXECUTIVE NETWORK PARTNERING CORPORATION

To Be Held on                        , 2022

To the Stockholders of Executive Network Partnering Corporation:

NOTICE IS HEREBY GIVEN that a special meeting of stockholders (the “special meeting”), of Executive Network Partnering Corporation, a Delaware corporation (“ENPC”), will be held on                , 2022, at            , Eastern Time.

The special meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You will be able to attend the special meeting online, vote and submit your questions during the special meeting by visiting. We are pleased to utilize the virtual stockholder meeting technology to (i) provide ready access and cost savings for our stockholders and ENPC and (ii) promote social distancing pursuant to guidance provided by the Center for Disease Control and the U.S. Securities and Exchange Commission due to the novel coronavirus. The virtual meeting format allows attendance from any location in the world.

You are cordially invited to attend the special meeting which will be held to consider and vote upon the following matters:

 

  (1)

The Business Combination Proposal — to consider and vote upon a proposal to approve the Business Combination and adopt the Business Combination Agreement. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A (Proposal No. 1);

 

  (2)

The Charter Proposals — to consider and vote upon, on an non-binding advisory basis, three separate proposals to amend the certificate of incorporation of Parent, effective following the Business Combination, (i) to approve the name “Granite Ridge Resources, Inc.” for Parent, to provide for a single class of common stock of Parent, and to remove provisions in the ENPC certificate of incorporation that will not be applicable to Parent following the Business Combination; (ii) to allow for stockholders of Parent to take action by written consent under certain conditions; and (iii) to exempt certain entities affiliated with Grey Rock from the restrictions of Section 203 of the DGCL. A copy of the amended and restated certificate of incorporation of Parent is attached to the accompanying proxy statement/prospectus as Annex B (Proposal No. 2); and

 

  (3)

The Incentive Plan Proposal — to consider and vote upon a proposal to adopt the Parent 2022 Omnibus Incentive Plan (an equity-based incentive plan), which we refer to as the Incentive Plan, a copy of which is attached to the accompanying proxy statement/prospectus as Annex C (Proposal No. 3); and

 

  (4)

The Adjournment Proposal — to consider and vote upon a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal (Proposal No. 4).

These items of business are described in the accompanying proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of our common stock at the close of business on                , 2022 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements of the special meeting.

All ENPC stockholders are cordially invited to attend the special meeting online. To ensure your representation at the special meeting, however, we urge you to complete, sign, date and return the enclosed proxy card as soon as


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possible. If you are a stockholder of record, you may also cast your vote online at the special meeting. If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the special meeting. If you fail to return your proxy card and do not attend the special meeting online, if you abstain from voting, or if you hold your shares in “street name” through a broker or other nominee and fail to give such nominee voting instructions (a “broker non-vote”), it will have the same effect as a vote “AGAINST” the Business Combination Proposal but will have no effect on the Charter Proposals, Incentive Plan Proposal or the Adjournment Proposal. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote online, obtain a legal proxy from your broker or bank. Public stockholders may elect to redeem their public shares even if they vote “FOR” the Business Combination Proposal.

The Business Combination Proposal is not conditioned on the approval of any other proposal. The Incentive Plan Proposal is conditioned on the approval of the Business Combination Proposal. Neither the Charter Proposals nor the Adjournment Proposal are conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event the Business Combination Proposal does not receive the requisite vote for approval, then we will not consummate the Business Combination. If we do not consummate a business combination or amend the ENPC certificate of incorporation by stockholder approval by December 18, 2022, we will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such Trust Account to our public stockholders.

After careful consideration, our Board (as defined herein) has determined that the Business Combination Proposal, the Charter Proposals, the Incentive Plan Proposal and the Adjournment Proposal are fair to and in the best interests of ENPC and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the Business Combination Proposal and “FOR” the other proposals presented in the accompanying proxy statement/prospectus. In considering the recommendation of our Board, you should keep in mind that our directors and executive officers may have interests in the Business Combination that are different from or in addition to (and may conflict with) the interests of our stockholders generally. For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons in the Business Combination.”

A complete list of ENPC stockholders of record entitled to vote at the special meeting will be available for 10 days before the special meeting at the principal executive offices of ENPC for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting online or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the annexes thereto) for a more complete description of the Business Combination and related transactions and each of our proposals. Whether or not you plan to attend the special meeting, we urge you to read the accompanying proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 37 thereof. If you have any questions regarding the accompanying proxy statement/prospectus or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali. at (800) 662-5200 if you are a stockholder or collect at (203) 658-9400 if you are a broker or bank.

Boston, Massachusetts

                        , 2022

 

By Order of the Board of Directors,

                     

Paul Ryan

Chairman


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TABLE OF CONTENTS

 

     Page  

FREQUENTLY USED TERMS

     iii  

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

     vii  

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

     1  

SUMMARY HISTORICAL FINANCIAL INFORMATION OF ENPC

     23  

SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF GREY ROCK ENERGY PARTNERS FUND, LP

     25  

SUMMARY HISTORICAL CONDENSED COMBINED FINANCIAL INFORMATION OF GREY ROCK ENERGY FUND II

     27  

SUMMARY HISTORICAL CONDENSED COMBINED FINANCIAL INFORMATION OF GREY ROCK ENERGY FUND III

     29  

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     31  

SUMMARY HISTORICAL RESERVE DATA OF THE FUNDS

     34  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     35  

RISK FACTORS

     37  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     74  

SPECIAL MEETING OF ENPC STOCKHOLDERS

     88  

PROPOSAL NO. 1 — THE BUSINESS COMBINATION PROPOSAL

     93  

PROPOSAL NO. 2 — THE CHARTER PROPOSALS

     137  

PROPOSAL NO. 3 — THE INCENTIVE PLAN PROPOSAL

     139  

PROPOSAL NO. 4 — THE ADJOURNMENT PROPOSAL

     144  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     145  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     155  

INFORMATION ABOUT ENPC

     165  

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

     178  

BUSINESS OF GREY ROCK

     184  

PROPERTIES OF GREY ROCK

     198  

GREY ROCK’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     213  

EXECUTIVE COMPENSATION

     256  

MANAGEMENT OF PARENT FOLLOWING THE BUSINESS COMBINATION

     257  

DESCRIPTION OF PARENT CAPITAL STOCK

     264  

BENEFICIAL OWNERSHIP OF SECURITIES

     271  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     277  

INFORMATION ON SECURITIES AND DIVIDENDS

     283  

LEGAL MATTERS

     285  

EXPERTS

     285  

APPRAISAL RIGHTS

     286  

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

     286  

TRANSFER AGENT AND REGISTRAR

     286  

SUBMISSION OF STOCKHOLDER PROPOSALS

     286  

STOCKHOLDER PROPOSALS

     286  

OTHER STOCKHOLDER COMMUNICATIONS

     286  

WHERE YOU CAN FIND MORE INFORMATION

     288  

INDEX TO FINANCIAL STATEMENTS

     F-1  

ANNEX A:

 

BUSINESS COMBINATION AGREEMENT

     A-1  

ANNEX B:

 

FORM OF AMENDED AND RESTATED CHARTER OF PARENT

     B-1  

ANNEX C:

 

PARENT OMNIBUS 2022 INCENTIVE PLAN

     C-1  

 

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ANNEX D:

 

SPONSOR AGREEMENT

   D-1

ANNEX E:

 

REGISTRATION RIGHTS AND LOCK-UP AGREEMENT

   E-1

ANNEX F:

 

MANAGEMENT SERVICES AGREEMENT

   F-1

ANNEX G:

 

SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE

   G-1

ANNEX H:

 

RESERVE REPORT OF FUND I AS OF DECEMBER 31, 2021

   H-1

ANNEX I:

 

RESERVE REPORT OF FUND II AS OF DECEMBER 31, 2021

   I-1

ANNEX J:

 

RESERVE REPORT OF FUND III AS OF DECEMBER 31, 2021

   J-1

ANNEX K:

 

GLOSSARY OF OIL AND NATURAL GAS TERMS

   K-1

ANNEX L:

 

OPINION OF STEPHENS INC.

   L-1

 

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FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” and “ENPC” refer to Executive Network Partnering Corporation, a Delaware corporation. Furthermore, in this proxy statement/prospectus:

Board” means the board of directors of ENPC.

“Business Combination” means the Transactions contemplated by the Business Combination Agreement and the related agreements.

Business Combination Agreement” means the Business Combination Agreement, dated as of May 16, 2022, as amended, by and among ENPC, Parent, ENPC Merger Sub, GREP Merger Sub, and GREP.

“Class A common stock means the Class A common stock, par value $0.0001 per share, of ENPC.

Class B common stock” means the Class B common stock, par value $0.0001 per share, of ENPC.

Class F common stock” means the Class F common stock, par value $0.0001 per share, of ENPC.

Class F Holders” means the Sponsor and the other holders of ENPC Class F common stock who are party to the Sponsor Agreement.

closing” means the closing of the Transactions.

Closing Date” means the date on which the Business Combination is consummated.

“Code” means the Internal Revenue Code of 1986, as amended and restated from time to time.

Combined Company” means Parent and its consolidated subsidiaries after giving effect to the Business Combination.

“DGCL” means the General Corporation Law of the State of Delaware.

ENPC CAPS™” means the securities offered in ENPC’s initial public offering, which consist of one share of Class A common stock and one-quarter of one ENPC warrant.

“ENPC certificate of incorporation” or “charter” means the ENPC amended and restated certificate of incorporation in effect as of September 17, 2020, as amended by the first amendment to the amended and restated certificate of incorporation in effect as of March 24, 2021.

ENPC common stock or “our common stock” means the Class A common stock, Class B common stock and Class F common stock.

ENPC Merger means the merger of ENPC Merger Sub with and into ENPC, with ENPC being the surviving corporation in the merger and a wholly-owned subsidiary of Parent.

ENPC Merger Sub” means ENPC Merger Sub, a Delaware corporation.

ENPC Warrant Agreement” means the Warrant Agreement, dated September 15, 2020, as amended by Amendment No. 1 dated March 24, 2021, between ENPC and Continental Stock Transfer & Trust Company, as warrant agent.

 

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ENPC warrants” means ENPC’s warrants sold as part of the CAPS™ in the IPO (whether purchased in the IPO or thereafter in the open market) and as part of the private placement CAPS™.

Exchange Act” means the Securities Exchange Act of 1934, as amended.

Existing Bylaws” means the bylaws of ENPC.

Existing GREP Members” means the members of GREP as of the Closing Date.

Forward Split” refers collectively to (i) the 2.5 for 1 forward stock split for each outstanding ENPC Class A common stock and ENPC Class B common stock, as effected by the first amendment to the charter dated as of March 24, 2021, and (ii) the 2.5 for 1 forward warrant split for each outstanding ENPC Warrant, as effected by that certain Amendment No. 1 to Warrant Agreement, dated March 24, 2021, by and between ENPC and Continental Stock Transfer & Trust Company, a New York corporation.

Founder Shares” means the ENPC Class F common stock and the ENPC Class A common stock to be issued upon the automatic conversion thereof at the time of the Business Combination.

Funds” means, collectively, Fund I, Fund II and Fund III.

Fund I” means Grey Rock Energy Fund, LP, a Delaware limited partnership.

Fund II” means, collectively, Grey Rock Energy Fund II, L.P., Grey Rock Energy Fund II-B, LP, and Grey Rock Energy Fund II-B Holdings, L.P., each a Delaware limited partnership.

Fund III” means, collectively, Grey Rock Energy Fund III-A, LP, Grey Rock Energy Fund III-B, LP, and Grey Rock Energy Fund III-B Holdings, LP, each a Delaware limited partnership.

GAAP” means generally accepted accounting principles in the United States.

GREP” means GREP Holdings, LLC, a Delaware limited liability company.

GREP Merger” means the merger of GREP Merger Sub with and into GREP with GREP being the surviving company in the merger and a wholly-owned subsidiary of Parent.

GREP Merger Sub” means GREP Merger Sub, LLC, a Delaware limited liability company.

Grey Rock” means Grey Rock Energy Management, LLC, a Delaware limited liability company.

Incentive Plan” means the Parent 2022 Omnibus Incentive Plan.

initial stockholders” or “initial holders” means the Sponsor and any other holders of Founder Shares prior to the IPO (or their permitted transferees).

IPO” means our initial public offering, consummated on September 18, 2020, in which we sold 41,400,000 CAPSTM at $10.00 per CAPSTM (after giving effect to the Forward Split).

IRS” means the U.S. Internal Revenue Service.

Manager” means Grey Rock Administration, LLC, a Delaware limited liability company, or its permitted assignee.

 

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Mergers” means, collectively, the ENPC Merger and the GREP Merger.

MSA” means the Management Services Agreement, by and between Granite Ridge Resources, Inc. and Grey Rock Administration, LLC to be entered into in connection with the consummation of the Transactions.

NYSE” means the New York Stock Exchange.

Parent” means Granite Ridge Resources, Inc., a Delaware corporation.

Parent Board” means the board of directors of Parent following the consummation of the Business Combination.

Parent common stock” means the common stock, par value $0.0001 per share, of Parent.

Parent Warrant Agreement” means the warrant agreement that will govern the Parent warrants.

Parent warrants” means the ENPC warrants that shall be converted into warrants of Parent upon consummation of the Business Combination and the warrants to be issued as consideration pursuant to the Business Combination Agreement.

Performance Shares” means the 1,200 shares of ENPC Class B common stock purchased by the Sponsor in exchange for a capital contribution of $18,750, or $15.625 per share.

private placement” means the private sale of private placement CAPSTM that occurred simultaneously with the consummation of our IPO for total gross proceeds of $6,140,000.

private placement CAPSTM” means the 614,000 CAPSTM purchased by the Sponsor in the private placement (after giving effect to the Forward Split), each consisting of one share of Class A common stock and one-quarter of one private placement warrant.

private placement common stock” means the 614,000 shares of Class A common stock underlying the private placement CAPSTM purchased by Sponsor in the private placement (after giving effect to the Forward Split).

private placement warrants” means the 153,500 warrants underlying the private placement CAPSTM purchased by the Sponsor in the private placement (after giving effect to the Forward Split), each of which is exercisable for one share of our Class A common stock in accordance with its terms.

public shares” means the 41,400,000 shares of our Class A common stock underlying the CAPSTM issued in our IPO (after giving effect to the Forward Split).

public stockholders” means holders of public shares, including our initial stockholders to the extent our initial stockholders hold public shares, provided that our initial stockholders will be considered “public stockholders” only with respect to any public shares held by them.

public warrants” means the 10,350,000 warrants underlying the CAPSTM issued in our IPO (after giving effect to the Forward Split), each of which is exercisable for one share of our Class A common stock in accordance with its terms.

redemption rights” means the offer by ENPC to redeem for cash all or a portion of the ENPC Class A common stock held by a holder of ENPC Class A common stock.

Securities Act” means the Securities Act of 1933, as amended.

SPAC Vesting Shares” means the 371,518 shares of Parent common stock to be issued to the Class F Holders in connection with the Mergers and subject to the vesting and forfeiture provisions set forth in the Sponsor Agreement.

special meeting” means the special meeting of stockholders of ENPC that is the subject of this proxy statement/prospectus.

Sponsor” means ENPC Holdings, LLC, a Delaware limited liability company.

 

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Stephens” means Stephens Inc.

Transactions” means, collectively, the Mergers, Business Combination and the other transactions contemplated by the Business Combination Agreement.

Transfer Agent” means Continental Stock Transfer & Trust Company, a New York corporation.

“Treasury regulations” means the regulations promulgated by the U.S. Treasury Department under the Code.

“Trust Account” means the trust account into which the net proceeds of our IPO and the private placement were deposited for the benefit of the public stockholders and which held total assets of approximately $414.1 million as of March 31, 2022.

Trust Agreement” means that certain Investment Management Trust Account Agreement, dated September 15, 2020, between ENPC and Continental Stock Transfer & Trust Company.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the special meeting, including with respect to the proposed Transactions. The following questions and answers do not include all the information that may be important to you. We urge stockholders to read carefully this entire proxy statement/prospectus, including the annexes and the other documents referred to herein.

 

Q:

Why are ENPC and Grey Rock proposing to enter into the Business Combination?

 

A:

ENPC is a blank check company formed specifically as a vehicle to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. In the course of ENPC’s search for a business combination partner, ENPC investigated the potential acquisition of many entities in various industries and concluded that Grey Rock was the best candidate for a business combination with ENPC. For more details on ENPC’s search for a business combination partner and the Board’s reasons for selecting Grey Rock as ENPC’s business combination partner, see the sections entitled “Proposal No. 1 — The Business Combination — Background to the Business Combination” and “Proposal No. 1 — The Business Combination — The ENPC Board of Directors’ Reasons for the Approval of the Business Combination.

 

Q:

Why am I receiving this proxy statement/prospectus?

 

A:

Our stockholders are being asked to consider and vote upon a proposal to approve the Business Combination and adopt the Business Combination Agreement, among other proposals. We have entered into the Business Combination Agreement by and among ENPC, Parent, ENPC Merger Sub, GREP Merger Sub, and GREP, which provides for (i) ENPC Merger Sub to be merged with and into ENPC with ENPC being the surviving corporation in the merger and a wholly-owned subsidiary of Parent and (ii) GREP Merger Sub to be merged with and into GREP with GREP being the surviving limited liability company in the merger and a wholly-owned subsidiary of Parent. The aggregate consideration to be paid in the Transactions to the direct or indirect owners of GREP will consist of 130.0 million shares of Parent’s common stock. The number of shares of the equity consideration was determined based on a $10.00 per share value for Parent’s common stock.

Pursuant to the Business Combination Agreement and immediately prior to the effective time of the ENPC Merger, (i) 495,357 shares of ENPC Class F common stock shall be converted into 1,238,393 shares of ENPC Class A common stock (of which 371,518 shares of ENPC Class A common stock shall be subject to the vesting and forfeiture provisions set forth in the Sponsor Agreement upon their conversion to Parent common stock in accordance with the terms of the Business Combination Agreement), and the remainder of ENPC Class F common stock outstanding will automatically be cancelled without any conversion, payment or distribution with respect thereto (the “ENPC Class F Conversion”), (ii) all other remaining shares of ENPC Class A common stock held by the Sponsor shall automatically be cancelled without any conversion, payment or distribution (the “Sponsor Share Cancellation”) and (iii) all shares of ENPC Class B common stock outstanding will be deemed transferred to ENPC and be surrendered and forfeited for no consideration (the “ENPC Class B Contribution”). Effective immediately prior to the ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, any and all ENPC CAPSTM, which are composed of one share of ENPC Class A common stock and one-fourth of one ENPC warrant, shall be immediately and automatically detached and broken into their constituent parts, such that a holder of an ENPC CAPSTM shall be deemed to hold one share of ENPC Class A common stock and one-fourth of one ENPC warrant and such underlying constituent securities shall be converted or cancelled (the “CAPSTM Separation”). Following the ENPC Class F Conversion, Sponsor Share Cancellation, ENPC Class B Contribution and CAPSTM Separation, each share of ENPC Class A common stock issued and outstanding will be converted into a right to receive one share of Parent common stock. Immediately prior to the effective time of the ENPC Merger, all ENPC private placement warrants and ENPC working capital warrants will be deemed

 

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transferred to ENPC and will be surrendered and forfeited for no consideration. At the effective time of the ENPC Merger, each ENPC public warrant issued and outstanding, entitling the holder thereof to purchase one share of ENPC Class A common stock at an exercise price of $11.50 per share (after giving effect to the Forward Split and subject to further adjustment), will be converted into the right to receive a warrant to purchase one share of Parent common stock at an exercise price of $11.50 per share (subject to adjustment) upon consummation of the Business Combination. For additional information, see the section in this proxy statement/prospectus entitled “Proposal No. 1 — The Business Combination Proposal — The Business Combination Agreement.” A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A.

The ENPC Class A common stock, ENPC CAPSTM and ENPC warrants are currently listed on the NYSE under the symbols “ENPC,” “ENPC.U” and “ENPC WS,” respectively. Parent will apply to list, to be effective at the time of the Business Combination, its common stock and warrants on the NYSE under the symbols “GRNT” and “GRNT WS,” respectively. We expect ENPC Class A common stock, ENPC CAPSTM and ENPC warrants will be delisted from the NYSE.

This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the special meeting. Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its annexes, which we urge you to do.

 

Q:

What is being voted on at the special meeting?

 

A:

Our stockholders are being asked to vote on the following proposals:

 

   

The Business Combination Proposal — A proposal to approve and adopt the Business Combination and the Business Combination Agreement;

 

   

The Charter Proposals — Three separate proposals to approve, on a non-binding advisory basis, material differences between the Amended and Restated Certificate of Incorporation of Parent that will be in effect upon the closing of the Business Combination and ENPC’s current amended and restated certificate of incorporation;

 

   

The Incentive Plan Proposal — A proposal to adopt the Incentive Plan; and

 

   

The Adjournment Proposal — A proposal to approve the adjournment of the special meeting to a later date, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Business Combination Proposal and the Incentive Plan Proposal.

 

Q:

Are the proposals conditioned on one another?

 

A:

The Business Combination Proposal is not conditioned on the approval of any other proposal. The Incentive Plan Proposal is conditioned on the approval of the Business Combination Proposal. Neither the Charter Proposals nor the Adjournment Proposal are conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event the Business Combination Proposal does not receive the requisite vote for approval, then we will not consummate the Business Combination. If we do not consummate a business combination or amend the ENPC certificate of incorporation by stockholder approval by December 18, 2022, we will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such Trust Account to our public stockholders.

 

Q:

Why are we proposing the Charter Proposals?

 

A:

We are requesting that our stockholders vote upon, on a non-binding advisory basis, a proposal to approve certain provisions contained in the amendment to the certificate of incorporation of Parent that materially

 

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  affect stockholder rights. This vote is not otherwise required by Delaware law, but, consistent with SEC guidance, we are submitting these provisions to our stockholders separately for approval. The stockholder vote regarding these proposals is an advisory vote and is not binding on us or our Board. Furthermore, the Business Combination is not conditioned on the approval of the Charter Proposals. Please see the section entitled “Proposal No. 2—The Charter Proposals.

 

Q:

Why is ENPC providing stockholders with the opportunity to vote on the Business Combination?

 

A:

Our charter requires that we provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination in conjunction with either a tender offer or a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than pursuant to a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the Business Combination Proposal in order to provide our public stockholders with the opportunity to redeem their public shares in connection with the closing of the Transactions.

 

Q:

What will happen in the Business Combination?

 

A:

At the closing, (i) ENPC Merger Sub will merge with and into ENPC, with ENPC being the surviving corporation in the merger and a wholly-owned subsidiary of Parent and (ii) GREP Merger Sub will merge with and into GREP, with GREP being the surviving company in the merger and a wholly-owned subsidiary of Parent. Upon consummation of the Business Combination, Parent will become the public company and the name of the public company will be Granite Ridge Resources, Inc. Each public stockholder’s ENPC common stock and ENPC warrants will be automatically converted into an equivalent number of shares of Parent common stock and Parent warrants as a result of the Transactions. 495,357 shares of ENPC Class F common stock will be converted to 1,238,393 shares of ENPC Class A common stock (of which 371,518 of those shares shall, upon conversion to Parent common stock, be subject to certain vesting and forfeiture provisions), the remaining shares of ENPC Class F common stock outstanding and all other ENPC Class A common stock held by the Sponsor and directors of ENPC will be automatically cancelled for no consideration, and all ENPC Class B common stock outstanding, ENPC private placement warrants and ENPC working capital warrants will be deemed transferred to ENPC and will be surrendered and forfeited for no consideration. Following the ENPC Class F Conversion, the Sponsor Share Cancellation, the ENPC Class B Contribution and the CAPSTM Separation, each share of ENPC Class A common stock outstanding will be automatically converted into one share of Parent common stock. The aggregate consideration to be paid in the Transactions to the Existing GREP Members will consist of 130.0 million shares of Parent common stock.

 

Q:

What equity stake will current ENPC stockholders and Existing GREP Members hold in Parent after the closing?

 

A:

The following table summarizes the pro forma equity ownership in Parent common stock immediately following the Business Combination under five redemption scenarios. For additional information, see the sections entitled “Summary of the Proxy Statement/Prospectus — Impact of the Business Combination on Parent’s Public Float” and “Summary Unaudited Pro Forma Condensed Combined Financial Information.”

 

    Assuming
No
Redemptions(1)(2)
    Assuming
25%
Redemptions(1)(4)
    Assuming
50%
Redemptions(1)(5)
    Assuming
75%
Redemptions(1)(6)
    Assuming
Maximum
Redemptions(1)(7)(8)
 

ENPC public stockholders

    24.0     19.2     13.7     7.3     0.4

Sponsor and independent directors(3)

    0.5     0.5     0.6     0.6     0.7

Existing GREP Members

    75.5     80.3     85.8     92.1     99.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    100.0     100.0     100.0     100.0     100.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Percentages may not add to 100% due to rounding.

(1)

Based on an aggregate of 172,266,875 shares of Parent common stock (excluding the SPAC Vesting Shares), which will be issued as consideration in the Transactions and does not take into account the dilutive effects of (i) the exercise of approximately 10,350,000 public warrants to purchase Parent’s common stock that will be outstanding following the Business Combination, (ii) any equity awards that may be issued under the proposed Incentive Plan following the Business Combination or (iii) the unvested SPAC Vesting Shares held by Sponsor and the ENPC independent directors. If the actual facts are different than these assumptions (which is likely), the ownership percentages held by each of our existing stockholders, Sponsor, ENPC independent directors and the Existing GREP Members will be different.

(2)

Assumes that none of our stockholders exercise redemption rights.

(3)

Excludes 371,518 SPAC Vesting Shares.

(4)

Assumes that 10,350,000 shares of our Class A common stock are redeemed for cash.

(5)

Assumes that 20,700,000 shares of our Class A common stock are redeemed for cash.

(6)

Assumes that 31,050,000 shares of our Class A common stock are redeemed for cash.

(7)

Assumes that 40,899,999 shares of our Class A common stock are redeemed for cash.

(8)

Reflects the requirement pursuant to the ENPC certificate of incorporation and the Business Combination Agreement that ENPC have net tangible assets (as defined in accordance with Rule 3a51-1(g)(1) of the Exchange Act (or any successor rule)) of at least $5,000,001 upon the redemption of Class A common stock by holders of ENPC Class A common stock.

The following tables summarize the fully diluted share count of Parent common stock immediately following the Business Combination at illustrative share prices, assuming no redemptions.

 

     Illustrative Share Price  

Share count (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  

ENPC public shares

     41.4        41.4        41.4        41.4        41.4        41.4        41.4  

ENPC public warrants(1)(2)

                         0.8        2.4        3.7  

Founder Shares(3)

     1.2        1.2        1.0        0.9        0.9        0.9        0.9  

Existing GREP Members shares

     130.0        130.0        130.0        130.0        130.0        130.0        130.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     172.6        172.6        172.4        172.3        173.1        174.7        176.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Illustrative Share Price  

Value of Ownership (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  

ENPC public shares

   $ 207      $ 290      $ 373      $ 414      $ 518      $ 621      $ 745  

ENPC public warrants(1)(2)

                         10        36        67  

Founder Shares(3)

     6        9        9        9        11        13        16  

Existing GREP Members shares

     650        910        1,170        1,300        1,625        1,950        2,340  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (Pro Forma Equity Value)

   $ 863      $ 1,208      $ 1,551      $ 1,723      $ 2,164      $ 2,620      $ 3,168  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Sponsor Multiple on Invested Capital

     0.89x        1.25x        1.25x        1.25x        1.56x        1.88x        2.25x  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Values may not add to totals due to rounding.

(1)

Assumes treasury share method for ENPC public warrants.

(2)

10.35 million ENPC public warrants issued as part of the ENPC IPO with strike price of $11.50 and redemption price of $18.00.

(3)

Reflects 371,518 SPAC Vesting Shares, which vest subject to certain conditions including if the per share value of the Parent common stock falls below $10.00 per share, as applicable.

 

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The following tables summarize the fully diluted share count of Parent common stock immediately following the Business Combination at illustrative share prices, assuming that 25% of our Class A common stock is redeemed for cash.

 

     Illustrative Share Price  

Share count (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ENPC public shares

     31.1        31.1        31.1        31.1        31.1        31.1        31.1  

ENPC public warrants(1)(2)

                                 0.8        2.4        3.7  

Founder Shares(3)

     1.2        1.2        1.0        0.9        0.9        0.9        0.9  

Existing GREP Members shares

     130.0        130.0        130.0        130.0        130.0        130.0        130.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     162.3        162.3        162.0        161.9        162.7        164.3        165.7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Illustrative Share Price  

Value of Ownership (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ENPC public shares

   $ 155      $ 217      $ 279      $ 311      $ 388      $ 466      $ 559  

ENPC public warrants(1)(2)

                                 10        36        67  

Founder Shares(3)

     6        9        9        9        11        13        16  

Existing GREP Members shares

     650        910        1,170        1,300        1,625        1,950        2,340  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (Pro Forma Equity Value)

   $ 811      $ 1,136      $ 1,458      $ 1,619      $ 2,034      $ 2,465      $ 2,982  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Sponsor Multiple on Invested Capital

     0.89x        1.25x        1.25x        1.25x        1.56x        1.88x        2.25x  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Values may not add to totals due to rounding. Assumes that 10,350,000 shares of our Class A common stock are redeemed for cash.

(1)

Assumes treasury share method for ENPC public warrants.

(2)

10.35 million ENPC public warrants issued as part of the ENPC IPO with strike price of $11.50 and redemption price of $18.00.

(3)

Reflects 371,518 SPAC Vesting Shares, which vest subject to certain conditions including if the per share value of the Parent common stock falls below $10.00 per share, as applicable.

The following tables summarize the fully diluted share count of Parent common stock immediately following the Business Combination at illustrative share prices, assuming that 50% of our Class A common stock is redeemed for cash.

 

     Illustrative Share Price  

Share count (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ENPC public shares

     20.7        20.7        20.7        20.7        20.7        20.7        20.7  

ENPC public warrants(1)(2)

                                 0.8        2.4        3.7  

Founder Shares(3)

     1.2        1.2        1.0        0.9        0.9        0.9        0.9  

Existing GREP Members shares

     130.0        130.0        130.0        130.0        130.0        130.0        130.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     151.9        151.9        151.7        151.6        152.4        154.0        155.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Illustrative Share Price  

Value of Ownership (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ENPC public shares

   $ 104      $ 145      $ 186      $ 207      $ 259      $ 311      $ 373  

ENPC public warrants(1)(2)

                                 10        36        67  

Founder Shares(3)

     6        9        9        9        11        13        16  

Existing GREP Members shares

     650        910        1,170        1,300        1,625        1,950        2,340  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (Pro Forma Equity Value)

   $ 760      $ 1,064      $ 1,365      $ 1,516      $ 1,905      $ 2,310      $ 2,795  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Sponsor Multiple on Invested Capital

     0.89x        1.25x        1.25x        1.25x        1.56x        1.88x        2.25x  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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Values may not add to totals due to rounding. Assumes that 20,700,000 shares of our Class A common stock are redeemed for cash.

(1)

Assumes treasury share method for ENPC public warrants.

(2)

10.35 million ENPC public warrants issued as part of the ENPC IPO with strike price of $11.50 and redemption price of $18.00.

(3)

Reflects 371,518 SPAC Vesting Shares, which vest subject to certain conditions including if the per share value of the Parent common stock falls below $10.00 per share, as applicable.

The following tables summarize the fully diluted share count of Parent common stock immediately following the Business Combination at illustrative share prices, assuming that 75% of our Class A common stock is redeemed for cash.

 

     Illustrative Share Price  

Share count (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ENPC public shares

     10.4        10.4        10.4        10.4        10.4        10.4        10.4  

ENPC public warrants(1)(2)

                                 0.8        2.4        3.7  

Founder Shares(3)

     1.2        1.2        1.0        0.9        0.9        0.9        0.9  

Existing GREP Members shares

     130.0        130.0        130.0        130.0        130.0        130.0        130.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     141.6        141.6        141.3        141.2        142.0        143.6        145.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Illustrative Share Price  

Value of Ownership (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ENPC public shares

   $ 52      $ 72      $ 93      $ 104      $ 129      $ 155      $ 186  

ENPC public warrants(1)(2)

                                 10        36        67  

Founder Shares(3)

     6        9        9        9        11        13        16  

Existing GREP Members shares

     650        910        1,170        1,300        1,625        1,950        2,340  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (Pro Forma Equity Value)

   $ 708      $ 991      $ 1,272      $ 1,412      $ 1,776      $ 2,154      $ 2,609  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Sponsor Multiple on Invested Capital

     0.89x        1.25x        1.25x        1.25x        1.56x        1.88x        2.25x  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Values may not add to totals due to rounding. Assumes that 31,050,000 shares of our Class A common stock are redeemed for cash.

(1)

Assumes treasury share method for ENPC public warrants.

(2)

10.35 million ENPC public warrants issued as part of the ENPC IPO with strike price of $11.50 and redemption price of $18.00.

(3)

Reflects 371,518 SPAC Vesting Shares, which vest subject to certain conditions including if the per share value of the Parent common stock falls below $10.00 per share, as applicable.

 

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The following tables summarize the fully diluted share count of Parent common stock immediately following the Business Combination at illustrative share prices, assuming maximum redemptions.

 

     Illustrative Share Price  

Share count (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ENPC public shares

     0.5        0.5        0.5        0.5        0.5        0.5        0.5  

ENPC public warrants(1)(2)

                                 0.8        2.4        3.7  

Founder Shares(3)

     1.2        1.2        1.0        0.9        0.9        0.9        0.9  

Existing GREP Members shares

     130.0        130.0        130.0        130.0        130.0        130.0        130.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     131.7        131.7        131.5        131.4        132.2        133.8        135.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Illustrative Share Price  

Value of Ownership (in millions)

   $ 5.00      $ 7.00      $ 9.00      $ 10.00      $ 12.50      $ 15.00      $ 18.00  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

ENPC public shares

   $ 3      $ 4      $ 5      $ 5      $ 6      $ 8      $ 9  

ENPC public warrants(1)(2)

                                 10        36        67  

Founder Shares(3)

     6        9        9        9        11        13        16  

Existing GREP Members shares

     650        910        1,170        1,300        1,625        1,950        2,340  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (Pro Forma Equity Value)

   $ 659      $ 922      $ 1,183      $ 1,314      $ 1,652      $ 2,007      $ 2,432  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Sponsor Multiple on Invested Capital

     0.89x        1.25x        1.25x        1.25x        1.56x        1.88x        2.25x  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Values may not add to totals due to rounding. Assumes that 40,899,999 shares of our Class A common stock are redeemed for cash.

(1)

Assumes treasury share method for ENPC public warrants.

(2)

10.35 million ENPC public warrants issued as part of the ENPC IPO with strike price of $11.50 and redemption price of $18.00.

(3)

Reflects 371,518 SPAC Vesting Shares, which vest subject to certain conditions including if the per share value of the Parent common stock falls below $10.00 per share, as applicable.

 

Q:

Will ENPC obtain new financing in connection with the Business Combination?

 

A:

No. It is anticipated that the Funds will pay off and terminate their credit facilities on or prior to the closing and that Parent will enter into a new credit facility following the closing. For a summary of the material terms of the Funds’ credit facilities, see the section entitled Grey Rock’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for more information.

 

Q:

What conditions must be satisfied to complete the Transactions?

 

A:

There are a number of closing conditions in the Business Combination Agreement, including that our stockholders have approved the Transactions and adopted the Business Combination Agreement. For a summary of the conditions that must be satisfied or waived prior to completion of the Transactions, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Conditions to Closing of the Transactions.”

 

Q:

Why is ENPC proposing the Incentive Plan Proposal?

 

A:

The purpose of the Incentive Plan is to provide eligible employees, directors and consultants of Parent the opportunity to receive stock-based incentive awards in order to encourage such persons to contribute materially to the growth of Parent and align their economic interests with those of its stockholders.

 

Q:

What happens if I sell my shares of ENPC common stock before the special meeting?

 

A:

The record date for the special meeting is                 , 2022, and is earlier than the date on which we expect the Business Combination to be completed. If you transfer your shares of ENPC common stock after the

 

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  record date, but before the special meeting, unless the transferee obtains a proxy from you to vote those shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares because you will no longer be able to deliver them for cancellation upon consummation of the Business Combination. If you transfer your shares of ENPC common stock before the record date, you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in our Trust Account. Regardless of whether you transfer your shares of ENPC common stock before or after the record date, your transferee will be entitled to exercise redemption rights with respect to the shares purchased by following the procedures set forth in this proxy statement/prospectus.

 

Q:

When and where is the special meeting?

 

A:

The special meeting will be held via live webcast on                 , 2022, at                 , Eastern Time. ENPC will be holding the special meeting virtually at the following URL:                 .

 

Q:

Who may vote at the special meeting?

 

A:

Only holders of record of our common stock as of the close of business on                 , 2022 (the “record date”) may vote at the special meeting. As of the close of business on the record date, there were 43,142,000 shares of our common stock outstanding, consisting of 42,014,000 shares of Class A common stock, 300,000 shares of Class B common stock and 828,000 shares of Class F common stock and entitled to vote. Our executive officers, directors and affiliates held approximately 20% of the voting power of our outstanding shares of common stock (not including the private placement common stock), and all of such shares will be voted in favor of the Business Combination Proposal and other proposals described in this proxy statement/prospectus and presented at the special meeting pursuant to the Sponsor Agreement. For additional information, see the section entitled “Special Meeting of ENPC Stockholders — Voting Power; Record Date.”

 

Q:

What constitutes a quorum at the special meeting?

 

A:

A quorum of our stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting if a majority of the voting power of all outstanding shares of our common stock entitled to vote at the special meeting is represented at the special meeting online or by proxy. If a stockholder fails to vote his, her or its shares online or by proxy, or if a broker fails to vote online or by proxy shares held by it in nominee name, such shares will not be counted for the purposes of establishing a quorum. If a stockholder who holds his, her or its shares in “street name” through a broker or other nominee fails to give voting instructions to such broker or other nominee (a “broker non-vote”) on all of the proposals set forth in this proxy statement/prospectus, such shares will not be counted for the purposes of establishing a quorum. An abstention from voting, shares represented at the special meeting online or by proxy but not voted on one or more proposals, or a broker non-vote, so long as the stockholder has given the broker or other nominee voting instructions on at least one of the proposals in this proxy statement/prospectus, will each count as present for the purposes of establishing a quorum. In the absence of a quorum, the chairman of the special meeting may adjourn the special meeting. ENPC’s initial stockholders will count toward this quorum and, pursuant to the Sponsor Agreement entered into concurrently with the execution and delivery of the Business Combination with ENPC, Sponsor, certain stockholders of ENPC, Parent and GREP (the “Sponsor Agreement”), the ENPC initial stockholders have agreed to vote any shares of ENPC common stock owned by them in favor of the Business Combination. As of the record date for the special meeting, the presence online or by proxy of                 shares of our common stock is required to achieve a quorum.

 

Q:

What vote is required to approve the proposals presented at the special meeting?

 

A:

The approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of the outstanding shares of our common stock, voting together as a single class. Accordingly, a stockholder’s

 

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  failure to vote by proxy or to vote online at the special meeting, an abstention from voting or a broker non-vote will each have the same effect as a vote “AGAINST” the Business Combination Proposal. Additionally, the affirmative vote or written consent of (i) a majority of the outstanding shares of Class B common stock and (ii) a majority of the outstanding shares of Class F common stock, each voting as a single class, will be required for the approval of the Business Combination Proposal. Pursuant to the Sponsor Agreement, the holders of the outstanding Class B common stock and Class F Common Stock have agreed to vote all their respective shares in favor of the Business Combination Proposal.

The approval of each of the Charter Proposals, the Incentive Plan Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the total votes cast by the stockholders present and in person or represented by proxy at the special meeting and entitled to vote thereon. Accordingly, none of a stockholder’s failure to vote online or by proxy, a broker non-vote or an abstention will be considered a “vote cast,” and thus will have no effect on the outcome of the Charter Proposals, the Incentive Plan Proposal or the Adjournment Proposal. The stockholder votes regarding the Charter Proposals are advisory votes and are not binding on us or our Board.

Unlike many other blank check companies in which the initial stockholders agree to vote their Founder Shares in accordance with the majority of the votes cast by the public stockholders in connection with an initial business combination, after approval of our Board, our initial stockholders have agreed to vote their shares of Class F common stock, Class B common stock and Class A common stock, as well as any shares of common stock held by them, in favor of the Business Combination. As a result, in addition to our initial stockholders’ shares, we would need                 , or approximately                 %, of the 41,400,000 public shares outstanding to be voted in favor of a transaction in order to have the Business Combination approved. Our initial stockholders own shares representing 20% of the voting power of our outstanding shares of common stock (not including the private placement common stock). Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if our initial stockholders agreed to vote their shares of common stock in accordance with the majority of the votes cast by our public stockholders.

 

Q:

May the initial stockholders, ENPC’s directors, officers, advisors or their respective affiliates purchase shares in connection with the Business Combination?

 

A:

At any time prior to the special meeting, our initial stockholders, directors, officers, advisors or their respective affiliates may purchase shares of ENPC common stock on the open market, and may purchase shares in privately negotiated transactions from stockholders who vote, or indicate an intention to vote, against the Business Combination Proposal, or who have elected or redeem, or indicate an intention to redeem, their shares in connection with the Business Combination, although they are under no obligation to do so. Any such privately negotiated purchases may be effected at purchase prices that are in excess of fair market value or in excess of the per share pro rata portion of the Trust Account. However, none of the funds in the Trust Account will be used to make such purchases. ENPC’s initial stockholders, directors, officers, advisors and their respective affiliates may also enter into transactions with stockholders and others to provide them with incentives to acquire shares of our common stock, to vote their shares in favor of the Business Combination Proposal or to not redeem their shares in connection with the Business Combination. They have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. While the exact nature of such incentives, if any, has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such persons against potential loss in value of their shares, including the granting of put options and the transfer to such persons of shares or warrants for nominal value. Our initial stockholders, directors, officers or their respective affiliates will not effect any such purchases when they are in possession of any material non-public information relating to ENPC or Grey Rock, during a restricted period under Regulation M under the Exchange Act or in a transaction which would violate Section 9(a)(2) or Rule 10(b)-5 under the Exchange Act. Any such purchases would be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.

 

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Q:

How many votes do I have at the special meeting?

 

A:

ENPC stockholders of record as of                 , 2022, the record date for the special meeting, are entitled to the following votes at the special meeting:

 

   

the 300,000 aggregate shares of Class B common stock represent 15% of the outstanding vote of the holders of ENPC common stock;

 

   

the 828,000 aggregate shares of Class F common stock represent 5% of the outstanding vote of the holders of ENPC common stock;

 

   

the 614,000 shares of Class A common stock underlying the ENPC CAPSTM purchased by the Sponsor in the private placement (after giving effect to the Forward Split) represent                 % of the outstanding vote of the holders of ENPC common stock;

 

   

the                 shares of Class A common stock held by the holders of public shares represent                 % of the outstanding vote of the holders of ENPC common stock; and

 

   

the                 shares of Class A common stock underlying the ENPC CAPSTM represent                 % of the outstanding vote of the holders of ENPC common stock.

As of the close of business on the record date, there were 42,014,000 shares of ENPC Class A common stock, 300,000 shares of ENPC Class B common stock, 828,000 shares of ENPC Class F common stock, and 10,350,000 public warrants and 153,500 private placement warrants to purchase ENPC Class A common stock outstanding.

 

Q:

Did the Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A:

Yes. The ENPC Board engaged Stephens Inc. (“Stephens”) to provide an opinion as to fairness, from a financial point of view, of the consideration to be issued by Parent for GREP in the proposed Business Combination to the holders of ENPC Class A common stock. On May 13, 2022, Stephens rendered its oral opinion to the ENPC Board, which was subsequently confirmed in writing by delivery of Stephens’ written opinion dated the same date, based upon and subject to the assumptions, limitations and qualifications contained in its opinion, and other matters Stephens considers relevant, that the consideration to be issued by Parent for GREP in the Business Combination was fair, from a financial point of view, to the holders of ENPC Class A common stock. In analyzing the Business Combination, the Board conducted due diligence on Grey Rock and reviewed comparisons of summary financial data of Grey Rock with certain of its peers in the industry and the financial terms set forth in the Business Combination Agreement. Based on the foregoing, and advice from its other advisors and its consideration and analysis of the Business Combination, the ENPC Board concluded that the Business Combination was in the best interest of our stockholders. For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Fairness Opinion of Stephens Inc.”

The ENPC Board obtained and considered the fairness opinion to determine whether experienced, independent valuation specialists would judge the negotiated purchase price to be fair, from a financial point of view, to the holders of ENPC Class A common stock, and to provide ENPC’s stockholders with additional information to consider when deciding whether to vote in favor of the Business Combination or not, and whether to redeem their shares of ENPC Class A common stock or not.

 

Q:

How will the initial stockholders and ENPC’s directors and officers vote?

 

A:

On May 16, 2022, our initial stockholders, our executive officers and our directors, entered into the Sponsor Agreement with ENPC, Parent and GREP pursuant to which they agreed to vote any shares of our common stock owned by them in favor of the proposed Business Combination. Pursuant to the Sponsor Agreement, the Sponsor and other holders of ENPC Class F common stock have agreed to, among other things, vote in favor of the proposals in this proxy statement/prospectus and refrain from exercising any dissenters’ rights or rights of appraisal under applicable law in connection with the Business Combination and vote all ENPC Class B common stock and ENPC Class F common stock outstanding and all ENPC Class A common stock

 

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  held by them in favor of the Business Combination. As of the date of this proxy statement/prospectus, our initial stockholders, executive officers and directors own approximately 20% of the voting power of our issued and outstanding shares of common stock (not including the private placement common stock). None of our initial stockholders, executive officers or directors have entered into agreements, and are not currently in negotiations, to purchase or sell shares of our common stock prior to the record date.

 

Q:

What interests do ENPC’s current officers and directors have in the Business Combination?

 

A:

None of our Sponsor or current officers or directors will receive any interest in the Business Combination other than the interests they owned prior to the Business Combination or as described herein. Our directors and executive officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) the interests of our stockholders.

These interests include:

 

   

the fact that the Sponsor and ENPC’s officers and directors will lose their entire investment in ENPC if the Business Combination with the Funds or another business combination is not completed by December 18, 2022;

 

   

the fact that the Sponsor and ENPC’s officers, and directors have entered into a letter agreement with ENPC and the Sponsor and certain directors entered into the Sponsor Agreement, pursuant to which they have agreed not to exercise their redemption rights with respect to any Founder Shares and public shares they may hold in connection with the completion of the Business Combination;

 

   

the fact that, in connection with the Business Combination, the Sponsor, ENPC’s officers and directors will forfeit all of their ENPC common stock and ENPC warrants other than 495,357 shares of ENPC Class F common stock, which will be converted to 1,238,393 shares of Parent common stock (of which 371,518 of those shares, upon conversion to Parent common stock, will be subject to vesting and forfeiture provisions);

 

   

that the Sponsor, ENPC’s officers and directors will hold Parent common stock following the Business Combination, the aggregate value of which is estimated to be approximately $8.6 million (excluding the SPAC Vesting Shares), assuming the per share value of the Parent common stock is the same as the $9.88 per share closing price of ENPC’s Class A common stock on the NYSE as of May 13, 2022 and such shares of Parent common stock will not be subject to any lock-up provisions. The SPAC Vesting Shares do not increase the value of the foregoing Parent common stock to be held by the Sponsor, ENPC’s officers and directors, as they only vest if the per share value of the Parent common stock falls below $10.00 per share and only to the extent necessary to maintain the approximately $8.6 million value of such Parent common stock. For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Other Related Agreements — ENPC Sponsor Agreement”;

 

   

if the Trust Account is liquidated, including in the event ENPC is unable to complete the Business Combination with the Funds or another business combination by December 18, 2022, the Sponsor has agreed to indemnify ENPC to ensure that the proceeds in the Trust Account are not reduced below $10 per public share, or such lesser amount per public share as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which ENPC has entered into an acquisition agreement or claims of any third party for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;

 

   

the fact that, as of March 31, 2022, (i) the Sponsor has loaned ENPC an aggregate of approximately $770,000 for working capital purposes, and pursuant to the Business Combination Agreement, the Sponsor will cancel such loans as part of the consideration for the Business Combination and (ii) the Sponsor may loan ENPC or one of its Affiliates additional loans prior to the closing. These loans will be due and payable in full on January 11, 2023 if ENPC does not complete the Business Combination;

 

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the fact that following the Business Combination, each of ENPC’s independent directors will own 15,000 shares of Parent common stock, which if such shares were ENPC Class A common stock and unrestricted and freely tradeable would be valued at approximately $148,200 based on the closing price of ENPC’s Class A common stock on May 13, 2022;

 

   

the fact that at the closing, the Sponsor and ENPC’s officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with activities on ENPC’s behalf, directly related to legal fees, accounting fees, regulatory fees and due diligence costs not to exceed $15.4 million. However, if ENPC fails to consummate the Business Combination, they will not have any claim against the Trust Account for reimbursement and ENPC will most likely not be able to reimburse these expenses if a business combination is not completed. As of                 , 2022, ENPC’s officers, directors, initial stockholders and their affiliates have incurred approximately $                in expenses prior to the special meeting;

 

   

the continued indemnification of ENPC’s existing directors and officers and the continuation of ENPC’s directors’ and officers’ liability insurance after the Business Combination;

 

   

the fact that Sponsor will enter into the RRA and Lock-Up Agreement with Parent, certain stockholders of ENPC and the Existing GREP Members with respect to the shares of Parent common stock that will be issued as partial consideration under the Business Combination Agreement and that only the shares of Parent common stock held by the Existing GREP Members will be subject to lock-up provisions;

 

   

the fact that Sponsor and its affiliates may receive a positive rate of return on their investments in ENPC, even if other stockholders of ENPC do not receive a positive rate of return on their investments;

 

   

the fact that Michael Calbert and Dick Boyce are each members of the Executive Partner Group of Solamere, which provides them an opportunity to invest in certain Solamere transactions on a no fee/no carry basis, but does not otherwise entitle them to any other form of compensation;

 

   

the fact that Paul Ryan is a partner at Solamere, for which he receives compensation;

 

   

the fact that 75% of the managers of the Sponsor are partners of Solamere;

 

   

the fact that Alex Dunn and Paul Ryan are indirect equityholders of the Sponsor; and

 

   

the fact that certain of ENPC’s officers and directors have fiduciary and contractual duties to Solamere and other parties. As a result, those certain officers and directors had certain duties to offer certain potential business combination opportunities to certain Solamere funds before ENPC could pursue such opportunities, although this did not materially affect ENPC’s search for a business combination partner.

These interests may influence our directors in making their recommendation that you vote in favor of the approval of the Business Combination Proposal and the other proposals set forth in this proxy statement/prospectus.

 

Q:

What happens if I vote against the Business Combination Proposal?

 

A:

If the Business Combination Proposal is not approved and we do not otherwise consummate an alternative business combination by December 18, 2022, we will be required to dissolve and liquidate our Trust Account by returning the then remaining funds in such account to the public stockholders. For additional information, see the section entitled “Information About ENPC — Liquidation if No Business Combination for more information.

 

Q:

Do I have redemption rights?

 

A:

If you are a holder of public shares, you may redeem your public shares for cash equal to a pro rata share of the aggregate amount on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination (including any portion of the interest earned thereon which was not previously

 

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  used or distributed to us to pay taxes), upon the consummation of the Business Combination. A public stockholder, together with any of his, her or its affiliates or any other person with whom such holder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, with respect to an aggregate of 15% or more of the outstanding public shares. Our initial stockholders have waived their redemption rights with respect to their Founder Shares in connection with the Business Combination, and our initial stockholders have also waived their redemption rights with respect to any public shares they hold in connection with the Business Combination. All such shares held by our initial stockholders will be excluded from the pro rata calculation used to determine the per share redemption price. For illustrative purposes, based on funds in our Trust Account of approximately $414.1 million as of March 31, 2022, stockholders would have received a redemption price of approximately $10.00 per share of our Class A common stock. Additionally, shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise, holders of such shares will only be entitled to a pro rata portion of the Trust Account (including any portion of the interest earned thereon which was not previously used or distributed to us to pay taxes) upon our liquidation.

Our public stockholders will retain their public warrants even if they redeem their shares. If any of ENPC’s public stockholders as of July 5, 2022 redeem their public shares at closing in accordance with the ENPC charter but continue to hold public warrants after the closing, the aggregate value of the public warrants that may be retained by them, based on the closing trading price per public warrant of $0.82 as of July 5, 2022, would be $8.2 million, regardless of the number of shares redeemed by public stockholders.

 

Q:

Do the initial stockholders or ENPC’s directors and officers have redemption rights in connection with the Business Combination?

 

A:

No. Our initial stockholders, directors and officers have waived their redemption rights with respect to their shares of common stock in connection with the Business Combination.

 

Q:

Will how I vote affect my ability to exercise redemption rights?

 

A:

No. You may exercise your redemption rights regardless of whether, or how, you vote your shares of our common stock on the Business Combination Proposal or any other proposal described in this proxy statement/prospectus. As a result, the Business Combination Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less-liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of the NYSE.

 

Q:

How do I exercise my redemption rights?

 

A:

In order to exercise your redemption rights you must, prior to                 , Eastern Time, on                 , 2022 (two business days before the special meeting), (i) submit a written request, which includes the name of the beneficial owner of the shares to be redeemed, to our Transfer Agent that we redeem your public shares for cash, and (ii) deliver your stock to our Transfer Agent physically or electronically through The Depository Trust Company (“DTC”). The address of Continental Stock Transfer & Trust Company, our Transfer Agent, is listed under the question “Who can help answer my questions?” below.

Any demand for redemption, once made, may be withdrawn at any time until the date of the special meeting. If you deliver your shares for redemption to our Transfer Agent and decide within the required timeframe not to exercise your redemption rights, you may request that our Transfer Agent return the shares to you (physically or electronically). You may make such request by contacting our Transfer Agent at the address listed under the question “Who can help answer my questions?” below.

 

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Q:

What are the U.S. federal income tax consequences of exercising my redemption rights?

 

A:

We expect that a U.S. Holder (as defined herein) that exercises its redemption rights to receive cash from the Trust Account in exchange for its ENPC common stock generally will be treated as selling such shares in a taxable transaction resulting in recognition of capital gain or loss. There may be certain circumstances in which the redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of ENPC common stock that such U.S. Holder owns or is deemed to own (including through the public warrants and, after the transaction, the shares and warrants of Parent) prior to and following the redemption. For a more complete discussion of the U.S. federal income tax considerations of a U.S. Holder’s exercise of redemption rights and a description of the U.S. federal income tax consequences for a Non-U.S. Holder’s (as defined herein) exercise of redemption rights, please see the section entitled “Material U.S. Federal Income Tax Considerations — Redemption of Our Common Stock.”

We strongly urge you to consult your tax advisors regarding the tax consequences of exercising your redemption rights.

 

Q:

What are the U.S. federal income tax consequences to me as a result of the Business Combination?

 

A:

Subject to the assumptions, limitations and qualifications described in the section entitled “Material U.S. Federal Income Tax Considerations — U.S. Holders, it is the opinion of Kirkland & Ellis LLP (“Kirkland”) that the Mergers taken together should qualify (in whole or in part) as a tax-deferred exchange for U.S. federal income tax purposes under Section 351 of the Code.

Under Section 351(a) of the Code, persons who receive stock in the exchange must be in control of the corporation immediately after the transaction. Kirkland is unable to opine that the Mergers “will” qualify as a tax-deferred transaction under Section 351 of the Code because of certain factual and legal uncertainties as to whether the persons who receive Parent common stock in the Mergers will be in control of Parent immediately after the Mergers for purposes of Section 351(a) of the Code. Under applicable guidance, a person who receives stock in a corporation in an exchange with a prearranged plan to dispose of such stock may not be considered as holding such stock for purposes of determining control of the corporation immediately after the transaction. There are legal uncertainties as to whether this rule applies to public shareholders that receive stock in an exchange. In addition, there are factual uncertainties regarding who will receive Parent common stock in the Merger because of the level of redemptions. If none of the public stockholders elect to redeem, then the public stockholders will receive over 20% of the Parent common stock received in the Mergers and their plans may be relevant for purposes of determining whether the Mergers satisfy the control requirement and such plans would be very difficult to ascertain. While Kirkland believes that the plans of unknown public shareholders should not matter for this purpose, there is a lack of clear guidance on this issue.

In addition, the parties intend for U.S. federal income tax purposes that the ENPC Merger qualifies as a tax-deferred reorganization under Section 368(a)(2)(E) or Section 368(a)(1)(B) of the Code to the extent that the applicable requirements are satisfied. If the ENPC Merger only qualifies as a tax-deferred exchange under Section 351 of the Code and does not qualify as a tax-deferred reorganization under Section 368(a) of the Code, then the exchange of public warrants for Parent warrants in the ENPC Merger would not qualify for tax-deferred treatment and would be taxable as further described in the section entitled “Material U.S. Federal Income Tax Considerations — U.S. Holders.” There are significant factual and legal uncertainties as to whether the ENPC Merger will qualify as a tax-deferred reorganization under Section 368(a) of the Code, including that the assets of GREP are only investment-type assets and that it cannot be determined until following the closing of the Business Combination whether Parent will continue a significant line of GREP’s historic business or use a significant portion of GREP’s historic business assets. Under Section 368(a) of the Code, the acquiring corporation must continue, either directly or indirectly through certain controlled corporations, either a significant line of the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business assets in a business. However, there is an absence of guidance as to how the provisions of Section 368(a) of the Code apply in the case of an

 

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acquisition of a corporation with only investment-type assets, such as ENPC, and there are significant factual and legal uncertainties concerning the determination of this requirement. Moreover, qualification of the ENPC Merger as a tax-deferred reorganization under Section 368(a) of the Code is based on facts that will not be known until or following the closing of the Business Combination (such as the level of redemptions). As a result, Kirkland is unable to opine as to whether the ENPC Merger constitutes a reorganization under Section 368(a) of the Code. The closing of the Business Combination is not conditioned upon the receipt of an opinion of counsel that the Business Combination will so qualify as a tax-deferred reorganization under Section 368(a) of the Code.

The parties intend to report (i) the Mergers taken together as a tax-deferred exchange under Section 351 of the Code and (ii) the ENPC Merger as a tax-deferred reorganization under Section 368(a) of the Code to the extent the applicable requirements are satisfied. However, any change that is made after the date hereof in any of the foregoing bases for the intended tax treatment, including any inaccuracy of the facts or assumptions upon which such expectations were based, could adversely affect the intended tax treatment. You are strongly urged to consult your tax advisor to determine the particular U.S. federal, state, local or foreign income or other tax consequences of the Business Combination (including the ENPC Merger) to you. Please see the section entitled “Material U.S. Federal Income Tax Considerations.”

 

Q:

If I am an ENPC warrant holder, can I exercise redemption rights with respect to my warrants?

 

A:

No. The holders of ENPC warrants have no redemption rights with respect to ENPC warrants or any shares of our common stock underlying ENPC warrants. Upon consummation of the Transactions, ENPC warrants shall, by their terms, entitle the holders to purchase shares of Parent common stock in lieu of shares of ENPC Class A common stock at an exercise price of $11.50 per share (subject to adjustment).

 

Q:

Do I have appraisal rights if I object to the proposed Business Combination?

 

A:

There are no appraisal rights available to holders of the ENPC Class A common stock in connection with the Business Combination. Appraisal rights are available to holders of ENPC Class B common stock and ENPC Class F common stock that do not vote in favor of the Business Combination Agreement and who otherwise strictly comply with the procedures set forth in Section 262 of the DGCL in connection with the Business Combination. For additional information, see the section entitled “Appraisal Rights.” Pursuant to the Sponsor Agreement, the Sponsor and other holders of ENPC Class F common stock have agreed to, among other things, refrain from exercising any dissenters’ rights or rights of appraisal under applicable law in connection with the Business Combination.

 

Q:

What happens to the funds held in the Trust Account upon consummation of the Business Combination?

 

A:

If the Business Combination is consummated, the funds held in the Trust Account will be released to us, and those funds will be used to pay or fund (i) the redemption price for shares of our Class A common stock redeemed by our stockholders who properly exercise redemption rights, (ii) fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees, and other professional fees) that were incurred by or on behalf of ENPC, Parent, GREP, Grey Rock and the Merger Subs in connection with the Business Combination and the other transactions contemplated by the Business Combination Agreement, and (iii) general corporate purposes of Parent, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. For additional information, see the section entitled “Certain Relationships and Related Transactions — ENPC’s Related Party Transactions.

 

Q:

What happens if a substantial number of the public stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights?

 

A:

Public stockholders may vote in favor of the Business Combination and exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available from the

 

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  Trust Account and the number of public stockholders are reduced as a result of redemptions by public stockholders.

However, the consummation of the Business Combination is conditioned upon, among other things, approval and adoption by holders of our common stock of the (i) Transactions and (ii) the Business Combination Agreement.

In addition, with fewer shares of Parent common stock and public stockholders, the trading market for Parent common stock may be less liquid than the market for shares of Parent common stock was prior to consummation of the Business Combination and Parent may not be able to meet the listing standards for the NYSE or another national securities exchange. In addition, with less funds available from the Trust Account, the working capital infusion from the Trust Account into Parent’s business will be reduced.

 

Q:

What happens if the Business Combination is not consummated?

 

A:

There are certain circumstances under which the Business Combination Agreement may be terminated. For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Conditions to the Closing of the Transactions — Termination” for information regarding the parties’ specific termination rights.

If, as a result of the termination of the Business Combination Agreement or otherwise, we are unable to complete the Transactions or another business combination transaction by December 18, 2022 or amend our charter by approval of ENPC stockholders to extend such date, our charter provides that we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, redeem all public shares then outstanding at a per share price, payable in cash, equal to the quotient obtained by dividing (A) the aggregate amount then on deposit in the Trust Account, including interest not previously released to us for regulatory withdrawals and not previously released to pay franchise and income taxes (less up to $100,000 of such net interest to pay dissolution expenses), by (B) the total number of then outstanding shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

We expect that the amount of any distribution our public stockholders will be entitled to receive upon our dissolution will be approximately the same as the amount they would have received if they had redeemed their shares in connection with the Business Combination, subject in each case to our obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. Holders of our Founder Shares have waived any right to any liquidation distribution with respect to those shares.

In the event of liquidation, there will be no distribution with respect to our outstanding warrants. Accordingly, the warrants will expire worthless.

 

Q:

When is the Business Combination expected to be completed?

 

A:

We currently anticipate that the Business Combination will be consummated within two days following the special meeting, provided that all other conditions to the consummation of the Business Combination have been satisfied or waived in accordance with the Business Combination Agreement. In any event, we expect the closing of the Transactions to occur on or prior to                 , 2022.

For a description of the conditions to the consummation of the Business Combination, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Conditions to Closing of the Transactions.”

 

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Q:

What do I need to do now?

 

A:

Whether or not you plan to attend the special meeting, we urge you to read this proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 37, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

 

Q:

How do I vote?

 

A:

If you were a holder of record of our common stock on                 , 2022, the record date for the special meeting, you may vote with respect to the proposals online at the special meeting or any adjournment thereof, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided to you by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly represented and voted at the meeting. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a legal proxy from your broker, bank or nominee.

 

Q:

What will happen if I abstain from voting or fail to vote at the special meeting?

 

A:

At the special meeting, if you abstain from voting with respect to a particular proposal, your shares will be counted as present for purposes of establishing a quorum. For purposes of approving the proposals, failure to vote or an abstention will each have the same effect as a vote “AGAINST” the Business Combination Proposal. A failure to vote or an abstention will have no effect on the outcome of each of the Charter Proposals, the Incentive Plan Proposal and the Adjournment Proposal.

 

Q:

What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A:

Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders at the special meeting or any adjournment thereof.

 

Q:

If I am not going to attend the special meeting, should I return my proxy card instead?

 

A:

Yes. Whether you plan to attend the special meeting or not, please read this proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

Q:

If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

 

A:

No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe the proposals presented to the stockholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will be counted as present for the

 

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  purpose of determining the existence of a quorum at the special meeting so long as a stockholder has given the broker or other nominee voting instructions on at least one of the proposals set forth in this proxy statement/prospectus. However, broker non-votes will not be counted as “votes cast” at the special meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

 

Q:

May I change my vote after I have mailed my signed proxy card?

 

A:

Yes. You may change your vote by sending a later-dated, signed proxy card to our Transfer Agent at the address listed under the question “Who can help answer my questions?” below so that it is received by the Transfer Agent prior to the special meeting, or attend the special meeting online and vote. You also may revoke your proxy by sending a notice of revocation to our chief executive officer, which must be received by our chief executive officer prior to the special meeting.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

 

Q:

Who will solicit and pay the cost of soliciting proxies?

 

A:

We will pay the cost of soliciting proxies for the special meeting. We have engaged Morrow Sodali (the “Proxy Solicitor”) to assist in the solicitation of proxies for the special meeting. We will pay a fee of $37,500 plus a per call fee for any incoming or outgoing stockholder calls for such services. We will reimburse the Proxy Solicitor for reasonable out-of-pocket expenses and will indemnify the Proxy Solicitor and its affiliates against certain claims, liabilities, losses, damages and expenses. We will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of our common stock for their expenses in forwarding soliciting materials to beneficial owners of our common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q:

Who can help answer my questions?

 

A:

If you have questions about the proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact:

Emmie Watts, Investor Relations

Executive Network Partnering Corporation

137 Newbury Street

7th Floor

Boston, MA 02116

Tel: (801) 400-3077

Email: ew@enpc.co

You may also contact the Proxy Solicitor at:

Tel: (800) 662-5200 – or banks and brokers can call collect at (203) 658-9400 Email: ENPC.info@investor.morrowsodali.com

 

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To obtain timely delivery, our stockholders must request the materials no later than five business days prior to the special meeting.

You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you intend to seek redemption of your public shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to our Transfer Agent prior to the special meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, New York 10004

Attn: Mark Zimkind

E-mail: cstmail@continentalstock.com

 

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that may be important to you. To better understand the proposals to be considered at the special meeting, including the Business Combination Proposal, whether or not you plan to attend the special meeting, we urge you to read this entire proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 37. See also the section entitled “Where You Can Find More Information.”

Unless otherwise specified, all share amounts and share calculations: (i) assume no exercise of redemption rights by our public stockholders, (ii) assume that an aggregate of 130.0 million shares of Parent common stock will be issued to the Existing GREP Members as consideration in the Business Combination, and (iii) do not include (A) any warrants to purchase Parent common stock that will be outstanding following the Business Combination, or (B) any equity awards that may be issued under the proposed Incentive Plan following the Business Combination.

Parties to the Business Combination

EXECUTIVE NETWORK PARTNERING CORPORATION

ENPC is a blank check company, incorporated in Delaware, formed in June 2020 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. Based on our business activities, ENPC is a “shell company” as defined under the Exchange Act because we have no operations and nominal assets consisting almost entirely of cash.

ENPC’s Class A common stock and ENPC public warrants are currently listed on the NYSE under the symbols “ENPC” and “ENPC WS,” respectively. Certain shares of ENPC Class A common stock and ENPC public warrants currently trade as CAPSTM consisting of one share of ENPC Class A common stock and one-fourth of one redeemable warrant, and are listed on the NYSE under the symbol “ENPC.U.” The ENPC CAPSTM will automatically separate into their component securities upon consummation of the Business Combination and those component securities will be converted into Parent securities and, as a result, ENPC Class A common stock, ENPC CAPSTM and ENPC warrants will no longer trade as independent securities.

The mailing address of ENPC’s principal executive office is 137 Newbury Street, 7th Floor, Boston, Massachusetts 02116, and its telephone number is (857) 362-9205.

ENPC MERGER SUB, INC.

ENPC Merger Sub, a Delaware corporation, is a direct wholly-owned subsidiary of Parent formed on May 10, 2022 to consummate the Business Combination. In the Business Combination, ENPC Merger Sub will merge with and into ENPC, with ENPC being the surviving entity and wholly-owned subsidiary of Parent. ENPC Merger Sub owns no material assets and does not operate any business. After the consummation of the Business Combination, ENPC Merger Sub will cease to exist.

The mailing address of ENPC Merger Sub’s principal executive office is 137 Newbury Street, 7th Floor, Boston, Massachusetts 02116, and its telephone number is (857) 362-9205.

GREP MERGER SUB, LLC

GREP Merger Sub, a Delaware limited liability company, is a direct wholly-owned subsidiary of Parent formed on May 10, 2022 to consummate the Business Combination. In the Business Combination, GREP Merger

 

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Sub will merge with and into GREP, with GREP being the surviving entity and wholly-owned subsidiary of Parent. GREP Merger Sub owns no material assets and does not operate any business. After the consummation of the Business Combination, GREP Merger Sub will cease to exist.

The mailing address of GREP Merger Sub’s principal executive office is 137 Newbury Street, 7th Floor, Boston, Massachusetts 02116, and its telephone number is (857) 362-9205

GRANITE RIDGE RESOURCES, INC.

Parent, a Delaware corporation, was formed on May 9, 2022 to consummate the Business Combination. Parent owns no material assets and does not operate any business. Following the Transactions, Parent will be a public company. Parent will apply to list its common stock and warrants on the NYSE under the symbols “GRNT” and “GRNT WS,” respectively, upon the closing of the Business Combination.

The current mailing address of Parent’s principal executive office is 137 Newbury Street, 7th Floor, Boston, Massachusetts 02116, and its telephone number is (857) 362-9205.

GREY ROCK ENERGY MANAGEMENT, LLC

Grey Rock Energy Management, LLC (“Grey Rock”) manages three funds with similar strategies, Grey Rock Energy Fund, LP, a Delaware limited partnership (“Fund I”) formed in 2014, Grey Rock Energy Fund II, L.P., Grey Rock Energy Fund II-B, LP, and Grey Rock Energy Fund II-B Holdings, L.P., each Delaware limited partnerships (collectively, “Fund II”) formed in 2016, and Grey Rock Energy Fund III-A, LP, Grey Rock Energy Fund III-B, LP, and Grey Rock Energy Fund III-B Holdings, LP, each Delaware limited partnerships (collectively, “Fund III” and, together with Fund I and Fund II, the “Funds”) formed in 2018. An affiliate of Grey Rock, Grey Rock Management Partners IV, LLC, manages another fund with a similar strategy to the Funds, Grey Rock Energy Fund IV-A, LP, Grey Rock Energy Fund IV-B, LP, and Grey Rock Energy Fund IV-B Holdings, LP, each Delaware limited partnerships (collectively, “Fund IV”) formed in 2022. Fund IV is not part of the proposed Business Combination, and, unless otherwise expressly provided herein, disclosure in this proxy statement/prospectus does not include information regarding Fund IV. The Funds hold strategic investments in non-operated working interests in diversified upstream oil and gas assets in North America.

The mailing address of Grey Rock’s principal executive office 5217 McKinney Avenue, Suite 400, Dallas, Texas 75205, and its telephone number is (214) 396-2850.

GREP HOLDINGS, LLC

GREP, a Delaware limited liability company, was formed on May 9, 2022 to consummate the Business Combination. In the Business Combination, GREP Merger Sub will merge with and into GREP, with GREP being the surviving entity and wholly-owned subsidiary of Parent.

The mailing address of GREP’s principal executive office is c/o Grey Rock Energy Management, LLC, 5217 McKinney Avenue, Suite 400, Dallas, Texas 75205, and its telephone number is (214) 396-2850.

The Business Combination Agreement

This section describes the material terms of the Business Combination Agreement. The description in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the complete text of the Business Combination Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus and which is incorporated by reference in this proxy statement/prospectus. This summary does not

 

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purport to be complete and may not contain all of the information about the Business Combination Agreement that is important to you. You are encouraged to read the Business Combination Agreement carefully and in its entirety. This section is not intended to provide you with any factual information about ENPC, ENPC Merger Sub, GREP Merger Sub, Parent or GREP. Such information can be found elsewhere in this proxy statement/prospectus.

The Business Combination Agreement provides that, subject to the conditions described herein, (a) ENPC Merger Sub will merge with and into ENPC, with ENPC surviving the ENPC Merger as a wholly-owned subsidiary of Parent, and (b) GREP Merger Sub will merge with and into GREP, with GREP surviving the GREP Merger as a wholly-owned subsidiary of Parent. The aggregate consideration to be paid in the Transactions to the direct and indirect owners of GREP will consist of 130.0 million shares of Parent’s common stock. The number of shares comprising the equity consideration was determined based on a $10.00 per share value for Parent’s common stock.

Pursuant to the Business Combination Agreement and immediately prior to the effective time of the ENPC Merger, (i) 495,357 shares of ENPC Class F common stock shall be converted into 1,238,393 shares of ENPC Class A common stock (of which 371,518 shares of ENPC Class A common stock shall be subject to the vesting and forfeiture provisions set forth in the Sponsor Agreement upon their conversion to Parent common stock in accordance with the terms of the Business Combination Agreement), and the remainder of ENPC Class F common stock outstanding will automatically be cancelled without any conversion, payment or distribution with respect thereto (the “ENPC Class F Conversion”), (ii) all other remaining shares of ENPC Class A common stock held by the Sponsor shall automatically be cancelled without any conversion, payment or distribution (the “Sponsor Share Cancellation”) and (iii) all shares of ENPC Class B common stock outstanding will be deemed transferred to ENPC and be surrendered and forfeited for no consideration (the “ENPC Class B Contribution”). Effective immediately prior to the ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, any and all ENPC CAPSTM, which are composed of one share of ENPC Class A common stock and one-fourth of one ENPC warrant, shall be immediately and automatically detached and broken into their constituent parts, such that a holder of an ENPC CAPSTM shall be deemed to hold one share of ENPC Class A common stock and one-fourth of one ENPC warrant and such underlying constituent securities shall be converted or cancelled (the “CAPSTM Separation”). Following the ENPC Class F Conversion, Sponsor Share Cancellation, ENPC Class B Contribution and CAPSTM Separation, each share of ENPC Class A common stock issued and outstanding will be converted into a right to receive one share of Parent common stock. Immediately prior to the effective time of the ENPC Merger, all ENPC private placement warrants and ENPC working capital warrants will be deemed transferred to ENPC and will be surrendered and forfeited for no consideration. At the effective time of the ENPC Merger, each ENPC public warrant issued and outstanding, entitling the holder thereof to purchase one share of ENPC Class A common stock at an exercise price of $11.50 per share (after giving effect to the Forward Split and subject to further adjustment), will be converted into the right to receive a warrant to purchase one share of Parent common stock at an exercise price of $11.50 per share (subject to adjustment) upon consummation of the Business Combination. The parties will take all lawful action to effect the conversion of the ENPC public warrants into the right to receive a warrant to purchase one share of Parent common stock, including causing the Warrant Agreement to be amended or assigned to Parent to give such effect, including adding Parent as a party thereto.

The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The representations, warranties and covenants in the Business Combination Agreement are also modified in part by the underlying disclosure schedules (the “disclosure schedules”), which are not filed publicly and which are subject to a contractual

 

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standard of materiality different from that generally applicable to stockholders and which were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the disclosure schedules contain information that is material to an investment decision. Additionally, the representations and warranties of the parties to the Business Combination Agreement may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of this proxy statement/prospectus. Accordingly, no person should rely on the representations and warranties in the Business Combination Agreement or the summaries thereof in this proxy statement/prospectus as characterizations of the actual state of facts about ENPC, ENPC Merger Sub, GREP Merger Sub, Parent or GREP or any other matter. See “Proposal No. 1 — Business Combination Proposal — The Business Combination Agreement” for additional detail on these provisions.

Conditions to Closing of the Transactions

Mutual Conditions to Closing

The obligations of ENPC, Parent, ENPC Merger Sub, GREP Merger Sub and GREP to consummate the Transactions contemplated by the Business Combination Agreement also are conditioned upon, among other things:

 

   

the termination or expiration of any waiting period applicable to the HSR Act;

 

   

the absence of any government orders, decrees, rulings, injunctions or other actions in effect that restrain, enjoin, or otherwise prohibit the consummation of the Transactions, and no law having been adopted that makes consummation of the Transactions illegal or otherwise prohibited;

 

   

the Business Combination Proposal having been approved by the ENPC stockholders at the special meeting;

 

   

the closing of the Redemption Offer (as defined in the Business Combination Agreement);

 

   

this proxy statement/prospectus shall have become effective in accordance with the provisions of the Securities Act, no stop order shall have been issued by the SEC and shall remain in effect with respect to this proxy statement/prospectus, and no proceeding seeking such a stop order shall have been threatened or initiated by the SEC and remain pending; and

 

   

ENPC having net tangible assets (as defined in accordance with Rule 3a51-1(g)(1) of the Exchange Act (or any successor rule)) of at least $5,000,001.

ENPC’s Conditions to Closing

The obligations of ENPC, Parent, ENPC Merger Sub and GREP Merger Sub to consummate the Transactions contemplated by the Business Combination Agreement also are conditioned upon, among other things:

 

   

the accuracy of the representations and warranties of GREP (subject to customary bring-down standards);

 

   

the covenants of GREP having been performed in all material respects;

 

   

the delivery by GREP to ENPC of a certificate with respect to the truth and accuracy of such party’s representations and warranties as of the closing, as well as the performance by such party of the covenants and agreements contained in the Business Combination Agreement required to be complied with by such party prior to the closing;

 

   

GREP having delivered, or standing ready to deliver, all closing deliveries as required by the Business Combination Agreement; and

 

   

the occurrence of all of the pre-closing transactions under the Business Combination Agreement.

 

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GREP’s Conditions to Closing

The obligations of GREP to consummate the Transactions contemplated by the Business Combination Agreement also are conditioned upon, among other things:

 

   

the accuracy of the representations and warranties of ENPC, Parent, ENPC Merger Sub and GREP Merger Sub (subject to customary bring-down standards);

 

   

the covenants of ENPC, Parent, ENPC Merger Sub and GREP Merger Sub having been performed in all material respects;

 

   

the delivery by ENPC to GREP of a certificate with respect to the truth and accuracy of ENPC’s, Parent’s, ENPC Merger Sub’s and GREP Merger Sub’s representations and warranties as of the closing, as well as the performance by such party of the covenants and agreements contained in the Business Combination Agreement required to be complied with by such party prior to the closing;

 

   

the Parent common stock and the Parent warrants having been approved for listing on NYSE;

 

   

ENPC having transferred or as of the closing shall transfer to Parent cash or immediately available funds equal to the funds in the Trust Account (net of the ENPC Stockholder Redemption Amount (as defined in the Business Combination Agreement) and payment of any transaction expenses of ENPC), together with the net cash proceeds to ENPC resulting from any issuance of ENPC Class A common stock after the execution date and before the closing; and

 

   

ENPC having delivered, or standing ready to deliver, all closing deliveries as required by the Business Combination Agreement.

Termination

The Business Combination Agreement may be terminated and the Transactions abandoned prior to the closing of the Transactions as follows:

 

   

by mutual written consent of ENPC and GREP;

 

   

by either ENPC or GREP if any governmental entity issues any order, decree, ruling or injunction or takes any other action permanently restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the Business Combination Agreement and such order, decree, ruling or injunction or other action shall have become final and nonappealable or if there shall be adopted any law that makes consummation of the Transactions contemplated by the Business Combination Agreement illegal or otherwise prohibited; provided, however, that the right to terminate shall not be available to the terminating party if the failure to fulfill any material covenant or agreement under the Business Combination Agreement by ENPC, Parent, ENPC Merger Sub or GREP Merger Sub (in the case where ENPC is the terminating party) or GREP (in the case where GREP is the terminating party) has been the cause of or resulted in the circumstances described in the foregoing;

 

   

by either ENPC or GREP in the event that any breach of a representation, warranty or covenant would cause the failure of a condition relating to such matters, and such breach cannot be or has not been cured by the earlier of thirty (30) days after notice is given and December 18, 2022 (“Terminable Breach”); provided, however, that neither the party terminating nor its affiliates is also in Terminable Breach of the Business Combination Agreement;

 

   

by either ENPC or GREP if, after the final adjournment of the special meeting at which a vote of ENPC’s stockholders has been taken, the requisite approval of ENPC’s stockholders has not been obtained with respect to the Business Combination Proposal; and

 

   

by either ENPC or GREP if the Transactions have not been consummated on or before 5:00 p.m., Dallas time on December 18, 2022; provided, however, that such right to terminate will not be

 

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available to the terminating party if failure to fulfill any material covenant or agreement by ENPC, Parent, ENPC Merger Sub or GREP Merger Sub (in the case where ENPC is the terminating party) or GREP (in the case where GREP is the terminating party) has been the cause of or resulted in the failure of the consummation of the Transactions on or before such date.

Effect of Termination

If the Business Combination Agreement is terminated in accordance with its terms, subject to certain exceptions, the parties will have no liability or obligation under such agreement; provided, however, that no party will be relieved or released from any liabilities arising out of any Willful and Material Breach (as defined in the Business Combination Agreement) of a covenant, agreement or obligation thereunder. Each party to the Business Combination Agreement will only bear its own termination expenses, except as otherwise provided by the Business Combination Agreement.

For more information about the transactions contemplated by the Business Combination Agreement, see the section entitled “Proposal No. 1 — The Business Combination Proposal.”

Other Related Agreements

ENPC Sponsor Agreement

Concurrently with the execution of the Business Combination Agreement, ENPC, Parent, the Sponsor, GREP and certain holders of ENPC Class F common stock (such holders, together with the Sponsor, the “Class F Holders”) entered into the Sponsor Agreement (the “Sponsor Agreement”), pursuant to which, among other things, the Class F Holders agreed to (a) vote their respective shares of ENPC Class F common stock, ENPC Class B common stock, and ENPC Class A common stock in favor of approving the Business Combination Agreement and the Transactions, (b) waive any adjustment to the conversion ratio set forth in ENPC’s organizational documents or any other anti-dilution or similar protection to which they are entitled with respect to their shares of Class F common stock and (c) be bound by certain transfer restrictions with respect to their shares of Class F common stock and other equity securities of ENPC prior to the closing.

Additionally, pursuant to the terms of the Sponsor Agreement, 371,518 of the shares of Parent common stock issuable to the Class F Holders in connection with the Mergers will be unvested as of the closing and will vest (and shall not be subject to forfeiture) if on the 90th calendar day following the closing (such date, the “Adjustment Date”), the volume weighted average price of a share of Parent common stock for the trailing twenty trading days ending on the day prior to the Adjustment Date (“Adjustment VWAP”) is less than $10.00. In such case, all or a portion of the SPAC Vesting Shares shall vest such that the product of (i) the vested SPAC Vesting Shares plus all other shares of Parent common stock issued to the Class F Holders in the Mergers, multiplied by (ii) the Adjustment VWAP shall equal $8,668,750; provided that the Adjustment VWAP shall be no less than $7.00 for purposes of foregoing calculation. Any SPAC Vesting Shares not vesting in accordance with the foregoing will be deemed to be transferred by the forfeiting holder to Parent for no consideration and shall be cancelled by Parent and cease to exist.

The obligations under the Sponsor Agreement will terminate upon the earlier to occur of (x) the closing of the transactions contemplated by the Business Combination Agreement and (y) the date on which the Business Combination Agreement is terminated in accordance with its terms. The Sponsor Agreement also provides for the waiver of certain appraisal and dissenters’ rights.

A copy of the Sponsor Agreement is attached hereto as Annex D and is incorporated by reference into this proxy statement/prospectus. You are encouraged to read the Sponsor Agreement in its entirety. For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Other Related Agreements — ENPC Sponsor Agreement.”

 

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Registration Rights and Lock-Up Agreement

In connection with the consummation of the Business Combination, Parent will enter into a Registration Rights and Lock-Up Agreement (the “RRA and Lock-Up Agreement”) with Parent, Sponsor, certain stockholders of ENPC and the Existing GREP Members interests with respect to the shares of Parent common stock that will be issued as consideration under the Business Combination Agreement. The RRA and Lock-Up Agreement includes, among other things, the following provisions:

Registration Rights. Parent will be required to file a resale shelf registration statement on behalf of the Parent security holders promptly after the closing of the Transactions to register approximately 131.2 million shares of Parent common stock held by the Existing GREP Members and certain stockholders of ENPC. The RRA and Lock-Up Agreement will also provide certain demand rights and piggyback rights to the Parent security holders, subject to certain specified underwriter cutbacks and issuer blackout periods. Parent shall bear all costs and expenses incurred in connection with the resale shelf registration statement, any demand registration statement, any underwritten takedown, any block trade, any piggyback registration statement and all expenses incurred in performing or complying with its other obligations under the RRA and Lock-Up Agreement, whether or not the registration statement becomes effective.

Lock-Up. Existing GREP Members will not be able to transfer any shares of Parent common stock beneficially owned or otherwise held by them for a period that is the earlier of (i) 180 days from the date of closing; (ii) the date on which the closing price of the Parent common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and similar transactions) for any 20 trading days within any 30-trading day period or (iii) the date on which Parent completes a liquidation, merger, stock exchange or other similar transaction that results in all of Parent’s stockholders having the right to exchange their shares of Parent common stock for cash, securities or other property (such period as described by clauses (i) — (iii), the “Lock-up Period”).

Termination of Letter Agreement. In connection with the consummation of the Transactions, the letter agreement, dated September 15, 2020, by and among ENPC, Sponsor and the other parties thereto, will be terminated at closing and Sponsor and such parties will not be restricted from transferring any shares of Parent common stock beneficially owned or otherwise held by them.

For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Other Related Agreements — Registration Rights and Lock-Up Agreement.”

Management Services Agreement

In connection with the consummation of the Business Combination, Manager will enter into a Management Services Agreement with Parent (the “MSA”). Under the MSA, Manager will provide general management, administrative and operating services covering the oil and gas assets and other properties of Parent (the “Assets”) and the day-to-day business and affairs of Parent relating to the Assets. Parent shall pay Manager an annual services fee of $10 million and shall reimburse Manager for certain Parent group costs related to the operation of the Assets (including for third party costs allocated or attributable to the Assets). The initial term of the MSA expires on April 30, 2028; however, the MSA will automatically renew for additional consecutive one-year renewal terms until terminated in accordance with its terms. Upon any termination of the MSA, Manager shall provide transition services for a period of up to 90 days.

If Parent terminates the MSA for convenience prior to the end of the initial term or any renewal term if less than 90 days’ notice is given by Parent, or upon a change of control of Parent (or a sale of all or substantially all the assets of Parent), or if Manager terminates the MSA due to Parent’s uncured material breach of the MSA,

 

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then Parent will be required to pay a termination fee to Manager equal to the lesser of $10 million or 50% of the remaining unpaid annual service fee applicable to the remainder of the initial term or to any renewal term, as applicable. Parent will not be required to pay a termination fee if the MSA is terminated by notice (a) by Parent with at least 90 days’ notice prior to expiration of the initial term or any renewal term, or (b) by Parent (i) upon a change of control or bankruptcy of Manager, (ii) upon the occurrence of certain key person events, (iii) upon the occurrence of uncured circumstances of malfeasance by Manager or certain of its employees or (iv) upon Manager’s uncured material breach of the MSA.

Manager is obligated to provide the services in good faith, in a workmanlike, reasonable and prudent manner, with at least the same degree of care, judgment and skill as historically provided by Manager with respect to the Assets prior to the Business Combination, in accordance with customary oil and gas industry practices and standards and in material compliance with contractual requirements affecting the Assets and all applicable laws. Manager will also indemnify Parent for (i) Manager’s own gross negligence, willful misconduct and actual fraud and (ii) any claims by Manager’s (and its affiliates’) employees or consultants relating to the terms and conditions of their employment or arrangement with Manager or such affiliate, except and excluding claims under agreements with Parent or its subsidiaries.

During the term of the MSA, each of Manager and Parent will be required to present to the other all opportunities sourced by it to acquire or invest in upstream oil, gas or other hydrocarbon assets located in North America. During the Term, each such opportunity will be offered 75% to Parent and 25% to Fund IV (as defined in the MSA) (or any additional oil and gas-focused funds or investment vehicles formed by affiliates of Manager admitted as a party to the MSA in accordance with its terms).

For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — Other Related Agreements — Management Services Agreement.”

Organizational Structure

Pre-Business Combination Grey Rock Structure

Grey Rock manages three funds with similar strategies, Fund I formed in 2014, Fund II formed in 2016, and Fund III formed in 2018. An affiliate of Grey Rock, Grey Rock Management Partners IV, LLC, manages another fund with a similar strategy to the Funds, Grey Rock Energy Fund IV-A, LP, Grey Rock Energy Fund IV-B, LP, and Grey Rock Energy Fund IV-B Holdings, LP, each Delaware limited partnerships (collectively, “Fund IV”) formed in 2022. Fund IV is not part of the proposed Business Combination, and, unless otherwise provided herein, disclosure in this proxy statement/prospectus does not include information regarding Fund IV. The Funds hold strategic investments in non-operated working interests in diversified upstream oil and gas assets in North America.

 

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Immediately prior to the closing of the Business Combination, the Funds and the Existing GREP Members will contribute the properties of each of the Funds to GREP. The diagram below illustrates what the ownership of GREP will look like immediately following the contribution of the properties of the Funds to GREP but prior to the closing of the Business Combination:

 

LOGO

The Business Combination Agreement provides, among other things, that (a) ENPC Merger Sub will merge with and into ENPC (the “ENPC Merger”), with ENPC surviving the ENPC Merger as a wholly-owned subsidiary of Parent, and (b) GREP Merger Sub will merge with and into GREP (the “GREP Merger,” together with the ENPC Merger, the “Mergers”), with GREP surviving the GREP Merger as a wholly-owned subsidiary of Parent.

Pursuant to the Business Combination Agreement and immediately prior to the effective time of the ENPC Merger, (i) 495,357 shares of ENPC Class F common stock shall be converted into 1,238,393 shares of ENPC Class A common stock (of which 371,518 shares of ENPC Class A common stock shall be subject to the vesting and forfeiture provisions set forth in the Sponsor Agreement upon their conversion to Parent common stock in accordance with the terms of the Business Combination Agreement), and the remainder of ENPC Class F common stock outstanding will automatically be cancelled without any conversion, payment or distribution with respect thereto (the “ENPC Class F Conversion”), (ii) all other remaining shares of ENPC Class A common stock held by the Sponsor shall automatically be cancelled without any conversion, payment or distribution (the “Sponsor Share Cancellation”) and (iii) all shares of ENPC Class B common stock outstanding will be deemed transferred to ENPC and be surrendered and forfeited for no consideration (the “ENPC Class B Contribution”). Effective immediately prior to the ENPC Class F Conversion, Sponsor Share Cancellation and ENPC Class B Contribution, any and all ENPC CAPSTM, which are composed of one share of ENPC Class A common stock and one-fourth of one ENPC warrant, shall be immediately and automatically detached and broken into their constituent parts, such that a holder of an ENPC CAPSTM shall be deemed to hold one share of ENPC Class A common stock and one-fourth of one ENPC warrant and such underlying constituent securities shall be converted or cancelled (the “CAPSTM Separation”). Following the ENPC Class F Conversion, Sponsor Share Cancellation, ENPC Class B Contribution and CAPSTM Separation, each share of ENPC Class A common stock issued and outstanding will be converted into a right to receive one share of Parent common stock. Immediately prior to the effective time of the ENPC Merger, all ENPC private placement warrants and ENPC working capital warrants

 

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will be deemed transferred to ENPC and will be surrendered and forfeited for no consideration. At the effective time of the ENPC Merger, each ENPC public warrant issued and outstanding, entitling the holder thereof to purchase one share of ENPC Class A common stock at an exercise price of $11.50 per share (after giving effect to the Forward Split and subject to further adjustment), will be converted into the right to receive a warrant to purchase one share of Parent common stock at an exercise price of $11.50 per share (subject to adjustment) upon consummation of the Business Combination. The parties will take all lawful action to effect the conversion of the ENPC public warrants into the right to receive a warrant to purchase one share of Parent common stock, including causing the Warrant Agreement to be amended or assigned to Parent to give such effect, including adding Parent as a party thereto.

Pre-Business Combination ENPC Structure

The diagram below illustrates what the ownership of ENPC will look like immediately prior to the closing of the Business Combination(1)(2):

 

LOGO

 

 

(1)

Shares shown as held by Sponsor include shares held by certain directors of ENPC.

(2)

Assumes no redemptions by public stockholders of ENPC common stock.

 

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Post-Business Combination Parent Structure

The diagram below illustrates what the ownership of Parent will look like immediately following the closing of the Business Combination(1)(2):

 

LOGO

 

(1)

See diagrams above and “Frequently Used Terms” for the entities comprising the “Grey Rock Energy Funds” and “Existing GREP Members.”

(2)

Assumes no redemptions by public stockholders of ENPC common stock.

Redemption Rights

Pursuant to our charter, in connection with the Business Combination, holders of our public shares may elect to have their shares redeemed for cash at a redemption price per share calculated in accordance with our charter. As of March 31, 2022, this would have amounted to approximately $10.00 per share. If a holder of public shares properly exercises his, her or its redemption rights, then such holder will be exchanging his, her or its shares of

 

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our Class A common stock for cash and will no longer own such shares. See the section entitled “Special Meeting of ENPC Stockholders — Redemption Rights and Procedures” for the procedures to be followed if you wish to redeem your shares for cash and not own the Parent common stock following consummation of the Business Combination.

Notwithstanding the foregoing, a holder of public shares, together with any of its affiliates or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from exercising redemption rights with respect to an aggregate of 15% or more of the public shares.

We will not consummate the Transactions or redeem any public shares if public stockholders redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001.

Impact of the Business Combination on Parent’s Public Float

The following table summarizes the pro forma equity ownership in Parent common stock immediately following the Business Combination under five redemption scenarios.

 

    Assuming
No
Redemptions(1)(2)
    Assuming
25%
Redemptions(1)(4)
    Assuming
50%
Redemptions(1)(5)
    Assuming
75%
Redemptions(1)(6)
    Assuming
Maximum
Redemptions(1)(7)(8)
 

ENPC public stockholders

    24.0     19.2     13.7     7.3     0.4

Sponsor and independent directors(3)

    0.5     0.5     0.6     0.6     0.7

Existing GREP Members

    75.5     80.3     85.8     92.1     99.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    100.0     100.0     100.0     100.0     100.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Percentages may not add to 100% due to rounding.

(1)

Based on an aggregate of 172,266,875 shares of Parent common stock excluding the SPAC Vesting Shares, which will be issued as consideration in the Transactions and does not take into account the dilutive effects of (i) the exercise of approximately 10,350,000 public warrants to purchase Parent’s common stock that will be outstanding following the Business Combination, (ii) any equity awards that may be issued under the proposed Incentive Plan following the Business Combination or (iii) the unvested SPAC Vesting Shares held by Sponsor and the ENPC independent directors. If the actual facts are different than these assumptions (which is likely), the ownership percentages held by each of our existing stockholders, Sponsor, ENPC independent directors and the Existing GREP Members will be different.

(2)

Assumes that none of our stockholders exercise redemption rights.

(3)

Excludes 371,518 SPAC Vesting Shares.

(4)

Assumes that 10,350,000 shares of our Class A common stock are redeemed for cash.

(5)

Assumes that 20,700,000 shares of our Class A common stock are redeemed for cash.

(6)

Assumes that 31,050,000 shares of our Class A common stock are redeemed for cash.

(7)

Assumes that 40,899,999 shares of our Class A common stock are redeemed for cash.

(8)

Reflects the requirement pursuant to the ENPC certificate of incorporation and the Business Combination Agreement that ENPC have net tangible assets (as defined in accordance with Rule 3a51-1(g)(1) of the Exchange Act (or any successor rule)) of at least $5,000,001 upon the redemption of Class A common stock by holders of ENPC Class A common stock.

Board of Directors of Parent Following the Business Combination

Upon consummation of the Business Combination, Parent’s board of directors will initially consist of up to seven directors, with each director having a term that expires as described herein until the applicable annual

 

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meeting of stockholders, or in each case until their respective successors are duly elected and qualified, or until their earlier resignation, removal or death. Griffin Perry and Matthew Miller will serve as the co-Chairmen of the Board. For additional information, see the section entitled “Management of Parent Following the Business Combination.

Regulatory Matters

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and the related rules and regulations issued by the Federal Trade Commission (the “FTC”), the waiting period of certain transactions, including the Business Combination, expired at 11:59 p.m. Eastern Time on June 30, 2022. For additional information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Business Combination Agreement — Covenants.”

Tax Considerations

For a detailed discussion of the material U.S. federal income tax consequences of the Business Combination, please see the section entitled “Material U.S. Federal Income Tax Considerations.”

Sources and Uses of Funds

The following tables summarize the sources and uses for funding the Business Combination, assuming none of ENPC’s outstanding shares of Class A common stock are redeemed in connection with the Business Combination.

 

Source of Funds (in millions)

   Amount      Percentage    

Uses(1) (in millions)

   Amount      Percentage  

Existing Cash held in Trust Account(1)

   $ 414        24   Cash to Balance Sheet    $ 377        22

Equity Rollover

     1,300        75  

Equity Rollover

     1,300        75

Sponsor Promote(2)

     9        1  

Sponsor Promote(2)

     9        1

Total Sources

   $ 1,723        100  

Fees and Expenses

     37        2
  

 

 

    

 

 

         
       

Total Uses

   $ 1,723        100
          

 

 

    

 

 

 

 

(1)

Excludes interest earned in the trust.

(2)

Assumes Sponsor retains 0.867 million shares of Parent common stock at the closing.

Accounting Treatment

The unaudited pro forma condensed combined financial statements included elsewhere in this proxy statement/prospectus present the pro forma effects of the following transactions collectively referred to in such pro forma condensed combined financial statements as the “Transactions”:

 

   

The formation transaction of Grey Rock Energy Partners Fund, LP, (“Grey Rock Energy Fund I” or “Fund I”) and its business combination with Grey Rock Energy Fund II, LP and its subsidiaries, Grey Rock Energy Fund II-B, LP, Grey Rock Energy Fund II-B Holdings and its subsidiaries and Grey Rock Preferred Limited Partner II, L.P (“Grey Rock Energy Fund II” or “Fund II”) and Grey Rock Energy Fund III-A, LP and its subsidiaries, Grey Rock Energy Fund III-B, LP, Grey Rock Energy Fund III-B Holdings, L.P. and its subsidiaries and Grey Rock Preferred Limited Partner III, L.P. (“Grey Rock Energy Fund III” or “Fund III”) (the “GREP Formation Transaction”);

 

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The business combination of GREP and ENPC, referred to in such pro forma condensed combined financial statements as the “Business Combination.”

The GREP Formation Transaction will be accounted for as a business combination pursuant to the guidance in Accounting Standards Codification 805, Business Combinations (“ASC 805”), using the acquisition method of accounting. Fund I has been identified as the acquirer and “predecessor” to the combined company. Management determined that Fund I was the predecessor as it preceded the formation of Fund II and Fund III and common management and ownership exists between each of the three Funds. For purposes of effecting the GREP Formation Transaction, Fund II and Fund III were not deemed to be entities under common control for financial reporting purposes. Under the acquisition method, Fund I will record the assets acquired and liabilities assumed from the Funds at their respective fair values at the acquisition date. The allocation of the preliminary estimated purchase price with respect to the Business Combination is based upon management’s estimates of and assumptions related to the fair values of assets to be acquired and liabilities to be assumed as of March 31, 2022, using currently available information.

The Business Combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, ENPC is treated as the “acquired” company for financial reporting purposes. Fund I has been determined to be the accounting acquirer because the Existing GREP Members, as a group, will retain a majority of the outstanding shares of the combined company as of the closing of the Business Combination, and they have nominated all members of the Parent board of directors as of the closing of the Business Combination.

The pro forma adjustments reflecting the GREP Formation Transaction and the consummation of the Business Combination are based on certain currently available information and certain assumptions and methodologies that management believes are reasonable under the circumstances. The pro forma adjustments, which are described in the accompanying notes to the unaudited condensed combined financial statements included elsewhere in this proxy statement/prospectus, may be revised as additional information becomes available and is evaluated. Therefore, it is likely the actual adjustments will differ from the pro forma adjustments, and it is possible that the difference may be material. Management believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the GREP Formation Transaction and the Business Combination based on information available to management at this time and the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial statements.

Appraisal Rights

Appraisal rights are not available to holders of ENPC Class A common stock in connection with the Business Combination. Holders of ENPC Class B common stock and ENPC Class F common stock that do not vote in favor of the Business Combination Agreement and who otherwise strictly comply with the procedures set forth in Section 262 of the DGCL, have the right to seek appraisal of the fair value of their respective shares of ENPC Class B common stock and ENPC Class F common stock, as determined by the Delaware Court of Chancery, if the ENPC Merger is completed. The “fair value” of shares of ENPC Class B common stock and ENPC Class F common stock as determined by the Delaware Court of Chancery could be more or less than, or the same as, the value of the consideration that a stockholder would otherwise be entitled to receive under the terms of the Business Combination Agreement.

Pursuant to the Sponsor Agreement, the Sponsor and other holders of ENPC Class F common stock have agreed to, among other things, refrain from exercising any dissenters’ rights or rights of appraisal under applicable law in connection with the Business Combination.

 

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The ENPC Board of Directors’ Reasons for the Approval of the Business Combination

The Board considered a wide variety of factors in connection with its evaluation of the Business Combination. In light of the complexity of those factors, the Board, as a whole, did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it took into account in reaching its decision. Individual members of the Board may have given different weight to different factors. This explanation of the reasons for the Board’s approval of the Business Combination, and all other information presented in this section, is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Note Regarding Forward-Looking Statements.

Before reaching its decision, the Board reviewed the results of the due diligence conducted by Sponsor, ENPC’s management and advisors, which included: 

 

   

extensive meetings and calls with management of Grey Rock to understand and analyze Grey Rock’s business and the business of GREP;

 

   

review by ENPC management of the results of financial, tax, legal, land, title, environmental and accounting due diligence materials prepared by ENPC’s advisors;

 

   

review of the financial statements of GREP and the Funds;

 

   

review of industry trends;

 

   

review of comparable companies, including Northern Oil and Gas, Inc.; and

 

   

reviews of certain projections provided by GREP.

The factors considered by the Board included, but were not limited to, the following.

 

   

Strong Fit with Stated Objectives of ENPC. Business characteristics are consistent with ENPC’s target objective to partner with a company which does not need substantial operational improvement and existing owners who wants to continue ownership of a high-quality asset but need to provide liquidity to existing stockholders and/or limited partners. Existing owners share a longer-term investment orientation and were not looking for immediate liquidity as part of the transaction.

 

   

Well-Positioned Asset with Attractive Geology. GREP focuses on core basins with lowest costs, operated by experienced partners with a focus on full cycle returns and single well economics. ENPC’s and GREP’s management believe there are further opportunities for improving efficiencies through technology and optimizing well design.

 

   

Strong Liquidity Profile. After giving effect to the Business Combination, Parent expects to have substantial free cash flow and strong liquidity, giving Parent the financial flexibility to fund development projects and pursue opportunistic acquisitions.

 

   

Accretive Acquisition Opportunities. More than $10 billion in capital has been deployed in the fragmented lower-48 non-op space, providing Parent ample opportunity to execute its growth strategy. Consolidation opportunities, including divestiture programs from independent companies and subscale private and public entities, coupled with historically low private equity investment in this area create exploitable market opportunity to make acquisitions at favorable valuations.

 

   

Compelling Long-Term Growth Opportunities. Strong revenue and Adjusted EBITDA growth projections through 2022 are consistent with a general growth in the upstream oil and gas industry. Geopolitical events potentially provide backdrop of higher oil and natural gas pricing than recent history.

 

   

Seasoned Management Team. The Grey Rock management team, which will continue to perform services for the Company under the MSA, brings veteran leadership with highly relevant upstream oil

 

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and gas experience (in addition to the highly relevant experience of the Parent’s anticipated Chief Executive Officer and Chief Financial Officer).

 

   

Opinion of Stephens. The Board received the oral opinion of Stephens (which was confirmed by Stephens’ written opinion dated May 13, 2022) that the consideration to be issued by Parent for GREP in the Business Combination was fair, from a financial point of view, to the holders of ENPC Class A common stock. See “Proposal No. 1 — The Business Combination Proposal — Fairness Opinion of Stephens Inc.”

In the course of its deliberations, the Board considered a variety of uncertainties, risks and other potentially negative reasons relevant to the Business Combination, including, but not limited to, the below:

 

   

The risk that the potential benefits of the Business Combination may not be fully achieved, or may not be achieved within the expected time frame and the significant fees, expenses and time and effort of management associated with completing the Business Combination.

 

   

The risk that the Transactions might not be consummated or completed in a timely manner or that the closing might not occur despite ENPC’s best efforts, including by reason of a failure to obtain the approval of ENPC’s stockholders, litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin the consummation of the Business Combination.

 

   

Lower oil or natural gas prices, increases in drilling costs or costs to acquire undeveloped leasehold interests and the resulting effects on GREP’s ability to grow its asset base efficiently and to sell oil or natural gas at favorable prices will reduce GREP’s operating margins, impact its ability to attract customers and could have a material adverse effect on its business, financial condition and results of operations.

 

   

Oil, natural gas and natural gas liquids prices are volatile. Key valuation metrics factor in recent, material increases in oil and natural gas prices. A sustained decline in oil, natural gas and natural gas liquids prices and other market and economic conditions could have a material adverse effect on GREP’s business, financial condition and results of operations.

 

   

Planned development and acquisition projects require substantial capital that may be expensive or unavailable, which could lead to a decline in GREP’s ability to access or grow production and reserves.

 

   

The estimated reserves are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present values of the reserves. GREP and third-party advisors have a wide range of estimates of proven reserves.

 

   

Development of PUDs may take longer and may require higher levels of capital expenditures than currently anticipated. Therefore, the estimated PUDs may not be ultimately developed or produced. PUDs represent a large portion of GREP’s PV-10 value.

 

   

If commodity prices decrease to a level such that future undiscounted cash flows are less than the carrying value of the Assets, Parent may be required to take write-downs of the carrying values of its properties.

 

   

GREP does not operate its wells so is subject to the capability and development timeline of the operators with which it partners.

 

   

Continuing coronavirus outbreaks may have a material adverse effect on GREP’s business, liquidity, financial condition and results of operations.

 

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Regulatory changes or actions may restrict the development of upstream oil and gas properties in a manner that may require GREP to cease certain or all operations, which could have a material adverse effect on its business, financial condition, results of operations and growth prospects.

 

   

Concerns about greenhouse gas emissions and global climate change may result in environmental taxes, charges, assessments or penalties and could have a material adverse effect on GREP’s business, financial condition and results of operations.

After considering the foregoing potentially negative and potentially positive reasons, the Board concluded, in its business judgment, that the potentially positive reasons relating to the Transactions outweighed the potentially negative reasons. In connection with its deliberations, the Board also considered that ENPC’s executive officers and directors may have financial interests in the Business Combination that may be different from or in addition to (and may conflict with) the interests of other ENPC stockholders. The Board was aware of and considered these interests, among other matters, in reaching the determination that the Transactions contemplated by the Business Combination Agreement were advisable and in the best interests of ENPC and its stockholders. See — Interests of Certain Persons in the Business Combination.”

The Charter Proposals

At the closing, Parent will adopt the amended and restated certificate of incorporation in the form set forth in Annex B. Assuming the Business Combination Proposal is approved, ENPC’s stockholders are also being asked to approve, on a non-binding advisory basis, the material differences between ENPC certificate of incorporation and Parent’s amended and restated certificate of incorporation that will be effective upon the closing. See the section entitled “Proposal No. 2 — The Charter Proposals.

The Incentive Plan Proposal

The proposed Incentive Plan will be effective upon closing of the Business Combination, subject to approval by our stockholders at the special meeting. The proposed Incentive Plan will reserve up to 6,500,000 shares of Parent common stock for issuance in accordance with the plan’s terms. The purpose of the Incentive Plan is to provide eligible employees, directors and consultants the opportunity to receive stock-based incentive awards in order to encourage them to contribute materially to Parent’s growth and to align the economic interests of such persons with those of its stockholders. The summary of the Incentive Plan above is qualified in its entirety by reference to the complete text of the Incentive Plan, a copy of which is attached as Annex C to this proxy statement/prospectus. You are encouraged to read the Incentive Plan in its entirety. See the section entitled “Proposal No. 3 — The Incentive Plan Proposal.

The Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the special meeting to permit us to approve the Business Combination Proposal, the Adjournment Proposal allows us to adjourn the special meeting to a later date, if necessary, to permit further solicitation of proxies. See the section entitled Proposal No. 4 — The Adjournment Proposal.

Quorum and Vote Required for Approval of the Proposals at the Special Meeting

A quorum of our stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting if a majority of the voting power of all outstanding shares of our common stock entitled to vote at the special meeting is represented at the meeting in person or by proxy. If a stockholder fails to vote his, her or its shares online or by proxy, or if a broker fails to vote online or by proxy shares held by it in nominee name, such

 

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shares will not be counted for the purposes of establishing a quorum. If a stockholder who holds his, her or its shares in “street name” through a broker or other nominee fails to give voting instructions to such broker or other nominee (a “broker non-vote”) on all of the proposals set forth in this proxy statement/prospectus, such shares will not be counted for the purposes of establishing a quorum. An abstention from voting shares represented at the special meeting online or by proxy but not voted on one or more proposals or a broker non-vote, so long as the stockholder has given the broker or other nominee voting instructions on at least one of the proposals in this proxy statement/prospectus, will each count as present for the purposes of establishing a quorum. As of the date of this proxy statement/prospectus, our executive officers, directors and affiliates held approximately 20% of the voting power of our outstanding shares of common stock (not including the private placement common stock). All of such shares will be voted in favor of the Business Combination Proposal and other proposals described in this proxy statement/prospectus and presented at the special meeting.

The approval of the Business Combination Proposal requires the affirmative vote of holders of a majority of the outstanding shares of our common stock, voting together as a single class. Accordingly, a stockholder’s failure to vote by proxy or to vote online at the special meeting, an abstention from voting or a broker non-vote will each have the same effect as a vote “AGAINST” the Business Combination Proposal. Additionally, the affirmative vote or written consent of (i) a majority of the outstanding shares of Class B common stock and (ii) a majority of the outstanding shares of Class F common stock, each voting as a single class, will be required for the approval of the Business Combination Proposal. Pursuant to the Sponsor Agreement, the holders of the outstanding Class B common stock and Class F common stock have agreed to vote all their respective shares in favor of the Business Combination Proposal.

The approval of each of the Charter Proposals, the Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of holders of a majority of the total votes cast by the stockholders present and in person or represented by proxy at the special meeting and entitled to vote thereon. Accordingly, none of a stockholder’s failure to vote online or by proxy, a broker non-vote or an abstention will be considered a “vote cast,” and thus will have no effect on the outcome of the Charter Proposals, the Incentive Plan Proposal or the Adjournment Proposal. The stockholder votes regarding the Charter Proposals are advisory votes and are not binding on us or our Board.

The Business Combination Proposal is not conditioned on the approval of any other proposal. The Incentive Plan Proposal is conditioned on the approval of the Business Combination Proposal. Neither the Charter Proposals nor the Adjournment Proposal are conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event the Business Combination Proposal does not receive the requisite vote for approval, then we will not consummate the Business Combination. If we do not consummate a business combination or amend the ENPC certificate of incorporation by stockholder approval by December 18, 2022, we will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such Trust Account to our public stockholders. For more information, see the section entitled “Proposal No. 1 — The Business Combination Proposal — The Business Combination Agreement — Covenants.

Recommendation to ENPC Stockholders

Our Board believes that each of the Business Combination Proposal, the Charter Proposals, the Incentive Plan Proposal and the Adjournment Proposal to be presented at the special meeting is in the best interest of ENPC and unanimously recommends that our stockholders vote “FOR” each of the proposals.

Interests of Certain Persons in the Business Combination

In considering the recommendation of our Board to vote in favor of the Business Combination Proposal, stockholders should be aware that, aside from their interests as stockholders, the Sponsor and certain of ENPC’s

 

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directors and officers have interests in the Business Combination that are different from or in addition to (and may conflict with) those of other stockholders. ENPC’s directors were aware of and considered these interests in evaluating the Business Combination and in recommending to stockholders that they approve the Business Combination. Stockholders should take these interests into account in deciding whether to approve the Business Combination. These interests include:

 

   

the fact that the Sponsor and ENPC’s officers and directors will lose their entire investment in ENPC if the Business Combination with the Funds or another business combination is not completed by December 18, 2022;

 

   

the fact that the Sponsor and ENPC’s officers, and directors have entered into a letter agreement with ENPC and the Sponsor and certain directors entered into the Sponsor Agreement, pursuant to which they have agreed not to exercise their redemption rights with respect to any Founder Shares and public shares they may hold in connection with the completion of the Business Combination;

 

   

the fact that, in connection with the Business Combination, the Sponsor, ENPC’s officers and directors will forfeit all of their ENPC common stock and ENPC warrants other than 495,357 shares of ENPC Class F common stock, which will be converted to 1,238,393 shares of Parent common stock (of which 371,518 of those shares, upon conversion to Parent common stock, will be subject to vesting and forfeiture provisions);

 

   

that the Sponsor, ENPC’s officers and directors will hold Parent common stock following the Business Combination, the aggregate value of which is estimated to be approximately $8.6 million (excluding the SPAC Vesting Shares), assuming the per share value of the Parent common stock is the same as the $9.88 per share closing price of ENPC’s Class A common stock on the NYSE as of May 13, 2022 and such shares of Parent common stock will not be subject to any lock-up provisions. The SPAC Vesting Shares do not increase the value of the foregoing Parent common stock to be held by the Sponsor, ENPC’s officers and directors, as they only vest if the per share value of the Parent common stock falls below $10.00 per share and only to the extent necessary to maintain the approximately $8.6 million value of such Parent common stock. For additional information, see the section entitled “Proposal No. 1— The Business Combination Proposal — Other Related Agreements — ENPC Sponsor Agreement”;

 

   

if the Trust Account is liquidated, including in the event ENPC is unable to complete the Business Combination with the Funds or another business combination by December 18, 2022, the Sponsor has agreed to indemnify ENPC to ensure that the proceeds in the Trust Account are not reduced below $10 per public share, or such lesser amount per public share as is in the Trust Account on the liquidation date, by the claims of prospective target businesses with which ENPC has entered into an acquisition agreement or claims of any third party for services rendered or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the Trust Account;

 

   

the fact that, as of March 31, 2022, (i) the Sponsor has loaned ENPC an aggregate of approximately $770,000 for working capital purposes, and pursuant to the Business Combination Agreement, the Sponsor will cancel such loans as part of the consideration for the Business Combination and (ii) the Sponsor may loan ENPC or one of its Affiliates additional loans prior to the closing. These loans will be due and payable in full on January 11, 2023 if ENPC does not complete the Business Combination;

 

   

the fact that following the Business Combination, each of ENPC’s independent directors will own 15,000 shares of Parent common stock with a value of $150,000 (assuming a price of $10.00 per share), which if such shares were ENPC Class A common stock and unrestricted and freely tradeable would be valued at approximately $148,200 based on the closing price of ENPC’s Class A common stock on May 13, 2022;

 

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the fact that at the closing, the Sponsor and ENPC’s officers and directors will be reimbursed for out-of-pocket expenses incurred in connection with activities on ENPC’s behalf, directly related to legal fees, accounting fees, regulatory fees and due diligence costs not to exceed $15.4 million. However, if ENPC fails to consummate the Business Combination, they will not have any claim against the Trust Account for reimbursement and ENPC will most likely not be able to reimburse these expenses if a business combination is not completed. As of                 , 2022, ENPC’s officers, directors, initial stockholders and their affiliates have incurred approximately $            in expenses prior to the special meeting;

 

   

the continued indemnification of ENPC’s existing directors and officers and the continuation of ENPC’s directors’ and officers’ liability insurance after the Business Combination;

 

   

the fact that Sponsor will enter into the RRA and Lock-Up Agreement with Parent, certain stockholders of ENPC and the Existing GREP Members with respect to the shares of Parent common stock that will be issued as partial consideration under the Business Combination Agreement and that only the shares of Parent common stock held by the Existing GREP Members will be subject to lock-up provisions;

 

   

the fact that Sponsor and its affiliates may receive a positive rate of return on their investments in ENPC, even if other stockholders of ENPC do not receive a positive rate of return on their investments;

 

   

the fact that Michael Calbert and Dick Boyce are each members of the Executive Partner Group of Solamere, which provides them an opportunity to invest in certain Solamere transactions on a no fee/no carry basis, but does not otherwise entitle them to any other form of compensation;

 

   

the fact that Paul Ryan is a partner at Solamere, for which he receives compensation;

 

   

the fact that 75% of the managers of the Sponsor are partners of Solamere;

 

   

the fact that Alex Dunn and Paul Ryan are indirect equityholders of the Sponsor; and

 

   

the fact that certain of ENPC’s officers and directors have fiduciary and contractual duties to Solamere and other parties. As a result, those certain officers and directors had certain duties to offer certain potential business combination opportunities to certain Solamere funds before ENPC could pursue such opportunities, although this did not materially affect ENPC’s search for a business combination partner.

Summary of Risk Factors

Grey Rock’s, the Funds’ and ENPC’s business and operations are subject to a number of risks and uncertainties, including those highlighted in the section entitled “Risk Factors” immediately following this summary. Some of these principal risks include the following:

Risks Related to the Funds’ Business and Operations

 

   

As a non-operator, the Funds’ development of successful operations relies extensively on third parties.

 

   

Oil and natural gas prices are volatile. Extended declines in such prices have adversely affected, and could in the future adversely affect, the Funds’ business and results of operations. Geopolitical factors, including actions by OPEC and hostilities between Russia and Ukraine, as well as economic conditions, including economic downturn or recession may impact oil and natural gas prices.

 

   

The Funds’ estimated reserves are based on many assumptions that may prove to be inaccurate.

 

   

The Funds’ future success depends on Grey Rock’s ability to replace reserves that its operators produce.

 

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Certain of the Funds’ undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established, operations are commenced or the leases are extended.

 

   

Deficiencies of title to the Funds’ leased interests could significantly affect the Funds’ financial condition.

 

   

Inflation could adversely impact the Funds’ ability to control its costs, including its operating partners.

 

   

The COVID-19 pandemic has had, and may continue to have, a material adverse effect on the Funds’ financial condition and results of operations.

 

   

Various laws and regulations govern environmental aspects of the oil and gas business.

 

   

Fuel conservation measures, technological advances and negative shift in market perception towards the oil and natural gas industry could reduce demand for oil and natural gas.

 

   

Increased attention to environmental, social and governance matters may impact the Funds’ business.

Risks Related to ENPC and the Nature of its Business

 

   

Risks and conditions related to ENPC’s liquidity and capital resources raise substantial doubt about ENPC’s ability to continue as a going concern.

 

   

If ENPC is unable to complete a business combination by December 18, 2022, ENPC will be forced to wind up.

 

   

ENPC’s stockholders may be held liable for claims by third parties to the extent of distributions they received.

Risks Related to the Business Combination

 

   

The Sponsor, ENPC directors and executive officers, and their affiliates, own interests in ENPC that will be worthless if the transactions are not approved, which may have influenced their decisions.

 

   

ENPC may not be able to realize the anticipated benefits from the Business Combination.

 

   

ENPC and the Funds will incur substantial costs in connection with the Business Combination.

Risks Related to Parent Following the Business Combination

 

   

Following the Business Combination, Parent will be reliant on the Manager for various certain key services under the MSA.

 

   

The relative lack of public company experience by Parent’s management team may put Parent at a competitive disadvantage.

Risks Related to Ownership of Parent Common Stock Following the Business Combination

 

   

Parent will qualify as an “emerging growth company”, which could make its securities less attractive.

 

   

If the Business Combination’s benefits do not meet the expectations of financial analysts, the market price of Parent common stock may decline after the Business Combination.

 

   

Future issuances of debt or equity securities, or future sales by Parent or its stockholders following the Business Combination, could cause the market price for Parent common stock to decline.

 

   

Anti-takeover provisions in the Parent Charter and Bylaws could delay or prevent a change of control.

 

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Parent will be a “controlled company” under the corporate governance rules of the NYSE.

 

   

Parent could be adversely affected by changes in applicable tax laws, regulations, or administrative interpretations thereof in the United States or other jurisdictions.

Risks Related to Redemptions

 

   

If ENPC’s stockholders fail to properly request redemption rights, they will not be entitled to redeem their shares for a pro rata portion of the Trust Account.

 

   

ENPC public stockholders, together with any persons with whom they are acting as a “group”, will be restricted from seeking redemption rights with respect to more than 15% of public shares.

 

   

There is no guarantee that a public stockholder’s decision whether to redeem shares for a pro rata portion of the Trust Account will put such stockholder in a better future economic position.

Risks If the Adjournment Proposal Is Not Approved

 

   

If the adjournment proposal is not approved, and ENPC is not otherwise authorized to consummate the Business Combination, the Business Combination will not be approved.

 

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SUMMARY HISTORICAL FINANCIAL INFORMATION OF ENPC

The following table sets forth summary historical financial information derived from ENPC’s unaudited financial statements as of and for the three months ended March 31, 2022. The following table also sets forth summary historical financial information derived from ENPC’s audited financial statements as of December 31, 2020 and 2021 and for the period from June 22, 2020 (inception) through December 31, 2020 and the year ended December 31, 2021. You should read the following summary financial information in conjunction with the section entitled “ENPC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and ENPC’s financial statements and related notes appearing elsewhere in this proxy statement/prospectus.

We have neither engaged in any operations nor generated any revenue to date. Our only activities from inception through March 31, 2022 were organizational activities and those necessary to complete the IPO and identifying a target company for a business combination. We do not expect to generate any operating revenue until after the completion of the Business Combination.

 

       For the Three Months  
Ended March 31,
    For the Year Ended
December 31, 2021
    For the Period from
June 22, 2020
(inception) through
December 31, 2020
 
     2022     2021  
(in thousands, except per share data)    (Unaudited)              

Statement of Operations Data:

        

General and administrative expenses

   $ 498     $ 277     $ 1,964     $ 173  

Administrative fee — related party

     60       60       240       80  

Franchise tax expense

     25       49       159       104  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (583     (386     (2,363     (357

Other (loss) income:

        

Change in fair value of derivative warrant liabilities

     3,879       1,997       3,794       2,836  

Offering costs associated with derivative warrants liabilities

     —       —         —       (182

Income from investments held in Trust Account

     27       10       41       12  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ 3,323     $ 1,622     $ 1,472     $ 2,309  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ENPC Class A common stock outstanding, basic and diluted (1)

     42,014       42,014       42,014       22,857  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income per share, ENPC common stock

   $ 0.08     $ 0.04     $ 0.03     $ 0.10  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ENPC Class B common stock outstanding, basic and diluted (2)

     300       300       300       300  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income per share, ENPC common stock

   $ 0.08     $ 0.04     $ 0.03     $ 0.10  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ENPC Class F common stock outstanding, basic and diluted (3)

     828       828       828       779  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic and diluted net income per share, ENPC common stock

   $ 0.08     $ 0.04     $ 0.03     $ 0.10  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

On March 24, 2021, ENPC effected a 2.5:1 forward stock split for each share of Class A common stock issued and outstanding. All shares and associated amounts have been retroactively restated to reflect the stock split.

 

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(2)

On July 17, 2020, ENPC effected a 100:1 stock split for each share of Class B common stock issued and outstanding. On March 24, 2021, ENPC effected a 2.5:1 forward stock split for each share of Class B common stock issued and outstanding. All shares and associated amounts have been retroactively restated to reflect the stock splits.

(3)

On July 29, 2020, ENPC effected a reverse stock split for all Class F common stock issued and outstanding. On September 17, 2020, ENPC effected a 1 for 1.2 forward stock split for all Class F common stock issued and outstanding. All shares and associated amounts have been retroactively restated to reflect the stock splits.

 

     March 31,
2022
     December 31,
2021
     December 31,
2020
 
(in thousands)    (Unaudited)                

Balance Sheet Data:

        

Cash

   $ 153      $ 94      $ 888  

Prepaid expenses

     118        207        441  
     

 

 

    

 

 

 

Total current assets

     271        301        1,329  

Investments held in Trust Account

     414,080        414,053        414,011  
  

 

 

    

 

 

    

 

 

 

Total Assets

     414,351        414,354        415,340  
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     2,180        1,196        291  

Convertible note — related party

     —        430        —  

Derivative warrant liabilities

     3,256        7,136        10,930  
  

 

 

    

 

 

    

 

 

 

Total Liabilities

     5,436        8,762        11,221  

Class A common stock subject to possible redemption

     414,000        414,000        414,000  

Accumulated deficit

     (5,085      (8,408      (9,881

Total equity

     408,915        405,592        404,119  
  

 

 

    

 

 

    

 

 

 

Total liabilities and stockholders’ capital

   $ 414,351      $ 414,354      $ 415,340  
  

 

 

    

 

 

    

 

 

 

 

     For the Three Months
Ended March 31,
    For the Year
Ended
December 31, 
2021
    For the Period
from June 22, 2020
(inception) through
December 31, 
2020
 
     2022     2021  
(in thousands)   

(Unaudited)

             

Statement of Cash Flows Data:

        

Net cash provided by (used in) operating activities

   $ (280   $ (207   $ (1,224   $ (562

Net cash provided by (used in) investing activities

     —       —       —       (414,000

Net cash provided by (used in) financing activities

     340       —       430       415,451  

 

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SUMMARY HISTORICAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF GREY ROCK ENERGY PARTNERS FUND, LP

The summary statement of operations and cash flow information of Grey Rock Energy Partners Fund, LP and its subsidiaries (“Fund I”) for the three months ended March 31, 2022 and 2021, as well as the balance sheet information as of March 31, 2022, are derived from the unaudited condensed consolidated financial statements of Fund I included elsewhere in this proxy statement/prospectus. The summary statement of operations and of cash flow information of Fund I for the years ended December 31, 2021, 2020 and 2019, as well as the balance sheet information as of December 31, 2021 and 2020, are derived from the audited consolidated financial statements of Fund I included elsewhere in this proxy statement/prospectus. The unaudited condensed consolidated financial statements were prepared on the same basis as the audited consolidated financial statements. In Grey Rock’s management’s opinion, such financial statements include all adjustments, consisting of normal recurring adjustments that Grey Rock’s management considers necessary for a fair presentation of the financial information for those periods.

The historical results of Fund I are not necessarily indicative of the results that may be expected in the future. You should read the following summary consolidated historical financial data together with the section titled “Grey Rock’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Fund I” and the audited consolidated financial statements of Fund I and related notes included elsewhere in this proxy statement/prospectus.

 

     Three Months Ended March 31,      Year Ended December 31,  
(in thousands)    2022      2021      2021     2020     2019  

Statements of Operations Information Revenues

            

Oil, natural gas, and related sales

   $ 1,809      $ 2,933      $ 10,257     $ 9,791     $ 13,440  

Operating expenses

            

Lease Operating Expenses

     397        572        1,799       2,156       2,980  

Production Taxes

     119        152        627       619       865  

Depletion and accretion expense

     438        1,189        3,038       9,837       7,262  

Impairment expense

     —          —          —         5,725       —    

General and administrative

     120        64        389       1,270       1,567  

Gain on disposal of oil and natural gas properties

     —          —          (1,341     (597     (4,910
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Total expenses

     1,074        1,977        4,512       19,010       7,764  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Net operating income (loss)

     735        956        5,745       (9,219     5,676  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Other (expense) income

            

(Loss) gain on derivative contracts

     (569      (746      (1,842     1,714       (1,371

Interest expense

     (12      (42      (138     (245     (665

Total other (expense) income

     (581      (788      (1,980     1,469       (2,036

Net income (loss)

   $ 154      $ 168      $ 3.765     $ (7,750   $ 3,640  
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 
     Three Months Ended March 31,      Year Ended December 31,  
     2022      2021      2021     2020     2019  

Statements of Cash Flow Information:

            

Net cash provided by operating activities

   $ 945      $ 1,289      $ 5,473     $ 8,152     $ 6,426  

Net cash (used in) provided by investing activities

     (421      (720      21,280       (6,455     8,154  

Net cash used in financing activities

     (400      (1,000      (27,300     (2,500     (13,241

 

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Table of Contents
     As of March 31,      As of December 31,  
Balance Sheet Information:    2022      2021      2020  

Cash

   $ 864      $ 740      $ 1,287  

Property and equipment, net

     15,071        15,046        37,711  

Total assets

     17,145        16,999        40,784  

Credit facilities

     700        1,100        6,400  

Total partners’ capital

     15,128        14,974        33,209  

 

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SUMMARY HISTORICAL CONDENSED COMBINED FINANCIAL INFORMATION OF GREY ROCK ENERGY FUND II

The summary statement of operations and cash flow information of Grey Rock Energy Fund II, LP and its subsidiaries, Grey Rock Energy Fund II-B, LP, Grey Rock Energy Fund II-B Holdings and its subsidiaries and Grey Rock Preferred Limited Partner II, L.P. (“Grey Rock Energy Fund II” or “Fund II”) for the three months ended March 31, 2022 and 2021, as well as the balance sheet information as of March 31, 2022, are derived from the unaudited condensed combined financial statements of Fund II included elsewhere in this proxy statement/prospectus. The summary statement of operations and of cash flow information of Fund II for the years ended December 31, 2021 and 2020, as well as the balance sheet information as of December 31, 2021 and 2020, are derived from the audited combined financial statements of Fund II included elsewhere in this proxy statement/prospectus. The unaudited condensed combined financial statements were prepared on the same basis as the audited combined financial statements. In Grey Rock’s management’s opinion, such financial statements include all adjustments, consisting of normal recurring adjustments that Grey Rock’s management considers necessary for a fair presentation of the financial information for those periods.

The historical results of Fund II are not necessarily indicative of the results that may be expected in the future. You should read the following summary historical financial data together with the section titled “Grey Rock’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Fund II” and the audited combined financial statements of Fund II and related notes included elsewhere in this proxy statement/prospectus.

 

     Three Months Ended March 31,      Year Ended December 31,  
(in thousands)    2022     2021      2021      2020  

Statements of Operations Information

          

Revenues

          

Oil, natural gas, and related sales

   $ 24,573     $ 14,974      $ 82,391      $ 49,017  

Operating expenses

          

Lease Operating Expenses

     3,607       2,743        13,128        13,760  

Production Taxes

     1,044       1,070        5,675        3,564  

Depletion and accretion expense

     5,438       8,369        31,090        47,980  

General and administrative

     1,086       850        3,528        3,672  

Gain on disposal of oil and natural gas properties

     —         (955      (938      (51
  

 

 

   

 

 

    

 

 

    

 

 

 

Total expenses

     11,175       12,077        52,483        68,925  
  

 

 

   

 

 

    

 

 

    

 

 

 

Net operating income (loss)

     13,398       2,897        29,908        (19,908
  

 

 

   

 

 

    

 

 

    

 

 

 

Other (expense) income

          

(Loss) gain on derivative contracts

     (8,770     (3,110      (13,232      8,363  

Interest expense

     (184     (193      (848      (1,167

Total other (expense) income

     (8,954     (3,303      (14,080      7,196  

Net income (loss)

   $ 4,444     $ (406    $ 15,828      $ (12,712
  

 

 

   

 

 

    

 

 

    

 

 

 
     Three Months Ended March 31,      Year Ended December 31,  
     2022     2021      2021      2020  

Statements of Cash Flow Information:

          

Net cash provided by operating activities

   $       13,091     $       10,471      $       43,990      $       44,569  

Net cash used in investing activities

     (5,773     (5,547      (13,288      (29,420

Net cash used in financing activities

     (3,000     (6,302      (31,191      (11,876

 

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Table of Contents
     As of March 31,      As of December 31,  
     2022      2021      2020  

Balance Sheet Information:

        

Cash

   $ 8,112      $ 3,794      $ 4,283  

Property and equipment, net

     158,876        155,336        173,600  

Total assets

     183,046        173,541        186,897  

Credit facilities

     17,000        20,000        22,093  

Total partners’ capital

     150,105        145,661        158,918  

 

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Table of Contents

SUMMARY HISTORICAL CONDENSED COMBINED FINANCIAL INFORMATION OF GREY ROCK ENERGY FUND III

The summary statement of operations and cash flow information of Grey Rock Energy Fund III-A, LP and its subsidiaries, Grey Rock Energy Fund III-B, LP, Grey Rock Energy Fund III-B Holdings, L.P. and Grey Rock Preferred Limited Partner III, L.P. (“Grey Rock Energy Fund III” or “Fund III”) for the three months ended March 31, 2022 and 2021, as well as the balance sheet information as of March 31, 2022, are derived from the unaudited condensed combined financial statements of Fund III included elsewhere in this proxy statement/prospectus. The summary statement of operations and of cash flow information of Fund III for the years ended December 31, 2021 and 2020, as well as the balance sheet information as of December 31, 2021 and 2020, are derived from the audited combined financial statements of Fund III included elsewhere in this proxy statement/prospectus. The unaudited condensed combined financial statements were prepared on the same basis as the audited combined financial statements. In Grey Rock’s management’s opinion, such financial statements include all adjustments, consisting of normal recurring adjustments that Grey Rock’s management considers necessary for a fair presentation of the financial information for those periods.

The historical results of Fund III are not necessarily indicative of the results that may be expected in the future. You should read the following summary historical financial data together with the section titled “Grey Rock’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Fund III” and the audited combined financial statements of Fund III and related notes included elsewhere in this proxy statement/prospectus.

 

     Three Months Ended March 31,      Year Ended December 31,  
(in thousands)    2022      2021      2021      2020  

Statements of Operations Information Revenues

           

Oil, natural gas, and related sales

   $ 67,469      $ 39,224      $ 197,546      $ 28,290  

Operating expenses

           

Lease Operating Expenses

     4,636        2,258        12,362        5,147  

Production Taxes

     3,786        1,916        10,808        1,815  

Depletion and accretion expense

     10,249        14,390        60,534        22,130  

General and administrative

     1,567        1,608        6,262        5,166  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     20,238        20,172        89,966        34,258  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net operating income (loss)

     47,231        19,052        107,580        (5,968
  

 

 

    

 

 

    

 

 

    

 

 

 

Other (expense) income

           

(Loss) gain on derivative contracts

     (19,056      (3,431      (17,315      2,928  

Interest expense

     (329      (111      (1,399      (428

Total other (expense) income

     (19,385      (3,542      (18,714      2,500  

Net income (loss)

   $ 27,846      $ 15,510      $ 88,866        (3,468
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three Months Ended March 31,      Year Ended December 31,  
     2022      2021      2021      2020  

Statements of Cash Flow Information:

           

Net cash provided by operating activities

   $       42,029      $       24,063      $   131,715      $   14,085  

Net cash used in investing activities

     (37,662      (17,419      (194,014      (80,868

Net cash provided by (used in) financing activities

     (916      9,654        66,980        66,447  

 

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Table of Contents
     As of March 31,      As of December 31,  
     2022      2021      2020  

Balance Sheet Information:

        

Cash

   $ 10,771      $ 7,319      $ 2,638  

Property and equipment, net

     324,384        278,391        172,481  

Total assets

     400,207        356,190        192,862  

Credit facilities

     28,949        29,938        9,897  

Total partners’ capital

     342,141        314,296        178,429  

 

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Table of Contents

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The summary unaudited pro forma condensed combined financial information of ENPC presented below has been derived from the “Unaudited Pro Forma Condensed Combined Financial Statements” included elsewhere in this proxy statement/prospectus. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of SEC Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Business” to aid you in your analysis of the financial aspects of the Transactions (as defined below) and is for informational purposes only. The unaudited pro forma condensed combined financial information presents the pro forma effects of the following transactions collectively referred to as the “Transactions” for purposes of the summary unaudited pro forma condensed combined financial information:

 

   

The GREP Formation Transaction

 

   

The business combination of Grey Rock and ENPC, referred to in this section as the “Business Combination”

The GREP Formation Transaction will be accounted for as a business combination pursuant to the guidance in Accounting Standards Codification 805, Business Combinations (“ASC 805”), using the acquisition method of accounting. Grey Rock Energy Fund I has been identified as the acquirer and “predecessor” to the Combined Company (as further described elsewhere in this proxy statement/prospectus).

The Business Combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, ENPC is treated as the “acquired” company for financial reporting purposes.

The pro forma balance sheet as of March 31, 2022 gives pro forma effect to the Transactions as if they had occurred on March 31, 2022. The pro forma statement of operations for the three months ended March 31, 2022 and the year ended December 31, 2021 give pro forma effect to the Transactions as if they had occurred on January 1, 2021.

The pro forma financial statements are presented to reflect the Transactions and do not represent what ENPC’s financial position or results of operations would have been had the Transactions occurred on the dates noted above, nor do they project the financial position or results of operations of the Company following the Transactions. The transaction accounting adjustments are based on available information and certain assumptions that management believes are factually supportable and are expected to have a continuing impact on the results of operations with the exception of certain non-recurring charges to be incurred in connection with the Transactions. In the opinion of management, all adjustments necessary to present fairly the summary unaudited pro forma condensed combined financial statements have been made.

The summary unaudited pro forma financial statements should be read together with the sections titled “ENPC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Grey Rock’s Management’s Discussion and Analysis of Financial Condition and Results of Operations – Fund I, Fund II and Fund III,” and the historical financial statements and related notes thereto of ENPC, Grey Rock Energy Fund I, Grey Rock Energy Fund II and Grey Rock Energy Fund III included elsewhere in this proxy statement/prospectus.

The summary unaudited pro forma condensed combined financial information contained herein assumes that the ENPC stockholders approve the Business Combination. ENPC cannot predict how many of its ENPC

 

31


Table of Contents

stockholders will exercise their right to redeem their ENPC common stock for cash. Therefore, the following tables present summary unaudited pro forma condensed combined financial information after giving effect to the Transactions under two scenarios:

 

   

Assuming No Redemptions: This scenario assumes that no stockholders of ENPC exercise redemption rights with respect to their ENPC common stock for a pro rata share of the funds in the Investment Held in Trust Account.

 

   

Assuming Maximum Redemptions: This scenario assumes that 40,899,999 of the ENPC common stock are redeemed for their pro rata share (approximately $10.00 per share) of the funds in the Investment Held in Trust Account. This scenario gives effect to ENPC’s public share redemptions of 40,899,999 shares for aggregate redemption payments of approximately $409,079 thousand. This scenario reflects the requirement pursuant to the ENPC certificate of incorporation and the Business Combination Agreement that ENPC have net tangible assets (as defined in accordance with Rule 3a51-1(g)(1) of the Exchange Act (or any successor rule)) of at least $5,000,001 upon the redemption of Class A common stock by holders of ENPC Class A common stock.

The information in the following tables are presented only as illustrative examples and are based on the scenarios described above, which may be different from the actual amount of redemptions in connection with the Business Combination. In the event shares of ENPC common stock are redeemed in connection with the Business Combination but the number of shares redeemed is less than 40,899,999, the values set forth below will fall between the two scenarios.

The table below sets forth the summary unaudited pro forma condensed combined statement of operations data for the three months ended March 31, 2022 and the year ended December 31, 2021.

 

     Pro Forma Combined  
   Three Months Ended
March 31, 2022
    Year Ended
December 31, 2021
 
(in thousands, except share and per share amounts)    Assuming No
Redemption
    Assuming
Maximum
Redemption
    Assuming No
Redemption
    Assuming
Maximum
Redemption
 

Revenue:

        

Oil, natural gas, and related product sales

   $ 93,851     $ 93,851     $ 290,194     $ 290,194  

Operating Expenses:

        

Lease operating expenses

     8,640       8,640       27,289       27,289  

Production taxes

     4,949       4,949       17,110       17,110  

Depletion and accretion expense

     49,110       49,110       212,992       212,992  

General and administrative

     2,352       2,352       8,465       8,465  

Gain on disposal of oil and natural gas properties

     —       —       (2,279     (2,279

Administrative fee — related party

     2,560       2,560       10,240       10,240  

Franchise tax expense

     25       25       159       159  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     67,636       67,636       273,976       273,976  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     26,215       26,215       16,218       16,218  

Gain/(loss) on derivative contracts

     (28,395     (28,395     (32,389     (32,389

Interest expense

     (525     (525     (2,385     (2,385

Change in fair value of derivative warrant liabilities

     3,822       3,822       3,739       3,739  

Income from investments held in Trust Account

     —       —       —       —  

 

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Table of Contents
     Pro Forma Combined  
   Three Months Ended
March 31, 2022
    Year Ended
December 31, 2021
 
(in thousands, except share and per share amounts)    Assuming No
Redemption
    Assuming
Maximum
Redemption
    Assuming No
Redemption
    Assuming
Maximum
Redemption
 

Other Income

     —       —       770       770  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     1,117       1,117       (14,047     (14,047

Income tax provision

     (3,896     (3,896     1,500       1,500  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 5,013     $ 5,013     $ (15,547   $ (15,547
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding of Class A common stock

     172,266,875       131,366,876       172,266,875       130,866,875  

Basic and diluted net income (loss) per share of Class A common stock

   $ 0.03     $ 0.04     $ (0.09   $ (0.12

The table below sets forth the summary unaudited pro forma condensed combined balance sheet data as of March 31, 2022:

 

(in thousands, except share and per share amounts)

   Pro Forma Combined  
   As of March 31, 2022  
   Assuming No
Redemptions
     Assuming
Maximum
Redemptions
 

Cash

   $ 433,718      $ 24,639  

Total assets

     1,990,858        1,581,779  

Total liabilities

     334,851        334,851  

Total stockholders’ equity

     1,656,007        1,246,928  

 

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SUMMARY HISTORICAL RESERVE DATA OF THE FUNDS

The following table presents summary historical data with respect to the estimated net proved reserves for the Funds based on SEC pricing as of December 31, 2021. The reserve estimates attributable to the Funds as of December 31, 2021 presented below are based on reserve reports of the Funds prepared by Netherland, Sewell & Associates, Inc. (the “2021 Reserve Reports”), copies of which are attached to this proxy statement/prospectus as Annexes H through J. Our estimated reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves. You should read the following summary reserve data together with the sections titled “Risk Factors,” “Business of Grey Rock” and “Grey Rock’s Management’s Discussion and Analysis of Financial Condition and Results of Operations — Fund I, Fund II and Fund III” in evaluating the material presented below.

 

     As of December 31, 2021(2)  
     Fund I     Fund II     Fund III  

Estimated proved developed reserves:

      

Oil (MBbl)

     630       4,213       6,815  

Natural Gas (MMcf)

     1,437       22,110       30,710  
  

 

 

   

 

 

   

 

 

 

Total (MBoe) (6:1) (1)

     870       7,898       11,934  

Estimated proved undeveloped reserves:

      

Oil (MBbl)

     27       1,087       10,046  

Natural Gas (MMcf)

     121       38,178       32,791  
  

 

 

   

 

 

   

 

 

 

Total (MBoe) (6:1) (1)

     47       7,450       15,511  

Estimated proved reserves

      

Oil (MBbl)

     657       5,300       16,861  

Natural Gas (MMcf)

     1,558       60,288       63,501  
  

 

 

   

 

 

   

 

 

 

Total (MBoe) (6:1) (1)

     917       15,348       27,445  

Percent proved developed

     95     51     43

 

(1)

Estimated proved reserves are presented on an oil-equivalent basis using a conversion of six Mcf per barrel of “oil equivalent.” This conversion is based on energy equivalence and not price or value equivalence.

(2)

For each of Fund I, Fund II and Fund III, the estimated proved reserves were determined using average first-of-the-month prices for the prior 12 months in accordance with SEC guidance. For crude oil and NGL volumes, the average West Texas Intermediate spot price of $66.55 per barrel was adjusted for quality, transportation fees, and market differentials. For Fund I and Fund III natural gas volumes, the average Henry Hub spot price of $3.598 per MMBtu was adjusted for energy content, transportation fees, and market differentials. For Fund II natural gas volumes, the average Henry Hub spot price of $3.598 per MMBtu is adjusted for energy content, transportation fees, and market differentials; for certain properties, gas prices are negative after adjustments. When applicable, gas prices were adjusted to include the value for natural gas liquids. All prices were held constant throughout the lives of the properties. For Fund I, the average adjusted product prices weighted by production over the remaining lives of the properties were $61.86 per barrel of oil and $4.912 per Mcf of gas. For Fund II, the average adjusted product prices weighted by production over the remaining lives of the properties are $62.58 per barrel of oil and $3.293 per Mcf of gas. For Fund III, the average adjusted product prices weighted by production over the remaining lives of the properties are $64.12 per barrel of oil and $5.478 per Mcf of gas.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements contained in this proxy statement/prospectus that reflect our current views with respect to future events and financial performance, business strategies, expectations for our business, and the timing and ability for us to complete the Business Combination and any other statements of a future or forward-looking nature, constitute “forward-looking statements” for the purposes of federal securities laws. These forward-looking statements include statements about the parties’ ability to close the Business Combination, the anticipated benefits of the Business Combination, the financial conditions, results of operations, earnings outlook and prospects of ENPC and GREP and may include statements for the period following the consummation of the Business Combination. The information included in this proxy statement/prospectus in relation to Grey Rock has been provided by Grey Rock and its management, and forward-looking statements include statements relating to Grey Rock’s management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. Forward-looking statements appear in a number of places in this proxy statement/prospectus including, without limitation, in the sections titled “ENPC’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Information About ENPC,” “Grey Rock’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business of Grey Rock,” and “Proposal No. 1 — The Business Combination Proposal — Unaudited Prospective Financial Information.

In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus may include, for example, statements about the benefits of the Business Combination and the future financial performance of Parent following the Business Combination.

The forward-looking statements contained in this proxy statement/prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us and/or Parent. You should not place undue reliance on these forward-looking statements in deciding how to grant your proxy or instruct how your vote should be cast or vote your shares on the proposals set forth in this proxy statement/prospectus. We cannot assure you that future developments affecting us and/or Parent will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control or the control of Grey Rock) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our and/or Grey Rock’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to:

 

   

the timing to complete the Transactions;

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Business Combination Agreement;

 

   

the outcome of any legal proceedings that may be instituted against us, Grey Rock and others following announcement of the Business Combination Agreement and transactions contemplated therein;

 

   

the inability to complete the Business Combination due to the failure to obtain our stockholders’ approval;

 

   

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the Business Combination;

 

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Parent’s ability to obtain the listing of its common stock and warrants on NYSE following the Business Combination;

 

   

the risk that the proposed Business Combination disrupts current plans and operations of Grey Rock as a result of the announcement and consummation of the Business Combination;

 

   

the ability to recognize the anticipated benefits of the Business Combination;

 

   

unexpected costs related to the proposed Business Combination;

 

   

the amount of any redemptions by public stockholders of ENPC being greater than expected;

 

   

the management and board composition of Parent following the proposed Business Combination;

 

   

limited liquidity and trading of Parent’s securities;

 

   

the use of proceeds not held in the Trust Account or available from interest income on the Trust Account balance;

 

   

geopolitical risk and changes in applicable laws or regulations;

 

   

the possibility that Grey Rock or ENPC may be adversely affected by other economic, business, and/or competitive factors;

 

   

operational risk;

 

   

the possibility that the COVID-19 pandemic, or another major disease, disrupts Grey Rock’s business;

 

   

litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Grey Rock’s resources; and

 

   

the risks that the consummation of the Business Combination is substantially delayed or does not occur.

Should one or more of these risks or uncertainties materialize, or should any of the assumptions made by our management or Grey Rock prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements.

All subsequent written and oral forward-looking statements concerning the Business Combination or other matters addressed in this proxy statement/prospectus and attributable to us or Grey Rock or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this proxy statement/prospectus. Except to the extent required by applicable law or regulation, ENPC and Grey Rock undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

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RISK FACTORS

You should carefully consider the following risk factors, in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements” and the financial statements and notes to the financial statements included herein. In addition, you should read and consider the risks associated with the business of ENPC because these risks may also affect Parent—these risks can be found in ENPC’s Annual Report on Form 10-K, as updated by subsequent Quarterly Reports on Form 10-Q, all of which are filed with the SEC. Please see the section entitled “Where You Can Find More Information” in this proxy statement/prospectus. Unless otherwise indicated, reference in this section and elsewhere in this proxy statement/prospectus to the Funds’ business being adversely affected, negatively impacted or harmed will include an adverse effect on, or a negative impact or harm to, the business, reputation, financial condition, results of operations, revenue and future prospects of Parent. As used in the risks described in this subsection, references to “we,” “us” and “our” are intended to refer to ENPC, unless the context clearly indicates otherwise.

Risks Related to the Funds’ Business and Operations

The following risk factors apply to the business and operations of GREP and the Funds and will also apply to the business and operations of the combined company following the completion of the Business Combination. These risk factors are not exhaustive, and investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of GREP and the Funds.

As a non-operator, the Funds’ development of successful operations relies extensively on third parties, which could have a material adverse effect on the Funds’ results of operation.

The Funds have only participated in wells operated by third parties. The success of the Funds’ business operations depends on the timing of drilling activities and success of the Funds’ third-party operators. If the Funds’ operators are not successful in the development, exploitation, production, and exploration activities relating to the Funds’ leasehold interests, or are unable or unwilling to perform, the Funds’ financial condition and results of operation would be materially adversely affected.

The Funds’ operators will make decisions in connection with their operations (subject to their contractual and legal obligations to other owners of working interests), which may not be in the Funds’ best interests. Grey Rock may have no ability to exercise influence over the operational decisions of its operators, including the setting of capital expenditure budgets and drilling locations and schedules. Dependence on third-party operators could prevent the Funds from realizing target returns for those locations. The success and timing of development activities by the Funds’ operators will depend on a number of factors that will largely be outside of Grey Rock’s control, including oil and natural gas prices and other factors generally affecting the industry operating environment; the timing and amount of capital expenditures; their expertise and financial resources; approval of other participants in drilling wells; selection of technology; and the rate of production of reserves, if any.

These risks are heightened in a low commodity price environment, which may present significant challenges to the Funds’ operators. The challenges and risks faced by the Funds’ operators may be similar to or greater than the Funds’ own, including with respect to their ability to service their debt, remain in compliance with their debt instruments and, if necessary, access additional capital. Commodity prices and/or other conditions have in the past and may in the future cause oil and gas operators to file for bankruptcy. The insolvency of an operator of any of the Properties, the failure of an operator of any of the Properties to adequately perform operations or an operator’s breach of applicable agreements could reduce the Funds’ production and revenue and result in the Funds’ liability to governmental authorities for compliance with environmental, safety and other regulatory requirements, to the operator’s suppliers and vendors and to royalty owners under oil and gas leases jointly owned with the operator or another insolvent owner. Finally, an operator of the Properties may have the right, if another non-operator fails to pay its share of costs because of its insolvency or otherwise, to require the Funds to pay its proportionate share of the defaulting party’s share of costs.

 

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The inability of one or more of the Funds’ operating partners to meet their obligations to the Funds may adversely affect the Funds’ financial results.

The Funds’ exposures to credit risk, in part, are through receivables resulting from the sale of the Funds’ oil and natural gas production, which operating partners market on the Funds’ behalf to energy marketing companies, refineries, and their affiliates. The Funds are subject to credit risk due to the relative concentration of the Funds’ oil and natural gas receivables with a limited number of operating partners. This may impact the Funds’ overall credit risk since these entities may be similarly affected by changes in economic and other conditions. A low commodity price environment may strain the Funds’ operating partners, which could heighten this risk. The inability or failure of the Funds’ operating partners to meet their obligations to the Funds or their insolvency or liquidation may adversely affect the Funds’ financial results.

The Funds’ business depends on third-party transportation and processing facilities and other assets that are owned by third parties.

The marketability of the Funds’ oil and natural gas depends in part on the availability, proximity and capacity of pipeline systems, processing facilities, oil trucking fleets and rail transportation assets owned by third parties. The lack of available capacity on these systems and facilities, whether as a result of proration, growth in demand outpacing growth in capacity, physical damage, scheduled maintenance, legal or other reasons, could result in a substantial increase in costs, declines in realized commodity prices, the shut-in of producing wells, or the delay or discontinuance of development plans for the Properties. In many cases, operators are provided only with limited, if any, notice as to when these circumstances will arise and their duration. In addition, the Funds’ wells may be drilled in locations that are serviced to a limited extent, if at all, by gathering and transportation pipelines, which may or may not have sufficient capacity to transport production from all of the wells in the area. As a result, the Funds may rely on third-party oil trucking to transport a significant portion of the Funds’ production to third-party transportation pipelines, rail loading facilities, and other market access points.

In addition, the third parties on whom operators rely for transportation services are subject to complex federal, state, tribal, and local laws that could adversely affect the cost, manner, or feasibility of conducting business on the Properties. Further, concerns about the safety and security of oil and gas transportation by pipeline may result in public opposition to pipeline development and increased regulation of pipelines by PHMSA, and therefore less capacity to transport the Funds’ products by pipeline. Any significant curtailment in gathering system or transportation, processing, or refining-facility capacity could reduce the Funds’ operating partners’ ability to market oil production and have an adverse effect on the Funds. Operators’ access to transportation options and the prices they receive can also be affected by federal and state regulation — including regulation of oil production, transportation, and pipeline safety — as well by general economic conditions and changes in supply and demand.

The loss of a key member of Grey Rock’s management team, upon whose knowledge, relationships with industry participants, leadership and technical expertise the Funds rely, could diminish Grey Rock’s ability to conduct the Funds’ operations and harm Grey Rock’s ability to execute the Funds’ business plan.

The Funds’ success depends heavily upon the continued contributions of those members of Grey Rock’s management team whose knowledge, relationships with industry participants, leadership, and technical expertise would be difficult to replace. In particular, the Funds’ ability to successfully acquire additional properties, to increase the Funds’ reserves, to participate in drilling opportunities, and to identify and enter into commercial arrangements depends on developing and maintaining close working relationships with industry participants. In addition, Grey Rock’s ability to select and evaluate suitable properties and to consummate transactions in a highly competitive environment is dependent on Grey Rock’s management team’s knowledge and expertise in the industry. To continue to develop the Funds’ business, Grey Rock relies on its management team’s knowledge and expertise in the industry and will use its management team’s relationships with industry participants to enter into strategic relationships. The members of Grey Rock’s management team may terminate their employment

 

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with Grey Rock at any time. If Grey Rock were to lose key members of Grey Rock’s management team, Grey Rock may not be able to replace the knowledge or relationships that they possess, and Grey Rock’s ability to execute the Funds’ business plan could be materially harmed.

Following the Business Combination, Parent will rely on continued contributions of the members of Grey Rock’s management team by virtue of its reliance on the MSA. Accordingly, if Grey Rock were to lose members of Grey Rock’s management team, Grey Rock’s ability to provide services to Parent could be materially harmed. As a result, Parent’s operations and financial condition could suffer. See “Risk Factors — Risks Related to Parent Following the Business Combination — Following the Business Combination, Parent will be reliant on affiliates of Grey Rock for various certain key services under the MSA, which could result in conflicts of interest and other unforeseen risks not present directly in the Funds’ investments.

Oil and natural gas prices are volatile. Extended declines in such prices have adversely affected, and could in the future adversely affect, the Funds’ business, financial position, results of operations and cash flow.

The oil and natural gas markets are very volatile, and Grey Rock cannot predict future oil and natural gas prices. Oil and natural gas prices have fluctuated significantly, including periods of rapid and material decline, in recent years. The prices the Funds receive for the oil and natural gas production associated with the Funds’ working interests heavily influence the Funds’ production, revenue, cash flows, profitability, reserve bookings and access to capital. Although Grey Rock seeks to mitigate volatility and potential declines in commodity prices through derivative arrangements that hedge a portion of the expected production associated with the Funds’ working interests, this merely seeks to mitigate (not eliminate) these risks, and such activities come with their own risks.

The prices the Funds receive for the production and the levels of the production associated with the Funds’ working interests depend on numerous factors beyond Grey Rock’s control. These factors include, but are not limited to, the following:

 

   

changes in global supply and demand for oil and natural gas;

 

   

the actions of OPEC and other major oil producing countries;

 

   

worldwide and regional economic, political and social conditions impacting the global supply and demand for oil and natural gas, which may be driven by various risks including war, terrorism, political unrest, or health epidemics (such as the global COVID-19 coronavirus outbreak);

 

   

the price and quantity of imports of foreign oil and natural gas;

 

   

political and economic conditions, including embargoes, in oil-producing countries or affecting other oil-producing activity, particularly those in the Middle East, Russia, South America and Africa;

 

   

the outbreak or escalation of military hostilities, including between Russia and Ukraine, and the potential destabilizing effect such conflicts may pose for the European continent or the global oil and natural gas markets;

 

   

the level of global oil and natural gas exploration, production activity and inventories;

 

   

changes in U.S. energy policy;

 

   

weather conditions and outbreak of disease;

 

   

technological advances affecting energy consumption;

 

   

domestic and foreign governmental taxes, tariffs and/or regulations;

 

   

proximity and capacity of processing, gathering, storage, oil and natural gas pipelines and other transportation facilities;

 

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the price and availability of competitors’ supplies of oil and natural gas in captive market areas; and

 

   

the price and availability of alternative fuels.

These factors and the volatility of the energy markets make it extremely difficult to predict oil and natural gas prices. A substantial or extended decline in oil or natural gas prices, such as the significant and rapid decline that occurred in 2020, has resulted in and could result in future impairments of the Funds’ proved oil and natural gas properties and may materially and adversely affect the Funds’ future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures. To the extent commodity prices received from production are insufficient to fund planned capital expenditures, the Funds may be required to reduce spending or borrow or issue additional equity to cover any such shortfall. Lower oil and natural gas prices may limit the Funds’ or, following the Business Combination, Parent’s ability to comply with the covenants under any credit facilities (or other debt instruments) and/or limit the Funds’ or Parent’s ability to access borrowing availability thereunder, which is dependent on many factors including the value of the Funds’ proved reserves.

Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect the Funds’ financial condition or results of operations.

The Funds’ operating partners’ drilling activities are subject to many risks, including the risk that they will not discover commercially productive reservoirs. Drilling for oil or natural gas can be uneconomical, not only from dry holes, but also from productive wells that do not produce sufficient revenues to be commercially viable. In addition, drilling and producing operations on the Funds’ acreage may be curtailed, delayed, or canceled by the operators of the Properties as a result of other factors, including:

 

   

declines in oil or natural gas prices, as occurred in 2020 in connection with the COVID-19 pandemic;

 

   

infrastructure limitations, such as gas gathering and processing constraints;

 

   

the high cost, shortages or delays of equipment, materials and services;

 

   

unexpected operational events, adverse weather conditions and natural disasters, facility or equipment malfunctions, and equipment failures or accidents;

 

   

title problems;

 

   

pipe or cement failures and casing collapses;

 

   

lost or damaged oilfield development and service tools;

 

   

compliance with environmental and other governmental requirements;

 

   

increases in severance taxes;

 

   

regulations, restrictions, moratoria and bans on hydraulic fracturing;

 

   

unusual or unexpected geological formations, and pressure or irregularities in formations;

 

   

loss of drilling fluid circulation;

 

   

environmental hazards, such as oil, natural gas or well fluids spills or releases, pipeline or tank ruptures and discharges of toxic gas;

 

   

fires, blowouts, craterings and explosions;

 

   

uncontrollable flows of oil, natural gas or well fluids; and

 

   

pipeline capacity curtailments.

In addition to causing curtailments, delays and cancellations of drilling and producing operations, many of these events can cause substantial losses, including personal injury or loss of life, damage to or destruction of

 

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property, natural resources and equipment, pollution, environmental contamination, loss of wells and regulatory penalties. The Funds ordinarily maintain insurance against various losses and liabilities arising from the Funds’ operations; however, insurance against all operational risks is not available to the Funds. Additionally, the Funds may elect not to obtain insurance if Grey Rock believes that the cost of available insurance is excessive relative to the perceived risks presented. Losses could therefore occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. The occurrence of an event that is not fully covered by insurance could have a material adverse impact on the Funds’ business activities, financial condition and results of operations.

Certain of the Funds’ undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established or operations are commenced on units containing the acreage or the leases are extended.

A portion of the Funds’ acreage is not currently held by production or held by operations. Unless production in paying quantities is established or operations are commenced on units containing these leases during their terms, the leases will expire. If the Funds’ leases expire and Grey Rock is unable to renew the leases, the Funds will lose their right to participate in the development of the related Properties. Drilling plans for these areas are generally in the discretion of third-party operators and are subject to change based on various factors that are beyond Grey Rock’s control, such as: the availability and cost of capital, equipment, services and personnel; seasonal conditions; regulatory and third-party approvals; oil and natural gas prices; results of title work; gathering system and other transportation constraints; drilling costs and results; and production costs. As of December 31, 2021, Grey Rock estimates that the Funds had leases that were not developed that represented 504 net acres potentially expiring in 2022, 1,543 net acres potentially expiring in 2023, 3,040 net acres potentially expiring in 2024, and 0 net acres potentially expiring in 2025 and beyond.

The Funds could experience periods of higher costs as activity levels fluctuate or if commodity prices rise. These increases could reduce the Funds’ profitability, cash flow, and ability to complete development activities as planned.

An increase in commodity prices or other factors could result in increased development activity and investment in the Funds’ areas of operations, which may increase competition for and cost of equipment, labor and supplies. Shortages of, or increasing costs for, experienced drilling crews and equipment, labor or supplies could restrict the Funds’ operating partners’ ability to conduct desired or expected operations. In addition, capital and operating costs in the oil and natural gas industry have generally risen during periods of increasing commodity prices as producers seek to increase production in order to capitalize on higher commodity prices. In situations where cost inflation exceeds commodity price inflation, the Funds’ profitability and cash flow, and the Funds’ operators’ ability to complete development activities as scheduled and on budget, may be negatively impacted. Any delay in the drilling of new wells or significant increase in drilling costs could reduce the Funds’ revenues and cash flows.

New technologies may cause the current exploration and drilling methods of the Funds’ operating partners to become obsolete, and such operators may not be able to keep pace with technological developments in the oil and gas industry.

The oil and natural gas industry is subject to rapid and significant advancements in technology, including the introduction of new products and services using new technologies. As competitors use or develop new technologies, the Funds may be placed at a competitive disadvantage, and competitive pressures may force the Funds’ operating partners to implement new technologies at a substantial cost. In addition, competitors may have greater financial, technical and personnel resources that allow them to enjoy technological advantages, and that may in the future, allow them to implement new technologies before the Funds or its operating partners can. Grey Rock cannot be certain that the Funds or their operators will be able to implement technologies on a timely basis or at a cost that is acceptable to the Funds. If the Funds’ operators are unable to maintain technological advancements consistent with industry standards, the Funds’ business, results of operations and financial condition may be materially adversely affected.

 

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Due to previous declines in oil and natural gas prices, Grey Rock has in the past taken writedowns of the Funds’ oil and natural gas properties. Grey Rock may be required to record further writedowns of the Funds’ oil and natural gas properties in the future.

In 2020, Grey Rock was required to write down the carrying value of certain of the Funds’ oil and natural gas properties, and further writedowns could be required in the future. Under the successful efforts method of accounting, capitalized costs related to proved oil properties, including wells and related support equipment and facilities, are evaluated for impairment on an annual basis. If undiscounted cash flows are insufficient to recover the net capitalized costs, an impairment charge for the difference between the net capitalized cost of proved properties and their estimated fair values is recognized. A substantial or extended decline in oil or natural gas prices, could result in future impairments of the Funds’ proved oil and natural gas properties.

The Funds’ estimated reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of the Funds’ reserves.

Determining the amount of oil and natural gas recoverable from various formations involves significant complexity and uncertainty. No one can measure underground accumulations of oil or natural gas in an exact way. Oil and natural gas reserve engineering requires subjective estimates of underground accumulations of oil and/or natural gas and assumptions concerning future oil and natural gas prices, production levels, and operating, exploration and development costs. Some of the Funds’ reserve estimates are made without the benefit of a lengthy production history and are less reliable than estimates based on a lengthy production history. As a result, estimated quantities of proved reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate.

Grey Rock routinely makes estimates of oil and natural gas reserves in connection with managing the Funds’ business and preparing reports to the Funds’ lenders and investors, including estimates prepared by Grey Rock’s independent reserve engineering firm. Although the reserve information contained herein is reviewed by Grey Rock’s independent reserve engineers, estimates of crude oil and natural gas reserves are inherently imprecise. The process also requires economic assumptions about matters such as oil and natural gas prices, development schedules, drilling and operating expenses, capital expenditures, taxes and availability of funds. Some of these assumptions are inherently subjective, and the accuracy of the Funds’ estimated reserves relies in part on the ability of Grey Rock’s reserve engineers to make accurate assumptions. Any significant variance from these assumptions by actual figures could greatly affect the Funds’ estimated reserves, the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, the classifications of reserves based on risk of recovery, and estimates of the future net cash flows. Numerous changes over time to the assumptions on which the Funds’ estimated reserves are based result in the actual quantities of oil and natural gas the Funds’ operating partners ultimately recover being different from the Funds’ estimated reserves. Any significant variance could materially affect the estimated quantities and present value of reserves shown in this proxy statement/prospectus, subsequent reports Parent files with the SEC or other company materials.

The present value of future net cash flows from the Funds’ proved reserves is not necessarily the same as the current market value of the Funds’ estimated proved reserves.

Grey Rock bases the estimated discounted future net cash flows from the Funds’ proved reserves using specified pricing and cost assumptions. However, actual future net cash flows from the Funds’ oil and natural gas properties will be affected by factors such as the volume, pricing and duration of the Funds’ oil and natural gas hedging contracts; actual prices the Funds receive for oil and natural gas; the Funds’ actual operating costs in producing oil and natural gas; the amount and timing of the Funds’ capital expenditures; the amount and timing of actual production; and changes in governmental regulations or taxation. In addition, the 10% discount factor Grey Rock uses when calculating discounted future net cash flows may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with the Funds or the oil and natural

 

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gas industry in general. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of the Funds’ reserves, which could adversely affect the Funds’ business, results of operations and financial condition.

The Funds’ future success depends on Grey Rock’s ability to replace reserves that the Funds’ operators produce.

Because the rate of production from oil and natural gas properties generally declines as reserves are depleted, the Funds’ future success depends upon the Funds’ ability to economically find or acquire and produce additional oil and natural gas reserves. Except to the extent that the Funds acquire additional properties containing proved reserves, conduct successful exploration and development activities or, through engineering studies, identify additional behind-pipe zones or secondary recovery reserves, the Funds’ proved reserves will decline as the Funds’ reserves are produced. Future oil and natural gas production, therefore, is highly dependent upon Grey Rock’s level of success in acquiring or finding additional reserves that are economically recoverable. Grey Rock cannot assure you that Grey Rock will be able to find or acquire and develop additional reserves at an acceptable cost.

The Funds may acquire significant amounts of unproved property to further their development efforts. Development and exploratory drilling and production activities are subject to many risks, including the risk that no commercially productive reservoirs will be discovered. Grey Rock seeks to acquire both proved and producing properties for the Funds as well as undeveloped acreage that Grey Rock believes will enhance growth potential and increase the Funds’ earnings over time. However, Grey Rock cannot assure you that all of these properties will contain economically viable reserves or that Grey Rock will not abandon the Funds’ initial investments. Additionally, Grey Rock cannot assure you that unproved reserves or undeveloped acreage that the Funds acquire will be profitably developed, that new wells drilled on the Properties will be productive or that the Funds will recover all or any portion of their investments in the Properties and the Funds’ reserves.

Extreme weather conditions could adversely affect operators’ ability to conduct drilling activities in some of the areas where the Properties are located.

Drilling and producing activities and other operations in some of the Funds’ operating areas could be adversely affected by extreme weather conditions, such as floods, lightning, drought, ice and other storms, prolonged freeze events, and tornadoes, which may cause a loss of productions from temporary cessation of activity, or lost or damaged facilities and equipment on the part of the Funds’ operating partners. Such extreme weather conditions could also impact other areas of operations for the Funds’ operating partners, including access to drilling and production facilities for routine operations, maintenance and repairs and the availability of, and access to, necessary third-party services, such as electrical power, water, gathering, processing, compression and transportation services. These constraints and the resulting shortages or high costs could delay or temporarily halt operations on the affected Properties and materially increase operation and capital costs, which could have a material adverse effect on the Funds’ business, financial condition and results of operations.

The development of the Funds’ proved undeveloped reserves may take longer and may require higher levels of capital expenditures than Grey Rock currently anticipates. Therefore, the Funds’ undeveloped reserves may not be ultimately developed or produced.

Approximately 53% of the Funds’ estimated net proved reserves volumes were classified as proved undeveloped as of December 31, 2021. Development of these reserves may take longer and require higher levels of capital expenditures than Grey Rock currently anticipates. Delays in the development of the Funds’ reserves or increases in costs to drill and develop such reserves will reduce the PV-10 value of the Funds’ estimated proved undeveloped reserves and future net revenues estimated for such reserves and may result in some projects becoming uneconomic. In addition, delays in the development of reserves could cause the Funds to have to reclassify their proved reserves as unproved reserves.

 

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Grey Rock’s acquisition strategy will subject the Funds to certain risks associated with the inherent uncertainty in evaluating properties for which Grey Rock has limited information.

Grey Rock intends to continue to expand the Funds’ operations in part through acquisitions. Grey Rock’s decision for the Funds to acquire a property will depend in part on the evaluation of data obtained from production reports and engineering studies, geophysical and geological analyses and seismic and other information, the results of which are often inconclusive and subject to various interpretations. Also, Grey Rock’s reviews of acquired properties are inherently incomplete because it generally is not economically feasible to perform an in-depth review of the individual properties involved in each acquisition. Even a detailed review of records and properties may not necessarily reveal existing or potential problems, nor will it permit Grey Rock to become sufficiently familiar with the properties to fully assess their deficiencies and potential. Inspections are often not performed on properties being acquired, and environmental matters, such as subsurface contamination, are not necessarily observable even when an inspection is undertaken. Any acquisition involves other potential risks, including, among other things:

 

   

the validity of Grey Rock’s assumptions about reserves, future production, revenues and costs;

 

   

a decrease in the Funds’ liquidity by using a significant portion of the Funds’ cash from operations or borrowing capacity to finance acquisitions;

 

   

a significant increase in the Funds’ interest expense or financial leverage if the Funds incur additional debt to finance acquisitions;

 

   

the ultimate value of any contingent consideration agreed to be paid in an acquisition;

 

   

the assumption of unknown liabilities, losses or costs for which the Funds are not indemnified or for which the Funds’ indemnity is inadequate;

 

   

“geological risk,” which refers to the risk that hydrocarbons may not be present or, if present, may not be recoverable economically;

 

   

an inability to hire, train or retain qualified personnel to manage and operate the Funds’ growing business and assets; and

 

   

an increase in the Funds’ costs or a decrease in the Funds’ revenues associated with any potential royalty owner or landowner claims or disputes, or other litigation encountered in connection with an acquisition.

The Funds may also acquire multiple assets in a single transaction. Portfolio acquisitions via joint-venture or other structures are more complex and expensive than single project acquisitions, and the risk that a multiple-project acquisition will not close may be greater than in a single-project acquisition. An acquisition of a portfolio of projects may result in the Funds’ ownership of projects in geographically dispersed markets which place additional demands on Grey Rock’s ability to manage such operations. A seller may require that a group of projects be purchased as a package, even though one or more of the projects in the portfolio does not meet the Funds’ investment criteria. In such cases, Grey Rock may attempt to make a joint bid with another buyer, and such other buyer may default on its obligations.

Further, the Funds may acquire properties subject to known or unknown liabilities and with limited or no recourse to the former owners or operators. As a result, if liability were asserted against the Funds based upon such properties, the Funds may have to pay substantial sums to dispute or remedy the matter, which could adversely affect the Funds’ cash flow. Unknown liabilities with respect to assets acquired could include, for example: liabilities for clean-up of undiscovered or undisclosed environmental contamination; claims by developers, site owners, vendors or other persons relating to the asset or project site; liabilities incurred in the ordinary course of business; and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the asset or project sites.

 

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The Funds may not be able to successfully integrate future acquisitions or realize all of the anticipated benefits from their future acquisitions, and the Funds’ future results will suffer if Grey Rock does not effectively manage the Funds’ expanded operations.

The Funds’ growth strategy, and that of Parent, will, in part, rely on acquisitions. Grey Rock has to plan and manage acquisitions effectively to achieve revenue growth and maintain profitability in the Funds’ evolving market. The Funds’ future success will depend, in part, upon Grey Rock’s ability to manage this expanded business, which may pose substantial challenges for management, including challenges related to the management and monitoring of new operations and basins and associated increased costs and complexity. The Funds may also face increased scrutiny from governmental authorities as a result of increases in the size of the Funds’ business. There can be no assurances that the Funds will be successful or that the Funds will realize the expected benefits currently anticipated from the Funds’ acquisitions. In addition, the process of integrating the Funds’ operations could cause an interruption of, or loss of momentum in, the activities of the Funds’ business. Members of Grey Rock’s management may be required to devote considerable amounts of time to this integration process, which decreases the time they have to manage the Funds’ business. If Grey Rock’s management is not able to effectively manage the integration process, or if any business activities are interrupted as a result of the integration process, the Funds’ business could suffer.

Deficiencies of title to the Funds’ leased interests could significantly affect the Funds’ financial condition.

Prior to drilling an oil or natural gas well, it is the normal practice in the oil and natural gas industry for the person or company acting as the operator of the well to obtain a preliminary title review of the spacing unit within which the proposed oil or natural gas well is to be drilled to ensure there are no obvious deficiencies in title to the well. Frequently, as a result of such examinations, certain curative work must be done to correct deficiencies in the marketability of the title, such as obtaining affidavits of heirship or causing an estate to be administered. Such curative work entails expense, and the operator may elect to proceed with a well despite defects to the title identified in the preliminary title opinion. Furthermore, title issues may arise at a later date that were not initially detected in any title review or examination. Any one or more of the foregoing could require the Funds to reverse revenues previously recognized and potentially negatively affect the Funds’ cash flows and results of operations. While Grey Rock typically conducts title examination prior to the Funds’ acquisition of oil and natural gas leases or undivided interests in oil and natural gas leases or other developed rights, any failure to obtain perfect title to the Funds’ leaseholds may adversely affect the Funds’ current production and reserves and the Funds’ ability in the future to increase production and reserves.

The Funds’ derivatives activities could adversely affect their cash flow, results of operations and financial condition.

To achieve more predictable cash flows and reduce the Funds’ exposure to adverse fluctuations in the price of oil and natural gas, the Funds enter into derivative instrument contracts for a portion of the Funds’ expected production, which may include swaps, collars, puts and other structures. In accordance with applicable accounting principles, the Funds are required to record their derivatives at fair market value, and they are included on the Funds’ balance sheet as assets or liabilities and in the Funds’ statements of income as gain (loss) on derivatives, net. Accordingly, the Funds’ earnings may fluctuate significantly as a result of changes in the fair market value of the Funds’ derivative instruments. In addition, while intended to mitigate the effects of volatile oil and natural gas prices, the Funds’ derivatives transactions may limit the Funds’ potential gains and increase the Funds’ potential losses if oil and natural gas prices were to rise substantially over the price established by the hedge.

The Funds’ actual future production may be significantly higher or lower than Grey Rock estimates at the time the Funds enter into derivative contracts for such period. If the actual amount of production is higher than Grey Rock estimates, the Funds will have greater commodity price exposure than Grey Rock intended. If the actual amount of production is lower than the notional amount that is subject to the Funds’ derivative financial

 

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instruments, the Funds might be forced to satisfy all or a portion of their derivative transactions without the benefit of the cash flow from their sale of the underlying physical commodity, resulting in a substantial diminution of the Funds’ liquidity. As a result of these factors, the Funds’ hedging activities may not be as effective as Grey Rock intends in reducing the volatility of the Funds’ cash flows, and in certain circumstances may actually increase the volatility of the Funds’ cash flows. In addition, such transactions may expose the Funds to the risk of loss in certain circumstances, including instances in which a counterparty to the Funds’ derivative contracts is unable to satisfy its obligations under the contracts; the Funds’ production is less than expected; or there is a widening of price differentials between delivery points for the Funds’ production and the delivery point assumed in the derivative arrangement.

Decommissioning costs are unknown and may be substantial. Unplanned costs could divert resources from other projects.

The Funds may become responsible for costs associated with plugging, abandoning and reclaiming wells, pipelines and other facilities that the Funds’ operators use for production of oil and natural gas reserves. Abandonment and reclamation of these facilities and the costs associated therewith is often referred to as “decommissioning.” The Funds accrue a liability for decommissioning costs associated with the Funds’ wells, but have not established any cash reserve account for these potential costs in respect of any of the Properties. If decommissioning is required before economic depletion of the Properties or if Grey Rock’s estimates of the costs of decommissioning exceed the value of the reserves remaining at any particular time to cover such decommissioning costs, the Funds may have to draw on funds from other sources to satisfy such costs. The use of other funds to satisfy such decommissioning costs could impair the Funds’ ability to focus capital investment in other areas of the Funds’ business.

The Funds are not insured against all of the operating risks to which their business is exposed.

In accordance with industry practice, the Funds maintain insurance against some, but not all, of the operating risks to which the Funds’ business is exposed. The Funds insure some, but not all, of the Properties from operational loss-related events. The Funds have insurance policies that include coverage for general liability, operational control of well, oil pollution, workers’ compensation and employers’ liability and other coverage. The Funds’ insurance coverage includes deductibles that have to be met prior to recovery, as well as sub-limits or self-insurance. Additionally, the Funds’ insurance is subject to exclusions and limitations, and there is no assurance that such coverage will adequately protect the Funds against liability from all potential consequences, damages or losses.

The Funds may be liable for damages from an event relating to a project in which the Funds own a non-operating working interest. Such events may also cause a significant interruption to the Funds’ business, which might also severely impact the Funds’ financial position. The Funds may experience production interruptions for which the Funds do not have production interruption insurance.

Grey Rock reevaluates the purchase of insurance, policy limits and terms for the Funds annually. Future insurance coverage for the Funds’ industry could increase in cost and may include higher deductibles or retentions. In addition, some forms of insurance may become unavailable in the future or unavailable on terms that Grey Rock believes are economically acceptable. No assurance can be given that the Funds will be able to maintain insurance in the future at rates that Grey Rock considers reasonable, and Grey Rock may elect to maintain minimal or no insurance coverage for the Funds. The Funds may not be able to secure additional insurance or bonding that might be required by new governmental regulations. This may cause the Funds to restrict their operations, which might severely impact the Funds’ financial position. The occurrence of a significant event, not fully insured against, could have a material adverse effect on the Funds’ financial condition and results of operations.

 

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Financial projections by Grey Rock and information regarding prior performance may not prove to be reflective of actual future results.

In connection with the Business Combination, Grey Rock prepared and ENPC considered, among other things, internal prospective financial information for the Funds. These financial projections include assumptions regarding commodity prices, production levels, and expenses. These financial projections speak only as of the date prepared and have not been, and will not be, updated. These financial projections were not provided with a view to public disclosure, are subject to significant economic, competitive, industry and other uncertainties and may not be achieved in full, at all or within projected timeframes. In addition, the failure to achieve projected results could have a material adverse effect on Parent’s share price and financial position following the Business Combination. For additional information regarding these financial projections, see “Proposal No. 1 — The Business Combination Proposal — Unaudited Prospective Financial Information.”

Information regarding prior performance, while a useful tool in evaluating the Funds’ investment activities, is not necessarily indicative of actual results to be achieved for unrealized investments, the realization of which is dependent upon many factors, many of which are beyond the control of Grey Rock. Further, there can be no assurance that the valuations for unrealized investments on which prior performance is calculated accurately reflect the amounts for which the subject investments will be sold and the actual realized returns may differ materially from such valuations. Any information presented in this proxy statement/prospectus is not intended to suggest that Grey Rock would make all of the same or similar investments, or would have the same or similar performance. Accordingly, prospective investors should not construe such performance as providing any assurances regarding the future performance of the Funds.

The Funds conduct business in a highly competitive industry.

The oil and natural gas industry is highly competitive. The key areas in respect of which the Funds face competition include: acquisition of assets offered for sale by other companies; access to capital (debt and equity) for financing and operational purposes; purchasing, leasing, hiring, chartering or other procuring of equipment by the Funds’ operators that may be scarce; and employment of qualified and experienced skilled management and oil and natural gas professionals.

Competition in the Funds’ markets is intense and depends, among other things, on the number of competitors in the market, their financial resources, their degree of geological, geophysical, engineering and management expertise and capabilities, their pricing policies, their ability to develop properties on time and on budget, their ability to select, acquire and develop reserves and their ability to foster and maintain relationships with the relevant authorities.

The Funds’ competitors also include entities with greater technical, physical and financial resources. Finally, companies and certain private equity firms not previously investing in oil and natural gas may choose to acquire reserves to establish a firm supply or simply as an investment. Any such companies will also increase market competition which may directly affect the Funds’ business. If the Funds are unsuccessful in competing against other companies, the Funds’ business, results of operations, financial condition or prospects could be materially adversely affected.

The ongoing military conflict between Ukraine and Russia has caused unstable market and economic conditions and is expected to have additional global consequences, such as heightened risks of cyberattacks. The Funds’ business, financial condition, and results of operations may be materially adversely affected by the negative global and economic impact resulting from the conflict in Ukraine or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale

 

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military invasion of Ukraine by Russian troops began. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine has led to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain disruptions. Various of Russia’s actions have led to sanctions and other penalties being levied by the U.S., the European Union, and other countries, as well as other public and private actors and companies, against Russia and certain other geographic areas, including restrictions on imports of Russian oil, liquefied natural gas and coal. These disruptions in the oil and gas markets have caused, and could continue to cause, significant volatility in energy prices, which could have a material effect on the Funds’ business. Additional potential sanctions and penalties have also been proposed and/or threatened.

In addition, the United States and other countries have imposed sanctions on Russia which increases the risk that Russia, as a retaliatory action, may launch cyberattacks against the United States, its government, infrastructure and businesses. On March 21, 2022, the Biden Administration issued warnings about the potential for Russia to engage in malicious cyber activity against the United States in response to the economic sanctions that have been imposed.

Prolonged unfavorable economic conditions or uncertainty as a result of the military conflict between Russia and Ukraine may adversely affect the Funds’ business, financial condition, and results of operations. Any of the foregoing may also magnify the impact of other risks described in this proxy statement/prospectus.

 

Inflation could adversely impact the Funds’ ability to control its costs, including the operating expenses and capital costs of the Funds’ operating partners.

Although inflation in the United States has been relatively low in recent years, it rose significantly beginning in the second half of 2021. This is believed to be the result of the economic impact from the COVID-19 pandemic, including the effects of global supply chain disruptions and government stimulus packages, among other factors. Global, industry-wide supply chain disruptions caused by the COVID-19 pandemic have resulted in shortages in labor, materials and services. Such shortages have resulted in inflationary cost increases for labor, materials and services and could continue to cause costs to increase as well as scarcity of certain products and raw materials. To the extent elevated inflation remains, the Funds’ operating partners may experience further cost increases for their operations, including oilfield services and equipment as increasing oil and natural gas prices increase drilling activity in the Funds’ operating partners’ areas of operations, as well as increased labor costs. An increase in oil and natural gas prices may cause the costs of materials and services to rise. Grey Rock cannot predict any future trends in the rate of inflation and a significant increase in inflation, to the extent the Funds are unable to recover higher costs through higher commodity prices and revenues, would negatively impact the Funds’ business, financial condition and results of operation.

The COVID-19 pandemic has had, and may continue to have, a material adverse effect on the Funds’ financial condition and results of operations.

The Funds face risks related to public health crises, including the COVID-19 pandemic. The effects of the COVID-19 pandemic, including travel bans, prohibitions on group events and gatherings, shutdowns of certain businesses, curfews, shelter-in-place orders and recommendations to practice social distancing in addition to other actions taken by both businesses and governments, resulted in a significant and swift reduction in international and U.S. economic activity. The collapse in the demand for oil caused by this unprecedented global health and economic crisis contributed to the significant decrease in crude oil prices in 2020 and had and could in the future continue to have a material adverse impact on the Funds’ financial condition and results of operations.

Since the beginning of 2021, the distribution of COVID-19 vaccines progressed and many government-imposed restrictions were relaxed or rescinded. However, Grey Rock continues to monitor the effects of the pandemic on the Funds’ operations. As a result of the ongoing COVID-19 pandemic, the Funds’ operations, and

 

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those of the Funds’ operating partners, have and may continue to experience delays or disruptions and temporary suspensions of operations. In addition, the Funds’ results of operations and financial condition have been and may continue to be adversely affected by the ongoing COVID-19 pandemic.

The extent to which the Funds’ operating and financial results are affected by COVID-19 will depend on various factors and consequences beyond Grey Rock’s control, such as the emergence of more contagious and harmful variants of the COVID-19 virus, the duration and scope of the pandemic, additional actions by businesses and governments in response to the pandemic, and the speed and effectiveness of responses to combat the virus. COVID-19, and the volatile regional and global economic conditions stemming from the pandemic, could also aggravate the other risk factors that Grey Rock identifies herein. While the effects of the COVID-19 pandemic have lessened recently in the United States, Grey Rock cannot predict the duration or future effects of the pandemic, or more contagious and harmful variants of the COVID-19 virus, and such effects may materially adversely affect the Funds’ results of operations and financial condition in a manner that is not currently known to Grey Rock or that Grey Rock does not currently consider to present significant risks to the Funds’ operations.

Grey Rock and the Funds’ operating partners depend on computer and telecommunications systems, and failures in those systems or cybersecurity threats, attacks and other disruptions could significantly disrupt the Funds’ business operations.

Grey Rock has entered into agreements with third parties for hardware, software, telecommunications and other information technology services in connection with the Funds’ business. In addition, Grey Rock has developed or may develop proprietary software systems, management techniques and other information technologies incorporating software licensed from third parties. It is possible that Grey Rock, or these third parties, could incur interruptions from cybersecurity attacks, computer viruses or malware, or that third-party service providers could cause a breach of the Funds’ data. Grey Rock believes that it has positive relations with its information technology vendors and maintains adequate anti-virus and malware software and controls; however, any interruptions to Grey Rock’s arrangements with third parties for its computing and communications infrastructure or any other interruptions to, or breaches of, Grey Rock’s information systems could lead to data corruption, communication interruption, loss of sensitive or confidential information or otherwise significantly disrupt the Funds’ business operations. Although Grey Rock utilizes various procedures and controls to monitor these threats and mitigate Grey Rock’s and the Funds’ exposure to such threats, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing. Furthermore, various third-party resources that Grey Rock relies on, directly or indirectly, in the operation of the Funds’ business (such as pipelines and other infrastructure) could suffer interruptions or breaches from cyber-attacks or similar events that are entirely outside Grey Rock’s control, and any such events could significantly disrupt the Funds’ business operations and/or have a material adverse effect on the Funds’ results of operations. Grey Rock has not, to its knowledge, experienced any material losses relating to cyber-attacks; however, there can be no assurance that Grey Rock or the Funds will not suffer material losses in the future.

In addition, the Funds’ operating partners face various security threats, including cybersecurity threats to gain unauthorized access to sensitive information or to render data or systems unusable, threats to the security of their facilities and infrastructure or third-party facilities and infrastructure, such as processing plants and pipelines, and threats from terrorist acts. If any of these security breaches were to occur, they could lead to losses of sensitive information, critical infrastructure or capabilities essential to the Funds’ operations and could have a material adverse effect on the Funds’ financial position, results of operations or cash flows. The U.S. government has issued warnings that U.S. energy assets may be the future targets of terrorist organizations. These developments subject the Funds’ operations to increased risks. Any future terrorist attack at the Funds’ operating partners’ facilities, or those of their purchasers or vendors, could have a material adverse effect on the Funds’ financial condition and operations.

 

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A variety of stringent federal, tribal, state, and local laws and regulations govern the environmental aspects of the oil and gas business, and noncompliance with these laws and regulations could subject the Funds to material administrative, civil or criminal penalties, injunctive relief, or other liabilities.

A variety of stringent federal, tribal, state, and local laws and regulations govern the environmental aspects of the oil and gas business. Any noncompliance with these laws and regulations could subject the Funds to material administrative, civil or criminal penalties, injunctive relief, or other liabilities. Additionally, compliance with these laws and regulations may, from time to time, result in increased costs of operations, delay in operations, or decreased production, and may affect acquisition costs. Examples of laws and regulations that govern the environmental aspects of the oil and gas business include the following:

 

   

the Clean Air Act (“CAA”), which restricts the emission of air pollutants from many sources, imposes various pre-construction, operating, monitoring, control, recordkeeping, and reporting requirements and is relied upon by the U.S. Environmental Protection Agency (“EPA”) as an authority for adopting climate change regulatory initiatives, including relating to GHG emissions;

 

   

the Clean Water Act (“CWA”), which regulates discharges of pollutants and dredge and fill material to state and federal waters and establishes the extent to which waterways are subject to federal jurisdiction as protected waters of the United States;

 

   

the Oil Pollution Act (“OPA”), which requires oil spill prevention, control, and countermeasure planning and imposes liabilities for removal costs and damages arising from an oil spill into waters of the United States;

 

   

the Safe Drinking Water Act (“SDWA”), which protects the quality of the nations’ public drinking water sources through adoption of drinking water standards and control over the subsurface injection of fluids into belowground formations;

 

   

the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which imposes liability without regard to fault on certain categories of potentially responsible parties including generators, transporters and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur, as well as on present and certain past owners and operators of sites were hazardous substance releases have occurred or are threatening to occur;

 

   

the Resource Conservation and Recovery Act (“RCRA”), which imposes requirements for the generation, treatment, storage, transport, disposal and cleanup of non-hazardous and hazardous wastes;

 

   

the Endangered Species Act (“ESA”), which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating limitations or restrictions or a temporary, seasonal or permanent ban on operations in affected areas. Similar protections are afforded to migratory birds under the Migratory Bird Treaty Act (“MBTA”) and bald and golden eagles under the Bald and Golden Eagle Protection Act (“BGEPA”);

 

   

the Emergency Planning and Community Right-to-Know Act (“EPCRA”), which requires certain facilities to report toxic chemical uses, inventories, and releases and to disseminate such information to local emergency planning committees and response departments; and

 

   

the Occupational Safety and Health Act (“OSHA”) and comparable state statutes, which impose regulations related to the protection of worker health and safety, including requiring employers to implement a hazard communication program and disseminate hazard information to employees.

These U.S. laws and their implementing regulations, as well as state counterparts, generally restrict or otherwise regulate the management of hazardous substances and wastes, the level of pollutants emitted to ambient air, discharges to surface water, and disposals or other releases to surface and below-ground soils and groundwater, including through permitting requirements, monitoring and reporting requirements, limitations or prohibitions of operations on certain protected areas, requirements to install certain emissions monitoring or

 

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control equipment, spill planning and preparedness requirements, and the application of specific worker health and safety criteria. Failure to comply with applicable environmental laws and regulations by the Funds or third-party operators or contractors could trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial requirements or other corrective measures, and the issuance of orders enjoining existing or future operations. In addition, the Funds or their operating partners may be strictly liable under state or federal laws for environmental damages caused by the previous owners or operators of properties it purchases, without regard to fault.

Environmental laws and regulations change frequently and tend to become more stringent over time, and the implementation of new, or the modification of existing, laws or regulations could adversely affect the Funds’ business. For example, in recent years, the EPA published final rules that establish new air emission control requirements, among other requirements, for oil and natural gas production, processing, transportation, and storage activities to address emissions of methane and VOCs. Among these requirements is the reduction of methane and VOC emissions from oil and gas wells through the use of reduced emission completions or “green completions” on all hydraulically fractured wells subject to the rule. These New Source Performance Standards (“NSPS”), as so referred, also impose requirements for leak detection and repair at well sites and natural gas transmission compressor stations and professional engineer certifications of emission control systems installed to comply with the rule. These rules have been heavily litigated and some aspects of them continue to be subject to various challenge, rescission, and proposal actions. Accordingly, the final implementation and scope of these requirements remains uncertain, but the imposition of these requirements on certain sources of air emissions in the oil and gas industry that were constructed, reconstructed, or modified on or after August 23, 2011, will likely result in increased costs for oil and natural gas exploration and production activities. Furthermore, EPA in November 2021 proposed a suite of NSPS rules, known as Subparts OOOOb and OOOOc that, if adopted, will further impact the upstream and midstream oil and gas sectors. As proposed, Subparts OOOOb and OOOOc would impose requirements on new, modified, existing and/or reconstructed sources in the oil and natural gas sector. The proposed regulations include additional inspections, emission control requirements, additional financial assurance for plugged and abandoned wells, and emissions guidelines to assist states in the development of plans to regulate methane emissions from certain existing sources. The proposed rules for new and modified facilities are currently estimated to be finalized by the end of 2022, while any standards finalized for existing facilities will require further state rulemaking actions over the next several years before they become effective. The proposed rules and any state standards, if implemented, could further increase the cost of development and operation of the Properties.

Additionally, some states in which the Properties are located, such as Colorado, have adopted stringent rules and regulations to reduce methane emissions and emissions of other hydrocarbons, VOCs, and nitrogen oxides associated with oil and gas facilities. For example, the Colorado Department of Public Health and Environment’s Air Quality Control Commission (“AQCC”) recently adopted more stringent standards for leak detection and repair inspection frequency, pipeline and compressor station inspection and maintenance frequencies, the development of pre-production air monitoring plans at certain oil and gas facilities, enclosed combustion device testing, a methane intensity reduction requirement based on statewide volume of production and additional measures for reducing and eliminating emissions from pneumatic devices. AQCC is expected to undertake several additional rulemaking efforts to further reduce emissions over the next several years. State rules and regulations such as these could significantly increase the costs to develop and operate the Properties, result in a delay in operations or decreased production, and may affect acquisition costs.

Grey Rock anticipates that hydraulic fracturing will be engaged in by some or all opportunities in which the Funds invest, which could be adversely affected by regulatory initiatives related to hydraulic fracturing.

Hydraulic fracturing is an important and commonly used process that Grey Rock anticipates will be engaged in by some or all opportunities in which the Funds invest. In recent years, some experts have warned that hydraulic fracturing could adversely affect groundwater. To the extent that such claims are made with respect to investments, they could have an adverse effect on the investments. In addition, flowback and produced water or

 

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certain other field fluids gathered from oil and natural gas exploration and production operations are often injected or disposed of in underground disposal wells. This disposal process has been linked to increased induced seismicity events in certain areas of the country. Certain states (including states in which the Properties are located) have begun to consider or adopt laws and regulations that may restrict or otherwise prohibit oilfield fluid disposal in certain areas or in underground disposal wells, and state agencies implementing these requirements may issue orders directing certain wells where seismic incidents have occurred to restrict or suspend disposal well operations or impose standards related to disposal well construction and monitoring. For example, the Colorado Oil and Gas Conservation Commission adopted regulations in November 2020 that impose various new requirements of the underground injection of fluid wastes to further seismic safety and protection of the environment. Such restrictions could limit oil and gas well exploration and production activities underlying the investments or increase the cost of those activities if wastewater disposal options become limited.

Hydraulic fracturing is an essential and common practice in the industry used to stimulate production of natural gas and/or oil from dense subsurface rock formations. The EPA has asserted authority over certain hydraulic-fracturing activities that use diesel fuel under the SDWA. In addition, legislation such as the Fracturing Responsibility and Awareness of Chemicals Act and similar proposals have been repeatedly introduced before Congress to provide for federal regulation of hydraulic fracturing, such as through disclosure requirements for chemical additives used in hydraulic fracturing fluids. Certain states (including states in which the Properties are located) have adopted, and other states are considering adopting, regulations that could impose more stringent permitting and well construction requirements on hydraulic-fracturing operations or seek to ban fracturing activities altogether. For example, Colorado Senate Bill 19-181 amended state law to give municipalities and counties greater local control over siting and permitting of oil and gas facilities, and some municipalities within the state have implemented regulations within their jurisdictions. In the event federal, tribal, state, local, or municipal legal restrictions are adopted in the Funds’ target areas, the investments may incur significant additional compliance costs, experience delays in exploration, development, or production activities, and perhaps even be precluded from the drilling of wells. A number of governmental bodies, including the EPA, a committee of the U.S. House of Representatives, the U.S. Department of Energy, and a number of other federal agencies have from time to time analyzed, or have been requested to review, a variety of environmental issues associated with hydraulic fracturing. As these studies proceed, and depending on their scope and results, they could spur initiatives to further regulate hydraulic fracturing under the SDWA or other regulatory programs. This, in turn, could lead to operational delays or increased operating costs in the production of oil and natural gas, including from the developing shale plays, or could make it more difficult to perform hydraulic fracturing, which could adversely affect the investments.

Specific climate legislation and regulation regarding emissions of carbon dioxide, methane, and other greenhouse gases may develop or be enacted, which could adversely affect the oil and gas industry and demand for the oil and gas produced from the Properties.

The energy industry is affected from time to time in varying degrees by political developments and a wide range of federal, tribal, state and local statutes, rules, orders and regulations that may, in turn, affect the operations and costs of the companies engaged in the energy industry. In response to findings that emissions of carbon dioxide, methane, and other greenhouse gases (“GHGs”) present an endangerment to public health and the environment, the EPA has adopted regulations under existing provisions of the CAA that, among other things, require preconstruction and operating permits for GHG emissions from certain large stationary sources that already emit conventional pollutants above a certain threshold. In addition, the EPA has adopted rules requiring the monitoring and reporting of GHG emissions from specified onshore and offshore oil and gas production sources in the United States on an annual basis, which may include operations on the Properties. Additional GHG regulation could also result from the agreement crafted during the United Nations climate change conference in Paris, France in December 2015 (the “Paris Agreement”). Under the Paris Agreement, the United States committed to reducing its GHG emissions by 26-28% by the year 2025 as compared with 2005 levels. Moreover, in November 2021, at the U.N. Framework Convention on Climate Change 26th Conference of

 

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the Parties, the U.S. and the European Union advanced a Global Methane Pledge to reduce global methane emissions at least 30% from 2020 levels by 2030, which over 100 countries have signed. While Congress has from time to time considered legislation to reduce emissions of GHGs, legislation aimed at reducing GHG emissions has not yet been adopted at the federal level.

In the absence of federal climate legislation, a number of state and regional efforts have emerged that are aimed at tracking or reducing GHG emissions by means of cap and trade programs. These programs typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs.

Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact the Funds, any future laws and regulations imposing reporting obligations on, or limiting emissions of GHGs from, operators’ equipment and operations could require them to incur costs to reduce emissions of GHGs associated with their operations. In addition, substantial limitations on GHG emissions could adversely affect demand for the oil and gas produced from the Properties. Restrictions on emissions of methane or carbon dioxide, such as restrictions on venting and flaring of natural gas, that may be imposed in various states, as well as state and local climate change initiatives, such as increased energy efficiency standards or mandates for renewable energy sources, could adversely affect the oil and gas industry, and, at this time, it is not possible to accurately estimate how potential future laws or regulations addressing GHG emissions would impact oil and gas assets. Finally, it should be noted that climate changes may have significant physical effects, such as increased frequency and severity of storms, freezes, floods, drought, hurricanes and other climatic events; if any of these effects were to occur, they could have an adverse effect on the Funds.

In addition, spurred by increasing concerns regarding climate change, the oil and natural gas industry faces growing demand for corporate transparency and a demonstrated commitment to sustainability goals. Environmental, social, and governance (“ESG”) goals and programs, which may include extralegal targets related to environmental stewardship, social responsibility, and corporate governance, have become an increasing focus of investors and stakeholders across the industry, and companies without robust ESG programs may find access to capital and investors more challenging in the future. Further, while reporting on most ESG information is currently voluntary, in March 2022, the SEC issued a proposed rule that would require public companies to disclose certain climate-related information, including climate-related risks, impacts, oversight and management, financial statement metrics and emissions, targets, goals and plans. While the proposed rule is not yet effective and is expected to be subject to a lengthy comment process, compliance with the proposed rule as drafted could result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.

Fuel conservation measures, technological advances and negative shift in market perception towards the oil and natural gas industry could reduce demand for oil and natural gas.

Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices, and the increased competitiveness of alternative energy sources could reduce demand for oil and natural gas. Additionally, the increased competitiveness of alternative energy sources (such as electric vehicles, wind, solar, geothermal, tidal, fuel cells and biofuels) could reduce demand for oil and natural gas and, therefore, the Funds’ revenues.

Additionally, certain segments of the investor community have recently expressed negative sentiment towards investing in the oil and natural gas industry. Recent equity returns in the sector versus other industry sectors have led to lower oil and natural gas representation in certain key equity market indices. Some investors, including certain pension funds, university endowments and family foundations, have stated policies to reduce or eliminate their investments in the oil and natural gas sector based on social and environmental considerations. Furthermore, certain other stakeholders have pressured commercial and investment banks to stop funding oil and

 

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gas exploration and production and related infrastructure projects. With the continued volatility in oil and natural gas prices, and the possibility that interest rates will continue to rise in the future, increasing the cost of borrowing, certain investors have emphasized capital efficiency and free cash flow from earnings as key drivers for energy companies, especially shale producers. This may also result in a reduction of available capital funding for potential development projects, further impacting the Funds’ future financial results.

The impact of the changing demand for oil and natural gas services and products, together with a change in investor sentiment, may have a material adverse effect on the Funds’ business, financial condition, results of operations and cash flows.

Increased attention to environmental, social and governance (“ESG”) matters may impact the Funds’ business.

Increasing attention to climate change, fuel conservation measures, alternative fuel requirements, incentives to conserve energy or use alternative energy sources, increasing consumer demand for alternatives to oil and natural gas, and technological advances in fuel economy and energy generation devices may result in increased costs, reduced demand for the Funds’ products, reduced profits, increased investigations and litigation, and negative impacts on the Funds’ access to capital markets. Increasing attention to climate change and any related negative public perception regarding the Funds and/or our industry, for example, may result in demand shifts for our products, increased litigation risk for the Funds, and increased regulatory, legislative and judicial scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines and enforcement interpretations.

In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions. Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward the Funds and the Funds’ industry and to the diversion of investment to other industries, which could have a negative impact on the Funds’ access to and costs of capital. Also, institutional lenders may, of their own accord, elect not to provide funding for fossil fuel energy companies based on climate change related concerns, which could affect the Funds’ access to capital for potential growth projects.

Risks Related to ENPC and the Nature of its Business

Risks Related to ENPC’s Liquidity and Capital Resources

As of March 31, 2022, ENPC had $153,000 in its operating bank account outside the Trust Account to fund its working capital requirements. Over the next several months, ENPC will be using these funds to complete the proposed Business Combination with GREP. ENPC anticipates that in order to fund its working capital requirements, it will need to use all of the remaining funds not held in trust and the interest earned on the funds held in the Trust Account. ENPC may need to raise additional capital through loans or additional investments from the Sponsor, its management team or other third parties. Neither the Sponsor, members of our management team nor any of their affiliates are under any obligation to advance funds to, or invest in, ENPC. Accordingly, ENPC may not be able to obtain additional financing. If ENPC is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a partnering transaction. ENPC cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. ENPC has no revenues, and had a working capital deficit of approximately $1.9 million as of March 31, 2022. These conditions raise substantial doubt about ENPC’s ability to continue as a going concern.

 

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If ENPC is unable to complete the Business Combination with the Funds or another business combination by December 18, 2022, ENPC will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating. In such event, third parties may bring claims against ENPC and, as a result, the proceeds held in the Trust Account could be reduced and the per-share liquidation price received by stockholders could be less than approximately $10.00 per share.

Under the terms of ENPC certificate of incorporation, as amended, ENPC must complete the Business Combination with the Funds or another business combination by December 18, 2022 or ENPC must (i) cease all operations except for the purpose of winding up, (ii) redeem 100% of ENPC’s outstanding public shares and, (iii) subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such event, third parties may bring claims against ENPC. Accordingly, the proceeds held in the Trust Account could be subject to claims which could take priority over those of ENPC’s public stockholders. Therefore, the per-share distribution from the Trust Account in such a situation may be less than approximately $10.00 to ENPC public stockholders, due to such claims.

Additionally, if ENPC is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, or if ENPC otherwise enters compulsory or court supervised liquidation, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in its bankruptcy estate and subject to the claims of third parties with priority over the claims of its stockholders. To the extent any bankruptcy claims deplete the Trust Account, ENPC may not be able to return to its public stockholders at least approximately $10.00 per share.

ENPC’s initial stockholders and management team have agreed to vote in favor of the Business Combination, regardless of how ENPC’s public stockholders vote.

Our amended and restated certificate of incorporation provides that, if we seek stockholder approval of a partnering transaction, such partnering transaction will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting, including ENPC Founder Shares, Performance Shares and private placement common stock. ENPC’s initial stockholders and management team have agreed to vote any ENPC shares owned by them in favor of the proposed Business Combination, including the Business Combination Agreement and the Business Combination Proposal. As of March 31, 2022 ENPC’s initial stockholders held 20% of the outstanding voting power of ENPC common stock (not including the private placement common stock) following ENPC’s initial public offering.

ENPC’s initial stockholders and management team also may from time to time purchase shares of Class A common stock prior to the Business Combination. As a result, in addition to ENPC’s Founder Shares, private placement common stock and Performance Shares, ENPC would need 15,218,001, or approximately 36.8%, of the 41,400,000 public shares sold in ENPC’s initial public offering to be voted in favor of the Business Combination in order to have the Business Combination approved. Accordingly, if ENPC seeks stockholder approval of the Business Combination, the agreement by our initial stockholders and management team to vote their Founder Shares, Performance Shares, private placement common stock and any public shares purchased during or after our initial public offering in favor the Business Combination will increase the likelihood that ENPC will receive the requisite stockholder approval for the Business Combination.

ENPC’s stockholders may be held liable for claims by third parties against ENPC to the extent of distributions received by them.

If ENPC is unable to complete the Business Combination with the Funds or another business combination within the required time period, ENPC will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders

 

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(including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of its remaining stockholders and its board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. ENPC cannot assure you that it will properly assess all claims that may be potentially brought against ENPC. As such, ENPC’s stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of its stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, ENPC cannot assure you that third parties will not seek to recover from its stockholders amounts owed to them by ENPC.

If ENPC is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against it which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by ENPC’s stockholders. Furthermore, because ENPC intends to distribute the proceeds held in the Trust Account to its public stockholders promptly after the expiration of the time period to complete a business combination, this may be viewed or interpreted as giving preference to its public stockholders over any potential creditors with respect to access to or distributions from its assets. Furthermore, ENPC’s board of directors may be viewed as having breached their fiduciary duties to its creditors and/or may have acted in bad faith, and thereby exposing itself and the company to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims of creditors. ENPC cannot assure you that claims will not be brought against it for these reasons.

Risks Related to the Business Combination

The Sponsor and ENPC’s current directors and executive officers and their affiliates own shares of ENPC Common Stock, Founder Shares and warrants that will be worthless (other than with respect to public shares they may have acquired during or after ENPC’s initial public offering) and may incur reimbursable expenses that may not be reimbursed or repaid if the transactions are not approved. Such interests may have influenced their decision to approve the Business Combination with the Funds.

The Sponsor, ENPC’s officers and directors and/or their affiliates beneficially own ENPC Common Stock, Founder Shares or warrants that they purchased prior to, or simultaneously with, ENPC’s initial public offering. The Sponsor and ENPC’s executive officers, directors and their affiliates have no redemption rights with respect to these securities in the event a business combination is not effected in the required time period. Therefore, if the Business Combination with the Funds or another business combination is not approved within the required time period, such securities will be worthless. Additionally, the Sponsor, ENPC’s officers, directors, and any of their respective affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on ENPC’s behalf, such as identifying and investigating possible business targets and business combinations. ENPC’s audit committee reviews on a quarterly basis all payments made to the Sponsor, ENPC’s executive officers or directors, or their or ENPC’s respective affiliates. Any such payments prior to the Business Combination will be made from (i) funds held outside the Trust Account or (ii) interest earned on the Trust Account and released to ENPC to pay its taxes. As of July 5, 2022, ENPC’s officers, directors, initial stockholders and their affiliates had incurred approximately $1,548,500 for working capital purposes of which approximately $778,500 is payable at the closing of the Business Combination and $770,000 of which Sponsor will cancel as part of the consideration for the Business Combination. Furthermore, in order to finance transaction costs in connection with an intended business combination, the Sponsor or an affiliate of the Sponsor or certain of ENPC’s officers and directors may, but are not obligated to, loan ENPC funds as may be required. These loans will be due and payable in full on January 11, 2023 if ENPC does not complete the Business Combination. Please see the sections entitled “Proposal No. 1 — The Business Combination Proposal — Interests of Certain Persons” and “Certain Relationships and Related Transactions — ENPC’s Related Party Transactions — Founder Shares and Performance Shares” for more information.

 

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These financial interests may have influenced the decision of ENPC’s directors and officers to approve the Business Combination with the Funds and to continue to pursue such Business Combination. In considering the recommendations of ENPC’s board of directors to vote for the Business Combination Proposal and other proposals, its stockholders should consider these interests.

Since the Sponsor will lose its entire investment in ENPC if a business combination is not completed (other than with respect to public shares it may acquire), a conflict of interest may arise in determining whether the Business Combination, or an alternative initial business combination, is appropriate for ENPC’s business combination.

On June 22, 2020, the Sponsor purchased an aggregate of (a) 690,000 (after giving effect to a reverse stock split effected on July 29, 2020 that reduced the outstanding founder shares from 737,789 shares to 690,000 shares) founder shares in exchange for a capital contribution of $6,250, or approximately $0.01 per share and (b) 120,000 Performance Shares (after giving effect to a 100-for-one stock split effected July 17, 2020) for a capital contribution of $18,750, or $0.156 per share. In September 2020, the Sponsor transferred 6,000 founder shares and 1,200 Performance Shares to each of Mr. Boyce, Mr. Calbert and Ms. Ruiz. On September 17, 2020, we effected a 1 for 1.2 forward stock split of the founder shares that increased the outstanding founder shares from 690,000 shares to 828,000 shares. The founder shares will be worthless if we do not complete a business combination. In addition, in connection with ENPC’s initial public offering, the Sponsor purchased an aggregate of 245,600 private placement CAPSTM (614,000 private placement CAPSTM after giving effect to the Forward Split) for an aggregate purchase price of $6,140,000, or $25.00 per private placement CAPSTM ($10.00 per private placement CAPSTM after giving effect to the Forward Split). The 614,000 shares of Class A common stock and 153,500 warrants underlying such private placement CAPSTM will also be worthless if we do not complete a business combination.

As a result, the Sponsor may be incentivized to complete the Business Combination, or an alternative initial business combination with a less favorable company or on terms less favorable to stockholders, rather than to liquidate, in which case the Sponsor would lose its entire investment. As a result, the Sponsor may have a conflict of interest in determining whether the Funds are the appropriate businesses with which to effectuate a business combination and/or in evaluating the terms of the Business Combination. The Board was aware of and considered these interests, among other matters, in evaluating and unanimously approving the Business Combination and in recommending to ENPC’s stockholders that they approve the Business Combination.

The exercise of ENPC’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the Business Combination may result in a conflict of interest when determining whether such changes to the terms of the Business Combination or waivers of conditions are appropriate and in ENPC’s stockholders’ best interest.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Business Combination Agreement, would require ENPC to agree to amend the Business Combination Agreement, to consent to certain actions taken by the Funds or to waive rights that ENPC is entitled to under the Agreement. Such events could arise because of changes in the course of the Funds’ business, a request by the Funds to undertake actions that would otherwise be prohibited by the terms of the Business Combination Agreement or the occurrence of other events that would have a material adverse effect on the Funds’ business and would entitle ENPC to terminate the Business Combination Agreement. In any of such circumstances, it would be at ENPC’s discretion, acting through its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of the directors described in the preceding risk factors may result in a conflict of interest on the part of one or more of the directors between what he or they may believe is best for ENPC and what he or they may believe is best for himself or themselves in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, ENPC does not believe there will be any changes or waivers that ENPC’s directors and officers would be likely to make after stockholder approval of the Business Combination Proposal has been obtained. While certain changes could be made without further

 

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stockholder approval, ENPC will circulate a new or amended proxy statement/prospectus and resolicit ENPC’s stockholders if changes to the terms of the transaction that would have a material impact on its stockholders are required prior to the vote on the Business Combination Proposal.

There may be tax consequences of the Business Combination that adversely affect ENPC stockholders and holders of public warrants.

Subject to the assumptions, limitations and qualifications described in “Material U.S. Federal Income Tax Considerations — U.S. Holders” below, it is the opinion of Kirkland that the Mergers taken together should qualify (in whole or in part) as a tax-deferred exchange for U.S. federal income tax purposes under Section 351 of the Code. In addition, the parties intend for U.S. federal income tax purposes that the ENPC Merger qualifies as a tax-deferred reorganization under Section 368(a)(2)(E) or Section 368(a)(1)(B) of the Code to the extent that the applicable requirements are satisfied. If the ENPC Merger only qualifies as a tax-deferred exchange under Section 351 of the Code and does not qualify as a tax-deferred reorganization under Section 368(a) of the Code, then the exchange of public warrants for Parent warrants in the ENPC Merger would not qualify for tax-deferred treatment and would be taxable as further described in “Material U.S. Federal Income Tax Considerations — U.S. Holders”. There are significant factual and legal uncertainties as to whether the ENPC Merger will qualify as a tax-deferred reorganization under Section 368(a) of the Code, including that the assets of GREP are only investment-type assets and that it cannot be determined until following the closing of the Business Combination whether Parent will continue a significant line of GREP’s historic business or use a significant portion of GREP’s historic business assets. Under Section 368(a) of the Code, the acquiring corporation must continue, either directly or indirectly through certain controlled corporations, either a significant line of the acquired corporation’s historic business or use a significant portion of the acquired corporation’s historic business assets in a business. However, there is an absence of guidance as to how the provisions of Section 368(a) of the Code apply in the case of an acquisition of a corporation with only investment-type assets, such as ENPC, and there are significant factual and legal uncertainties concerning the determination of this requirement. Moreover, qualification of the ENPC Merger as a tax-deferred reorganization under Section 368(a) of the Code is based on facts which will not be known until or following the closing of the Business Combination (such as the level of redemptions). As a result, Kirkland is unable to opine as to whether the ENPC Merger constitutes a reorganization under Section 368(a) of the Code. The closing of the Business Combination is not conditioned upon the receipt of an opinion of counsel that the Business Combination will so qualify as a tax-deferred reorganization under Section 368(a) of the Code. The parties intend to report (a) the Mergers taken together as a tax-deferred exchange under Section 351 of the Code, and (b) the ENPC Merger as a tax-deferred reorganization under Section 368(a) of the Code to the extent the applicable requirements are satisfied. However, any change that is made after the date hereof in any of the foregoing bases for the intended tax treatment, including any inaccuracy of the facts or assumptions upon which such expectations were based, could adversely affect the intended tax treatment.

Further, ENPC has not sought, and does not intend to seek, a ruling from the IRS as to any U.S. federal income tax consequences described herein. The IRS may disagree with the descriptions of U.S. federal income tax consequences contained herein, and its determination may be upheld by a court. Any such determination could subject an investor or ENPC to adverse U.S. federal income tax consequences that would be different than those described herein. Accordingly, no assurance can be given that the Mergers will qualify for tax-deferred treatment under Section 351 or Section 368(a) of the Code. Each prospective investor is strongly urged to consult with a tax advisor with respect to the specific U.S. federal, state, local or foreign income or other tax consequences of the Business Combination to such prospective investor. Please see the section entitled “Material U.S. Federal Income Tax Considerations” for more information.

 

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The fact that the Funds are private companies limits ENPC’s access to some information that may be relevant to the Business Combination. This may result in a business combination that is not as profitable as ENPC suspects.

By definition, very little public information exists about private companies, which required ENPC to make decisions on whether to pursue the Business Combination on the basis of limited information provided by the Funds, which may result in the Business Combination being less profitable than ENPC suspected, if at all.

The scope of due diligence ENPC has conducted in conjunction with the Business Combination may be different than would typically be conducted in the event Grey Rock pursued an underwritten initial public offering, and you may be less protected as an investor from any material issues with respect to Grey Rock’s and the Funds’ business, including any material omissions or misstatements contained in the registration statement or this proxy statement/prospectus, than an investor in an initial public offering.

The scope of due diligence ENPC has conducted in conjunction with the Business Combination may be different than would typically be conducted in the event Grey Rock pursued an initial public offering. In a typical initial public offering, the underwriters of the offering conduct due diligence on the company to be taken public, and following the offering, the underwriters are subject to liability to private investors for any material misstatements or omission in the registration statement. While potential investors in an initial public offering typically have a private right of action against the underwriters of the offering for any of these material misstatements or omissions, there are no underwriters of the Parent common stock and Parent warrants that will be issued pursuant to the registration statement of which this proxy statement/prospectus forms a part and thus no corresponding right of action is available to investors in the Business Combination for any material misstatements or omissions in such registration statement. Therefore, as an investor in the Business Combination, you may be exposed to future write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative impact on Parent’s financial condition and its share price, which could cause you to lose some or all of your investment without certain recourse against any underwriter that may be available in an underwritten offering.

ENPC may not be able to realize the anticipated benefits from the Business Combination.

The successful completion of the Business Combination may not yield the anticipated benefits or the benefits may not occur in the anticipated time frame. Moreover, the ability to realize the benefits in the expected time frame may be materially adversely affected by a number of factors. The proposed Business Combination to date has placed, and future acquisitions could continue to place, significant demands on both Grey Rock’s and ENPC’s administrative, operational and financial resources and may also result in the assumption of unexpected liabilities and may divert management’s attention from the operation of the Funds’ legacy business.

Additionally, strategic investments and partnerships with other companies may expose Parent to the risk that it may not be able to control the operations of the investee or partnership, which could decrease the amount of benefits Parent realizes from a particular relationship. Parent will also be exposed to the risk that its partners in strategic investments may encounter financial difficulties that could lead to disruption of investee or partnership activities, or impairment of assets acquired, which could materially adversely affect future reported results of operations and financial condition.

The NYSE may not agree to list Parent’s securities from trading on its exchange, which could limit investors’ ability to make transactions in Parent’s securities and subject us to additional trading restrictions.

ENPC’s securities are currently listed on the NYSE. However, ENPC cannot assure that Parent’s securities will be listed on the NYSE after the Business Combination. In order to continue listing Parent’s securities on the NYSE after the Business Combination, Parent must maintain certain financial, distribution and stock price levels. Generally, Parent must maintain a minimum amount in stockholders’ equity and a minimum number of holders

 

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of Parent’s securities. Additionally, in connection with the Business Combination, Parent will be required to comply with the NYSE’s initial listing requirements, which are more rigorous than the NYSE’s continued listing requirements, in order to maintain the listing of Parent’s securities on the NYSE. ENPC cannot assure you that Parent will be able to meet those initial listing requirements or obtain all the necessary approvals. Failure to obtain the necessary approvals will result in the failure of the Business Combination to be consummated. If the NYSE delists Parent’s securities from trading on its exchange and Parent is not able to list its securities on another national securities exchange, ENPC expects Parent’s securities could be quoted on an over-the-counter market. If this were to occur, Parent could face significant material adverse consequences, including:

 

   

a limited availability of market quotations for Parent’s securities;

 

   

reduced liquidity for Parent’s securities;

 

   

a determination that Parent’s common stock is a “penny stock” which will require brokers trading in Parent’s common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for Parent’s securities;

 

   

a limited amount of news and analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

The unaudited pro forma financial information included elsewhere in this proxy statement/prospectus may not be indicative of the Combined Company’s actual financial position or what results of operations would have been.

The unaudited pro forma financial information in this proxy statement/prospectus is presented for illustrative purposes only, has been prepared based on a number of assumptions and is not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. The unaudited pro forma condensed combined financial information does not reflect any of the benefits that the combined companies may achieve as a result of the Business Combination or the costs to combine ENPC and the Funds or the costs necessary to achieve these benefits. See “Unaudited Pro Forma Condensed Combined Financial Information”.

The future exercise of registration rights may adversely affect the market price of the Parent common stock after the Business Combination.

Parent’s common stock owned by the Existing GREP Members or their transferees will be subject to the RRA and Lock-up Agreement that provides for the registration for resale of Parent’s common stock held by the Existing GREP Members or their transferees. The Existing GREP Members are expected to own approximately 75.5% of Parent’s common stock following the closing of the Business Combination assuming no redemptions. Sales of securities pursuant to this agreement may substantially depress the market price of Parent’s common stock.

Each of ENPC and the Funds have incurred and will incur substantial costs in connection with the Business Combination and related transactions, such as legal, accounting, consulting and financial advisory fees.

Each of ENPC and the Funds have incurred and expect that it will incur significant, non-recurring costs in connection with consummating the Business Combination. ENPC and the Funds may also incur additional costs to retain key employees. ENPC and the Funds will also incur significant legal, financial advisor, accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the Business Combination. Although the parties have been provided with estimates of the costs for each advisory firm, the total actual costs may exceed those estimates and some of these costs are payable regardless of whether the Business Combination are completed.

 

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While ENPC and the Funds work to complete the Business Combination, management’s focus and resources may be diverted from operational matters and other strategic opportunities.

Successful completion of the Business Combination may place a significant burden on the management of ENPC and Grey Rock and other internal resources. The diversion of management’s attention and any difficulties encountered in the transition process could harm Parent’s business, financial condition, results of operations and prospects, including with respect to any future growth-oriented acquisitions undertaken by Parent. Diversion of management’s attention and any difficulties encountered in the transition process could have an adverse effect on Parent.

Following the consummation of the Business Combination, Parent will incur significant increased expenses and administrative burdens as a public company, which could have an adverse effect on its business, financial condition and results of operations.

Following the consummation of the Business Combination, Parent will face increased legal, accounting, administrative and other costs and expenses as a public company that the Funds do not currently incur. The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the PCAOB and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements will require Parent to carry out activities the Funds have not done previously. For example, Parent will create new board committees and adopt new internal controls and disclosure controls and procedures. In addition, additional expenses ass