In a press release despatched to Rigzone specializing in Crescent Power Firm’s SilverBow Sources transaction, Andrew Dittmar, a Principal Analyst at Enverus Intelligence Analysis (EIR), stated the deal addresses key considerations for SilverBow.
These key considerations are round strengthening the steadiness sheet and growing scale to make the corporate extra related with buyers, in response to Dittmar, who outlined that the deal “additionally gives a bigger platform to consolidate throughout the Eagle Ford”.
In a joint assertion printed late Thursday, Crescent Power and SilverBow introduced that that they had entered right into a definitive settlement pursuant to which Crescent will purchase SilverBow in a transaction valued at $2.1 billion.
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SilverBow shareholders will obtain 3.125 shares of Crescent Class A typical inventory for every share of SilverBow frequent inventory, with the choice to elect to obtain all or a portion of the proceeds in money at a worth of $38 per share, topic to attainable professional ration with a most complete money consideration for the transaction of $400 million, the joint assertion famous.
Dittmar identified in his assertion that $38 per share marked a 17 p.c premium to SilverBow’s prior day shut.
“With the 17 p.c premium on the prior-day shut, a bit greater than what has been seen in latest upstream consolidation, and the prospect to fold the corporate into a bigger group with economies of scale and synergies, it seems that it could be difficult for Kimmeridge to make a counterproposal that will be extra engaging to SilverBow,” Dittmar stated within the assertion.
Crescent’s aspect of issues, Dittmar stated the deal is the largest step they’ve taken to realize the corporate’s purpose of being a principal consolidator within the Eagle Ford.
“The Eagle Ford is probably the most fragmented among the many main unconventional performs and gives substantial alternative to construct a big and related firm, one thing the Crescent group is on their option to attaining,” he added.
“The deal for SilverBow, like Crescent’s earlier acquisitions within the Eagle Ford, appears to have been priced primarily on the worth of present manufacturing with little or nothing paid for the undeveloped stock,” he continued.
“Regardless of not having to allocate worth to stock, shopping for SilverBow nonetheless provides over 600 areas to Crescent’s drilling stock with a mixture of gasoline and oil centered stock,” he went on to state.
Within the be aware, Dittmar stated having extra choices to shift growth between the 2 commodities needs to be a profit for Crescent by permitting the corporate to drill oil areas throughout this era of low gasoline costs however seize upside ought to gasoline costs see their anticipated enchancment as extra U.S. LNG export capability comes on-line.
“The elevated scale close to the coast and talent to extra effectively supply pipeline capability and coordinate on bottlenecks also needs to assist the mixed firm seize worth by offering gasoline to LNG services,” he added.
Following closing of the deal and a discount in leverage, Crescent is prone to resume opportunistically consolidating throughout the Eagle Ford, profiting from the numerous personal fairness investments which might be nonetheless lively within the play like EnCap’s Verdun Oil, Dittmar stated within the assertion.
“Different firms doubtlessly occupied with rising within the Eagle Ford, like Baytex Power, may transfer extra quickly on offers of their very own forward of Crescent resuming shopping for extra Eagle Ford belongings after SilverBow,” he added.
Within the Crescent-SilverBow joint assertion, the businesses stated the transaction will create a scaled firm with a balanced portfolio of high-quality and long-life belongings, a beautiful, returns-driven monetary framework, and powerful steadiness sheet, led by a administration group and board with vital working and investing experience that’s well-positioned to drive long-term progress and worth creation.
“It is a compelling transaction for shareholders of each firms, making a premier progress by way of acquisition platform,” John Goff, Crescent’s Chairman of the Board, stated within the assertion.
“As Chairman and a serious long-term shareholder, it has been thrilling to observe this enterprise execute on the technique administration laid out from the very starting. This mixture additional positions Crescent as a number one progress enterprise, and we sit up for welcoming the SilverBow group as we proceed to construct this firm,” he added.
Crescent CEO David Rockecharlie stated within the assertion, “the mixture with SilverBow, which is anticipated to be instantly accretive to all key per share metrics, solidifies Crescent as a number one operator within the Eagle Ford and strengthens the corporate’s progress platform with elevated scale”.
“The SilverBow group has constructed a complementary and top quality place within the Eagle Ford, and we imagine the mixture presents a singular worth proposition in our evolving sector,” he added.
“The mixed firm can have a beautiful and balanced portfolio of secure, low-decline and extremely cash-generative manufacturing with a deep stock of confirmed drilling areas, properly positioned for versatile capital allocation by way of commodity cycles,” he continued.
“This mixture creates a number one mid-cap firm with vital worth creation potential and the steadiness of a large-cap operator,” he went on to state.
SilverBow CEO Sean Woolverton stated within the assertion, “that is an thrilling new chapter for SilverBow and a compelling worth proposition for our shareholders”.
“The transaction delivers a beautiful premium to SilverBow shareholders, with a option to choose into the numerous upside, sustainable worth and significant synergies that we see on this mixture by receiving Crescent shares – or to obtain fast money liquidity,” he added.
“This transaction is according to our dedication to pursuing any path that may maximize worth for shareholders and is the results of a evaluation of alternate options performed with the help of our monetary and authorized advisors,” he continued.
“The SilverBow group constructed an unimaginable firm, and … [this] thrilling announcement is a testomony to their laborious work and dedication. This mixture of two robust firms positions the professional forma enterprise for continued success above and past what both firm may obtain by itself,” Woolverton continued.
To contact the writer, e-mail andreas.exarheas@rigzone.com
