Civitas Resources has agreed to acquire US-based energy producer Crestone Peak Resources (CPP), creating an oil and gas producer with an enterprise value of around $4.5bn.
The combined company will have operations across more than half a million net acres. It is estimated to produce approximately 160,000 barrels of oil equivalent per day.
With an aggregate enterprise value of around $2.6bn, Civitas is the entity being created through the merger of Bonanza Creek Energy and Extraction Oil & Gas.
The all-stock merger of equals was announced last month and is expected to be finalised towards the end of 2021.
Both Bonanza Creek and Extraction, along with Crestone, are focused on Colorado’s Denver-Julesburg (DJ) Basin.
The takeover of Crestone is expected to boost the combined company’s scale, in-basin diversification, balance sheet, and liquidity profile.
The Crestone deal is planned to be completed immediately after the Bonanza Creek/Extraction merger to create Civitas, which is said to be the largest pure-play energy producer in the DJ Basin.
The deal has already secured clearance from the Bonanza Creek, Extraction and Crestone boards, as well as Crestone’s shareholders. It now awaits approval from Bonanza Creek’s shareholders.
Crestone shareholders have agreed to swap their equity interests in the company for nearly 22.5 million shares of Bonanza Creek stock.
Crestone’s owners include Canada Pension Plan Investment Board (CPP Investments) and investment firm The Broe Group.
In 2016, Crestone was created by a joint agreement between CPP Investments and The Broe Group to purchase assets in the DJ Basin from Encana Oil & Gas (USA).
Following completion of the latest transaction, CPP Investments will be Civitas’ largest shareholder and designate one director to the Civitas board.
The deal will see shareholders of Bonanza Creek and Extraction each owning around 37% of Civitas. The remaining 26% stake will be held by Crestone shareholders.
Civitas intends to become Colorado’s first carbon neutral oil and gas producer after the deal closes. The combined business will be based in Denver, Colorado.
Civitas said in a press statement: “Civitas will have established itself as the preferred consolidation partner in the target-rich DJ Basin, which will help increase its trading liquidity and market relevance, and ultimately elevate its presence among top energy producers in the country.”
Extraction CEO Tom Tyree said: “Crestone brings to Civitas complementary, premium assets at the front end of the cost curve, along with common organisational and community values, including an aggressive commitment to sustainability.”
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