Crescent Energy Company announced today the acquisition of SilverBow Resources in a deal valued at $2.1 billion. The acquisition will give Crescent Energy a pro forma output of 250,000 BOE/D, with oil representing 39%.
With 70% of the combined production in the Eagle Ford Shale of south Texas, the deal positions Crescent as the second-largest operator in the region, between EOG Resources and ConocoPhillips in terms of gross operated output. SilverBow also operates assets in the US Rockies, including Colorado, Wyoming, and Utah.
Crescent added that it will gain at least 400 low-risk drilling locations from SilverBow, increasing its total inventory of high-quality future oil and gas wells to over 1,100.
Upon closing, the Crescent board will expand to 11 members, including two directors designated by SilverBow.
Crescent CEO David Rockecharlie will retain his role, and the company will maintain its headquarters in Houston. Rockecharlie commented on the deal, “The combination with SilverBow solidifies Crescent as a leading operator in the Eagle Ford and strengthens the company’s growth platform with increased scale. The SilverBow team has built a complementary and high-quality position in the Eagle Ford, and we believe the combination offers a unique value proposition in our evolving sector.”
Crescent Energy also anticipates annual synergy savings of $65 to $100 million due to corporate and operational overlaps.
Andrew Dittmars, principal analyst at Enverus Intelligence Research, noted that the terms of the deal indicate that, similar to other recent deals, the value was placed on producing assets with virtually no premium offered for undeveloped locations.
“For Crescent, the deal is the biggest step they have taken to achieve the company’s goal of being a principal consolidator in the Eagle Ford,” said Dittmars. “The Eagle Ford is the most fragmented among the major unconventional plays and provides substantial opportunity to build a large and relevant company, something the Crescent team is on their way to achieving.”
Terms of the transaction will see SilverBow shareholders receive 3.125 shares of Crescent’s common stock per share of SilverBow. Additionally, SilverBow shareholders can elect to receive a cash payout of $38 per share, capped to a total of $400 million.
Post-merger, Crescent shareholders will hold between 69 and 79% of the combined company, while SilverBow shareholders will own 21 to 31%, depending on the final cash consideration at closing. Pending shareholder and regulatory approvals, the transaction is expected to close by the end of the third quarter of this year.
The acquisition comes after SilverBow spent the past 2 years rebuffing takeover efforts by its largest shareholder, Kimmeridge Energy Investment, whichwithdrew its latest merger offer a month ago.
