Shale Consolidation: Civitas Expands DJ Basin Footprint With New Acquisition

The all-stock transaction is expected to bolster the newly created operator's production profile to around 160,000 BOE/D.

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Denver-based Civitas Resources announced today that it is acquiring Crestone Peak Resources in an all-stock transaction. Civitas was formed last month through the announced merger of Denver-Julesburg (DJ) Basin operators Bonanza Creek Energy and Extraction Oil & Gas.

On a pro forma basis, the three-way merger will create a firm with an enterprise value of nearly $4.5 billion and a production profile of almost 160,000 BOE/D. Crestone’s assets will bring Civitas’ position in the DJ Basin to more than 500,000 net acres. In addition, the combination with Crestone is expected to realize nearly $45 million in expected annual synergies.

Under the agreement, Crestone shareholders will exchange their stock for about 22.5 million shares of Bonanza Creek stock. Bonanza Creek and Extraction shareholders will each own nearly 37% of Civitas while Crestone shareholders will hold 26% of the new company. Closing of both transactions is expected this fall.

Media reports published prior to the deal pegged the ultimate value at around $1.3 billion; however, the privately held companies did not disclose the value of the proposed transaction.

Crestone was formed in 2016 by the Canada Pension Plan Investment Board and Denver-based investment firm The Broe Group. That same year it acquired Encana's (now called Ovintiv) entire 51,000-acre position in the DJ Basin.

Civitas is aiming to become Colorado’s first carbon-neutral oil and gas producer based on Scope 1 and 2 emissions.