Yahoo Finance Crescent (CRGY) & SilverBow (SBOW) Unite in $2.1B Merger
Crescent Energy Company CRGY has agreed to acquire SilverBow Resources, Inc. SBOW at a valuation of $2.1 billion. The transaction will merge SilverBow and Crescent Energy to create a scaled company. The combined entity will boast a balance portfolio of high-quality and long-life assets, along with a strong balance sheet and a financial framework that will attract high returns.
SilverBow shareholders will receive 3.125 shares of Crescent Class A common stock against each share of SilverBow common stock. The shareholders will also have an option to receive a part or the entire compensation in cash at the rate of $38 per share. However, the total cash consideration for the deal is limited to a total of $400 million. If the cash consideration exceeds this limit, then the shareholders will receive a mix of cash and stock.
Post completion, Crescent shareholders will own about 69-79% of the combined company while SilverBow shareholders will own about 21-31%. The combination of the two companies is expected to give rise to the second largest operator in the Eagle Ford shale. It will also boost the company’s portfolio to around 250,000 barrels of oil equivalent per day, characterized by assets that have a long-life and low production decline rates and a deep, high-quality inventory.
The combined company will focus on generating significant shareholder value and maintaining disciplined capital allocation. The company will also focus on maintaining a sound financial position by taking a disciplined approach toward capital allocation. The company plans to have a peer leading capital return framework through a fixed dividend and a stock buyback program.
CRGY believes that the merger will drive remarkable annual synergies of $65-$100 million through immediate cost of capital savings and operational efficiencies. After the closing of the transaction, Crescent’s board of directors will increase to accommodate 11 members, out of which 2 will be designated by SilverBow.
The merger will create a leading growth business in the Eagle Ford shale and would be highly beneficial to shareholders of both the companies. Crescent emphasizes that the merger will position as a top operator in Eagle Ford and will be immediately accretive to key financial metrics. SilverBow, on the other hand, stated that the transaction will offer a premium to its shareholders and that the decision is consistent with its commitment to maximize value for shareholders.
SilverBow had previously rejected an offer by Kimmeridge Energy Management to acquire and merge the company with Kimmeridge Texas Gas. Kimmeridge is the largest shareholder of SilverBow Resources.
Zacks Rank & Key Picks
Currently, CRGY and SBOW carry a Zacks Rank #3 (Hold) each.
Some better-ranked stocks in the energy sector are SM Energy SM and Eni SpA E. SM Energy presently sports a Zacks Rank #1 (Strong Buy) and Eni carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy is an upstream energy firm operating in the prolific Midland Basin region and the South Texas region. For 2024, the company expects its production to increase from the prior-year reported figure, signaling a bright production outlook.
Eni is a leading global integrated energy company with a prominent focus on liquefied natural gas businesses. As natural gas has a lesser carbon footprint compared with other fossil fuel, it will play an important role in the global energy transition process. Eni’s participation in the natural gas market will allow it to capitalize on the mounting global demand in the future.
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Eni SpA (E) : Free Stock Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
SilverBow Resources (SBOW) : Free Stock Analysis Report
Crescent Energy Company (CRGY) : Free Stock Analysis Report
