Denver’s Centennial Resource Development has merged with a Texas company to create a $7 billion oil and gas production company to focus its effort in Texas.
Centennial reached the deal with Colgate Energy, a firm based in Midland, Texas. The stock transaction means the combined company will be based in Midland while Centennial’s office in Colorado will be kept for the development of new business operations.
“This transformative combination significantly increases scale and drives accretion across all our key financial and operating metrics,” said Sean Smith, chief executive officer of Centennial Resource Development, in a statement.
Prior to the merger, Centennial had more than 75,000 in inventory in the southern Delaware Basin of West Texas.
The merger will result in what the two firms call the largest “pure-play E&P” company in the Basin with about 180,000 net leasehold acres and 40,000 net royalty acres with a total current production of nearly 135,000 Boed/d.
The firms say the merger will position the new company to increase cash returns to shareholders with more than $1 billion of expected free cash flow in 2023 based on current strip prices.