Crescent Energy’s acquistion of Tulsa-based Vital Energy this week created a company with a combined value of $9 billion.
The $3.1 billion all-stock deal was announced Sunday as Cresent, based in Houston, Texas, will expand operations and holdings in the Permian Basin and other areas of the country.
“The combined company will have an enterprise value of approximately $9 billion and a free cash flow generation capacity
comparable to our new top 10 peers,” explained Crescent CEO David Rockecharlie.
” The transaction provides a substantial foothold in the Permian that complements our existing scale positions across
the Eagle Ford and the Uinta.”
Under the deal, Vital shareholders received 1.9062 shares of Crescent common stock and the closing, anticipated by the end of the year, would result in a 23% ownership of the company by Vital shareholders.
“Following close, the Crescent Board will expand to 12 members and 10 representatives from Crescent and two from Vital. As mentioned in my opening remarks, this attractive combination creates a top 10 independent, catalyzing a step change in Crescent’s market position with attractive tailwinds from
an increased investor pool, incremental index inclusion, and a potential ratings,” added Rockecharlie.
He said the combined company will produce nearly 400,000 barrels of oil equivalent a day with about $13 billion of total proved SEC reserves.
Rockecharlie said the company will also hold nearly 1 million net acres across its core areas. It also includes more than a decade of low-risk development inventory.
The acquisition will also bring about some changes from the way Vital Energy operated, according to the Crescent Energy CEO.
“And so, we’re — just to confirm for you, we’re going to bring it into our business strategy and operate it how Crescent operates. That is different than others in the industry. And first of all, I’d say that Vital strategy had included a more growth through the drillbit approach along with the acquisitions they were doing, and that just hasn’t been our style from the beginning.”
He said Crescent intends to maximize cash flow and returns abut at the same time “take our time.”
“And so, we think there’s great capital projects to do here. But as we look at this business, we want to do this right. And so, taking your time and being able to high-grade inventory, plan within the context of our broader portfolio, and then also integrate and high-grade among the opportunities we have to develop is just the
way we like to do things.”
