Crescent Energy Announces Complementary Central Eagle Ford Bolt-On
September 04 2024 - 7:46AM
Business Wire
Crescent Energy Company (NYSE: CRGY) (“Crescent” or the
“Company”) today announced the signing of a definitive agreement to
acquire assets from a private Eagle Ford operator for total cash
consideration of $168 million, subject to customary purchase price
adjustments. The acquisition is directly offset Crescent’s existing
Central Eagle Ford footprint and builds upon its significant
acquisition activity in the Eagle Ford over the past 18 months,
including the recently closed acquisition of SilverBow Resources
Inc. The transaction, which has an effective date of May 1, is
expected to close in September 2024, subject to customary closing
conditions. Additional details have been posted on Crescent’s
website at www.crescentenergyco.com.
HIGHLIGHTS
- Strong investment returns and accretive to key financial
metrics – The transaction is accretive to Operating Cash Flow,
Levered Free Cash Flow(1) and net asset value per share, with
unlevered cash-on-cash returns in excess of Crescent’s 2.0x
Multiple on Invested Capital (“MOIC”) target
- Complementary operations directly offset core position –
Low-decline oil production with attractive inventory directly
offset Crescent’s existing footprint in Frio, Atascosa, La Salle
and McMullen counties with potential for meaningful operating
efficiencies and extended lateral lengths across Crescent’s
existing position
- High-return drilling inventory; immediately competes for
capital – Acquisition adds roughly 30 oil-weighted, core
development locations with advantaged NRIs from owned minerals
further increasing returns
- Minerals, surface and midstream ownership enhances
flexibility – Approximately 5,300 net royalty acres, greater
than 3,500 surface acres and owned takeaway increase margins and
create meaningful operating flexibility
- Maintains strong balance sheet and Investment Grade credit
metrics – Crescent’s leverage ratio is expected to remain
relatively unchanged, with net debt to trailing 12-month Adjusted
EBITDAX ratio expected to be below the Company’s publicly stated
maximum leverage target of 1.5x(2). In conjunction with the signing
of the transaction, Crescent entered into additional hedges in-line
with its risk-management strategy
“This transaction builds upon our momentum in the Eagle Ford,
where we see substantial opportunity for further growth and
compelling investment returns,” said Crescent CEO David
Rockecharlie. “We are adding low-decline oil production and
high-quality acreage adjacent to our existing position, with
meaningful opportunity to further increase returns through improved
operating efficiency. We are pleased with this attractive
acquisition, and we believe in our ability to continue to
accretively scale Crescent.”
(1)
Non-GAAP financial measure. Please see
“Non-GAAP Measures” for a description of the applicable metric.
(2)
Crescent defines leverage as the ratio of
consolidated net debt to consolidated Adjusted EBITDAX
(non-GAAP).
About Crescent Energy
Crescent is a differentiated U.S. energy company committed to
delivering value for shareholders through a disciplined growth
through acquisition strategy and consistent return of capital. Our
long-life, balanced portfolio combines stable cash flows from
low-decline production with deep, high-quality development
inventory. Our activities are focused in Texas and the Rocky
Mountains. For additional information, please visit
www.crescentenergyco.com.
Cautionary Statement Regarding
Forward-Looking Information
This communication contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements are based on current expectations,
including with respect to the proposed transaction. The words and
phrases “should”, “could”, “may”, “will”, “believe”, “think”,
“plan”, “intend”, “expect”, “potential”, “possible”, “anticipate”,
“estimate”, “forecast”, “view”, “efforts”, “target”, “goal” and
similar expressions identify forward-looking statements and express
the Company’s expectations about future events. All statements,
other than statements of historical facts, included in this
communication that address activities, events or developments that
the Company expects, believes or anticipates will or may occur in
the future are forward-looking statements. Such statements are
subject to a number of assumptions, risks and uncertainties, many
of which are beyond the Company’s control. Such risks and
uncertainties include, but are not limited to, the ability of the
parties to consummate the transaction in a timely manner or at all;
satisfaction of the conditions precedent to consummation of the
transaction; the integration of the assets acquired in the
transaction into the Company’s existing strategies and plans; the
possibility of litigation (including related to the transaction
itself), weather, political, economic and market conditions,
including a decline in the price and market demand for natural gas,
natural gas liquids and crude oil, actions by the Organization of
the Petroleum Exporting Countries (“OPEC”) and non-OPEC oil
producing countries, the timing and success of business development
efforts, and other uncertainties. Consequently, actual future
results could differ materially from expectations. The Company
assumes no duty to update or revise its forward-looking statements
based on new information, future events or otherwise.
Non-GAAP Measures
Crescent defines Levered Free Cash Flow as Adjusted EBITDAX less
interest expense, excluding non-cash amortization of deferred
financing costs, discounts, and premiums, loss from extinguishment
of debt, excluding non-cash write-off of deferred financing costs,
discounts, and premiums, realized loss on interest rate
derivatives, current income tax benefit (expense), tax-related
redeemable noncontrolling interest distributions made by OpCo and
development of oil and natural gas properties. Levered Free Cash
Flow does not take into account amounts incurred on
acquisitions.
Crescent defines Adjusted EBITDAX as net income (loss) before
interest expense, loss from extinguishment of debt, realized (gain)
loss on interest rate derivatives, income tax expense (benefit),
depreciation, depletion and amortization, exploration expense,
non-cash gain (loss) on derivatives, impairment expense, non-cash
equity-based compensation expense, (gain) loss on sale of assets,
other (income) expense, transaction and nonrecurring expenses and
early settlement of derivative contracts. Additionally, we further
subtract certain redeemable noncontrolling interest distributions
made by Crescent Energy OpCo LLC, our wholly owned subsidiary,
related to Manager Compensation to KKR Energy Assets Manager LLC,
our external manager, and settlement of acquired derivative
contracts.
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version on businesswire.com: https://www.businesswire.com/news/home/20240903447796/en/
IR@crescentenergyco.com
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