By Michael Dabaie

Centennial Resource Development Inc. agreed to merge with Colgate Energy Partners III LLC, the companies said.

Under the deal, existing Centennial shareholders will own about 53% of the combined company, and existing Colgate owners will own about 47%, they said.

The combined company will be a pure-play exploration and production company in the Delaware Basin with about 180,000 net leasehold acres, 40,000 net royalty acres and total current production of about 135,000 barrels of oil equivalent a day, the companies said.

The deal values Colgate at about $3.9 billion and comprises 269.3 million shares of Centennial stock, $525 million of cash and the assumption of about $1.4 billion of Colgate's debt, they said.

Centennial shares were up 6.5% to $7.98 in premarket trading.

Centennial in early December said it closed a sale of noncore assets to affiliates of Henry Resources LLC and Pickering Energy Partners LP for a cash purchase price of $101 million.

Write to Michael Dabaie at michael.dabaie@wsj.com

(END) Dow Jones Newswires

May 19, 2022 07:56 ET (11:56 GMT)