HOUSTON–(BUSINESS WIRE)–Crescent Energy Company (NYSE: CRGY) and SilverBow Resources, Inc. (NYSE: SBOW), today announced that they have entered into a definitive agreement pursuant to which Crescent will acquire SilverBow in a transaction valued at $2.1 billion. The transaction will create a scaled company with a balanced portfolio of high-quality and long-life assets, an attractive, returns-driven financial framework and strong balance sheet, led by a management team and Board with significant operating and investing expertise that is well-positioned to drive long-term growth and value creation.
SilverBow shareholders will receive 3.125 shares of Crescent Class A common stock for each share of SilverBow common stock, with the option to elect to receive all or a portion of the proceeds in cash at a value of $38 per share, subject to possible pro ration with a maximum total cash consideration for the transaction of $400 million.
The Transaction Offers Compelling Value for All Shareholders:
– High-Quality, Scaled and Complementary Asset Portfolio – Complementary combination creates the 2nd largest operator in the Eagle Ford with a broader portfolio of roughly 250 Mboe/d of low-decline, long-life production and a deep, high-quality inventory that supports compelling returns through cycles.
– Focus on Free Cash Flow and Disciplined Capital Allocation – The combined company’s advantaged asset profile generates substantial free cash flow governed by disciplined, investor-first capital allocation, with a strong balance sheet and peer leading return of capital framework, which includes a fixed dividend and stock buyback program.
– Potential for Meaningful Cost Savings and Efficiencies – Scaled enterprise advantages and complementary assets expected to drive significant annual synergies of $65 to $100 million through immediate cost of capital savings and operating efficiencies.
– Creates “Must-Own” Mid-Cap E&P Primed for Sustainable Value Creation – The combined company will have the investing and operating expertise, the balance sheet strength and the capital markets access necessary to continue executing on Crescent’s proven strategy of free cash flow and prudent growth through disciplined, returns-driven M&A.
“This is a compelling transaction for shareholders of both companies, creating a premier growth through acquisition platform,” said John Goff, Crescent’s Chairman of the Board. “As Chairman and a major long-term shareholder, it has been exciting to watch this business execute on the strategy management laid out from the very beginning. This combination further positions Crescent as a leading growth business, and we look forward to welcoming the SilverBow team as we continue to build this company.”
Crescent CEO David Rockecharlie said, “The combination with SilverBow, which is expected to be immediately accretive to all key per share metrics, solidifies Crescent as a leading operator in the Eagle Ford and strengthens the company’s growth platform with increased scale. The SilverBow team has built a complementary and high-quality position in the Eagle Ford, and we believe the combination offers a unique value proposition in our evolving sector. The combined company will have an attractive and balanced portfolio of stable, low-decline and highly cash-generative production with a deep inventory of proven drilling locations, well-positioned for flexible capital allocation through commodity cycles. This combination creates a leading mid-cap company with significant value creation potential and the stability of a large-cap operator.”
SilverBow CEO Sean Woolverton added, “This is an exciting new chapter for SilverBow and a compelling value proposition for our shareholders. The transaction delivers an attractive premium to SilverBow shareholders, with a choice to opt into the significant upside, sustainable value and meaningful synergies that we see in this combination by receiving Crescent shares — or to receive immediate cash liquidity. This transaction is consistent with our commitment to pursuing any path that will maximize value for shareholders and is the result of a review of alternatives conducted with the assistance of our financial and legal advisors. The SilverBow team built an incredible company, and today’s exciting announcement is a testament to their hard work and dedication. This combination of two strong companies positions the pro forma business for continued success above and beyond what either company could achieve on its own.”
Transaction Details
Under the terms of the agreement, SilverBow shareholders who elect to receive stock will receive 3.125 shares of Crescent Class A common stock for each share of SilverBow common stock. The transaction is structured as a cash-election merger with shareholders able to elect to receive $38 per share in cash up to a maximum total cash consideration of $400 million (the “Available Cash Election Amount”). If aggregate cash elections by shareholders exceed the Available Cash Election Amount, shareholders electing cash only will receive a mix of cash and stock that limits the total transaction cash consideration to the Available Cash Election Amount. Pro forma for the transaction, Crescent shareholders will own between approximately 69% and 79% and SilverBow shareholders will own between approximately 21% and 31% of the combined company, on a fully diluted basis and dependent on the final cash consideration at closing.
Timing and Approvals
The combination has been unanimously approved by the boards of directors of both companies. A special committee of independent directors of Crescent (the “Special Committee”) have also unanimously approved the transaction. Current Crescent shareholders representing ~43% of total Class A common stock and Class B common stock outstanding have entered into voting agreements in support of the transaction. The transaction, which will be subject to customary closing conditions, including approvals by shareholders of each company and typical regulatory agencies, is targeted to close by the end of the third quarter of this year.
Governance
After close, the Crescent board of directors will increase to 11 members with the addition of 2 directors to be designated by SilverBow. John Goff will continue to serve as Non-Executive Chairman and David Rockecharlie will continue to serve as Chief Executive Officer of the combined company. Crescent will remain headquartered in Houston.
Advisors
Crescent’s financial advisors in connection with the acquisition are Jefferies LLC, as lead advisor, and Wells Fargo. Crescent’s counsel is Vinson & Elkins LLP. Wells Fargo Bank, NA has also provided $2.0 billion of committed financing for the transaction.
The Special Committee retained Intrepid Partners, LLC as financial advisor and Richards, Layton & Finger LLP as counsel.
SilverBow’s joint financial advisors are BofA Securities, Inc. and Evercore and its counsel is Gibson, Dunn & Crutcher LLP.
About Crescent Energy Company
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. Crescent’s portfolio of low-decline, cash-flow oriented assets comprises both mid-cycle unconventional and conventional assets with a long reserve life and deep inventory of high-return development locations in the Eagle Ford and Uinta basins. Crescent’s leadership is an experienced team of investment, financial and industry professionals that combines proven investment and operating expertise. For more than a decade, Crescent and its predecessors have executed on a consistent strategy focused on cash flow, risk management and returns. For additional information, please visit www.crescentenergyco.com.
About SilverBow Resources
SilverBow Resources, Inc. (NYSE: SBOW) is a Houston-based energy company actively engaged in the exploration, development, and production of oil and gas in the Eagle Ford Shale and Austin Chalk in South Texas. With over 30 years of history operating in South Texas, the Company possesses a significant understanding of regional reservoirs which it leverages to assemble high quality drilling inventory while continuously enhancing its operations to maximize returns on capital invested. For more information, please visit www.sbow.com.
