Comprehensive Energy Data Intelligence

Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...

Centennial, Colgate Merger Is Completed on Sep.1

The completion of the merger between Centennial Resource Development Inc. and Colgate Energy Partners II LLC happened on Sept. 1, sealing the debut of Permian Resources Corp., which is considered the largest pure-play E&P company in the Delaware Basin.

Permian Resources’ idea was to combine two successful E&P companies, creating a better, stronger, and more strategically compelling company. Centennial and Colgate announced an agreement to merge in May, denying rumors that Colgate, a privately held independent Midland-based company, had been seeking an IPO.

The merger estimated Colgate at about $3.9 billion and consists of 269.3 million shares of Centennial stock, $525 million of cash, and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt.

Permian Resources, being the combined company, has a deep inventory of “high-quality” drilling locations on around 180,000 net acres the companies anticipate will provide more than $1 billion of free cash flow in 2023 at current strip prices, in accordance with the company release on Sept. 1.

It is important to notice, that Permian Resources co-CEOs Hickey and James Walter own about 6% of total shares outstanding, representing one of the highest CEO ownership levels in the industry. Additionally, Permian Resources employees together own over 13% of the company.

Since its establishment, Colgate has earned about $1 billion in announced deals. Backed by Pearl Energy Investments and NGP, Colgate was announced to be considering an IPO last December that some sources said would estimate the company at around $4 billion.

Permian Resources is now operating an eight-rig drilling program and anticipates decreasing it to a seven-rig program in November. The development program is expected to maintain the production of 140,000 to 150,000 boe/d (about 52% oil) during the fourth quarter.

During 2023, Permian Resources expects its operating activity to be divided relatively evenly between New Mexico and Texas. The company considers beginning next year operating a seven-rig drilling program with the potential to decrease its rig count during the year, assuming expected operational efficiencies are completed.

Permian Resources is targeting annual corporate synergies of approximately $65 million, equating to more than $450 million of total net present value over the next ten years.

The variable return program is structured to distribute at least 50% of free cash flow after the base dividend through a variable dividend, share repurchases, or a combination of both. The compilation between variable dividends and share repurchases will be dependent upon market conditions during a given quarter.

Furthermore, the company expects to initiate a quarterly base dividend of $0.05 per share that the company considers is supported below $40/bbl WTI during a multiyear period. The quarterly base dividend is anticipated to be formally declared and paid starting in the fourth quarter of 2022.

If you are further interested in learning about the deals in the Delaware basin or about upstream/midstream M&As companies and their assets, please, contact our Houston sales office or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business. Tel. +1 713-203-3128 Email: treitmeier@hartenergy.com

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Earthstone Expands Due to Acquisition of Titus’ Delaware

Earthstone Energy Inc., based in Texas, announced the transaction on June 28: the acquisition of Titus Oil&Gas which will raise production in the Delaware Basin by 26%. The $627 million acquisition fills the Permian Basin in Eddy and Lea counties, N.M. with 86 net locations on 7,900 net acres of leasehold, while it is not clear how much of the leasehold might be on federal acreage It is Earthstone’s seventh acquisition since 2021, a span that includes the closing of approximately $1.89 billion in acquisitions in the Permian Basin. The purchase of Titus Oil & Gas Production LLC and Titus Oil & Gas Production II LLC, privately held companies backed by NGP Energy Capital Management LLC, is estimated at $575 million in cash and it is the equivalent of $52 million in stock (3.9 million shares of its Class A common stock based on the June 24 closing price). Titus shared that its net production in June was 31,800 boe/d. The company had reserves of approximately 28.9 MMboe. Earthstone is sure its net production will increase, at the midpoint, by 20,500 boe/d (65% oil) in the fourth quarter.

Antero Midstream Corp. bought Marcellus assets of Crestwood Equity Partners LP on September 12 for $205 million in cash, signing another sale of noncore assets by the Houston-based company. Crestwood has strategically enhanced its asset portfolio through a series of A&D transactions for the previous 18 months to create a competitive scale in the Williston, Delaware, and Power River basins. The strategy covered acquisitions of Oasis Midstream Partners, Sendero Midstream, and Crestwood Permian Basin Holdings LLC (CPJV), which was a 50:50 joint venture of Crestwood and First Reserve. The assets to be bought cover 72 miles of dry gas gathering pipelines and nine compressor stations with about 700 MMcf/d of compression capacity. The current throughput on the system is approximately 200 MMcf/d, resulting in important available capacity for increase without major capital investment. The deal includes almost 425 undeveloped drilling locations and 120,000 gross dedicated acres from Antero Resources mainly in Harrison County. The acquisition is also anticipated to raise Antero Midstream’s compression capacity by 20% and gathering pipeline mileage by 15%.

On January 6, Phillips 66 announced that it plans to acquire more than 43% of DCP Midstream LP for $3.8 billion, expanding the business in the oil & gas business.

On January 5 Northern Oil & Gas (NOG) concluded a deal to acquire working interests in Midland-Petro D.C. Partners LLC (MPDC)'s Mascot Project in the Midland Basin, according to a January 9 press release. Firstly estimated at $330 million in cash, the deal was signed with an additional 3.25% working interest added to the 36.7% agreed upon when the transaction was announced on October 19. NOG paid $29 million more for the additional interests, which now totalled 39.958%. Finally, the deal closed for $320 million in cash and $43 million in debt at signing in October with the finance of Minnetonka, Minn.-based NOG with cash on hand, operating free cash flow, and assistance from its revolving credit facility.

Talos Energy Inc. is closing its $1.1 billion purchase of private operator EnVen Energy. A special meeting for Talos’ stockholders to vote on the deal and other matters is set on February 8, according to a prospectus filed on January 11 with the Securities and Exchange Commission. Shareholders are being asked to approve the EnVen merger, which as the company considered in September would raise its Gulf of Mexico production up to 40%. According to a January 11 press release, Talos asserted that it anticipates closing the transaction soon after the meeting. Talos Energy Inc. supposes that adding EnVen would double its operated deepwater facility footprint, extending key infrastructure in existing Talos operating areas. More than 80% of the combined assets will be deepwater, with the company operating more than 75% of the acreage it holds interests in. Talos is one of the largest independent operators in the U.S. Gulf of Mexico, with production operations, prospects, leases, and seismic databases spanning the basin in both Deep Water and Shallow Water. The company aims to actively grow through a balanced focus on asset optimization, development, and exploration while also seeking to add to its portfolio through acquisitions and business development.

2023 blog posts