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Crescent Energy Boosts Portfolio with Eagle Ford Acquisition: Expands Non-Operated Assets
06/20/2023
Big announcement! Crescent Energy is set to bolster its inventory in the play by acquiring operated and working interests from Mesquite Energy.
Crescent Energy Co. seals a $600 million cash deal to acquire assets in the Eagle Ford Shale from Mesquite Energy Inc. (formerly Sanchez Energy).
Crescent has announced that their definitive purchase agreement with Mesquite Energy grants them operatorship and working interests, leading to a substantial expansion of Crescent's presence in the Eagle Ford region. This deal builds upon the shale play's impressive streak of successful mergers and acquisitions, which began with a strong first quarter. The assets acquired from Mesquite Energy encompass approximately 75,000 contiguous net acres, predominantly situated in Dimmit and Webb counties, Texas.
Growth and Operational Control in Eagle Ford
- The acquired asset brings a large, proven inventory with significant growth potential, effectively doubling Crescent's operated Eagle Ford inventory. Crescent sees additional upside in the Austin Chalk and Upper Eagle Ford formations.
- Crescent is acquiring over $700 million of proven developed producing PV-10 value, reflecting the asset's financial value and stability.
- The transaction is expected to immediately enhance operating cash flow, free cash flow, and net asset value, showcasing the positive financial benefits for Crescent.
- Post-transaction, Crescent will significantly increase its non-operated interest from approximately 15% to around 50% in the acquired assets. Crescent will operate approximately 90% of its Eagle Ford position, consolidating operational control and establishing a prominent presence in the region.
- The acquisition expands Crescent's base of predictable cash flow, with the acquired assets currently producing an average of about 20,000 barrels of oil equivalent per day (boe/d), mostly consisting of liquids (70%). The asset's 12-month decline rate of 17% provides stability and consistent production levels.
“As operator, we look forward to engaging with all stakeholders to improve performance and maximize value across this high-quality asset base,” David Rockecharlie said.
According to Crescent CEO, this acquisition solidifies the company's position as a leading consolidator in the Eagle Ford region. He stated that it aligns with their long-standing strategy of low-risk acquisitions and exploitation.
Having been an active non-operated owner of these assets for the past six years, they are well acquainted with them and foresee significant potential for growth by increasing their scale and assuming operational control. As the operator, they are eager to collaborate with all stakeholders to enhance performance and maximize the value of this exceptional asset base.
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