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Crescent Energy Boosts Portfolio with Eagle Ford Acquisition: Expands Non-Operated Assets
06/20/2023![Crescent-Energy-Boosts-Portfolio-with-Eagle-Ford-Acquisition-Expands-Non-Operated-Assets](https://images2.rextag.com/public/blog/158Blog_Crescent will acquire Mesquite Energy Incs assets.png)
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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Matador Acquires Additional Land in Delaware from Advance Energy for $1.6 Billion
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Diamondback Wraps Up Permian Divestitures, Sets Sights on Midstream Deals
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Diamondback Energy is on a roll! In the first quarter, they made impressive strides towards their goal of divesting $1 billion in non-core assets by year-end. They successfully sold their upstream and midstream assets, marking a significant achievement.
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The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction. Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, President Obama rejected the project, citing concerns about its environmental impact. However, in 2017, President Trump revived the project, leading to further legal challenges. In June 2021, U.S. President Joe Biden officially canceled the project on his first day in office.
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The renewable natural gas (RNG) industry in the United States is showing promising signs of growth. As of 2019, the U.S. consumed 261 billion cubic feet (BCF) of RNG, primarily utilized by independent power producers, electric utilities, and various commercial and industrial entities. However, this figure represents only a small fraction of its potential. Research indicates that the U.S. could theoretically produce up to 2,200 BCF of RNG through anaerobic digestion alone, which would equate to about 11% of daily national natural gas consumption.
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