In a transformative transaction for the U.S. shale industry, Crescent Energy Company has agreed to acquire rival Eagle Ford producer SilverBow Resources in an all-stock deal valued at $2.1 billion. The combination solidifies Crescent’s position as a leading player in the prolific Eagle Ford basin of South Texas, creating the second largest operator in the region.
The deal significantly bolsters Crescent’s scale and low-cost inventory. SilverBow shareholders can elect to receive 3.125 Crescent shares for each SilverBow share owned, or opt for $38 per share in cash up to a $400 million cap. Post-closing, expected in Q3 2024, existing Crescent investors will own between 69-79% of the combined entity.
The merged company boasts imposing production of around 250,000 boe/d from a complementary portfolio of high-quality, long-life assets spanning the Eagle Ford and Uinta basins. This large-scale, high-margin asset base underpins robust free cash flow generation backed by a deep inventory of high-return drilling locations to drive compelling growth.
For Crescent, the deal achieves increased scale and premiumization of its portfolio through SilverBow’s attractive Eagle Ford position assembled over 30 years in the region. The combination enhances corporate returns through $65-$100 million of expected annual synergies from combined operating efficiencies and cost of capital benefits.
Crescent characterizes the transaction as highly accretive on all key per share metrics. It aligns with the company’s proven strategy of pursuing disciplined acquisitions at attractive valuations to augment its free cash flow, production, and inventory depth. Maintaining a fortress investment-grade balance sheet post-merger affords financial flexibility to further consolidate the fragmented shale landscape.
The deal represents a compelling value proposition for SilverBow shareholders. They gain exposure to Crescent’s larger-scale diversified assets while participating in the upside from performance improvements, synergy realization, and further consolidation. Alternatively, investors can opt for immediate cash consideration at a premium.
Crescent’s leadership expressed high confidence in the strategic merits of the transaction. Chairman John Goff labeled it “a compelling transaction…creating a premier growth platform”, while CEO David Rockecharlie highlighted SilverBow’s “complementary and high-quality” Eagle Ford position enhancing Crescent’s “unique value proposition.”
The merger exemplifies the accelerating consolidation across the U.S. shale patch as producers pursue scale, streamlining, and consistent shareholder returns. Crescent emerges exceptionally well-positioned to lead this rationalization as a serial acquirer given its sector-leading free cash flow generation, returns philosophy, and strong balance sheet.
Investors evaluating opportunities in the energizing energy and natural resources space may be interested in Noble Capital Markets’ upcoming Emerging Growth Equity Conference in September, offering insights into prospective investments.
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