Chord Energy and Enerplus forge $11bn merger to create Williston Basin powerhouse

Chord Energy Corporation (NASDAQ: CHRD) and Enerplus Corporation (TSX: ERF) (NYSE: ERF) have unveiled a landmark merger agreement, valued at approximately $11 billion in stock and cash, heralding a significant shakeup in the energy sector. This strategic union is poised to create a dominant force in the Williston Basin, boasting a combined 4Q23 production of 287 MBoepd, and approximately 1.3 million net acres under its belt. The merger is designed to significantly enhance free cash flow generation, enabling both entities to deliver increased capital returns to their shareholders.

The merged entity is set to become a leading operator in the Williston Basin, holding a commanding position with approximately 98% of its combined acreage in the region. With oil making up about 56% of its production, the new company is expected to enjoy peer-leading EBITDA margins, underpinning its financial strength and operational efficiency.

Under the terms of the agreement, Enerplus shareholders will receive 0.10125 shares of Chord common stock and $1.84 per share in cash, reflecting a composition of 90% stock and 10% cash. Post-merger, Chord shareholders will own approximately 67% of the combined company, with Enerplus shareholders holding around 33% on a fully diluted basis.

This transaction is not just a financial maneuver but a strategic alignment of complementary strengths. It promises to enhance the combined company’s inventory quality, expand its development opportunities, and bolster its financial metrics across the board. The merger is expected to be accretive to cash flow per share, free cash flow per share, net asset value, and return of capital, supported by significant synergy opportunities estimated to yield up to $150 million per year.

Both companies have expressed their commitment to this merger’s potential to generate value for shareholders, employees, and the communities in which they operate. Danny Brown, President and CEO of Chord Energy, highlighted the strategic merits of the combination, emphasizing the expectation of improved returns, capital efficiency, and sustainable free cash flow generation. Similarly, Ian Dundas, President and CEO of Enerplus, underscored the immediate value and future upside potential this merger offers to Enerplus shareholders.

The merger is subject to approval by both Chord and Enerplus shareholders, along with customary closing conditions and regulatory approvals, with a targeted completion by mid-year 2024. Once finalized, the combined company’s board will include representatives from both Chord and Enerplus, ensuring a balanced governance structure that leverages the strengths and insights of both teams.