Crescent Energy acquisition of SilverBow Resources : In a significant move that reshapes the landscape of the energy sector, Crescent Energy Company (NYSE: CRGY) and SilverBow Resources, Inc. (NYSE: SBOW) have announced a definitive merger agreement valued at $2.1 billion. This strategic amalgamation marks a major shift, creating a formidable entity in the Eagle Ford region and positioning the new entity for long-term sustainable growth.

Crescent Energy acquisition of SilverBow Resources – Key Transaction Details

The terms of the agreement specify that SilverBow Resources’ shareholders will receive 3.125 shares of Crescent Class A common stock for each share of SilverBow common stock they hold. Alternatively, shareholders can opt for a cash payout at $38 per share, up to a total cash limit of $400 million. This transaction is structured to offer flexibility and an attractive premium to SilverBow shareholders, reflecting a robust valuation that underscores the confidence in the combined operational strengths and market potentials.

Strategic Advantages of the Merger

Crescent Energy acquisition of SilverBow Resources is expected to create the second-largest operator in the Eagle Ford region, with a combined output of approximately 250 thousand barrels of oil equivalent per day (Mboe/d). This positions the newly formed company as a powerhouse with significant operational synergies, estimated to save $65 to $100 million annually. The combined entity will leverage a diversified asset portfolio characterized by low-decline and long-life production capabilities, which are anticipated to yield robust returns across varying market cycles.

John Goff, Chairman of the Board at Crescent, emphasized the strategic nature of the merger, stating, “This is a compelling transaction for shareholders of both companies, creating a premier growth through acquisition platform.” The merger not only signifies a transformational stride in Crescent’s expansion strategy but also enhances its financial framework, promoting a disciplined capital allocation and strong free cash flow.

Impact of Crescent Energy acquisition of SilverBow Resources on Shareholders and Market Position

David Rockecharlie, CEO of Crescent, highlighted the merger’s immediate benefits, pointing out that it is accretive to all key per-share metrics. The strategic combination is set to fortify Crescent’s position as a leader in the Eagle Ford area and expand its growth trajectory with increased scalability. Sean Woolverton, CEO of SilverBow, also noted the transaction’s alignment with their goal to maximize shareholder value, offering both immediate cash liquidity and the opportunity for long-term capital growth through shares in the merged entity.

Governance and Future Outlook

Post-merger, Crescent’s board of directors will expand to include 11 members, incorporating two directors from SilverBow, ensuring a seamless integration and continuity in governance. The merged company will continue to be headquartered in Houston, with John Goff serving as the Non-Executive Chairman and David Rockecharlie as the CEO.

Crescent Energy acquisition of SilverBow Resources Financial and Legal Advisors

Crescent Energy has engaged Jefferies LLC and Wells Fargo as its financial advisors, with legal counsel provided by Vinson & Elkins LLP. SilverBow Resources has appointed BofA Securities, Inc. and Evercore as its financial advisors and Gibson, Dunn & Crutcher LLP as legal counsel.

Closing Conditions and Timeline

Crescent Energy acquisition of SilverBow Resources has received unanimous approval from the boards of directors of both companies and is supported by voting agreements from significant Crescent shareholders. It is subject to customary closing conditions, including shareholder and regulatory approvals, and is anticipated to close by the end of the third quarter of this year.

This merger not only creates a ‘must-own’ mid-cap E&P entity but also sets a new standard for operational excellence and financial prudence in the energy sector. Crescent Energy acquisition of SilverBow Resources represents a strategic alignment that promises to deliver enhanced shareholder value through disciplined growth and operational synergies.

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