Crescent Energy Closes $2.1B Acquisition of SilverBow
by Rocky Teodoro Rigzone Staff
Houston-based Crescent Energy has closed its acquisition of SilverBow Resources, Inc. ahead of schedule.
The combined company is the second largest operator in the Eagle Ford, Crescent said in a news release. The SilverBow integration is underway with “approximately $35 million of the previously announced $65 million to $100 million in annual synergies captured to date through an improved cost of capital resulting in reduced interest expense,” it said.
SilverBow shareholders elected to receive in aggregate approximately $358 million in total cash consideration as part of the transaction. Crescent issued approximately 52 million shares of Class A common stock to fund the non-cash portion of the consideration. As of closing, former SilverBow shareholders own approximately 23 percent of the combined company on a fully diluted basis, according to the release.
“Today is an exciting day for Crescent. We are well positioned to create value, and I am grateful for the trust from our original Crescent and new SilverBow shareholders, each of whom voted with an overwhelming majority to approve our merger and to take equity consideration and participate in the go-forward company,” said Crescent CEO David Rockecharlie.
“Through disciplined investing and operations, we have delivered profitable growth, tripling the size of our business over the last four years. We have created a premier growth through acquisition platform by executing on our cash flow and returns-oriented strategy. Today, we are focused on rapidly integrating our new assets and personnel and continuing to deliver on the significant synergies we’ve identified to strengthen returns. We are highly confident in our ability to execute and demonstrate Crescent’s value proposition as a leading mid-cap company,” Rockecharlie added.
Marc Rowland and Michael Duginski have been appointed to Crescent’s board, effective as of closing of the acquisition. The additions expand Crescent’s board to a total of eleven directors, of which nine are considered independent directors.
Silverbow was involved in a proxy fight with energy-focused asset manager Kimmeridge earlier in the year. Kimmeridge had urged the board of SilverBow Resources Inc. to merge with Kimmeridge Texas Gas (KTG) after several rejections. However, the board said that Kimmeridge “has failed to provide, or demonstrate an ability to consummate, a credible and actionable proposal”.
In May, Crescent announced the acquisition of Silverbow in a transaction valued at $2.1 billion, saying that the transaction “will create a scaled company with a balanced portfolio of high-quality and long-life assets, an attractive, returns-driven financial framework and strong balance sheet, led by a management team and board with significant operating and investing expertise that is well-positioned to drive long-term growth and value creation”.
SilverBow CEO Sean Woolverton said in an earlier statement, “This is an exciting new chapter for SilverBow and a compelling value proposition for our shareholders. The transaction delivers an attractive premium to SilverBow shareholders, with a choice to opt into the significant upside, sustainable value and meaningful synergies that we see in this combination by receiving Crescent shares — or to receive immediate cash liquidity. This transaction is consistent with our commitment to pursuing any path that will maximize value for shareholders and is the result of a review of alternatives conducted with the assistance of our financial and legal advisors”.
“This combination of two strong companies positions the pro forma business for continued success above and beyond what either company could achieve on its own,” he added.
Crescent Energy describes itself as a leading growth-through-acquisition company primed for sustainable value creation with a focused portfolio of high-quality and long-life assets, an attractive, returns-driven financial framework and strong balance sheet.