HOUSTON - Crescent Energy Company (NYSE: CRGY), an American energy firm with a market capitalization of $3.4 billion, has entered into a definitive agreement to purchase assets in the Eagle Ford (NYSE:F) region from Ridgemar Energy. According to InvestingPro data, the company's stock is trading near its 52-week high of $15.54, reflecting strong investor confidence. The deal, announced today, involves an upfront payment of $905 million, with additional payments contingent on future oil prices.
The acquisition, effective as of October 1, is slated to close in the first quarter of 2025, pending the satisfaction of customary closing conditions. This move is part of Crescent's strategy to expand its presence in the Eagle Ford area, where it has invested over $4 billion in the past 18 months. The company has demonstrated strong financial performance, with InvestingPro analysis showing revenue growth of 12.6% in the last twelve months and a healthy gross profit margin of 54.5%.
The assets in question are adjacent to Crescent’s core operations in Frio, Atascosa, La Salle, and McMullen counties. This proximity is expected to facilitate significant operational efficiencies. Crescent anticipates that the acquisition will be accretive to several key financial metrics, including Operating Cash Flow and Levered Free Cash Flow, a non-GAAP measure described by the company.
Crescent Energy's CEO, David Rockecharlie, expressed confidence in the transaction, noting the assets' potential to enhance the company's scale, improve cash margins, and extend the life of its low-risk inventory. The acquired assets include approximately 20 thousand barrels of oil equivalent per day (Mboe/d) of production and around 140 high-return drilling locations.
The transaction is structured to include up to $100 million in equity issued to the seller, with the remainder paid in cash. Future considerations could add up to $170 million, dependent on the average quarterly West Texas Intermediate (WTI) crude oil prices in 2026 and 2027.
Jefferies LLC and Kirkland & Ellis LLP have been advising Crescent on the financial and legal aspects of the acquisition, respectively. Ridgemar Energy was advised by RBC Capital Markets, LLC, and Vinson & Elkins LLP.
Crescent Energy, focused on growth through acquisitions and consistent return of capital, maintains operations primarily in Texas and the Rocky Mountains. The company aims to integrate the new assets efficiently into its existing portfolio while continuing to pursue investment grade credit metrics.
This information is based on a press release statement from Crescent Energy.
In other recent news, Crescent Energy has been making notable strides in its third quarter of 2024. The energy company's Q3 financial results revealed record production levels of 219,000 barrels of oil equivalent per day, surpassing previous expectations. This success is attributed to the effective integration of the SilverBow (NYSE:SBOW) acquisition, which has led to significant operational improvements and increased efficiency.
Crescent Energy has also revised its production outlook upward for the third consecutive quarter, with anticipated capital expenditures ranging from $425 million to $455 million for the remainder of the year. The company reported an adjusted EBITDA of approximately $430 million and a levered free cash flow of $160 million.
The firm continues to explore strategic mergers and acquisitions while maintaining a solid balance sheet, with net leverage standing at 1.5 times. Crescent Energy has also expressed plans to capitalize on growth opportunities and operational efficiencies, including potential ventures in the Uinta basin and further development of Eagle Ford assets. These recent developments reflect Crescent Energy's commitment to disciplined capital allocation and sustainable growth for long-term shareholder value.
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