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Investing.com -- Fitch Ratings has revised Crescent Energy Company’s outlook to positive from stable following the announcement of its acquisition of Vital Energy.
The rating agency affirmed Crescent’s Long-Term Issuer Default Ratings at ’BB-’ while upgrading the outlook based on the company’s agreement to acquire Vital Energy in an all-stock deal valued at approximately $3.1 billion, including Vital’s $2.3 billion debt.
The acquisition will significantly enhance Crescent’s scale, boosting combined production to about 400,000 barrels of oil equivalent per day (kboe/d), up from Crescent’s current 260 kboe/d. Vital will contribute roughly 285,000 net acres in the Permian Basin, primarily in Howard, Glasscock, Reagan, and Reeves counties.
Crescent expects to finalize the deal in the fourth quarter of 2025. The transaction will increase Crescent’s liquids mix to 65% of production from 60% at the second quarter of 2025, primarily through higher natural gas liquids share.
Fitch noted that Vital’s acreage has weaker inventory quality in the Permian compared to peers, with historically higher breakeven prices. The agency believes Vital’s best locations in Howard County have been largely drilled.
Following the acquisition, Crescent’s Fitch-calculated EBITDA leverage will increase to 1.7x from 1.6x at midcycle oil and gas prices. The company plans to reduce leverage through a $1 billion divestment program expected to complete within 12 months.
The decline rate of the combined company will initially increase, as Vital’s year-end 2024 oil production decline rate was 42% and total decline rate was 36%. Crescent plans to lower the combined decline rate back to 25% after curtailing Vital’s drilling program.
Crescent maintains an extensive hedging program to offset its lower operating netbacks compared to oil-focused shale peers. As of August 2025, the company will have roughly 50% of oil and 60% of natural gas hedged for 2026 after the Vital acquisition.
In the second quarter of 2025, Crescent reported average production of 263 kboe/d (41% oil) and generated an unhedged cash netback of $16.5 per barrel of oil equivalent.
Future positive rating actions could follow the completion of Vital’s acquisition coupled with debt reduction that leads to midcycle EBITDA leverage below 2.0x and improvement in netbacks relative to peers.
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