Crescent Energy Company announced the signing of a definitive agreement to acquire Eagle Ford assets from Ridgemar Energy for an upfront consideration of $905 million plus future oil price contingent consideration, subject to customary purchase price adjustments.
This acquisition directly offset Crescent’s core Central Eagle Ford position and builds on its significant acquisition activity in the Eagle Ford over the past 18 months, totaling over $4 billion of accretive M&A.
The deal, which has an effective date of October 1 is expected to close in the first quarter of 2025, subject to customary closing conditions. These are the highlights:
1.) Adding significant and contiguous scale offset Crescent’s existing footprint in Frio, Atascosa, La Salle and McMullen counties with potential for meaningful operating efficiencies
2.) The deal, valued at 2.7x EBITDA, is accretive to Operating Cash Flow, Levered Free Cash Flow, and net asset value, with strong expected cash-on-cash returns
3.) About 20 Mboe/d of high-margin, oil-weighted production and about 140 well-understood, high-return locations immediately compete for capital and extend Crescent’s low-risk inventory life
4.) Utilize neutral-to-accretive transactions with a balanced consideration mix. Crescent’s net debt to trailing 12-month Adjusted EBITDAX ratio expected to be at or below the Company’s publicly stated maximum leverage target of 1.5 times
The base upfront consideration of $905 million consists of up to $100 million of equity issued to the seller and the remainder in cash. And the future oil price contingent consideration of up to $170 million consists of payments by Crescent to seller of 1.) $15 million per quarter in 2026 and $12.5 million per quarter in 2027 for which the average quarterly WTI price is greater than or equal to $70 per bbl; and 2.) An additional $15 million per quarter in 2026 for which the average quarterly WTI price is greater than or equal to $75 per bbl.
Jefferies worked as financial advisor to Crescent in connection with the acquisition and Kirkland & Ellis worked as legal counsel. RBC Capital Markets worked as financial advisor to Ridgemar Energy and Vinson & Elkins worked as legal counsel.
KEY QUOTE:
“This transaction continues to highlight our ability to utilize our investing and operating expertise to identify and acquire high-quality assets, efficiently integrate them into our business and drive additional value through improved operations. With accelerated synergies captured from the integration of SilverBow and our recent bolt-on acquisition, our full team is ready and eager to add the Ridgemar assets to our core operating footprint in the Eagle Ford. These assets contribute meaningful scale, enhance Crescent’s cash margins, increase our oil-weighting and extend our low-risk inventory life, all at an attractive and highly accretive valuation. I remain confident in our ability to capitalize on our strong momentum and continue our profitable growth trajectory towards our investment grade ambitions.”
- Crescent CEO David Rockecharlie
