US company Civitas Resources is poised for a transformational acquisition of shale oil producing assets in the Permian and DJ basins through a $4.7 billion agreement with private equity firm NGP Energy Capital Management.
Two definitive agreements will see Civitas acquire oil producing assets from Hibernia Energy’s Midlands area of west Texas for $2.25 billion in cash, and from Tap Rock Resources for Delaware area assets in New Mexico for $2.45 billion, which includes $1.5 billion in cash and 13.5 million shares of Civitas common stock.
Hibernia Energy and Tap Rock Resources are respective portfolio companies of funds managed by NGP.
The combined transactions will add 68,000 net acres in the Midland and Delaware basins and will add combined proved reserves of 335 million barrels of oil equivalent, as at the end of 2022.
They will increase Civitas’ existing production by 60%, adding 100,000 boe per day (54% oil) of current production.
The deals are expected to close in the third quarter of 2023.
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“These accretive and transformative transactions will immediately create a stronger, more balanced and sustainable Civitas,” said Chris Doyle, Civitas chief executive.
“By acquiring attractively priced, scaled assets in the heart of the Permian basin, we advance our strategic pillars through increased free cash flow and enhanced shareholder returns.”
Civitas said it plans to fund the two transactions through $2.7 billion of unsecured senior debt, 13.5 million shares of Civitas common stock valued at $950 million, $600 million in borrowings under the company’s undrawn credit facility and $400 million of cash-on-hand.
NGP Energy Capital Management is a private equity and venture capital firm, led by managing partner Chris Carter.
It seeks invest in the energy sector including oil and natural gas production, acquisition, exploitation, and development drilling companies, midstream and oilfield services companies, alternative energy and natural gas.
Carter started his career with McKinsey & Company and also worked as an analyst with Deutsche Bank’s Energy Investment Banking Group, where he focused on financing and merger and acquisition transactions. He joined NGP as an Associate in 2004.