Riverstone Energy Limited Centennial & Colgate in $7.0 Bn Permian Pure-Play (3395M)
20 Mayo 2022 - 12:16PM
UK Regulatory
TIDMRSE
RNS Number : 3395M
Riverstone Energy Limited
20 May 2022
LEI: 213800HAZOW1AWRSZR47
Centennial and Colgate to Combine, Creating $7.0 Billion Permian
Basin Pure-Play
20 May 2022 - On 19 May 2022, Centennial Resources Development,
Inc. (Nasdaq:CDEV; "Centennial") announced it had entered into a
cash-and-stock merger agreement with privately held Colgate Energy
Partners III ("Colgate"), creating a $7 billion Permian Basin
energy company and the largest pure-play in the Delaware Basin.
Centennial shareholders will own 53 per cent. of the combined
company, and existing Colgate owners will own 47 per cent. Colgate
Co-CEOs Will Hickey and James Walter will assume the Co-CEO roles,
with Centennial's CEO, Sean Smith, to serve as Chairman of the
Board.
With approximately 180,000 net leasehold acres, 40,000 net
royalty acres, and total production of 135,000 boe/d, the combined
business is expected to generate over $1 billion of free cash flow
in 2023 at current strip prices and possess over 15 years of high
quality drilling inventory. Both companies intend to extend their
track record in emissions footprint reduction, following an
approximately 43 per cent. reduction in greenhouse gas emissions
for the combined company during the 2020-2021 period.
Proforma for this transaction, Centennial/Colgate will have less
than 1.0x debt/EBITDA. The combined company announced an initial
$100 million annual dividend in addition to Centennial's previously
announced $350 million share buyback authorisation, which was
expected to commence this quarter but which had not yet been tapped
previous to today's announcement. The merger is expected to close
in the second half of 2022, subject to shareholder and regulatory
approvals.
We welcome this transformational transaction that will create a
premier Permian Basin pure-play. Bolstered by a strong balance
sheet the company will continue prioritizing its commitment to ESG
excellence through the reduction of its GHG emissions and by
driving continued improvements in minimizing flaring. The pro forma
business will maintain its Board committees devoted to ESG
initiatives and continue to tie executive compensation to ESG
performance. Its Corporate Sustainability Reports will remain a
staple of its investor outreach effort. The combined businesses
will focus on maximizing corporate-level returns and generating
free cash flow with a focus on returning it to shareholders. These
ongoing efforts, together with a larger and more liquid float, will
help expand its shareholder base and accelerate REL's transition to
a pure-play decarbonisation investment portfolio.
REL holds 12.5 million shares in Centennial valued at $94
million as at market close on 18 May 2022 of $7.49 per share. REL
has invested $268 million into Centennial since 2016, and has
realised $194 million, or 72 per cent. of its cost basis, through
proceeds from share sales. The previously realised plus unrealised
position as of close on 18 May 2022 marks Centennial at 1.1x Gross
MOIC for REL.
Additional information on the merger can be found on the
Company's website: https://www.cdevinc.com/ .
About Centennial
Centennial Resource Development, Inc. (Nasdaq:CDEV) is an
independent oil producer with assets in the core of the southern
Delaware Basin, a sub-basin of the Permian Basin in West Texas.
With approximately 75,500 net acres and 15+ years of economic
inventory, we are pursuing a growth strategy grounded in technical
leadership, strong well results, attractive investment returns and
a conservative balance sheet. Centennial is headquartered in
Denver, Colorado.
About Riverstone Energy Limited:
REL is a closed-ended investment company that has since 2020
been exclusively focussed on pursuing and has committed $167
million to a global strategy across decarbonisation sectors
presented by Riverstone's investment platform. REL's ordinary
shares are listed on the London Stock Exchange, trading under the
symbol RSE. REL has 18 active investments spanning decarbonisation,
oil and gas, renewable energy and power in the Continental U.S.,
Western Canada, Gulf of Mexico and Europe.
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May 20, 2022 13:16 ET (17:16 GMT)
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