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Centennial (CDEV) Signs Merger Agreement With Colgate Energy

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Centennial Resource Development, Inc. (CDEV - Free Report) announced that it has signed an accord to merge with Colgate Energy Partners. The agreement, approved by both the firms’ board of directors and likely to close in the second half of this year, will create a $7 billion Permian Basin pure-play.

With the deal's closure, the merged entity will be the largest pure-play exploration and production company in the Delaware Basin, said Centennial Resource. In Delaware, a sub-basin of the broader Permian (the most prolific basin in the United States), the combined player will have operating activities across roughly 180,000 net leasehold acres and 40,000 net royalty acres. Centennial Resource added that currently, the total combined production is 135,000 barrels of oil equivalent per day.

Centennial Resource added that this prolific asset base will help the merged entity to return significant value to stockholders. The merged company will be able to generate more than $1 billion of expected free cash flow in 2023.

CDEV also said that apart from generating sustainable free cash flow, the merged firm will have a strong balance sheet with expected leverage of below 1.0x by the end of this year.

Centennial Resource currently carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include ConocoPhillips (COP - Free Report) , Marathon Oil (MRO - Free Report) and Occidental Petroleum (OXY - Free Report) . While ConocoPhillips and Marathon Oil carry a Zacks Rank #2 (Buy), Occidental Petroleum sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Considering production and reserves, ConocoPhillips is one of the leading exploration and production players in the global market. COP has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, ConocoPhillips is likely to see earnings growth of 141.6%.

Marathon Oil is a leading oil and natural gas exploration and production company. MRO has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, Marathon Oil is likely to see earnings growth of 201.3%.

In the United States, Occidental Petroleum is among the largest oil producers. OXY has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days.

In 2022, Occidental Petroleum is likely to see earnings growth of 278.8%.