We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Crescent Energy to Acquire Vital Energy in a Deal Worth $3.1 Billion
Read MoreHide Full Article
Key Takeaways
Crescent Energy is acquiring Vital Energy in a $3.1B all-stock transaction, including debt.
CRGY expects $90-$100M in annual synergies and aims for stronger shareholder returns.
CRGY will consolidate assets across Eagle Ford, Permian, and Uinta Basins with 10+ years of inventory.
Crescent Energy Company (CRGY - Free Report) , an independent oil and gas company, announced that it has entered into an agreement to acquire Vital Energy, Inc. (VTLE - Free Report) in an all-stock transaction valued at $3.1 billion, including Vital’s net debt. The acquisition expands Crescent Energy’s access to key oil and gas producing basins in the United States. Notably, CRGY will gain a significant acreage position in the Permian Basin of Texas and New Mexico.
Deal Terms and Shareholder Impact
Per the terms of the agreement, Vital Energy shareholders will receive 1.9062 shares of Crescent Class A common stock for every share of Vital common stock they own. This deal is anticipated to deliver strong returns for all shareholders and generate $90-$100 million in annual synergies. The company also mentioned that the combined entity will be led by a management team having extensive operating and investing knowledge. This should ensure increased value creation for all stakeholders and long-term growth for the combined company.
Free Cash Flow-Focused Operating Strategy
Crescent Energy plans to follow its strategy focused on lower drilling activity, prioritizing higher free cash flow generation. This should enable the company to improve shareholder returns and support higher dividends. Furthermore, CRGY plans to execute a pipeline of non-core asset divestitures worth $1 billion, aimed at improving its balance sheet position. The acquisition shall allow CRGY to consolidate a strong asset base in the prolific Eagle Ford, Permian and Uinta Basins of the United States with more than 10 years of high-quality inventory in the region.
Future Strategic Focus
The acquisition is anticipated to be completed by year-end 2025, subject to customary closing conditions. After the merger, Crescent shareholders are expected to hold about 77% of the combined company, while Vital shareholders will own the remaining 23%. The combination of the two companies enables Crescent Energy to gain access to premium shale basins in the U.S. that support low-cost production. Per Reuters, following the merger, CRGY’s primary focus will be on assets in the Eagle Ford, Permian and Uinta Basins for production. This suggests that the company may consider divesting other assets outside these basins.
Zacks Rank & Key Picks
Currently, CRGY and VTLE each carry a Zacks Rank #3 (Hold).
Enbridge is a leading midstream energy firm that operates an extensive crude oil and liquids transportation network spanning 18,085 miles, along with a gas transportation network covering 71,308 miles. The company has a stable business model supported by take-or-pay contracts, protecting it against commodity price volatility.
Galp Energia is a Portuguese energy company engaged in exploration and production activities. The company’s oil exploration efforts have yielded positive results, particularly the Mopane discovery in the Orange Basin, offshore Namibia. After the initial exploration phase, Galp estimated that the Mopane prospect could hold nearly 10 billion barrels of oil. This discovery allows Galp to diversify its global presence, with the potential to become a significant oil producer in the region.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Crescent Energy to Acquire Vital Energy in a Deal Worth $3.1 Billion
Key Takeaways
Crescent Energy Company (CRGY - Free Report) , an independent oil and gas company, announced that it has entered into an agreement to acquire Vital Energy, Inc. (VTLE - Free Report) in an all-stock transaction valued at $3.1 billion, including Vital’s net debt. The acquisition expands Crescent Energy’s access to key oil and gas producing basins in the United States. Notably, CRGY will gain a significant acreage position in the Permian Basin of Texas and New Mexico.
Deal Terms and Shareholder Impact
Per the terms of the agreement, Vital Energy shareholders will receive 1.9062 shares of Crescent Class A common stock for every share of Vital common stock they own. This deal is anticipated to deliver strong returns for all shareholders and generate $90-$100 million in annual synergies. The company also mentioned that the combined entity will be led by a management team having extensive operating and investing knowledge. This should ensure increased value creation for all stakeholders and long-term growth for the combined company.
Free Cash Flow-Focused Operating Strategy
Crescent Energy plans to follow its strategy focused on lower drilling activity, prioritizing higher free cash flow generation. This should enable the company to improve shareholder returns and support higher dividends. Furthermore, CRGY plans to execute a pipeline of non-core asset divestitures worth $1 billion, aimed at improving its balance sheet position. The acquisition shall allow CRGY to consolidate a strong asset base in the prolific Eagle Ford, Permian and Uinta Basins of the United States with more than 10 years of high-quality inventory in the region.
Future Strategic Focus
The acquisition is anticipated to be completed by year-end 2025, subject to customary closing conditions. After the merger, Crescent shareholders are expected to hold about 77% of the combined company, while Vital shareholders will own the remaining 23%. The combination of the two companies enables Crescent Energy to gain access to premium shale basins in the U.S. that support low-cost production. Per Reuters, following the merger, CRGY’s primary focus will be on assets in the Eagle Ford, Permian and Uinta Basins for production. This suggests that the company may consider divesting other assets outside these basins.
Zacks Rank & Key Picks
Currently, CRGY and VTLE each carry a Zacks Rank #3 (Hold).
Some better-ranked stocks from the energy sector are Enbridge Inc. (ENB - Free Report) and Galp Energia SGPS SA (GLPEY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Enbridge is a leading midstream energy firm that operates an extensive crude oil and liquids transportation network spanning 18,085 miles, along with a gas transportation network covering 71,308 miles. The company has a stable business model supported by take-or-pay contracts, protecting it against commodity price volatility.
Galp Energia is a Portuguese energy company engaged in exploration and production activities. The company’s oil exploration efforts have yielded positive results, particularly the Mopane discovery in the Orange Basin, offshore Namibia. After the initial exploration phase, Galp estimated that the Mopane prospect could hold nearly 10 billion barrels of oil. This discovery allows Galp to diversify its global presence, with the potential to become a significant oil producer in the region.