Crescent Energy Strikes $2.1 Billion Deal for SilverBow

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MCKITTRICK, CA - MARCH 23: Pump jacks and wells are seen in an oil field on the Monterey Shale formation where gas and oil extraction using hydraulic fracturing, or fracking, is on the verge of a boom on March 23, 2014 near McKittrick, California. Critics of fracking in California cite concerns over water usage and possible chemical pollution of ground water sources as California farmers are forced to leave unprecedented expanses of fields fallow in one of the worst droughts in California history. Concerns also include the possibility of earthquakes triggered by the fracking process which injects water, sand and various chemicals under high pressure into the ground to break the rock to release oil and gas for extraction though a well. The 800-mile-long San Andreas Fault runs north and south on the western side of the Monterey Formation in the Central Valley and is thought to be the most dangerous fault in the nation. Proponents of the fracking boom saying that the expansion of petroleum extraction is good for the economy and security by developing more domestic energy sources and increasing gas and oil exports. (Photo by David McNew/Getty Images)

Crescent Energy Inc. agreed to buy SilverBow Resources Inc., a rival oil and gas producer that’s in a proxy fight with its largest shareholder, for $2.1 billion. 

Each SilverBow share will be exchanged for 3.125 shares in Crescent Class A stock, valued at $38.28 based on Wednesday’s closing price. SilverBow holders will have the option to receive all or a portion of the proceeds in cash at $38 a share, up to a maximum of $400 million, according to a statement Thursday.

The value of the stock swap is about 18% above SilverBow’s closing price Wednesday. Bloomberg News reported earlier that the companies were in advanced talks. SilverBow shares rose as much as 16% in New York on Thursday, hitting the highest intraday price since September. Crescent Energy shares fell as much as 11%.

The deal will give Crescent, which is backed and managed by KKR & Co., bigger operations in the Eagle Ford basin, an oil-and-gas-rich stretch of shale in southeastern Texas. Crescent also has drilling operations in the Rocky Mountain region.

The agreement comes as SilverBow seeks to fend off a board challenge from Kimmeridge Energy Management Co., which owns about 13% of its outstanding shares. SilverBow has been feuding with Kimmeridge since the asset manager began building a stake in the company in 2022. Kimmeridge is seeking three seats on SilverBow’s board after dropping its latest takeover offer.

Kimmeridge Comments

Kimmeridge found out about the deal with Crescent “like everybody” Thursday morning, Kimmeridge Managing Partner Mark Viviano said at the Super Dug shale conference in Fort Worth, Texas. Kimmeridge will ask SilverBow why the deal with Crescent is the right one, he said.

As of Wednesday, SilverBow shares had gained 11% this year to $32.35, giving the Houston-based company a market value of about $826 million. Including debt, SilverBow has an enterprise value of about $1.9 billion. Shares of Crescent fell 0.8% Wednesday to $12.25 for a market value of about $2.2 billion.  

Shareholders were slated to vote by Tuesday on rival slates of board candidates from SilverBow and Kimmeridge. Proxy advisers Institutional Shareholder Services and Glass Lewis both recommended they back SilverBow’s nominees.

Over the past three years, Crescent, which is 15% owned by KKR, has expanded through six transactions — five of them asset deals — valued at more than $2 billion, according to data compiled by Bloomberg. Combined with SilverBow, Crescent will be one of the biggest operators in the Eagle Ford basin, competing with companies including EOG Resources Inc. and ConocoPhillips.

Crescent’s financial advisers on the acquisition are Jefferies LLC, as lead advisor, and Wells Fargo & Co., while BofA Securities Inc. and Evercore advised SilverBow.

(Adds Kimmeridge comment in sixth paragraph; updates shares in third paragraph)

©2024 Bloomberg L.P.

By Crystal Tse , Ryan Gould


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