• Transaction immediately accretive on key financial metrics: cash flow per share, free cash flow per share and free cash flow yield, on an actual and debt-adjusted basis(1)
• Scales Crescent’s production base in the Rockies region and adds multi-year inventory of proven, high-return development locations
• Maintains financial strength with pro forma Net Debt / LTM Adj. EBITDAX ratio of 1.4x(2)

Crescent Energy has entered into a definitive purchase agreement with Verdun Oil Company II LLC to acquire Uinta Basin assets previously owned by EP Energy for $815 million, subject to customary purchase price adjustments. The all-cash transaction, expected to close in the first half of 2022, will be funded through the company’s revolving credit facility and cash on hand. Closing is subject to customary closing conditions, including certain regulatory approvals. The acquisition is consistent with Crescent’s strategy to acquire high-value & accretive, cash flowing assets while maintaining financial strength.

Acquisition Consistent with Crescent’s Strategy:

• Highly Accretive Oil Acquisition Expands Rockies Asset Base: Acquisition multiple of <2.0x 2022E Adj. EBITDAX(1)(3)generates ~55% accretion to annualized cash flow per share and ~30% accretion to annualized free cash flow per share
• Low-Risk Assets with Strong Production and Cash flow: Increasing annualized Adjusted EBITDAX(1)(3) by $400 - $465 million at $75/Bbl NYMEX WTI pricing, ~85% of which is from existing production and current drilled but uncompleted wells
• Proven Opportunity for Disciplined Reinvestment: Multi-year inventory of high value, oil-weighted development opportunities; planning to operate two rigs on the assets in 2022 post-closing
• Enhances Key Asset Portfolio Characteristics: Maintains our peer-leading decline rate (~21% pro forma), expands production from the Rockies & Eagle Ford to ~65% of our total production base, increases our percent operated to ~70% based on 2022 expected production
• Maintains Financial Strength and Increases Scale: Adding meaningful scale to the business while maintaining modest leverage (pro forma 1.4x Net Debt / LTM Adj. EBITDAX(2))

“We are acquiring these assets at a compelling valuation. They are a great addition to our existing Rockies footprint and align perfectly with our cash flow based strategy,” said Crescent CEO David Rockecharlie. “Importantly, this transaction maintains our commitment to financial strength and flexibility while adding meaningful scale to our low-decline production base, free cash flow and proven inventory of highly economic re-investment opportunity.”

The transaction will be funded with borrowings under Crescent’s revolving credit facility and cash on hand. Crescent’s lenders authorized an increase of the Company’s elected commitment amount under the existing revolving credit facility to $1.3 billion from $700 million, contingent upon the closing of the transaction. The Company’s current liquidity pro forma for the elected commitment amount increase is $1.1 billion. In conjunction with signing of the transaction, the Company entered into additional oil swaps consistent with its risk-management strategy for invested capital.

Uinta Asset Overview:

Proven Basin with Substantial Existing Production: Crescent acquiring over 400 producing vertical and horizontal wells. Ongoing, well-understood development in the Uteland Butte and Wasatch formations with 350+ horizontal wells drilled by area operators to date and significant long-term resource potential from additional producing zones under active horizontal development.

Large, Contiguous Acreage Position: The transaction will provide Crescent with more than 145,000 contiguous net acres (>85% held-by-production), primarily located in Duchesne and Uintah counties, Utah. The assets are operated with an average working interest of ~83% and average royalty rates less than ~20%.

Deep, Undeveloped Inventory of Drilling Locations: Acquisition to provide Crescent with a multi-year inventory of high value, oil-weighted development opportunities. The Uinta basin has a significant amount of resource in place across multiple stacked reservoirs providing attractive long-term resource potential beyond the horizontal targets actively being developed today.

Preliminary 2022 Pro Forma Outlook:

Post-closing of the transaction, Crescent plans to operate two rigs in the Uinta Basin for the remainder of the year. The capital associated with this program is expected to be $225 - $275 million and Crescent’s revised 2022 capital budget is expected to be $600 - $700 million.

1. Based on preliminary guidance expectations assuming $75 per Bbl NYMEX WTI and $3.75 per MMbtu Henry Hub.
2. Estimated LTM Adj. EBITDAX as of 3/31/22.
3. Adjusted EBITDAX, Unhedged Adjusted EBITDAX, Levered Free Cash Flow and Adjusted Cash G&A are non-GAAP financial measures.
4. Annualized pro forma mid-point includes annualized cash flows from the acquisition.
5. Dividends are subject to board approval and applicable law. Pro forma dividend expectation based on 10% of Adj. EBITDAX framework. 

KeyFacts Energy Industry Directory: Crescent Energy