Crescent Energy has entered into a definitive purchase agreement to acquire incremental working interest in its operated Western Eagle Ford assets for total consideration of $250 million in cash, subject to customary purchase price adjustments. The acquisition follows the recent $600 million acquisition of operatorship of the Western Eagle Ford position that closed in July 2023.

Highlights

• Attractive purchase price and immediately accretive to key financial metrics – The transaction is expected to be immediately accretive to operating cash flow, free cash flow and net asset value. Crescent is acquiring more than $300 million of proved developed PV-10 value(1)
• Further enhances Eagle Ford scale and operational control – Combined with the acquisition of operatorship of this asset in July, Crescent will have increased its legacy ~15% non-operated interest to a ~63% operated working interest in the acquired assets and will operate approximately 90% of its broader Eagle Ford position. Crescent expects meaningful improvements in capital efficiencies, operating performance and basin-wide synergies from its increased scale and operatorship
• Low decline production with substantial cash flow and reserves – Acquisition grows Crescent’s large base of stable cash flow with current production of approximately 12 Mboe/d as of June 2023 (~70% liquids) and an estimated next 12-month decline rate of 13%(2)
• Proven inventory with significant resource upside – Incremental exposure to high-value operated Eagle Ford inventory with substantial potential upside from the Austin Chalk and Upper Eagle Ford
• Maintains strong balance sheet and Investment Grade credit metrics – Crescent’s leverage ratio is expected to remain relatively unchanged, and we expect our net debt to trailing twelve month Adjusted EBITDAX ratio to be below our publicly stated maximum leverage target of 1.5x(3)

(1) PD PV-10 estimate presented for a June 1, 2023 effective date at NYMEX pricing as of 8/31/23; such estimate utilizes the assumptions included in our third party reserve reports as of December 31, 2022, including with respect to development plans, type curves and well spacing, other than adjustments to reflect production data from such assets between December 31, 2022 and June 1, 2023 and certain operations related adjustments including COPAS OH recoveries and downtime.
(2) Decline rate based on reserve report forecast.
(3) Crescent defines leverage as the ratio of consolidated net debt to consolidated Adjusted EBITDAX (non-GAAP).

Crescent CEO David Rockecharlie said:
“We are pleased to further scale our high-quality Western Eagle Ford position following the recent acquisition of operatorship of this asset earlier in the quarter. This transaction is consistent with our strategy to grow opportunistically through accretive acquisitions, adding low decline cash flow and high quality inventory at attractive valuations while maintaining financial strength. With increased scale and operational control, we believe there are significant opportunities to realize meaningful synergies across our broader Eagle Ford footprint.”

Updated 2023 Outlook

For the fourth quarter of 2023, the Company estimates the acquisition will increase net production by 12 MBoe/d and capital investments by approximately $5 million.

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