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$690 Million Deal Moves Ahead: Crescent Energy to Complete Purchase of EP Energy's Uinta Assets
04/06/2022
On March 30, Crescent Energy closed the acquisition of Uinta Basin assets in Utah that were previously owned by EP Energy for $690 million, a few hundred million dollars below the original price. While a total cash consideration of about $815 million was announced at the time of the transaction's announcement back in February.
At least according to Crescent CEO David Rockecharlie, the accretive deal increases Crescent's Rockies position and adds significant cash flow and a portfolio of high-quality oil-weighted undeveloped sites.
Crescent's acquisition of Uinta indicates its competitive strength and ability to simultaneously deliver shareholder value through accretive acquisitions and to create long-term value for its shareholders through the consolidation of its businesses in today's market.
Upon closing of the Uinta transaction, Crescent's lenders increased the borrowing base under the revolving credit facility to $1.8 billion and the committed amount to $1.3 billion, an increase of $600 million from its previous level.
EP Energy had owned these assets earlier, according to a news release from Crescent Energy on Feb. 16 that was dedicated to the Uinta acquisition. The Uinta comprises about 145,000 contiguous net acres, most of it producing oil (roughly 65%), about 30,000 boe/d.
A year after EP Energy emerged from a bankruptcy process that handed control to its creditors, EnCap Investments agreed to take over EP Energy's assets in the Eagle Ford and Uinta basins for $1.55 billion.
Although U.S. antitrust regulators threatened to hinder EnCap's acquisition of EP Energy, citing the private equity firm's dominant position in the Uinta shale formation as a concern.
According to Reuters, the U.S. government agencies finally approved EnCap's $1.5 billion purchase of EP Energy on the condition that EP Energy's entire Utah oil business be sold. If the assets from Utah hadn't been sold, there would have been just three producers that sell Uinta Basin crude oil to refineries in Salt Lake City, and consumers would have paid more in prices.
Crescent Energy was formed in December when Contango Oil & Gas and KKR went for an all-stock merge. KKR remains the company's partner, but Contango serves as its subsidiary as it manages a portfolio of assets in the Lower 48.
Having completed the Uinta acquisition, Crescent Energy expects to operate two rigs off Uinta for the remainder of the year. In addition to its acquired Uinta assets, Crescent's pro forma year-end 2021 provided reserves totaled 598 million boe, of which 83% was developed, 55% was liquid, and its provided PV-10 was $6.2 billion. Based on the production type curves used in Crescent's third-party reserve reports, a 22% decline rate for its proved developed producing reserves is expected for the first year.
Moreover, on March 30, the company reiterated its previously announced capital investment strategy and production and cost guidance for 2022. Investments in the Eagle Ford and Uinta basins will account for 80%-85% of the $600 million-$700 million capital program for 2022.
Concerning the Uinta acquisition, the Company added additional oil hedges as part of its risk management practices. Together with the expected Uinta volumes, Crescent now has derivative agreements in place covering approximately 60% of its expected total production in 2022.
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To Be or Not To Be: Bakken Assets Could Fetch $5 Billion for Exxon Mobil
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Pine Wave Energy and Silver Hill Reached an Agreement Over Haynesville Assets — Deal is Sealed
Looks like Pine pulled the plug on its properties in Caddo Parish, Louisiana, and Harrison and Panola counties, Texas. Which includes a total of 12,500 acres and ownership interests in 10 operated wells with a production capacity of 100 million cubic feet per day along with 18 miles of naturalgas gathering pipelines. Did Pine just give up on Haynesville?
Kinetik Holdings recently announced a series of transactions in the energy sector. They struck a deal to buy Durango Permian infrastructure for $765 million. At the same time, they're selling their 16% share in the Gulf Coast Express Pipeline to ArcLight Capital Partners for $540 million. The total purchase cost includes $510 million in cash paid immediately and an additional $30 million that will be paid later, depending on whether they decide to expand further.
Recently, the Permian has seen significant acquisitions: Exxon Mobil purchased Pioneer Natural Resources for about $60 billion. Diamondback Energy's $26 billion deal to acquire Endeavor Energy Resources is currently on hold due to requests from the U.S. Federal Trade Commission. Occidental’s acquisition of CrownRock for $12 billion in the Midland.
EOG Resources is pushing boundaries in Ohio's Utica oil play and now drilling on the Sable pad, also located in Noble County. This site features the 3.7-mile lateral currently under construction. The company's first multi-well pads in the area Timberwolf and Xavier have each produced over 200,000 barrels of oil since their inception—Timberwolf in August and Xavier in October. A third site, the four-well White Rhino pad in Noble County, is also showing promising early results, according to Keith Trasko, EOG’s Senior Vice President of Exploration and Production, who noted the wells are performing as expected in their initial weeks.