Comprehensive Energy Data Intelligence
Information About Energy Companies, Their Assets, Market Deals, Industry Documents and More...
Ranger Oil Acquisition by Baytex: Boosting Shareholder Returns and Introducing Dividend with Improved Free Cash Flow in Eagle Ford Operations
03/29/2023
Baytex Energy, a Canadian oil and gas company, has announced its acquisition of Ranger Oil, an Eagle Ford operator based in Texas, in a deal worth $150 million. The acquisition will accelerate Baytex's shareholder returns and introduce a dividend with enhanced free cash flow.
With this acquisition, Baytex is set to expand its operations in the Eagle Ford region, one of the largest shale formations in the United States. Ranger Oil holds approximately 22,000 net acres in the region, with production averaging around 2,400 barrels of oil equivalent per day.
According to Baytex CEO Ed LaFehr, the acquisition will enhance the company's free cash flow and enable it to increase shareholder returns. The company plans to achieve this by optimizing Ranger Oil's production, reducing costs, and implementing efficient drilling and completion techniques.
LaFehr also stated that the acquisition aligns with Baytex's strategy of maintaining a strong balance sheet while continuing to grow its business. The company plans to fund the acquisition using its credit facility and expects the transaction to close in the fourth quarter of 2021.
The transaction includes
- Acquisition of 162,000 net acres in the crude oil window of the Eagle Ford shale, concentrated in Gonzales, Lavaca, Fayette, and Dewitt counties. The area is on-trend with Baytex's non-operated position in the Karnes Trough.
- Production of 67-70 Mboe/d (working interest), with 96% operated. The breakdown is 72% light oil, 15% NGLs, and 13% natural gas.
- 174 MMboe of proved reserves (working interest before royalties), comprising 120 MMbbls of tight oil, 27 MMbbls of NGLs, and 162 Bcf of shale gas.
- 258 MMboe of proved plus probable reserves (working interest before royalties), comprising 180 MMbbls of tight oil, 39 MMbbls of NGLs, and 232 Bcf of shale gas.
- Baytex's production is expected to average 155,000 to 160,000 boe/d (52% light oil, 22% heavy oil, 11% NGLs, and 14% natural gas) for the twelve months following closing.
An enhanced inventory of 741 net undrilled locations that immediately compete for capital in Baytex's portfolio. This represents an inventory life of 12 to 15 years and includes 523 quality Lower Eagle Ford opportunities and 218 additional Upper Eagle Ford and Austin Chalk opportunities. Baytex anticipates modest production growth from the acquired assets using two rigs and around 50 to 55 net wells per year.
Once the acquisition is complete, Baytex plans to recommend an initial quarterly dividend of $0.0225 per share ($0.09 per share annualized), representing a dividend yield of approximately 1.6%. This dividend is expected to be fully funded up to US$47/bbl WTI and would represent 4% of adjusted funds flow and 8% of free cash flow at US$75 WTI. The first dividend is expected to be paid in October 2023, subject to approval by the Baytex Board of Directors.
Baytex's balance sheet will remain a priority following the acquisition, with a total debt target of $1.5 billion, which represents approximately 1x total debt to EBITDA at US$50/bbl WTI. Once this debt level is achieved, Baytex plans to increase direct shareholder returns to 75% of free cash flow.
If you are looking for more information about energy companies, their assets, and energy deals, please, contact our sales office mapping@hartenergy.com, Tel. 619-349-4970 or SCHEDULE A DEMO to learn how Rextag can help you leverage energy data for your business.
Energy Giant Baytex Makes a Bold Move: Snaps Up Ranger Oil in $2.5 Billion Deal
Baytex Energy Group has announced that it will acquire Eagle Ford exploration and production company, Ranger Oil, for approximately $2.5 billion in cash and stock, which includes taking over the company's existing debt. Upon the successful closure of the acquisition, Baytex will have a controlling stake of approximately 63% in the newly merged company, leaving Ranger shareholders with around 37%. This significant move is in line with a trend of substantial mergers and acquisitions in the Eagle Ford area, with Marathon Oil, Devon Energy, and Chesapeake Energy among the companies involved in recent transactions.
Matador Acquires Additional Land in Delaware from Advance Energy for $1.6 Billion
Matador Resources Co. is making a big move in the oil and gas industry by acquiring Advance Energy Partners Holdings LLC, a major player in the northern Delaware Basin. The acquisition, which comes with a hefty price tag of at least $1.6 billion in cash, includes valuable assets in Lea County, N.M., and Ward County, Texas, as well as key midstream infrastructure.
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.