Tulsa’s Vital Energy – which experienced financial struggles recently, including a reported net loss – is being acquired by Houston shale producer Crescent Energy in a $3.1 billion allstock deal that creates a company with a combined value of $9 billion.
The merger is expected to close by the end of the year and would add operations across the Eagle Ford and Permian basins and the Uinta Basin in Utah with one of the nation’s largest independent oil and gas producers. It also will create a top 10 independent oil and gas producer in the U.S.
The combined company will have more than a decade of development inventory and plans to pursue $90 million to $100 million in annual cost synergies, officials said. It’s also reported that Crescent plans to sell $1 billion in non-core assets.
Crescent will continue to focus on a free cash flow – focused strategy, with capital discipline and shareholder returns as priorities.
Crescent CEO David Rockecharlie said the combined company will produce nearly 400,000 barrels of oil equivalent a day with about $13 billion of total proved SEC reserves. He said the company will hold nearly one million net acres across its core areas.
The announcement “recognizes the value we have created at Vital Energy. Our combination with Crescent Energy will create a premier, scaled, mid-cap operator with significant efficiencies across a larger asset base,” said Vital CEO Jason Pigott.
“This transaction is transformative for Crescent and consistent with our strategy,” said John Goff, Crescent’s chairman of the board. “Crescent’s impressive trajectory of returns-driven growth through mergers and acquisitions has cemented the company as a top 10 independent, with line of sight to an investment grade credit rating. Acquiring Vital and executing on an attractive pipeline of non-core divestitures sharpens our focus and expands our opportunity set for accretive future growth.”
“With this acquisition and our $1 billion non-core divestiture pipeline, we are better positioned than ever before,” Rockecharlie said. “Crescent will have more focus, more scale and more potential to deliver long-term value to shareholders.”
Under the merger, shareholders in Vital will receive 1.9062 Crescent shares for each share, a move that represents a 15% premium to Vital’s 30-day average price as of Aug. 22. Boards of both companies approved the deal.