REG - Riverstone Energy Ld - Centennial & Colgate in $7.0 Bn Permian Pure-Play

Riverstone EnergyAnnouncement

20/05/2022 18:30

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RNS Number : 3395M  Riverstone Energy Limited  20 May 2022

LEI: 213800HAZOW1AWRSZR47

 

 

Centennial and Colgate to Combine, Creating $7.0 Billion Permian Basin
Pure-Play

 

 

20 May 2022 - On 19 May 2022, Centennial Resources Development, Inc.
(Nasdaq:CDEV; "Centennial") announced it had entered into a cash-and-stock
merger agreement with privately held Colgate Energy Partners III ("Colgate"),
creating a $7 billion Permian Basin energy company and the largest pure-play
in the Delaware Basin.  Centennial shareholders will own 53 per cent. of the
combined company, and existing Colgate owners will own 47 per cent.  Colgate
Co-CEOs Will Hickey and James Walter will assume the Co-CEO roles, with
Centennial's CEO, Sean Smith, to serve as Chairman of the Board.

 

With approximately 180,000 net leasehold acres, 40,000 net royalty acres, and
total production of 135,000 boe/d, the combined business is expected to
generate over $1 billion of free cash flow in 2023 at current strip prices and
possess over 15 years of high quality drilling inventory.  Both companies
intend to extend their track record in emissions footprint reduction,
following an approximately 43 per cent. reduction in greenhouse gas emissions
for the combined company during the 2020-2021 period.

 

Proforma for this transaction, Centennial/Colgate will have less than 1.0x
debt/EBITDA.  The combined company announced an initial $100 million annual
dividend in addition to Centennial's previously announced $350 million share
buyback authorisation, which was expected to commence this quarter but which
had not yet been tapped previous to today's announcement.  The merger is
expected to close in the second half of 2022, subject to shareholder and
regulatory approvals.

 

We welcome this transformational transaction that will create a premier
Permian Basin pure-play.  Bolstered by a strong balance sheet the company
will continue prioritizing its commitment to ESG excellence through the
reduction of its GHG emissions and by driving continued improvements in
minimizing flaring.  The pro forma business will maintain its Board
committees devoted to ESG initiatives and continue to tie executive
compensation to ESG performance.  Its Corporate Sustainability Reports will
remain a staple of its investor outreach effort. The combined businesses will
focus on maximizing corporate-level returns and generating free cash flow with
a focus on returning it to shareholders. These ongoing efforts, together with
a larger and more liquid float, will help expand its shareholder base and
accelerate REL's transition to a pure-play decarbonisation investment
portfolio.

 

REL holds ~12.5 million shares in Centennial valued at $94 million as at
market close on 18 May 2022 of $7.49 per share.  REL has invested $268
million into Centennial since 2016, and has realised $194 million, or 72 per
cent. of its cost basis, through proceeds from share sales.  The previously
realised plus unrealised position as of close on 18 May 2022 marks Centennial
at 1.1x Gross MOIC for REL.

 

Additional information on the merger can be found on the Company's website:
https://www.cdevinc.com/ (https://www.cdevinc.com/) .

 

About Centennial
Centennial Resource Development, Inc. (Nasdaq:CDEV) is an independent oil
producer with assets in the core of the southern Delaware Basin, a sub-basin
of the Permian Basin in West Texas. With approximately 75,500 net acres and
15+ years of economic inventory, we are pursuing a growth strategy grounded in
technical leadership, strong well results, attractive investment returns and a
conservative balance sheet. Centennial is headquartered in Denver, Colorado.

About Riverstone Energy Limited:

REL is a closed-ended investment company that has since 2020 been exclusively
focussed on pursuing and has committed $167 million to a global strategy
across decarbonisation sectors presented by Riverstone's investment
platform.  REL's ordinary shares are listed on the London Stock Exchange,
trading under the symbol RSE.  REL has 18 active investments spanning
decarbonisation, oil and gas, renewable energy and power in the
Continental U.S., Western Canada, Gulf of Mexico and Europe.

 

 

 

 

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