DENVER, June 7, 2021 /PRNewswire/ -- Civitas
Resources, Inc. ("Civitas" or the "Company"), a Colorado energy leader that will be formed
upon closing of the recently-announced merger of Bonanza Creek
Energy, Inc. (NYSE: BCEI) ("Bonanza Creek") and Extraction Oil
& Gas, Inc. (NASDAQ: XOG) ("Extraction"), today announced that
it has materially advanced its consolidation strategy in the
Denver-Julesburg (DJ) Basin by entering into a
definitive agreement to acquire Crestone Peak Resources
("Crestone"), another leading
energy producer in the region. Civitas is expected to have an
enterprise value of approximately $4.5
billion (based on the closing market equity capitalizations
of Extraction and Bonanza Creek as of June
4, 2021), and will be optimally positioned to increase
efficiencies through combining operations across more than half a
million net acres and an estimated production base of approximately
160,000 barrels of oil equivalent per day.
The agreement to acquire Crestone represents the most recent initiative
in Civitas' execution of the new E&P business model that has
been actively embraced by each of Bonanza Creek and Extraction. The
model is defined by operational discipline, a strong balance sheet,
commitment to free cash flow generation, financial alignment with
stakeholders, environmental and community leadership, and
best-in-class governance. Civitas is also proud that, inclusive of
the Crestone assets, it will be
Colorado's first carbon neutral
oil and gas producer (scope 1 and scope 2) upon closing, advancing
its net-zero goals.
STRATEGIC RATIONALE
- The acquisition of Crestone
will strengthen the strategic rationale underlying the formation of
Civitas, as it is projected to enhance the Company's scale,
in-basin diversification, balance sheet, and liquidity profile.
Civitas will have established itself as the preferred consolidation
partner in the target-rich DJ Basin, which will help increase its
trading liquidity and market relevance, and ultimately elevate its
presence among top energy producers in the country.
- With the addition of Crestone,
Civitas will operate across more than half a million net acres,
with leasehold positions in all key areas of the DJ Basin. The
Company will also have an estimated production base of
approximately 160,000 barrels of oil equivalent per day (on a pro
forma 1Q21 production basis) and YE20 SEC proved reserves of more
than 530 MMBoe.
- Crestone's primary shareholder
is Canada Pension Plan Investment Board ("CPP Investments"). CPP
Investments will become Civitas' largest shareholder and will
designate one member to the Civitas board upon closing.
- Civitas is committed to returning capital to shareholders
through increased dividends and anticipates that the previously
announced Civitas annual dividend of $1.60/share will be increased to $1.85 at closing, with the continued potential
for additional increases, share repurchases and special
dividends.
- The acquisition of Crestone is
expected to be accretive on all 2022 estimated key metrics,
including cash flow per share, dividends per share, inventory
quality, credit profile and cost of capital. Civitas, pro forma for
the Crestone transaction, is
expected to generate more than $1.3
billion in 2022E EBITDA and more than $575 million in 2022E free cash flow.
- Civitas expects to target flat to low production growth with
moderate cash flow reinvestment.
- The Company's enhanced financial profile is expected to
accelerate cash returns to shareholders. The integration of
Crestone is expected to result in
approximately $45 million of annual synergies, in addition to
approximately $25 million in annual
synergies associated with the Bonanza Creek/Extraction merger.
- The acquisition of Crestone
will further advance Civitas' industry-leading ESG strategy,
demonstrated by the Company's commitment to achieve net-zero
emissions. Civitas has an intensive, continuing focus to reduce
operational emissions and a multi-year investment in certified
emissions offsets.
- Upon closing, Civitas will provide a progressive framework for
achieving its ESG targets, which it believes will address the
interests of its operating partners, employees, and service
providers.
- Civitas was created with the goal of operating in partnership
with, and delivering unprecedented value to, its communities. To
that end, Civitas is committed to demonstrating industry-leading
alignment with its community stakeholders through transparent
communication, safe and responsible operations, and innovative
community projects.
COMMENTARY
Eric Greager, President and Chief
Executive Officer of Bonanza Creek, said, "We are actively building
one of the most durable and profitable producers in the DJ Basin.
Our combination with Crestone is
just one early marker of what we hope to achieve as Civitas, as we
establish ourselves as the preferred consolidation partner in the
DJ Basin and work toward becoming one of the top energy producers
in the nation."
Tom Tyree, Chief Executive
Officer of Extraction, said, "Crestone brings to Civitas complementary,
premium assets at the front end of the cost curve, along with
common organizational and community values, including an aggressive
commitment to sustainability. We look forward to creating
significant value for all stakeholders and furthering Civitas'
standing as an ESG leader among oil and gas producers in
Colorado."
Tony Buchanon, President and
Chief Executive Officer of Crestone, said, "The benefits of in-basin
consolidation are compelling, and we are pleased to become part of
the dynamic enterprise that is Civitas. Crestone has long been a leader in safety and
sustainability issues, and we look forward to continuing that
leadership at Civitas."
"Over the past five years of our investment in Crestone, the company has demonstrated its
commitment to operational strength and efficiency, along with its
introduction of innovative sustainability practices. The
combination of Crestone with
Civitas creates a stronger platform in the DJ Basin with
significant free cash flow and the potential to continue value
creation," said Michael Hill,
Managing Director and Americas Head of Sustainable Energy, CPP
Investments.
GOVERNANCE AND TRANSACTION DETAILS
Following the closing of the transaction with Crestone, Civitas' board of directors will
increase from eight to nine. Each of Bonanza Creek and Extraction
will designate four directors, with CPP Investments designating one
director. All board members will stand for re-election annually. As
previously announced, Bonanza Creek President and Chief Executive
Officer, Eric Greager, will serve as
President and CEO of Civitas.
"Our board will reflect exceptional competence, diversity, and
governance standards, consistent with our focus on share price
performance and our commitment to industry-leading sustainability
practices. We also warmly welcome a CPP Investments director
designee to Civitas," commented Ben
Dell, current Chair of the Board of Extraction, who will
serve as Chair of Civitas.
Under the terms of the definitive agreement, shareholders of
Crestone will exchange 100% of the
equity interests in Crestone for
approximately 22.5 million shares of Bonanza Creek common stock.
Upon completion of the all-stock transaction, Bonanza Creek and
Extraction shareholders will each own approximately 37% of Civitas
and Crestone shareholders,
including CPP Investments, will own approximately 26% of Civitas.
The Company will be headquartered in Denver, Colorado.
The Crestone transaction, which
is expected to close immediately following the Bonanza
Creek/Extraction merger in the fall of 2021, has been unanimously
approved by the boards of directors of Bonanza Creek, Extraction
and Crestone, and fully approved
by Crestone's shareholders.
Kimmeridge Energy and CPP Investments have entered into support
agreements to vote in favor of the transaction. The transaction is
subject to customary closing conditions, including approvals by
Bonanza Creek shareholders and consummation of the Bonanza Creek /
Extraction merger.
ADVISORS
J.P. Morgan Securities LLC is serving as financial advisor and
Vinson & Elkins LLP is serving as legal advisor to Bonanza
Creek. Petrie Partners Securities, LLC is serving as financial
advisor and Kirkland & Ellis LLP is serving as legal advisor to
Extraction. Jefferies LLC is serving as lead financial advisor, TD
Securities (USA) LLC is serving as
financial advisor, and Gibson, Dunn & Crutcher LLP is serving
as legal advisor to Crestone.
CONFERENCE CALL WEBCAST AND ADDITIONAL MATERIALS
Civitas will discuss the transaction on a conference call today
at 7:00a.m. Mountain Time
(9:00a.m. Eastern Time).
Institutional investors and analysts are invited to participate in
the call by dialing (877) 793-4362, or (615) 247-0186 for
international calls, using conference ID: 2588925. Other interested
parties, including individual investors, members of the media and
employees of Civitas and Crestone,
are encouraged to participate via webcast. The webcast, and an
accompanying investor presentation, may be accessed from each of
the company's respective investor relations pages:
https://ir.bonanzacrk.com/investor-overview and
https://ir.extractionog.com. A replay of the call will be posted on
the investor relations section of each company's homepage.
ABOUT THE COMPANIES
Bonanza Creek is an independent energy company engaged in the
acquisition, exploration, development, and production of oil and
associated liquids-rich natural gas in the Rocky Mountain region of
the United States. Bonanza Creek's
assets and operations are concentrated in rural, unincorporated
Weld County, Colorado, within the
DJ Basin, focused on the Niobrara and Codell formations. Bonanza
Creek's common shares are listed for trading on the NYSE under the
symbol: "BCEI". For more information about Bonanza Creek, please
visit www.bonanzacrk.com.
Extraction is a Denver-based
independent energy company differentiated by its financial,
operational and governance model. Extraction is focused on
developing and producing crude oil, natural gas and NGLs in
the Denver-Julesburg Basin of Colorado. Extraction's
common shares are listed for trading on NASDAQ under the symbol
XOG. For more information about Extraction, please
visit www.extractionog.com.
Crestone is an independent
energy company focusing on the acquisition, exploration,
development, and production of oil and gas reserves in the Rocky
Mountain Region. Formed in 2016, Crestone's team of nearly 200 energy
professionals has significant operating experience and deep ties to
communities in Colorado and is
committed to operating safely and environmentally responsibly.
Crestone's acreage is located in
the Greater Wattenberg Field of Colorado's Denver-Julesburg Basin.
Crestone is headquartered in
Denver and has an office in
Firestone. For more information
about Crestone, please visit
www.crestonepeakresources.com.
NO OFFER OR SOLICITATION
This communication relates to proposed business combination
transactions between Bonanza Creek Energy, Inc. ("BCEI") and
Extraction Oil & Gas, Inc. ("XOG") (the "XOG Merger") and
between BCEI, Crestone Peak Resources LP ("CPR"), CPPIB Crestone
Peak Resources America Inc. ("CPPIB"), Crestone Peak Resources
Management LP ("CPR Management LP," and, together with CPR and
CPPIB, the "Group Companies") and XOG (the "Crestone Merger," and
together with the XOG Merger, the "Mergers"). Communications in
this document do not constitute an offer to sell or the
solicitation of an offer to subscribe for or buy any securities or
a solicitation of any vote or approval with respect to the Mergers
or otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. Offers of securities
with respect to the XOG Merger and offers of securities to certain
holders with respect to the Crestone Merger shall be made only by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended (the "Securities Act"). BCEI
intends to issue the merger consideration in connection with the
Crestone Merger to certain holders in reliance on the exemptions
from the registration requirements under the Securities Act,
pursuant to Section 4(a)(2) thereof.
PARTICIPANTS IN THE SOLICITATION
BCEI, XOG and their respective directors and certain of their
executive officers and other members of management and employees
may be deemed, under SEC rules, to be participants in the
solicitation of proxies from BCEI's shareholders and XOG's
shareholders in connection with the Mergers. Information regarding
the executive officers and directors of BCEI is included in its
definitive proxy statement for its 2021 annual meeting filed with
the SEC on April 28, 2021.
Information regarding the executive officers and directors of XOG
is included in its amended annual report on Form 10-K/A filed with
the SEC on April 30, 2021. Additional
information regarding the persons who may be deemed participants
and their direct and indirect interests, by security holdings or
otherwise, will be set forth in the Registration Statement, Joint
Proxy Statement and other materials when they are filed with the
SEC in connection with the Mergers. Free copies of these documents
may be obtained as described in the paragraphs above.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
Certain statements in this document concerning the Mergers,
including any statements regarding the expected timetable for
completing the Mergers, the results, effects, benefits and
synergies of the Mergers, future opportunities for the combined
company, future financial performance and condition, guidance and
any other statements regarding BCEI's, XOG's or the Group
Companies' future expectations, beliefs, plans, objectives,
financial conditions, assumptions or future events or performance
that are not historical facts are "forward-looking" statements
based on assumptions currently believed to be valid.
Forward-looking statements are all statements other than statements
of historical facts. The words "anticipate," "believe," "ensure,"
"expect," "if," "intend," "estimate," "probable," "project,"
"forecasts," "predict," "outlook," "aim," "will," "could,"
"should," "would," "potential," "may," "might," "anticipate,"
"likely," "plan," "positioned," "strategy," and similar expressions
or other words of similar meaning, and the negatives thereof, are
intended to identify forward-looking statements. Specific
forward-looking statements include statements regarding BCEI, XOG
and the Group Companies' plans and expectations with respect to the
Mergers and the anticipated impact of the Mergers on the combined
company's results of operations, financial position, growth
opportunities and competitive position. The forward-looking
statements are intended to be subject to the safe harbor provided
by Section 27A of the Securities Act of 1933, Section 21E of the
Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995.
These forward-looking statements involve significant risks and
uncertainties that could cause actual results to differ materially
from those anticipated, including, but not limited to, the
possibility that shareholders of BCEI may not approve the issuance
of new shares of BCEI common stock in the Mergers or that
shareholders of XOG may not approve the XOG Merger Agreement; the
risk that a condition to closing of the Mergers may not be
satisfied, that either party may terminate the XOG Merger Agreement
or the Crestone Peak Merger Agreement or that the closing of the
Mergers might be delayed or not occur at all; potential adverse
reactions or changes to business or employee relationships,
including those resulting from the announcement or completion of
the Mergers; the diversion of management time on Merger-related
issues; the ultimate timing, outcome and results of integrating the
operations of BCEI, XOG and the Group Companies; the effects of the
business combination of BCEI, XOG and the Group Companies,
including the combined company's future financial condition,
results of operations, strategy and plans; the ability of the
combined company to realize anticipated synergies in the timeframe
expected or at all; changes in capital markets and the ability of
the combined company to finance operations in the manner expected;
regulatory approval of the Mergers; the effects of commodity
prices; the risks of oil and gas activities; and the fact that
operating costs and business disruption may be greater than
expected following the public announcement or consummation of the
Mergers. Expectations regarding business outlook, including changes
in revenue, pricing, capital expenditures, cash flow generation,
strategies for our operations, oil and natural gas market
conditions, legal, economic and regulatory conditions, and
environmental matters are only forecasts regarding these
matters.
Additional factors that could cause results to differ materially
from those described above can be found in BCEI's Annual Report on
Form 10-K for the year ended December 31,
2020 and in its subsequently filed Quarterly Report on Form
10-Q, each of which is on file with the SEC and available from
BCEI's website at www.bonanzacrk.com under the "Investor Relations"
tab, and in other documents BCEI files with the SEC, and in XOG's
Annual Report on Form 10-K for the year ended December 31, 2020 and in its subsequently filed
Annual Report on Form 10-K/A, each of which is on file with the SEC
and available from XOG's website at www.extractionog.com under the
"Investor Relations" tab, and in other documents XOG files with the
SEC.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time.
Neither BCEI nor XOG assumes any obligation to update
forward-looking statements to reflect circumstances or events that
occur after the date the forward-looking statements were made or to
reflect the occurrence of unanticipated events except as required
by federal securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
INVESTOR CONTACTS
Bonanza Creek Energy
Scott
Landreth
slandreth@bonanzacrk.com
Extraction Oil & Gas
John
Wren
ir@extractionog.com
MEDIA CONTACTS
Brian Cain
(281) 825.2010
info@extractionog.com
Daniel Yunger
Kekst CNC
Kekst-extraction@kekstcnc.com
View original content to download
multimedia:http://www.prnewswire.com/news-releases/civitas-adds-premium-assets-in-dj-basin-with-all-stock-acquisition-of-crestone-peak-resources-301306693.html
SOURCE Civitas Resources, Inc.