Crescent Energy Company (NYSE: CRGY) has made a bold move in the energy sector by signing a definitive agreement to acquire assets in the Eagle Ford from Ridgemar Energy. This deal, valued at an upfront consideration of $905 million plus additional oil price contingent payments, is a continuation of Crescent’s aggressive expansion strategy in the region.
The acquisition directly enhances Crescent’s operations, adding to its already substantial presence in Frio, Atascosa, La Salle, and McMullen counties in Texas. By integrating these assets, Crescent not only gains significant scale but also anticipates substantial operational efficiencies due to the assets being contiguous with their current operations.
David Rockecharlie, CEO of Crescent, highlighted the strategic fit, stating, “This transaction continues to highlight our ability to utilize our investing and operating expertise to identify and acquire high-quality assets, efficiently integrate them into our business, and drive additional value through improved operations.” He emphasized that the company is well-prepared to incorporate the Ridgemar assets, leveraging recent successes with integration and operational improvements.
Financially, this deal is set to be beneficial. Valued at 2.7 times EBITDA, it’s expected to be accretive to key metrics like Operating Cash Flow, Levered Free Cash Flow, and net asset value. The acquisition will boost Crescent’s production by approximately 20 thousand barrels of oil equivalent per day (Mboe/d), which is notably oil-weighted. Furthermore, it adds about 140 high-return drilling locations that are poised to compete for capital allocation within Crescent’s portfolio, thus extending the company’s inventory life.
The transaction also maintains Crescent’s financial discipline. It’s structured to keep the company’s leverage ratio at or below the targeted maximum of 1.5x, ensuring that the balance sheet remains strong post-acquisition.
An interesting aspect of the deal includes future considerations tied to oil prices. If West Texas Intermediate (WTI) prices hit or exceed certain thresholds in 2026 and 2027, Crescent could owe up to $170 million in additional payments. This not only aligns the deal’s economics with commodity price movements but also provides a hedge against volatility while offering potential upside for both parties.
Rockecharlie expressed confidence in the deal’s impact, noting, “These assets contribute meaningful scale, enhance Crescent’s cash margins, increase our oil-weighting, and extend our low-risk inventory life, all at an attractive and highly accretive valuation. I remain confident in our ability to capitalize on our strong momentum and continue our profitable growth trajectory towards our investment grade ambitions.”
With an effective date of October 1, the transaction is slated to close in the first quarter of 2025, subject to customary conditions. More details can be found on Crescent’s website at www.crescentenergyco.com. This acquisition not only solidifies Crescent’s position in the Eagle Ford but also sets a strong foundation for future growth, maintaining its focus on high-quality, accretive investments that align with its strategic vision.
