Crescent Seals Acquisition of Eagle Ford Player Ridgemar

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Crescent Seals Acquisition of Eagle Ford Player Ridgemar

Crescent Energy Co. has completed the purchase of Ridgemar (Eagle Ford) LLC for an upfront price of $905 million, growing its footprint in Texas’ Eagle Ford shale. “We are pleased to complete this accretive acquisition, which further scales our core Eagle Ford position as we also welcome many talented new members to the Crescent Energy […]

Crescent Energy Co. has completed the purchase of Ridgemar (Eagle Ford) LLC for an upfront price of $905 million, growing its footprint in Texas’ Eagle Ford shale.

“We are pleased to complete this accretive acquisition, which further scales our core Eagle Ford position as we also welcome many talented new members to the Crescent Energy team”, chief executive David Rockecharlie said in a company statement.

“This acquisition demonstrates our disciplined approach to creating shareholder value by combining our investing and operational expertise to acquire and efficiently integrate high-quality assets while maintaining a strong financial profile.

“These assets enhance our oil-weighted production and extend our low-risk inventory, reinforcing our ability to deliver sustained cash flow and returns.

“We remain focused on executing our strategy of profitable growth and advancing our investment-grade ambitions”.

Announcing the agreement December 3, 2024, Houston, Texas-based Crescent said then the transaction with Ridgemar “builds upon its significant acquisition activity in the Eagle Ford over the past 18 months, totaling more than $4 billion of accretive M&A [mergers and acquisitions]”.

The acquisition gives Crescent “approximately 20 Mboe/d [thousand barrels of oil equivalent a day] of high-margin, oil-weighted production and ~140 well understood, high-return locations that immediately compete for capital and extend Crescent’s low-risk inventory life”, Crescent said.

It added, “The transaction, valued at 2.7x EBITDA [earnings before interests, taxes, depreciation and amortization], is accretive to operating cash flow, levered free cash flow and net asset value, with strong expected cash-on-cash returns”.

The base upfront consideration consists of $830 million in cash and over 5.45 million shares from Crescent’s common stock.

Additionally Crescent owes Ridgemar, also based in Houston, an oil price-contingent consideration of up to $170 million. Crescent will pay $15 million per quarter in 2026 and $12.5 million per quarter in 2027 if the average quarterly West Texas Intermediate (WTI) price is more than or equal to $70 a barrel. If the average quarterly WTI price is greater than or equal to $75 per barrel, Crescent will pay $15 million per quarter in 2026, according to the December announcement.

Crescent issued senior notes with an aggregate principal amount of $400 million to help pay for the cash portion of the transaction, according to a regulatory disclosure December 13, 2024.

The new issuance, involving noteholders in a previous $700 million bond sale, bears an annual interest of 7.625 percent and a maturity date of 2032 – the same terms as the previous offering.

Crescent had $136.15 million in cash and cash equivalents at the end of the third quarter of 2024, according to its latest results. Current assets totaled $864.71 million, while Crescent owed $929.75 million in current liabilities at the end of the period.

Jefferies LLC served as financial advisor to Crescent in the transaction with Ridgemar, while Kirkland & Ellis LLP served as legal counsel.

Ridgemar’s financial advisor was RBC Capital Markets LLC. Energy and Vinson & Elkins LLP served as its legal counsel.

Besides the Eagle Ford, Crescent also operates in the Uinta Basin in Utah.

Crescent produced 219,000 boed on average in the third quarter of 2024, according to its latest results. That consisted of 39 percent oil and 58 percent liquids.

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