Comstock Resources Inc. wrapped up its multibillion-dollar purchase on July 16 of private-equity backed Haynesville operator Covey Park Energy LLC.
The acquisition of the Denham Capital-backed company, supported by an investment from Dallas Cowboys owner Jerry Jones, creates a basin leader in the Haynesville Shale. As a result of the combination, Comstock’s position in North Louisiana and East Texas now totals about 374,000 net acres with over 1.1 billion cubic feet equivalent per day of net production. The company also has assets in North Dakota.
The companies jointly announced the agreement on June 10 for the cash-and-stock transaction, which, including the assumption of debt, was worth roughly $2.2 billion. Comstock funded the Covey Park acquisition through a combination of debt under a new $2.5 billion revolving credit facility and its investment from Jones.
Comstock’s management team will continue to be led by M. Jay Allison as board chairman and CEO and Roland Burns as president and CFO. Covey Park co-CEO John Jacobi along with Denham Capital Managing Partner Jordan Marye will also join the Comstock board of directors, which has been expanded to include the two following the merger.
The remainder of the company’s leadership will be comprised of executives from both Comstock and Covey Park.
Covey Park executives joining Comstock include:
- David Terry as senior vice president of corporate development;
- Patrick McGough as vice president of operations;
- Mark Wilson as vice president of financial reporting; and
- Whitney Ward as vice president of marketing.
Comstock will also retain the following executives:
- Dan Harrison as COO;
- Dan Presley as vice president of accounting, controller and treasurer; and
- LaRae Sanders as vice president of land.
Additionally, the following Comstock management will continue to serve through the transition period, but plan to retire once the transition is complete:
- Russell Romoser, vice president of reservoir engineering;
- Mike McBurney, vice president of marketing; and
- Rick Singer, vice president of financial reporting.
The transaction included the payment of $700 million cash, $210 million of a newly issued convertible Comstock preferred stock and about 28.8 million shares of newly issued Comstock common stock valued at $6 per share to the equity owners of Covey Park.
Wells Fargo Securities LLC was lead financial adviser to Comstock for the transaction. BMO Capital Markets also acted as a financial adviser to the company. Locke Lord LLP is the company’s legal adviser. Locke Lord’s deal team was led by Dallas Partner Jack Jacobsen and Houston Partner Michael Blankenship.
Meanwhile, BofA Merrill Lynch and Barclays were lead financial advisers to Covey Park. Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC also provided financial advice to Covey Park. Vinson & Elkins LLP is the company’s legal adviser led by partners Doug McWilliams and Shamus Crosby.
The Anadarko Basin’s Simpson shale formation is being called “one of the biggest yet-to-be-developed shale plays in the United States.”
Recovering more for less is the ultimate goal for operators and service companies.
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