
(Source: Shutterstock.com)
Crescent Energy Co. has entered into an agreement to bolt-on assets in the Eagle Ford Shale from Mesquite Energy Inc. — formerly Sanchez Energy — in a $600 million cash deal.
Crescent said the definitive purchase agreement with Mesquite Energy provides operatorship and working interests and significantly enhances Crescent’s scale in the Eagle Ford. The deal continues the shale play’s recent M&A hot streak following a hot first quarter.
The Mesquite Energy assets are 100% operated and span approximately 75,000 contiguous net acres, primarily located in Dimmit and Webb counties, Texas, according to a May 2 Crescent press release.
The asset provides a “large, proven inventory with significant resource upside” that nearly doubles Crescent’s operated Eagle Ford inventory with substantial potential upside from the Austin Chalk and Upper Eagle Ford, Crescent said.
Crescent said it is acquiring “more than $700 million of proved developed producing PV-10 value” and that it expects the transaction to be immediately accretive to operating cash flow, free cash flow and net asset value.
“Expanded operational control provides opportunity for meaningful improvement in capital efficiencies, asset performance and basin-wide synergies,” Crescent said. “Pro forma for the transaction, Crescent will increase its legacy ~15% non-operated interest to a ~50% operated working interest in the acquired assets and operate approximately 90% of its Eagle Ford position.”
Crescent said the acquisition increases the company’s base of predictable cash flow with current average production of approximately 20,000 boe/d (70% liquids) and a 12-month decline rate of 17%.
The transaction is expected to close early in the third quarter of 2023, subject to customary closing conditions, with an effective date of March 1, 2023.
In conjunction with the signing of the transaction, the company entered into additional hedges in accordance with its risk-management strategy. The company expects to update its 2023 outlook incorporating the acquisition upon closing.
Crescent CEO David Rockecharlie said the acquisition cements its position as a leading consolidator in the Eagle Ford and is “consistent with the low-risk, acquire and exploit strategy that we’ve employed for the past decade.”
“We know these assets well as an active, non-operated owner for the last six years and see meaningful upside potential through increased scale and operatorship,” he said. “As operator, we look forward to engaging with all stakeholders to improve performance and maximize value across this high-quality asset base.”
Kirkland & Ellis LLP is serving as Crescent's legal counsel. Jefferies LLC is serving as financial adviser and Gibson, Dunn & Crutcher LLP is serving as legal counsel to Mesquite.
Recommended Reading
Texas Upstream Employment Slips in March, TIPRO Says
2025-04-18 - Texas’ upstream energy sector employed 204,400 people in March, down by 700 people from the previous month.
USGS: 47 MMbbl of Oil, 876 Bcf of Gas in Conventional Rockies’ Basins
2025-03-13 - The U.S. Geological Survey surveyed areas where potential hydrocarbons in as yet undiscovered oil and gas formations in the Wind River, Bighorn and Powder River basins.
Algeria Launches Program to Grow Oil, Gas Production
2025-05-12 - The African nation has extended its bid submissions for a hydrocarbon tender to July.
What’s Next for the US as an Apex Hydrocarbon Producer?
2025-05-07 - Expect more company integration and more investor attention to data centers and LNG terminals in the U.S. hydrocarbon space, says East Daley Analytics.
Woodside Reaches $17.5B FID on Louisiana LNG Development
2025-04-29 - Woodside Energy has reached a final investment decision to develop Louisiana LNG and is targeting first LNG by 2029.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.