The combined company, to be named
TRANSACTION HIGHLIGHTS
The merger will create a leading energy producer in
The combined company will operate across approximately 425,000 net acres, with a production base of 117 thousand barrels of oil equivalent per day (117 Mboe/d, on a pro forma 1Q21 production basis).
The transaction is expected to be significantly accretive to free cash flow and other per-share metrics.
At closing, Civitas is projected to be one of most well-capitalized companies in the industry, with a leverage ratio below 0.3x pro forma 1Q21 Net Debt / 2021E EBITDA.
Civitas expects to achieve annual expense and capital savings of approximately
Bonanza Creek's recently announced annual dividend of
Bonanza Creek President and Chief Executive Officer,
Extraction Chairman of the Board,
Civitas will take to the next level an E&P business model that has been actively embraced by both Bonanza Creek and Extraction, 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.
At closing, Civitas will be
CEO COMMENTARY
'Successful E&P operators will be those who place a priority on disciplined capital deployment, deliver operational and cost excellence, maintain a relentless focus on shareholder value, and have governance standards that are aligned with the times,' said
'We believe the combination of Bonanza Creek and Extraction will create one of the most durable, profitable, and progressive producers in the
TRANSACTION DETAILS
Under the terms of the definitive merger agreement, Extraction shareholders will receive a fixed exchange ratio of 1.1711 shares of Bonanza Creek common shares for each share of Extraction common stock owned on the closing date. Based on the exchange ratio and the closing price of Bonanza Creek's common stock on
The transaction, which is expected to close in the third quarter of 2021, has been unanimously approved by the boards of directors of both companies. Funds managed by Kimmeridge Energy own approximately 38% percent of the outstanding shares of Extraction and have entered into a support agreement to vote in favor of the transaction. The closing of the merger is subject to customary closing conditions, including approvals by Bonanza Creek and Extraction shareholders.
STRATEGIC RATIONALE
Enhanced scale and geographic breadth - Civitas will be the largest pure-play energy producer in the
Significant corporate synergies further reduce basin-leading cost structures - The combined company expects to generate approximately
Acceleration of cash returns to shareholders - Civitas represents the next level of an E&P business model that has been actively embraced by both Bonanza Creek and Extraction, and is defined by capital discipline, low cost structure, and a strong balance sheet to maximize free cash flow and accelerate the distribution of a material portion of this cash to shareholders. Disciplined reinvestment rates are expected to yield flat to low production growth in the coming years and generate sufficient free cash flow to support material dividends going forward. Bonanza Creek's recently announced annual dividend of
Strong balance sheet and liquidity - The all-stock transaction ensures Civitas will retain a strong balance sheet, with a leverage ratio below 0.3x pro forma 1Q21 Net Debt / 2021E EBITDA, at the time of closing, and Civitas will target leverage of approximately 0.5x over the longer term. Civitas will also have significant liquidity. As of
Advances consolidation strategy - Civitas represents a major step in
Industry-leading commitment to ESG excellence and values - Civitas will expand on the ESG initiatives pursued by both Bonanza Creek and Extraction, including its commitment to become
GOVERNANCE AND LEADERSHIP
Following the merger, the Civitas board of directors will consist of eight members, four directors from Bonanza Creek and four from Extraction. Extraction's current Chairman,
ABOUT THE COMPANIES
Bonanza Creek is an independent oil and natural gas company engaged in the acquisition, exploration, development, and production of oil and associated liquids-rich natural gas in the
Extraction is a
Contact:
Email: slandreth@bonanzacrk.com
Cautionary Statement Regarding Forward-Looking Information
Certain statements in this news release concerning the proposed transaction, including any statements regarding the expected timetable for completing the proposed transaction, the results, effects, benefits and synergies of the proposed transaction, future opportunities for the combined company, future financial performance and condition, guidance and any other statements regarding Bonanza Creek's or Extractions 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 Extraction and Bonanza Creek's plans and expectations with respect to the proposed transaction and the anticipated impact of the proposed transaction 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 Bonanza Creek and Extraction may not approve the merger agreement; the risk that a condition to closing of the proposed transaction may not be satisfied, that either party may terminate the merger agreement or that the closing of the proposed transaction 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 transaction; the diversion of management time on transaction-related issues; the ultimate timing, outcome and results of integrating the operations of Bonanza Creek and Extraction; the effects of the business combination of Bonanza Creek and Extraction, 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 transaction; 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 proposed transaction. 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.
All forward-looking statements speak only as of the date they are made and are based on information available at that time.
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