Centennial to Acquire Silverback’s Upstream Assets for $885 Million, Texas
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Colorodo based oil and natural gas firm Centennial Resource Development has agreed to purchase all the upstream assets of Silverback Exploration in Reeves County, US for $885m.
The acquisition is expected to increase Centennial’s horizontal drilling inventory by 44% and is likely to close by December end.
Silverback’s oil and gas assets in Reeves County have a current net production of around 3,500 barrels of oil equivalent a day (Boe/d) and include at least 600 horizontal drilling locations.
According to the Colorodo company, the overall potential of undeveloped resource in the Wolfcamp A and Wolfcamp B formations and also the upside potential from the Wolfcamp C, Avalon and Bone Spring formations is estimated to be over 600MMBoe.
Centennial CEO Mark Papa said: “While we did not expect to make such a significant acquisition so quickly, we could not pass up the opportunity to accretively add core acreage offsetting our existing Centennial assets at such a compelling price. Pro forma for the transaction, Centennial will be one of the largest operators in the Delaware Basin, with over 77,000 contiguous net acres.
Papa also added that the acquisition will increase the company’s 2020 oil production goal to 50,000 Bo/d from 30,000 Bo/d besides sustaining one of the lowest debt levels in the industry.
In connection with the acquisition, Texas-based private equity firm Riverstone and affiliated funds will invest $500m in Centennial’s common and convertible preferred shares.
Centennial intends to finance the remainder of the purchase price through equity and/or debt financings.
While Weil, Gotshal & Manges acted as legal counsel to Centennial in the transaction, Latham & Watkins acted as legal counsel to Riverstone.
Founded in 2000, Riverstone is an energy and power-focused private investment firm, with over $34bn of capital raised.
Source: (November 29, 2016) Energy Business Review
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