Civitas Resources, the exploration and production company, formed just a month ago by the merger of Bonanza Creek and Extraction Oil and Gas Inc., will acquire its peer Crestone Peak Resources for a total consideration of $1,3 billion; including debt.
Firstly, the merger between Bonanza Creek and Extraction was set to create the largest exploration & production firms primarily focused on Colorado’s Denver-Julesburg basin (DJ Basin).
Secondly, acquiring Crestone Peak will further expand the company’s footprint in the area. However, the transaction was not disclosed officially, but through sources with knowledge of the matter and quoted by Reuters.
Thirdly, according to the agency, Civitas Resources will use its own stock as currency to pay for the acquisition; including the Canada Pension Plan Investment Board (CPPIB) and investment firm The Broe Group. Reuters also said that the acquisition could be announced officially this very Monday.
Moreover, sources spoke on condition of anonymity ahead of a formal announcement; and neither companies were available immediately for comments. However, consolidation of exploration and production activities in the DJ Basin is a critical step for E&P companies in the area. Especially when they are already grappling with regulatory hurdles as to how and where to drill.
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Civitas may push for greener activities in the DJ Basin
In addition, Crestone was formed in 2016; when CPPIB and Broe acquired assets, centered around the Greater Wattenberg portion of the DJ Basin, from Encana Oil & Gas, as Reuters reports.
On the other hand, Bonanza Creek and Extraction said last month that their merger would create Colorado’s first carbon neutral oil and gas producer. Consequently, Civitas Resources may be pushing that objective also.
In fact, the largest shareholder for Extraction Oil and Gas Inc., now part of Civitas, is Kimmeridge Energy Management. A company that has been pushing for measures to improve the green credentials of the shale industry; including the creation of a carbon trading platform for the U.S. oil and gas industry.
Finally, such companies will most likely be a factor in the direction that the acquisition of Creston Peak, by Civitas, may take in the future. Especially in the midst of the Biden-Harris administration.