Independence Energy LLC and Contango Oil and Gas announced this Tuesday that they have entered into an agreement to merge together in an all-stock transaction. The combination will create a premier, diversified and low leverage U.S. independent oil and gas company focused on consolidation.
Firstly, upon completion of the transaction, Independence shareholders will own approximately 76 percent; and Contango shareholders will own approximately 24 percent of the combined company.
Secondly, the combined company will have an initial equity market capitalization of approximately $4.8 billion; and an enterprise value of approximately $5.7 billion. Indeed, it will be a leading oil and gas company in the U.S.
Thirdly, it will have increased scale, improved access to capital; also, low leverage and a successful, proven management team. It will be in a position to be a primary platform for pursuing upstream oil and natural gas opportunities; as it will have an estimated EBITDA of $750MM – $800MM; and also unlevered Free Cash Flow of $375MM – $400MM, with ~75% of expected 2022 cash flow attributable to PDP2.
Moreover, Independence Energy is an upstream oil and gas business built and managed by KKR’s Energy Real Assets. It operates low-decline, producing assets with meaningful reinvestment opportunities for low-risk growth across the Eagle Ford, Rockies, Permian and Mid-Continent.
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Independence Energy and Contango will form premier company, led by KKR
On the one hand, KKR is a leading global investment firm investing in a diverse range of energy sources; it is committed to investing in a stable energy transition, one that supports the energy needs of today in a responsible manner; while also contributing to a cleaner tomorrow.
On the other hand, Contango is a Fort Worth, Texas based, independent oil and gas company; it also operates a portfolio of low-decline, producing assets primarily in the Mid-Continent, Permian, and the Rockies areas.
Finally, about the matter, David Rockecharlie, Head of KKR Energy Real Assets, who will serve as Chief Executive Officer of the new company, said. “With today’s transaction, we are continuing to execute on the strategy we have been building over the last decade.”