CPP Investments’ Colorado Energy Play to be Scooped by Civitas Resources
Posted on 06/08/2021
Civitas Resources Inc. was formed through the merger of Bonanza Creek Energy, Inc. (ticker: BCEI-N) and Extraction Oil & Gas Inc. The merger between Bonanza Creek and Extraction was announced in May 2021. The May merger will create the largest exploration and production company focused on Colorado’s Denver-Julesburg basin. Extraction’s largest shareholder is investment firm Kimmeridge Energy Management. Civitias will have an aggregate enterprise value of approximately US$ 2.6 billion (based on the closing share prices of Bonanza Creek and Extraction on May 7, 2021).
Civitas Resources signed a deal to acquire Crestone Peak Resources LP to create a Colorado-focused oil and gas producer worth around US$ 4.5 billion. Investment firm The Broe Group and Canada Pension Plan Investment Board (CPP Investments) formed Crestone Peak Resources in 2016. CPP Investments owns the Crestone investment via CPPIB Crestone Peak Resources America Inc.
The final combined entity would produce around 160,000 barrels of oil equivalent per day.
Civitas will use 22.5 million Bonanza Creek shares to pay Crestone’s owners, including CPP Investments and The Broe Group, giving them 26% of the overall company.
The Crestone deal is expected to close immediately after the Bonanza/Extraction deal in the fall.
Advisors for the Crestone Deal
J.P. Morgan Securities LLC is serving as financial advisor and Vinson & Elkins LLP is serving as legal advisor to Bonanza Creek. Petrie Partners Securities, LLC is serving as financial advisor and Kirkland & Ellis LLP is serving as legal advisor to Extraction. Jefferies LLC is serving as lead financial advisor, TD Securities (USA) LLC is serving as financial advisor, and Gibson, Dunn & Crutcher LLP is serving as legal advisor to Crestone.