With ‘Pipeline of M&A,’ Crescent Ready for Another Deal

Big buyer Crescent Energy isn’t done with dealmaking yet, after bringing in Eagle Ford Shale neighbor SilverBow Resources’ 91,000 boe/d for $2.1 billion in stock, cash and debt assumption on July 30.

“Currently we have one of the largest pipelines of M&A opportunity in our recent history,” CEO David Rockecharlie told investors during an Aug. 6 earnings call.

He added, “We are looking forward to delivering more value from our existing asset base and future acquisitions. We are a proven growth-through-acquisition company.”

From a small start in 2021, Crescent is the No. 2 Eagle Ford operator today behind ConocoPhillips after closing on SilverBow, Rockecharlie noted.

“And we are just getting started,” he said.

In particular, the Eagle Ford is of key interest. “[It] remains one of the most fragmented basins in the U.S. and we see meaningful opportunity there with our increased scale, strong operating and financial performance and solid balance sheet,” he said.

Crescent has three rigs drilling the Eagle Ford currently and one in the Uinta.

Backstory

Crescent was born in 2021 from the all-stock merger of private investment firm KKR’s Energy Real Assets group’s E&P, Independence Energy LLC, with publicly held Contango Oil & Gas.

Independence operated in the Eagle Ford, Rockies, Permian and Midcontinent. Contango’s portfolio was in the Midcontinent, Permian and Rockies.

Post-closing, Crescent exited the Permian and Midcontinent.

Its current E&P portfolio is exclusively in the Eagle Ford in South Texas and in the Uinta Basin in Utah. It also has an EOR and carbon capture, utilization and sequestration unit in Wyoming.

Since adding the SilverBow property, Crescent holds 458,000 net acres in the Eagle Ford, 95% operated.

In the Uinta, it has 145,000 net acres, 100% operated.

Would Crescent divest too?

A securities analyst asked on the Aug. 6 call if Crescent is ready to transact immediately should an M&A deal present itself.

Rockecharlie said, “Very simply, we feel like we'll be ready to go when the market presents itself.”

Absorbing the SilverBow operations isn’t an impediment to taking in another property. Integration was underway before closing last week, so it is expected “to happen relatively quickly,” he said.

Would Crescent consider selling any of its portfolio too?

Brandi Kendall, Crescent CFO, said it wouldn’t need to for fiscal reasons. “We feel really good with where the balance sheet is today.”

Clay Rynd, Crescent’s executive vice president, investments, said, “We’re both in the acquisition business and the divestiture business. So you've seen us divest assets, particularly non-core assets, over time and do that opportunistically when we think the buyer sees value that we can't capture.”

He added that Crescent has made $150 million of divestments in the past 18 months.

But “we're not a forced seller of assets into a tough tape,” Rynd said.

Rockecharlie noted that all Big Three debt-rating services—Fitch Ratings, Moody’s Ratings and S&P Global Ratings—recently assigned positive outlooks on Crescent’s debt credit score, although it’s not yet rated investment-grade.

“We've never been better positioned for future growth through accretive returns-driven M&A,” Rockecharlie said.