Latham & Watkins represented Centennial Resource Development, Inc. in the transaction. Kirkland & Ellis counseled Colgate Energy Partners III.
Centennial Resource Development, Inc. (NASDAQ: CDEV) and Colgate Energy Partners III, LLC have entered into an agreement to combine in a merger of equals transaction. The combined company will be the largest pure-play E&P company in the Delaware Basin with approximately 180,000 net leasehold acres, 40,000 net royalty acres, and total current production of approximately 135,000 Boe/d. The combined company plans to leverage its high-quality, scaled asset base to drive leading shareholder returns.
The approximately $7.0 billion merger of equals values Colgate at approximately $3.9 billion and is comprised of 269.3 million shares of Centennial stock, $525 million of cash and the assumption of approximately $1.4 billion of Colgate’s outstanding net debt. Given existing cash balances and interim free cash flow, the company expects its net debt-to-LTM EBITDAX ratio at closing to be approximately 1.0x. The cash consideration and the repayment of Colgate’s outstanding credit facility borrowings at closing are expected to be funded with cash on hand and borrowings under an upsized revolving credit facility.
The transaction has been unanimously approved by the Boards of Directors of both companies and is expected to close in the second half of 2022. The company intends to provide detailed forward-looking guidance for the remainder of 2022 at or shortly after closing of the transaction.
Founded in 2015, Colgate has exhibited an exceptional value-creation track record under the leadership of its current Co-CEOs, Will Hickey and James Walter. Colgate has total current production of approximately 70,000 Boe/d and possesses a high-quality acreage position consisting of approximately 105,000 net leasehold acres and 25,000 net royalty acres in the Delaware Basin, with its position concentrated in Reeves and Ward Counties, Texas and Eddy County, New Mexico.
Centennial Resource Development (NASDAQ:CDEV) is an independent oil producer with assets in the core of the southern Delaware Basin, a sub-basin of the Permian Basin in West Texas. Centennial is headquartered in Denver, Colorado.
Latham & Watkins LLP represented Centennial Resource Development, Inc. in the transaction with a corporate deal team led by Houston partners John Greer (Picture) and Ryan Maierson, with associates Thomas Verity, Bryan Ryan, Jordan Mack, Brent Wagner, Ziyad Barghouthy, and Zek Zhang. Advice was also provided on tax matters by Houston partner Jim Cole, with associates Michael Rowe and Marianne Standley; on antitrust matters by Washington, D.C. partner Mike Egge, with associate Mary Casale; on benefits and compensation matters by Washington, D.C. partner Matthew Conway and counsel Laura Szarmach, with Chicago associate Victoria Wolfe; on environmental matters by Washington, D.C. partner James Barrett, with associate Andy Landolfi; on finance matters by Houston partner Catherine Ozdogan; and on oil and gas related matters by Houston partners Robin Fredrickson and Jeff Munoz, with associate Robert Cunningham.
The Kirkland team was led by corporate partners Sean Wheeler, Debbie Yee, Emily Lichtenheld and Cephas Sekhar; real assets partners Anthony Speier and Chad Smith and associate Will Eiland; tax partners David Wheat and Joe Tobias; environmental transactions partner Jonathan Kidwell; and debt finance partner Rachael Lichman.
Involved fees earner: William Eiland – Kirkland & Ellis; Jonathan Kidwell – Kirkland & Ellis; Rachael Lichman – Kirkland & Ellis; Emily Lichtenheld – Kirkland & Ellis; Cephas Sekhar – Kirkland & Ellis; Chad Smith – Kirkland & Ellis; Anthony Speier – Kirkland & Ellis; Joe Tobias – Kirkland & Ellis; David Wheat – Kirkland & Ellis; Sean Wheeler – Kirkland & Ellis; Debbie Yee – Kirkland & Ellis; Ziyad Barghouthy – Latham & Watkins; James Barrett – Latham & Watkins; Mary Casale – Latham & Watkins; Jim Cole – Latham & Watkins; Matthew Conway – Latham & Watkins; Robert Cunningham – Latham & Watkins; Michael Egge – Latham & Watkins; Robin Fredrickson – Latham & Watkins; John Greer – Latham & Watkins; Andrew Landolfi – Latham & Watkins; Jordan Bartley Mack – Latham & Watkins; Ryan Maierson – Latham & Watkins; Jeffrey Muñoz – Latham & Watkins; Catherine Ozdogan – Latham & Watkins; Michael Rowe – Latham & Watkins; Bryan Ryan – Latham & Watkins; Marianne Standley – Latham & Watkins; Laura Szarmach – Latham & Watkins; Thomas Verity – Latham & Watkins; Brent Wagner – Latham & Watkins; Victoria Wolfe – Latham & Watkins; Zek Zhang – Latham & Watkins;