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Centennial Buys Delaware Basin E&P Silverback

Announced Date
November 28,2016
Deal Value $
855,000,000
Net Acres
35,195
Location Count
600
Transaction Type
Property
Buyer
Seller
Price Per BOE $
35,000
Source Documents:
   Source Link
   Source Link
Location
Region
Permian - Delaware Basin

Country
United States

State
Texas

County
Reeves

Play


Production
Production
3,500 Boe/d


Multiples
Production ($/boe/d)
244,286

$Price/Net Acre
24,293

$Price/Adj. Net Acre
20,813

$/Location
1,220,833

Adj. $/acre is based on production @35,000 Boe/d

Transaction Details: 

Riverstone-backed Centennial Resource Development has agreed to acquire 100% of the leasehold interests and related upstream assets in Reeves County from private equity backed Silverback Exploration, LLC a Encap Investment portfolio company.

On November 21, 2016, an affiliate of Riverstone Holdings LLC entered into a purchase agreement with Silverback to acquire 100% of its leasehold interests and related upstream assets in Reeves County for an aggregate purchase price of $855 million in cash.

Acreage Map:

The acquisition is expected to close on December 30, 2016.

Acquisition Highlights:

  • ~35,000 net acres directly offsetting existing Centennial acreage in Reeves County (95% operated, ~88% average working interest)
  • Approximately 3,500 Boe/d of current net production
  • At least 600 horizontal drilling locations assuming 880’ spacing prospective for the Upper Wolfcamp A (~210 locations), Lower Wolfcamp A (~180 locations) and Wolfcamp B (~220 locations)
  • Estimated undeveloped resource potential of over 600 MMBoe from the Wolfcamp A and Wolfcamp B formations with additional upside potential from the Wolfcamp C, Avalon and Bone Spring formations
  • Contiguous position supports extended lateral development (acquisition increases operated extended lateral locations by 136%)

Mark Papa, Chief Executive Officer of Centennial commented, "We are very excited to announce our agreement to acquire the Silverback assets. While we did not expect to make such a significant acquisition so quickly, we could not pass up the opportunity to accretively add core acreage offsetting our existing Centennial assets at such a compelling price. Pro forma for the transaction, Centennial will be one of the largest operators in the Delaware Basin, with over 77,000 contiguous net acres. This transaction increases our horizontal drilling inventory by 44% and more than doubles our inventory of extended length laterals, which we believe provides the most capital efficient development. Furthermore, this transaction allows us to increase our 2020 oil production goal from 30,000 Bo/d to 50,000 Bo/d, all the while maintaining one of the lowest debt levels in the industry. Finally, we appreciate the continued support of our institutional shareholders, including Riverstone, and look forward to developing this high-quality asset base.”

Transaction Financing

In connection with the acquisition, Riverstone and affiliated funds have committed to invest up to $500 million in a combination of CDEV common and convertible preferred shares at the common equivalent of $14.54 per share, subject to adjustment. The preferred shares will be convertible into common shares upon the approval of the Company's stockholders of such conversion at a special meeting. Holders of the preferred shares will not be entitled to a preferred dividend, but will be entitled to participate in dividends payable on the common stock. The preferred shares will also have a liquidation preference of $0.0001 per share and holders will be entitled to participate with common stockholders in distributions upon liquidation. The Company intends to finance the remainder of the purchase price through equity and/or debt financings. Receipt of the funds necessary to effect the acquisition pursuant to financing arrangements satisfactory to CDEV is a condition to its obligation to effect the assignment.

Advisors

Weil, Gotshal & Manges LLP acted as legal counsel to Centennial. Latham & Watkins LLP acted as legal counsel to Riverstone. Tudor, Pickering, Holt & Co. acted as financial advisor to Silverback in connection with the transaction. Kelly Hart & Hallman LLP acted as legal advisor to Silverback.

About Silverback Exploration LLC

Silverback Exploration is a San Antonio-based, independent oil and gas company focused on the pursuit of leasing and drilling opportunities in domestic resource plays, both conventional and unconventional.

Silverback’s operations are currently focused in the Permian Basin region of West Texas. The company operates more than 30 wells on 34,000 acres in Reeves County, producing oil, natural gas and natural gas liquids from multiple stacked pay zones including the Upper and Middle Wolfcamp, Bone Spring and Avalon Shale formations.

Executive Team:

  • George M. Young, Jr. - CEO
  • Ted Collins, Jr. - Executive Advisor and Chairman of the Board
  • Stephen Lipari - Chief Operating Officer
  • Chris Williford - CFO
  • Davie Frye - VP of Business Development and VP of Land
  • Jon Conaway - VP of Exploration

Contact:

1826 North Loop 1604 West, Suite 250
San Antonio, TX 78248
Phone: 210-585-3316 

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Price History



Date Deal Headline Price$/acre
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Nov-03-2021 - - Click here Texas  E&P
Nov-05-2018 - - Click here New Mexico  E&P