Denver-based Civitas Resources said Wednesday that it is acquiring $2.15 billion in Midland Basin producing assets from Vencer Energy, a subsidiary of Vitol. Civitas said by increasing its presence in the Permian, the company aims to balance its portfolio of production properties with those it holds in the Denver-Julesburg basin.
The $2.1 billion includes $1.55 billion in cash, along with 7.3 million shares of Civitas stock. The 44,000 acres of assets involved, all in Texas, are located in Glasscock, Martin, Midland, Reagan and Upton counties.
Financial advice on the deal was led by BofA Securities, serving as lead financial advisor, but included J.P. Morgan Securities and RBC Capital Markets.
On the legal side, Kirkland & Ellis is advising Civitas and Latham & Watkins is counseling Vencer.
The Kirkland team was led by corporate partners Thomas Laughlin, Lindsey Jaquillard and associate Matt Gibson; debt finance partners Will Bos and Shan Khan; capital markets partners Julian Seiguer, Bryan Flannery and Ieuan List; and tax partners Mark Dundon and Ryan Phelps.
The Latham team is led by Houston partners James Garrett, Michael King and John Greer, backed by associates Cesar Leyva, Daniel Harrist, Monika Kluziak, John Daywalt, Jordan Armstrong, Kevin Donovan and Chris Fanick. From Washington, D.C., labor and employment advice was provided by partner Adam Kestenbaum and from Houston by counsel Kris Benskin. Houston partner Jim Cole provided tax advice with associate Dominick Constantino, while partner Jason Cruise provided insights on antitrust issues. Houston partner Catherine Ozdogan counseled on finance.
Civitas was formed in May 2021 from the merger of two Denver-based energy companies, Bonanza Creek Energy and Extraction Oil & Gas. By June 2021, the company — which claims a net-zero emissions development strategy — had acquired Crestone Peak Resources for $1.06 billion, followed in February 2022 by the acquisition of Bison Oil & Gas for $346 million and just this year the acquisition of Midland Basin operator Hibernia Energy III for $2.25 billion.
Geneva-based Vitol, which claims to be the largest independent energy company in the world, has been active in a variety of North American basins. In February 2022, the company partnered with the management of VTX Energy to form VTX Energy Partners specifically to pursue, develop and operate energy assets in the U.S. Lower 48.
In June 2023 they partnered with Riverstone to form Valor Upstream Credit Partners, an investment platformed aimed at energy transition. And in July 2022 Vitol signed an agreement with Delfin Midstream for a 15-year supply of natural gas from their deepwater port off the coast of Louisiana.
Chris Doyle, president and CEO of Civitas, described the Vitol acquisition as “a unique opportunity to capture high-quality assets at an attractive price.”
A Civitas release said the $2.15 billion price tag is 2.8x the 2024 Adjusted EBITDAX with approximately 80 percent of the purchase underwritten by the value of proved developed and proved developed non-producing reserves. Doyle expects Civitas to generate $1.8 billion of free cash flow in 2024, assuming oil is fetching $80 per barrel and natural gas $3.50 per MM/Btu.Tulane Law School grad Travis Counts, chief legal officer for Civitas, is a Bracewell alumnus who as compiled resume entries at such familiar energy stops as Concho Resources, Halcon and PetroHawk.