Permian Resources Corp. (PR) and Earthstone Energy, Inc. (ESTE) said on Monday that they have inked a deal allowing Permian to buy Earthstone, for around $4.5 billion in an all-stock transaction. The transaction includes Earthstone's net debt.
Following the news, ESTE was trading up by 8.32 percent at $17.58 per share in the pre-market trade on New York Stock Exchange.
The transaction, expected to be closed by year-end 2023, will consist of 1.446 shares of Permian for each share of Earthstone, representing an implied value to each Earthstone stockholder of $18.64 per share. This is based on the per share closing price of Permian on August 18.
Permian will issue around 211 million shares in the transaction.
Post transaction, Permian shareholders will own approximately 73 percent of the combined company, whereas the Earthstone shareholders will own around 27 percent. The acquisition will strengthen Permian's position as a leading Delaware Basin independent E&P with over 400,000 Permian net acres, pro forma production of around 300,000 Boe/d.
James Walter, Co-CEO of Permian Resources, said: "…We expect the transaction to be accretive across all key financial metrics before synergies and significantly accretive including synergies, both over the short and long-term."
Citing the accretive nature of this transaction, Permian said that it intends to raise its quarterly base dividend by 20 percent to $0.06 per share starting with its first quarter 2024 dividend.
In conjunction with the deal, Permian has secured a $500 million incremental commitment under its credit facility from Wells Fargo Bank, which will increase aggregate lender commitments thereunder to $2 billion.
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