East Daley Analytics – Dissecting the Energy Value Chain
Energy Insights and News

Spurning Kimmeridge, SilverBow to Merge with Crescent in $2.1B Deal

Comments: 0

SilverBow Resources (SBOW) has reached a deal to be acquired by Crescent Energy (CRGY), creating a leading  producer in South Texas. The agreement with CRGY, valued at $2.1B, comes after SBOW spurned an earlier offer by investor Kimmeridge Texas Gas (KTG).

SBOW and CRGY announced the merger agreement last Thursday (May 16). Under the deal, SBOW shareholders have the option to receive 3.125 shares of CRGY common stock, or cash valuing SBOW at $38/share. The maximum value of the cash component is $400MM under the cash-elect merger structure.


In March, KTG proposed to create a CombineCo stock with SilverBow valued at $34/share. KTG estimated the  combination to be worth $2.1B under the “double dummy” merger structure. SBOW’s board rejected that offer, saying it could not independently verify KTG’s valuation of its assets and that it “substantially undervalues” SBOW.

East Daley noted the stakes were high in South Texas in the Kimmeridge–SilverBow battle. KTG is an investor in Commonwealth LNG and has signed a multi-year transportation agreement with Kinder Morgan Texas Pipeline (KMTP) in support of that project. Moreover, multiple G&P systems provide services for the producers in South Texas.

Clients can analyze the midstream exposure of the proposals for SBOW using the ‘Producer to System Analysis’ dashboard in Energy Data Studio. Midstream companies serving CRGY and SBOW in the Eagle Ford include Western Midstream (WES), Enterprise Products (EPD), Energy Transfer (ET) and KMI (see figure from EDS).EF Production

KTG’s offer for SBOW would create an Eagle Ford pure-play with 2025E production of 180 Mboe/d. By contrast, the SBOW-CRGY entity would be more diversified, with drilling locations in the Rockies and Eagle Ford and estimated 2024 production of 250 Mboe/d.

The KTG-SBOW combo targets a 70% gas, 30% liquids production ratio for 2025, while the CRGY-SBOW entity would produce 60% gas, 40% liquids in 2024. The estimated profile for the CRGY-SBOW transaction represents only a slight departure from the 54% gas, 46% liquids ratio that SBOW provided in its standalone 2024 guidance.

In addition to the different merger structures, strategy appears to be a factor favoring the deal with Crescent. KTG had sought a deal with SBOW to control more Eagle Ford acreage and feed downstream investments like Commonwealth LNG. CRGY is acquiring SBOW to add drilling locations to a growing business portfolio with more flexibility to target either gas or liquids, depending on the price.

The CRGY-SBOW agreement would create one of the leading producers in the Eagle Ford with average 2023 production of ~604 MMcf/d and future growth opportunities (see figure). SBOW and CRGY expect to close the merger by the end of 3Q24. – Zach Krause Tickers: CRGY, EPD, ET, KMI, SBOW, WES.


East Daley is Attending EIC Investor Conference

East Daley is heading to the Energy Infrastructure Council Investor conference in Aventura, Florida on May 21 – 23! Come see Rob Wilson, VP of Analytics, speak on May 23. Want to connect while we are at EIC? Request a meeting.


Available Now: Ethane Supply & Demand Report + Data Set

The new Ethane Supply & Demand Report + Data Set is a comprehensive data file and report providing valuable insights into historical and forecasted supply and demand components for ethane. The report covers crucial metrics such as ethane supply from US gas processing plants, and demand from domestic ethylene steam crackers and ethane exports. Learn more about the Ethane Supply & Demand Report and Data Set.


Access the NEW G&P System Financial Dashboard

We are thrilled to introduce a groundbreaking addition to East Daley's suite of energy management tools: the G&P System Financial dashboard. This dynamic tool will revolutionize how you scope and analyze multiple financial metrics and throughput forecasts for individual G&P systems across the US. Clients can log in to Energy Data Studio to review the G&P System Financial dashboard prototype. Learn more here.


Energy Data Studio

East Daley Analytics has launched Energy Data Studio, a platform for our industry-leading midstream data and commodity production forecasts. All clients have access to the new client portal. If you have not yet logged in, please fill out the form to request a registration email be resent.

Energy Data Studio leverages our G&P data set for insights into midstream assets across every major oil and gas basin in North America. Users can navigate detailed visual dashboards by region, pipeline, or individual asset to understand crude oil, natural gas and NGL supply at the most granular level.

Energy Data Studio is available through data downloads from the visual interface, in Excel files, or as a direct feed delivered into subscribers’ workflow via secure file transfer. To learn more about Energy Data Studio, please contact insight@eastdaley.com.


The Daley Note

Subscribe to The Daley Note (TDN) for midstream insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.

About the AuthorEast Daley Analytics