Callon Petroleum To Buy Primexx In About $788 Mln Cash, Stock Deal

(RTTNews) - Callon Petroleum Co. (CPE) announced Wednesday an agreement to acquire the leasehold interests and related oil, gas, and infrastructure assets of Primexx Energy Partners and its affiliates. The cash and stock transaction is valued at around $788 million.

The acquisition consideration includes $440 million in cash and 9.19 million shares of CPE stock issued to the seller, subject to closing adjustments.

The transaction is expected to close early in the fourth quarter of 2021, subject to customary closing conditions and regulatory approvals.

The purchase price represents a headline purchase price multiple of approximately $43,800 per oil equivalent per day or Boe/d, based on second quarter production.

Primexx is a private oil and gas operator in the Delaware Basin with a contiguous footprint of 35,000 net acres in Reeves County. It recorded second-quarter 2021 net production of around 18,000 Boe/d.

Further, Kimmeridge, an investor in both the public and private oil and gas space, has agreed to convert their remaining portion of the Callon second lien senior notes that were issued in 2020 into common shares after the close of the Primexx transaction. This equitization further advances the Company's deleveraging timetable and saves nearly $20 million per year in interest costs.

The company entered into an agreement with Chambers Investments, LLC, a private investment vehicle managed by Kimmeridge Energy, to exchange $197.0 million of its outstanding Second Lien Notes for a notional amount of approximately $223.1 million of Company common stock.

The acquisition of Primexx, combined with the impact of the Kimmeridge exchange, is forecast to be accretive across all key financial metrics. It will enable the Company to leverage its existing operating model and knowledge base in the southern Delaware Basin.