Civitas Resources to issue $2.7B of debt to fund Permian basin deal

Civitas has agreed to purchase a portion of Tap Rock’s Delaware Basin assets for $2.45 billion, which includes $1.5 billion in cash and approximately 13.5 million shares of Civitas common stock valued at approximately $950 million, subject to customary anti-dilution and purchase price adjustments. Tap Rock will retain its ownership of the Olympus development area. The assets include approximately 30,000 net acres, primarily located in Eddy and Lea counties, New Mexico, an area widely considered to be the core of the Delaware Basin. First quarter 2023 average production was approximately 59 MBoe/d, of which 52% was oil. The Company will have an inventory of approximately 350 high-quality locations in the Delaware Basin. Civitas has also agreed to purchase Hibernia’s Midland Basin assets for $2.25 billion in cash, subject to customary purchase price adjustments. The assets include approximately 38,000 net acres in Upton and Reagan counties, Texas – an active and well delineated area in the Midland Basin. First quarter 2023 average production was approximately 41 MBoe/d, of which 56% was oil. The Company will have an inventory of approximately 450 high-quality locations on a contiguous acreage position in the Midland Basin. Total consideration for the two transactions is approximately $4.7 billion. Civitas plans to fund the two transactions through the incurrence of approximately $2.7 billion of unsecured senior debt, approximately 13.5 million shares of Civitas common stock valued at $950 million, approximately $600 million in borrowings under the Company’s undrawn credit facility and approximately $400 million of cash-on-hand. Bank of America and JP Morgan are also providing Civitas with $3.5 billion of committed financing for the transaction.