Comprehensive M&A data with integrated detailed company information
Comstock boosts foothold in Haynesville with Covey Park
Posted on Tuesday, 11 June 2019 10:05
Comstock Resources has agreed to acquire Covey Park for USD 2.20 billion to become the leader in the Haynesville Basin.
The target is a private natural gas company that will take the buyer’s production in the aforementioned shale to 1.10 billion of cubic feet equivalent (bcfe) of net daily production and 2,000 drilling locations.
Comstock will assume Covey Park’s outstanding debt and the retirement of its existing preferred units, worth about USD 1.10 billion, as part of the transaction.
Under the terms of the deal, the acquiror will receive funding from its majority shareholder - Dallas Cowboys’ owner Jerry Jones - who will invest an additional USD 475.00 million in cash for newly-issued stock, bringing his total investment in the business to USD 1.10 billion, or a 75.0 per cent stake.
In addition, Comstock has appointed BMO Capital Markets to arrange an amended and restated USD 2.50 billion bank credit facility with an initial borrowing base of USD 1.58 billion and a maturity of five years from closing.
Covey Park’s shareholders will receive USD 700.00 million in cash, USD 210.00 million of a newly-issued convertible preferred stock and 28.83 million shares of common stock in the buyer at an agreed price of USD 6.00 apiece, representing a total USD 169.38 million.
The deal is expected to complete on or before 31st July 2019 and remains subject to regulatory approvals.
Combined, the two companies will have industry-leading earnings before interest, taxes, depreciation and amortisation margin of 76.0 per cent, with over 500 miles of gas gathering infrastructure and over 500 horizontal Haynesville shale wells.
According to Zephyr, the M&A database published by Bureau van Dijk, there have been 471 deals targeting the oil and gas extraction business announced worldwide in 2019 to date.
The largest of these involves Occidental Petroleum agreeing to acquire Anadarko Petroleum of the US for USD 57.00 billion.
Berkshire Hathaway is planning to invest USD 10.00 billion in Occidental if the Anadarko acquisition is successful in the second-biggest of these deals.
Devon Canada’s assets, ConocoPhillips UK oil and gas division and Arktik of Russia, among others, have also been targeted this year.
© Zephus Ltd