Riverstone Energy buys controlling stake in Silver Run

Riverstone Energy has announced that Silver Run Acquisition Corporation will buy a controlling stake in Centennial Resource Production, LLC. As part of the deal, Riverstone will end up with a controlling stake in Silver Run. Centennial Resource Production is an independent oil and natural gas company located in the core of the Southern Delaware Basin. On July 6, 2016, an affiliate of Riverstone Holdings LLC entered into a definitive agreement to purchase an approximate 89% interest in Centennial from funds controlled by, and affiliates of, NGP Energy Capital Management. In accordance with the definitive agreement, Riverstone has agreed to assign, and Silver Run has agreed to assume, its right to purchase the interest in Centennial to Silver Run and will participate in the transaction as an equity holder directly in Silver Run. In connection with the assignment of Riverstone’s rights under the definitive agreement and the acquisition of the Centennial interest by Silver Run, Riverstone and certain Riverstone controlled investment funds will purchase an estimated $810 million of Silver Run Class A Common Stock at $10.00 per share, including up to $175 million from Riverstone Energy Limited. In addition, certain funds managed by Capital World Investors and certain funds managed by Fidelity Management and Research Company will purchase $200 million of Silver Run Class A Common Stock at $10.00 per share. The proceeds of both stock sales will be used to fund a portion of the cash consideration required to effect the Centennial acquisition.

Following the closing of the Centennial acquisition and related transactions, Riverstone and such affiliates will be the single largest stockholder of Silver Run, with an approximate 51% ownership interest. NGP is expected to retain a significant equity stake in Centennial, approximating 11% of the outstanding interests, and will have a representative on the Silver Run Board of Directors.

Mark Papa, Chairman and Chief Executive Officer of Silver Run, will lead Centennial following the consummation of the transaction. Centennial’s existing senior management team led by Chief Executive Officer Ward Polzin, will provide transition services for a period of time as Mr. Papa looks to permanently fill key management positions. Mr. Papa  commented, “Since our IPO, we have been searching to acquire a meaningful position in one of North America’s premier oil shale basins. There has been a lot of recent excitement about the Delaware Basin, but we believe its potential is still significantly underappreciated. Centennial has an enviable position in the Delaware’s southern oil-rich core. I want to commend Ward and his team for assembling such a top-notch set of assets and organization. I look forward to replicating the culture and philosophy that made EOG Resources such a success during my time there and using the Centennial assets as a platform to build something truly special.” The anticipated initial enterprise value of the combined company is approximately $1,735 million, implying a multiple of 12.6x and 6.6x projected calendar 2017 and 2018 adjusted EBITDA, respectively, and post-closing equity value of $1,835 million at $10.00 per share. Silver Run expects to be debt-free at the closing of the transaction and have $100 million of cash-on-hand and an undrawn revolving credit facility to fund future drilling and acquisitions. At consummation of the transaction, Silver Run is expected to be renamed Centennial Resource Development Corp. and trade on the NASDAQ stock exchange under the ticker symbol “CDEV”. RSE : Riverstone Energy buys controlling stake in Silver Run