Kimmeridge Energy Management proposed on Wednesday a new offer for South Texas oil and gas producer SilverBow Resources as the energy asset manager continues to pursue a deal with SilverBow that could become another in a long list of U.S. oil and gas mergers in recent months.
Kimmeridge proposed to combine Kimmeridge Texas Gas (KTG) and SilverBow in a deal that values SilverBow Resources at around $2.1 billion including debt.
The KTG assets have an equity value of $1.1 billion and an expected enterprise value of $1.4 billion at closing of the proposed transaction, Kimmeridge said in a statement today.
Kimmeridge would contribute the KTG assets to SilverBow in exchange for 32.4 million shares priced at $34 per share. In addition, Kimmeridge plans to inject $500 million of fresh equity capital at the same price of $34 per share, in exchange for 14.7 million shares.
SilverBow said earlier this month it hadn’t accepted previous offers from Kimmeridge because the energy asset manager could not secure the necessary financing.
Kimmeridge and SilverBow Resources have been in extensive talks about a possible deal since August 2022, SilverBow said, confirming it had received today’s offer.
In today’s proposal, Kimmeridge said that it “has sufficient capital to fully finance the equity investment of $500 million and intends to use those funds to pay down SBOW’s existing long-term debt obligations.”
After receiving the latest proposal, SilverBow’s Board of Directors will review it to determine the course of action that it believes is in the best interest of the company and all of its shareholders, the producer said.
Houston-based SilverBow Resources is an independent exploration and production company with assets in the Eagle Ford Shale and Austin Chalk in South Texas.
A SilverBow-Kimmeridge merger would be yet another deal in the U.S. oil and gas industry, which has seen hundreds of billions of U.S. dollars worth of M&A activity in recent months.
By Charles Kennedy for Oilprice.com
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