Alabama’s Energen acquired by Diamondback Energy in $9.2B deal
Diamondback Energy Inc. will will acquire Birmingham-based Energen Corp. in a roughly $8.4 billion all-stock transaction, including Energen’s net debt of $830 million as of June 30. The companies announced the transaction in a statement Tuesday. Energen Chairman and CEO James McManus said he believes “the combination of the two companies’ quality assets, track record of execution, and peer-leading cost structures will form an even stronger, large-cap independent producer uniquely positioned to drive growth and development in the Permian Basin.” “This transaction is the outcome of a comprehensive strategic review by Energen’s Board with the assistance of our outside advisors,” he explained further. Energen shareholders will receive 0.6442 shares of Diamondback common stock in exchange for each share of Energen common stock, representing an implied value to each Energen shareholder of $84.95 per share based on the closing price of Diamondback common stock on August 13. “We look forward to welcoming Energen’s employees as members of the Diamondback team, and applaud them for the hard work and dedication they have put forth to create this opportunity for the two teams to become one,” said Travis Stice, Chief Executive Officer of Diamondback. “The synergies provided in this transaction, as well as the opportunities for capital improvements provided by increased size and scale, create a truly outstanding value proposition. The combined company’s expected production growth, capital productivity and cost structure will enhance our free cash flow profile to grow our long-term capital return program.”
Billionaire investor Carl Icahn may bid to buy Birmingham’s Energen
There’s buzz around the Magic City that billionaire investor Carl Icahn is considering a bid to buy Birmingham-based oil and gas producer Energen Corp. Outlets across the country have begun to speculate as well. “Activist investor Keith Meister on Monday reunited with billionaire investor Carl Icahn and said in a regulatory filing that they may try to buy oil and gas producer Energen Corp,” wrote Svea Herbst-Bayliss for Reuters. “The announcement comes roughly two months after the Birmingham, Alabama-based company settled a long-simmering fight with Meister’s New York-based hedge fund Corvex Management by agreeing to review its businesses and adding two members to the board.” The Reuters’ piece continued, “Now Meister and Icahn have laid out a path where they might step into the strategic review process and prepare to take over the company themselves.” Cara Lombardo and Allison Prang at the Wall Street Journal back up the considerations. “Activist investors Corvex Management LP and Carl Icahn say they are potentially interested in buying oil-and-gas company Energen Corp.EGN 6.46% , according to a securities filing,” the duo wrote. Why Energen? Energen operates exclusively in the Permian Basin of west Texas and New Mexico and is focused on return-driven growth from the drilling and development of multiple horizontal shale formations in the Delaware and Midland basins using its Generation 3 frac design. As of July 1, 2017, the company has identified 4,116 net engineered, unrisked, potential drilling locations in the Delaware and Midland basins with an estimated 2.5 billion barrels of oil-equivalent, net, undeveloped resource potential. And the company is doing well for itself in 2018. Energen’s net income more than tripled to $118.9 million, or $1.22 per share in the first quarter of the year, from $33.4 million, or 34 cents per share, just a year ago. “In the first quarter of 2018, Energen built on the strong execution, growth, and financial strength it demonstrated in 2017,” said James McManus, Energen’s chairman and chief executive officer. “In short, we are extremely pleased with our performance in the quarter and confident that Energen is well-positioned to continue delivering strong results and creating shareholder value.”
