Bonanza Creek Energy Inc., BCEI through its previously-announced all-stock deal of equals with Extraction Oil & Gas Inc. XOG, is expected to form the largest pure-play oil and gas company — Civitas Resources Inc. — in the Denver-Julesburg (“DJ”) basin of Colorado.

Civitas, which will form one of the most durable and advanced producers in the DJ basin, significantly enhanced its consolidation strategy in the DJ basin by entering a definite agreement to obtain Crestone Peak Resources, a leading energy producer in the region.

Notably, the merged entity will acquire Crestone to form a Colorado-based oil and gas producer with an enterprise value of $4.5 billion. The acquisition of Crestone, which is also active in Colorado, is expected to improve the combined company’s footprint, in-basin diversification, balance sheet and liquidity position.

Per the terms of the transaction, Crestone shareholders will receive 22.5 million shares of Bonanza Creek common stock in exchange for 100% of their equity interests. Once the deal closes, Crestone shareholders will own about 26% of Civitas, while Bonanza Creek and Extraction shareholders will each own about 37% of the merged company.

Civitas will be well-positioned to increase efficiencies by combining operations across more than half a million net acres, with an estimated production of 160,000 barrels of oil equivalent per day. Importantly, the company aims to become the first carbon-neutral oil and gas producer of Colorado after the deal closes.

Notably, the transaction is expected to close immediately, following the completion of Bonanza Creek’s all-stock merger deal with Extraction by the third quarter of 2021. The deal has been approved by the boards of directors of Bonanza Creek, Extraction and Crestone. It has also been fully approved by Crestone shareholders.

Company Profile & Price Performance

Headquartered in Denver, Bonanza is an independent energy company engaged in the acquisition, exploration and development of onshore oil and natural gas properties in the United States.

Shares of the company have outperformed the industry in the past six months. It stock has gained 94.6% compared with the industry’s 69.1% growth.

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Zacks Rank & Stocks to Consider

The company currently has a Zack Rank #3 (Hold).

Some better-ranked players in the energy space are Callon Petroleum Company CPE and Sasol Ltd. SSL, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Callon’s earnings for 2021 are expected to rise 43.5% year over year.

Sasol’s earnings for 2021 are expected to increase 81.5% year over year.

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Sasol Ltd. (SSL) : Free Stock Analysis Report
 
Callon Petroleum Company (CPE) : Free Stock Analysis Report
 
Bonanza Creek Energy, Inc. (BCEI) : Free Stock Analysis Report
 
Extraction Oil & Gas, Inc. (XOG) : Free Stock Analysis Report
 
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