KKR brings two US shale companies together
US shale oil and gas producer Contango said it would merge in an all-stock deal with Independence Energy to form a new producer with assets spread out across premier US shale basins.
Independence is backed by US investment firm KKR. Its asset base is spread out over the Eagle Ford and Permian basins in the US south and includes holdings in the Rockies region. Contango, which has struggled during the pandemic, is focused primarily in the Permian, the Rocky Mountains region and Oklahoma.
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The combined company, which will have its headquarters in Houston, could yield an Ebidta in the range of $750mn to $800mn and free cash flow of as much as $400mn by next year, conditional on regulatory approval.
For 2022, the companies said they expected to realise a production volume of between 108,000 and 114,000 barrels of oil equivalent per day.
Shareholders in Independence will have a controlling stake in the new as-yet un-named company and KKR will designate the board of directors.
David Rockecharlie, the head of KKR’s Energy Real Assets team, will serve initially as the CEO, while Contango chairman John Goff assumes the role of board chair.