Crescent Energy Co (NYSE:CRGY) inked an agreement to acquire SilverBow Resources Inc (NYSE:SBOW) for $2.1 billion.
While the company has been growing mainly through acquisitions, the purchase of SilverBow Resources "is the most impactful to date," according to KeyBanc Capital Markets.
The Crescent Energy Analyst: Tim Rezvan initiated coverage of Crescent Energy with an Overweight rating and price target of $16.
The Crescent Energy Thesis: The acquisition of SilverBow Resources will add to Crescent Energy's scale and production in the Eagle Ford, Rezvan said in the initiation note.
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The purchase offers "clear synergies that can be attained, both financially (lower cost of capital, lower G&A/boe) and operationally (more simul-frac opportunities, best practices in the field and hydrocarbon optionality in the Eagle Ford)," the analyst wrote.
The 2025 estimates for Crescent Energy's free cash flow yield ranks "among the very best of any E&P company under coverage," Rezvan stated.
"The increased size of the Company, in addition to more high-quality inventory, warrants multiple expansion," he added.
CRGY Price Action: Shares of Crescent Energy had risen by 0.69% to $11.71 at the time of publication on Thursday.
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