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Mega-Merger Creates A $5.7 Billion U.S. Shale Giant

In the latest merger in the U.S. oil and gas industry, Independence Energy and Contango Oil & Gas Company announced Tuesday an all-stock deal to combine operations in a new business with an enterprise value of around $5.7 billion. 

Independence Energy was built and managed by KKR’s Energy Real Assets team with assets across the Eagle Ford, Rockies, Permian, and Mid-Continent. 

Fort Worth, Texas-based Contango Oil & Gas has producing assets in most of Independence Energy’s focus areas—in the Mid-Continent, Permian, and Rockies areas. 

The all-stock transaction will create a premier, diversified, and low leverage U.S. independent oil and gas company focused on consolidation, the companies said. 

The terms of the deal say that Independence will merge with an operating subsidiary of a new parent company, which will become a publicly traded entity at closing. Contango will become a wholly-owned subsidiary of the operating subsidiary. The combined company will be headquartered in Houston and expects to operate under a new name and under a new ticker symbol. 

The deal is expected to close later this year, subject to the approval of Contango shareholders, certain regulatory approvals, and satisfaction of other customary closing conditions.

The combined business will be managed by KKR’s Energy Real Assets team and led by David Rockecharlie, Head of KKR Energy Real Assets, who will serve as Chief Executive Officer.

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The deal “positions the combined company to be a leading consolidator in the U.S. oil and gas industry through increased scale, improved access to capital, low leverage, and a successful, proven management team,” the company said. 

“We see tremendous opportunity ahead to create long-term value in the energy sector,” Rockecharlie said. 

The deal announced today is the latest in the U.S. oil and gas sector, which, analysts say, could go through another wave of mergers and acquisitions. 

Two weeks ago, Cabot Oil & Gas Corporation and Cimarex Energy announced an all-stock merger of equals that would result in a company with a total enterprise value of around $17 billion. 

By Tsvetana Paraskova for Oilprice.com

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