Bonanza Creek, Extraction Oil & Gas To Combine In All-Stock Merger Of Equals

Mergers and Acquisitions

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Bonanza Creek Energy (BCEI) and Extraction Oil & Gas (XOG) announced that they have entered into a definitive agreement to combine in an all-stock merger of equals.

The combined company, to be named Civitas Resources, will be the largest pure-play energy producer in Colorado's Denver-Julesburg Basin, with an aggregate enterprise value of approximately $2.6B, the companies said in a statement. The combined company will operate across approximately 425,000 net acres, with a production base of 117 thousand barrels of oil equivalent per day. The transaction is expected to be significantly accretive to free cash flow and other per-share metrics. Civitas expects to achieve annual expense and capital savings of approximately $25M. Bonanza Creek's recently announced annual dividend of $1.40 per share is expected to be increased by Civitas to $1.60 per share effective at closing, with such increase representing a distribution of approximately half of the transaction synergies to Civitas' shareholder base. Bonanza Creek President and CEO, Eric Greager, will serve as President and CEO of Civitas. Other senior leadership positions will be filled by current executives of Bonanza Creek and Extraction.

Extraction Chairman of the Board, Ben Dell, will serve as Chairman of Civitas, and each of Bonanza Creek and Extraction will nominate four directors to Civitas' diverse, eight-member Board. Under the terms of the definitive merger agreement, Extraction shareholders will receive a fixed exchange ratio of 1.1711 shares of Bonanza Creek common shares for each share of Extraction common stock owned on the closing date. Based on the exchange ratio and the closing price of Bonanza Creek's common stock on May 7, 2021, Civitas would have an aggregate enterprise value of approximately $2.6B. Upon completion of the transaction, Bonanza Creek and Extraction shareholders will each own approximately 50.0% of Civitas, both on a fully diluted basis. The transaction, which is expected to close in the third quarter of 2021, has been unanimously approved by the boards of directors of both companies. Funds managed by Kimmeridge Energy own approximately 38% percent of the outstanding shares of Extraction and have entered into a support agreement to vote in favor of the transaction.

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