Dec 13, 2019, 09:32 EST
Salem, US, Dec 13, 2019, 09:32 /Comserve / -- Parsley Energy, Inc., an independent oil and natural gas company, announced a definitive merger agreement with Jagged Peak Energy Inc. under which the latter would be acquired by Parsley for an approximate value of USD 2.27 billion in an all-stock transaction.
Parsley Energy, Inc., an independent oil and natural gas company, announced a definitive merger agreement with Jagged Peak Energy Inc. under which the latter would be acquired by Parsley for an approximate value of USD 2.27 billion in an all-stock transaction. Jagged Peak energy is also an independent oil and natural gas company based in West Texas with more than 2,000 drilling locations across several adjacent locations including Winkler, Ward, Pecos and Reeves.
As per the agreement, the shareholders of Jagged Peak will shares of Parsley Class A common stock for each share of Jagged Peak common stock at a fixed exchange ratio of 0.447, indicating a price of USD 7.59 per share of Jagged Peak according to closing price of Parsley on October 11, 2019 along with a premium of 1.5%. Parsley will receive approximately 267,000 net acres land in the Permian which would consist of around 147,000 net acres in the Midland Basin along with 120,000 net acres in the Delaware Basin. Further, this acquisition is expected to generate cash general and administrative savings of USD 25 million for the company in the first year and USD 40-50 million in subsequent years. This would increase the corporate free cash flow while aiding in margin expansion.
The current average cost of drilling, completion and equipment in the Delaware Basin for Parsley is estimated to be USD 1,100-1,150 per lateral foot. However, the transaction could result in cost saving of at least USD 100 per lateral foot in the Delaware Basin across Jagged Peak Energy’s leftover inventory. Further, this combination would increase the operational efficiencies due to the close proximity of Jagged Peak’s property.
The acquisition is estimated to be finalized in the first quarter of 2020 and the transaction is expected to be tax-free for all the shareholders of Jagged Peak Energy. Moreover, the Parsley shareholders would own around 77% share in the combined company while Jagged Peak Energy shareholders would own approximately 23% of the company.
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Parsley Energy, Inc., an independent oil and natural gas company, announced a definitive merger agre