Bonanza Creek to buy HighPoint Resources for $375M

DENVER — Denver-based Bonanza Creek Energy Inc. (NYSE: BCEI) is acquiring  fellow Denver oil and gas company HighPoint Resources Corp. (NYSE: HPR) in a deal valued at $376 million.

Both companies have substantial operations in the Denver-Julesburg Basin of Northern Colorado with a combined 50,000 barrels of oil equivalent per day, according to a joint filing with the Securities and Exchange Commission. 

The transaction value is based on the equity to be issued to HighPoint equity holders, the equity and debt to be issued to HighPoint debt holders and the remaining debt to be assumed. Bonanza Creek will issue 9.8 million shares of common stock and up to $100 million in senior unsecured notes in the transaction. The transaction has been unanimously approved by the board of directors of each company.

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The combination is expected to create the leading unconventional oil producer in rural Weld County and to increase free cash flow and economic resilience. “With its enhanced operating scale and significant increase in free cash flow, the company plans to pursue a business model focused on strong capital returns to its shareholders,” the combined company said in a press release.  

The transaction is expected to close in the first quarter of 2021 and no later than the second quarter of 2021, the companies said. 

Upon completion of the transaction, Bonanza Creek shareholders will own approximately 68% of the combined company, and HighPoint’s stakeholders will own approximately 32%.  Upon closing, Bonanza Creek’s balance sheet is expected to consist of approximately $50 million of cash, $100 million of senior unsecured notes, and approximately $150 million of reserve based lending debt.  

The new company’s board of directors will consist of seven members: five from Bonanza Creek and two selected by HighPoint’s supporting noteholders. Eric Greager will serve as CEO of the combined company, and Brian Steck will serve as chairman of the board. 

In 2019, Bonanza produced 7.8 million barrels of oil and 23 million MCF of natural gas. HighPoint produced 10 million barrels of oil and 31.6 million MCF of gas.

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