Callon Petroleum, a Permian Basin-focused company has lowered its offer to acquire rival Texas-based energy company Carrizo Oil & Gas in an all-stock deal.
Under the amended merger agreement, Carrizo shareholders are now offered 1.75 CPE shares for each share held, down from the earlier offer of 2.05 CPE shares.
As per the amended exchange ratio, Callon’s shareholders will hold a nearly 58% stake in the combined company, while Carrizo’s shareholders will hold the remaining stake of around 42%.
The merger is expected to create a major oil and gas company with development operations across a portfolio of oil-weighted assets located in the Permian Basin and Eagle Ford Shale.
Callon president and CEO Joe Gatto said: “Since announcing the transaction, we have had extensive and valued dialogue with our shareholders, who have expressed support for the industrial logic and strategic merits of this transaction.
“In recognition of evolving investor expectations for a successful combination in the current environment, we have agreed to revised terms with Carrizo that enable value-creation opportunities for both shareholder bases.”
Based on the closing prices on the July 12 pre-announcement date, the amended exchange ratio represents a premium of 6.7% to Carrizo shareholders.
Callon’s acquisition of Carrizo Oil & Gas faced shareholder opposition
The previous merger bid was opposed by the former’s shareholder Paulson & Co.
Paulson, which is a New York-based investment management firm, held a stake of 9.5% in the Permian Basin-focused company.
Following the acquisition, Callon is expected to have a footprint of nearly 200,000 net acres in the Permian Basin and Eagle Ford Shale, which includes more than 90,000 net acres in the Delaware Basin, and around 2,500 total gross horizontal drilling locations.
Carrizo president and CEO S.P. “Chip” Johnson, IV said: “We believe that a combination with Callon creates the most value for our shareholders.
“Under the revised terms of the merger, Carrizo shareholders will have meaningful participation in the upside of a strong company that reflects current investor priorities, and benefits from the enhanced operational efficiencies needed to be a low-cost producer in today’s dynamic pricing environment.”
