Under the terms of the agreement, each share of Callon common stock will be exchanged for a fixed ratio of 1.0425 shares of APA common stock.
The deal, which is inclusive of Callon’s net debt, is anticipated to enhance APA’s financial metrics and add to its inventory.
APA said the acquisition will provide it with additional scale across the Permian Basin, particularly in the Delaware Basin, where Callon holds nearly 120,000 acres.
Following the acquisition, APA’s combined oil-prone acreage in the Midland and Delaware Basins is expected to increase by more than 50%.
On a pro forma basis, the deal will boost APA’s total production to more than 500,000 barrels of oil equivalent per day and increase its enterprise value to more than $21bn.
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Upon completion, existing APA shareholders will own approximately 81% of the combined entity, while Callon shareholders will hold around 19%.
APA CEO and president John Christmann IV said: “This transaction is aligned with APA’s overall portfolio strategy and fits all the criteria of our disciplined approach to evaluating external growth opportunities.
“Callon has built a strong portfolio in the Permian Basin that is complementary to our existing Permian assets and rounds out our opportunity set in the Delaware.”
Callon president and CEO Joe Gatto said: “This combination with APA now provides for an enhanced value proposition for our shareholders built on their depth of experience and strong execution in the Permian Basin, flexibility for increased capital allocation, and ongoing delineation and optimisation efforts.”
The boards of directors of both companies have unanimously approved the transaction, which is slated to conclude in the second quarter of 2024, subject to customary closing conditions.
The deal marks further consolidation in the US oil and gas industry.