Silver Run Acquisition has signed an agreement to acquire a stake in US-based Centennial Resource Production.
An affiliate of Riverstone recently agreed to buy approximately 89% interest in Centennial from funds controlled by NGP Energy Capital Management.
In accordance with the agreement, Riverstone agreed to assign, and Silver Run agreed to assume its right to purchase the stake in Centennial.
In connection with this, Riverstone, certain of its controlled investment funds, will purchase an estimated $810m of Silver Run Class A Common Stock at $10 per share.
Certain funds that are also managed by Capital World Investors and by Fidelity Management and Research Company will purchase $200m of Silver Run Class A Common Stock at $10 per share.
The proceeds of these sales will be used to fund a portion of the Centennial acquisition.
Once the deal concludes, Riverstone and affiliates will have about 51% stake in Silver Run, while NGP is expected to retain a significant equity stake in Centennial.
Silver Run chairman and CEO Mark Papa said: "There has been a lot of recent excitement about the Delaware Basin, but we believe its potential is still significantly underappreciated.
“Centennial has an enviable position in the Delaware's southern oil-rich core. I want to commend Ward and his team for assembling such a top-notch set of assets and organisation."
The initial enterprise value of the combined company is expected to be approximately $1,735m.
The transaction is subject to approval of Silver Run stockholders and the satisfaction or waiver of other customary conditions, is expected to close in September this year.
