Centennial Resource Development (CDEV)

[dan_s]

This one will get a lot of attention from Wall Street.

Former EOG CEO Mark Papa completes acquisition of Delaware Basin pure-play Centennial Resources

Silver Run Acquisition Corporation announced today that it completed its acquisition of an 89% controlling interest in Centennial Resource Production, a pure-play Delaware Basin company with 42,500 net acres primarily in Reeves and Ward counties, Texas.

Silver Run bought Centennial from an affiliate of Riverstone Holdings LLC. In connection with the transaction, Silver Run has been renamed Centennial Resource Development, and its common stock and warrants will be traded under the symbols “CDEV” and “CDEVW”, respectively, beginning October 12, the company said in a press release.

The size of the company’s board of directors has been increased from four members to eight members, including Mark G. Papa, Maire A. Baldwin, Karl Bandtel, Pierre F. Lapeyre Jr., David M. Leuschen, Jeffrey H. Tepper, Robert M. Tichio and Tony R. Weber.

Silver Run is headed by former 14-year EOG Resources (ticker: EOG) CEO Mark Papa, who saw the share price of EOG increase 1,000% during his tenure there. Centennial’s existing senior management team led by present CEO Ward Polzin will provide transition services for a period of time while Papa looks to permanently fill management positions.

In connection with the closing of the transaction, Riverstone and certain Riverstone controlled investment funds purchased approximately $810 million of Silver Run Class A Common Stock at $10.00 per share, including $175 million from Riverstone Energy Limited. In addition, certain funds managed by Capital World Investors and certain funds managed by Fidelity Management and Research Company purchased an aggregate of $200 million of Silver Run Class A Common Stock at $10.00 per share.

The proceeds of both stock sales were used to fund a portion of the cash consideration for the transaction.

Following the closing, Riverstone and its affiliates are the single largest stockholder of Silver Run, with an approximate 51% ownership interest. NGP has retained an 11% interest in Centennial Resource Production, and has appointed Mr. Tony R. Weber as a director on Silver Run’s board of directors.

For more + maps read this: http://www.oilandgas360.com/silver-run- ... S_Campaign

[mrmuileh]

I think that CDEV is a very interesting way to place a bet on Mark Papa, if you think that what he built EOG is repeatable to some degree.

They seem to have big money behind them and it seems logical to expect other acquisitions in the Permian Basin or Scoop and Stack.

CDEV also has warrants (CDEVW) that can be exercised at $11.50. They can be exercised 12 months from the date of Silver Run's IPO and do not expire for 5 years. However, CDEV can redeem the warrants if CDEV trades at $18 or above for 20 days within a 30 day period, so it seems to me that this is the likely fate of the warrants and this would cap the value of the warrants at around $6.50/share.

[dan_s]

For those of you not familiar with warrants, they are like long dated call options. They give you the right, but not the obligation, of buying the common stock at a fixed price. The best part is that when warrant holders elect to buy the stock, the money goes into the company. Just make sure you understand the terms of the warrants before you buy them.