Comstock Resources (CRK) Update - June 10
Posted: Mon Jun 10, 2019 9:41 am
By Dallas Business Journal on June 10, 2019
Comstock Resources Inc. (NYSE: CRK) has entered into an agreement to acquire Covey Park Energy in a cash and stock transaction valued at about $2.2 billion, according to a news release issued Monday.
The move grows Comstock's position in the Haynesville shale and is expected to help the Frisco oil company get closer to its goal of sustainable free cash flow generation and reduced leverage, in addition to pushing operating efficiencies and having a combined drilling program.
The deal includes the assumption of Dallas-based Covey Park's outstanding debt and the retirement of its existing preferred units, which total about $1.1 billion in the aggregate.
Comstock CEO M. Jay Allison will lead the company following the transaction, through the management team is expected to include representation form both Comstock and Covey Park.
Dallas Cowboys owner Jerry Jones became the majority stake of Comstock last year. With the Covey Park transaction, Jones plans to invest an additional $475 million in cash for 50,000,000 newly issued shares of Comstock stock. Jones will remain the company's largest shareholder with 75 percent ownership interest and a cumulative investment of about $1.1 billion.
"This combination is another step toward completing my vision to create an industry-leading natural gas company," Jones said in a prepared statement.
With 16 percent common stock ownership interest, private equity firm Denham Capital will become the company's second-largest shareholder.
The deal has already been unanimously approved by both company's boards of directors. The transaction is expected to close July 31 pending regulatory approvals and customary closing conditions.
Comstock Resources Inc. (NYSE: CRK) has entered into an agreement to acquire Covey Park Energy in a cash and stock transaction valued at about $2.2 billion, according to a news release issued Monday.
The move grows Comstock's position in the Haynesville shale and is expected to help the Frisco oil company get closer to its goal of sustainable free cash flow generation and reduced leverage, in addition to pushing operating efficiencies and having a combined drilling program.
The deal includes the assumption of Dallas-based Covey Park's outstanding debt and the retirement of its existing preferred units, which total about $1.1 billion in the aggregate.
Comstock CEO M. Jay Allison will lead the company following the transaction, through the management team is expected to include representation form both Comstock and Covey Park.
Dallas Cowboys owner Jerry Jones became the majority stake of Comstock last year. With the Covey Park transaction, Jones plans to invest an additional $475 million in cash for 50,000,000 newly issued shares of Comstock stock. Jones will remain the company's largest shareholder with 75 percent ownership interest and a cumulative investment of about $1.1 billion.
"This combination is another step toward completing my vision to create an industry-leading natural gas company," Jones said in a prepared statement.
With 16 percent common stock ownership interest, private equity firm Denham Capital will become the company's second-largest shareholder.
The deal has already been unanimously approved by both company's boards of directors. The transaction is expected to close July 31 pending regulatory approvals and customary closing conditions.