BCEI ACQUISITION
Posted: Mon Jun 07, 2021 11:50 am
From my friends at Stifel
Bonanza Creek Energy (BCEI, $47.35, Buy; Target $79.00)
Another Step in Accretive DJ Roll-up - Michael S. Scialla
We view the Crestone Peak acquisition positively. The all-stock transaction will create a company with a combined market-cap of nearly $4B that is capable of maintaining production on a cash flow reinvestment rate of ~50%. The company will have one of the strongest balance sheets in the industry and one of the higher FCF yields in our peer group at 14%. The acquired properties are largely contiguous with the legacy XOG assets, and the transaction is expected to generate meaningful synergies. Over the past 7 months, BCEI has transformed from a small company with sub-scale operations to a mid-cap leader that is poised to continue to roll-up private DJ Basin operators in all-stock, immediately accretive deals.
BCEI is on my Watch List and I will take a hard look at it in July.