Energy Prospectus

Crescent Energy Company (NYSE: CRGY) ("Crescent" or the "Company") and SilverBow Resources, Inc. (NYSE: SBOW) ("SilverBow") today announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), in connection with Crescent's pending acquisition of SilverBow.

The expiration of the waiting period under the HSR Act satisfies an important condition necessary for the completion of the transaction.

Meetings of the stockholders of each of Crescent and SilverBow are scheduled for July 29, 2024 at 10:00 am Central Time for stockholders of record as of June 28, 2024. The details of each special meeting, including the terms of the proposed transaction, have been outlined in the joint proxy statement/prospectus, filed on June 28, 2024 with the Securities and Exchange Commission (the "SEC").

The transaction, which would create a leading mid-cap E&P with a scaled, balanced portfolio of high-quality assets in the Eagle Ford, is expected to close shortly after receiving approval from the stockholders of each of Crescent and SilverBow. < So, we can now expect the merger to close by the end of July. I will be updating my Proforma forecast model for Crescent Energy this afternoon and posting it to the EPG website. SilverBow's Q3 2024 production is forecast to be 94,000 Boepd (25,500 bbl oil per day, 19,500 bbl ngls per day and 294,000 mcf ngas per day. So, Crescent Energy's Q3 results will include 2/3rds of those volumes

Here is how my forecasts for 2024 and 2025 compare to TipRanks' Consensus Forecasts

2024 EPG Forecast / TipRanks Forecast
Net Income per share = $1.03 / $1.34
Adjusted Operating Cash Flow per share = $5.56 / $6.39

2025 EPG Forecast / TipRanks Forecast
Net Income per share = $1.90 / $2.66
Adjusted Operating Cash Flow per share = $6.14 / $6.08

Yes, TipRanks' Forecasts are actually higher than my forecasts for both years.

I have gained more confidence in my model, but I still have some conservative "cushions" in the operating cash flow calculations for each period.

TipRanks: "In the last 3 months, 7 ranked analysts set 12-month price targets for CRGY. The average price target among the analysts is $16.88. The 7 price targets range from $13 to $20."

This is a significant merger, creating one of the top producing companies in South Texas. Unlike the Permian Basin, South Texas has plenty of pipeline access to refineries and LNG export facilities. The merger is now expected to close before both companies announce Q2 actual results. If Crescent Energy's detailed guidance provided early in August confirms my model assumptions, I expect TipRanks price target of $16.88 to move closer to my valuation.

For 2H 2024 more than 70% of proforma oil and more than 60% of natural gas is hedged, so the commodity price risk on this one is LOW.

The only negative I can come up with is that the post-merger balance sheet will show ~1.5 leverage (Net Debt / 2024 EBITDA). Crescent Energy is going to generate a lot of operating cash flow (over $430 million) in Q4, so they will have more than enough free cash flow to paydown debt and maintain their current dividend of $0.12/quarter (3.88% yield based on today's closing price of $12.37).

My current valuation of CRGY increases by $1 to $23.00/share.