Crescent Energy pays about $56,600 per flowing barrel for Devon's Eagle Ford fields

Divide Crescent's net price of about $3.85 billion ^[10] by the roughly 68,000 barrels of oil equivalent a day it says it is buying ^[8] and the Eagle Ford fields cost about $56,600 per flowing barrel ^[18]. On the $4.22 billion cash figure in the filing ^[1] (Devon rounds it to $4.2 billion ^[2]), the number is about $62,100 ^[19]. That metric puts the whole price on current output. The more than 600 net locations Crescent calls Tier 1 ^[8], spread across about 90,000 net acres in Karnes, DeWitt and Gonzales counties ^[3], are counted at zero.

The roughly $370 million between the two prices ^[20] comes from the estimated effective-date adjustments ^[10]. Crescent chief executive David Rockecharlie said the deal is "adding high-quality assets at an attractive valuation in the heart of one of our core operating areas" ^[12]. The Seeking Alpha contributor behind "Crescent Energy: An Excellent Deal" disclosed a long position in Crescent ^[17]. Crescent has identified about $140 million a year of synergies across drilling, operating expenses and marketing ^[9]. That is about 3.6% of the net price each year ^[21].

For Devon the package is about 4% of total production ^[4]. Set against Crescent's 68,000 barrels a day, that puts Devon near 1.7 million barrels of oil equivalent a day ^[22], assuming both companies count production the same way. Devon closed its Coterra acquisition in May ^[14], and activist investors have pushed it to sell non-core holdings faster or explore a sale of the whole company, Bloomberg reported ^[15]. "This sale is a direct outcome of our ongoing portfolio review, and it sharpens our focus on the highest-return, longest-duration assets," chief executive Clay Gaspar said ^[7]. Devon is choosing buybacks and a smaller debt balance over drilling that inventory itself ^[6].

KKR-backed Crescent will pay with cash on hand plus new debt and equity, and has financing commitments from JPMorgan Chase Bank and RBC Capital Markets ^[8][11]. The material does not include Crescent's current production, its existing debt or the split between new borrowing and new shares. Without those, neither its leverage after closing nor how much larger it gets in the Eagle Ford can be calculated.

An equity-heavy raise puts the cost on current holders through dilution and keeps the added leverage small. Lean on debt instead and the cost shows up as borrowing concentrated in a basin Crescent already calls core ^[12]. The $140 million a year ^[9] offsets part of either cost if it arrives on schedule. I think the 7% fall in Crescent's shares ^[13] mostly prices a financing investors cannot see yet, since 68,000 barrels a day of current output is easier to value than an undisclosed capital structure. The counter-case is that investors think about $56,600 a flowing barrel ^[18] is simply too much. If Crescent sells its equity and the shares keep falling, the counter-case is the right one.