Chord Energy (CHRD) and Enerplus (ERF) merge to form a $11 billion powerhouse

February 22, 2024 6:29 AM EST

Chord Energy (NASDAQ: CHRD) announced on Wednesday its plans to acquire Canadian energy firm Enerplus (NYSE: ERF), in a deal that will create a new entity focused on the Williston basin with an enterprise value of $11 billion.

This acquisition, which comes as part of a broader trend of consolidation within the U.S. oil and gas sector, is set to establish one of the leading operators in the Williston basin, located in North Dakota, featuring approximately 1.3 million net acres and producing around 287,000 barrels of oil equivalent per day.

ERF shares popped over 12% in premarket trading while CHRD gained 1.3%.

Under the terms of the agreement, Enerplus shareholders are to receive 0.10125 shares of Chord common stock plus $1.84 in cash for each Enerplus common share they hold.

Based on Chord's closing price on the announcement day, the equity value of the transaction is calculated to be around $3.8 billion.

"This combination further strengthens our Williston Basin position and represents a compelling opportunity for both companies' shareholders," said Danny Brown, Chord Energy's President and CEO.

“The combined company is expected to benefit from improving returns, capital efficiency, low-cost inventory, and a peer-leading balance sheet, all of which support sustainable free cash flow generation and meaningful shareholder returns,” he added.

The companies anticipate that the synergies realized post-merger, on an after-tax present value basis, will surpass $750 million.

Chord Energy is expected to issue approximately 20.7 million shares of its common stock as part of the deal, which is expected to be completed by mid-2024.

Following the merger, Chord's shareholders will retain a 67% stake in the newly combined entity, with the remainder held by Enerplus's shareholders.

The combined company will be led by Brown.

By Vahid Karaahmetovic

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