Crescent Energy Announces Offering of $250 Million Private Placement of Additional 7.375% Senior Notes Due 2033

Rhea-AI Summary

Crescent Energy Company (NYSE: CRGY) has announced that its subsidiary, Crescent Energy Finance , plans to offer $250 million in additional 7.375% Senior Notes due 2033. This private placement is subject to market conditions and will be offered to eligible purchasers under Rule 144A and Regulation S of the Securities Act. These notes will be an extension of the previously issued $750 million in 7.375% Senior Notes due 2033.

The new notes will have similar terms to the existing ones, maturing on January 15, 2033, with interest payable semi-annually. Crescent Energy intends to use the net proceeds to repay a portion of its revolving credit facility. The notes and related guarantees are not registered under the Securities Act and will be offered only to qualified institutional buyers and non-U.S. persons.

Positive

• Raising $250 million in additional capital through senior notes
• Potential reduction of revolving credit facility debt

Negative

• Increased long-term debt obligation with 7.375% interest rate
• Potential dilution of existing noteholders' position

Insights

Financial Analyst

Crescent Energy's $250 million private placement of additional 7.375% Senior Notes due 2033 is a significant move to restructure its debt. This offering, combined with the existing $750 million, brings the total to $1 billion in senior notes. The high yield of 7.375% reflects current market conditions and potentially the company's risk profile. Using proceeds to repay revolving credit suggests a strategy to optimize their debt structure, potentially reducing short-term financial pressure. However, investors should note that this doesn't reduce overall debt, but rather shifts it to longer-term obligations. The impact on the company's financial health will depend on how effectively they manage this increased long-term debt load and utilize the freed-up credit facility.

Energy Sector Analyst

This debt offering by Crescent Energy highlights the ongoing capital needs in the energy sector, particularly for exploration and production companies. The 10-year maturity of these notes indicates a long-term outlook, suggesting confidence in the company's future operations. However, the high interest rate could be a double-edged sword: while it may attract investors seeking yield, it also increases Crescent's financial obligations. The energy market's volatility makes such high-interest debt potentially risky. Investors should closely monitor Crescent's ability to generate sufficient cash flow to service this debt, especially given the cyclical nature of oil and gas prices. The company's strategy in using this capital for growth or efficiency improvements will be important in determining the long-term impact of this debt issuance.

HOUSTON--(BUSINESS WIRE)-- Crescent Energy Company (NYSE: CRGY) (“we” or “our”) announced today that, subject to market conditions, its indirect subsidiary Crescent Energy Finance LLC (the “Issuer”) intends to offer for sale in a private placement pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), to eligible purchasers $250 million aggregate principal amount of 7.375% Senior Notes due 2033 (the “Notes”). The Notes are being offered as additional notes under the indenture dated as of June 14, 2024, as previously supplemented (the “Indenture”), pursuant to which the Issuer has previously issued $750 million aggregate principal amount of 7.375% Senior Notes due 2033 (the “Existing Notes”). The Notes will have substantially identical terms, other than the issue date and issue price, as the Existing Notes, and the Notes and the Existing Notes will be treated as a single series of securities under the Indenture and will vote together as a single class. The Notes mature on January 15, 2033 and pay interest at the rate of 7.375% per year, payable on January 15 and July 15 of each year, with interest payments on the Notes commencing on January 15, 2025. The Issuer intends to use the net proceeds from this offering to repay a portion of the amounts outstanding under its revolving credit facility.

The Notes and the related guarantees have not been registered under the Securities Act, or any state securities laws, and, unless so registered, the Notes and the guarantees may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Issuer plans to offer and sell the Notes only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to persons outside the United States pursuant to Regulation S under the Securities Act.

This communication shall not constitute an offer to sell, or the solicitation of an offer to buy, the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Crescent Energy Company

Crescent Energy Company is a U.S. energy company with a portfolio of assets concentrated in Texas and the Rockies.

Cautionary Statement Regarding Forward-Looking Information

This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on current expectations. The words and phrases “should”, “could”, “may”, “will”, “believe”, “think”, “plan”, “intend”, “expect”, “potential”, “possible”, “anticipate”, “estimate”, “forecast”, “view”, “efforts”, “target”, “goal” and similar expressions identify forward-looking statements and express our expectations about future events. This communication includes statements regarding this private placement and the use of proceeds therefrom that may contain forward-looking statements within the meaning of federal securities laws. We believe that our expectations are based on reasonable assumptions; however, no assurance can be given that such expectations will prove to be correct. A number of factors could cause actual results to differ materially from the expectations, anticipated results or other forward-looking information expressed in this communication, including weather, political, economic and market conditions, including a decline in the price and market demand for natural gas, natural gas liquids and crude oil, uncertainties inherent in estimating natural gas and oil reserves and in projecting future rates of production, our hedging strategy and results, federal and state regulations and laws, upcoming elections and associated political volatility, the severity and duration of public health crises, actions by the Organization of the Petroleum Exporting Countries (“OPEC”) and non-OPEC oil-producing countries, the impact of the armed conflict in Ukraine, continued hostilities in the Middle East, including the Israel-Hamas conflict and rising tensions with Iran, the impact of disruptions in the capital markets, the timing and success of business development efforts, including acquisition and disposition opportunities, our ability to integrate operations or realize any anticipated operational or corporate synergies and other benefits from the acquisition of SilverBow Resources, Inc., our reliance on our external manager, sustained cost inflation, elevated interest rates and central bank policy changes associated therewith and other uncertainties. All statements, other than statements of historical facts, included in this communication that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Consequently, actual future results could differ materially from our expectations due to a number of factors, including, but not limited to, those items identified as such in the most recent Annual Report on Form 10-K and any subsequently filed Quarterly Reports on Form 10-Q and the risk factors described thereunder, filed by Crescent Energy Company with the U.S. Securities and Exchange Commission.

Many of such risks, uncertainties and assumptions are beyond our ability to control or predict. Because of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements. We do not give any assurance (1) that we will achieve our expectations or (2) concerning any result or the timing thereof.

All subsequent written and oral forward-looking statements concerning this offering, the use of proceeds therefrom, Crescent Energy Company and the Issuer or other matters and attributable thereto or to any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. We assume no duty to update or revise these forward-looking statements based on new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240903624205/en/

IR@crescentenergyco.com

Source: Crescent Energy

FAQ

What is the purpose of Crescent Energy's (CRGY) $250 million note offering?

Crescent Energy (CRGY) plans to use the net proceeds from the $250 million note offering to repay a portion of the amounts outstanding under its revolving credit facility.

What is the interest rate and maturity date for Crescent Energy's (CRGY) new senior notes?

The new senior notes offered by Crescent Energy (CRGY) have an interest rate of 7.375% and mature on January 15, 2033.

How much in total senior notes will Crescent Energy (CRGY) have outstanding after this offering?

After this offering, Crescent Energy (CRGY) will have a total of $1 billion in 7.375% Senior Notes due 2033 outstanding, consisting of the existing $750 million and the new $250 million offering.

Who is eligible to purchase Crescent Energy's (CRGY) new senior notes?

Crescent Energy (CRGY) plans to offer the new senior notes only to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S of the Securities Act.