Crescent Energy Announces Offering of $700 Million Private Placement of Senior Notes Due 2032

Rhea-AI Summary

Crescent Energy Company (CRGY) announces a private placement offering of $700 million Senior Notes due 2032 to fund the repurchase of existing 2026 Senior Notes, subject to market conditions. The offering is aimed at qualified institutional buyers and non-US persons.

Insights

Financial Analyst

The move by Crescent Energy Company to issue $700 million in Senior Notes due 2032 signifies a strategic financial restructuring. This effort to manage debt by buying back their 7.250% Senior Notes due 2026 can be seen as a proactive measure to take advantage of current market conditions and potentially lower the company's debt servicing costs. The tender offer, paired with the redemption of remaining 2026 Notes, suggests that the company is looking to streamline its capital structure.

Investors should note that the new issuance is unregistered, targeting qualified institutional buyers, which implies a limited market and higher yields due to the private placement. The impact on the company's stock could be mixed. On one hand, successful debt management may be viewed positively, indicating strong financial stewardship. On the other hand, the increase in leverage could be a concern for the company's long-term financial health if not managed properly.

Legal Expert

The legal framework surrounding the offering is notable. The reliance on Rule 144A and Regulation S indicates that Crescent Energy is circumventing the public registration process, which can be both time-consuming and costly. This move allows the company to tap into a pool of institutional investors quickly, but it also limits the liquidity of the notes since they cannot be sold to the general public without registration, unless certain conditions are met.

From a legal perspective, the guarantees by the Issuer's subsidiaries create a layer of complexity and potential risk. These guarantees mean that in the event of a default, creditors could have claims against the subsidiaries, which could impact the overall financial stability of Crescent Energy. Investors should consider the legal implications of these guarantees when assessing the risk associated with the Senior Notes.

Market Research Analyst

Within the energy sector, the issuance of debt instruments like Senior Notes is a common practice to raise capital for various purposes, including refinancing existing debt. The decision to refinance the 2026 Notes before maturity could be indicative of Crescent Energy's anticipation of a changing interest rate environment or a strategic move to improve financial metrics such as leverage ratios or interest coverage ratios.

Market conditions play a pivotal role in the timing and success of such offerings. If the market perceives the energy sector as stable with growth potential, the offering could be met with strong demand. However, if there are concerns about volatility in energy prices or regulatory changes, it might affect the appetite of institutional investors for the notes, thus influencing the terms Crescent Energy can secure.

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 $700 million aggregate principal amount of Senior Notes due 2032 (the “Notes”). The Notes will be guaranteed on a senior unsecured basis by all of the Issuer’s subsidiaries that guarantee the Issuer’s existing notes and the indebtedness under its revolving credit facility (the “revolving credit facility”).

The Issuer intends to use net proceeds from this offering, together with additional borrowings under the revolving credit facility, to purchase for cash any and all of the Issuer’s outstanding 7.250% Senior Notes due 2026 (the “2026 Notes”), pursuant to the tender offer that commenced concurrently with the offering of the Notes (the “Tender Offer”), and to the extent any 2026 Notes remain outstanding after the Tender Offer, to fund the full redemption of any 2026 Notes not purchased in the Tender Offer (the “Redemption”). The Tender Offer and the Redemption are each conditioned on the consummation of this offering.

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. Additionally, this communication shall not constitute an offer to purchase or the solicitation of an offer to sell any 2026 Notes in the Tender Offer, nor does it constitute a notice of redemption under the indenture governing the 2026 Notes.

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, including the Tender Offer, the timing and outcome thereof, and the Redemption, 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, the impact of pandemics such as COVID-19, actions by the Organization of the Petroleum Exporting Countries (“OPEC”) and non-OPEC oil-producing countries, including recent production cuts by OPEC, the impact of armed conflicts, including in and around Ukraine and Israel, the impact of disruptions in the banking industry and capital markets, the timing and success of business development efforts, including acquisition and disposition opportunities, our reliance on external manager, cost inflation 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 their respective forward-looking statements based on new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240318351454/en/

Brandi Kendall

IR@crescentenergyco.com

Source: Crescent Energy

FAQ

What type of securities is Crescent Energy Company (CRGY) offering in the private placement?

Crescent Energy Company is offering $700 million aggregate principal amount of Senior Notes due 2032 in the private placement.

How does Crescent Energy Company (CRGY) plan to use the net proceeds from the offering?

The company intends to use the net proceeds from the offering, along with additional borrowings under the revolving credit facility, to repurchase its outstanding 7.250% Senior Notes due 2026 through a Tender Offer.

Who are the intended buyers for the Notes offered by Crescent Energy Company (CRGY)?

Crescent Energy Company plans to offer and sell the Notes to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S.

Are the Notes and guarantees registered under the Securities Act?

No, the Notes and guarantees have not been registered under the Securities Act or state securities laws and may only be offered or sold under specific exemptions.

What conditions are associated with the Tender Offer and Redemption mentioned in the announcement?

The Tender Offer and Redemption are conditioned on the successful completion of the offering of the Senior Notes due 2032.