RSP Permian Buy to Be ‘Immediately Accretive’ to Concho Resources



CXO-RSPP: Transaction highlights

As part of Concho Resources’ (CXO) acquisition of RSP Permian (RSPP), RSPP shareholders will receive 0.32 of Concho Resources (CXO) shares for each RSP share. That represents a consideration of $50.24 per share to each RSP shareholder based on the closing price of CXO stock on March 27, 2018. It also represents a 29% premium to RSP’s closing price of $38.92 on March 27, 2018.

Upon closing the deal, Concho shareholders will own ~74.5% of the combined company, and RSP shareholders will own ~25.5%. CXO expects the deal to be immediately accretive to important per-share metrics such as net asset value, earnings, cash flow, and debt-adjusted growth. The transaction is also expected to enhance Concho’s three-year outlook for annualized production growth.

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Growth forecasts

In its 4Q17 earnings release, CXO provided a three-year CAGR (compound annual growth rate) forecast of 20% for 2017–2020. Concho expects to deliver that growth within its operating cash flows at an average crude oil price in the low-to-mid $50-per-barrel range over the duration of the outlook. Crude oil prices are currently trading at $65.09 per barrel.

The deal is expected to close in 3Q18 and is still subject to shareholder and regulatory approvals.


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