Civitas strikes $5 billion deal!

Newsletter No. 20

Good afternoon!


Hope everyone had a great week last week. 


Today’s Headlines

  • Macro Economic Overview: We are in an Economic Multiverse

  • Sad Day in Oceanic Exploration

  • LNG Futures Gain 4% on Output Decline and Hotter Weather Forecast

  • Deal of the Week: Civitas Resources Strikes Deals Totaling $4.7B

  • Well of the Week: The Drake Well


Macro Economic Overview: We are in an Economic Multiverse 

King’s Chief Growth Officer Eric Rice sheds light on on the often overlooked geopolitical factors that significantly impact investing and financial decisions in his latest “Rice Report.”


In this video, Rice discusses recession, debt ceiling, high interest rates, globalization, taxes and tax shelters, just to name a few topics.


You can watch the entire report here.


Sad Day in Oceanic Exploration

As fellow explorers, albeit from a different proficiencies, we are saddened by the devastating loss and are praying for the families who lost their loved ones on the Oceangate Expeditions submersible.


Those tragically lost were Oceangate CEO Stockton Rush, Pakistani businessman Shahzada Dawood and his son Suleman Dawood, billionaire Hamish Harding, and Paul-Henri Nargeolet.


Quoting the Wall Street Journal, “These men were true explorers who shared a distinct spirit of adventure, and a deep passion for exploring and protecting the world’s oceans.”  



LNG Futures Gain 4% on Output Decline and Hotter Weather Forecast

U.S. natural gas futures gained about 4% after a drop in output as well as a forecast for hot weather, especially in Texas. Prices went up even though flow to liquid natural gas (LNG) export plants remains low for maintenance work.


Here in Texas, it’s HOT! I mean really hot! Temperatures are expected to continue in the three-digit range for a while. The power grid operator projected electric use would break records … AGAIN!


Increased power demand is expected to boost the amount of gas generators burn in the state. This is because Texas gets about half of its electricity from gas.


With more hot weather coming, Refinitiv is predicting that U.S. gas demand will rise from week to week.


Gas flows to the U.S. LNG export plants fell in June, bringing it to well below the monthly record high in April due to maintenance at facilities including Freeport LNG here in Texas and Cheniere Energy Inc.’s Sabine Pass in Louisiana.


Deal of the Week: Civitas Resources Expands into Permian Basin with $4.7B

Colorado-focused oil and gas company Civitas Resources has struck two deals totaling close to $5 billion to expand into the Permian Basin.


Civitas announced that it signed agreements with Hibernia Energy and Tap Rock Resources, who are managed by NGP Energy Capital Management.


The company said the deal with give it “a stronger, more balanced and sustainable enterprise.” This acquisition will boost Civitas’ production by 60%, according to the company in a statement.


Civitas’ president and CEO, Chris Doyle said in a statement, “By acquiring attractively priced, scaled assets in the heart of the Permian Basin, we advance our strategic pillars through increased free cash flow and enhanced shareholder returns.”


This deal includes a portion of Tap Rock’s assets in the Delaware Basin of the Permian. It will cover 30,000 net acres, primarily in New Mexico.


Civitas has also agreed to purchase assets in the Midland Basin for a cash amount over $2 billion. Those assets are said to include about 38,000 net acres in the Texas counties of Upton and Reagan.


The company plans to pay for these transactions with close to $3 billion in unsecured debt, over 13 million shares of its common stock, which is valued around $950 million, $400 million cash and borrowing approximately $600 million.


Bank of America and JP Morgan are also committing $3,5 billion in financing for the deal.



Well of the Week: The Drake Well

This week, I want to look at the first commercial oil well in the United States, the Drake Well.


The well was drilled by Edwin Drake in 1859, along the banks of Oil Creek, in Cherrytree Township in Pennsylvania.


Measuring 69.5-feet deep, or 21.2 miles, the success of this well brought about the first oil boom in the country. 


The oil along Oil Creek had been known to Native Americans for hundreds of years through seeps and the Europeans found out about it in the 1600s, with the petroleum, or “mineral oil,” being used for medicinal purposes, and was touted as something that could cure rheumatism and arthritis.


In the 1800s, Samuel Kier recognized its ability to be an illuminant oil and made it usable in lamps by removing the odor and impurities.


After further investigation into the petroleum, it was confirmed that the quality of the petroleum allowed for, after distilling, the production of kerosene.


Most of the oil produced was formed in sandstone reservoir rocks in northwestern Pennsylvania.


The Drake Well is listed on the National Register of Historic Places and was named a National Historic Landmark in 1966 and a Historic Mechanical Engineering Landmark in 1979.


Saudi Arabia Reducing Oil Output

NBC Charlotte, North Carolina asked Jay Young to come on for an interview.

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Recommended Reads

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Texas oil and gas industry reaches another record in May

There are some outstanding results developing in the current program… KOPX Program 4. If you are not in it, and you are accredited, it’s a good time to have a conversation! You can schedule a Zoom here.

 All the best,