| Item 1.01. | Entry into a Material Definitive Agreement. |
On May 2, 2023, Javelin EF L.P. (the “Purchaser”), a subsidiary of Crescent Energy Company (NYSE: CRGY) (the “Company”), entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Mesquite Comanche Holdings, LLC (“Comanche Holdings”) and SN EF Maverick, LLC (“SN EF Maverick,” and collectively with Comanche Holdings, the “Seller”), pursuant to which the Purchaser has agreed to acquire from the Seller certain interests in oil and gas properties, rights and related assets (the “Purchased Assets”).
Under the terms and conditions of the Purchase Agreement, which has an economic effective date of March 1, 2023, upon closing, the Seller will receive aggregate consideration of approximately $600 million in cash (the “Consideration”), subject to customary purchase price adjustments set forth in the Purchase Agreement. Upon execution of the Purchase Agreement, the Company deposited approximately $60.0 million (the “Deposit”) into escrow, which will be credited toward the Consideration payable at the closing of the Transaction. The board of directors of the Company has unanimously approved the Purchase Agreement and the transactions contemplated thereby (the “Transaction”).
The Seller and the Purchaser have made customary representations and warranties in the Purchase Agreement. The Purchase Agreement also contains customary covenants and agreements, including, among others, covenants and agreements relating to (a) the conduct of the Seller’s business during the period between the execution of the Purchase Agreement and closing of the Transaction and (b) the efforts of the parties to cause the Transaction to be completed, including obtaining any required governmental approval and causing any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), to expire or terminate.
The Purchase Agreement has been included with this Current Report on Form 8-K to provide investors and security holders with information regarding the terms of the transactions contemplated therein. It is not intended to provide any other factual information about the Company, the Purchaser, the Seller or the Purchased Assets. The representations, warranties, covenants and agreements contained in the Purchase Agreement, which are made only for purposes of the Purchase Agreement and as of specific dates, are solely for the benefit of the parties to the Purchase Agreement, may be subject to limitations agreed upon by the parties (including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors and security holders. Company security holders should not rely on the representations, warranties, covenants and agreements or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, the Purchaser, the Seller or the Purchased Assets. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
The Transaction is subject to the satisfaction or waiver of customary closing conditions, including, among others, (a) the accuracy of the representations and warranties of each party (subject to specified materiality standards and customary qualifications), (b) compliance by each party in all material respects with their respective covenants and (c) the expiration or termination of all waiting periods imposed under the HSR Act. The Transaction is expected to close early in the third quarter of 2023.
The Purchase Agreement contains certain customary termination rights for the Purchaser and the Seller, including among other things, that either party may terminate the Purchase Agreement if (i) the parties mutually agree in writing, (ii) the closing has not occurred on or before July 6, 2023, subject to certain extensions, and (iii) subject to certain exceptions and extensions, the other party has breached a representation, warranty, covenant or agreement contained in the Purchase Agreement resulting in a failure of a condition set forth in the Purchase Agreement that cannot be cured by the scheduled closing date. In certain circumstances, the Seller may be entitled to terminate the Purchase Agreement and receive the Deposit as liquidated damages as the Seller’s sole and exclusive remedy. In certain circumstances, the Purchaser may be entitled to seek specific performance or alternatively to terminate the Purchase Agreement and receive a refund of the Deposit and up to an additional amount not to exceed the amount of the Deposit for actual, direct damages.
