Showdown at the Eagle Ford Corral

Don’t look for Kimmeridge any time soon to wrap up and slap a bow on its dogged pursuit of a prized Eagle Ford player. Reese Energy Consulting today is following news on the now two-year chase by NY-based KEM to lasso Houston’s SilverBow Resources and merge the East Texas gas producer with the asset manager’s Kimmeridge Texas Gas.

For KEM—Silverbow’s largest investor—it’s been quite the rodeo to tie-down roping the calf after its latest buyout proposal for $2.1 billion was both sniffed and rejected again. Some media reports describe the standoff as a showdown as investors and shareholders on both sides push for or dissuade a merger.

Here’s what a combo would look like: Kimmeridge Texas Gas operates 148,000 net acres in the Eagle Ford, producing 315 MMCFED flowed to neighboring Gulf Coast markets. SilverBow holds 220,000 net acres in the Eagle Ford, reporting 4Q net production of 59.4 MBOED, 1,000 high-value locations, and more than a decade of inventory. This, following its $700 million “transformational” acquisition last August of Chesapeake’s South Texas position.

Aside from quipping, “You’ve gotta be joking,” at KEM’s latest bid—which SilverBow believes substantially undervalues its assets—SilverBow also announced a couple of news nuggets that could require extra butter on the popcorn to fully enjoy what happens next.  

In a resounding “I don’t bloody think so,” Silverbow says it will NOT (their caps; not ours), nominate KEM nominees to board seats. Wrapping that up with a silver bow, the company suggested KEM needs to perform due diligence on its own Eagle Ford assets to determine actual value, not their “assertion” of value, which SilverBow believes to be false.

Otherwise, SilverBow looks forward to one day hammering out a deal with KEM and making shareholders deliriously happy.