Sitio Royalties And Brigham Minerals To Combine In $4.8B All-stock, At-market Merger, Forming A Premier Consolidator Of Oil And Gas Mineral And Royalty Interests

Author: Benzinga Newsdesk | September 06, 2022 07:08am

Sitio Royalties Corp. (NYSE:STR) (“Sitio”, "STR" or the “Company”) and Brigham Minerals, Inc. (NYSE:MNRL) (“Brigham Minerals”, “MNRL” or “Brigham”) today announced that they have entered into a definitive agreement to combine in an all-stock merger, with an aggregate enterprise value of approximately $4.8 billion based on the closing share prices of STR and MNRL on Friday, September 2, 2022. The combination brings together two of the largest public companies in the oil and gas mineral and royalty sector with complementary high-quality assets in the Permian Basin and other oil-focused regions, creating an industry leader with a proven track record of consolidating oil and gas mineral and royalty interests operated by a diverse set of E&P companies.

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TRANSACTION HIGHLIGHTS

• Combination creates an industry leader, with complementary high-quality assets in the Permian Basin and other active U.S. oil basins; combined company expected to be a premier consolidator in the fragmented minerals space
• 259,510 net royalty acres on a combined basis, pro forma 2Q 2022 net production of 32.8 Mboe/d and 50.3 net line-of-sight wells operated by a well-capitalized, diverse set of E&P companies as of June 30, 20221 2
• Combined company expected to benefit from a step-change in greater scale, enhanced margins, and increased access to capital, leading to accelerated consolidation potential, attractive returns and long-term value for stakeholders
• Transaction expected to generate approximately $15 million of annual operational cash cost synergies and to reduce Sitio’s 2Q 2022 pro forma cash G&A per Boe by 19% to approximately $1.72 per Boe for the combined company
• Strong balance sheet with pro forma 2Q 2022 leverage of approximately 1.0x3
• Merger to increase Sitio’s public float by 5.8x, from approximately $320 million to approximately $1.9 billion based on Sitio’s Class A share closing price as of September 2, 2022
• At-market merger results in Sitio and Brigham shareholders receiving approximately 54% and 46% of combined company, respectively, on a fully diluted basis
• Balanced capital allocation framework that prioritizes return of capital to shareholders at a minimum 65% payout ratio, while using retained cash to protect the balance sheet and opportunistically fund cash acquisitions
• Board of Directors of combined company will consist of 9 total directors, including 5 directors nominated by Sitio and 4 directors nominated by Brigham; Noam Lockshin, the current Chairman of Sitio’s Board, to serve as Chairman of the Board of the combined company
• Shared commitment to prioritizing best-in-class corporate governance practices including management incentive compensation and capital allocation that is well-aligned with shareholder interests to drive long-term returns
• Current Sitio management team to run combined company, which will retain the Sitio Royalties Corp. company name

Posted In: MNRL STR