Highlights
- Following closing, acquisition of Lucero is expected to be immediately accretive to Vitesse’s earnings, operating cash flow, free cash flow and net asset value
- Subject to board approval and closing the transaction, Vitesse expects to increase its cash dividend from $2.10 to $2.25 per share on an annualized basis
- Upon closing, this acquisition strengthens Vitesse’s financial position with expected near-term Net Debt to Adjusted EBITDA ratio of ~0.3x
- The acquisition of Lucero provides Vitesse with an operational component to its strategy, as Lucero currently operates more than 65 producing wells
- Lucero operations provide flexibility in future capital spending with 2 gross (1.9 net) drilled uncompleted wells and up to 50 gross (25 net) locations in the core of the Bakken
- Vitesse is hedging a significant portion of the acquired oil production through the end of 2026
- After giving effect to the transaction, Vitesse would have had two-stream production of approximately 19.4 Mboe/d during the third quarter of 2024
- Gary Reaves, Managing Partner at First Reserve Management, LP, which owns 37% of Lucero, and director of Lucero, and M. Bruce Chernoff, Lucero’s Chairman, who owns 22% of Lucero, to be nominated to join the Vitesse Board
- The Company will continue to be led by the Vitesse executive team
Vitesse Energy and Lucero Energy have entered into a definitive agreement under which Vitesse will acquire Lucero in an all-stock transaction with a fully diluted equity value of US$222 million. Under the terms of the agreement, Lucero shareholders will receive 0.01239 of a share of Vitesse common stock for each common share of Lucero. The addition of Lucero’s operations will provide additional scale to Vitesse’s assets across the Bakken, where Lucero had approximately 6.4 Mboe per day of two-stream net production during the third quarter of 2024. Lucero had no outstanding debt and US$56 million of cash as of September 30, 2024, and Vitesse expects to use a portion of the cash held by Lucero at closing to reduce outstanding borrowings under Vitesse’s revolving credit facility. Vitesse is targeting about US$3 million of general and administrative synergies annually.
“We are acquiring a high-quality company that has been very well managed and will be a terrific complement to our existing business. We are excited to add an operated leg to our strategy, while keeping our emphasis primarily on non-op,” commented Bob Gerrity, Vitesse’s Chairman and Chief Executive Officer. “This opens the door to acquiring operated and non-operated packages that are accretive to our dividend, while giving us proportionately more control over our future capital spending. In addition, this transaction supports our ability to pay the dividend, and the anticipated increased liquidity furthers our ability to make future acquisitions.”
Brett Herman, President & CEO of Lucero commented, “We are very proud of the significant steps we have taken to enhance Lucero’s asset base, operational performance, and balance sheet over the past several years. Combining with Vitesse will provide Lucero shareholders with immediate value for their investment and the opportunity to participate in the future upside from ownership in a stronger, larger company with enhanced shareholder returns. The transaction creates a unique oil weighted company with assets in the core of the Williston Basin exhibiting lower production declines, high operating netbacks, and strong capital efficiencies. I want to thank our employees for their dedication and hard work over the years that allowed us to build such a great organization and reach this exciting milestone.”
TRANSACTION DETAILS
In this all-stock transaction, each outstanding common share of Lucero will be exchanged for 0.01239 of a share of Vitesse common stock, with approximately 8,175,000 shares of common stock expected to be issued at closing. After closing, existing Vitesse stockholders are expected to own approximately 80% and existing Lucero shareholders are expected to own approximately 20% of the Company on a fully diluted basis.
GOVERNANCE AND LEADERSHIP
Following the closing of the transaction, the board of directors of Vitesse will increase to nine members and will comprise the seven current members of Vitesse’s board and two nominees currently serving on Lucero’s board, namely Messrs. Reaves and Chernoff. Vitesse’s leadership team will continue to serve in their respective capacities in the company.
KeyFacts Energy: Acquisitions & Mergers news