Ownership of oil and mineral companies Sitio and Brigham merge to equal $4 billion

Sitio . property rights corp.

And the

Brigham Metals a company

They reached an agreement to merge to form one of the largest metals and equity-traded companies in the United States, valued at nearly $4 billion, the two companies said Tuesday.

Both Sitio and Brigham, like the rest of the industry, have posted increased profits in the past few months on the back of higher oil prices.

The two companies said that the combination of the two companies will allow the new entity to achieve economies of scale and become a leader in the mineral rights industry.

“Mineral acreage and ownership benefit from scale unlike any other business in the energy value chain,” said Chris Conocenti, CEO of Sitio.

Sitio shares were down 1.55% to $24.83 on Tuesday. Brigham’s stock fell 4.66 percent to $28.03.

metal holders Taking home a piece of the oil and gas pumped into their land in the form of royalty payments, often 12.5% ​​to 20% of the value of the fuel. They don’t control the pace of development, but they’re not in the hook of drilling or overhead costs either, and they’re reaping the benefits of higher commodity prices.

Brigham Minerals and Sitio have both made major acquisitions this year in the oil-rich Permian Basin.


picture:

Michael Nagel/Bloomberg News

The companies said Noam Lochchin, a partner in private equity firm Kimmeridge Energy Management, which currently owns 43.2% of Sitio’s outstanding shares, will become president of the new company upon completion of the transaction. Mr. Lokshin is currently the President of Sitio. Mr. Connocenti will serve as CEO of the combined company, which will be based in Denver and operate under the Sitio name.

The all-share deal is expected to expire in the first quarter of 2023, according to the companies. The companies said that under the terms of the deal, Sitio shareholders will own about 54% of the company, while Brigham will own the remaining 46%.

Sitio and Brigham are pursuing a consolidation strategy in The oil-rich Permian Basin in West Texas and New Mexico, where it has made major acquisitions this year.

Sito Formed after merger From Desert Peak Minerals Inc. Owned by Kimmeridge and

Black stone a company

Backed by Falcon Metals earlier this year.

Brigham has announced mining and property interest deals in the region worth about $150 million so far this year. Meanwhile, Sitio bought more than 40,000 net acres in the Permian in the second and third quarters, the company told investors last month, including nearly $323 million for the acquisition in June.

The two companies said the newly formed company will have interests in more than 34% of all wells drilled in the Permian in the last quarter of 2021.

“In the long term, as other plays continue to mature and inventory dwindles, exposure to Permian will be key for royalty companies to maintain a pipeline of wells that will be developed on their land,” said Andrew Dittmar, analyst at data firm Enverus.

Brigham Chief Executive Robert Rosa said last month that he was bullish on oil prices, citing supply chain issues limiting production in the oil patch, issues with Russian energy supplies and the need for replenishment. withdrawn strategic petroleum reserve And what he described inability Organization of the Petroleum Exporting Countries (OPEC) to increase production.

“We’ve seen long-term structural advantages of being in the energy space,” he told investors.

write to Benoît Morenne at [email protected]

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